Document:

tcrd-ex47_8.htm

Exhibit 4.7

Description of First Eagle Alternative Capital BDC, Inc.’s Registered Securities

DESCRIPTION OF OUR CAPITAL STOCK 

The following description summarizes the material provisions of the Delaware General Corporation Law and our amended and restated certificate of incorporation (“certificate of incorporation”) and bylaws, as amended (“bylaws”) of First Eagle Alternative Capital BDC, Inc. (the “Company,” “we,” or us”). This summary may not contain all of the information that is important, and is qualified by the Delaware General Corporation Law and our certificate of incorporation and bylaws for a more detailed description of the provisions summarized below. 

General 

We were incorporated on May 26, 2009 under the laws of the state of Delaware. Under the terms of our certificate of incorporation, our authorized capital stock will consist solely of 100,000,000 shares of common stock, par value $0.001 per share, and 100,000,000 shares of preferred stock, par value $0.001 per share. Our common stock is quoted on The NASDAQ Global Select Market under the ticker symbol “FCRD.”

Under the terms of our certificate of incorporation, holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive proportionately any distributions declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any series of preferred stock which we may designate and issue in the future. In addition, holders of our common stock may participate in our dividend reinvestment plan. 

Preferred stock 

Under the terms of our certificate of incorporation, our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval. The board has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock. The Investment Company Act of 1940, as amended (the “1940 Act”) limits our flexibility as to certain rights and preferences of the preferred stock that our certificate of incorporation may provide and requires, among other things, that immediately after issuance and before any distribution is made with respect to common stock, we meet a coverage ratio of total assets to total senior securities, which include all of our borrowings and our preferred stock, of at least 200%, and the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on the preferred stock are unpaid in an amount equal to two full years of dividends on the preferred stock until all arrears are cured. The features of the preferred stock will be further limited by the requirements applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, or the Code. The purpose of authorizing our board to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with providing leverage for our investment program, possible acquisitions and other corporate purposes, could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, a majority of our outstanding voting stock. 

Delaware law and certain charter and bylaw provisions; anti-takeover measures 

At our 2018 Annual Meeting of Stockholders, stockholders approved an amendment to our certificate of incorporation to make certain revisions to bring provisions in our certificate of incorporation into conformity with Delaware law and our certificate of incorporation and bylaws provide that: 

  •   directors may be removed with or without cause by the affirmative vote of the holders of a majority of the then outstanding shares of our capital stock entitled to vote; and 

  •   subject to the rights of any holders of preferred stock, any vacancy on the board of directors, however the vacancy occurs, including a vacancy due to an enlargement of the board, may only be filled by vote of a majority of the directors then in office. 

The limitations on the filling of vacancies could have the effect of making it more difficult for a third party to acquire us, or of discouraging a third party from acquiring us. Our certificate of incorporation also provides that special meetings of the stockholders may only be called by our board of directors, Chairman or Chief Executive Officer. 

Delaware’s corporation law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws requires a greater percentage. Our certificate of incorporation permits our board of directors to adopt, amend or repeal our bylaws. Our bylaws generally can be amended by approval of at least 66 2/3% of the total number of continuing directors or by a vote of a majority of our stockholders. 

Limitations of liability and indemnification 

Under our certificate of incorporation, we will fully indemnify any person who was or is involved in any actual or threatened action, suit or proceeding by reason of the fact that such person is or was one of our directors or officers; provided, however, that, except for proceedings to enforce rights to indemnification, we will not be obligated to indemnify any director or officer in connection with a proceeding initiated by such person unless such proceeding was authorized or consented to by our board of directors. So long as we are regulated under the 1940 Act, the above indemnification and limitation of liability is limited by the 1940 Act or by any valid rule, regulation or order of the Securities and Exchange Commission thereunder. The 1940 Act provides, among other things, that a company may not indemnify any director or officer against liability to it or its security holders to which he or she might otherwise be subject by reason of his or her willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. 

Delaware law also provides that indemnification permitted under the law shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement, a vote of stockholders or otherwise. 

We have obtained liability insurance for our officers and directors. 

Anti-takeover provisions 

The following summary outlines certain provisions of Delaware law and our certificate of incorporation regarding anti-takeover provisions. These provisions could have the effect of limiting the ability of other entities or persons to acquire control of us by means of a tender offer, proxy contest or otherwise, or to change the composition of our board of directors. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of directors. These measures, however, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders and could have the effect of depriving stockholders of an opportunity to sell their shares at a premium over prevailing market prices. These attempts could also have the effect of increasing our expenses and disrupting our normal operation. We believe, however, that the benefits of these provisions outweigh the potential disadvantages of discouraging acquisition proposals because the negotiation of the proposals may improve their terms. 

Pursuant to Delaware law and our certificate of incorporation, a director may be removed from office with or without cause by a vote of the holders of at a majority of the shares then entitled to vote for the election of the respective director. 

In addition, our certificate of incorporation requires the favorable vote of a majority of our board of directors followed by the favorable vote of the holders of at least 75% of our outstanding shares of each affected class or series, voting separately as a class or series, to approve, adopt or authorize certain transactions with 10% or greater holders of a class or series of shares and their associates, unless the transaction has been approved by at least 80% of our directors, in which case “a majority of the outstanding voting securities” (as defined in the 1940 Act) will be required. For purposes of these provisions, a 10% or greater holder of a class or series of shares, or a principal stockholder, refers to any person who, whether directly or indirectly and whether alone or together with its affiliates and associates, beneficially owns 10% or more of the outstanding shares of our voting securities. 

The 10% holder transactions subject to these special approval requirements are: the merger or consolidation of us or any subsidiary of ours with or into any principal stockholder; the issuance of any of our securities to any principal stockholder for cash, except pursuant to any automatic dividend reinvestment plan; the sale, lease or exchange of all or any substantial part of our assets to any principal stockholder, except assets having an aggregate fair market value of less than 5% of our total assets, aggregating for the purpose of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period; or the sale, lease or exchange to us or any subsidiary of ours, in exchange for our securities, of any assets of any principal stockholder, except assets having an aggregate fair market value of less than 5% of our total assets, aggregating for purposes of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period. 

To convert us to a closed-end or open-end investment company, to merge or consolidate us with any entity or sell all or substantially all of our assets to any entity in a transaction as a result of which the governing documents of the surviving entity do not contain substantially the same anti-takeover provisions as are provided in our certificate of incorporation or to liquidate and dissolve us other than in connection with a qualifying merger, consolidation or sale of assets or to amend certain of the provisions relating to these matters, our certificate of incorporation requires either (i) the favorable vote of a majority of our continuing directors followed by the favorable vote of the holders of at least 75% of our then outstanding shares of each affected class or series of our shares, voting separately as a class or series or (ii) the favorable vote of at least 80% of the then outstanding shares of our capital stock, voting together as a single class. As part of any such conversion to an open-end investment company, substantially all of our investment policies and strategies and portfolio would have to be modified to assure the degree of portfolio liquidity required for open-end investment companies. In the event of our conversion to an open-end investment company, the common shares would cease to be listed on any national securities exchange or market system. Stockholders of an open-end investment company may require the company to redeem their shares at any time, except in certain circumstances as authorized by or under the 1940 Act, at their net asset value, less such redemption charge, if any, as might be in effect at the time of a redemption. You should assume that it is not likely that our board of directors would vote to convert us to an open-end fund. 

The 1940 Act defines “a majority of the outstanding voting securities” as the lesser of a majority of the outstanding shares and 67% of a quorum of a majority of the outstanding shares. For the purposes of calculating “a majority of the outstanding voting securities” under our certificate of incorporation, each class and series of our shares will vote together as a single class, except to the extent required by the 1940 Act or our certificate of incorporation, with respect to any class or series of shares. If a separate class vote is required, the applicable proportion of shares of the class or series, voting as a separate class or series, also will be required. 

Our board of directors has determined that provisions with respect to the board of directors and the stockholder voting requirements described above, which voting requirements are greater than the minimum requirements under Delaware law or the 1940 Act.

 

DESCRIPTION OF DEBT SECURITIES

As required by federal law for all bonds and notes of companies that are publicly offered, our debt securities are governed by an indenture, dated as of November 18, 2014 by and between the Company and U.S. Bank National 

Association (the “trustee”), and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce holders rights against us if we default. There are some limitations on the extent to which the trustee acts on the holders’ behalf, described in the second paragraph under “Events of Default—Remedies if an Event of Default Occurs.” Second, the trustee performs certain administrative duties for us. 

Because this section is a summary, it does not describe every aspect of the debt securities and the indenture. The following description summarizes the material provisions of the indenture. We urge you to read the indenture because it, and not this description, defines rights of the holders of debt securities. For example, in this section, we use capitalized words to signify terms that are specifically defined in the indenture. We have filed the form of the indenture with the SEC. The specific terms of any outstanding debt securities modify the terms of the indenture as provided in such debt securities supplemental indenture.

We are permitted, under specified conditions, to issue multiple classes of indebtedness if our asset coverage, as defined in the 1940 Act, is at least equal to 200% (or 150% if certain requirements are met) immediately after each such issuance. In addition, while any indebtedness and other senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage.

General 

The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the “indenture securities.” The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of indenture securities. See “Resignation of Trustee” section below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term “indenture securities” means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures. 

We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.

Issuance of Securities in Registered Form 

Debt securities issued in book-entry form are represented by global securities. 

Book-Entry Holders 

Debt securities are represented by one or more global securities registered in the name of a depositary that holds them on behalf of financial institutions that participate in the depositary’s book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests on behalf of themselves or customers. 

Under the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in book-entry form, we recognize only the depositary as the holder of the debt securities and we will make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants, which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements 

they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities. 

As a result, investors do not own debt securities directly. Instead, they own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and not holders, of the debt securities. 

Legal Holders 

Our obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee, run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a debt security or has no choice because we are issuing the debt securities only in book-entry form. 

For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders. 

When we refer to you, we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest.

Global Securities 

Our debt securities were issued as registered securities in book-entry form only. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms. 

 

Each debt security issued in book-entry form is represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. The Depository Trust Company, New York, New York, known as DTC, is the depositary for all debt securities issued in book-entry form. 

A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under “Special Situations when a Global Security Will Be Terminated”. As a result of these arrangements, the depositary, or its nominee, is the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security. 

Special Considerations for Global Securities 

As an indirect holder, an investor’s rights relating to a global security are governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security is considered the holder of the debt securities represented by the global security. 

For debt securities issued only in the form of a global security, an investor should be aware of the following: 

 

	
 
	
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An investor cannot cause the debt securities to be registered in his or her name, and cannot obtain certificates for his or her interest in the debt securities, except in the special situations we describe below. 

 

	
 
	
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An investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection of his or her legal rights relating to the debt securities, as we describe under “Issuance of Securities in Registered Form” above. 

 

	
 
	
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An investor may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required by law to own their securities in non-book-entry form. 

 

	
 
	
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An investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective. 

 

	
 
	
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The depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in a global security. We and the trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way. 

 

	
 
	
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If we redeem less than all the debt securities of a particular series being redeemed, DTC’s practice is to determine by lot the amount to be redeemed from each of its participants holding that series. 

 

	
 
	
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An investor is required to give notice of exercise of any option to elect repayment of its debt securities, through its participant, to the applicable trustee and to deliver the related debt securities by causing its participant to transfer its interest in those debt securities, on DTC’s records, to the applicable trustee. 

 

	
 
	
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DTC requires that those who purchase and sell interests in a global security deposited in its book-entry system use immediately available funds. Your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global security. 

 

	
 
	
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Financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the debt securities. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries. 

Special Situations when a Global Security will be Terminated 

In a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-book-entry form (certificated securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors under “Issuance of Securities in Registered Form” above. 

If a global security is terminated, only the depositary, and not we or the applicable trustee, is responsible for deciding the names of the institutions in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities. 

Payment and Paying Agents 

We will pay interest to the person listed in the applicable trustee’s records as the owner of the debt security at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due date. That day, often approximately two weeks in advance of the interest due 

date, is called the “record date.” Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called “accrued interest.” 

Payments on Global Securities 

We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder’s right to those payments will be governed by the rules and practices of the depositary and its participants. 

Payment when Offices are Closed 

If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business day. 

Events of Default 

Holders have rights if an Event of Default occurs in respect of the debt securities of the applicable series and is not cured, as described later in this subsection. 

The term “Event of Default” in respect of the debt securities of your series means any of the following: 

 

	
 
	
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we do not pay the principal of, or any premium on, a debt security of the series on its due date, and do not cure this default within five days; 

 

	
 
	
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we do not pay interest on a debt security of the series when due, and such default is not cured within 30 days; 

 

	
 
	
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we do not deposit any sinking fund payment in respect of debt securities of the series on its due date, and do not cure this default within five days; 

 

	
 
	
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we remain in breach of a covenant in respect of debt securities of the series for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the trustee or holders of at least 25% of the principal amount of debt securities of the series; 

 

	
 
	
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we file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed for a period of 60 days; 

 

	
 
	
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on the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%; and 

 

	
 
	
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any other Event of Default in respect of debt securities of the series described in the applicable prospectus supplement occurs. 

An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal, premium or interest, if it considers the withholding of notice to be in the best interests of the holders. 

Remedies if an Event of Default Occurs 

If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. In certain circumstances, a declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the debt securities of the affected series. 

 

The trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an “indemnity”). If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default. 

Before a holder is allowed to bypass the trustee and bring their own lawsuit or other formal legal action or take other steps to enforce such holder’s rights or protect such holder’s interests relating to the debt securities, the following must occur: 

 

	
 
	
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the holder must give the trustee written notice that an Event of Default has occurred and remains uncured; 

 

	
 
	
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the holders of at least 25% in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action; 

 

	
 
	
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the trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity; and 

 

	
 
	
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the holders of a majority in principal amount of the debt securities must not have given the trustee a direction inconsistent with the above notice during that 60 day period. 

However, holders are entitled at any time to bring a lawsuit for the payment of money due on a holder’s debt securities on or after the due date. 

Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than: 

 

	
 
	
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the payment of principal, any premium or interest; or 

 

	
 
	
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in respect of a covenant that cannot be modified or amended without the consent of each holder. 

Each year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities, or else specifying any default. 

Merger or Consolidation 

Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We may also be permitted to sell all or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions are met: 

 

	
 
	
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where we merge out of existence or sell our assets, the resulting entity must agree to be legally responsible for our obligations under the debt securities; 

 

	
 
	
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immediately after giving effect to such transaction, no Default or Event of Default shall have happened and be continuing; 

 

	
 
	
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under the indenture, no merger or sale of assets may be made if as a result any of our property or assets or any property or assets of one of our subsidiaries, if any, would become subject to any mortgage, lien or other encumbrance unless either (a) the mortgage, lien or other encumbrance could be created pursuant to the limitation on liens covenant in the indenture without equally and ratably securing the indenture securities or (b) the indenture securities are secured equally and ratably with or prior to the debt secured by the mortgage, lien or other encumbrance;

 

	
 
	
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we must deliver certain certificates and documents to the trustee; and 

 

	
 
	
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we must satisfy any other requirements specified in the prospectus supplement relating to a particular series of debt securities. 

Modification or Waiver 

There are three types of changes we can make to the indenture and the debt securities issued thereunder. 

Changes Requiring Approval 

First, there are changes that we cannot make to debt securities without specific approval of all of the holders. The following is a list of those types of changes: 

 

	
 
	
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change the stated maturity of the principal of or interest on a debt security; 

 

	
 
	
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reduce any amounts due on a debt security; 

 

	
 
	
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reduce the amount of principal payable upon acceleration of the maturity of a security following a default; 

 

	
 
	
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adversely affect any right of repayment at the holder’s option; 

 

	
 
	
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change the place (except as otherwise described in the prospectus or prospectus supplement) or currency of payment on a debt security; 

 

	
 
	
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impair your right to sue for payment; 

 

	
 
	
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adversely affect any right to convert or exchange a debt security in accordance with its terms; 

 

	
 
	
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modify the subordination provisions in the indenture in a manner that is adverse to holders of the debt securities; 

 

	
 
	
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reduce the percentage of holders of debt securities whose consent is needed to modify or amend the indenture; 

 

	
 
	
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reduce the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults; 

 

	
 
	
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modify any other aspect of the provisions of the indenture dealing with supplemental indentures, modification and waiver of past defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and 

 

	
 
	
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change any obligation we have to pay additional amounts. 

Changes Not Requiring Approval 

The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities 

in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the indenture after the change takes effect. 

 

Changes Requiring Majority Approval 

Any other change to the indenture and the debt securities would require the following approval: 

 

	
 
	
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if the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that series; and 

 

	
 
	
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if the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose. 

The holders of a majority in principal amount of all of the series of debt securities issued under an indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants in that indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under “—Changes Requiring Your Approval.” 

Further Details Concerning Voting 

When taking a vote, we will use the following rules to decide how much principal to attribute to a debt security: 

 

	
 
	
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for original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity of these debt securities were accelerated to that date because of a default; 

 

	
 
	
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for debt securities whose principal amount is not known (for example, because it is based on an index), we will use a special rule for that debt security described in the prospectus supplement; and 

 

	
 
	
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for debt securities denominated in one or more foreign currencies, we will use the U.S. dollar equivalent. 

Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under “Defeasance—Full Defeasance.” 

We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities that are entitled to vote or take other action under the indenture. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities of those series on the record date and must be taken within eleven months following the record date. 

Defeasance 

The following provisions will be applicable to each series of debt securities. 

Covenant Defeasance 

Under current U.S. federal tax law, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the particular series was issued. This is called “covenant defeasance.” In that event, holders would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay the holders’ debt securities. If applicable, holders also would be released from the subordination provisions as described under the “Indenture Provisions—Subordination” section below. In order to achieve covenant defeasance, we must do the following: 

 

	
 
	
•
	
 
	
if the debt securities of the particular series are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of such debt securities a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates; 

 

	
 
	
•
	
 
	
we must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity; and 

 

	
 
	
•
	
 
	
we must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to covenant defeasance have been complied with. 

If we accomplish covenant defeasance, holders can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt securities became immediately due and payable, there might be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall. 

Full Defeasance 

If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called “full defeasance”) if we put in place the following other arrangements for you to be repaid: 

 

	
 
	
•
	
 
	
if the debt securities of the particular series are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of such debt securities a combination of money and United States government or United States government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates. 

 

	
 
	
•
	
 
	
we must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling that allows us to make the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity. Under current U.S. federal tax law, the deposit and our legal release from the debt securities would be treated as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit; 

 

	
 
	
•
	
 
	
we must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to defeasance have been complied with; 

 

	
 
	
•
	
 
	
Defeasance must not result in a breach of the indenture or any other material agreements; and 

 

	
 
	
•
	
 
	
Satisfy the conditions for covenant defeasance contained in any supplemental indentures. 

If we ever did accomplish full defeasance, as described above, holders would have to rely solely on the trust deposit for repayment of the debt securities. Holders could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. 

 

Form, Exchange and Transfer of Certificated Registered Securities 

Holders may exchange their certificated securities, if any, for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. 

Holders may exchange or transfer their certificated securities, if any, at the office of their trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves. 

Holders will not be required to pay a service charge to transfer or exchange their certificated securities, if any, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. 

If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts. 

If any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed. 

Resignation of Trustee 

Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee. 

The Trustee under the Indenture 

U.S. Bank National Association serves as the trustee under the indenture. 

 

6.125% SENIOR NOTES DUE 2023

The below description of our 6.125% Senior Notes due 2023 (the “2023 Notes”) should be read together with the indenture and the Third Supplemental Indenture, dated as of October 5, 2018, by and between the Company and U.S. Bank National Association, as trustee (the “trustee”) (the “Third Supplemental Indenture” and together with the indenture, the “2023 Notes Indenture”). The terms below modify any terms of the indenture as stated below.  

 

	
Issuer 
	
First Eagle Alternative Capital BDC, Inc. 

 

	
Title of the securities 
	
6.125% Notes due 2023 

 

	
Aggregate principal amount 
	
$50,000,000 

 

 

	
Initial public offering price 
	
$25 per 2023 Note (Par) 

 

	
Principal payable at maturity 
	
100% of the aggregate principal amount; the principal amount of each 2023 Note will be payable on its stated maturity date at the office of the trustee in the City of St. Paul, Minnesota or at such other office designated by the trustee. 

 

	
Type of Note 
	
Fixed rate note 

 

	
Listing 
	
The 2023 Notes are listed on the NYSE under the trading symbol “FCRW.” 

 

	
Interest rate 
	
6.125% per year 

 

	
Day count basis 
	
360-day year of twelve 30-day months 

 

	
Original issue date 
	
October 5, 2018 

 

	
Stated maturity date 
	
October 30, 2023 

 

	
Date interest starts accruing 
	
October 5, 2018 

 

	
Interest payment dates 
	
Each March 30, June 30, September 30 and December 30, commencing December 30, 2018. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment. 

 

	
Interest periods 
	
The initial interest period will be the period from and including          , 2018, to, but excluding, the initial interest payment date, and the subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be. 

 

	
Regular record dates for interest 
	
Each March 15, June 15, September 15 and December 15. 

 

	
Specified currency 
	
U.S. Dollars 

 

	
Place of payment 
	
St. Paul, Minnesota 

 

	
Ranking of Notes 
	
The 2023 Notes are our direct unsecured obligations and will rank: 

 

	
 
	
•
	
 
	
pari passu with our other outstanding and future unsecured unsubordinated indebtedness; 

 

	
 
	
•
	
 
	
senior to any of our future indebtedness that expressly provides it is subordinated to the 2023 Notes; 

 

	
 
	
•
	
 
	
effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness; and 

 

	
 
	
•
	
 
	
structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, of which there is currently none. 

 

	
Denominations 
	
The 2023 Notes are in denominations of $25 and integral multiples of $25 in excess thereof. 

 

	
Business day 
	
Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City or the place of payment are authorized or required by law or executive order to close. 

 

	
Optional redemption 
	
The 2023 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after October 30, 2021, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. 

 

	
 
	
Holders may be prevented from exchanging or transferring the 2023 Notes when they are subject to redemption. In case any 2023 Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such 2023 Note, each holder will receive, without a charge, a new 2023 Note or 2023 Notes of authorized denominations representing the principal amount of such holder’s remaining unredeemed 2023 Notes. Any exercise of our option to redeem the 2023 Notes will be done in compliance with the indenture and the 1940 Act, to the extent applicable. 

 

	
 
	
If we redeem only some of the 2023 Notes, the trustee will determine the method for selection of the particular 2023 Notes to be redeemed, in accordance with the indenture and the 1940 Act and in accordance with the rules of any national securities exchange or quotation system on which the 2023 Notes are listed, in each case, to the extent applicable. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the 2023 Notes called for redemption. 

 

	
Sinking fund 
	
The 2023 Notes will not be subject to any sinking fund. 

 

	
Repayment at option of Holders 
	
Holders will not have the option to have the 2023 Notes repaid prior to the stated maturity date. 

 

	
Defeasance and covenant defeasance 
	
The 2023 Notes are subject to defeasance by us. 

 

	
 
	
The 2023 Notes are subject to covenant defeasance by us. 

 

	
 
	
Under the Revolving Facility, as currently in effect, we would be prohibited from defeasing the 2023 Notes or effecting covenant defeasance under the 2023 Notes without the consent of the lenders. 

 

	
Form of Notes 
	
The 2023 Notes will be represented by global securities that will be deposited and registered in the name of DTC, or its nominee. Except in limited circumstances, you will not receive certificates for the 2023 Notes. Beneficial interests in the 2023 Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the 2023 Notes through either DTC, if they are a participant, or indirectly through organizations which are participants in DTC. 

 

	
Trustee, Paying Agent and Security Registrar 
	
U.S. Bank National Association is the trustee, security registrar and paying agent. U.S. Bank National Association, in each of its capacities, including without limitation as trustee, security registrar and paying agent, assumes no responsibility for the accuracy or completeness of the information concerning us or our affiliates or any other party contained in this document or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or for any information provided to it by us, including but not limited to settlement amounts and any other information. 

 

 

	
 
	
We may maintain banking relationships in the ordinary course of business with the trustee and its affiliates. 

 

	
Other covenants 
	
In addition to the covenants described in the indenture, the following covenants shall apply to the 2023 Notes: 

 

	
 
	
•
	
 
	
We agree that for the period of time during which the 2023 Notes are outstanding, we will not violate Section 18(a)(1)(A) as modified by Section 61(a) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings (or 150% if certain requirements are met). 

 

	
 
	
•
	
 
	
We agree that, for the period of time during which the 2023 Notes are outstanding, we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution (except a distribution payable in our stock), upon any class of our capital stock, or purchase or redeem any of our capital stock, if our asset coverage, as defined in the 1940 Act and after giving effect to any exemptive relief granted to us by the SEC with respect to such asset coverage, is (i) below the Asset Coverage Requirement (as defined below) at the time of the declaration of such dividend or distribution or purchase or redemption and after deducting the amount of such dividend, distribution, purchase or redemption and (ii) has been below the Asset Coverage Requirement for the six consecutive months immediately preceding such declaration or purchase or redemption, in each case whether or not we continue to be subject to the Asset Coverage Requirement. Notwithstanding the foregoing restriction, we will be permitted to declare a cash dividend or distribution on our capital stock only up to such amount as is necessary for us to maintain our status as a regulated investment company under Subchapter M of the the Code. “Asset Coverage Requirement” shall mean the asset coverage test set forth in Section 18(a)(1)(B) as modified by Section 61(a) of the 1940 Act or any successor provisions with respect to such asset coverage test.

 

	
 
	
 

 

	
Reports by the Company 
	
If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934 as amended, or the Exchange Act, to file any periodic reports with the SEC, we agree to furnish to holders of the 2023 Notes and the trustee, for the period of time during which the 2023 Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.

 

 

	
 
	
 

 

	
Modifications to events of default 
	
The following events of default, as described in the indenture: 

 

	
 
	
•
	
 
	
We do not pay the principal of, or any premium on, a debt security of the series on its due date, and do not cure this default within 5 days. 

 

	
 
	
•
	
 
	
On the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%. 

 

	
 
	
with respect to the Notes has been revised to read as follows: 

 

	
 
	
•
	
 
	
We do not pay the principal of, or any premium on, any 2023 Note on its due date. 

 

	
 
	
•
	
 
	
On the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%, giving effect to any exemptive relief granted to us by the SEC. 

 

	
Global Clearance and Settlement Procedures 
	
Interests in the 2023 Notes trade in DTC’s Same Day Funds Settlement System, and any permitted secondary market trading activity in such 2023 Notes will, therefore, be required by DTC to be settled in immediately available funds. None of the issuer, the trustee or the paying agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. 

 

 

6.75% SENIOR NOTES DUE 2022

The below description of our 6.75% Senior Notes due 2022 (the “2022 Notes”) should be read together with the indenture and the Second Supplemental Indenture, dated as of December 14, 2015, by and between the Company and the trustee (the “Second Supplemental Indenture” and together with the indenture, the “2022 Notes Indenture”). The terms below modify any terms of the indenture as stated below.  

 

 

	
Issuer 
	
First Eagle Alternative Capital BDC, Inc. 

 

	
Title of the securities 
	
6.75% Notes due 2022 

 

	
Aggregate principal amount 
	
$60,000,000 

  

	
Initial public offering price 
	
100.00% of the aggregate principal amount. 

 

	
Principal payable at maturity 
	
100.00% of the aggregate principal amount; the principal amount of each 2022 Note will be payable on its stated maturity date at the office of the trustee in the City of St. Paul, Minnesota or at such other office designated by the trustee. 

 

	
Type of Note 
	
Fixed rate note 

 

	
Listing 
	
The 2022 Notes are listed on the New York Stock Exchange under the symbol “FCRZ.” 

 

	
Interest rate 
	
6.75% per year 

 

	
Day count basis 
	
360-day year of twelve 30-day months 

  

	
Stated maturity date 
	
December 30, 2022 

  

	
Interest payment dates 
	
Each March 30, June 30, September 30, and December 30, commencing December 30, 2016. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment. 

 

	
Interest periods 
	
The subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be. 

 

	
Regular record dates for interest 
	
Each March 15, June 15, September 15 and December 15. 

 

	
Specified currency 
	
U.S. Dollars 

 

	
Place of payment 
	
St. Paul, Minnesota 

 

	
Ranking of Notes 
	
The 2022 Notes will be our direct unsecured obligations and will rank: 

 

	
 
	
•
	
 
	
pari passu with our other outstanding and future senior unsecured indebtedness; 

 

	
 
	
•
	
 
	
senior to any of our future indebtedness that expressly provides it is subordinated to the 2022 Notes; 

 

	
 
	
•
	
 
	
effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, including without limitation, the $96.2 million in borrowings under; and 

 

	
 
	
•
	
 
	
structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, of which there is currently none. 

 

	
Denominations 
	
The 2022 Notes are in denominations of $25 and integral multiples of $25 in excess thereof. 

 

	
Business day 
	
Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City or the place of payment are authorized or required by law or executive order to close. 

 

	
Optional redemption 
	
The 2022 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after December 30, 2018, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. 

 

 

	
 
	
Holders may be prevented from exchanging or transferring the 2022 Notes when they are subject to redemption. In case any 2022 Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such 2022 Note, such holder will receive, without a charge, a new 2022 Note or 2022 Notes of authorized denominations representing the principal amount of such holder’s remaining unredeemed 2022 Notes. Any exercise of our option to redeem the 2022 Notes will be done in compliance with the indenture and the 1940 Act, to the extent applicable.

 

 

	
 
	
If we redeem only some of the 2022 Notes, the trustee will determine the method for selection of the particular 2022 Notes to be redeemed, in accordance with the Third Supplemental Indenture and the 1940 Act and in accordance with the rules of any national securities exchange or quotation system on which the 2022 Notes are listed, in each case, to the extent applicable. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the 2022 Notes called for redemption. 

 

	
Sinking fund 
	
The 2022 Notes will not be subject to any sinking fund. 

 

	
Repayment at option of Holders 
	
Holders will not have the option to have the 2022 Notes repaid prior to the stated maturity date. 

 

	
Defeasance and covenant defeasance 
	
The 2022 Notes are subject to defeasance by us. 

 

	
 
	
The 2022 Notes are subject to covenant defeasance by us. 

 

	
Form of Notes 
	
The 2022 Notes will be represented by global securities that will be deposited and registered in the name of DTC, or its nominee. Except in limited circumstances, holders will not receive certificates for the 2022 Notes. Beneficial interests in the 2022 Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the 2022 Notes through either DTC, if they are a participant, or indirectly through organizations which are participants in DTC. 

 

	
Trustee, Paying Agent and Security Registrar 
	
U.S. Bank National Association is the trustee, security registrar and paying agent. U.S. Bank National Association, in each of its capacities, including without limitation as trustee, security registrar and paying agent, assumes no responsibility for the accuracy or completeness of the information concerning us or our affiliates or any other party contained in this document or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or for any information provided to it by us, including but not limited to settlement amounts and any other information. We may maintain banking relationships in the ordinary course of business with the trustee and its affiliates. 

 

 

 

	
Other covenants 
	
In addition to the covenants described in the indenture, the following covenant shall apply to the Notes: 

 

	
 
	
•
	
 
	
We agree that for the period of time during which the 2022 Notes are outstanding, we will not violate Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC. 

 

	
 
	
•
	
 
	
We agree that, for the period of time during which the 2022 Notes are outstanding, we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution (except a distribution payable in our stock), upon any class of our capital stock, or purchase or redeem any of our capital stock, if our asset coverage, as defined in the 1940 Act and after giving effect to any exemptive relief granted to us by the SEC with respect to such asset coverage, is (i) below the Asset Coverage Requirement (as defined below) at the time of the declaration of such dividend or distribution or purchase or redemption and after deducting the amount of such dividend, distribution, purchase or redemption and (ii) has been below the Asset Coverage Requirement for the six consecutive months immediately preceding such declaration or purchase or redemption. Notwithstanding the foregoing restriction, we will be permitted to declare a cash dividend or distribution on our capital stock only up to such amount as is necessary for us to maintain our status as a regulated investment company under Subchapter M of the Code. “Asset Coverage Requirement” shall mean the asset coverage test set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions with respect to such asset coverage test. 

 

	
Reports by the Company 
	
If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934 to file any periodic reports with the SEC, we agree to furnish to holders of the 2022 Notes and the trustee, for the period of time during which the 2022 Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.

 

	
 
	
 

 

	
Modifications to events of default 
	
The following events of default, as described in the indenture: 

 

	
 
	
•
	
 
	
We do not pay the principal of, or any premium on, a debt security of the series on its due date, and do not cure this default within 5 days. 

 

	
 
	
•
	
 
	
On the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%. 

 

	
 
	
with respect to the 2022 Notes has been revised to read as follows: 

 

 

	
 
	
•
	
 
	
We do not pay the principal of, or any premium on, any 2022 Note on its due date. 

 

	
 
	
•
	
 
	
On the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%, giving effect to any exemptive relief granted to us by the SEC. 

 

	
Global Clearance and Settlement Procedures 
	
Interests in the 2022 Notes trade in DTC’s Same Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. None of the issuer, the trustee or the paying agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 1st day of January, 2021 (the “Effective Date”), by and between American Rebel Holdings, Inc., a Nevada corporation (“American Rebel”), and Charles A. Ross, Jr. (“Ross”).

 

WITNESSETH:

 

WHEREAS, American Rebel is a publicly traded Nevada corporation with its common stock traded on the Over-the-Counter Market under the symbol “AREB” and registered with the United States Securities and Exchange Commission.

 

WHEREAS, American Rebel and Ross desire to enter into this Employment Agreement, pursuant to which Ross shall be employed by American Rebel, to set forth the respective rights, duties and obligations of the parties hereto.

 

NOW THEREFORE, in consideration of the promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which the parties hereto acknowledge, American Rebel and Ross agree as follows:

 

1. EMPLOYMENT. American Rebel hereby agrees to employ Ross as its Chief Executive Officer and Ross hereby accepts such employment, upon the terms and conditions hereinafter set forth. 

 

2. TERM. For purposes of this Agreement, “Term” shall mean the original term (as defined in Section 2.1 below), if Renewal Term is initiated, then “Term” shall mean the renewal term period (as defined in Section 2.2, below). 

 

2.2 Original Term: The Term of this Agreement shall commence on January 1, 2021 and expire on December 31, 2025, unless sooner terminated pursuant to the terms and provisions herein stated. 

 

2.3 Renewal: At any time prior to the expiration of the Original Term, as stated above, American Rebel and Ross may, by mutual written agreement, extend Ross’ employment under the terms of this Agreement for such additional periods as they may agree. 

 

3. COMPENSATION. 

 

3.1 Cash Salary: American Rebel shall pay Ross a base cash salary of One Hundred Eighty Thousand Dollars ($180,000) per year (“Salary”). Such Salary shall be payable in accordance with American Rebel’s normal policies. Further, the Board of Directors shall review the Salary annually for an increase, such increase not to be less than the year-over-year increase in the U.S. Consumer Price Index.  

 

3.2 Retention Bonus; Preferred Stock Grant: Concurrent with the signing of this Agreement, American Rebel shall grant and issue to Ross fifty thousand (50,000) shares of Series A - Super Voting Convertible Preferred Stock, valued at $50.  

 

3.3 Incentive Compensation: In addition to the Salary, Ross shall be eligible to receive as incentive compensation (“Bonus”) in respect of each fiscal year (or portion thereof) of American Rebel, up to one hundred percent (100%) of his then applicable Salary, in addition to any other amount determined in accordance with any other short term incentive compensation program, which has been or may be established by the Board either for Ross or for executives or senior management. The determination as to the amounts of any awards to be paid to Ross under these programs shall be reviewed at least annually by the Board to ensure that such amounts are competitive with awards granted to similarly situated CEOs of companies comparable to American Rebel. The specific goals and objectives, including quantitative and qualitative measures, used to determine the amount to be paid as a Bonus for each fiscal year shall be agreed to by and between the CEO and the Board not later than June 30th of each successive year this Agreement.  

 

 

4. ROSS BENEFITS. 

 

4.1 General Benefits: Ross shall be entitled to receive or participate in all benefit plans and programs of American Rebel made available from time to time to executives or senior management of American Rebel, including but not limited to, dental and medical insurance, pension and profit sharing plans, 401(k) plans, incentive savings plans, stock option plans, restricted stock plans, group life insurance, salary continuation plans, disability coverage and other fringe benefits. 

 

4.2 Vacation: Ross shall be entitled during the Term of this Agreement to four (4) weeks vacation per year during which time Ross’ compensation will be paid in full. Unused days of vacation will be compensated in accordance with American Rebel’s policy as established by American Rebel from time to time. Ross may take the vacation periods at any time during the year as long as Ross schedules time off as to not create an unreasonable hardship on American Rebel. In addition, Ross shall have such other days off, including paid sick leave and paid holidays, in accordance with American Rebel’s policy. 

 

4.3 Business Expenses: American Rebel shall, in accordance with, and to the extent of, its policies in effect from time to time, bear all customary business expenses (including the advancement of certain expenses) incurred by Ross in performing his duties as an executive of American Rebel, provided that Ross accounts promptly for such expenses to American Rebel in the manner prescribed from time to time by American Rebel. 

 

5. DUTIES/SERVICE. 

 

5.1 Position: Ross shall be employed as Chief Executive Officer and shall perform such duties as are normally associated with such position, subject to the direction, supervision and rules and regulations of American Rebel. 

 

5.2 Place of Employment: The place of Ross’ employment and the performance of Ross’ duties will be primarily on a full-time remote basis from his Nashville, Tennessee home, less than full-time at American Rebel’s corporate headquarters, or at such other location as agreed upon by American Rebel and Ross. 

 

5.3 Extent of Services: Ross shall devote his full-time and best efforts to American Rebel and shall fulfill the duties of his position which shall include such duties as may, from time to time be assigned to him by the Board, provided such duties are reasonably consistent with Ross’ education, experience and background. American Rebel acknowledges Ross presently, or may in the future, serve on the Board, be the manager or member of, provide consulting services for or be an executive officer of other companies and such action shall not be a breach of this section; provided, however, that such companies are: (a) listed on Exhibit A, attached hereto and updated from time to time; and (b) do not compete with American Rebel or interfere with the performance of Ross’ duties pursuant to this Agreement, as determined in the reasonable judgment of the Board. Additionally, American Rebel recognizes that Ross has, or may have in the future, equity positions in other companies, which either: (a) are listed on Exhibit A attached hereto and updated from time to time; or (b) do not compete with American Rebel in the reasonable judgment of the Board. American Rebel recognizes that such equity positions may require attention from Ross during normal business hours. However, Ross agrees that if such time is considered excessive by the Board, Ross shall be so advised and noticed by American Rebel and Ross shall be required to make appropriate adjustments to ensure his duties and obligations under this Agreement are fulfilled. 

 

 

6. TERMINATION. The Term of this Agreement shall end upon its expiration pursuant to Section 2 hereof, provided that this Agreement shall terminate prior to such date: (a) upon Ross’ resignation, death or permanent disability or incapacity; or (b) by American Rebel at any time for “Cause” (as defined in Section 6.4 below) or without Cause. 

 

6.1 By Resignation Prior to Change of Control: If Ross resigns with “Good Reason” (as defined below) prior to a Change of Control (as defined in Section 7), this Agreement shall terminate but, Ross shall be entitled to receive a lump sum payment equal to twelve (12) months Salary, plus any equity compensation due, plus his prorated Bonus through the date of termination. Further, upon resignation for Good Reason prior to a Change of Control, all unvested stock or options held by Ross shall immediately vest and become exercisable for the full term set forth in such stock option or equity award agreements. To the extent Ross elects to continue his group health coverage pursuant to COBRA following his termination of employment, then Ross shall be eligible to continue such coverage for himself and his dependents (if applicable), at American Rebel’s expense, for a period of twelve (12) months at the same cost as if Ross were still an employee of American Rebel. To the extent that American Rebel finds it undesirable to cover Ross under its group health plan, American Rebel shall provide Ross (at American Rebel’s expense) with the same level of coverage under an individual policy or policies. 

 

For purposes of this Agreement, “Good Reason” shall mean any of the following if the same shall occur without Ross’ express written consent: 

 

(i) a material diminution in Ross’ Salary;  

 

(ii) a material diminution in Ross’ authority, duties, or responsibilities;  

 

(iii) a material change in the geographic location at which Ross must perform the services for which he is employed; or  

 

(iv)a change in the current reporting structure of the CEO reporting directly to the entire Board; or 

 

(v) any other action or inaction that constitutes a material breach by American Rebel under this Agreement.  

 

Ross shall be required to provide notice to American Rebel of the existence of any of the foregoing conditions within 30 days of the initial existence of the condition, upon the notice of which American Rebel shall have a period of 30 days during which it may remedy the condition without giving rise to the obligations under this Section 6.1

 

If Ross resigns without Good Reason, Ross shall be entitled to receive Ross’ Salary only through the date of such resignation. 

 

6.2 By Reason of Incapacity or Disability: If Ross becomes so incapacitated by reason of accident, illness, or other disability that Ross is unable to carry on substantially all of the normal duties and obligations of Ross under this Agreement for a continuous period of sixty (60) calendar days, this Agreement shall terminate. For purposes of the foregoing, Ross’ permanent disability or incapacity shall be determined in accordance with American Rebel’s disability insurance policy, if such a policy is then in effect, or if no such policy is then in effect, such permanent disability or incapacity shall be determined by American Rebel’s Board of Directors in its good faith judgment based upon Ross’ inability to perform normal and reasonable duties and obligations. If Ross’ employment is terminated due to such disability, Ross shall be entitled to receive Ross’ Salary only through the date of such termination. Other disability benefits, if any, will be determined in accordance with the terms of American Rebel’s benefit plans and programs. 

 

6.3 By Reason of Death: If Ross dies during the Term of this Agreement, American Rebel shall pay to the estate of Ross any earned Salary only through the date of Ross’ death. Other death benefits, if any, will be determined in accordance with the terms of American Rebel’s benefit plans and programs. 

 

 

6.4 For Cause: If this Agreement is terminated by American Rebel for Cause, Ross shall be entitled to receive Ross’ Salary only through the date of termination.  

 

For purposes of this Agreement, “Cause” shall mean: 

 

(i)any act of dishonesty or fraud with respect to American Rebel;  

 

(ii)Ross’ conviction of a felony, a crime involving moral turpitude or other act causing material harm to American Rebel’s standing and reputation;  

 

(iii)Ross’ continued material failure to perform Ross’ duties to American Rebel after ten (10) business days’ written notice thereof to Ross; or 

 

(iv)gross negligence or willful misconduct by Ross with respect to American Rebel.  

 

American Rebel shall provide Ross, within ten (10) business days of becoming aware of a “For Cause” breach, written notice, which shall include written documentation, if any, of the “For Cause” breach, as defined above. Upon receipt of the written notice, Ross shall have thirty (30) calendar days to respond to American Rebel’s notice and attempt to cure or resolve the “For Cause” breach. If after that 30 day period, in the judgment of the Board, the “For Cause” breach still exists, then termination shall become effective immediately. 

 

6.5 Without Cause Prior to Change of Control: If American Rebel terminates Ross’ employment without Cause prior to a Change of Control, Ross shall be entitled to receive a lump sum payment equal to twelve (12) months Salary plus his prorated Bonus through the date of termination. Further, all unvested stock or options held by Ross shall immediately vest and become exercisable for the full term set forth in such stock option or equity award agreements. To the extent Ross elects to continue his group health coverage pursuant to COBRA following his termination of employment, then Ross shall be eligible to continue such coverage for himself and his dependents (if applicable), at American Rebel’s expense, for a period of twelve (12) months at the same cost as if Ross were still an employee of American Rebel. To the extent that American Rebel finds it undesirable to cover Ross under its group health plan, American Rebel shall provide Ross (at American Rebel’s expense) with the same level of coverage under an individual policy or policies. Ross expressly agrees and understands that, under such circumstances, he shall be entitled only to the payments recited herein, including any prorated Bonus through the date of termination, and he shall not be entitled to any further compensation of any kind through the Term of the Agreement. 

 

6.6 Change of Control Severance: If American Rebel terminates Ross’ employment without Cause within twelve (12) months after a Change of Control, or Ross resigns his employment with Good Reason within twelve (12) months after a Change of Control, Ross shall be entitled to receive a lump sum payment equal to twelve (12) months Salary plus 100% of his prior year’s Bonus. Further, all stock options or equity awards granted by American Rebel shall immediately vest and become exercisable for the full term set forth in such stock option or equity award agreements. To the extent Ross elects to continue his group health coverage pursuant to COBRA following his termination of employment, then Ross shall be eligible to continue such coverage for himself and his dependents (if applicable), at American Rebel’s expense, for a period of twelve (12) months at the same cost as if Ross were still an employee of American Rebel. To the extent that American Rebel finds it undesirable to cover Ross under its group health plan, American Rebel shall provide Ross (at American Rebel’s expense) with the same level of coverage under an individual policy or policies. 

 

6.7 No Mitigation: Ross shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement, nor shall any such payment or benefit be reduced by any earnings or benefits Ross may receive from any other source. 

 

6.8 Effect of Termination on Unused Vacation Time and Other Benefits: Upon the termination of this Agreement, unless termination is for Cause, Ross shall also have the right to receive any accrued but unused vacation time for that current fiscal year, and any benefits vested under the terms of any applicable benefit plans. 

 

 

6.9 Time of Payment: Any amounts payable under this Section 6 shall be paid in a single lump sum within 30 days following Ross’ termination of employment. The parties intend that all such payments shall satisfy the short term deferral exception under Treasury Regulation §1.409A-1(b)(4) and therefore shall be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended. 

 

6.10 Release and Waiver: Notwithstanding the preceding provisions of this Section 6 or any other provision in this Agreement to the contrary, Ross’ entitlement to any post-termination payment under this Agreement shall be subject to and conditioned upon Ross’ execution of a release and waiver of claims on the form reasonably acceptable to American Rebel.  

 

7. CHANGE OF CONTROL.  

 

For purposes of this Agreement a “Change of Control” shall mean:

 

(i)The consummation of a merger or consolidation of American Rebel with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of American Rebel immediately prior to such merger, consolidation or other reorganization;  

 

(ii)the sale, transfer or other disposition of all or substantially all of American Rebel’s assets; or 

 

(iii)The date that 40% or more of the current members of the Board of Directors as of the date of this Agreement are replaced by directors who are not currently members of the Board of Directors. 

 

8. TRADE SECRETS AND CONFIDENTIALITY. 

 

8.1 Nondisclosure: Without the prior written consent of American Rebel, Ross shall not, at any time, either during or after the term of this Agreement, directly or indirectly, divulge or disclose to any person, firm, association, or corporation, or use for Ross’ own benefit, gain, or otherwise, any customer lists, plans, products, data, results of tests and data, or any other trade secrets or confidential materials or like information (collectively referred to as the “Confidential Information”) of American Rebel and/or its Affiliates, as hereinafter defined, it being the intent of American Rebel, with which intent Ross hereby agrees, to restrict Ross from disseminating or using any like information that is unpublished or not readily available to the general public. 

 

8.1.1 Definition of Affiliate. For purposes of this Agreement, the term “Affiliate” shall mean any entity, individual, firm, or corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with American Rebel. 

 

8.2 Notice of Compelled Disclosure: If, at any time, Ross becomes legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand, or similar process or otherwise) to disclose any of the Confidential Information, Ross shall provide American Rebel with prompt, prior written notice of such requirement so that American Rebel may seek a protective order or other appropriate remedy and/or waive compliance with the terms of this Agreement. In the event that such protective order or other remedy is not obtained, that American Rebel waives compliance with the provisions hereof, Ross agrees to furnish only that portion of the Confidential Information which Ross is advised by written opinion of counsel is legally required and exercise Ross’ best efforts to obtain assurance that confidential treatment will be accorded such Confidential Information. In any event, Ross shall not oppose action by American Rebel to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information. 

 

8.3 Assurance of Compliance: Ross agrees to represent to American Rebel, in writing, at any time that American Rebel shall reasonably request, that Ross has complied with the provisions of this section, or any other section of this Agreement. 

 

 

9. NON-COMPETITION AND NON-SOLICITATION.  

 

9.1 Covenant Not To Compete. Ross acknowledges and agrees that in consideration of and reliance upon his employment, American Rebel shall allow Ross access to American Rebel’s proprietary information and data, including but not limited to processes, suppliers, present and future business plans, marketing strategies, marketing channels, distributors, budgets, manufacturers, investors and stockholders. Ross acknowledges and agrees that any and all such information and data could be used to the competitive disadvantage of American Rebel. Accordingly, for the term of this Agreement and for a period of twelve (12) months following the termination of this Agreement (except in the case of termination of this Agreement pursuant to Section 6 because of a Change of Control or any Business Combination or any termination of this Agreement (without cause)), Ross shall not, without the express written consent of American Rebel, directly or indirectly in any manner, including without limitation by employment, contract, consultation, investment (either directly or beneficially) assist any person or entity in engaging in any competition with American Rebel. The term “engaging in competition” as used herein shall be deemed to be used in its ordinary meaning and sense and shall include engaging in, assisting or have an interest in, or entering the employment of or acting as an agent, advisor or consultant for, any person or entity which is engaged in, or will be engaged in, the development, manufacture, supplying or sale of a product, process, service or development which is competitive with a product, process, service or development on which American Rebel has expended resources and on which Ross worked or with respect to which Ross has or had access to Confidential Information while at Company. Upon the Effective Date, Ross agrees that the geographical scope of this covenant not to compete shall be North America.  

 

9.2 Acknowledgment Regarding Restrictions. Ross recognizes and agrees that the restraints contained in Section 9.1, including the geographic scope thereof in light of American Rebel’s marketing efforts, are reasonable and enforceable in view of American Rebel’s legitimate interests in protecting its Confidential Information and customer goodwill and the limited scope of the restrictions in Section 9.1. 

 

9.3 Enforcement in Equity. Ross acknowledges and agrees that in the event that there is a breach of the covenant not to compete or of the non-solicitation covenant set forth herein, that American Rebel has no adequate remedy at law. Accordingly, the parties agree that American Rebel may enforce these covenants in equity by way of injunctive relief, both temporary and permanent. The exclusive jurisdiction and venue for any such actions shall be the District Court of Davidson County, Tennessee and Ross irrevocably consents to the personal jurisdiction of that court for such purposes. American Rebel shall not be deemed stopped from combining a claim for injunctive relief with a claim for money damages in the same action. In the event that American Rebel is the prevailing party in any such action, they shall be entitled to recover their reasonable attorney’s fees as part of the judgment in the action. 

 

9.4 Non-Solicitation; Agreement not to Hire/be Hired. Ross understands and appreciates that American Rebel invests a tremendous amount of time, energy, resources and expertise in the training and education of its employees to be able to operate its operations. Further, Ross understands that in the event an employee of American Rebel or any of its operating subsidiaries, is enticed to leave, then American Rebel shall be damaged in an amount the Parties are not capable of calculating at the present time. Therefore, Ross agrees, that during any non-compete period set forth above and continuing for an additional six (6) month period, that he will not offer employment or contractor status to any employee or contractor or affiliated person of American Rebel, or accept employment or contractor status from any employee or contractor or affiliated person of American Rebel or its operating subsidiaries, nor to allow any person or entity affiliated with Ross to offer such employment status with Ross or any other concern, venture or entity with whom Ross may be employed by, associated or hold a more than five percent (5%) ownership position in. 

 

10. RETURN OF AMERICAN REBEL PROPERTY. Ross agrees that upon any termination of his employment, Ross shall return to American Rebel within a reasonable time not to exceed forty-eight (48) hours, any of American Rebel’s property in his possession or under his control, including but not limited to, all lists, books, records, data, and other information (including all copies thereof in whatever form or media) of every kind relating to or connected with American Rebel or its Affiliates and their activities, business and customers, computer/office automation equipment, records and names, addresses, and other information with regard to customers or potential customers of American Rebel with whom Ross has had contact or done business. 

 

11. RELATIONSHIP OF PARTIES. The parties intend that this Agreement create an Employee-Employer relationship between the parties. 

 

 

12. NOTICES. All notices, required and demands and other communications hereunder must be in writing and shall be deemed to have been duly given when personally delivered or when placed in the United States Mail and forwarded by Registered or Certified Mail, Return Receipt Requested, postage prepaid, or when forwarded via reputable overnight carrier, addressed to the party to whom such notice is being given at the following address: 

 

As to American Rebel: American Rebel Holdings, Inc. 

718 Thompson Lane, Ste 108-199

Nashville, Tennessee 37204

Attn: Board of Directors

 

As to Ross: Charles A. Ross, Jr. 

900 20th Avenue South, #1206

Nashville, Tennessee 37212

 

Address Change: Any party may change the address(es) at which notices to it or him, as the case may be, are to be sent by giving the notice of such change to the other parties in accordance with this Section 12. 

 

13. MISCELLANEOUS. 

 

13.1 Entire Agreement: This Agreement and the Exhibits hereto contain the entire agreement of the parties. This Agreement may not be altered, amended or modified except in writing duly executed by the parties. 

 

13.2 Assignment: Neither party, without the written consent of the other party, can assign this Agreement. 

 

13.3 Binding: This Agreement shall be binding upon and inure to the benefit of the parties, their personal representative, successors and assigns. 

 

13.4 No Waiver: The waiver of the breach of any covenant or condition herein shall in no way operate as a continuing or permanent waiver of the same or similar covenant or condition. 

 

13.5 Severability: If any provision of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions will continue in full force without being impaired or invalidated in any way. The parties hereto agree to replace any invalid provision with at valid provision which most closely approximates the intent of the invalid provision. 

 

13.6 Interpretation: This Agreement shall not be construed more strongly against any party hereto regardless of which party may have been more responsible for the preparation of Agreement. 

 

13.7 Governing Law: This Agreement shall be governed by and construed under the laws of the State of Tennessee, without reference to the choice of law principles thereof. 

 

13.8 Arbitration: 

 

13.8.1 Any controversy, dispute or claim of whatever nature in any way arising out of or relating to Ross’ employment with American Rebel, including, without limitation (except as expressly excluded below in Section 13.8.2) any claims or disputes by Ross against American Rebel, or by American Rebel against Ross, concerning, arising out of or relating to the separation of that employment; any other adverse personnel action by American Rebel; any federal, state or local law, statute or regulation prohibiting employment discrimination or harassment; any public policy; any American Rebel disciplinary action; any American Rebel decision regarding a American Rebel policy or practice, including but not limited to Ross’ compensation or other benefits; and any other claim for personal, emotional, physical or economic injury (individually or collectively, “Covered Claims”) shall be resolved, at the request of any party to this Agreement, by final and binding arbitration in Las Vegas, Nevada before Judicial Arbitration Mediation Services (“JAMS”) in accordance with JAMS’ then-current policies and procedures for arbitration of employment disputes. All costs for such arbitration, including but not limited to Ross’ attorney’s fees, professional fees, witness fees or any other costs, expenses, or fees related to the arbitration, regardless of the party bringing the action, shall be borne by American Rebel. 

 

 

13.8.2 The only claims or disputes excluded from binding arbitration under this Agreement are the following: any claim by Ross for workers’ compensation benefits or for benefits under an American Rebel plan that provides its own arbitration procedure; and any claim by either party for equitable relief, including but not limited to, a temporary restraining order, preliminary injunction or permanent injunction against the other party. 

 

13.8.3 This agreement to submit all Covered Claims to binding arbitration in no way alters the exclusivity of Ross’ remedy under Section 6.5 in the event of any termination without Cause or the exclusivity of Ross’ remedy under Section 6.4 in the event of any termination for Cause, and does not require American Rebel to provide Ross with any type of progressive discipline. 

 

13.9 Taxes: American Rebel is authorized to withhold from any payment or benefit provided hereunder, the amount of withholding taxes due any federal, state or local authority in respect of such benefit or payment and to take such other action as may be necessary in the opinion of American Rebel to satisfy all obligations for the payment of such withholding taxes. In the event American Rebel does not make such deductions or withholdings, Ross shall indemnify American Rebel for any amounts paid with respect to any such taxes, together with any interest, penalties and related expenses thereto. Ross acknowledges that no oral or written representation of fact or opinion has been made to him by American Rebel or its attorneys regarding the tax treatment or consequences of any payment made under this Agreement. Ross acknowledges and agrees that to the extent any liability or responsibility exists for Ross’ federal, state and local income or other taxes, such liability or responsibility rests solely with his. Ross further agrees to indemnify and hold harmless American Rebel in connection with any liability incurred by American Rebel in connection with any tax or taxes for which Ross is responsible. 

 

13.10 Section 409A of the Internal Revenue Code: To the extent applicable, this Agreement shall be interpreted, construed and operated in accordance with the Section 409A of the Internal Revenue Code, and the Treasury regulations and other guidance issued thereunder. Any reference to termination of employment, severance from employment or similar terms shall mean and be interpreted as a “separation from service” as defined (as defined in Treasury Regulation §1.409A-1(h)). If on the date of Ross’ separation from service with American Rebel, Ross is a specified employee (as defined in Code Section 409A and Treasury Regulation §1.409A-1(i)), no payment constituting the “deferral of compensation” within the meaning of Treasury Regulation §1.409A-1(b) and after application of the exemptions provided in Treasury Regulation §§1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) shall be made to Ross at any time during the six (6) month period following Ross’ separation from service, and any such amounts shall instead be paid in a lump sum on the first payroll payment date following expiration of such six (6) month period. Any obligation of American Rebel to reimburse Ross for expenses incurred during any taxable year of Ross shall not affect the expenses eligible for reimbursements in any other taxable year. Further, such reimbursement of expenses shall be made on or before the last day of Ross’ taxable year following the taxable year in which the expense was incurred. 

 

13.11 Titles: Titles to the sections of this Agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement. 

 

13.12 Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original, but together which shall constitute one and the same instrument. 

 

SIGNATURE PAGE TO FOLLOW

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE.

 

	 

	American Rebel Holdings, Inc.

	 

	a Nevada corporation

	American Rebel:

	 

	 

	 

	By:

	/s/ Doug Grau

	 

	 

	Doug Grau, President

	Ross:

	 

	 

	 

	 

	/s/ Charles A. Ross, Jr.

	 

	 

	Charles A. Ross, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Employment Agreement

 

 

EXHIBIT A

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