Document:

ex10-28.htm

Exhibit 10.28

 

THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

 

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.

Option to Purchase

	
2,000,000 shares

	
Option Number 2

Common Stock Purchase Option

of

MedCAREERS GROUP, INC.

THIS CERTIFIES that Garret Armes, or any subsequent permitted holder hereof (“Holder”) has the right to purchase from MedCAREERS GROUP, INC., a Nevada Company (the “Company”), up to 2,000,000 fully paid and nonassessable shares, of the Company's common stock, $0.001 par value per share (“Common Stock”), subject to adjustment as provided herein, at a price equal to the Exercise Price as defined in Section 3 below, at any time during the Term of this Option (as defined below).

Holder agrees with the Company that this Option to Purchase Common Stock of the Company (this “Option” or this “Agreement”) is issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions set forth herein.

1.           Date of Issuance and Term.

This Option shall be deemed to be issued on November 18, 2010 (“Date of Issuance”).  The term of this Option begins on the Date of Issuance and ends at 5:00 p.m., Central Standard Time, on the fifth anniversary date of the Date of Issuance (the “Term”).  This Option was issued in connection with Holder’s employment agreement.

2.           Exercise.

(a) Manner of Exercise. During the Term, this Option may be Exercised, but only to the extent the Option has vested pursuant to Section 11 below, as to all or any lesser number of full shares of Common Stock covered hereby (the “Option Shares” or the “Shares”) upon surrender of this Option, with the Notice of Exercise Form attached

  

 

  

hereto as Exhibit A (the “Notice of Exercise”) duly completed and executed, together with the full Exercise Price (as defined below, which may be satisfied by either a Cash Exercise or a Cashless Exercise, as each is defined below, for each share of Common Stock as to which this Option is Exercised, at the office of the Company, Attn: CEO and delivered to such location as the Company may then be located or such other office or agency as the Company may designate in writing, by overnight mail, by facsimile (such surrender and payment of the Exercise Price hereinafter called the “Exercise” of this Option).   In the case of a Cashless Exercise, the Exercise Price is deemed to have been delivered upon the Holder’s delivery of a Notice of Exercise to the Company.

(b)  Date of Exercise.  The “Date of Exercise” of the Option shall be defined as the date that a copy of the Notice of Exercise Form attached hereto as Exhibit A, completed and executed, is sent by facsimile to the Company or its transfer agent (“Transfer Agent”) (including but not limited to a scanned “PDF” file which is delivered as an attachment to an e-mail to the Company), provided that the original Option (if delivery of the original Option is required pursuant to Section 2(k) hereof) and Notice of Exercise Form are received by the Company and the Exercise Price is satisfied, each as soon as practicable thereafter.  Alternatively, the Date of Exercise shall be defined as the date the original Notice of Exercise Form is received by the Company, if Holder has not sent advance notice by facsimile.  Upon delivery of the Notice of Exercise Form to the Company by facsimile or otherwise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Option Shares with respect to which this Option has been exercised, irrespective of the date delivery of the certificates evidencing such Option Shares are made.  The Company shall deliver any objection to any Notice of Exercise within five (5) Business Days of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error.  "Business Day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of Atlanta, Georgia are authorized or required by law or executive order to remain closed.

(c)  Delivery of Common Stock Upon Exercise.  Within ten (10) Trading Days from the delivery to the Company of the Notice of Exercise, surrender of this Option (if required) and payment of the aggregate Exercise Price (which, in the case of a Cashless Exercise, shall be deemed to have been paid upon the submission by the Holder of a Notice of Exercise)(the “Option Shares Delivery Deadline”), the Company shall issue and deliver (or cause its transfer agent so to issue and deliver) in accordance with the terms hereof to or upon the order of the Holder that number of shares of Common Stock (“Exercise Shares”) for the portion of this Option converted as shall be determined in accordance herewith.  Upon the Exercise of this Option or any part thereof, the Company shall, at its own cost and expense, take all necessary action, which shall not include obtaining and delivering an opinion of counsel to assure that the Company's transfer agent shall issue stock certificates in the name of Holder (or its nominee) or such other persons as designated by Holder and in such denominations to be specified at Exercise representing the number of shares of Common Stock issuable upon such Exercise, which action shall be the sole responsibility of Holder. The Company warrants that no

  

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instructions other than these instructions have been or will be given to the transfer agent of the Company's Common Stock and that, unless waived by the Holder, in the event the Exercise Shares are eligible to be issued without legend pursuant to Rule 144 under the Securities Act of 1933, as amended (the “1933 Act” or the “Securities Act”) in the reasonable determination of the Company’s counsel, upon receipt from the Holder of an opinion of counsel as to the fact that such Exercise Shares are eligible to be issued without legend, the Exercise Shares will be free-trading, and freely transferable, and will not contain a legend restricting the resale or transferability of the Exercise Shares if the Unrestricted Conditions (as defined below) are met, and the Holder has supplied the Company with an opinion of counsel as to such fact, acceptable to the Company, which acceptance shall not be unreasonably withheld.

(d)  Maximum Interest Rate.  Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

(e)  Revocation of Exercise Upon Delivery Failure.  In addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Exercise Shares by the Option Shares Delivery Deadline, the Holder will be entitled to revoke all or part of the relevant Notice of Exercise by delivery of a notice to such effect to the Company whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the delivery of such notice.

(f)  Legends.

(i) Restrictive Legend. The Holder understands that (a) the Option and, (b) until such time as Exercise Shares have been registered under the 1933 Act, if ever, or, may be sold pursuant to Rule 144 under the 1933 Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Exercise Shares, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY

  

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SATISFACTORY TO COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

(ii) Removal of Restrictive Legends.  Certificates evidencing the Exercise Shares shall not contain any legend restricting the transfer thereof (including the legend set forth above in subsection 2(f)(i)): (i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any valid and applicable sale of such Exercise Shares pursuant to Rule 144, which determination shall be made in the sole determination of the Company’s counsel, provided that the Company may request an opinion from Holder as to the applicability of such rule, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Securities and Exchange Commission (the “Commission”), which determination shall be made in the sole determination of the Company’s counsel (collectively, the “Unrestricted Conditions”). If the Unrestricted Conditions are met at the time of issuance or resale of Exercise Shares, then such Exercise Shares shall be issued free of all legends.

(iii) Sale of Unlegended Shares.  Holder agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 2(f)(i) above is predicated upon the Company’s reliance that the Holder will sell any Exercise Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

(g) Cancellation of Option.  This Option shall be cancelled upon the full Exercise of this Option, and, as soon as practical after the Date of Exercise, Holder shall be entitled to receive Common Stock for the number of shares purchased upon such Exercise of this Option, and if this Option is not Exercised in full, Holder shall be entitled to receive a new Option (containing terms identical to this Option) representing any unexercised portion of this Option in addition to such Common Stock.

(h)  Holder of Record.  Each person in whose name any Option for shares of Common Stock is issued shall, for all purposes, be deemed to be the Holder of record of such shares on the Date of Exercise of this Option, irrespective of the date of delivery of the Common Stock purchased upon the Exercise of this Option.  Nothing in this Option shall be construed as conferring upon Holder any rights as a stockholder of the Company.

(i)  Delivery of Electronic Shares.   In lieu of delivering physical certificates representing the unlegended shares of Common Stock issuable upon Exercise (the “Unlegended Shares”), provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon written request of the Holder, so long as the certificates therefor do not bear a legend, and are not required to bear a legend, and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall cause its

  

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transfer agent to electronically transmit the Unlegended Shares to the Holder by crediting the account of the Holder's broker with DTC identified in the written request through its Deposit Withdrawal Agent Commission (“DWAC”) system. Otherwise, delivery of the Common Stock shall be by physical delivery to the address specified by the Holder in the Notice of Exercise.  The time periods for delivery and liquidated damages described herein shall apply to the electronic transmittals described herein, or to physical delivery, whichever is applicable.

(j)  Surrender of Option Upon Exercise; Book-Entry.  Notwithstanding anything to the contrary set forth herein, upon Exercise of this Option in accordance with the terms hereof, the Holder shall not be required to physically surrender the original Option Certificate to the Company unless all of this Option is Exercised, in which case such Holder shall deliver the original Option being Exercised to the Company promptly following the Date of Exercise at issue.  Partial exercises of this Option resulting in purchases of a portion of the total number of Option Shares available hereunder shall have the effect of lowering the outstanding number of Option Shares purchasable hereunder in an amount equal to the applicable number of Option Shares purchased.  The Holder and the Company shall maintain records showing the amount of this Option that is so Exercised and the dates of such Exercises or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this original Option upon each such Exercise.  In the event of any dispute or discrepancy, such records of the Holder shall be controlling and determinative in the absence of manifest error.  The Holder and any assignee, by acceptance of this Option, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Option Shares hereunder, the number of Option Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

3. Exercise Price.  The Exercise Price (“Exercise Price”) shall be $0.25 per share, subject to adjustment pursuant to the terms hereof, including but not limited to Section 5 below.  Payment of the Exercise Price may be made by either of the following or a combination thereof, at the election of holder:

(i)                 Cash Exercise: The Holder may exercise this Option in cash, via bank or cashiers check or via wire transfer (a “Cash Exercise”); or

(ii)                 Cashless Exercise:  The Holder, at its option, in the event the Market Price (defined below) of the Company’s Common Stock is greater than the Exercise Price, may exercise this Option in one or more cashless exercise transactions, subject to the following sentence.  In the event a registration statement is in effect which relates to some or all of the Option Shares, the Holder shall be required to affect a Cash Exercise of this Option until such time as the Holder has extinguished the full number of registered Option Shares, at which time the Holder shall be eligible for a Cashless Exercise for the remaining unregistered Option Shares, if any. In order to effect a Cashless Exercise, the Holder shall surrender this Option at the principal office of the Company together with notice of cashless election, in which event the Company shall

  

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issue Holder a number of shares of Common Stock computed using the following formula (a “Cashless Exercise”), assuming that the Exercise Price is less than the Market Price (as defined below):

X = Y (A-B)/A

where:                    X = the number of shares of Common Stock to be issued to Holder.

Y = the number of shares of Common Stock for which this Option is being Exercised.

A = the Market Price of one (1) share of Common Stock (for purposes of this Section 3(ii), where “Market Price,” as of any date, means the Closing Price (as defined herein) of the Company’s Common Stock during the five (5) consecutive Trading Day period immediately preceding the date of Exercise, or other applicable date).

B = the applicable Exercise Price.

As used herein, the “Closing Price” for any security as of any date means the closing sales price on the principal trading market for such security, the closing sales price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or, if no closing sales price is reported for such security, the average of the closing bid and ask price for such security on the principal securities exchange or trading market where such security is listed or traded, or if applicable as listed in the “pink sheets” by the National Quotation Bureau, Inc.  “Trading Day” shall mean any day on which the Common Sock is traded for any period on the principal securities exchange or other securities market on which the Common Stock is then being traded.

For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and acknowledged that the Common Stock issuable upon Exercise of this Option in a Cashless Exercise transaction shall be deemed to have been acquired at the time this Option was issued.  Moreover, it is intended, understood and acknowledged that the holding period for the Common Stock issuable upon Exercise of this Option in a Cashless Exercise transaction shall be deemed to have commenced on the date this Option was issued.

 

4.           Transfer and Registration.

Subject to the provisions of Section 8 of this Option, this Option may be transferred on the books of the Company, in whole or in part, in person or by attorney, upon surrender of this Option properly completed and endorsed.  This Option shall be cancelled upon such surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be entitled to receive a new Option or Options as to the

  

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portion of this Option transferred, and Holder shall be entitled to receive a new Option as to the portion hereof retained.

5.           Adjustments; Additional Adjustments; Purchase Rights.

(a)  Recapitalization or Reclassification.  If the Company shall at any time prior to end of the Term, effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or smaller number of shares (each a “Recapitalization”), then upon the effective date thereof, the number of shares of Common Stock which Holder shall be entitled to purchase upon Exercise of this Option shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such recapitalization, reclassification or similar transaction, and the applicable Exercise Price shall be, in the case of an increase in the number of shares, proportionally decreased and, in the case of a decrease in the number of shares, proportionally increased.  The Company shall give Holder the same notice it provides to holders of Common Stock of any transaction described in this Section 5(a).

 (b)  Exercise Price Adjusted.  As used in this Option, the term “Exercise Price” shall mean the applicable purchase price per share specified in Section 3 of this Option, until the occurrence of an event stated in this Section 5 or otherwise set forth in this Option, and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsection.  No such adjustment under this Section 5 shall be made unless such adjustment would change the applicable Exercise Price at the time by $.01 or more; provided, however, that all adjustments not so made shall be deferred and made when the aggregate thereof would change the applicable Exercise Price at the time by $.01 or more. No adjustment made pursuant to any provision of this Section 5 shall have the net effect of increasing the applicable Exercise Price in relation to the split adjusted and distribution adjusted price of the Common Stock.

(c)  Adjustments: Additional Shares, Securities or Assets.  In the event that at any time, as a result of an adjustment made pursuant to this Section 5 or otherwise, Holder shall, upon Exercise of this Option, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5.

(d)  Subdivision or Combination of Common Stock.  If the Company at any time prior to the end of the Term subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares represented by this

  

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Option shall proportionally increase.  If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares represented by this Option shall proportionally decrease.

6.           Fractional Interests.

No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of this Option, but on Exercise of this Option, Holder may purchase only a whole number of shares of Common Stock.  If, on Exercise of this Option, Holder would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon Exercise shall be the next closest number of whole shares.

7.           Reservation of Shares.

From and after the date hereof, the Company shall at all times reserve for issuance such number of authorized and unissued shares of Common Stock (or other securities substituted therefor as herein above provided) equal to 100% (the “Minimum Option Share Reservation Amount”) of such number as shall be sufficient for the Exercise of this Option and payment of the Exercise Price in full. If at any time the number of shares of Common Stock authorized and reserved for issuance is below 100% of the number of shares sufficient for the Exercise of this Option (a “Share Authorization Failure”)(based on the Exercise Price in effect from time to time), the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company's obligations under this Section 7, in the case of an insufficient number of authorized shares, and using its best efforts to obtain stockholder approval of an increase in such authorized number of shares such that the number of shares authorized and reserved for the Exercise of this Option shall exceed the Minimum Option Share Reservation Amount. The Company covenants and agrees that upon the Exercise of this Option, all shares of Common Stock issuable upon such Exercise shall be duly and validly issued, fully paid, nonassessable and not subject to liens, claims, preemptive rights, rights of first refusal or similar rights of any person or entity.

8.           Restrictions on Transfer.

(a) Registration or Exemption Required.  This Option has been issued in a transaction exempt from the registration requirements of the Act by virtue of Regulation D of the 1933 Act. The Option and the Common Stock issuable upon the Exercise of this Option may not be transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Act and

  

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applicable state laws.

(b) Assignment.  If Holder can provide the Company with reasonably satisfactory evidence that the conditions above regarding registration or exemption have been satisfied, Holder may sell, transfer, assign, pledge or otherwise dispose of this Option, in whole or in part. Holder shall deliver a written notice to Company, substantially in the form of the Assignment attached hereto as Exhibit B, indicating the person or persons to whom the Option shall be assigned and the respective number of options to be assigned to each assignee. The Company shall effect the assignment within ten (10) days of receipt of such notice, and shall deliver to the assignee(s) designated by Holder an Option or Options of like tenor and terms for the appropriate number of shares.

 

9.           Noncircumvention.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Option, and will at all times in good faith carry out all the provisions of this Option and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Option above the Exercise Price then in effect, and (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Option.

10.           Remedies, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Option, if any, shall be cumulative and in addition to all other remedies available under this Option, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder right to pursue actual damages for any failure by the Company to comply with the terms of this Option.  The Company acknowledges that a breach by it of its obligations hereunder could cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Option could seek, in addition to all other available remedies, an injunction restraining any breach.

11.           Vesting.  This option shall vest at the rate of 1/3 each year (1,333,333 option shares) on each of the following three anniversary dates of this Agreement provided that Holder is still employed by the Company on said anniversary.  If Holder voluntarily resigns from his employment, any vested options shall remain in effect for a period of one year after said resignation.  If the Holder’s employment is terminated for cause, then the vested options shall be exercisable within 90 days of said termination after which time the options shall terminate.  Vesting of the options shall accelerate as to all options if: (a) Holder is employed at the time of one of the following triggering events: (i) there is a change of control whereby 50% or more of the Company’s common stock is acquired by a third party; or (ii) substantially all of the assets of the Nurses

  

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Lounge business unit are acquired by a third party in an arms-length transaction.  Only vested options may be Exercised by Holder.  The preceding vesting schedules refers to any options that are validly assigned even if Holder is no longer the Holder.  Any options that will be the terms hereof will never vest shall be terminated and cancelled.

12.           Dispute Resolution. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Option Shares issuable upon any exercise of this Option, the Company shall promptly issue to the Holder the number of Option Shares that are not disputed and resolve such dispute in accordance with this subsection.  In the case of a dispute as to the determination of the closing price or the Closing Price of the Company’s Common Stock or the arithmetic calculation of the Exercise Price, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within five (5) Business Days of receipt, or deemed receipt, of the Notice of Exercise or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within five (5) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within five (5) Business Days submit via facsimile (i) the disputed determination of the closing price or the Closing Price of the Company’s Common Stock to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld, or (ii), the disputed arithmetic calculation of the Exercise Price to the Company’s independent, outside accountant or (or any other matter referred to above that is not expressly designated to the independent investment bank or the independent outside accountant pursuant to an expert attorney from a nationally recognized outside law firm (having at least 50 attorneys and having with no prior relationship with the Company) selected by the Company and approved by the Holder. The Company, at the Company’s expense, shall cause the investment bank or the accountant, law firm, or other expert, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error (collectively, the “Dispute Resolution Procedures”).

13.            Benefits of this Option.

Nothing in this Option shall be construed to confer upon any person other than the Company and Holder any legal or equitable right, remedy or claim under this Option and this Option shall be for the sole and exclusive benefit of the Company and Holder.

14.           Governing Law.

All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the

 

  

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interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of Atlanta, Georgia or the State in which the Holder resides.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Atlanta, Georgia or the state where the Holder resides for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  The parties hereby waive all rights to a trial by jury.  If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

15.           Loss of Option.

Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Option, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of this Option, if mutilated, the Company shall execute and deliver a new Option of like tenor and date.

16.           Notice or Demands.

Notices or demands pursuant to this Option to be given or made by Holder to or on the Company shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, until another address is designated in writing by the Company, to the address set forth in Section 2(a) above. Notices or demands pursuant to this Option to be given or made by the Company to or on Holder shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to the address of Holder set forth in the Company’s records, until another address is designated in writing by Holder.

17.           Amendment.  This Option may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

  

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18.           Capacity.   Each signatory below confirms and acknowledges that they have received valid authorization and that each respective party has authorized such signatory to sign this Option on such party’s behalf.

19.           Entire Agreement.   This Agreement is the entire and fully integrated agreement of the parties regarding the subject matter hereof, and there are no oral representations, warranties, agreements, or promises pertaining to this Agreement.

20.           Effect of Facsimile and Photocopied Signatures. This Option may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Option or any counterpart hereof to produce or account for any of the other counterparts.  A copy of this Option signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original.  A photocopy of this Option shall be effective as an original for all purposes.

IN WITNESS WHEREOF, the undersigned has executed this Option effective as of November 18, 2010.

	  	
MedCAREERS GROUP, INC.

	  	  
	  	
By:________________________

	  	  
	  	
Chief Executive Officer

 

HOLDER:

By:_/s/ Garret Armes__________________________

If entity named above:

Print Name of Signatory:_____________________________________

Signature of Signatory:______________________________________

Signatory’s Position With Entity:_______________________________                                                                                                                 

  

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EXHIBIT A

NOTICE OF EXERCISE FORM FOR OPTION

TO:  MedCAREERS GROUP, INC.

The undersigned hereby irrevocably Exercises the right to purchase ____________ of the shares of Common Stock (the “Common Stock”) of MedCAREERS GROUP, INC., a Nevada Company (the “Company”), evidenced by the attached option (Option #____, the “Option”), and herewith makes payment of the applicable Exercise price with respect to such shares in full, all in accordance with the conditions and provisions of said Option.

1.           The undersigned agrees not to offer, sell, transfer or otherwise dispose of any of the Common Stock obtained on Exercise of the Option, except in accordance with the applicable provisions of the Option.

2.           The undersigned requests that stock certificates for such shares be issued free of any restrictive legend, if appropriate, and an option representing any unexercised portion hereof be issued, pursuant to the Option in the name of the undersigned and delivered to the undersigned at the address set forth below:

Dated:________

Signature

Print Name

Address

NOTICE

The signature to the foregoing Notice of Exercise Form must correspond to the name as written upon the face of the attached Option in every particular, without alteration or enlargement or any change whatsoever.

  

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EXHIBIT B

ASSIGNMENT

(To be executed by the registered holder

desiring to transfer the Option)

FOR VALUE RECEIVED, the undersigned holder of the attached option (Option #____, the “Option”) hereby sells, assigns and transfers unto the person or persons below named the right to purchase _______ shares of the Common Stock of MedCAREERS GROUP, Inc., a Nevada Company, with an exercise price of $______ per share, evidenced by the attached Option and does hereby irrevocably constitute and appoint _______________________ attorney to transfer the said Option on the books of the Company, with full power of substitution in the premises.

	
Dated:

	
____________

	
______________________________

	  	  	
Signature

Fill in for new registration of Option:

	
___________________________________

	  	
Name

	
___________________________________

	  	
Address

	  
	
___________________________________

	
Please print name and address of assignee

	
(including zip code number)

NOTICE

The signature to the foregoing Assignment must correspond to the name as written upon the face of the attached Option in every particular, without alteration or enlargement or any change whatsoever.

Page 14 of 14axr8k083013exh10.htm

SETTLEMENT AGREEMENT

 

This Agreement (“Agreement”) is entered into this 30th day of August, 2013 (“Effective Date”), by and between AMREP Corporation (“AMREP”) and the Pension Benefit Guaranty Corporation (“PBGC”, and collectively with AMREP, “Parties”).

 

WITNESSETH

 

WHEREAS, PBGC is a wholly-owned United States government corporation established under section 4002 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), 29 U.S.C. § 1302 (2006 & Supp. IV 2011) to administer the pension plan termination insurance program created by Title IV of ERISA, 29 U.S.C. §§ 1301-1461; and

 

WHEREAS, AMREP is a corporation incorporated under the laws of the state of Oklahoma; and

 

WHEREAS, AMREP is, and has been at all relevant times, the contributing sponsor (as that term is defined in 29 U.S.C. § 1301(a)(13)) of the Retirement Plan for Employees of AMREP Corporation (“Pension Plan” or “Plan”); and

 

WHEREAS AMREP admits that (i) on April 21, 2010 (“First Event Date”), it ceased operations, within the meaning of 29 U.S.C. § 1362(e), at its facility located in Louisville, Colorado and, as a result of such cessation, more than 20% of the Plan’s participants were separated from employment (“First Cessation of Operations”); and (ii) on January 31, 2011 (“Second Event Date”), it ceased operations, within the meaning of 29 U.S.C. § 1362(e), at its facility located in Mount Morris, Illinois and, as a result of such cessation, more than 20% of the Plan’s participants were separated from employment (“Second Cessation of Operations”, and collectively with the First Cessation of Operations, “Cessations of Operations”); and

 

WHEREAS, PBGC asserts that the Cessations of Operations are events described in ERISA §4062(e), and that AMREP and any other members of its controlled group (as defined in ERISA §4001(a)(14)) (AMREP or any other such member, a “Controlled Group Member”) are therefore subject to the provisions of ERISA §4063 and liable thereunder to PBGC with respect to the Plan; and

 

WHEREAS, PBGC has informed AMREP that AMREP’s initial liability under ERISA §4063(b) as a result of the Cessations of Operations was $11,688,437 (“Liability”); and

 

WHEREAS, on August 13, 2012, the Parties entered into that certain Tolling and Forbearance Agreement whereby, inter alia, they agreed to the following terms:

 

	
i.     

	
AMREP will make all minimum funding contributions to the Plan required under 26 U.S.C. §§ 412 and 430 (including 26 U.S.C. § 430(j)(3)) during the Forbearance Period, as defined below.  Additionally, AMREP (a) would make a cash contribution to the Plan in the amount of $3,000,000 within ten days; and (b) could, at its sole discretion at any time, make one or more further cash contributions to the Plan;

 

  

  

  

  

 

 

	
ii.     

	
Any contributions to the Plan above and beyond the minimum required contributions made by AMREP (“Excess Contributions”) would have the effect of reducing dollar for dollar the Liability then outstanding, and will first be applied towards the Liability on account of the First Cessation of Operations;

 

	
iii.     

	
AMREP would not elect any pre-funding balances pursuant to 26 U.S.C. § 430(f)(6)(B) for any Excess Contributions made to the Plan;

 

	
iv.     

	
Absent material breaches of the Tolling and Forbearance Agreement, PBGC would forbear from taking any action against AMREP on account of the Cessations of Operations until August 13, 2013 (“Forbearance Period”);

 

	
v.     

	
With respect to each Cessation of Operations, the running of the termination period provided in 29 U.S.C. § 1363(c)(2), (c)(3) is tolled for the duration of the Forbearance Period, and that AMREP shall not assert or rely on the termination period provided in 29 U.S.C. § 1363(c)(2), (c)(3), as a defense against PBGC’s enforcement of 29 U.S.C. §§ 1362(e), 1363 against it with respect to any Cessation of Operations; and

 

	
vi.     

	
During the Forbearance Period, AMREP may engage in negotiations with PBGC to resolve the remaining Liability owed; and

 

WHEREAS, on August 16, 2012, AMREP made a $3,000,000 contribution to the Plan and did not elect a pre-funding balance pursuant to 26 U.S.C. § 430(f)(6)(B); and

 

WHEREAS, AMREP made $425,929 in Excess Contributions during the Forbearance Period and did not elect a pre-funding balance pursuant to 26 U.S.C. § 430(f)(6)(B); and

 

WHEREAS, AMREP has made all minimum required contributions to the Plan during the Forbearance Period; and

 

WHEREAS, as a result of the payments made by AMREP as described above, the amount of Liability remaining as of the Effective Date is $8,262,508; and

 

WHEREAS, in lieu of PBGC attempting to apply the provisions of subsections 4063(b), (c) or (d) of ERISA, 29 U.S.C. § 1363(b), (c) and (d), or otherwise enforcing against AMREP such liability that has resulted from the Cessations of Operations, PBGC and AMREP have reached an understanding with respect to such Liability which takes into account the contributions made during the Forbearance Period as described above; and

 

NOW THEREFORE, AMREP and PBGC, for good and valuable consideration set out herein, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

 

  

  

  

  

1.           Contributions to the Plan

 

1.1           In addition to making all minimum funding contributions to the Plan required under 26 U.S.C. §§ 412 and 430 (including 26 U.S.C. § 430(j)(3)) for each plan year for which any Additional Contribution (as defined below) is made (all such minimum funding contributions, collectively, “Required Contributions”), (a) AMREP shall, or AMREP shall cause one or more its direct or indirect subsidiaries to, make a cash contribution to the Plan in the amount of $3,243,008 (“Mandatory Additional Contribution”) within ten (10) days of the Effective Date, and (b) AMREP may, or AMREP may cause one or more its direct or indirect subsidiaries to, in AMREP’s sole discretion at any time, make one or more further cash contributions to the Plan (“Optional Additional Contributions”, and collectively with the Mandatory Additional Contribution, “Additional Contributions”).

 

1.2           AMREP shall not at any time elect under 26 U.S.C. § 430(f)(6)(B) to create or increase the Plan’s prefunding balance (as defined in 26 U.S.C. § 430(f)(6)) by using (a) all or any portion of any Additional Contributions, or (b) all or any portion of any excess described in 26 U.S.C. § 430(f)(6)(B) that is directly or indirectly attributable to any Additional Contributions. AMREP’s obligation not to make such an election with respect to any Additional Contributions is continuing and will survive termination of this Agreement.

 

1.3           AMREP agrees that in the event that it makes an election prohibited under Section 1.2, it will be liable to PBGC in the amount so elected, such liability will be immediately due and payable upon such election without notice or demand, and any sums collected on account of any such liability shall be deposited by PBGC in the trust of the Plan.  Any such liability will be in addition to all other obligations of AMREP under this Agreement.

 

1.4           Each Additional Contribution made by AMREP will have the effect of reducing dollar for dollar the Liability then outstanding, and will first be applied towards the Liability on account of the First Cessation of Operations.

 

2.           Mortgage Securities

 

2.1           To secure any unpaid amounts of the Liability, AMREP will, on or before the thirtieth (30th) day following the Effective Date, execute first lien mortgages in favor of PBGC (“Original PBGC Mortgages”) on the real properties described in Exhibit A hereto (“Original Mortgaged Properties”), which are currently appraised at $10,039,000.

 

2.2           The Liability shall at all times be secured by PBGC Mortgages (as defined in Section 2.4 below) on the Mortgaged Properties (as defined in Section 2.4 below).  The appraised value of the Mortgaged Properties as stated in the Annual Appraisals (as defined in Section 2.3 below) (such appraised value, “Appraised Value”), after subtracting the amount of any encumbrances on the Mortgaged Properties senior in priority to the PBGC Mortgages, shall at all times be at least two times the amount of the Liability then outstanding.

 

If, at any time, the Appraised Value of the Mortgaged Properties, after subtracting the amount of any encumbrances on the Mortgaged Properties senior in priority to the PBGC Mortgages, exceeds two times the amount of the Liability then outstanding (after deducting the amount of any Sale Contribution (as defined in Section 2.5 below) expected pursuant to a sale of 

 

  

  

  

  

Mortgaged Property notified by AMREP to PBGC as contemplated by Section 2.4 below), AMREP may in its sole discretion identify Mortgaged Properties to be released from the PBGC Mortgages (“Released Properties”) such that, following such release, the Appraised Value of the Mortgaged Properties remaining subject to the PBGC Mortgages, after subtracting the amount of any encumbrances on such Mortgaged Properties senior in priority to the PBGC Mortgages, exceeds two times the amount of the Liability then outstanding (after deducting the amount of any Sale Contribution expected pursuant to a sale of Mortgaged Property notified by AMREP to PBGC as contemplated by Section 2.4 below).  AMREP shall provide to PBGC a recordable discharge and release of the PBGC Mortgages with respect to any Released Properties.  PBGC will promptly confirm AMREP’s compliance with this Section 2.2 and promptly execute and record each discharge and release the PBGC Mortgages with respect to any Released Properties; provided that, PBGC shall not be required to execute and record a discharge and release of the PBGC Mortgages with respect to a Released Property that is being sold pursuant to Section 2.4 below until the Closing Date thereof.  PBGC agrees to promptly execute such other documents as may be necessary to effect and evidence the termination, discharge and release of the PBGC Mortgages with respect to a Released Property.

 

2.3           AMREP will provide to PBGC updated appraisals of the Mortgaged Properties on each anniversary of the Effective Date (the most recent appraisals of the Mortgaged Properties provided to PBGC (including, as applicable, the appraisals provided to PBGC prior to the Effective Date), “Annual Appraisals”).  If at any time the Appraised Value of the Mortgaged Properties, after subtracting the amount of any encumbrances on the Mortgaged Properties senior in priority to the PBGC Mortgages, is less than two times the amount of the Liability then outstanding, AMREP will make a top-up payment to the Pension Plan in the amount equal to half of the difference between two times the amount of the Liability then outstanding and the Appraised Value of the Mortgaged Properties (“Top-Up Payment”).  For example, if the Liability then outstanding is $5,000,000 and the Annual Appraisals state that the Appraised Value of the Mortgaged Properties is $9,000,000, AMREP shall make a Top-Up Payment of $500,000 to the Plan.  PBGC shall notify AMREP in writing that a Top-Up Payment is required which shall include the amount required to be remitted to the Plan.  AMREP shall make the Top-Up Payment in the amount specified by PBGC within ten (10) days of the date the PBGC notification is received by AMREP.

 

2.4           If AMREP chooses to sell any of the Mortgaged Properties at any time or in any combination during the duration of this Agreement, AMREP shall use its commercially reasonable efforts to notify PBGC of the sale(s) at least forty-five (45) days prior to the date the sale(s) is (are) expected to close (“Closing Date”).  If necessary to comply with Section 2.2 (after deducting the amount of any Sale Contribution expected pursuant to a sale of Mortgaged Property notified by AMREP to PBGC as contemplated by this Section 2.4 from the Liability then outstanding), AMREP will use its commercially reasonable efforts to provide to PBGC at least thirty (30) days prior to the Closing Date current appraisals of replacement properties that AMREP proposes will secure the remaining Liability then outstanding (“Replacement Properties”).  PBGC, in its sole discretion, will determine whether the Replacement Properties are acceptable additional security for the Liability then outstanding.  If the Replacement Properties are acceptable to PBGC, AMREP will provide PBGC with first lien mortgages (“Replacement PBGC Mortgages”, collectively with the Original PBGC Mortgages, “PBGC Mortgages”) on such Replacement Properties (“Replacement Mortgaged Properties”, collectively 

 

  

  

  

  

with the Original Mortgaged Properties, “Mortgaged Properties”) at least ten (10) days prior to the Closing Date.   The Replacement PBGC Mortgages shall contain the same terms and conditions as the Original PBGC Mortgages.

 

If any of the Mortgaged Properties are listed for sale by AMREP and AMREP expects that the Closing Date may take place in less than forty-five (45) days (“Expedited Closing Date”), AMREP will immediately notify PBGC in writing when a potential buyer expresses interest in said Mortgaged Properties.  The Parties agree that an Expedited Closing Date does not release AMREP from its responsibility to provide PBGC with current appraisals of Replacement Properties, nor does it in any way release AMREP from its responsibility, if necessary to comply with Section 2.2 (after deducting the amount of any Sale Contribution expected pursuant to a sale of Mortgaged Property notified by AMREP to PBGC as contemplated by this Section 2.4 from the Liability then outstanding), to provide Replacement PBGC Mortgages on Replacement Mortgaged Properties that are acceptable to PBGC, as determined by PBGC in its sole discretion, prior to the Expedited Closing Date.

 

If the sale of a Mortgaged Property would result in the Appraised Value of the Mortgaged Properties remaining subject to the PBGC Mortgages being less than two times the amount of the Liability then outstanding (after deducting the amount of any Sale Contribution expected pursuant to a sale of such Mortgaged Property), PBGC shall have the unilateral right to veto any sale of the Mortgaged Properties if (a) the Replacement Properties suggested by AMREP are insufficient to secure the Liability then outstanding (after deducting the amount of any Sale Contribution expected pursuant to a sale of such Mortgaged Property), as determined by PBGC in its sole discretion; (b) Replacement PBGC Mortgages on Replacement Mortgaged Properties are not validly executed and filed at least ten (10) days prior to the Closing Date; or (c) Replacement PBGC Mortgages on Replacement Mortgaged Properties are not validly executed and filed prior to the Expedited Closing Date.

 

2.5           No later than five (5) days after the Closing Date, AMREP shall provide to PBGC a written closing statement evidencing all financial details of the sale of the Mortgaged Property, including purchase price.  No later than ten (10) days after the Closing Date, AMREP shall deposit into the Pension Plan (such deposited amount, “Sale Contribution”) 50% of the lesser of (i) the amount equal to the total purchase price of such Mortgaged Property minus any costs or expenses in connection with such sale or in preparing such Mortgaged Property for sale or (ii) the Appraised Value of such Mortgaged Property.  Each Sale Contribution shall be treated in the same manner as Additional Contributions provided in Section 1 above.  AMREP shall further provide to PBGC written documentation of such Sale Contribution within five (5) days of its deposit into the Plan.

 

2.6           If, at any time, AMREP grants a lien, mortgage, or interest on any of the Mortgaged Properties in a priority junior to that of the PBGC Mortgages (“Junior Interest”), such Junior Interest shall not have any rights with respect to the Mortgaged Properties unless said rights are expressly approved in writing by PBGC, in its sole discretion.  Execution of a Junior Interest on any of the Mortgaged Properties that does not so limit the rights of a Junior Interest will be considered an Event of Default (as described in Section 6.1 below). PBGC hereby expressly approves the Junior Interest of American Republic Investment Co. in certain real estate owned by Two Commerce LLC, as described in, and as modified by, the Mortgage 

 

  

  

  

  

Subordination Agreement, dated as of the Effective Date, between PBGC and American Republic Investment Co.

 

2.7           Following the Agreement Termination Date (as defined in Section 4.1 below), and at AMREP’s sole expense, AMREP will provide to PBGC a recordable discharge and release of the PBGC Mortgages.  PBGC shall promptly execute and record each discharge and release.  PBGC agrees, following the Agreement Termination Date, to promptly execute such other documents as may be necessary to effect and evidence the termination, discharge and release of the PBGC Mortgages.

 

3.           Notice Requirements

 

3.1           During the term of the Agreement, and in addition to the other notice requirements herein, AMREP will provide notices and information to PBGC as follows:

 

(a)           The Pension Plan’s actuarial valuation report by October 31 of each plan year;

 

(b)           Written notice no later than ten (10) days after the due date of any Required Contribution that AMREP has failed to timely pay;

 

(c)           Written documentation of all Additional Contributions made to the Plan within five (5) business days of their deposit; and

 

(d)           Copies of all Internal Revenue Service (“IRS”) Forms 5310-A on the date  filed with the IRS for any plan merger or consolidation, spinoff, or transfer of plan assets or liabilities to another plan that involves the Pension Plan.  In the event that any such Form 5310-A will not be timely filed with the IRS, AMREP will notify PBGC at least 30 days before any plan merger or consolidation, spinoff, or transfer of plan assets or liabilities to another plan that involves the Pension Plan.

 

4.           Termination of the Agreement

 

4.1           This Agreement will terminate on the date the Liability has been paid in full to the Plan, as confirmed in writing to AMREP by PBGC (which confirmation shall be provided within thirty (30) days after PBGC receives notice from AMREP that the Liability has been paid in full) (“Agreement Termination Date”).  In the event the Liability has not been paid in full, this Agreement shall nonetheless terminate on the later of:

 

(a)           the fifth anniversary of the Effective Date (“Fifth Anniversary”); or

 

(b)           if an Event of Default (as defined in Section 6.1 below) that has not been waived by PBGC in writing exists on the Fifth Anniversary, the date upon which such Event of Default is cured.

 

4.2           Effective on the Agreement Termination Date and in consideration of the terms, conditions, mutual covenants and agreements set forth herein, the adequacy and sufficiency of which are hereby acknowledged, PBGC, on its own behalf, and in every other capacity in which

 

  

  

  

  

it may now or in the future act, will be deemed to release and forever discharge each Controlled Group Member from any claim whatsoever with respect to any and all of such member’s liability and/or obligations under sections 4062(e) and/or 4063 of ERISA with regard to the Cessations of Operations.

 

5.           Representations and Warranties

 

5.1           AMREP hereby represents and warrants to PBGC that each of the following is true and correct as of the Effective Date:

 

(a)           AMREP has full power and authority to enter into and perform its obligations under the Agreement and to carry out and consummate the transactions contemplated by the Agreement;

 

(b)           AMREP’s execution, delivery and performance of the Agreement and all other documents executed or to be executed by AMREP in connection with the Agreement have been duly authorized by all necessary corporate action; and

 

(c)           This Agreement has been duly executed by authorized officers or other representatives of AMREP.  This Agreement shall constitute a legal, valid and binding contract and agreement of AMREP enforceable by PBGC, and only by PBGC, against AMREP in accordance with its terms.

 

5.2           PBGC hereby represents and warrants to AMREP that each of the following is true and correct as of the Effective Date:

 

(a)           PBGC has full power and authority to enter into and perform its obligations under the Agreement and to carry out and consummate the transactions contemplated by the Agreement;

 

(b)           PBGC’s execution, delivery and performance of the Agreement and all other documents have been duly authorized by all necessary corporate action and are within PBGC’s statutory authorization and authority; and

 

(c)           This Agreement shall be duly executed by authorized officers or other representatives of PBGC.  This Agreement shall constitute a legal, valid and binding contract and agreement of PBGC enforceable against PBGC in accordance with its terms.

 

6.           Default; Remedies

 

6.1           Event of Default.  Each of the following shall constitute an “Event of Default” under this Agreement:

 

(a)           AMREP  fails to make any Required Contributions in accordance with the minimum funding standards of ERISA and the Internal Revenue Code (the “Code”);

 

(b)           AMREP materially breaches any other covenant, term or condition of this Agreement and, if curable, fails to cure such breach within thirty (30) days after such breach; provided, however, that if the breach cannot by its nature be cured within the thirty (30) day period, but is susceptible to being cured within a reasonable time greater than thirty (30) days, then AMREP shall have an additional period (which shall not in any case exceed thirty (30) days, for a maximum total of sixty (60) days) to attempt to cure such breach, and within any such additional period the failure to cure the breach shall not be deemed an Event of Default;

 

  

  

  

  

(c)           Any representation or warranty made by AMREP in Section 5.1 above is untrue in any material respect as of the Effective Date;

 

(d)           AMREP (i) becomes insolvent; or (ii) is unable, or admits in writing its inability, to pay debts as they generally mature; or (iii) makes a general assignment for the benefit of creditors or to an agent authorized to liquidate any of its property; or (iv) makes or sends notice of a bulk transfer; or (v) files or, consents to the filing against it, of a petition or other papers commencing a proceeding under Title 11 of the United States Code or any similar type of insolvency proceeding (“Insolvency Proceeding”); or (vi) has an Insolvency Proceeding filed or instituted against it which has not been dismissed within forty-five (45) days after its commencement, or in which an order for relief has been entered against it, or (vii) applies to a court for appointment of a receiver, trustee or custodian for any of its property; or (viii) has a receiver, trustee or custodian appointed for any of its property (with or without its consent);

 

(e)           AMREP dissolves or discontinues (other than on a temporary basis) doing business;

 

(f)           The Pension Plan terminates under 29 U.S.C. § 1341(c) or 29 U.S.C. § 1342; or

 

(g)           The occurrence of a “default” (as defined therein) under any of the PBGC Mortgages.

 

6.2           Notice.  AMREP shall immediately give written notice to PBGC upon the occurrence of any Event of Default.

 

6.3           General Remedies.  If any Event of Default occurs, then PBGC may take any one or more of the following actions:

 

(a)  exercise any or all of the rights and remedies available to it as a secured party under the UCC or any other applicable law, including (but not limited to) the right to repossess the Mortgaged Properties and the right to sell the Mortgaged Properties to the extent necessary to pay the remainder of the Liability then outstanding; and

 

(b)  foreclose on the Mortgaged Properties non-judicially, to the fullest extent permitted by law, or proceed by a suit or suits at law or in equity to foreclose on the Mortgaged Properties.

 

6.4           Forbearance.  So long as no Event of Default exists and remains uncured, PBGC will forbear during the term of this Agreement from taking any action against AMREP or other 

 

  

  

  

  

Controlled Group Member to enforce sections 4062(e) and/or 4063 of ERISA, 29 U.S.C. §§ 1362(e), 1363, on account of the Cessations of Operations.

 

6.5           Remedies Not Exclusive.  No remedy recited in this Agreement with respect to the occurrence of an Event of Default shall limit PBGC in any manner from pursuing after the occurrence of an Event of Default any and all remedies provided under the UCC, ERISA, the Code, or other applicable law.  The rights and remedies provided for in this Agreement or which PBGC may otherwise have at law or in equity shall be distinct, separate, and cumulative.  The rights and remedies shall not be deemed to be inconsistent with each other, and none of them, whether or not exercised by PBGC, shall be deemed to be in exclusion of any other.  Any two or more of such rights and remedies may be exercised at the same time, all to the fullest extent permitted by law.

 

7.           General Provisions

 

7.1           Compliance with ERISA.  Nothing in this Agreement affects AMREP’s obligations to comply with ERISA and the Code, including, without limitation, AMREP’s obligation to make all Required Contributions in accordance with the minimum funding standards of ERISA and the Code.

 

7.2           Limitation of Rights.  This Agreement is intended to be and is for the sole and exclusive benefit of PBGC and AMREP.  Nothing expressed or mentioned in or to be implied from the Agreement gives any person other than PBGC or AMREP any legal or equitable right, remedy, or claim against PBGC or AMREP under or in respect of this Agreement.

 

7.3           Notices.  All notices, demands, instructions and other communications required or permitted under the Agreement to any Party shall be in writing and shall be personally delivered or sent by registered, certified, or express mail, postage prepaid, return receipt requested, facsimile (which shall be immediately followed by the original of such communication), or pre-paid overnight delivery service with confirmed receipt, and shall be deemed to be given for purposes of this Agreement on the date the writing is personally delivered or sent to the intended recipient, or in the case of facsimile, on the date transmitted to the intended recipient.  Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section, all such notices, demands, instructions and other communications shall be sent to the Parties as indicated below:

 

 

	 To AMREP:	      	Peter M. Pizza
	 	 	Chief Financial Officer
	 	 	AMREP Corporation
	 	 	300 Alexander Park, Suite 204
	 	 	
Princeton, NJ 08540

	 	 	
Facsimile:  (609) 716-8255

	 	 	
PPizza@amrepcorp.com

 

 

 

  

  

  

  

 

	 	      	Christopher Vitale
	 	 	General Counsel
	 	 	AMREP Corporation
	 	 	300 Alexander Park, Suite 204
	 	 	
Princeton, NJ 08540

	 	 	
Facsimile:  (609) 716-8255

	 	 	
CVitale@amrepcorp.com

 

 

	 To PBGC:	      	Corporate Finance and Restructuring Department
	 	 	Pension Benefit Guaranty Corporation
	 	 	1200 K Street, N.W., Ste. 270
	 	 	
Washington, D.C.  20005-4026

	 	 	
Facsimile:  (202) 842-2643

	 	 	
Shelton.Mark@pbgc.gov

 

	 	      	Office of the Chief Counsel
	 	 	Pension Benefit Guaranty Corporation
	 	 	1200 K Street, N.W.
	 	 	
Washington, D.C.  20005-4026

	 	 	
Facsimile:  (202) 326-4112

	 	 	
Hansen.Courtney@pbgc.gov and efile@pbgc.gov

 

7.4           Counterparts.  This Agreement may be executed and delivered (including by facsimile or electronic pdf transmission) in one or more counterparts and by different Parties on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

7.5           Entire Agreement.  This Agreement, including the Mortgages, contains the complete and exclusive statement of the agreement and understanding by and among the Parties and supersedes all prior agreements, understandings, commitments, representations, communications, and proposals, oral or written, among the Parties or any of them relating to the subject matter of this Agreement.  This Agreement may not be amended, modified, or supplemented except by an instrument in writing executed by the Parties hereto.

 

7.6           No Waivers.  The failure of any Party to enforce a provision of the Agreement shall not constitute a waiver of such Party’s right to enforce that provision of the Agreement.

 

7.7           Headings.  The section and paragraph headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

 

7.8           Governing Law.  Except to any extent preempted by federal law, the laws of the State of New York, without giving effect to New York’s rules concerning conflicts of law, shall govern all disputes arising out of or relating to this Agreement; provided, however, that any actions with respect to the PBGC Mortgages shall be governed by the laws of state in which each Mortgaged Property is located.

 

  

  

  

  

7.9           Jurisdiction; Venue.  Any action, suit or proceeding arising out of or relating to this Agreement, except for one brought with respect to the Mortgaged Properties, shall be brought in the United States District Court for the District of Columbia.

 

7.10           Construction.  The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party hereto, nor shall any rule of construction that favors a non-draftsman be applied.  A reference to any statute shall be deemed also to refer to all rules and regulations promulgated under the statute, unless the context requires otherwise.

 

7.11           Assignment.  No Party may assign this Agreement in whole or in part, or delegate any of its duties hereunder, without the express prior written consent of the other Party.  Any such assignment or delegation made without such express prior written consent shall be null and void ab initio.

 

7.12           Unenforceable, Invalid Provisions.  If any provision in this Agreement shall be invalid, inoperative or unenforceable as applied in any particular case, this shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance.  If any provision of this Agreement shall be invalid, inoperative or unenforceable in all cases, this shall not have the effect of rendering any other provision of the Agreement invalid, inoperative, or unenforceable.  The invalidity of any portion of this Agreement shall not affect the remaining portions of the Agreement.

 

7.13           Inapplicability to Pension Plan. This Agreement is not a document or instrument governing the Pension Plan, nor does anything in this Agreement amend, supplement or derogate from the documents and instruments governing the Pension Plan.  Further, nothing in this Agreement alters, amends or otherwise modifies the operation or administration of the Pension Plan.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the Effective Date.

	AMREP CORPORATION	
PENSION BENEFIT GUARANTY

CORPORATION

 

	By:        	
/s/ Peter M. Pizza                              

	By:       	
/s/ Kristina Archeval/RDB                         

	 	
Peter M. Pizza

 

	 	
Kristina Archeval

	Title:     	
Vice President and Chief Financial

Officer

 

	Title:       	
Director, Corporate Finance And

Restructuring Department

	Date:	
August 30, 2013                                           

	Date:       	
September 3, 2013

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