Document:

enva-ex104_343.htm

Exhibit 10.4 

AMENDMENT NO. 5 TO CREDIT AGREEMENT

This AMENDMENT NO. 5 TO CREDIT AGREEMENT (this “Amendment”), dated as of September 30, 2016, is by and among ENOVA INTERNATIONAL, INC., a Delaware corporation (the “Borrower”), the Guarantors (as defined in the Credit Agreement), the Required Lenders (as defined in the Credit Agreement) and JEFFERIES FINANCE LLC, as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement (as defined below).

W I T N E S S E T H

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of May 14, 2014 (as amended by that certain Amendment to Credit Agreement dated as of March 25, 2015, Amendment No. 2 to Credit Agreement dated as of November 5, 2015, Amendment No. 3 and Revolving Commitment Increase dated as of December 29, 2015 and Amendment No. 4 dated as of June 30, 2016 and as has been further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, the Credit Parties have requested that the Lenders amend certain provisions of the Credit Agreement;

WHEREAS, the Lenders party hereto are willing to make such amendments to the Credit Agreement, in accordance with and subject to the terms and conditions set forth herein; and

WHEREAS, the Lenders party hereto constitute the Required Lenders and such Lenders hereby notify the other parties hereto of their consent to this Amendment;

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

 

1.1 The cover page is amended by deleting the text “$75,000,000” and inserting in its place the text “$35,000,000”.

 

1.2Section 2.1(a)(i) of the Credit Agreement is hereby amended by deleting the text 

“SEVENTY FIVE MILLION DOLLARS ($75,000,000)” and replacing it with the text “THIRTY FIVE MILLION DOLLARS ($35,000,000)”.

 

1.3 Section 6.18(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Maximum Leverage Ratio.  The Borrower shall not permit the Leverage Ratio at any fiscal quarter end to be greater than the ratio set forth below opposite such fiscal quarter:

 

 

 

		
		
	
Fiscal Quarter(s) Ending
	
Maximum Leverage Ratio

	
June 30, 2014 through through September 30, 2015 
	
3.00:1.00

	
December 31, 2015 and March 31, 2016
	
3.75:1.00

	
June 30, 2016
	
4.00:1.00

	
September 30, 2016 and thereafter
	
4.25:1.00

.
 

ARTICLE II

CONDITIONS TO EFFECTIVENESS

	
2.1
	
Closing Conditions.  This Amendment shall become effective upon the satisfaction of the following conditions (the date upon which such conditions are satisfied, the “Amendment Effective Date”):

	
(a)
	
Executed Amendments.  The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties and Lenders constituting the Required Lenders.

	
(b)
	
Default.  After giving effect to this Amendment, no Default or Event of Default shall exist.

	
(c)
	
Miscellaneous.  All other documents and legal matters required in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

	
2.2 
	
Condition Subsequent.The continued effectiveness of this Amendment after October 3, 2016 is subject to the receipt by the Lender of an amendment fee in the amount of $500,000 no later than 3:00 PM New York City time on October 3, 2016.

ARTICLE III

MISCELLANEOUS

	
3.1 
	
Effect of Amendment.  (a) Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any other Credit Document, and shall not 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 Credit Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Credit Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other 

2

 

 

 

		
Credit Document in similar or different circumstances.  Each Credit Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (i) that it is bound by all terms of the Credit Agreement applicable to it and (ii) that it is responsible for the observance and full performance of its respective Obligations.

	
(b)
	
On and after the Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other Credit Document shall be deemed a reference to the Credit Agreement as amended hereby.  This Amendment shall constitute a “Credit Document” for all purposes of the Credit Agreement and the other Credit Documents.

	
3.2
	
Representations and Warranties.  The Credit Parties hereby represent and warrant as follows:

	
(a)
	
The execution, delivery and performance by each Credit Party of this Amendment to which such Person a party has 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) materially conflict with or result in the breach or contravention of, or the creation of any Lien under, any material Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject; or (iii) violate any Law.

	
(b)
	
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, delivery or performance by, or enforcement against, any Credit Party of this Amendment.

	
(c)
	
This Amendment has been duly executed and delivered by each Credit Party that is party hereto.  This Amendment constitutes a legal, valid and binding obligation of such Credit Party, enforceable against each Credit Party that is party thereto in accordance with its terms, subject as to enforcement of remedies to (i) any Debtor Relief Laws and (ii) general principles of equity, whether applied by a court of law or equity.

	
(d)
	
The representations and warranties set forth in Article III of the Credit Agreement are true and correct as of the date hereof (except for those which expressly relate to an earlier date).

	
(e)
	
No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Amendment.

	
3.3
	
Entire Agreement.  This Amendment and the other Credit Documents represent the final agreement among the parties pertaining to the subject matter hereof 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.

	
3.4
	
Expenses. In each case subject to the limitations on reimbursement of costs and expenses set forth in Section 9.5 of the Credit Agreement, the Borrower agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses incurred by the 

3

 

 

 

		
Administrative Agent in connection with this Amendment, including the reasonable fees, charges and disbursements of Davis Polk & Wardwell LLP, counsel for the Administrative Agent. 

	
3.5
	
Counterparts.  This Amendment 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.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy or email shall be effective as delivery of a manually executed counterpart of this Amendment.

	
3.6
	
No Actions, Claims, Etc.  As of the date hereof, each of the Credit Parties hereby acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, against the Administrative Agent, the Lenders, or the Administrative Agent’s or the Lenders’ respective officers, employees, representatives, agents, counsel or directors arising from any action by such Persons, or failure of such Persons to act, under the Credit Agreement on or prior to the date hereof.

	
3.7
	
Governing Law.  This Amendment, and any claim, controversy or dispute arising out of or relating to this Amendment, shall be governed by, and construed in accordance with, the laws of the State of New York.

	
3.8
	
Consent to Jurisdiction; Service of Process; Venue; Waiver of Jury Trial.  The provisions of Sections 9.13 and 9.16 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

	
3.9
	
Headings.  The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

4

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by its proper and duly authorized officers as of the day and year first above written.

BORROWER:

		
	
ENOVA INTERNATIONAL, INC.,
a Delaware corporation

	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

 

GUARANTORS:

	
	
ENOVA ONLINE SERVICES, INC.
CNU DOLLARSDIRECT INC.
CNU DOLLARSDIRECT LENDING INC.
MOBILE LEASING GROUP, INC.
ENOVA FINANCIAL HOLDINGS, LLC
CNU ONLINE HOLDINGS, LLC
DEBIT PLUS, LLC
BILLERS ACCEPTANCE GROUP, LLC

 

		
	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President of each of the foregoing

 

		
	
DP LABOR HOLDINGS, LLC

	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

[Signature Page to Amendment]

 

 

		
		
	
CNU OF ALABAMA, LLC
CNU OF ALASKA, LLC

CNU OF ARIZONA, LLC
CNU OF CALIFORNIA, LLC
CNU OF COLORADO, LLC
CNU OF DELAWARE

CNU OF FLORIDA, LLC

CASHNETUSA OF FLORIDA, LLC

CNU OF HAWAII, LLC

CNU OF IDAHO, LLC

CNU OF ILLINOIS, LLC

CNU OF INDIANA, LLC

CNU OF KANSAS, LLC

CNU OF LOUISIANA, LLC

CNU OF MAINE, LLC

CASHNET CSO OF MARYLAND, LLC

CNU OF MICHIGAN, LLC

CNU OF MINNESOTA, LLC

CNU OF MISSISSIPPI, LLC

CNU OF MISSOURI, LLC

CNU OF MONTANA, LLC

CNU OF NEVADA, LLC

CNU OF NEW HAMPSHIRE, LLC

CNU OF NEW MEXICO, LLC

	
By:
	
CNU Online Holdings, LLC,

The sole member of each of the foregoing entities

	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

[Signature Page to Amendment]

 

 

 

			
			
	
CNU OF NORTH DAKOTA, LLC

CNU OF OHIO, LLC

OHIO CONSUMER FINANCIAL SOLUTIONS, LLC

CNU OF OKLAHOMA, LLC

CNU OF OREGON, LLC

CNU OF RHODE ISLAND, LLC

CNU OF SOUTH CAROLINA, LLC

CNU OF SOUTH DAKOTA, LLC

CNU OF TENNESSEE, LLC

CNU OF TEXAS, LLC

CNU OF UTAH, LLC

CNU OF VIRGINIA, LLC

CNU OF WASHINGTON, LLC

CNU OF WISCONSIN, LLC

CNU OF WYOMING, LLC

DOLLARSDIRECT, LLC

CNU TECHNOLOGIES OF IOWA, LLC

HEADWAY CAPITAL, LLC

CASHEURONET UK, LLC

EURONETCASH, LLC

ENOVA BRAZIL, LLC

AEL NET MARKETING, LLC

ENOVA INTERNATIONAL GEC, LLC

AEL NET OF MISSOURI, LLC

NC FINANCIAL SOLUTIONS, LLC

TENNESSEE CNU, LLC

ENOVA LENDING SERVICES, LLC

NETCREDIT FINANCE, LLC

ENOVA FINANCE 2, LLC

ENOVA FINANCE 3, LLC

ENOVA FINANCE 4, LLC

 

	
By:
	
CNU Online Holdings, LLC,

The sole member of each of the foregoing entities

	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

[Signature Page to Amendment]

 

 

 

		
		
	
NC FINANCIAL SOLUTIONS OF ALABAMA, LLC

NC FINANCIAL SOLUTIONS OF ARIZONA, LLC

NC FINANCIAL SOLUTIONS OF CALIFORNIA, LLC

CREDITME, LLC

NC FINANCIAL SOLUTIONS OF DELAWARE, LLC

NC FINANCIAL SOLUTIONS OF FLORIDA, LLC

NC FINANCIAL SOLUTIONS OF GEORGIA, LLC

NC FINANCIAL SOLUTIONS OF IDAHO, LLC

NC FINANCIAL SOLUTIONS OF ILLINOIS, LLC

NC FINANCIAL SOLUTIONS OF INDIANA, LLC

NC FINANCIAL SOLUTIONS OF KANSAS, LLC

NC FINANCIAL SOLUTIONS OF LOUISIANA, LLC

NC FINANCIAL SOLUTIONS OF MARYLAND, LLC

NC FINANCIAL SOLUTIONS OF MISSISSIPPI, LLC

NC FINANCIAL SOLUTIONS OF MISSOURI, LLC

NC FINANCIAL SOLUTIONS OF MONTANA, LLC

NC FINANCIAL SOLUTIONS OF NEVADA, LLC

NC FINANCIAL SOLUTIONS OF NEW HAMPSHIRE, LLC

NC FINANCIAL SOLUTIONS OF NEW JERSEY, LLC

NC FINANCIAL SOLUTIONS OF NEW MEXICO, LLC

NC FINANCIAL SOLUTIONS OF NORTH DAKOTA, LLC

NC FINANCIAL SOLUTIONS OF OHIO, LLC

NC FINANCIAL SOLUTIONS OF OREGON, LLC

NC FINANCIAL SOLUTIONS OF RHODE ISLAND, LLC

NC FINANCIAL SOLUTIONS OF SOUTH CAROLINA, LLC

NC FINANCIAL SOLUTIONS OF SOUTH DAKOTA, LLC

NC FINANCIAL SOLUTIONS OF TENNESSEE, LLC

NC FINANCIAL SOLUTIONS OF TEXAS, LLC

NC FINANCIAL SOLUTIONS OF UTAH, LLC

NC FINANCIAL SOLUTIONS OF VIRGINIA, LLC

NC FINANCIAL SOLUTIONS OF WISCONSIN, LLC

 

	
By:
	
NC Financial Solutions, LLC

The sole member of each of the foregoing entities

	
 

 

By:
	
 

 

/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Manager of Sole Member

 

[Signature Page to Amendment]

 

 

 

		
		
	
DEBIT PLUS TECHNOLOGIES, LLC

DEBIT PLUS SERVICES, LLC

DEBIT PLUS PAYMENT SOLUTIONS, LLC

 

 

	
By:
	
Debit Plus, LLC,

The sole member of each of the foregoing entities

	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

[Signature Page to Amendment]

 

 

 

 

		
	
CASHNETUSA CO LLC

CASHNETUSA OR LLC

THE CHECK GIANT NM LLC

 

	
By:

By:
	
CNU of New Mexico, LLC,

Manager of each of the foregoing entities
CNU Online Holdings, LLC,

The sole member of each of the foregoing entities

 

		
	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

ENOVALYTICS, LLC

ENOVACO, LLC

ENOVA BUSINESS, LLC

 

		
	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

THE BUSINESS BACKER, LLC

 

By:CNU Online Holdings, LLC, 
Manager of the foregoing entity

 

		
	
By:
	
/s/ Lisa M. Young

	
 
	
Name:Lisa M. Young

	
 
	
Title:Vice President

 

 

 

 

[Signature Page to Amendment]

 

 

 

ADMINISTRATIVE AGENT:

		
	
JEFFERIES FINANCE LLC, as Administrative Agent on behalf of the Lenders

	
By:
	
/s/ J. Paul McDonnell

	
 
	
Name:J. Paul McDonnell

	
 
	
Title:Managing Director

 

LENDERS:

		
	
JEFFERIES GROUP LLC, as a Lender

	
By:
	
/s/ Mark Sahler

	
 
	
Name:Mark Sahler

	
 
	
Title:Managing Director

 

[Signature Page to Amendment]imi-ex1011d_308.htm

 

Exhibit 10.11d

INTERMOLECULAR, INC.

CHANGE IN CONTROL AND SEVERANCE AGREEMENT

This Change in Control and Severance Agreement (the “Agreement”) is made and entered into by and between Christian Kramer (“Executive”) and Intermolecular, Inc. (the “Company”), effective as of the date of the closing of the Company’s initial public offering of shares of its common stock (the “Effective Date”).

R E C I T A L S

A.It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change in control.  The Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”) recognizes that the possibility of an involuntary termination (either outside of or in connection with such an acquisition or other change in control) can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. 

B.The Compensation Committee believes that it is in the best interests of the Company and its stockholders to (1) assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of such an event and (2) provide Executive with an incentive to continue Executive’s employment with the Company 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 Compensation Committee also believes that it is in the best interests of the Company and its stockholders 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.Certain capitalized terms used in this Agreement are defined in Section 7 below.

The parties hereto agree as follows:

1.Term of Agreement.  This Agreement shall become effective as of the Effective Date and shall 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.  

 

LA\2306504.1

 

3.Termination without Cause or for Good Reason Outside of a Change in Control Period.  If (i) Executive’s employment with the Company is terminated after the Effective Date by the Company other than for Cause or by Executive for Good Reason and (ii) the date of Executive’s termination of employment (the “Termination Date”) occurs outside of a Change in Control Period, then, subject to Executive executing a general release of all claims against the Company and its affiliates in a form acceptable to the Company (a “Release of Claims”) and such Release of Claims becoming effective and irrevocable within sixty (60) days following the Termination Date, then in addition to any accrued but unpaid salary, bonus, vacation and expense reimbursement payable in cash in accordance with applicable law (“Accrued Obligations”), the Company shall provide Executive with the following:

(a) Severance.  Executive shall be entitled to receive an amount equal to twelve (12) months of Executive’s base salary at the rate in effect immediately prior to Executive’s termination of employment, which shall be paid in a cash lump sum on the payroll date that immediately follows the date the Release of Claims is first 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 (on an after-tax basis), the applicable COBRA premiums for Executive and Executive’s covered dependents during the period commencing on the Termination Date and ending on the earlier to occur of (i) the twelve  (12) month anniversary of the Termination Date and (ii) the date on which Executive and Executive’s covered dependents, if any, become eligible for healthcare coverage under another employer’s group health plan(s) (of which eligibility Executive hereby agrees to give prompt notice to the Company).  After the Company ceases to pay or reimburse COBRA premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at Executive’s expense in accordance with the provisions of COBRA.

4.Certain Terminations During a Change in Control Period.  If (i) Executive’s employment with the Company is terminated by the Company for other than Cause or by Executive for Good Reason and (ii) the Termination Date occurs during a Change in Control Period, then, subject to Executive executing a Release of Claims and such Release of Claims becoming effective and irrevocable within sixty (60) days following the Termination Date, in addition to the Accrued Obligations, 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) months of the Executive’s  base salary at the rate in effect immediately prior to Executive’s termination of employment and (ii) Executive’s target annual bonus (one year only) for the year in which the Termination Date occurs, which shall be paid in a cash lump sum on the payroll date that immediately follows the date the Release of Claims is first 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 (on an after-tax basis), the applicable COBRA premiums for Executive and 

 

 

Executive’s covered dependents during the period commencing on the Termination Date and ending on the earlier to occur of (i) the eighteen (18) month anniversary of the Termination Date and (ii) the date on which Executive and Executive’s covered dependents, if any, become eligible for healthcare coverage under another employer’s group health plan(s) (of which eligibility Executive hereby agrees to give prompt notice to the Company).  After the Company ceases to pay or reimburse COBRA premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at Executive’s expense in accordance with the provisions of COBRA. 

(c) Equity Awards.  Each outstanding equity award, including, without limitation, each stock option and restricted stock award, then-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 all of the shares of Company common stock subject to such equity award.

5.Other Termination.  If Executive’s employment with the Company is terminated after the Effective Date by the Company for Cause or by Executive other than for Good Reason at any time (outside of or within a Change in Control Period) or if Executive fails to execute a Release of Claims or if such Release of Claims fails to become effective and irrevocable within sixty (60) days following the Termination Date, then Executive shall be entitled to receive the Accrued Obligations and to elect any continued healthcare coverage as may be required under COBRA or similar state law.  

 

 

6.Limitation on Payments. 

(a) Parachute Payments.  Any provision of this Agreement to the contrary notwithstanding, if any payment or benefit received or to be received by Executive from the Company pursuant to this Agreement or otherwise (all such payments and benefits, the “Payments”) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code” and such excise tax, the “Excise Tax”), then, after taking into account any reduction in the Payments provided by reason of Section 280G of the Code in another plan, arrangement or agreement, the Payments will be equal to the Reduced Amount (as defined below).  The “Reduced Amount” will be the largest portion of the Payments that would result in no portion of the Payments (after reduction) being subject to the Excise Tax but only if (i) the Reduced Amount, after taking into account all applicable federal, state and local employment taxes and income taxes (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes) on the Reduced Amount (and after taking into account the phase out itemized deductions and personal exemptions attributable to such Payments) is greater than or equal to (ii) the net amount of the Payments without reduction (but after taking into account all applicable federal, state and local employment taxes, income taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), and after taking into account the phase out itemized deductions and personal exemptions attributable to such Payments.   If a reduction in the Payments is to be made so that the Payments equals the Reduced Amount, Executive will have no rights to any additional payments and/or benefits constituting the Payments, and the reduction in payments and/or benefits 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 paid to Executive, in each case beginning with payments that would be made last in time.

(b) Accounting Firm.  The accounting firm engaged by the Company for general tax purposes as of the day prior to the Change in Control will perform the calculations set forth in Section 6(a).  If the firm so engaged by the Company is serving as accountant or auditor for the acquiring company, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder.  The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company within fifteen (15) days before the consummation of a Change in Control (if requested at that time by the Company) or such other time as requested by the Company.  If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company with documentation reasonably acceptable to the Company that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Company and Executive. 

 

 

7.Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:

(a) Cause.  “Cause” shall mean (i) theft, dishonesty or falsification of any employment or Company records; (ii) malicious or reckless disclosure of the Company’s confidential or proprietary information; (iii) commission of any immoral or illegal act or any gross or willful misconduct, where the Board reasonably determines that such act or misconduct has (A) seriously undermined the ability of the Company’s Board or management to entrust Executive with important matters or otherwise work effectively with Executive, (B) contributed to the Company’s loss of significant revenues or business opportunities, or (C) significantly and detrimentally effected the business or reputation of the Company or any of its subsidiaries; and/or (iv) the failure or refusal by Executive to follow the reasonable and lawful directives of the Board, provided such failure or refusal continues after Executive’s receipt of reasonable notice in writing of such failure or refusal and an opportunity to correct the problem.  Notwithstanding the foregoing, “Cause” shall not exist where any of the foregoing are due to Executive’s physical or mental disability. 

(b) Change in Control.  “Change in Control” shall have the meaning set forth in Section 2.8 of the Company’s 2011 Incentive Award Plan, provided, that in no event shall a Change in Control be deemed to have occurred unless such Change in Control constitutes a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5).

(c) Change in Control Period.  “Change in Control Period” means that period of time commencing on the date that is one (1) month prior to the date of the consummation of a Change in Control and ending on the first (1st) anniversary of such Change in Control.

(d) Good Reason.  “Good Reason” means Executive’s voluntary resignation following the occurrence of any of the following without Executive’s consent (i) the delegation to Executive of any duties or the reduction of Executive’s duties, either of which materially reduces the nature, responsibility, or character of Executive’s position, when taken as a whole, to a level below that generally associated with a similar position in a company of a similar size, in the same industry and with the same general characteristics as the Company at the time; (ii) a material reduction of Executive’s salary (other than in connection with a similar reduction in the salaries of all executive level employees) from that immediately prior to such reduction; (iii) a relocation of Executive’s principal office to a place that increases Executive’s one-way commute by more than thirty-five (35) miles as compared to Executive’s one-way commute as of immediately prior to such relocation; or (iv) the material breach by the Company of this Agreement.  Notwithstanding the foregoing, in no event shall Executive have Good Reason to terminate Executive’s employment unless Executive provides to the Company written notice of the condition giving rise to Good Reason within sixty (60) days after the initial occurrence of such condition, such condition continues beyond thirty (30) days after the Company receives such notice (the “Cure Period”) and Executive’s resignation for Good Reason is effective within thirty (30) days after the end of the Cure Period.

 

 

8.Successors.

(a) Company’s Successors.  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.

(b) Executive’s Successors.  This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution.  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.

9.Notices.  Any notice to be given under the terms of this Agreement shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Executive shall be addressed to Executive at Executive’s last address reflected on the Company’s records.  Any notice shall be deemed duly given when sent via email or when sent by reputable overnight courier or by certified mail (return receipt requested) through the United States Postal Service.

10.Restrictive Covenants.

(a) Proprietary Information Agreement.  Executive shall remain bound by Executive’s obligations under the Company’s standard Employee Confidentiality and Inventions Assignment Agreement (the “Proprietary Information Agreement”).

 

 

(b) Proprietary Information.  Without limiting the Proprietary Information Agreement, except as Executive reasonably and in good faith determines to be required in the faithful performance of Executive’s duties to the Company, Executive shall at all times before and after Executive’s termination of employment maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for Executive’s benefit or the benefit of any other person or entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person or entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information.  Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for Executive’s benefit or the benefit of any other person or entity, any Proprietary Information after the date Executive terminates employment will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company.  The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(c) Nonsolicitation.  Without limiting the Proprietary Information Agreement, Executive hereby agrees that Executive shall not while employed or otherwise providing services to the Company and with respect to subsection (ii) below, within the one (1) year period immediately following the termination of Executive’s employment with or other service to the Company, directly or indirectly, either for Executive or on behalf of any other person or entity, (i) recruit or otherwise solicit or induce any employee, customer or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the date Executive terminates employment with or other service to the Company, or who thereafter becomes employed by the Company.

(d) Return of Materials.  Upon termination of Executive’s employment with the Company for any reason, Executive will promptly deliver to the Company (i) all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents that are Proprietary Information, including all physical and digital copies thereof, and (ii) all other Company property (including, without limitation, any personal computer or wireless device and related accessories, keys, credit cards and other similar items) which is in Executive’s possession, custody or control. 

 

 

(e) Exception to Restrictive Covenants.  Notwithstanding anything in this Section 10 to the contrary, Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process.

(f) Nondisparagement.  Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, partners, members, equity holders or affiliates, either orally or in writing, at any time, provided, that Executive may confer in confidence with Executive’s legal representatives and make truthful statements as required by law.

(g) Subsequent Employment.  Prior to accepting other employment or any other service relationship prior to the first (1st) anniversary of Executive’s termination of employment, Executive shall provide a copy of this Section 10 to any recruiter who assists Executive in obtaining other employment or any other service relationship and to any employer or other person or entity with which Executive discusses potential employment or any other service relationship.

(h) Enforceability.  In the event the terms of this Section 10 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.  Any breach or violation by Executive of the provisions of this Section 10 shall toll the running of any time periods set forth in this Section 10 for the duration of any such breach or violation.

(i) Affiliates.  As used in this Section 10, the term “Company” shall include the Company and any parent, affiliated, related and/or direct or indirect subsidiary entity thereof.

 

 

11.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 controversies, claims and disputes arising out of or relating to this Agreement, including without limitation any alleged violation of its terms, shall be resolved by final and binding arbitration before a single neutral arbitrator in Santa Clara County, California, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”). The arbitration shall be commenced by filing a demand for arbitration with the AAA within fourteen (14) days after the filing party has given notice of such breach to the other party.  The arbitrator shall award the prevailing party attorneys’ fees and expert fees, if any.  Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations imposed on them under Section 10 hereof, and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law.  Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Section 10 of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

12.Miscellaneous Provisions.

(a) Section 409A.  

(i) General.  To the extent applicable, this Agreement shall be interpreted and applied consistent and in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and Department of Treasury regulations and other interpretive guidance issued thereunder.  If, however, the Company determines that any compensation or benefits payable under this Agreement may be or become subject to Section 409A of the Code, the Company may in its sole discretion adopt such amendments to this Agreement or to adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take such other actions, as the Company determines necessary or appropriate to (i) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of such compensation and benefits, or (ii) comply with the requirements of Section 409A of the Code ; provided, however, that this Section 12(a)(i) shall not create any obligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action.

(ii) 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 of this Agreement 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 (a “Separation from Service”) and, except as provided under Section 12(a)(iii) of this Agreement, any such amount shall be paid, or in the case of installments, payments shall commence, on the sixtieth (60th) day following Executive’s Separation from Service.  

 

 

(iii) Specified Employee.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed at the time of Executive’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 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 until 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 12(a)(iii) shall be paid in a lump sum to Executive, and any remaining payments due under this Agreement shall be paid as otherwise provided herein.

(iv) 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 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 Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

(v) Installments.  Any right to a series of installment payments pursuant to this Agreement is to be treated as a right to a series of separate payments.  To the extent permitted under Section 409A of the Code, any separate payment or benefit under this Agreement or otherwise shall not be deemed “nonqualified deferred compensation” subject to Section 409A of the Code and Sections 3 or 4 of this Agreement to the extent provided in the exceptions in Treasury Regulation Section 1.409A-1(b)(4), Section 1.409A-1(b)(9) or any other applicable exception or provision of Section 409A of the Code.

(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 and the Proprietary Information Agreement represent the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all prior arrangements and understandings regarding same including, without limitation, any severance provisions of any offer letter agreement or employment agreement between Executive and the Company.

(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)

 

 

 

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.

 

	
 
	
INTERMOLECULAR, INC.

	
 
	
 
	
 

	
 
	
By: 
	
/s/ Bruce McWilliams

	
 
	
Title:
	
CEO

	
 
	
Date:
	
July 26, 2016

	
 
	
 
	
 

	
 
	
EXECUTIVE

	
 
	
/s/ Christian Kramer

	
 
	
Date: 27 July, 2016

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