Document:

EX-10.1

Table of Contents

 Exhibit 10.1 

CYTODYN INC. 
 2012 EQUITY
INCENTIVE PLAN 

Table of Contents

 TABLE OF CONTENTS 

 

							
	 ARTICLE 1
	  	ESTABLISHMENT AND PURPOSE	  	 	1	 
			
	 1.1
	  	Establishment	  	 	1	 
			
	 1.2
	  	Purpose	  	 	1	 
			
	 ARTICLE 2
	  	DEFINITIONS	  	 	1	 
			
	 2.1
	  	Defined Terms	  	 	1	 
			
	 2.2
	  	Gender and Number	  	 	5	 
			
	 ARTICLE 3
	  	ADMINISTRATION	  	 	5	 
			
	 3.1
	  	Administration by Board	  	 	5	 
			
	 3.2
	  	Delegation to Committee	  	 	5	 
			
	 3.3
	  	Authority of the Committee	  	 	5	 
			
	 3.4
	  	Action by the Committee	  	 	6	 
			
	 3.5
	  	Further Delegation	  	 	6	 
			
	 ARTICLE 4
	  	DURATION; SHARES SUBJECT TO THE PLAN; ELIGIBILITY	  	 	6	 
			
	 4.1
	  	Duration of the Plan	  	 	6	 
			
	 4.3
	  	Shares Subject to the Plan	  	 	6	 
			
	 4.5
	  	Eligibility	  	 	7	 
			
	 ARTICLE 5
	  	AWARDS	  	 	7	 
			
	 5.1
	  	Types of Awards	  	 	7	 
			
	 5.2
	  	General	  	 	7	 
			
	 5.3
	  	Nonuniform Determinations	  	 	7	 
			
	 5.4
	  	Award Agreements	  	 	7	 
			
	 5.5
	  	Provisions Governing All Awards	  	 	7	 
			
	 ARTICLE 6
	  	OPTIONS	  	 	11	 
			
	 6.1
	  	Types of Options	  	 	11	 
			
	 6.2
	  	General	  	 	11	 
			
	 6.3
	  	Option Price	  	 	11	 
			
	 6.4
	  	Option Term	  	 	11	 
			
	 6.5
	  	Time of Exercise	  	 	12	 
			
	 6.6
	  	Special Rules for Incentive Stock Options	  	 	12	 
			
	 6.7
	  	Restricted Shares	  	 	12	 

  
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 TABLE OF CONTENTS 

 (Continued) 

							
	 	  	 	  	Page	 
			
	 6.8
	  	Limitation on Number of Shares Subject to Options	  	 	12	 
			
	 ARTICLE 7
	  	STOCK APPRECIATION RIGHTS	  	 	12	 
			
	 7.1
	  	General	  	 	12	 
			
	 7.2
	  	Nature of Stock Appreciation Right	  	 	12	 
			
	 7.3
	  	Exercise	  	 	13	 
			
	 7.4
	  	Form of Payment	  	 	13	 
			
	 7.5
	  	Limitation on Number of Stock Appreciation Rights	  	 	13	 
			
	 ARTICLE 8
	  	RESTRICTED AWARDS	  	 	13	 
			
	 8.1
	  	Types of Restricted Awards	  	 	13	 
			
	 8.2
	  	General	  	 	14	 
			
	 8.3
	  	Restriction Period	  	 	14	 
			
	 8.4
	  	Forfeiture	  	 	14	 
			
	 8.5
	  	Settlement of Restricted Awards	  	 	14	 
			
	 8.6
	  	Rights as a Shareholder	  	 	15	 
			
	 8.7
	  	Limitation in Number of Restricted Awards	  	 	15	 
			
	 ARTICLE 9
	  	OTHER STOCK-BASED AND COMBINATION AWARDS	  	 	15	 
			
	 9.1
	  	Other Stock-Based Awards	  	 	15	 
			
	 9.2
	  	Combination Awards	  	 	15	 
			
	 ARTICLE 11
	  	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.	  	 	15	 
			
	 11.1
	  	Plan Does Not Restrict the Corporation	  	 	15	 
			
	 11.2
	  	Mandatory Adjustment	  	 	16	 
			
	 11.3
	  	Adjustments by the Committee	  	 	16	 
			
	 ARTICLE 12
	  	AMENDMENT AND TERMINATION	  	 	16	 
			
	 ARTICLE 13
	  	MISCELLANEOUS	  	 	16	 
			
	 13.1
	  	Tax Withholding	  	 	16	 
			
	 13.2
	  	Unfunded Plan	  	 	17	 
			
	 13.3
	  	Fractional Shares	  	 	17	 
			
	 13.4
	  	Annulment of Awards	  	 	17	 
			
	 13.5
	  	Engaging in Competition With the Corporation	  	 	17	 
			
	 13.6
	  	Other Corporation Benefit and Compensation Programs	  	 	17	 

  
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 TABLE OF CONTENTS 

  (Continued) 

							
	 	  	 	  	Page	 
			
	 13.7
	  	Securities Law Restrictions	  	 	18	 
			
	 13.8
	  	Continuing Restriction Agreement	  	 	18	 
			
	 13.9
	  	Governing Law	  	 	18	 

  
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 2012 EQUITY INCENTIVE PLAN 

ARTICLE 1 
 ESTABLISHMENT AND
PURPOSE 
 1.1 Establishment. CytoDyn Inc., a Colorado corporation (the “Corporation”), hereby establishes the CytoDyn Inc. 2012 Equity
Incentive Plan (the “Plan”), effective as of December 12, 2012 (the “Effective Date”). 
 1.2 Purpose. The purpose of the
Plan is to promote and advance the interests of the Corporation and its shareholders by enabling the Corporation to attract, retain, and reward employees, directors, and outside consultants of the Corporation and its subsidiaries. It is also
intended to strengthen the mutuality of interests between such employees, directors, and consultants and the Corporation’s shareholders. The Plan is designed to serve these purposes by offering stock options and other equity-based incentive
awards, thereby providing a proprietary interest in pursuing the long-term growth, profitability, and financial success of the Corporation. 

ARTICLE 2 
 DEFINITIONS 

2.1 Defined Terms. For purposes of the Plan, the following terms have the meanings set forth below: 

“Affiliate” means any parent corporation or subsidiary corporation of the Corporation, whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f), respectively, of the Code. 
 “Award” means an award or grant made to a Participant of Options,
Stock Appreciation Rights, Restricted Awards, or Other Stock-Based Awards pursuant to the Plan. 
 “Award Agreement” means an agreement as
described in Section 5.4. 
 “Board” means the Board of Directors of the Corporation. 

“Change in Control” means: 
 (i) Any one person
or entity, or more than one person or entity acting as a group (as defined in Treasury Regulation Section 1.409A-3), acquires ownership of stock of the Corporation that, together with stock previously
held by the acquiror, constitutes more than fifty (50%) percent of the total fair market value or total voting power of the Corporation’s stock. If any one person or entity, or more than one person or entity acting as a group, is
considered to own more than fifty (50%) percent of the total fair market value or total voting power of the Corporation’s stock, the acquisition of additional stock by the same person or entity or persons or entities acting as a group does
not cause a Change in Control. An increase in the percentage of stock owned by any one person or entity, or persons or entities acting as a group, as a result of a transaction in which the Corporation acquires its stock in exchange for property, is
treated as an acquisition of stock; or (ii) A majority of the members of the Corporation’s board of directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a

  
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majority of the members of the board of directors prior to the date of appointment or election; or (iii) Any one person or entity, or more than one person or entity acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by that person or entity or persons or entities acting as a group) assets from the Corporation that have a total gross fair market
value equal to at least forty (40%) percent of the total gross fair market value of all the Corporation’s assets immediately prior to the acquisition or acquisitions. Gross fair market value means the value of the Corporation’s
assets, or the value of the assets being disposed of, without regard to any liabilities associated with these assets. 
 In determining whether a Change in
Control occurs, the attribution rules of Code Section 318 apply to determine stock ownership. The stock underlying a vested option is treated as owned by the individual who holds the vested option, and the stock underlying an unvested option is
not treated as owned by the individual who holds the unvested option. 
 “Change in Control Date” means the date a Change in Control
actually occurs. 
 “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor statute,
together with rules, regulations, and interpretations promulgated thereunder. 
 “Committee” means the committee appointed by the Board, if
any, to administer the Plan as provided in Article 3 of the Plan. If no separate committee has been appointed to administer the Plan, the term “Committee” will refer to the full Board as administrator of the Plan. 

“Common Stock” means the common stock of the Corporation. 

“Consultant” means any consultant or adviser to the Corporation or an Affiliate selected by the Committee, who is not an employee of the
Corporation or an Affiliate. 
 “Continuing Restriction” means a Restriction contained in Sections 5.5(d), 5.5(g), 13.4, 13.5, 13.7
and 13.8 of the Plan and any other Restrictions expressly designated by the Committee in an Award Agreement as a Continuing Restriction. 

“Continuous Service” means that the Participant’s service with the Corporation, or an Affiliate whether as an Employee, Non-Employee Director or Consultant, is not interrupted or terminated. The Committee may in its sole discretion determine whether Continuous Service shall be considered interrupted in the case of (i) any leave
of absence approved by the Corporation, including sick leave, maternity leave, military leave or any other personal leave, or (ii) a change in the capacity in which the Participant renders services to the Corporation or an Affiliate. 

  
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 “Corporation” means CytoDyn Inc., a Colorado corporation, or any successor corporation.

 “Disability” means the condition of being “disabled” within the meaning of Section 22(e)(3) of the Code. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute, together with
rules and interpretations promulgated thereunder. 
 “Fair Market Value” means, on any given day, the fair market value per share of the
Common Stock determined as follows: 
 (a) If the Common Stock is traded on an established securities exchange, including without limitation The Nasdaq
Stock Market or any successor market thereto, the closing sale price of Common Stock as reported for such day by the principal exchange on which the Common Stock is traded (as determined by the Committee) or, if Common Stock was not traded on such
day, on the next preceding day on which the Common Stock was traded; 
 (b) If trading activity in the Common Stock is reported on an established over-the-counter market, including without limitation the OTC Markets or any successor market thereto, the closing sale price of Common Stock as reported for such day by the
principal market on which the Common Stock is traded (as determined by the Committee) or, if Common Stock was not traded on such day, on the next preceding day on which the Common Stock was traded; 

(c) If there is no market for the Common Stock or if trading activities for the Common Stock are not reported in one of the manners described above, the Fair
Market Value will be as determined by the Committee, including valuation by an independent appraisal that satisfies the requirements of Code Section 401(a)(28)(C) as of a date that is no more than twelve (12) months before the date of the
transaction for which the appraisal is used (e.g., the date of grant of an Award) or such other reasonable valuation method acceptable under Treasury Regulation Section 1.409A-1(b)(5)(iv). 

“Incentive Stock Option” or “ISO” means any Option intended to be an “incentive stock option” within the meaning
of Section 422 of the Code. 
 “Non-Employee Director” means a member of the Board who is not
an employee of the Corporation or any Affiliate. 
 “Nonqualified Option” or “NQO” means any Option granted pursuant to
the Plan that is not an Incentive Stock Option. 
 “Option” means an ISO or an NQO. 

  
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 “Other Stock-Based Award” means an Award as defined in Section 9.1. 

“Participant” means an employee of the Corporation or an Affiliate, a Consultant or a Non-Employee
Board Director who is granted an Award under the Plan. 
 “Plan” means this CytoDyn Inc. 2012 Equity Incentive Plan, as set forth herein
and as it may be amended from time to time. 
 “Reporting Person” means a Participant who is subject to the reporting requirements of
Section 16(a) of the Exchange Act. 
 “Restricted Award” means a Restricted Share or a Restricted Unit granted pursuant to Article 8
of the Plan. 
 “Restricted Share” means an Award described in Section 8.1(a) of the Plan. 

“Restricted Unit” means an Award of units representing Shares described in Section 8.1(b) of the Plan. 

“Restriction” means a provision in the Plan or in an Award Agreement which limits the exercisability or transferability, or which governs the
forfeiture or required sale, of an Award or Shares, cash, or other property payable pursuant to an Award. 
 “Share” means a share of
Common Stock. 
 “Stock Appreciation Right” or “SAR” means an Award to benefit from the appreciation of Common Stock
granted pursuant to the provisions of Article 7 of the Plan. 
 “Vest,” “Vesting,” or “Vested” means:

 (a) In the case of an Award that requires exercise, to be or to become immediately and fully exercisable and free of all Restrictions (other than
Continuing Restrictions); 
 (b) In the case of an Award that is subject to forfeiture, to be or to become nonforfeitable, freely transferable, and free of
all Restrictions (other than Continuing Restrictions); 
 (c) In the case of an Award that is required to be earned by attaining specified performance
goals, to be or to become earned and nonforfeitable, freely transferable, and free of all Restrictions (other than Continuing Restrictions); or 
 (d) In
the case of any other Award as to which payment is not dependent solely upon the exercise of a right, election, or option, to be or to become immediately payable and free of all Restrictions (except Continuing Restrictions). 

  
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 2.2 Gender and Number. Except where otherwise indicated by the context, any masculine or feminine
terminology used in the Plan also includes the opposite gender; and the definition of any term in Section 2.1 in the singular also includes the plural, and vice versa. 

ARTICLE 3 
 ADMINISTRATION

 3.1 Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as
provided in Section 3.2. The body administering the plan from time to time is referred to herein as the “Committee.” 
 3.2 Delegation to
Committee. The Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to further delegate administrative powers,
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and re-vest in the
Board the administration of the Plan. 
 3.3 Authority of the Committee. The Committee has full power and authority (subject to such orders or
resolutions as may be issued or adopted from time to time by the Board in the event of delegation to a board committee) to administer the Plan in its sole discretion, including the authority to: 

(a) Construe and interpret the Plan and any Award Agreement; 

(b) Promulgate, amend, and rescind rules and procedures relating to the implementation of the Plan; 

(c) Select the employees, Non-Employee Directors, and Consultants who will be granted Awards; 

(d) Determine the number and types of Awards to be granted to each Participant; 

(e) Determine the number of Shares, or Share equivalents, to be subject to each Award; 

(f) Determine the Fair Market Value of Shares if no public market exists for such Shares; 

(g) Determine the option price, purchase price, base price, or similar feature for any Award 

(h) Accelerate Vesting of Awards and waive any Restrictions; and 

  
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 (i) Determine all the terms and conditions of all Award Agreements, consistent with the requirements of the
Plan. 
 Decisions of the Committee, or any delegate as permitted by the Plan, will be final, conclusive, and binding on all Participants. 

3.4 Action by the Committee. A majority of the members of the Committee will constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or action in writing by all of the members of the Committee, will be the valid acts of the Committee. 

3.5 Further Delegation. Notwithstanding the foregoing, the Committee may delegate to one or more officers of the Corporation the authority to determine
the recipients, types, amounts, and terms of Awards granted to Participants who are not Reporting Persons. 
 ARTICLE 4 

DURATION; SHARES SUBJECT TO THE PLAN; ELIGIBILITY 

4.1 Duration of the Plan. The Plan is effective as of the Effective Date. The Plan will terminate ten years after the Effective Date or, if earlier,
when Awards have been granted covering all available Shares or the Plan is otherwise terminated by the Board. Termination of the Plan will not affect outstanding Awards. 

4.2 Prior Plans. The Plan is separate from the CytoDyn Inc. 2004 Stock Incentive Plan (the “Prior Plan”). The adoption of the Plan neither
affects nor is affected by the continued existence of the Prior Plan except that no further Awards will be granted under the Prior Plan after the Effective Date. 

4.3 Shares Subject to the Plan. The Shares which may be made subject to Awards under the Plan are Shares of Common Stock, which may be either
authorized and unissued Shares or reacquired Shares. Subject to adjustment pursuant to Article 11, the maximum number of Shares for which Awards may be granted under the Plan is 25,000,000, all of which may be issued under the Plan through
Incentive Stock Options. If an Award under the Plan is canceled or expires for any reason prior to having been fully Vested or exercised by a Participant, is settled in cash in lieu of Shares or is exchanged for other Awards, or is otherwise
forfeited or terminated, all Shares covered by such Awards will be added back into the number of Shares available for future Awards under the Plan. In addition, if the exercise price of any Option granted under the Plan is satisfied by tendering
Shares to the Corporation, only the number of Shares issued net of Shares tendered to the Corporation shall be deemed delivered for purposes of determining the maximum number of Shares available under the Plan. 

4.4 Reservation of Shares. The Corporation, during the term of the Plan and outstanding Awards, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

  
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 4.5 Eligibility. Employees of the Corporation and any subsidiary (including employees who may also be
directors of the Corporation or a subsidiary), Consultants, and Non-Employee Directors are eligible to receive Awards under the Plan. 

ARTICLE 5 
 AWARDS 

5.1 Types of Awards. The types of Awards that may be granted under the Plan are: 

(a) Options governed by Article 6 of the Plan; 
 (b) Stock
Appreciation Rights governed by Article 7 of the Plan; 
 (c) Restricted Awards governed by Article 8 of the Plan; and 

(d) Other Stock-Based Awards or combination awards governed by Article 9 of the Plan. 

In the discretion of the Committee, any Award may be granted alone, in addition to, or in tandem with other Awards under the Plan. 

5.2 General. Subject to the limitations of the Plan, the Committee may cause the Corporation to grant Awards to such Participants, at such times, of
such types, in such amounts, for such periods, with such option prices, purchase prices, or base prices, and subject to such terms, conditions, limitations, and restrictions as the Committee, in its discretion, deems appropriate. Awards may be
granted as additional compensation to a Participant or in lieu of other compensation to such Participant. A Participant may receive more than one Award and more than one type of Award under the Plan. 

5.3 Nonuniform Determinations. The Committee’s determinations under the Plan or under one or more Award Agreements, including, without limitation,
(a) the selection of Participants to receive Awards, (b) the type, form, amount, and timing of Awards, (c) the terms of specific Award Agreements, and (d) elections and determinations made by the Committee with respect to
exercise or payments of Awards, need not be uniform and may be made by the Committee selectively among Participants and Awards, whether or not Participants are similarly situated. 

5.4 Award Agreements. Each Award will be evidenced by a written agreement (an “Award Agreement”) between the Corporation and the Participant.
Award Agreements may, subject to the provisions of the Plan, contain any provision approved by the Committee. 
 5.5 Provisions Governing All Awards.
All Awards are subject to the following provisions: 
 (a) Alternative Awards. If any Awards are designated in their Award Agreements as alternative
to each other, the exercise of all or part of one Award will automatically cause an immediate equal (or pro rata) corresponding termination of the other alternative Award or Awards. 

  
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 (b) Rights as Shareholders. No Participant will have any rights of a shareholder with respect to
Shares subject to an Award until such Shares are issued in the name of the Participant. 
 (c) Employment Rights. Neither the adoption of the Plan
nor the granting of any Award confers on any person the right to continued employment with the Corporation or any Affiliate or the right to remain as a director of or a Consultant to the Corporation or any Affiliate, as the case may be, nor does it
interfere in any way with the right of the Corporation or an Affiliate to terminate such person’s employment or to remove such person as a Consultant or as a director at any time for any reason, with or without cause. 

(d) Restriction on Transfer. Unless otherwise expressly provided in an individual Award Agreement, each Award (other than Restricted Shares after they
Vest) will not be transferable other than by will or the laws of descent and distribution and will be exercisable (if exercise is required), during the lifetime of the Participant, only by the Participant or, in the event the Participant becomes
legally incompetent, by the Participant’s guardian or legal representative. Notwithstanding the foregoing, any Award may be surrendered to the Corporation pursuant to Section 5.5(h) in connection with the payment of the purchase or option
price of another Award or the payment of the Participant’s federal, state, or local tax withholding obligation with respect to the exercise or payment of another Award. 

(e) Termination of Employment. The terms and conditions under which an Award may be exercised, if at all, after a Participant’s termination of
employment or service as a Non-Employee Board Director or Consultant will be determined by the Committee and specified in the applicable Award Agreement. 

(f) Change in Control. In connection with a Change in Control, the Committee, in its sole discretion, may, unless otherwise provided in an Award
Agreement: 
 (i) Provide that, upon the occurrence of a Change in Control Date, each outstanding Award will become immediately Vested to the full extent
not previously Vested. Any such acceleration of Award Vesting must comply with applicable regulatory requirements and any Participant will be entitled to decline the accelerated Vesting of all or any portion of his or her Award, if he or she
determines that such acceleration may result in adverse tax consequences to him or her; and 

  
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 (ii) In the event the Board approves a proposal that will result in a Change in Control or a Change in
Control Date occurs (each, a “Transaction”), the Committee may, in its sole discretion, and to the extent possible under the structure of the Transaction, select one of the following alternatives for treating outstanding Awards under the
Plan: 
 (A) The Committee may provide that outstanding Awards will be converted into or replaced by Awards of a similar type in the stock of the surviving
or acquiring corporation in the Transaction. The amount and type of securities subject to and the exercise price (if applicable) of the replacement or converted Awards will be determined by the Committee based on the exchange ratio, if any, used in
determining shares of the surviving corporation to be issued to holders of Shares of the Corporation. If there is no exchange ratio in the Transaction, the Committee will, in making its determination, take into account the relative values of the
companies involved in the Transaction and such other factors as the Committee deems relevant. Such replacement or converted Awards will continue to Vest over the period (and at the same rate) as the Awards which the replacement or converted Awards
replaced, unless determined otherwise by the Committee; or 
 (B) The Committee may provide a 10-day period prior to
the consummation of the Transaction during which all outstanding Awards will tentatively become fully Vested, and upon consummation of such Transaction, all outstanding and unexercised Awards will immediately terminate. If the Committee elects to
provide such 10-day period for the exercise of Awards, the Committee must provide written notice (a “Proposal Notice”) to all Participants at least 15 days prior to the commencement of such 10-day period and must so state its intention to terminate all unexercised Awards. Participants, by written notice to the Corporation, may exercise their Awards and, in so exercising the Awards, may condition such
exercise upon, and provide that such exercise will become effective immediately prior to, the consummation of the Transaction, in which event Participants need not make payment for any Common Stock to be purchased upon exercise of an Award until
five days after written notice by the Corporation to the Participants that the Transaction has been consummated. If the Transaction is consummated, each Award, to the extent not previously exercised prior to the consummation of the Transaction, will
terminate and cease being exercisable as of the effective date of such Transaction. If the Transaction is abandoned, (1) all outstanding Awards not exercised will continue to be Vested and exercisable, to the extent such Awards were Vested and
exercisable prior to the date of a Proposal Notice, and (2) to the extent that any Awards not exercised prior to such abandonment have become Vested and exercisable solely by operation of this Section 5.5(f)(ii), such Vesting and
exercisability will be deemed annulled, and the Vesting and exercisability provisions otherwise in effect will be reinstituted, as of the date of such abandonment; or 

  
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 (C) The Committee may provide that outstanding Awards that are not fully Vested will become fully Vested
subject to the Corporation’s right to pay each Participant a cash amount (determined by the Committee and based on the amount, if any, being received by the Corporation’s shareholders in the Transaction) in exchange for cancellation of the
applicable Award. 
 Unless the Committee specifically provides otherwise in a Change in Control provision for a specific Award Agreement, Awards will
become Vested as of a Change in Control Date only if, or to the extent, such acceleration in the Vesting of the Awards does not result in an “excess parachute payment” within the meaning of Section 280G(b) of the Code. The Committee,
in its discretion, may include specific Change in Control provisions in some Award Agreements and not in others, may include different Change in Control provisions in different Award Agreements, and may include Change in Control provisions for some
Awards or some Participants and not for others. 
 (g) Conditioning or Accelerated Benefits. The Committee, in its discretion, may include in any
Award Agreement a provision conditioning or accelerating the Vesting of an Award or the receipt of benefits pursuant to an Award, either automatically or in the discretion of the Committee, upon the occurrence of specified events, including without
limitation, a Change in Control of the Corporation (subject to the foregoing), a sale of all or substantially all of the property and assets of Corporation, or an event of the type described in Article 11 of this Plan. 

(h) Payment of Purchase Price and Withholding. The Committee, in its discretion, may include in any Award Agreement a provision permitting the
Participant to pay the purchase or option price, if any, for Shares or other property issuable pursuant to the Award, in whole or in part by any one or more of the following methods; provided, however, that the availability of any one or more
methods of payment may be suspended from time to time if the Committee determines that the use of such payment method would result in adverse financial accounting treatment for the Corporation or a violation of laws or regulations applicable to the
Corporation: 
 (i) By delivering cash or a check; 
 (ii) By
delivering previously owned Shares (including Restricted Shares, whether or not Vested); 
 (iii) By reducing the number of Shares or other property
otherwise Vested and issuable pursuant to the Award; 
 (iv) Unless specifically prohibited by any applicable statute or rule, including, without
limitation, the provisions of the Sarbanes-Oxley Act of 2002, by delivering to the Corporation a promissory note on such terms and over such period as the Committee may determine; 

(v) In the event Shares are publicly traded, by delivery (in a form approved by the Committee) of an irrevocable direction to a securities broker acceptable
to the Committee (subject to the provisions of the Sarbanes-Oxley Act of 2002 and any other applicable statute or rule); or 

  
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 (vi) In any combination of the foregoing or in any other form approved by the Committee. 

If Restricted Shares are surrendered in full or partial payment of the purchase or option price of Shares issuable under an Award, a corresponding number of
the Shares issued upon exercise of the Award will be Restricted Shares subject to the same Restrictions as the surrendered Restricted Shares. Shares withheld or surrendered as described above will be valued based on their Fair Market Value on the
date of the transaction. Any Shares withheld or surrendered with respect to a Reporting Person will be subject to such additional conditions and limitations as the Committee may impose to comply with the requirements of the Exchange Act. 

(i) Service Periods. At the time of granting an Award, the Committee may specify, by resolution or in the Award Agreement, the period or periods of
service performed or to be performed by the Participant in connection with the grant of the Award. 
 ARTICLE 6 

OPTIONS 
 6.1 Types of Options.
Options granted under the Plan may be in the form of Incentive Stock Options or Nonqualified Options. The grant of each Option and the Award Agreement governing each Option will identify the Option as an ISO or an NQO. In the event the Code is
amended to provide for tax-favored forms of stock options other than or in addition to Incentive Stock Options, the Committee may grant Options under the Plan meeting the requirements of such forms of options.
ISOs may not be awarded unless the Plan is approved by shareholders within 12 months of adoption of the Plan. 
 6.2 General. All Options will be
subject to the terms and conditions set forth in Article 5 and this Article 6 and Award Agreements governing Options may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee deems
desirable. 
 6.3 Option Price. Each Award Agreement for Options will state the option exercise price per Share of Common Stock purchasable under the
Option, which may not be less than 100 percent of the Fair Market Value of a Share on the date of grant for all Options. 
 6.4 Option Term. The
Award Agreement for each Option will specify the term of each Option, which may be unlimited or may have a specified period during which the Option may be exercised, as determined by the Committee, provided, however, that no ISO may be exercisable
after the expiration of 10 years from the date such ISO is granted. 

  
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 6.5 Time of Exercise. The Award Agreement for each Option will specify, as determined by the
Committee: 
 (a) The time or times when the Option becomes exercisable and whether the Option becomes exercisable in full or in graduated amounts based on:
(i) continuation of employment over a period specified in the Award Agreement, (ii) satisfaction of performance goals or criteria specified in the Award Agreement, or (iii) a combination of continuation of employment and satisfaction
of performance goals or criteria; and 
 (b) Such other terms, conditions, and restrictions as to when the Option may be exercised as determined by the
Committee. 
 (c) The extent, if any, to which the Option will remain exercisable after the Participant ceases to be an employee, Consultant, or director of
Corporation or an Affiliate. 
 An Award Agreement for an Option may, in the discretion of the Committee, provide whether, and to what extent, the time when
an Option becomes exercisable may be accelerated or otherwise modified (i) in the event of the death, Disability, or retirement of the Participant or (ii) upon the occurrence of a Change in Control. The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option becomes exercisable. 
 6.6 Special Rules for Incentive Stock
Options. In the case of an Option designated as an Incentive Stock Option, the terms of the Option and the Award Agreement will conform with the statutory and regulatory requirements specified pursuant to Section 422 of the Code, as in
effect on the date such ISO is granted. ISOs may be granted only to employees of the Corporation or an Affiliate. ISOs may not be granted under the Plan after ten years following the date specified in Section 1.1, unless the ten-year limitation of Section 422(b)(2) of the Code is removed or extended. 
 6.7 Restricted Shares. In the
discretion of the Committee, the Shares issuable upon exercise of an Option may be Restricted Shares if so provided in the Award Agreement for the Option. 

6.8 Limitation on Number of Shares Subject to Options. In no event may Options for more than 3,000,000 Shares be granted to any individual under the
Plan during any calendar year. To the extent required by Section 162(m) of the Code, if any Option is canceled, the canceled Option shall continue to be counted against the maximum number of Shares for which Options may be granted to an
individual under the Plan. 
 ARTICLE 7 

STOCK APPRECIATION RIGHTS 
 7.1
General. Stock Appreciation Rights are subject to the terms and conditions set forth in Article 5 and this Article 7 and Award Agreements governing Stock Appreciation Rights may contain such additional terms and conditions, not inconsistent
with the express terms of the Plan, as the Committee deems desirable. 
 7.2 Nature of Stock Appreciation Right. A Stock Appreciation Right is an
Award entitling a Participant to receive an amount equal to the excess (or, if the Committee determines at the time of grant, a portion of the excess) of the Fair Market Value of a Share of Common Stock on the date of

  
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exercise of the SAR over the base price, as described below, on the date of grant of the SAR, multiplied by the number of Shares with respect to which the SAR is being exercised. The base price
will be designated by the Committee in the Award Agreement for the SAR and may be the Fair Market Value of a Share on the grant date of the SAR or such other higher price as the Committee determines. The base price may not be less than the Fair
Market Value of a Share on the grant date of the SAR. 
 7.3 Exercise. A Stock Appreciation Right may be exercised by a Participant in accordance
with procedures established by the Committee. The Committee may also provide that a SAR will be automatically exercised on one or more specified dates or upon the satisfaction of one or more specified conditions. 

7.4 Form of Payment. Payment upon exercise of a Stock Appreciation Right may be made in cash, in Shares, in other property, or in any combination of
the foregoing, or in any other form as the Committee may determine. 
 7.5 Limitation on Number of Stock Appreciation Rights. The maximum number of
Shares with respect to which Stock Appreciation Rights may be granted to any individual under the Plan during any calendar year is 3,000,000. To the extent required by Section 162(m) of the Code, if any SAR is canceled, the canceled SAR shall
continue to be counted against the maximum number of Shares for which SARs may be granted to an individual under the Plan. 
 ARTICLE 8 

RESTRICTED AWARDS 
 8.1 Types of
Restricted Awards. Restricted Awards granted under the Plan may be in the form of either Restricted Shares or Restricted Units. 
 (a) Restricted
Shares. A Restricted Share is an Award of Shares to a Participant subject to such terms and conditions as the Committee deems appropriate, including, without limitation, a requirement that the Participant forfeit such Restricted Shares back to
the Corporation upon termination of Participant’s employment (or service as a Non-Employee Board Director or Consultant) for specified reasons within a specified period of time or upon other conditions,
including failure to achieve performance goals, as set forth in the Award Agreement for such Restricted Shares. Each Participant receiving a Restricted Share will be issued a stock certificate in respect of such Shares, registered in the name of
such Participant, and will execute a stock power in blank with respect to the Shares evidenced by such certificate. The certificate evidencing such Restricted Shares and the stock power will be held in custody by the Corporation until the
Restrictions have lapsed. 
 (b) Restricted Units. A Restricted Unit is an Award of units (with each unit having a value equivalent to one Share)
granted to a Participant subject to such terms and conditions as the Committee deems appropriate, and may include a requirement that the Participant forfeit such Restricted Units upon termination of Participant’s employment (or service as a Non-Employee Board Director or Consultant) for specified reasons within a specified period of time or upon other conditions, as set forth in the Award Agreement for such Restricted Units. The Committee will set the
terms and conditions of the Award Agreement so that the Restricted Unit Award will comply with or be exempt from Code Section 409A. 

  
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 8.2 General. Restricted Awards are subject to the terms and conditions of Article 5 and this Article
8 and Award Agreements governing Restricted Awards may contain such additional terms and conditions, not inconsistent with the express provisions of the Plan, as the Committee deems desirable. 

8.3 Restriction Period. Award Agreements for Restricted Awards will provide that Restricted Awards, and the Shares subject to Restricted Awards, may
not be transferred, and may provide that, in order for a Participant to Vest in such Restricted Awards, the Participant must remain in the employment (or remain as a Non-Employee Board Director or Consultant)
of the Corporation or its Affiliates, subject to relief for reasons specified in the Award Agreement, for a period commencing on the grant date of the Award and ending on such later date or dates as the Committee may designate at the time of the
Award (the “Restriction Period”). During the Restriction Period, a Participant may not sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares received under or governed by a Restricted Award grant. The Committee, in its
sole discretion, may provide for the lapse of restrictions in installments during the Restriction Period. In addition, the Committee, in its discretion, may condition Vesting of Restricted Awards on continued employment (or service as a Non-Employee Board Director or Consultant) or attainment of performance goals, or both. 
 8.4 Forfeiture. If a
Participant ceases to be an employee (or Consultant or Non-Employee Director) of the Corporation or an Affiliate during the Restriction Period for any reason other than reasons which may be specified in an
Award Agreement, the Award Agreement may require that all non-Vested Restricted Awards previously granted to the Participant be forfeited and returned to the Corporation. 

8.5 Settlement of Restricted Awards. 
 (a) Restricted
Shares. Upon Vesting of a Restricted Share Award, the restrictive stock legend on certificates for such Shares covering applicable Restrictions will be removed, the Participant’s stock power will be returned, and the Shares will no longer
be Restricted Shares. 
 (b) Restricted Units. Upon Vesting of a Restricted Unit Award, a Participant is entitled to receive payment for Restricted
Units in an amount equal to the aggregate Fair Market Value of the Shares covered by such Restricted Units at the expiration of the Applicable Restriction Period. Payment in settlement of a Restricted Unit will be made as soon as practicable
following the conclusion of the applicable Restriction Period in cash, in installments, in Restricted Shares or unrestricted Shares equal to the number of Restricted Units or in any other manner or combination as the Committee, in its sole
discretion, determines. 

  
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 8.6 Rights as a Shareholder. A Participant has, with respect to unforfeited Shares received under a
grant of Restricted Shares, all the rights of a shareholder of the Corporation, including the right to vote the shares and the right to receive any cash dividends. Stock dividends issued with respect to Restricted Shares will be treated as
additional Shares covered by the grant of Restricted Shares and will be subject to the same Restrictions. A Participant will have no rights as a shareholder with respect to a Restricted Unit Award until Shares are issued to the Participant in
settlement of the Award. 
 8.7 Limitation in Number of Restricted Awards. The aggregate number of Shares subject to Restricted Share Awards and
Restricted Unit Awards that may be granted under the Plan may not exceed 5,000,000 Shares. 
 ARTICLE 9 

OTHER STOCK-BASED AND COMBINATION AWARDS 

9.1 Other Stock-Based Awards. The Committee may grant other Awards under the Plan pursuant to which Shares are or may in the future be acquired, or
Awards denominated in or measured by Share equivalent units, including Awards valued using measures other than the market value of Shares. Other Stock-Based Awards are not restricted to any specific form or structure and may include, without
limitation, Share purchase warrants, other rights to acquire Shares, and securities convertible into or redeemable for Shares. Such Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, any other type of Award
granted under the Plan. 
 9.2 Combination Awards. The Committee may also grant Awards under the Plan in tandem or combination with other Awards or
in exchange of Awards, or in tandem or combination with, or as alternatives to, grants or rights under any other employee plan of the Corporation, including the plan of any acquired entity. No action authorized by this section will reduce the amount
of any existing benefits or change the terms and conditions thereof without the Participant’s consent. 
 ARTICLE 10 

DIVIDEND EQUIVALENTS 
 Any Awards may, at
the discretion of the Committee, earn dividend equivalents. In respect of any such Award which is outstanding on a dividend record date for Common Stock, the Participant may be credited with an amount equal to the amount of cash or stock dividends
that would have been paid on the Shares covered by such Award, had such covered Shares been issued and outstanding on such dividend record date. The Committee will establish such rules and procedures governing the crediting of dividend equivalents,
including the timing, form of payment, and payment contingencies of such dividend equivalents, as it deems appropriate or necessary. 

ARTICLE 11 
 ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION, ETC. 
 11.1 Plan Does Not Restrict the Corporation. The existence of the Plan and the Awards granted under the Plan
will not affect or restrict in any way the right or power of the Board or the 

  
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shareholders of the Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, any merger or
consolidation of the Corporation, any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Corporation’s capital stock or the rights thereof, the dissolution or liquidation of the Corporation or any sale or
transfer of all or any part of its assets or business, or any other corporate act or proceeding. 
 11.2 Mandatory Adjustment. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other distribution of the Corporation’s securities without the receipt of consideration by the Corporation, of or on the Common Stock, the Committee shall
make proportionate adjustments or substitution to the aggregate number and type of Shares for which Awards may be granted under the Plan, the maximum number and type of Shares which may be sold or awarded to any Participant, the number and type of
Shares covered by each outstanding Award, and the base price or purchase price per Share in respect of outstanding Awards. 
 11.3 Adjustments by the
Committee. In the event of any change in capitalization affecting the Common Stock of the Corporation not described in Section 11.2 above, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem
appropriate to reflect such change, will be made with respect to the aggregate number of Shares for which Awards in respect thereof may be granted under the Plan, the maximum number of Shares which may be sold or awarded to any Participant, the
number of Shares covered by each outstanding Award, and the base price or purchase price per Share in respect of outstanding Awards. The Committee may also make such adjustments in the number of Shares covered by, and price or other value of, any
outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends), of the Corporation assets to shareholders. 

ARTICLE 12 
 AMENDMENT AND
TERMINATION 
 The Board may amend, suspend, or terminate the Plan or any portion of the Plan at any time, provided that no amendment may be made
without shareholder approval if such approval is required by applicable law or the requirements of an applicable stock exchange or registered securities association. 

ARTICLE 13 
 MISCELLANEOUS

 13.1 Tax Withholding. The Corporation has the right to deduct from any settlement of any Award under the Plan, including the delivery or
Vesting of Shares or Awards, any federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take such other action as may be necessary in the opinion of the Corporation to satisfy all obligations
for the payment of such taxes. The recipient of any payment or distribution under the Plan has the obligation to make arrangements satisfactory to the Corporation for the satisfaction of any such tax withholding obligations. The Corporation will not
be required to make any such payment or distribution under the Plan until such obligations are satisfied. 

  
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 13.2 Unfunded Plan. The Plan will be unfunded and the Corporation will not be required to segregate
any assets that may at any time be represented by Awards under the Plan. Any liability of the Corporation to any person with respect to any Award under the Plan will be based solely upon any contractual obligations that may be effected pursuant to
the Plan. No such obligation of the Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of the Corporation. 

13.3 Fractional Shares. No fractional Shares of Common Stock will be issued or delivered under the Plan or any Option, Options granted under the Plan
will not be exercisable with respect to fractional Shares. In lieu of such fractional Shares, the Corporation will pay an amount in cash equal to the same fraction using the current market value of a Share of Common Stock. 

13.4 Annulment of Awards. Any Award Agreement may provide that the grant of an Award payable in cash is revocable until cash is paid in settlement
thereof or that grant of an Award payable in Shares is revocable until the Participant becomes entitled to the certificate in settlement thereof. In the event Participant’s employment (or services as a
Non-Employee Director or Consultant) terminates for cause (as defined below), any Award which is revocable will be annulled as of the date of such termination for cause. For the purpose of this
Section 13.4, the term “for cause” has the meaning set forth in the Participant’s employment agreement, if any, or otherwise means any discharge (or removal) for material or flagrant violation of the policies and procedures of
the Corporation or for other performance or conduct which is materially detrimental to the best interests of the Corporation, as determined by the Committee. 

13.5 Engaging in Competition With the Corporation. Any Award Agreement may provide that, if a Participant terminates employment (or service as a Non-Employee Board Director or Consultant) with the Corporation or an Affiliate for any reason whatsoever, and within a period of time (as specified in the Award Agreement) after the date thereof accepts employment
with any competitor of (or otherwise engages in competition with) the Corporation, the Committee, in its sole discretion, may require such Participant to return to the Corporation the economic value of any Award that is realized or obtained
(measured at the date of exercise, Vesting, or payment) by such Participant at any time during the period beginning on the date that is one year prior to the date of such Participant’s termination of employment (or service as a Non-Employee Board Director or Consultant) with the Corporation. 
 13.6 Other Corporation Benefit and Compensation
Programs. Payments and other benefits received by a Participant under an Award made pursuant to the Plan are not to be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination indemnity or severance
pay law of any state or country and will not be included in, or have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by the Corporation or an Affiliate unless expressly so provided
by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in
lieu of a portion of cash compensation. Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards, or payments under any other Corporation or Affiliate plans, arrangements, or programs. The Plan
notwithstanding, the Corporation or any Affiliate may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain, and reward employees and directors for their service with the Corporation
and its Affiliates. 

  
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 13.7 Securities Law Restrictions. No Shares may be issued under the Plan unless counsel for the
Corporation is satisfied that such issuance will be in compliance with applicable federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or registered securities association upon which the Common Stock is then listed or quoted, and any applicable
federal or state securities laws. The Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 

13.8 Continuing Restriction Agreement. Each Participant will, if requested by the Corporation and as a condition to issuance of Shares under the Plan
upon an Award or exercise of an Award granted under the Plan that results in the issuance of Shares, become a party to and be bound by a stock restriction or other agreement with the Corporation containing restrictions on transfer of Shares,
including a right of first refusal for the benefit of the Corporation, a market stand-off provision, and such other terms as the Corporation may reasonably require. 

13.9 Governing Law. Except with respect to references to the Code or federal securities laws, the Plan and all actions taken thereunder will be
governed by and construed in accordance with the laws of the state of Oregon, without regard to principles of conflict of laws. 
 As approved by the
shareholders of CytoDyn Inc. on December 12, 2012; and amended upon approval of the shareholders of CytoDyn Inc. on February 27, 2015; and further amended upon approval of the shareholders of CytoDyn Inc. on March 18, 2016; and
further amended upon approval of the shareholders of CytoDyn Inc. August 24, 2017; and further amended upon approval of the shareholders of CytoDyn Inc. May 22, 2019 

  
 18ex_178845.htm

Exhibit 4.13

 

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF 

THE SECURITIES EXCHANGE ACT OF 1934

 

As of December 31, 2019 JMP Group LLC (“JMP Group LLC,” “we,” “us” or the “Company”) had the following classes of securities registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) common shares representing limited liability company interests, $.001 par value per share (“Common Stock”), (ii) 6.875% Senior Notes due 2029 (“6.875% Notes”), (iii) 7.25% Senior Notes due 2027 (“7.25% Notes”), and (iv) Guarantees of 7.25% Senior Notes due 2027 (“Guarantees of Notes”). The Company’s Common Stock is listed on the New York Stock Exchange and each of the 6.875% Notes, 7.25% Notes and Guarantees of Notes are each listed on the Nasdaq Global Market.

 

Description of Common Shares

 

The following summary of the material features of our Common Shares does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of our Amended and Restated Limited Liability Company Agreement of JMP Group LLC, dated as of January 1, 2015, or the LLC Agreement, and other applicable law.

 

Pursuant to our LLC Agreement, we are currently authorized to issue 100,000,000 common shares and 10,000,000 preferred shares, in one or more series. The authorized common shares and preferred shares will be available for issuance without further action by our shareholders, unless such action is required by applicable law or the rules of any stock exchange. If the approval of our shareholders is not required, our board of directors may determine not to seek shareholder approval.

 

General 

 

Dividends

 

Subject to provisions of the Delaware Limited Liability Company Act, or the LLC Act, and to any future rights which may be granted to the holders of any series of our preferred shares, dividends are paid on our common shares when and as declared by our board of directors out of funds legally available for dividend payments.

 

Voting rights

 

Each holder of our common shares is entitled to one vote per share on all matters submitted to a vote of our common shareholders. Holders of our common shares are not entitled to cumulative voting rights.

 

Liquidation

 

If we are liquidated, holders of our common shares are entitled to receive all remaining assets available for distribution to shareholders after satisfaction of our liabilities and the preferential rights of any of our preferred shares that may be outstanding at that time.

 

Preemptive rights

 

The holders of our common shares do not have any preemptive, conversion or redemption rights by virtue of their ownership of the common shares.

 

Preferred Shares

 

Our preferred shares may be issued in one or more series, and our board of directors is authorized to determine the designation and to fix the number of shares of each series. Our board of directors is further authorized to fix and determine the dividend rate, premium or redemption rates, conversion rights, voting rights, preferences, privileges, restrictions and other variations granted to, or imposed upon, any wholly unissued series of our preferred shares. As of the date of this annual report on Form 10-K, no preferred shares are issued or outstanding.

 

 

 

 

 

Listing

 

Our Common Shares are listed on the New York Stock Exchange and trade under the symbol “JMP.”

 

Transfer Agent and Registrar

 

The Transfer Agent and Registrar for our common shares is American Stock Transfer & Trust Company, N.A.

 

Certain Anti-Takeover Matters

 

Our LLC Agreement includes a number of provisions that may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include:

 

Advance Notice Requirements

 

Our LLC Agreement establishes advance notice procedures with regard to shareholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our shareholders. These procedures provide that notice of such shareholder proposals must be timely and given in writing to our Secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days, or more than 120 days, prior to the first anniversary of the date on which the Company first mailed its proxy materials for the previous year’s annual meeting. The notice must contain certain information specified in the LLC Agreement.

 

No Written Consent of Shareholders

 

Our LLC Agreement requires all shareholder actions to be taken by a vote of the shareholders at an annual or special meeting, and does not permit our shareholders to act by written consent without a meeting.

 

Preferred Shares

 

Our LLC Agreement provides for 10,000,000 authorized preferred shares. The existence of authorized but unissued preferred shares may enable the board of directors to render more difficult or may discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary duties, the board of directors were to determine that a takeover proposal is not in our best interests, the board of directors could cause preferred shares to be issued without shareholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquiror or insurgent shareholder or shareholder group. In this regard, the LLC Agreement grants our board of directors’ broad power to establish the rights and preferences of authorized and unissued preferred shares. The issuance of preferred shares could decrease the amount of earnings and assets available for distribution to holders of common shares. The issuance may also adversely affect the rights and powers, including voting rights, of such holders and may have the effect of delaying, deterring or preventing a change of control of us.

 

Limitation of Liability and Indemnification Matters

 

Our LLC Agreement provides that our directors will not be liable to us or our shareholders for monetary damages for a breach of fiduciary duty as a director, except in certain cases where liability is mandated by the LLC Act. Our LLC Agreement also provides for indemnification, to the fullest extent permitted by law, by us of any person made, or threatened to be made a party to, or who is involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was our director or officer, or at our request, serves or served as a director or officer of any other enterprise, against all expenses, liabilities, losses and claims actually incurred or suffered by such person in connection with the action, suit or proceeding. Our LLC Agreement also provides that, to the extent authorized from time to time by our board of directors, we may provide indemnification to any one or more employees and other agents to the extent and effect determined by the board of directors to be appropriate and authorized by the LLC Act. Our LLC Agreement also permits us to purchase and maintain insurance for the foregoing and we expect to maintain such insurance.

 

2

 

 

Description of 6.875% Notes

 

The following summary of the terms of the 6.875% Notes and the associated indenture does not purport to be complete and is subject, and qualified in its entirety by reference, to the detailed provisions of the 6.875% Notes and the indenture, including the definitions of certain terms used in the indenture, which are filed as Exhibits to this annual report on Form 10-K. We urge you to read the indenture and the form of the note contained therein in their entirety, because those documents, and not this description, define your legal rights as a holder of the notes. The summary below is also qualified by provisions of applicable law.

 

General

 

The 6.875% Notes were issued in September 2019 pursuant to an underwritten public offering in an initial aggregate principal amount of $36,000,000. We may, without the consent of holders of the 6.875% Notes, increase the aggregate principal amount of the 6.875% Notes by issuing additional notes in the future on the same terms and conditions, except for any difference in the issue price and interest accrued prior to the issue date of the additional notes, and with the same CUSIP number as the 6.875% Notes, provided that such additional notes are fungible with the 6.875% Notes for U.S. federal income tax purposes. The 6.875% Notes and any additional notes would rank equally and ratably and would be treated as a single series of notes for all purposes under the indenture.

 

Listing

 

The 6.875% Notes were initially listed on the NYSE and trade under the symbol “JMPD.”In January 2020, the listing of the 7.25% Senior Notes was transferred to the Nasdaq Global Market and the ticker symbol was changed to “JMPNZ.”

 

Optional Redemption

 

We may, at our option, at any time and from time to time, on or after September 30, 2021, redeem the 6.875% Notes in whole or in part on not less than 30 nor more than 60 days’ prior notice mailed to the holders of the 6.875% Notes. The 6.875% Notes will be redeemable at a redemption price equal to 100% of the principal amount of the 6.875% Notes to be redeemed plus accrued and unpaid interest to, but not including, the date of redemption.

 

On and after any redemption date, interest will cease to accrue on the 6.875% Notes called for redemption. On or prior to any redemption date, we are required to deposit with a paying agent money sufficient to pay the redemption price of and accrued interest on the 6.875% Notes to be redeemed on such date. If we are redeeming less than all of the 6.875% Notes, the trustee under the indenture must select the 6.875% Notes to be redeemed by such method as the trustee deems fair and appropriate in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances.

 

 Interest

 

Interest on the 6.875% Notes will accrue at the rate of 6.875% per year from and including September 26, 2019, or the most recent interest payment date to which interest has been paid, and will be payable quarterly in arrears on each March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2019. We will pay interest to those persons who were holders of record of such notes on the 15th day of the month corresponding to an interest payment date: March 15, June 15, September 15 and December 15, the record date preceding each interest payment date. Interest on the 6.875% Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months. We will not provide a sinking fund for the 6.875% Notes.

 

3

 

 

If any interest payment date or the stated maturity date is not a business day, the payment otherwise required to be made on such date will be made on the next business day without any additional payment as a result of such delay. The term “business day” means, with respect to any note, any day, other than a Saturday, Sunday or any other day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. All payments will be made in U.S. dollars.

 

Ranking

 

The 6.875% Notes will be our general unsecured senior obligations that rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the 6.875% Notes. The 6.875% Notes will rank equally with all our other unsecured senior indebtedness. The 6.875% Notes will be effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The 6.875% Notes will also be effectively subordinated to all liabilities, including trade payables and lease obligations, of our subsidiaries. Any right by us to receive the assets of any of our subsidiaries upon a liquidation or reorganization of that subsidiary, and the consequent right of the holders of the 6.875% Notes to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinated to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary that is senior to that held by us.

 

Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the 6.875% Notes or to make any funds available for payment on the 6.875% Notes, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to us by our subsidiaries may be subject to statutory, contractual or other restrictions, may depend on the earnings or financial condition of our subsidiaries and are subject to various business considerations. As a result, we may be unable to gain significant, if any, access to the cash flow or assets of our subsidiaries.

 

The indenture does not limit the amount of additional indebtedness, including senior or secured indebtedness, which we can create, incur, assume or guarantee, nor does the indenture limit the amount of indebtedness or other liabilities that our subsidiaries can create, incur, assume or guarantee.

 

Maturity

 

The 6.875% Notes will mature on September 30, 2029.

 

Certain Covenants

 

Payment of Principal, Interest or Additional Amounts. The Company will duly and punctually pay the principal of and interest on and any additional amounts payable with respect to, the 6.875% Notes in accordance with their terms.

 

Maintenance of Office or Agency. The Company will be required to maintain an office or agency in each place of payment for the 6.875% Notes for notice and demand purposes and for the purposes of presenting or surrendering notes for payment, registration of transfer, or exchange.

 

Reports. So long as any notes are outstanding under the indenture, the Company will file with the trustee, within 30 days after the Company has filed the same with the SEC, unless such reports are available on the SEC’s EDGAR filing system (or any successor thereto), copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations.

 

4

 

 

Consolidation, Merger and Sale of Assets

 

The indenture provides that the Company may not directly or indirectly consolidate with or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets and properties and the assets and properties of its subsidiaries (taken as a whole) to another person in one or more related transactions unless the successor person is a person organized under the laws of any domestic jurisdiction and assumes the Company’s obligations on the 6.875% Notes and under the indenture, and after giving effect thereto no event of default, and no event that, after notice or lapse of time or both, would become an event of default, shall have occurred and be continuing, and that certain other conditions are met.

 

Events of Default, Notice and Waiver

 

The following are events of default under the indenture:

 

	 	
			●

				
			failure by us to pay the principal on any note when due, whether at maturity, upon redemption or otherwise;

			

 

	 	
			●

				
			failure by us to pay an installment of interest on any note when due, if the failure continues for 30 days after the date when due;

			

 

	 	
			●

				
			failure by us to comply with our obligations under “—Consolidation, Merger and Sale of Assets” above;

			

 

	 	
			●

				
			failure by us to comply with any other term, covenant or agreement contained in the 6.875% Notes or the indenture, if such failure is not cured within 60 days after notice to us by the trustee or to the trustee and us by holders of at least 25% in aggregate principal amount of the 6.875% Notes then outstanding, in accordance with the indenture;

			

  

	 	
			●

				
			a default by us or any of our significant subsidiaries in the payment when due, after the expiration of any applicable grace period, of principal of or interest on, indebtedness for money borrowed in the aggregate principal amount then outstanding of $10.0 million or more, or acceleration of our or any of our significant subsidiaries’ indebtedness for money borrowed in such aggregate principal amount then outstanding of $10.0 million or more so that it becomes due and payable before the date on which it would otherwise have become due and payable;

			

 

	 	
			●

				
			failure by us or any of our significant subsidiaries, within 30 days, to pay, bond or otherwise discharge any final, non-appealable judgments or orders for the payment of money the total uninsured amount of which for us or any of our significant subsidiaries exceeds $10.0 million, which are not stayed on appeal; and

			

 

	 	
			●

				
			certain events of bankruptcy, insolvency or reorganization with respect to us or any of our subsidiaries that is a “significant subsidiary” (as defined in Regulation S-X under the Exchange Act) or any group of our subsidiaries that in the aggregate would constitute a “significant subsidiary.”

			

 

If an event of default, other than an event of default referred to in the last bullet point above with respect to us (but including an event of default referred to in that bullet point solely with respect to a significant subsidiary, or group of subsidiaries that in the aggregate would constitute a significant subsidiary, of ours), has occurred and is continuing, either the trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the 6.875% Notes then outstanding, by notice to us and the trustee, may declare the principal of, and any accrued and unpaid interest on, all notes to be immediately due and payable. In the case of an event of default referred to in the last bullet point above with respect to us (and not solely with respect to a significant subsidiary, or group of subsidiaries that in the aggregate would constitute a significant subsidiary, of ours), the principal of, and accrued and unpaid interest on, all notes will automatically become immediately due and payable.

 

5

 

 

Notwithstanding the paragraph above, for the first 360 days immediately following an event of default relating to (i) our failure to file with the trustee pursuant to Section 314(a)(1) of the Trust Indenture Act any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act or (ii) our failure to comply with our reporting obligations to the trustee set forth under the heading “—Certain Covenants—Reports” above, the sole remedy for any such event of default shall be the accrual of additional interest on the 6.875% Notes at a rate per annum equal to (i) 0.25% of the outstanding principal amount of the 6.875% Notes for the first 180 days following the occurrence of such event of default and (ii) 0.50% of the outstanding principal amount of the 6.875% Notes for the next 180 days after the first 180 days following the occurrence of such event of default, in each case, payable quarterly at the same time and in the same manner as regular interest on the 6.875% Notes. This additional interest will accrue on all outstanding notes from, and including the date on which such event of default first occurs to, and including, the 360th day thereafter (or such earlier date on which such event of default shall have been cured or waived). In addition to the accrual of such additional interest, on and after the 360th day immediately following an event of default relating to such reporting obligations, either the trustee or the holders of not less than 25% in aggregate principal amount of the 6.875% Notes then outstanding may declare the principal amount of the 6.875% Notes and any accrued and unpaid interest through the date of such declaration, to be immediately due and payable.

 

After any acceleration of the 6.875% Notes, the holders of a majority in aggregate principal amount of the 6.875% Notes by written notice to the trustee, may rescind or annul such acceleration in certain circumstances, if:

 

	 	
			●

				
			the rescission would not conflict with any order or decree;

			

 

	 	
			●

				
			all events of default, other than the non-payment of accelerated principal or interest, have been cured or waived; and

			

 

	 	
			●

				
			certain amounts due to the trustee are paid.

			

 

Except as provided in the indenture, the holders of a majority of the aggregate principal amount of outstanding notes may, by notice to the trustee, waive any past default or event of default and its consequences, other than a default or event of default:

 

	 	
			●

				
			in the payment of principal of, or interest on, any note; or

			

 

	 	
			●

				
			in respect of any provision under the indenture that cannot be modified or amended without the consent of the holders of each outstanding note affected.

			

 

We will promptly notify the trustee upon our becoming aware of the occurrence of any default or event of default. In addition, the indenture requires us to furnish to the trustee, on an annual basis, a statement by our officers stating whether they have actual knowledge of any default or event of default by us in performing any of our obligations under the indenture or the 6.875% Notes and describing any such default or event of default. If a default or event of default has occurred and the trustee has received notice of the default or event of default in accordance with the indenture, except as described in the following sentence, the trustee must mail to each registered holder of notes a notice of the default or event of default within 30 days after receipt of the notice. The trustee need not mail the notice if the default or event of default:

 

	 	
			●

				
			has been cured or waived; or

			

 

	 	
			●

				
			is not in the payment or delivery of any amounts due (including principal or interest) with respect to any note and the trustee in good faith determines that withholding the notice is in the best interests of the holders.

			

 

Limitation on Suits

 

The indenture limits the right of holders of the 6.875% Notes to institute legal proceedings. No holder will have the right to bring a claim under the indenture unless:

 

	 	
			●

				
			the holder has previously given written notice to the trustee that an event of default with respect to the 6.875% Notes is continuing;

			

 

6

 

 

	 	
			●

				
			the holders of not less than 25% of the aggregate outstanding principal amount of the 6.875% Notes shall have made a written request to the trustee to pursue the claim and furnished the trustee, if requested, security or an indemnity satisfactory to the trustee against any loss, liability or expense;

			

 

	 	
			●

				
			the trustee does not comply within 60 days of receipt of the request and the offer of security or indemnity; and

			

 

	 	
			●

				
			during such 60-day period, no direction inconsistent with a request has been given to the trustee by the holders of a majority of the aggregate principal amount of the 6.875% Notes.

			

 

Subject to the indenture, applicable law and the trustee’s rights to indemnification, the holders of a majority in aggregate principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.

 

Discharge, Defeasance and Covenant Defeasance

 

The indenture provides, with respect to the 6.875% Notes, that the Company may satisfy and discharge its obligations under the 6.875% Notes and the indenture if:

 

(a) all notes previously authenticated and delivered, with certain exceptions, have been accepted by the trustee for cancellation; or

 

(b) (i) the 6.875% Notes have become due and payable, or mature within one year, or all of them are to be called for redemption within one year under arrangements satisfactory to the trustee for giving the notice of redemption and the Company irrevocably deposits in trust with the trustee, as trust funds solely for the benefit of the holders of such notes, for that purpose, money or governmental obligations or a combination thereof sufficient (in the opinion of a nationally recognized independent registered public accounting firm expressed in a written certification thereof delivered to the trustee) to pay the entire indebtedness on the 6.875% Notes to maturity or redemption, as the case may be, and pays all other sums payable by it under the indenture; and

 

(ii) the Company delivers to the trustee an officers’ certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in the indenture relating to the satisfaction and discharge of the indenture have been complied with.

 

Notwithstanding such satisfaction and discharge, the obligations of the Company to compensate and indemnify the trustee, to pay additional amounts, if any, in respect of the 6.875% Notes in certain circumstances and the obligations of the Company and the trustee to hold funds in trust and to apply such funds pursuant to the terms of the indenture, with respect to issuing temporary notes, with respect to the registration, transfer and exchange of notes, with respect to the replacement of mutilated, destroyed, lost or stolen notes and with respect to the maintenance of an office or agency for payment, shall in each case survive such satisfaction and discharge.

 

Unless inapplicable to the 6.875% Notes pursuant to the terms thereof, the indenture provides that (i) the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the 6.875% Notes, and the provisions of the indenture will, except as noted below, no longer be in effect with respect to the 6.875% Notes (“defeasance”) and (ii) (1) the Company may omit to comply with the covenant under “—Consolidation, Merger and Sale of Assets” and any other additional covenants established pursuant to the terms of the 6.875% Notes, and such omission shall be deemed not to be an event of default under the third or fourth bullet point of the first paragraph of “—Events of Default, Notice and Waiver” and (2) the occurrence of any event described in the fifth bullet point of the first paragraph of “—Events of Default, Notice and Waiver” shall not be deemed to be an event of default, in each case with respect to the outstanding notes ((1) and (2) of this clause (ii), “covenant defeasance”); provided that the following conditions shall have been satisfied with respect to such series:

 

7

 

 

(a) the Company has irrevocably deposited in trust with the trustee as trust funds solely for the benefit of the holders of the 6.875% Notes, for payment of the principal of and interest of the 6.875% Notes, money or government obligations or a combination thereof sufficient (in the opinion of a nationally recognized independent registered public accounting firm expressed in a written certification thereof delivered to the trustee) without consideration of any reinvestment to pay and discharge the principal of and accrued interest on the outstanding notes of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the trustee), as the case may be;

 

(b) such defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under, the indenture or any other material agreement or instrument to which the Company is a party or by which it is bound;

 

(c) no event of default or event which with notice or lapse of time would become an event of default with respect to the 6.875% Notes shall have occurred and be continuing on the date of such deposit;

 

(d) the Company shall have delivered to such trustee an opinion of counsel as described in the indenture to the effect that the holders of the 6.875% Notes will not recognize income, gain or loss for federal income tax purposes as a result of the Company’s exercise of its option under this provision of the indenture and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance or covenant defeasance had not occurred;

 

(e) the Company has delivered to the trustee an officers’ certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in the indenture relating to the defeasance contemplated have been complied with;

 

(f) if the 6.875% Notes are to be redeemed prior to their maturity, notice of such redemption shall have been duly given or in another manner satisfactory to the trustee; and

  

(g) any such defeasance or covenant defeasance shall comply with any additional or substitute terms provided for by the terms of the 6.875% Notes.

 

Notwithstanding a defeasance or covenant defeasance, the Company’s obligations with respect to the following in respect of the 6.875% Notes will survive with respect to the 6.875% Notes until otherwise terminated or discharged under the terms of the indenture or no notes are outstanding:

 

(a) the rights of holders of outstanding notes to receive payments in respect of the principal of, interest on or additional amounts, if any, payable in respect of, such notes when such payments are due from the trust referred in clause (a) in the preceding paragraph;

 

(b) the issuance of temporary notes, the registration, transfer and exchange of notes, the replacement of mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and holding payments in trust;

 

(c) the rights, powers, trusts, duties and immunities of the trustee, and the Company’s obligations in connection therewith; and

 

(d) the defeasance or covenant defeasance provisions of the indenture.

 

Modification and Waiver

 

The indenture provides that supplements to the indenture and the applicable supplemental indentures may be made by the Company and the trustee for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture or of modifying in any manner the rights of the holders of notes, with the consent of the holders of a majority in principal amount of the outstanding notes; provided that no such supplemental indenture may, without the consent of the holder of each note affected thereby, among other things:

 

8

 

 

(a) change the stated maturity of the principal of, or any interest or additional amounts on, such notes, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest or any additional amounts thereon, or change in the ranking provisions of the indenture in any way that adversely affects the rights of any holders of the 6.875% Notes, or change the redemption provisions or adversely affect the right of repayment at the option of the holder, or change the place of payment or currency in which the principal of or any interest or additional amounts with respect to any note is payable, or impair or affect the right of any holder of notes to institute suit for the payment after such payment is due (except a rescission and annulment of acceleration with respect to the 6.875% Notes by the holders of at least a majority in aggregate principal amount of the then-outstanding notes of such series and a waiver of the payment default that resulted from such acceleration);

 

(b) reduce the percentage of outstanding notes, the consent of the holders of which is required for any such supplemental indenture, or the consent of whose holders is required for any waiver or reduce the quorum required for voting; or

 

(c) modify any of the provisions of the sections of the indenture relating to supplemental indentures with the consent of the holders, waivers of defaults or securities redeemed in part, except to increase any such percentage or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of each holder affected thereby.

 

The indenture provides that a supplemental indenture that changes or eliminates any covenant or other provision of the indenture that has been included expressly and solely for the benefit of one or more particular series of securities, or that modifies the rights of the holders of the securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under the indenture of the holders of securities of any other series.

  

The indenture provides that the Company and the trustee may, without the consent of the holders of notes, enter into additional supplemental indentures for one of the following purposes:

 

	 	
			●

				
			to evidence the succession of another person to the Company and the assumption by any such successor of the covenants of the Company in the indenture and in the 6.875% Notes;

			

 

	 	
			●

				
			to add to the covenants of the Company or to surrender any right or power conferred on the Company pursuant to the indenture;

			

 

	 	
			●

				
			to establish the form and terms of the 6.875% Notes as permitted by the indenture;

			

 

	 	
			●

				
			to evidence and provide for a successor trustee under the indenture or to provide for or facilitate the administration of the trusts under the indenture by more than one trustee;

			

 

	 	
			●

				
			to cure any ambiguity, to correct or supplement any provision in the indenture that may be defective or inconsistent with any other provision of the indenture or to make any other provisions with respect to matters or questions arising under the indenture; provided that no such action pursuant to this clause shall adversely affect the interests of the holders of notes in any material respect;

			

 

	 	
			●

				
			to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of the 6.875% Notes under the indenture;

			

 

	 	
			●

				
			to add any additional events of default with respect to the 6.875% Notes;

			

 

	 	
			●

				
			to supplement any of the provisions of the indenture as may be necessary to permit or facilitate the defeasance and discharge of the 6.875% Notes, provided that such action does not adversely affect the interests of any holder of an outstanding note in any material respect;

			

 

	 	
			●

				
			to make provisions with respect to the conversion or exchange rights of holders of notes;

			

 

	 	
			●

				
			to pledge to the trustee as security for the 6.875% Notes any property or assets;

			

 

	 	
			●

				
			to add guarantees in respect of the 6.875% Notes;

			

 

9

 

 

	 	
			●

				
			to provide for certificated notes in addition to or in place of global notes;

			

 

	 	
			●

				
			to qualify the indenture under the Trust Indenture Act of 1939, as amended;

			

 

	 	
			●

				
			to conform the text of the indenture or the 6.875% Notes to any provision of this “Description of Notes”, to the extent that such provision, in the good faith judgment of the Company, was intended to be a verbatim recitation of a provision of the indenture or such notes; or

			

 

	 	
			●

				
			to make any other change that does not adversely affect the rights of holders of notes in any material respect.

			

 

Trustee

 

The trustee for the 6.875% Notes is U.S. Bank National Association. We have appointed the trustee as the paying agent and registrar with regard to the 6.875% Notes. The indenture permits the trustee to deal with us and any of our affiliates with the same rights the trustee would have if it were not trustee. However, under the Trust Indenture Act, if the trustee acquires any conflicting interest and there exists a default with respect to the 6.875% Notes, the trustee must eliminate the conflict or resign. The trustee and its affiliates have in the past provided and may from time to time in the future provide banking and other services to us in the ordinary course of their business.

  

The holders of a majority in aggregate principal amount of the 6.875% Notes then outstanding have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, subject to certain exceptions. If an event of default occurs and is continuing, the trustee must exercise its rights and powers under the indenture using the same degree of care and skill as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The indenture does not obligate the trustee to exercise any of its rights or powers at the request or demand of the holders, unless the holders have provided the trustee with such indemnity that is reasonably satisfactory to the trustee against the costs, expenses and liabilities that the trustee may incur to comply with the request or demand, subject to certain conditions.

 

Denominations, Interest, Registration and Transfer

 

The 6.875% Notes are issued in registered form, without interest coupons, in denominations of integral multiples of $25 principal amount, in the form of global securities. We will not impose a service charge in connection with any transfer or exchange of any note.

 

Global Notes; Book-Entry Form

 

Global notes will be deposited with the trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of DTC or a nominee of DTC.

 

Beneficial interests in a global note may be held directly through DTC if the holder is a participant in DTC or indirectly through organizations that are participants in DTC.

 

Except in the limited circumstances described below and in “—Certificated Securities,” holders of notes were not be entitled to receive notes in certificated form. Unless and until it is exchanged in whole or in part for certificated securities, each global note may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.

 

We applied to DTC for acceptance of the global securities in its book-entry settlement system. The custodian and DTC will electronically record the principal amount of notes represented by global securities held within DTC. Beneficial interests in the global securities will be shown on records maintained by DTC and its direct and indirect participants, including Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”). Investors may elect to hold interests in the global notes through either DTC in the U.S. or Clearstream or Euroclear in Europe if they are participants of such systems, or indirectly through organizations which are participants in such systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold such interests in customers’ securities accounts in the depositaries’ names on the books of DTC.

 

10

 

 

So long as DTC or its nominee is the registered owner or holder of a global note, DTC or such nominee will be considered the sole owner or holder of the 6.875% Notes represented by such global note for all purposes under the indenture and the 6.875% Notes. No owner of a beneficial interest in a global note will be able to transfer such interest except in accordance with DTC’s applicable procedures and the applicable procedures of its direct and indirect participants. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. These limitations and requirements may impair the ability to transfer or pledge beneficial interests in a global note.

 

Payments of principal and interest under each global note will be made to DTC or its nominee as the registered owner of such global note. We expect that DTC or its nominee, upon receipt of any such payment, will immediately credit DTC participants’ accounts with payments proportional to their respective beneficial interests in the principal amount of the relevant global note as shown on the records of DTC. We also expect that payments by DTC participants to owners of beneficial interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants, and none of us, the trustee, the custodian or any paying agent or registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in any global note or for maintaining or reviewing any records relating to such beneficial interests.

 

      DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities deposited with it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, which eliminates the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers (including the underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the depository. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The ownership interest and transfer of ownership interests of each beneficial owner or purchaser of each security held by or on behalf of DTC are recorded on the records of the direct and indirect participants. The DTC rules applicable to its participants are on file with the SEC.

 

Clearstream advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations (“Clearstream Participants”) and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides Clearstream Participants with, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier). Clearstream Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant, either directly or indirectly.

 

Distributions with respect to interests in the 6.875% Notes held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures, to the extent received by the U.S. Depositary for Clearstream.

 

11

 

 

Euroclear advises that it was created in 1968 to hold securities for participants of Euroclear (“Euroclear Participants”) and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the “Euroclear Operator”), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.

 

The Euroclear Operator has advised us that it is regulated and examined by the Belgian Banking and Finance Commission.

 

Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear, and applicable Belgian law (collectively, the “Euroclear Terms and Conditions”). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Euroclear Terms and Conditions only on behalf of Euroclear Participants, and has no records of or relationship with persons holding through Euroclear Participants.

 

Distributions with respect to the 6.875% Notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Euroclear Terms and Conditions.

 

The information in this section concerning DTC, DTC’s book-entry system, Clearstream and Euroclear has been obtained from sources that we believe to be reliable, but we and the underwriters take no responsibility for the accuracy or completeness thereof.

 

None of the Company, the trustee or the underwriters will be liable or responsible for DTC, Euroclear or Clearstream.

 

Certificated Securities

 

The trustee will exchange beneficial interests in a global note for one or more certificated securities registered in the name of the owner of the beneficial interest, as identified by DTC, only if:

 

	 	
			●

				
			DTC notifies us that it is unwilling or unable to continue as depositary for that global note or ceases to be a clearing agency registered under the Exchange Act and, in either case, we do not appoint a successor depositary within 120 days;

			

 

	 	
			●

				
			we, at our option, notify the trustee that we have elected to cause the issuance of notes in definitive form under the indenture; or

			

 

	 	
			●

				
			an event of default has occurred and is continuing.

			

 

Settlement and Payment

 

We will make payments in respect of notes represented by global securities by wire transfer of immediately available funds to DTC or its nominee as registered owner of the global securities.

 

We expect the 6.875% Notes will trade in DTC’s Same-Day Funds Settlement System, and DTC will require all permitted secondary market trading activity in the 6.875% Notes to be settled in immediately available funds. We expect that secondary trading in any certificated securities will also be settled in immediately available funds.

 

12

 

 

Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

 

Although DTC has agreed to the above procedures to facilitate transfers of interests in the global securities among DTC participants, DTC is under no obligation to perform or to continue those procedures, and those procedures may be discontinued at any time. None of us, the underwriters or the trustee will have any responsibility for the performance by DTC or its direct or indirect participants of their respective obligations under the rules and procedures governing their operations.

 

Governing Law

 

The indenture and the 6.875% Notes will be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state.

 

 

Description of 7.25% Notes and Guarantee

 

The following summary of the terms of the 7.25% Notes and the associated indenture does not purport to be complete and is subject, and qualified in its entirety by reference, to the detailed provisions of the 7.25% Notes and the indenture, including the definitions of certain terms used in the indenture, which are filed as Exhibits to this annual report on Form 10-K. We urge you to read the indenture and the form of the note contained therein in their entirety, because those documents, and not this description, define your legal rights as a holder of the 7.25% Notes. The summary below is also qualified by provisions of applicable law.

 

General

 

In November 2017, JMP Group Inc. completed an underwritten public offering of $50.0 million aggregate principal amount of 7.25% Senior Notes. We may, without the consent of holders of the notes, increase the aggregate principal amount of the notes by issuing additional notes in the future on the same terms and conditions, except for any difference in the issue price and interest accrued prior to the issue date of the additional notes, and with the same CUSIP number as the notes offered hereby, provided that such additional notes are fungible with the notes offered hereby for U.S. federal income tax purposes. The 7.25% Notes and any additional notes would rank equally and ratably and would be treated as a single series of notes for all purposes under the indenture.

 

Listing 

 

The 7.25% Senior Notes were initially listed on the NYSE and trade under the symbol “JMPD.” In January 2020, the listing of the 7.25% Senior Notes was transferred to the Nasdaq Global Market and the ticker symbol was changed to “JMPNL.”

 

Indenture

 

The 7.25% Senior Notes were issued pursuant to an existing indenture with U.S. Bank National Association, as trustee (the “Senior Indenture”). The existing indenture also covered 8.00% Senior Notes due 2023 (8.00% Notes”) that were issued in January 2023 by JMP Group, Inc.  The indenture contains customary events of default and cure provisions. If an uncured default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the 8.00% Notes or the 7.25% Senior Notes, as the case may be, may declare the respective notes immediately due and payable. The 7.25% Senior Notes do not contain any minimum liquidity covenant. In September 2019 JMP Group Inc. redeemed all of remaining issued and outstanding 8.00% Notes. In connection with such redemption JMP Group LLC deposited an amount with the trustee under the Indenture sufficient to pay and discharge all obligations with respect to the 8.00% Notes and the Indenture with respect to the 8.00% Notes was satisfied and discharged in accordance with its terms, and JMP Group Inc. and the guarantors party to the Indenture were released from their obligations under the Indenture with respect to the 8.00% Notes.

 

13

 

 

The indenture does not contain any provisions that would necessarily protect holders of notes if we become involved in a highly leveraged transaction, reorganization, merger or other similar transaction that adversely affects us or them.

 

Optional Redemption

 

We may, at our option, at any time and from time to time, on or after November 28, 2020, redeem the 7.25% Notes in whole or in part on not less than 30 nor more than 60 days’ prior notice mailed to the holders of the 7.25% Notes. The 7.25% Notes will be redeemable at a redemption price equal to 100% of the principal amount of the 7.25% Notes to be redeemed plus accrued and unpaid interest to, but not including, the date of redemption.

 

On and after any redemption date, interest will cease to accrue on the 7.25% Notes called for redemption. On or prior to any redemption date, we are required to deposit with a paying agent money sufficient to pay the redemption price of and accrued interest on the 7.25% Notes to be redeemed on such date. If we are redeeming less than all of the 7.25% Notes, the trustee under the indenture must select the 7.25% Notes to be redeemed by such method as the trustee deems fair and appropriate in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances.

 

Interest

 

Interest on the 7.25% Notes will accrue at the rate of 7.25% per year from and including November 28, 2017, or the most recent interest payment date to which interest has been paid, and will be payable quarterly in arrears on each February 15, May 15, August 15 and November 15 of each year, commencing on February 15, 2018. We will pay interest to those persons who were holders of record of such notes on the first day of the month corresponding to an interest payment date: February 1, May 1, August 1 and November 1, the record date preceding each interest payment date. Interest on the 7.25% Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months. We will not provide a sinking fund for the 7.25% Notes.

 

If any interest payment date or the stated maturity date is not a business day, the payment otherwise required to be made on such date will be made on the next business day without any additional payment as a result of such delay. The term “business day” means, with respect to any note, any day, other than a Saturday, Sunday or any other day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. All payments will be made in U.S. dollars.

 

Ranking

 

The 7.25% Notes will be our general unsecured senior obligations that rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the 7.25% Notes. The 7.25% Notes will rank equally with all our other unsecured senior indebtedness. The 7.25% Notes will be effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The 7.25% Notes will also be effectively subordinated to all liabilities, including trade payables and lease obligations, of our subsidiaries. Any right by us to receive the assets of any of our subsidiaries upon a liquidation or reorganization of that subsidiary, and the consequent right of the holders of the 7.25% Notes to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinated to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary that is senior to that held by us.

 

Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the 7.25% Notes or to make any funds available for payment on the 7.25% Notes, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to us by our subsidiaries may be subject to statutory, contractual or other restrictions, may depend on the earnings or financial condition of our subsidiaries and are subject to various business considerations. As a result, we may be unable to gain significant, if any, access to the cash flow or assets of our subsidiaries.

 

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The indenture does not limit the amount of additional indebtedness, including senior or secured indebtedness, which we can create, incur, assume or guarantee, nor does the indenture limit the amount of indebtedness or other liabilities that our subsidiaries can create, incur, assume or guarantee. As of September 30, 2017, we had $101.3 million aggregate principal amount of consolidated outstanding indebtedness, consisting of $46.0 million of our 8.00% Senior Notes, $48.3 million of our 7.25% Senior Notes and $7.0 million of borrowings under the CLO V warehouse facility. Our consolidated outstanding indebtedness does not include asset-backed securities of CLO III and CLO IV, which are consolidated in our financial statements, together with the loans collateralizing such securities of CLO III and CLO IV, for financial reporting purposes, even though CLO III and CLO IV are bankruptcy remote entities with no recourse to us.

 

Guarantees

 

JMP Group LLC, the ultimate parent of JMP Group Inc., and JMP Investment Holdings LLC, the direct parent of JMP Group Inc., will fully and unconditionally guarantee, on a senior unsecured basis, jointly and severally, to each holder of the 7.25% Notes and the trustee under the indenture, the full and prompt performance of the Company’s obligations under the 7.25% Notes, including the payment of principal of, premium, if any, and interest on the 7.25% Notes. Each guarantee will be a general senior unsecured obligation of that guarantor, rank equal in right of payment to all existing and future senior indebtedness of that guarantor, effectively subordinate in right of payment to all existing and future secured indebtedness of that guarantor to the extent of the value of the assets securing such indebtedness and senior in right of payment to any future subordinated indebtedness of that guarantor. As of September 30, 2017, the guarantors had $101.3 million aggregate principal amount of consolidated outstanding indebtedness, consisting of their guarantees with respect to the Senior Notes of JMP Group Inc. and borrowings under the CLO V warehouse facility described above. The guarantors have no other indebtedness, excluding intercompany indebtedness. The obligations of each guarantor will be released upon repayment in full of all the guaranteed obligations or the exercise by the Company of its defeasance or covenant defeasance or satisfaction and discharge options described below.

 

Maturity

 

The 7.25% Notes will mature on November 15, 2027.

 

Certain Covenants

 

Payment of Principal, Interest or Additional Amounts. The Company will duly and punctually pay the principal of and interest on and any additional amounts payable with respect to, the 7.25% Notes in accordance with their terms.

 

Maintenance of Office or Agency. The Company will be required to maintain an office or agency in each place of payment for the 7.25% Notes for notice and demand purposes and for the purposes of presenting or surrendering notes for payment, registration of transfer, or exchange.

 

Reports. So long as any notes are outstanding under the indenture, the Company will file with the trustee, within 30 days after the Company has filed the same with the SEC, unless such reports are available on the SEC’s EDGAR filing system (or any successor thereto), copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations.

 

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So long as JMP Group LLC remains a guarantor of the 7.25% Notes, the Company remains a wholly owned, directly or indirectly, subsidiary of JMP Group LLC and JMP Group LLC provides the condensed consolidating financial information required by, and otherwise complies with the disclosure requirements required under, SEC Regulation S-X Rule 3-10 (or any successor provision), the information, documents and other reports required to be filed and furnished to the trustee pursuant to this covenant may, at the option of the Company, be filed by and be those of JMP Group LLC rather than the Company.

 

Consolidation, Merger and Sale of Assets

 

The indenture provides that the Company may not directly or indirectly consolidate with or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets and properties and the assets and properties of its subsidiaries (taken as a whole) to another person in one or more related transactions unless the successor person is a person organized under the laws of any domestic jurisdiction and assumes the Company’s obligations on the 7.25% Notes and under the indenture, and after giving effect thereto no event of default, and no event that, after notice or lapse of time or both, would become an event of default, shall have occurred and be continuing, and that certain other conditions are met.

 

Events of Default, Notice and Waiver

 

The following are events of default under the indenture:

 

	 	
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			failure by us to pay the principal of on any note when due, whether at maturity, upon redemption or otherwise;

			

 

	 	
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			failure by us to pay an installment of interest on any note when due, if the failure continues for 30 days after the date when due;

			

 

	 	
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			failure by us to comply with our obligations under “—Consolidation, Merger and Sale of Assets” above;

			

 

	 	
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			failure by us or any guarantor to comply with any other term, covenant or agreement applicable to us or it contained in the 7.25% Notes or the indenture, if failure is not cured within 60 days after notice to us or such guarantor, as applicable, by the trustee or to the trustee and us or such guarantor, as applicable, by holders of at least 25% in aggregate principal amount of the 7.25% Notes then outstanding, in accordance with the indenture;

			

 

	 	
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			a default by us, any guarantor or any of our or its respective significant subsidiaries in the payment when due, after the expiration of any applicable grace period, of principal of or interest on, indebtedness for money borrowed in the aggregate principal amount then outstanding of $10.0 million or more, or acceleration of our, any guarantor’s or any of our or its significant subsidiaries’ indebtedness for money borrowed in such aggregate principal amount or more so that it becomes due and payable before the date on which it would otherwise have become due and payable;

			

 

	 	
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			failure by us, any guarantor or any of our or its respective significant subsidiaries, within 30 days, to pay, bond or otherwise discharge any final, non-appealable judgments or orders for the payment of money the total uninsured amount of which for us, such guarantor or any of our or its significant subsidiaries exceeds $10.0 million, which are not stayed on appeal;

			

 

	 	
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			certain events of bankruptcy, insolvency or reorganization with respect to us, any guarantor or any of our or its subsidiaries that is a “significant subsidiary” (as defined in Regulation S-X under the Exchange Act) or any group of our or its subsidiaries that in the aggregate would constitute a “significant subsidiary”; and

			

 

	 	
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			any guarantor denies or disaffirms in writing its obligations under the indenture or, except as permitted by the indenture, said obligations are determined to be unenforceable or invalid or shall for any reason cease to be in full force and effect.

			

 

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If an event of default, other than an event of default referred to in the second to last bullet point above with respect to us (but including an event of default referred to in that bullet point solely with respect to a significant subsidiary, or group of subsidiaries that in the aggregate would constitute a significant subsidiary, of ours), has occurred and is continuing, either the trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the 7.25% Notes then outstanding, by notice to us and the trustee, may declare the principal of, and any accrued and unpaid interest on, all notes to be immediately due and payable. In the case of an event of default referred to in the last bullet point above with respect to us (and not solely with respect to a significant subsidiary, or group of subsidiaries that in the aggregate would constitute a significant subsidiary, of ours), the principal of, and accrued and unpaid interest on, all notes will automatically become immediately due and payable.

 

Notwithstanding the paragraph above, for the first 360 days immediately following an event of default relating to (i) our failure to file with the trustee pursuant to Section 314(a)(1) of the Trust Indenture Act any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act or (ii) our failure to comply with our reporting obligations to the trustee set forth under the heading “—Certain Covenants—Reports” above, the sole remedy for any such event of default shall be the accrual of additional interest on the 7.25% Notes at a rate per annum equal to (i) 0.25% of the outstanding principal amount of the 7.25% Notes for the first 180 days following the occurrence of such event of default and (ii) 0.50% of the outstanding principal amount of the 7.25% Notes for the next 180 days after the first 180 days following the occurrence of such event of default, in each case, payable quarterly at the same time and in the same manner as regular interest on the 7.25% Notes. This additional interest will accrue on all outstanding notes from, and including the date on which such event of default first occurs to, and including, the 360th day thereafter (or such earlier date on which such event of default shall have been cured or waived). In addition to the accrual of such additional interest, on and after the 360th day immediately following an event of default relating to such reporting obligations, either the trustee or the holders of not less than 25% in aggregate principal amount of the 7.25% Notes then outstanding may declare the principal amount of the 7.25% Notes and any accrued and unpaid interest through the date of such declaration, to be immediately due and payable.

 

 

After any acceleration of the 7.25% Notes, the holders of a majority in aggregate principal amount of the 7.25% Notes by written notice to the trustee, may rescind or annul such acceleration in certain circumstances, if:

 

	 	
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			the rescission would not conflict with any order or decree;

			

 

	 	
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			all events of default, other than the non-payment of accelerated principal or interest, have been cured or waived; and

			

 

	 	
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			certain amounts due to the trustee are paid.

			

 

Except as provided in the indenture, the holders of a majority of the aggregate principal amount of outstanding notes may, by notice to the trustee, waive any past default or event of default and its consequences, other than a default or event of default:

 

	 	
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			in the payment of principal of, or interest on, any note; or

			

 

	 	
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			in respect of any provision under the indenture that cannot be modified or amended without the consent of the holders of each outstanding note affected.

			

 

We will promptly notify the trustee upon our becoming aware of the occurrence of any default or event of default. In addition, the indenture requires us to furnish to the trustee, on an annual basis, a statement by our officers stating whether they have actual knowledge of any default or event of default by us in performing any of our obligations under the indenture or the 7.25% Notes and describing any such default or event of default. If a default or event of default has occurred and the trustee has received notice of the default or event of default in accordance with the indenture, except as described in the following sentence, the trustee must mail to each registered holder of notes a notice of the default or event of default within 30 days after receipt of the notice. The trustee need not mail the notice if the default or event of default:

 

	 	
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			has been cured or waived; or

			

 

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			is not in the payment or delivery of any amounts due (including principal or interest) with respect to any note and the trustee in good faith determines that withholding the notice is in the best interests of the holders.

			

 

Limitation on Suits

 

The indenture limits the right of holders of the 7.25% Notes to institute legal proceedings. No holder will have the right to bring a claim under the indenture unless:

 

	 	
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			the holder has previously given written notice to the trustee that an event of default with respect to the 7.25% Notes is continuing;

			

 

	 	
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			the holders of not less than 25% of the aggregate outstanding principal amount of the 7.25% Notes shall have made a written request to the trustee to pursue the claim and furnished the trustee, if requested, security or an indemnity reasonably satisfactory to the trustee against any loss, liability or expense;

			

 

	 	
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			the trustee does not comply within 60 days of receipt of the request and the offer of security or indemnity; and

			

 

	 	
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			during such 60-day period, no direction inconsistent with a request has been given to the trustee by the holders of a majority of the aggregate principal amount of the 7.25% Notes.

			

 

Subject to the indenture, applicable law and the trustee’s rights to indemnification, the holders of a majority in aggregate principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.

 

Discharge, Defeasance and Covenant Defeasance

 

The indenture provides, with respect to the 7.25% Notes, that the Company may satisfy and discharge its obligations under the 7.25% Notes and the indenture if:

 

(a) all notes previously authenticated and delivered, with certain exceptions, have been accepted by the trustee for cancellation; or

 

(b) (i) the 7.25% Notes have become due and payable, or mature within one year, or all of them are to be called for redemption within one year under arrangements satisfactory to the trustee for giving the notice of redemption and the Company irrevocably deposits in trust with the trustee, as trust funds solely for the benefit of the holders of such notes, for that purpose, money or governmental obligations or a combination thereof sufficient (in the opinion of a nationally recognized independent registered public accounting firm expressed in a written certification thereof delivered to the trustee) to pay the entire indebtedness on the 7.25% Notes to maturity or redemption, as the case may be, and pays all other sums payable by it under the indenture; and

 

(ii) the Company delivers to the trustee an officers’ certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in the indenture relating to the satisfaction and discharge of the indenture have been complied with.

 

Notwithstanding such satisfaction and discharge, the obligations of the Company to compensate and indemnify the trustee, to pay additional amounts, if any, in respect of the 7.25% Notes in certain circumstances and the obligations of the Company and the trustee to hold funds in trust and to apply such funds pursuant to the terms of the indenture, with respect to issuing temporary notes, with respect to the registration, transfer and exchange of notes, with respect to the replacement of mutilated, destroyed, lost or stolen notes and with respect to the maintenance of an office or agency for payment, shall in each case survive such satisfaction and discharge.

 

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Unless inapplicable to the 7.25% Notes pursuant to the terms thereof, the indenture provides that (i) the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the 7.25% Notes, and the provisions of the indenture will, except as noted below, no longer be in effect with respect to the 7.25% Notes (“defeasance”) and (ii) (1) the Company may omit to comply with the covenant under “—Consolidation, Merger and Sale of Assets” and any other additional covenants established pursuant to the terms of the 7.25% Notes, and such omission shall be deemed not to be an event of default under the third or fourth bullet point of the first paragraph of “—Events of Default, Notice and Waiver” and (2) the occurrence of any event described in the fifth bullet point of the first paragraph of “—Events of Default, Notice and Waiver” shall not be deemed to be an event of default, in each case with respect to the outstanding notes ((1) and (2) of this clause (ii), “covenant defeasance”); provided that the following conditions shall have been satisfied with respect to such series:

 

(a) the Company has irrevocably deposited in trust with the trustee as trust funds solely for the benefit of the holders of the 7.25% Notes, for payment of the principal of and interest of the 7.25% Notes, money or government obligations or a combination thereof sufficient (in the opinion of a nationally recognized independent registered public accounting firm expressed in a written certification thereof delivered to the trustee) without consideration of any reinvestment to pay and discharge the principal of and accrued interest on the outstanding notes of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the trustee), as the case may be;

 

(b) such defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under, the indenture or any other material agreement or instrument to which the Company is a party or by which it is bound;

 

(c) no event of default or event which with notice or lapse of time would become an event of default with respect to the 7.25% Notes shall have occurred and be continuing on the date of such deposit;

 

(d) the Company shall have delivered to such trustee an opinion of counsel as described in the indenture to the effect that the holders of the 7.25% Notes will not recognize income, gain or loss for Federal income tax purposes as a result of the Company’s exercise of its option under this provision of the indenture and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance or covenant defeasance had not occurred;

 

(e) the Company has delivered to the trustee an officers’ certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in the indenture relating to the defeasance contemplated have been complied with;

 

(f) if the 7.25% Notes are to be redeemed prior to their maturity, notice of such redemption shall have been duly given or in another manner satisfactory to the trustee; and

 

(g) any such defeasance or covenant defeasance shall comply with any additional or substitute terms provided for by the terms of the 7.25% Notes.

 

Notwithstanding a defeasance or covenant defeasance, the Company’s obligations with respect to the following in respect of the 7.25% Notes will survive with respect to the 7.25% Notes until otherwise terminated or discharged under the terms of the indenture or no notes are outstanding:

 

(a) the rights of holders of outstanding notes to receive payments in respect of the principal of, interest on or additional amounts, if any, payable in respect of, such notes when such payments are due from the trust referred in clause (a) in the preceding paragraph;

 

(b) the issuance of temporary notes, the registration, transfer and exchange of notes, the replacement of mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and holding payments in trust;

 

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(c) the rights, powers, trusts, duties and immunities of the trustee, and the Company’s obligations in connection therewith; and

 

(d) the defeasance or covenant defeasance provisions of the indenture.

 

Modification and Waiver

 

The indenture provides that supplements to the indenture and the applicable supplemental indentures may be made by the Company and the trustee for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture or of modifying in any manner the rights of the holders of notes, with the consent of the holders of a majority in principal amount of the outstanding notes; provided that no such supplemental indenture may, without the consent of the holder of each note affected thereby, among other things:

 

(a) change the stated maturity of the principal of, or any interest or additional amounts on, such notes, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest or any additional amounts thereon, or change in the ranking provisions of the indenture in any way that adversely affects the rights of any holders of the 7.25% Notes, or change the redemption provisions or adversely affect the right of repayment at the option of the holder, or change the place of payment or currency in which the principal of or any interest or additional amounts with respect to any note is payable, or impair or affect the right of any holder of notes to institute suit for the payment after such payment is due (except a rescission and annulment of acceleration with respect to the 7.25% Notes by the holders of at least a majority in aggregate principal amount of the then-outstanding notes of such series and a waiver of the payment default that resulted from such acceleration);

 

(b) reduce the percentage of outstanding notes, the consent of the holders of which is required for any such supplemental indenture, or the consent of whose holders is required for any waiver or reduce the quorum required for voting; or

 

(c) modify any of the provisions of the sections of the indenture relating to supplemental indentures with the consent of the holders, waivers of defaults or securities redeemed in part, except to increase any such percentage or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of each holder affected thereby.

 

The indenture provides that a supplemental indenture that changes or eliminates any covenant or other provision of the indenture that has been included expressly and solely for the benefit of one or more particular series of securities, or that modifies the rights of the holders of the securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under the indenture of the holders of securities of any other series.

 

The indenture provides that the Company and the trustee may, without the consent of the holders of notes, enter into additional supplemental indentures for one of the following purposes:

 

	 	
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			to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company in the indenture and in the 7.25% Notes;

			

 

	 	
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			to add to the covenants of the Company or to surrender any right or power conferred on the Company pursuant to the indenture;

			

 

	 	
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			to establish the form and terms of the 7.25% Notes as permitted by the indenture;

			

 

	 	
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			to evidence and provide for a successor trustee under the indenture or to provide for or facilitate the administration of the trusts under the indenture by more than one trustee;

			

 

	 	
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			to cure any ambiguity, to correct or supplement any provision in the indenture that may be defective or inconsistent with any other provision of the indenture or to make any other provisions with respect to matters or questions arising under the indenture; provided that no such action pursuant to this clause shall adversely affect the interests of the holders of notes in any material respect;

			

 

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			to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of the 7.25% Notes under the indenture;

			

 

	 	
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			to add any additional events of default with respect to the 7.25% Notes;

			

 

	 	
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			to supplement any of the provisions of the indenture as may be necessary to permit or facilitate the defeasance and discharge of the 7.25% Notes, provided that such action does not adversely affect the interests of any holder of an outstanding note in any material respect;

			

 

	 	
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			to make provisions with respect to the conversion or exchange rights of holders of notes;

			

 

	 	
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			to pledge to the trustee as security for the 7.25% Notes any property or assets;

			

 

	 	
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			to add guarantees in respect of the 7.25% Notes;

			

 

	 	
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			to provide for certificated notes in addition to or in place of global notes;

			

 

	 	
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			to qualify the indenture under the Trust Indenture Act of 1939, as amended;

			

 

	 	
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			to conform the text of the indenture or the 7.25% Notes to any provision of this “Description of Notes”, to the extent that such provision, in the good faith judgment of the Company, was intended to be a verbatim recitation of a provision of the indenture or such notes; or

			

 

	 	
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			to make any other change that does not adversely affect the rights of holders of notes in any material respect.

			

 

Trustee

 

The trustee for the 7.25% Notes is U.S. Bank National Association. We have appointed the trustee as the paying agent and registrar with regard to the 7.25% Notes. The indenture permits the trustee to deal with us and any of our affiliates with the same rights the trustee would have if it were not trustee. However, under the Trust Indenture Act, if the trustee acquires any conflicting interest and there exists a default with respect to the 7.25% Notes, the trustee must eliminate the conflict or resign. The trustee and its affiliates have in the past provided or may from time to time in the future provide banking and other services to us in the ordinary course of their business.

 

The holders of a majority in aggregate principal amount of the 7.25% Notes then outstanding have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, subject to certain exceptions. If an event of default occurs and is continuing, the trustee must exercise its rights and powers under the indenture using the same degree of care and skill as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The indenture does not obligate the trustee to exercise any of its rights or powers at the request or demand of the holders, unless the holders have provided the trustee with such indemnity that is reasonably satisfactory to the trustee against the costs, expenses and liabilities that the trustee may incur to comply with the request or demand, subject to certain conditions.

 

Denominations, Interest, Registration and Transfer

 

The 7.25% Notes will be issued in registered form, without interest coupons, in denominations of integral multiples of $25 principal amount, in the form of global securities. We will not impose a service charge in connection with any transfer or exchange of any note.

 

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Global Notes; Book-Entry Form

 

Global notes will be deposited with the trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of DTC or a nominee of DTC.

 

Beneficial interests in a global note may be held directly through DTC if the holder is a participant in DTC or indirectly through organizations that are participants in DTC.

 

Except in the limited circumstances described below and in “—Certificated Securities,” holders of notes will not be entitled to receive notes in certificated form. Unless and until it is exchanged in whole or in part for certificated securities, each global note may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.

 

We will apply to DTC for acceptance of the global securities in its book-entry settlement system. The custodian and DTC will electronically record the principal amount of notes represented by global securities held within DTC. Beneficial interests in the global securities will be shown on records maintained by DTC and its direct and indirect participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, société anonyme (“Clearstream”). Investors may elect to hold interests in the global notes through either DTC in the U.S. or Clearstream or Euroclear in Europe if they are participants of such systems, or indirectly through organizations which are participants in such systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold such interests in customers’ securities accounts in the depositaries’ names on the books of DTC.

 

So long as DTC or its nominee is the registered owner or holder of a global note, DTC or such nominee will be considered the sole owner or holder of the 7.25% Notes represented by such global note for all purposes under the indenture and the 7.25% Notes. No owner of a beneficial interest in a global note will be able to transfer such interest except in accordance with DTC’s applicable procedures and the applicable procedures of its direct and indirect participants. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. These limitations and requirements may impair the ability to transfer or pledge beneficial interests in a global note.

 

Payments of principal and interest under each global note will be made to DTC or its nominee as the registered owner of such global note. We expect that DTC or its nominee, upon receipt of any such payment, will immediately credit DTC participants’ accounts with payments proportional to their respective beneficial interests in the principal amount of the relevant global note as shown on the records of DTC. We also expect that payments by DTC participants to owners of beneficial interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants, and none of us, the trustee, the custodian or any paying agent or registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in any global note or for maintaining or reviewing any records relating to such beneficial interests.

 

DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities deposited with it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, which eliminates the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers (including the underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the depository. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The ownership interest and transfer of ownership interests of each beneficial owner or purchaser of each security held by or on behalf of DTC are recorded on the records of the direct and indirect participants.

 

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Clearstream advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations (“Clearstream Participants”) and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier). Clearstream Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant, either directly or indirectly.

 

Distributions with respect to interests in the 7.25% Notes held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures, to the extent received by the U.S. Depositary for Clearstream.

 

Euroclear advises that it was created in 1968 to hold securities for participants of Euroclear (“Euroclear Participants”) and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the “Euroclear Operator”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.

 

Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear, and applicable Belgian law (collectively, the “Euroclear Terms and Conditions”). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Euroclear Terms and Conditions only on behalf of Euroclear Participants, and has no records of or relationship with persons holding through Euroclear Participants.

 

Distributions with respect to the 7.25% Notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Euroclear Terms and Conditions.

 

The information in this section concerning DTC, DTC’s book-entry system, Clearstream and Euroclear has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof.

 

Neither we nor the trustee will be liable or responsible for DTC, Euroclear or Clearstream.

 

Certificated Securities

 

The trustee will exchange beneficial interests in a global note for one or more certificated securities registered in the name of the owner of the beneficial interest, as identified by DTC, only if:

 

	 	
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			DTC notifies us that it is unwilling or unable to continue as depositary for that global note or ceases to be a clearing agency registered under the Exchange Act and, in either case, we do not appoint a successor depositary within 120 days;

			

 

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			●

				
			we, at our option, notify the trustee that we have elected to cause the issuance of notes in definitive form under the indenture; or

			

 

	 	
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			an event of default has occurred and is continuing.

			

 

Settlement and Payment

 

We will make payments in respect of notes represented by global securities by wire transfer of immediately available funds to DTC or its nominee as registered owner of the global securities.

 

We expect the 7.25% Notes will trade in DTC’s Same-Day Funds Settlement System, and DTC will require all permitted secondary market trading activity in the 7.25% Notes to be settled in immediately available funds. We expect that secondary trading in any certificated securities will also be settled in immediately available funds.

 

Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

 

Although DTC has agreed to the above procedures to facilitate transfers of interests in the global securities among DTC participants, DTC is under no obligation to perform or to continue those procedures, and those procedures may be discontinued at any time. None of us, the underwriters or the trustee will have any responsibility for the performance by DTC or its direct or indirect participants of their respective obligations under the rules and procedures governing their operations.

 

Governing Law

 

The indenture and the 7.25% Notes are governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state.

 

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