Document:

SUMMER ENERGY HOLDINGS, INC.

2018 STOCK OPTION AND STOCK AWARD PLAN

 

1. Establishment, Purpose and Term of Plan. 

 

1.1 Establishment.  This Summer Energy Holdings, Inc. 2018 Stock Option and Stock Award Plan (the “Plan”) shall become effective upon the date that it is approved by the stockholders of Summer Energy Holdings, Inc. (the “Company”). 

 

1.2 Purpose.  The purpose of the Plan is to advance the interests of the Company and its shareholders by providing an incentive to attract, retain and reward persons performing services for any Participating Company and by motivating such persons to contribute to the growth and profitability of the Company. 

 

1.3 Term of Plan.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed.  However, all Awards shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the shareholders of the Company. 

 

2. Definitions and Construction. 

 

2.1 Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below: 

 

(a)“Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee. 

 

(b)“Award” means any award or benefit granted to any participant under the Plan, including, without limitation, the grant of an Option, Restricted Stock Grant, Restricted Stock Unit, or Stock Appreciation Right. 

 

(c) “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s). 

 

(d)“Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. 

 

(e) “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  The Committee must be comprised of at least two (2) members of the Board and shall be constituted in a manner as to permit the Plan to comply with rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.  Once appointed, the Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan. 

 

(f)“Company” means Summer Energy Holdings, Inc., a Nevada corporation, or any successor corporation thereto. 

 

(g) “Consultant” means any person, including an advisor, engaged by a Participating Company to render services other than as an Employee or a Director. 

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(h)“Director” means a member of the Board or of the board of directors of any other Participating Company. 

 

(i)“Disability” means, with respect to a Grantee, that the Grantee has any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, and which renders the Grantee unable to engage in any substantial gainful activity.  A Grantee shall not be considered to have a Disability unless Grantee furnishes proof of the existence thereof in such form and manner, and at such time, as the Administrator may require, and the Administrator determines in its discretion that the Grantee has such a medically determinable physical or mental impairment. 

 

(j)“Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. 

 

(k)“Exchange Act” means the Securities Exchange Act of 1934, as amended. 

 

(l)“Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Administrator, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: 

 

(i) If, on such date, the Stock is listed on any established stock exchange or a national market system, including without limitation the National  Market System of the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as reported in The Wall Street Journal or such other source as the Administrator deems reliable.  If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Administrator, in its discretion.  If the Stock is listed on a market system but is not actively traded in such amounts and as frequently as the Administrator deems necessary, in its sole discretion, to determine the Fair Market Value of a share of Stock, then the Administrator shall determine, in its sole discretion, the value of a share of Stock.

 

(ii) If, on such date, there is no public market for the Stock, the Fair Market Value of a share of Stock shall be as determined by the Administrator in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.

 

(m)“Grant Agreement” means a written agreement, including any related form of stock option grant agreement, restricted stock grant agreement, restricted stock unit agreement, or stock appreciation right grant agreement, between the Company and a Grantee setting forth the terms, conditions and restrictions of the Award granted to the Grantee and any shares acquired upon the exercise thereof. 

 

(n)“Grantee” means a person who has been granted one or more Awards. 

 

(o)“Incentive Stock Option” means an Option intended to be (as set forth in the Grant Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.  An Option shall only be treated as an Incentive Stock Option pursuant to the Plan if it is originally designated as an Incentive Stock Option in the Grant Agreement.  An Option originally designated in a Grant Agreement as an Incentive Stock Option may nonetheless be treated as a Nonstatutory Stock Option if the Option at any time after grant fails to meet to requirements for incentive stock option treatment under Section 422 of the Code. 

 

(p)“Insider” means an officer or a Director of the Company or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act. 

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(q)“Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Grant Agreement) or which does not qualify as an Incentive Stock Option.  An Option which is designated as a Nonstatutory Stock Option in the Grant Agreement pursuant to which the Option was granted shall in all events be treated as a Nonstatutory Stock Option.  Furthermore, an Option originally designated as an Incentive Stock Option may subsequently become a Nonstatutory Stock Option upon the Option subsequently failing the meet the requirements for incentive stock option under Section 422 of the Code. 

 

(r)“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 

 

(s)“Option” means a right to purchase a specified number of shares of Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan.  An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option. 

 

(t)“Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code. 

 

(u)“Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation. 

 

(v)“Plan” means this 2018 Stock Option and Stock Award Plan, as amended from time to time in accordance with the terms hereof. 

 

(w)“Restricted Stock” means shares of Stock granted under the Plan that are subject to the restrictions set forth in Section 7 hereof. 

 

(x)“Restricted Stock Grant” means an Award representing the right to receive a specified number of shares of Restricted Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan.  

 

(y)“Restricted Stock Unit” means a hypothetical Stock unit having a value equal to the Fair Market Value of an identical number of shares of Stock issued pursuant to the Plan, subject to any restrictions and conditions as are established pursuant to Section 8 hereof. 

 

(z)“Restricted Stock Unit Grant” means an Award representing the right to receive a specified number of Restricted Stock Units (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. 

 

(aa)“Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation. 

 

(bb)“Securities Act” means the Securities Act of 1933, as amended. 

 

(cc)“Service” means a Grantee’s employment or service with a Participating Company, whether in the capacity of an Employee, a Director or a Consultant.  The Grantee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Grantee renders Service to a Participating Company or a change in the Participating Company for which the Grantee renders such Service, provided that there is no interruption or termination of the Grantee’s Service.  Furthermore, a Grantee’s Service with a Participating Company shall not be deemed to have terminated if the Grantee takes any military leave, sick leave, or other bona fide leave of absence approved by such Participating Company; provided, however, that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Grantee’s Service shall be deemed to have terminated unless the Grantee’s right to return to Service with such Participating Company is guaranteed by statute or contract.  Notwithstanding the foregoing, unless otherwise designated by the Participating Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Grantee’s Grant Agreement.  The Grantee’s Service shall be deemed to have terminated either upon an actual termination of  

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Service or upon the corporation for which the Grantee performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its discretion, shall determine whether the Grantee’s Service has terminated and the effective date of such termination.

 

(dd)“Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. 

 

(ee)“Stock Appreciation Right” means the right to receive an amount determined in accordance with Section 9 hereof. 

 

(ff)“Stock Appreciation Right Grant” means an Award representing the right to receive Stock Appreciation Rights with respect to a specified number of shares of Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. 

 

(gg)“Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 

 

(hh)“Ten Percent Owner” means a Grantee who, at the time an Award is granted to the Grantee, owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code. 

  

2.2Construction.  To the extent any provision herein conflicts with the conditions of any relevant tax law or regulation which are relied upon for tax relief in respect of a particular Award or Stock granted to a Grantee pursuant to this Plan, the provisions of said law or regulation shall prevail over those of the Plan, and the Administrator is empowered to interpret and enforce the said prevailing provisions.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

 

3. Administration. 

 

3.1 Administration by the Administrator.  The Plan shall be administered by the Board, which may delegate such responsibilities in whole or in part to a Committee.  Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board.  The Board may limit the composition of the Committee to those persons necessary to comply with the requirements of Section 162(m) of the Code and Section 16 of the Exchange Act.  All questions of interpretation of the Plan or of any Award shall be determined by the Administrator (the Board, or to the Committee to which the Board has delegated such responsibility), and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. 

 

3.2 Administration with Respect to Insiders.  With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered by the Committee in compliance with the requirements of Rule 16b-3 with respect to a plan intended to qualify thereunder as a discretionary plan.   

 

3.3 Powers of the Administrator.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Administrator shall have the full and final power and authority, in its discretion: 

 

(a)to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock to which each Award relates; 

 

(b)to designate Options as Incentive Stock Options or Nonstatutory Stock Options; 

 

(c)to determine the Fair Market Value of shares of Stock or other property; 

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(d)to determine the terms, conditions and restrictions, not inconsistent with the terms of the Plan, applicable to each Award (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of an Option, (ii) the Grant Value of a Stock Appreciation Right, (iii) the method of payment for shares purchased upon the exercise of an Option, (iv) the consideration to be paid in settlement of a Restricted Stock Unit, (v) the method of payment for the amount due upon exercise of a Stock Appreciation Right, (vi) the method for satisfaction of any tax withholding obligation arising in connection with the grant or exercise of an Award, including by the withholding or delivery of shares of stock, (vii) the timing, terms and conditions of the exercisability of the Award or the vesting of any shares acquired upon the exercise thereof, (viii) the time of the expiration of the Award, (ix) the effect of the Grantee’s termination of Service with the Participating Companies on any of the foregoing, and (x) all other terms, conditions and restrictions applicable to the Award or such shares not inconsistent with the terms of the Plan; 

 

(e)to approve one or more forms of Grant Agreement; 

 

(f)to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Stock covered by such Option shall have declined since the date the Option was granted; 

 

(g)to amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new Award in substitution for, any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired upon the exercise thereof; 

 

(h)to accelerate, continue, extend or defer the exercisability of any Award or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following a Grantee’s termination of Service with the Participating Companies; 

 

(i)to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Administrator deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Awards; and 

 

(j)to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Grant Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Board may deem advisable to the extent consistent with the Plan and applicable law. 

 

3.4Effect of Administrator’s Decision.  Whether explicitly provided elsewhere in this Plan with respect to any matter, all decisions, determinations and interpretations of the Administrator provided in this Plan shall be made in the Administrator’s sole and absolute discretion, and shall be final and binding on all Grantees and any other holders of any Awards.  No member of the Committee or the Board shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted hereunder. All such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as Incentive Stock Options. 

 

4. Shares Subject to Plan. 

 

4.1 Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be One Million Five Hundred Thousand (1,500,000) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  Such number of shares of Stock may be issued under this Plan pursuant to Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock Grants, Restricted Stock Unit Grants, Stock Appreciation Right Grants, or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Grantee’s exercise price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.   

 

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4.2 Adjustments for Changes in Capital Structure.  In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Awards and in the exercise price per share of any outstanding Awards.  If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 11.1) shares of another corporation (the “New Shares”), the Administrator may unilaterally amend the outstanding Awards to provide that such Awards are exercisable for New Shares.  In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Administrator, in its discretion.  Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the exercise price of any Award be decreased to an amount less than the par value, if any, of the stock subject to the Award.  The adjustments determined by the Administrator pursuant to this Section 4.2 shall be final, binding and conclusive. 

 

5. Eligibility and Award Limitations. 

 

5.1 Persons Eligible for Awards.  Awards may be granted only to Employees, Consultants, and Directors.  For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Awards are granted in connection with written offers of an employment or other service relationships with a Participating Company.  Eligible persons may be granted more than one (1) Award. 

 

5.2 Award Grant Restrictions.  Any person who is not an Employee on the effective date of the grant of an Award to such person may not be granted an Incentive Stock Option.  An Incentive Stock Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences Service with a Participating Company, with an exercise price determined as of such date in accordance with Section 6.1. 

 

5.3 Fair Market Value Limitation.  To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Companies, including the Plan) become exercisable by a Grantee for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code.  If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Grantee may designate which portion of such Option the Grantee is exercising.  In the absence of such designation, the Grantee shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Separate certificates representing each such portion shall be issued upon the exercise of the Option. 

 

5.4Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. 

 

6. Terms and Conditions of Options. 

 

Options shall be evidenced by Grant Agreements specifying the number of shares of Stock covered thereby, in such form as the Administrator shall from time to time establish.  No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Grant Agreement.  Grant 

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Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

6.1Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company, a Participating Company and/or the Grantee, and as shall be permissible under the terms of the Plan. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Grant Agreement by the person entitled to exercise the Option and full payment for the Stock with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 6.4 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Stock, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 hereof. Exercise of an Option in any manner shall result in a decrease in the number shares of Stock which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of shares of Stock as to which the Option is exercised. 

 

6.2 Exercise Price.  The exercise price for each Option shall be established in the discretion of the Administrator; provided, however, that (a) the exercise price per share for an Incentive Stock Option granted to a Ten Percent Owner shall not be less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) the exercise price per share for either an Incentive Stock Option granted to a person other than a Ten Percent Owner or a Nonstatutory Stock Option granted to any person shall not be less than the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. 

 

6.3 Exercise Period.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Administrator and set forth in the Grant Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, (c) no Option granted to a prospective Employee, prospective Consultant or prospective Director may become exercisable prior to the date on which such person commences Service with a Participating Company, and (d) unless otherwise permitted by applicable law, and with the exception of an Option granted to an officer, Director or Consultant, no Option shall become exercisable at a rate less than twenty percent (20%) per year over a period of five (5) years from the effective date of grant of such Option, subject to the Grantee’s continued Service.  Subject to the foregoing, unless otherwise specified by the Administrator in the grant of an Option, any Option granted hereunder shall have a term of ten (10) years from the effective date of grant of the Option. 

 

6.4 Payment of Exercise Price. 

 

(a) Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Grantee having a Fair Market Value (as determined by the Administrator without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than the exercise price, (iii) by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by such other consideration as 

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may be approved by the Administrator from time to time to the extent permitted by applicable law, or (v) by any combination of the foregoing.  The Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Grant Agreement described in Section 10, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

  

(b) Limitations on Forms of Consideration.

 

(i) Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Administrator, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Grantee for more than six (6) months or were not acquired, directly or indirectly, from the Company.

 

(ii) Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.

 

6.5 Tax Withholding.  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Grantee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Administrator, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by any Participating Company with respect to such Option or the shares acquired upon the exercise thereof.  Alternatively or in addition, in its discretion, the Administrator shall have the right to require the Grantee, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of any Participating Company arising in connection with the Option or the shares acquired upon the exercise thereof.  The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Grant Agreement until all of the Participating Companies’ tax withholding obligations have been satisfied by the Grantee. 

 

6.6 Repurchase Rights.  Stock acquired by the exercise of an Option granted under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Option is granted.  In exercising its right of first refusal or other repurchase right, the repurchase price may be paid by the Company, or its assignee, by cash, check, or cancellation of indebtedness.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.  If not exercised before, a right to repurchase pursuant to this Section 6.6 shall automatically expire on the earlier of: (1) ninety-one (91) days after the date of exercise of the Option with respect to which the securities were acquired, or (2) the first date upon which any class of common equity securities of the Company are required to be registered under Section 12 of the Exchange Act. 

  

6.7 Effect of Termination of Service. 

 

(a) Option Exercisability.  Subject to earlier termination of the Option as otherwise provided herein, an Option shall be exercisable after a Grantee’s termination of Service as follows:

 

(i) Disability.  If the Grantee’s Service with the Participating Companies is terminated because of the Disability of the Grantee, the Option, to the extent unexercised and exercisable on the date on which the Grantee’s Service terminated, may be exercised by the Grantee (or the Grantee’s guardian or legal representative) at any time prior to the expiration of six (6) months (or such longer period of time as determined by the Administrator, in its discretion) after the date on which the Grantee’s Service terminated, but in any event no 

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later than the date of expiration of the Option’s term as set forth in the Grant Agreement evidencing such Option (the “Option Expiration Date”).

 

(ii) Death.  If the Grantee’s Service with the Participating Companies is terminated because of the death of the Grantee, the Option, to the extent unexercised and exercisable on the date on which the Grantee’s Service terminated, may be exercised by the Grantee’s legal representative or other person who acquired the right to exercise the Option by reason of the Grantee’s death at any time prior to the expiration of six (6) months (or such longer period of time as determined by the Administrator, in its discretion) after the date on which the Grantee’s Service terminated, but in any event no later than the Option Expiration Date.  The Grantee’s Service shall be deemed to have terminated on account of death if the Grantee dies within thirty (30) days (or such longer period of time as determined by the Administrator, in its discretion) after the Grantee’s termination of Service.

 

(iii) Termination After Change in Control.  The Administrator may, in its discretion, provide in any Grant Agreement that if the Grantee’s Service with the Participating Companies ceases as a result of “Termination After Change in Control” (as defined in such Grant Agreement), then (1) the Option, to the extent unexercised and exercisable on the date on which the Grantee’s Service terminated, may be exercised by the Grantee (or the Grantee’s guardian or legal representative) at any time prior to the expiration of six (6) months (or such longer period of time as determined by the Administrator, in its discretion) after the date on which the Grantee’s Service terminated, but in any event no later than the Option Expiration Date, and (2) the exercisability and vesting of the Option and any shares acquired upon the exercise thereof shall be accelerated effective as of the date on which the Grantee’s Service terminated to such extent, if any, as shall have been determined by the Administrator, in its discretion, and set forth in the Grant Agreement.

 

(iv) Other Termination of Service.  If the Grantee’s Service with the Participating Companies terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Grantee on the date on which the Grantee’s Service terminated, may be exercised by the Grantee within ninety (90) days (or such longer period of time as determined by the Administrator, in its discretion) after the date on which the Grantee’s Service terminated, but in any event no later than the Option Expiration Date.

 

 (b) Extension if Exercise Prevented by Law.  Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in Section 6.7(a) is prevented by the provisions of Section 14 below, the Option shall remain exercisable until thirty (30) days (or such longer period of time as determined by the Administrator, in its discretion) after the date the Grantee is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date.

 

(c) Extension if Grantee Subject to Section 16(b).  Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.7(a) of shares acquired upon the exercise of the Option would subject the Grantee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Grantee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Grantee’s termination of Service, or (iii) the Option Expiration Date.

 

6.8Buyout Provisions.  The Administrator may at any time offer to buy out, for a payment in cash or shares of Stock, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Grantee at the time that such offer is made. 

 

7.Terms and Conditions of Restricted Stock Grants 

 

Restricted Stock Grants shall be evidenced by Grant Agreements specifying the number of shares of Restricted Stock covered thereby, in such form as the Administrator shall from time to time establish.  No Restricted Stock Grant or purported Restricted Stock Grant shall be a valid and binding obligation of the Company unless evidenced by a fully executed Grant Agreement.  Grant Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

7.1Restrictions. Shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, for such period as the  

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Administrator shall determine from the date on which the Award is granted (the “Restricted Period”). The Administrator may also impose such additional or alternative restrictions and conditions on the shares of Restricted Stock as it deems appropriate, including but not limited to the satisfaction of performance including performance criteria with respect to the Company, a Participating Company and/or the Grantee, and as shall be permissible under the terms of the Plan. Certificates for shares of Restricted Stock shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares in contravention of such restrictions shall be null and void ab initio and without effect. During the Restricted Period, such certificates shall be held with an agent designated by the Administrator under the terms and conditions of escrow and security agreements approved by the Administrator. In determining the Restricted Period of an Award the Administrator may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded shares on successive anniversaries of the date of such Award.

 

7.2Adjustment of Performance Goals.  The Administrator may adjust performance goals for any shares of Restricted Stock to take into account changes in law and accounting and tax rules and to make such adjustments as the Administrator deems necessary or appropriate to reflect the inclusion or the exclusion of the impact of extraordinary or unusual items, events or circumstances. The Administrator also may adjust the performance goals by reducing the amount to be received by any Grantee pursuant to an Award if and to the extent that the Administrator deems it appropriate. 

 

7.3Repurchase Rights.  Restricted Stock granted under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Restricted Stock is granted.  In exercising its right of first refusal or other repurchase right, the repurchase price may be paid by the Company, or its assignee, by cash, check, or cancellation of indebtedness.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Restricted Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Restricted Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.  If not exercised before, a right to repurchase pursuant to this Section 7.3 shall automatically expire on the earlier of: (1) one (1) year after the date of grant of the Restricted Stock Grant with respect to which the securities were acquired, or (2) the first date upon which any class of common equity securities of the Company are required to be registered under Section 12 of the Exchange Act. 

 

7.4Forfeiture. Subject to such exceptions as may be determined by the Administrator, upon the termination of the Grantee’s Service for any reason prior to the expiration of the Restricted Period of an Award, any shares remaining subject to restrictions shall thereupon be forfeited by the Grantee and transferred to, and reacquired by, the Company at no cost to the Company, subject to all applicable law. 

 

7.5Ownership. During the Restricted Period the Grantee shall possess all incidents of ownership of such shares of Restricted Stock, subject to Section 7.1, including the right to receive dividends with respect to such shares and to vote such shares. 

 

8.Terms and Conditions of Restricted Stock Unit Grants 

 

Restricted Stock Unit Grants shall be evidenced by Grant Agreements specifying the number of units, in such form as the Administrator shall from time to time establish.  No Restricted Stock Unit or purported Restricted Stock Unit shall be a valid and binding obligation of the Company unless evidenced by a fully executed Grant Agreement.  Grant Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

8.1Consideration.  At the time of the grant of a Restricted Stock Unit Grant, the Administrator will determine the consideration, if any, to be paid by the Participant on delivery of each share of Stock subject to the Restricted Stock Unit Grant.  Payment of the consideration (if any) may be made, in the discretion of the Administrator, in any form of legal consideration that may be acceptable to the Administrator, in its sole discretion, and permissible under applicable law. 

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8.2Settlement.  A Restricted Stock Unit Grant may be settled by the delivery of shares of Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Administrator and contained in the Grant Agreement.   

 

8.3Additional Restrictions.  At the time of a Restricted Stock Unit Grant, the Administrator, in its sole discretion, may impose such restrictions or conditions that delay the delivery of the shares of Stock (or their cash equivalent) subject to a Restricted Stock Unit Grant to a time after the vesting of such Restricted Stock Unit Grant. 

8.4Termination of Continuous Service.  In the event of a termination of a Participant’s Continuous Service with the Company for any reason whatsoever (including death or Disability), the unvested portion of any Restricted Stock Unit Grant will be forfeited on the Grantee’s termination of continuous service except as otherwise provided in the applicable Grant Agreement. 

 

8.5Vesting of Restricted Stock Units.  Subject to Section 8.3 above, the Grant Agreement shall specify the date or dates, the performance goals or objectives which must be achieved, and any other conditions on which the Restricted Stock Units may vest. 

 

8.6Dividend Equivalents.  Dividend equivalents may be credited on shares of Stock covered by a Restricted Stock Unit Grant, as determined by the Administrator and contained in a Grant Agreement.  At the sole discretion of the Administrator, such dividend equivalents may be converted into additional shares of Stock covered by the Restricted Stock Unit Grant in such manner as determined by the Administrator.  Any additional shares covered by the Restricted Stock Unit Grant credited by reason of such dividend equivalents will be subject to all the same terms and conditions of the underlying Grant Agreement to which they relate. 

 

8.7 Tax Withholding.  The Company shall have the right, but not the obligation, to deduct from the amount payable upon settlement of a Restricted Stock Unit an amount equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by any Participating Company with respect to such Restricted Stock Unit upon the settlement thereof.  Alternatively or in addition, in its discretion, the Administrator shall have the right to require the Grantee, through payroll withholding, cash payment or otherwise, to make adequate provision for any such tax withholding obligations of any Participating Company arising in connection with the Restricted Stock Unit upon the settlement thereof.  The Company shall have no obligation to pay any amounts due until all of the Participating Companies’ tax withholding obligations have been satisfied by the Grantee. 

 

8.8Adjustments.  If the Committee determines, in its sole discretion, that any distribution, merger, consolidation, reorganization, split-up, spin-off, subdivision, combination, share exchange, dividend, contribution, disposition or acquisition (either of equity or assets), warrants or rights offering to purchase interests in the Company or any Participating Company, or other extraordinary event affects the Restricted Stock Units authorized and granted under this Plan such that an adjustment in such Restricted Stock Units is required in order to preserve the level of benefits or potential benefits (without enlargement or dilution of such benefits) intended to accrue to the Grantees under this Plan, then the Committee, in its sole discretion, shall make such adjustments in the Restricted Stock Units (including increases or decreases to the number of Restricted Stock Units granted and/or changes to the equity to which the value of a Restricted Stock Unit is tied) and/or the terms of this Plan relating to the valuation of the Stock in such manner as the Committee, in its sole discretion, deems appropriate and equitable.  The Committee may make any such adjustment for all Grantees and all Restricted Stock Units, or the Committee, in its sole discretion, may make such adjustments only for such Grantees or such Restricted Stock Units as it deems appropriate; provided that any such adjustment is made in compliance with the requirements of Code Section 409A relating to “stock rights” that do not constitute nonqualified deferred compensation for purposes of Code Section 409A.  In addition, the Committee may, without the consent of any Grantee, convert or exchange the Restricted Stock Units granted pursuant to this Plan for an equity award that is based on or tied to the value of any person whose assets include the ownership of 50% or more of the Company; provided that any such conversion or exchange is made in compliance with the requirements of Code Section 409A relating to “stock rights” that do not constitute nonqualified deferred compensation for purposes of Code Section 409A. 

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8.9Compliance with Code Section 409A.  Notwithstanding anything in this Section 8 to the contrary, all Restricted Stock Unit Grants are intended to be structured to satisfy the requirements of Code Section 409A, or an applicable exemption, as determined by the Administrator. 

 

9.Terms and Conditions of Stock Appreciation Right Grants 

 

Stock Appreciation Rights shall be evidenced by Grant Agreements specifying the number of rights grants, in such form as the Administrator shall from time to time establish.  No Stock Appreciation Right or purported Stock Appreciation Right shall be a valid and binding obligation of the Company unless evidenced by a fully executed Grant Agreement.  Grant Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

9.1Value of Stock Appreciation Right.  Each Stock Appreciation Right shall entitle the Grantee to receive, subject to the terms and conditions of this Plan and the Grant Agreement relating thereto, a payment in an amount equal to the positive difference, if any, obtained by deducting (i) the Fair Market Value of one share of Stock as of the Stock Appreciation Right’s grant date or such greater amount as may be set forth by the Committee in the Grant Agreement (the “Grant Value”), subject to adjustment in accordance with this Plan from (ii) the Fair Market Value of one share of Stock as of the exercise date for the Stock Appreciation Right. 

 

9.2Exercise of Stock Appreciation Rights.   

 

(a)Election to Exercise Vested Stock Appreciation Right.  Any Stock Appreciation Right granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company, a Participating Company and/or the Grantee, and as shall be permissible under the terms of the Plan. A Stock Appreciation Right may not be exercised with respect to a fraction of a share. A Stock Appreciation Right shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Grant Agreement by the person entitled to exercise the Stock Appreciation Right, which notice will specify the number of vested Stock Appreciation Rights which Grantee is electing to exercise.  

 

(b)Deemed Exercise of Stock Appreciation Rights.  Except as otherwise provided in the Grant Agreement and subject to any additional restrictions set forth in the Grant Agreement, upon the Grantee’s termination of Service (whether due to death, Disability or any other reason) or upon a Change in Control, the Grantee will be deemed to have exercised all vested Stock Appreciation Rights.   

 

9.3Exercise Period.  Stock Appreciation Rights shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Administrator and set forth in the Grant Agreement evidencing such Stock Appreciation Right; provided, however, that no Stock Appreciation Right shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Stock Appreciation Right and unless otherwise permitted by applicable law, and with the exception of a Stock Appreciation Right granted to an officer, Director or Consultant, no Stock Appreciation Right shall become exercisable at a rate less than twenty percent (20%) per year over a period of five (5) years from the effective date of grant of such Stock Appreciation Right, subject to the Grantee’s continued Service.  Subject to the foregoing, unless otherwise specified by the Administrator in the grant of a Stock Appreciation Right, any Stock Appreciation Right granted hereunder shall have a term of ten (10) years from the effective date of grant of the Stock Appreciation Right. 

 

9.4 Payment of Amount Due.  Payment of the amount due upon exercise of a Stock Appreciation Right shall be made (i) in cash, by check or cash equivalent, (ii) shares of Stock, (iii) by such other consideration as may be approved by the Administrator from time to time to the extent permitted by applicable law, or (iv) by any combination of the foregoing.  The Company shall pay the amount due within thirty (30) days of the exercise of the Stock Appreciation Right. 

 

9.5 Tax Withholding.  The Company shall have the right, but not the obligation, to deduct from the amount due upon exercise of a Stock Appreciation Right an amount equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by any Participating Company with respect to such Stock  

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Appreciation Right upon the exercise thereof.  Alternatively or in addition, in its discretion, the Administrator shall have the right to require the Grantee, through payroll withholding, cash payment or otherwise, to make adequate provision for any such tax withholding obligations of any Participating Company arising in connection with the Appreciation Right upon the exercise thereof.  The Company shall have no obligation to pay any amounts due until all of the Participating Companies’ tax withholding obligations have been satisfied by the Grantee.

 

9.6Adjustments.  If the Committee determines, in its sole discretion, that any distribution, merger, consolidation, reorganization, split-up, spin-off, subdivision, combination, share exchange, dividend, contribution, disposition or acquisition (either of equity or assets), warrants or rights offering to purchase interests in the Company or any Participating Company, or other extraordinary event affects the Stock Appreciation Rights authorized and granted under this Plan such that an adjustment in such Stock Appreciation Rights is required in order to preserve the level of benefits or potential benefits (without enlargement or dilution of such benefits) intended to accrue to the Grantees under this Plan, then the Committee, in its sole discretion, shall make such adjustments in the Stock Appreciation Rights (including increases or decreases to the Grant Value of a Stock Appreciation Right, increases or decreases to the number of Stock Appreciation Rights granted and/or changes to the equity to which the value of a Stock Appreciation Right is tied) and/or the terms of this Plan relating to the valuation of a Stock Appreciation Right in such manner as the Committee, in its sole discretion, deems appropriate and equitable.  The Committee may make any such adjustment for all Grantees and all Stock Appreciation Rights, or the Committee, in its sole discretion, may make such adjustments only for such Grantees or such Stock Appreciation Rights as it deems appropriate; provided that any such adjustment is made in compliance with the requirements of Code Section 409A relating to “stock rights” that do not constitute nonqualified deferred compensation for purposes of Code Section 409A.  In addition, the Committee may, without the consent of any Grantee, convert or exchange the Stock Appreciation Rights granted pursuant to this Plan for an equity award that is based on or tied to the value of any person whose assets include the ownership of 50% or more of the Company; provided that any such conversion or exchange is made in compliance with the requirements of Code Section 409A relating to “stock rights” that do not constitute nonqualified deferred compensation for purposes of Code Section 409A.   

 

9.7No Rights as a Shareholder.  At no time will the Grantee be considered a shareholder of the Company or have any rights as a shareholder; the right to vote or receive dividends or any other rights as a shareholder shall never exist with respect to a Stock Appreciation Right, notwithstanding the exercise of the Stock Appreciation Right. Exercise of a Stock Appreciation Right in any manner shall result in a decrease in the number rights which thereafter may be available, both for purposes of the Plan and for exercise under the Stock Appreciation Right, by the number of rights to which the Stock Appreciation Right is exercised. 

 

9.8Buyout Provisions.  The Administrator may at any time offer to buy out, for a payment in cash or shares of Stock, a Stock Appreciation Right previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Grantee at the time that such offer is made. 

 

10. Standard Forms of Grant Agreement. 

 

10.1 General.  Unless otherwise provided by the Administrator at the time the Award is granted, an Award shall comply with and be subject to the terms and conditions set forth in the standard form of Grant Agreement in effect at the time of the grant. 

 

10.2 Authority to Vary Terms.  The Administrator shall have the authority from time to time to vary the terms of any of the standard form of Grant Agreement described in this Section 10 either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Grant Agreement are not inconsistent with the terms of the Plan. 

 

11. Change in Control. 

 

11.1 Definitions. 

 

(a) An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related 

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transactions by the shareholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or (iv) a liquidation or dissolution of the Company.

 

(b) A “Change in Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) wherein the shareholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporation(s)”), as the case may be.  For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations.  The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

 

11.2 Effect of Change in Control on Options.  In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s stock.  In the event the Acquiring Corporation elects not to assume or substitute for outstanding Options in connection with a Change in Control, any unexercisable or unvested portions of outstanding Options and any shares acquired upon the exercise thereof held by Grantees whose Service has not terminated prior to such date shall be immediately exercisable and vested in full as of the date ten (10) days prior to the date of the Change in Control.  The exercise or vesting of any Option and any shares acquired upon the exercise thereof that was permissible solely by reason of this Section 11.2 shall be conditioned upon the consummation of the Change in Control.  Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Grant Agreement evidencing such Option except as otherwise provided in such Grant Agreement.  Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 11.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its discretion. 

 

11.3Effect of Change in Control on Restricted Stock.  In the event of a Change in Control, all restrictions then outstanding with respect to shares of Restricted Stock awarded hereunder shall automatically expire and be of no further force and effect. The Administrator shall have the authority (and the Grant Agreement may so provide) to cancel all or any portion of any outstanding restrictions prior to the expiration of the Restricted Period with respect to any or all of the shares of Restricted Stock awarded on such terms and conditions as the Administrator shall deem appropriate. 

 

11.4Effect of Change in Control on Restricted Stock Units.  In the event of a Change in Control, all restrictions, if any, then outstanding with respect to Restricted Stock Units awarded hereunder shall automatically expire and be of no further force and effect, and all outstanding Restricted Stock Units shall become fully vested. 

 

11.5Effect of Change in Control on Stock Appreciation Rights.  In the event of a Change in Control, all outstanding Stock Appreciation Rights shall become fully vested. 

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12. Provision of Information. 

 

Unless not required by applicable law, at least annually, copies of the Company’s balance sheet and income statement for the just completed fiscal year shall be made available to each Grantee and purchaser of shares of Stock upon the exercise of an Option.  The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure them access to equivalent information.

 

13. Nontransferability of Awards. 

 

During the lifetime of the Grantee, an Award shall be exercisable only by the Grantee or the Grantee’s guardian or legal representative.  No Award shall be assignable or transferable by the Grantee, except by will or by the laws of descent and distribution.  Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect and void ab initio and without effect.

  

14. Compliance with Securities Law. 

 

The grant of Awards and the issuance of shares of Stock pursuant to Awards shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.  Awards may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed.  In addition, no Award may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Award be in effect with respect to the shares issuable upon exercise of the Award or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of any Award or the receipt of any Stock pursuant to this Plan, the Company may require the Grantee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  

 

15. Indemnification. 

 

In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of a Participating Company, members of the Board and any officers or employees of the Participating Companies to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

16. Termination or Amendment of Plan. 

 

The Board may terminate or amend the Plan at any time.  However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s shareholders under any applicable law, regulation or rule.  No termination or amendment of the Plan may adversely affect any then outstanding Award or any unexercised portion thereof, without the consent of the Grantee, unless such termination 

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or amendment is required to enable an Award designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any applicable law, regulation or rule.

  

17. No Enlargement of Employee Rights. 

 

This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Grantee to be consideration for, or an inducement to, or a condition of, the employment of any Grantee.  Nothing contained in the Plan shall be deemed to give the right to any Grantee to be retained as an employee of the Company or any Participating Company or to interfere with the right of the Company or any Participating Company to discharge any Grantee at any time.

 

18. Application of Funds. 

 

The proceeds received by the Company from the sale of Stock pursuant to Grant Agreements, except as otherwise provided herein, will be used for general corporate purposes.

 

19. Shareholder Approval. 

 

The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by the shareholders of the Company within twelve (12) months of the date of adoption thereof by the Board.  Awards granted prior to shareholder approval of the Plan or in excess of the Authorized Shares previously approved by the shareholders shall become exercisable no earlier than the date of shareholder approval of the Plan or such increase in the Authorized Shares, as the case may be.

 

20.Reservation of Stock.   

 

The Company, during the term of this Plan, will at all times reserve and keep available such number of shares of Stock as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Stock as to which such requisite authority shall not have been obtained.

 

21.Information to Grantees and Purchasers. 

 

The Company shall make available to each Grantee, during the period such Grantee has one or more Awards outstanding, copies of annual financial statements.  The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

 

22.Certain Tax Matters. 

 

The Administrator may require the holder of any Award or Stock received pursuant to this Plan to remit to the Company, regardless of when such liability arises, an amount sufficient to satisfy any Federal, state and local tax withholding requirements associated with such Award or Stock.  The Administrator may, in its discretion, permit the holder of Stock to satisfy any such obligation by having withheld from the shares (or where applicable, cash) to be delivered to the holder of upon exercise of an Option a number of shares (or, where applicable, amount of cash) sufficient to meet any such withholding requirement.  If a Grantee makes an election under Section 83(b) of the Code with respect to the receipt of any Award, or disposes of Stock acquired pursuant to the exercise of an Incentive Stock Option in a transaction deemed to be a disqualifying disposition under Section 421 of the Code, then, within thirty (30) days of such Section 83(b) election or disqualifying disposition, the Participant shall inform the Company of such actions. 

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23.Shareholder Agreement. 

 

Upon receipt of any shares of Stock under the Plan, if the Company requires its shareholders to enter into a shareholder agreement at the time of their acquisition of Stock, then, as a condition to the receipt of shares under the Plan, the Administrator may require the holder of an Award to execute and deliver to the Company a shareholder agreement in substantially the form in use at the time of exercise or receipt of shares.  This requirement shall not apply if either: (i) the holder of the Award has previously executed and delivered such shareholder agreement, it is in effect at the time the holder of Award receives the shares, and the shareholder agreement would cover the shares received under the Plan; or (ii) such shareholder agreement is no longer in effect with respect to other holders of Stock.

 

24.Repurchase Rights.   

 

The Administrator may, in its discretion, subject any Award to repurchase rights provisions.  The terms and conditions of any repurchase rights will be established by the Administrator in its sole discretion and shall be set forth in the Grant Agreement representing the Award.  To ensure that shares of Stock subject to a repurchase right under this Section 24 will be available for repurchase, the Administrator may require the holder of an Award to deposit the certificate or certificates evidencing such shares with an agent designated by the Administrator under the terms and conditions of escrow and security agreements approved by the Administrator.

 

25.Right of First Refusal.   

 

The Administrator may, in its discretion, subject any Award to right of first refusal provisions.  The terms and conditions of any right of first refusal provisions will be established by the Administrator in its sole discretion and set forth in the Grant Agreement representing the Award.

 

26.Non-Exclusivity of the Plan. 

 

Neither the adoption of the Plan by the Board nor the submission of the Plan to stockholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or Participating Company now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term or long-term incentive plans. 

 

 

 

Effective: February 20, 2018

17

4817-4420-0797.v2(Multicurrency-Cross Border)

 

 

ISDA®

International Swaps and Derivatives Association, Inc.

MASTER AGREEMENT

 

dated as of February 21, 2018

	EDF Energy Services, LLC

	and

	Summer Energy Northeast, LLC

(formerly: REP Energy, LLC)

	(“Party A”)

	 

	(“Party B”)

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will 
be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents 
and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those 
Transactions.

Accordingly, the parties agree as follows:

1.Interpretation 

(a)Definitions.  The terms defined in Section 14 and in the Schedule will have the meanings therein 
specified for the purpose of this Master Agreement. 

(b)Inconsistency.  In the event of any inconsistency between the provisions of the Schedule and the 
other provisions of this Master Agreement, the Schedule will prevail.  In the event of any inconsistency 
between the provisions of any Confirmation and this Master Agreement (including the Schedule), such 
Confirmation will prevail for the purpose of the relevant Transaction. 

(c)Single Agreement.  All Transactions are entered into in reliance on the fact that this Master 
Agreement and all Confirmations form a single agreement between the parties (collectively referred to as 
this “Agreement”), and the parties would not otherwise enter into any Transactions. 

2.Obligations 

(a)General Conditions. 

(i)Each party will make each payment or delivery specified in each Confirmation to be made by 
it, subject to the other provisions of this Agreement. 

(ii)Payments under this Agreement will be made on the due date for value on that date in the place 
of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in 
freely transferable funds and in the manner customary for payments in the required currency.  Where 
settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on 
the due date in the manner customary for the relevant obligation unless otherwise specified in the 
relevant Confirmation or elsewhere in this Agreement. 

(iii)Each obligation of each party under Section 2(a)(i) is subject to (l) the condition precedent 
that no Event of Default or Potential Event of Default with respect to the other party has occurred 
and is continuing, (2) the condition precedent that no Early Termination Date in respect of the 
 

1ISDA® 1992 

 

DB1/ 95864532.2

relevant Transaction has occurred or been effectively designated and (3) each other applicable 
condition precedent specified in this Agreement.

(b)Change of Account.  Either party may change its account for receiving a payment or delivery by 
giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment 
or delivery to which such change applies unless such other party gives timely notice of a reasonable 
objection to such change. 

(c)Netting.  If on any date amounts would otherwise be payable: 

(i)in the same currency; and 

(ii)in respect of the same Transaction,  

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount 
will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been 
payable by one party exceeds the aggregate amount that would otherwise have been payable by the other 
party, replaced by an obligation upon the party by whom the larger aggregate amount would have been 
payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount will be determined in respect 
of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of 
whether such amounts are payable in respect of the same Transaction.  The election may be made in the 
Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions 
identified as being subject to the election, together with the starting date (in which case subparagraph (ii) 
above will not, or will cease to, apply to such Transactions from such date).  This election may be made 
separately for different groups of Transactions and will apply separately to each pairing of Offices through 
which the parties make and receive payments or deliveries.

(d)Deduction or Withholding for Tax. 

(i)Gross-Up.  All payments under this Agreement will be made without any deduction or 
withholding for or on account of any Tax unless such deduction or withholding is required by any 
applicable law, as modified by the practice of any relevant governmental revenue authority, then in 
effect.  If a party is so required to deduct or withhold, then that party (“X”) will:-- 

(1)promptly notify the other party (“Y”) of such requirement; 

(2)pay to the relevant authorities the full amount required to be deducted or withheld 
(including the full amount required to be deducted or withheld from any additional amount 
paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such 
deduction or withholding is required or receiving notice that such amount has been assessed 
against Y; 

(3)promptly forward to Y an official receipt (or a certified copy), or other documentation 
reasonably acceptable to Y, evidencing such payment to such authorities; and 

(4)if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is 
otherwise entitled under this Agreement, such additional amount as is necessary to ensure that 
the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed 
against X or Y) will equal the full amount Y would have received had no such deduction or 
withholding been required.  However, X will not be required to pay any additional amount to Y to 
the extent that it would not be required to be paid but for: 

(A)the failure by Y to comply with or perform any agreement contained in 
Section 4(a)(i), 4(a)(iii) or 4(d); or 

(B)the failure of a representation made by Y pursuant to Section 3(f) to be accurate and 
true unless such failure would not have occurred but for (I) any action taken by a taxing 
authority, or brought in a court of competent jurisdiction, on or after the date on which a 
 

2ISDA® 1992 

 

DB1/ 95864532.2

Transaction is entered into (regardless of whether such action is taken or brought with 
respect to a party to this Agreement) or (II) a Change in Tax Law.

(ii)Liability.  If:-- 

(1)X is required by any applicable law, as modified by the practice of any relevant 
governmental revenue authority, to make any deduction or withholding in respect of which X 
would not be required to pay an additional amount to Y under Section 2(d)(i)(4); 

(2)X does not so deduct or withhold; and 

(3)a liability resulting from such Tax is assessed directly against X,  

then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y 
will promptly pay to X the amount of such liability (including any related liability for interest, but 
including any related liability for penalties only if Y has failed to comply with or perform any 
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e)Default Interest; Other Amounts.  Prior to the occurrence or effective designation of an Early 
Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any 
payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest 
(before as well as after judgment) on the overdue amount to the other party on demand in the same currency 
as such overdue amount, for the period from (and including) the original due date for payment to (but 
excluding) the date of actual payment, at the Default Rate.  Such interest will be calculated on the basis of 
daily compounding and the actual number of days elapsed.  If, prior to the occurrence or effective designation 
of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of 
any obligation required to be settled by delivery, it will compensate the other party on demand if and to the 
extent provided for in the relevant Confirmation or elsewhere in this Agreement. 

3.Representations 

Each party represents to the other party (which representations will be deemed to be repeated by each party 
on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at 
all times until the termination of this Agreement) that:

(a)Basic Representations. 

(i)Status.  It is duly organized and validly existing under the laws of the jurisdiction of its 
organization or incorporation and, if relevant under such laws, in good standing; 

(ii)Powers.  It has the power to execute this Agreement and any other documentation relating to 
this Agreement to which it is a party, to deliver this Agreement and any other documentation relating 
to this Agreement that it is required by this Agreement to deliver and to perform its obligations 
under this Agreement and any obligations it has under any Credit Support Document to which it is 
a party and has taken all necessary action to authorize such execution, delivery and performance; 

(iii)No Violation or Conflict.  Such execution, delivery and performance do not violate or conflict 
with any law applicable to it, any provision of its constitutional documents, any order or judgment 
of any court or other agency of government applicable to it or any of its assets or any contractual 
restriction binding on or affecting it or any of its assets; 

(iv)Consents.  All governmental and other consents that are required to have been obtained by it 
with respect to this Agreement or any Credit Support Document to which it is a party have been 
obtained and are in full force and effect and all conditions of any such consents have been complied 
with; and 

(v)Obligations Binding.  Its obligations under this Agreement and any Credit Support Document 
to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance 
with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, 
moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to 
 

3ISDA® 1992 

 

DB1/ 95864532.2

equitable principles of general application (regardless of whether enforcement is sought in a 
proceeding in equity or at law)).

(b)Absence of Certain Events.  No Event of Default or Potential Event of Default or, to its knowledge, 
Termination Event with respect to it has occurred and is continuing and no such event or circumstance would 
occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support 
Document to which it is a party. 

(c)Absence of Litigation.  There is not pending or, to its knowledge, threatened against it or any of its 
Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, 
agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of 
this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations 
under this Agreement or such Credit Support Document. 

(d)Accuracy of Specified Information.  All applicable information that is furnished in writing by or 
on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of 
the date of the information, true, accurate and complete in every material respect. 

(e)Payer Tax Representation.  Each representation specified in the Schedule as being made by it for 
the purpose of this Section 3(e) is accurate and true. 

(f)Payee Tax Representations.  Each representation specified in the Schedule as being made by it for 
the purpose of this Section 3(f) is accurate and true. 

4.Agreements 

Each party agrees with the other that, so long as either party has or may have any obligation under this 
Agreement or under any Credit Support Document to which it is a party:--

(a)Furnish Specified Information.  It will deliver to the other party or, in certain cases under 
subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:-- 

(i)any forms, documents or certificates relating to taxation specified in the Schedule or any 
Confirmation; 

(ii)any other documents specified in the Schedule or any Confirmation; and 

(iii)upon reasonable demand by such other party, any form or document that may be required or 
reasonably requested in writing in order to allow such other party or its Credit Support Provider to 
make a payment under this Agreement or any applicable Credit Support Document without any 
deduction or withholding for or on account of any Tax or with such deduction or withholding at a 
reduced rate (so long as the completion, execution or submission of such form or document would 
not materially prejudice the legal or commercial position of the party in receipt of such demand), 
with any such form or document to be accurate and completed in a manner reasonably satisfactory 
to such other party and to be executed and to be delivered with any reasonably required certification,  

in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as 
reasonably practicable.

(b)Maintain Authorizations.  It will use all reasonable efforts to maintain in full force and effect all 
consents of any governmental or other authority that are required to be obtained by it with respect to this 
Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain 
any that may become necessary in the future. 

(c)Comply with Laws.  It will comply in all material respects with all applicable laws and orders to 
which it may be subject if failure so to comply would materially impair its ability to perform its obligations 
under this Agreement or any Credit Support Document to which it is a party. 

(d)Tax Agreement.  It will give notice of any failure of a representation made by it under Section 3(f) 
to be accurate and true promptly upon learning of such failure. 

4ISDA® 1992 

 

DB1/ 95864532.2

(e)Payment of Stamp Tax.  Subject to Section 1l, it will pay any Stamp Tax levied or imposed upon 
it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, 
organised, managed and controlled, or considered to have its seat, or in which a branch or office through 
which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify 
the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s 
execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp 
Tax Jurisdiction with respect to the other party. 

5.Events of Default and Termination Events 

(a)Events of Default.  The occurrence at any time with respect to a party or, if applicable, any Credit 
Support Provider of such party or any Specified Entity of such party of any of the following events constitutes 
an event of default (an “Event of Default”) with respect to such party:-- 

(i)Failure to Pay or Deliver.  Failure by the party to make, when due, any payment under this 
Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not 
remedied on or before the third Local Business Day after notice of such failure is given to the party; 

(ii)Breach of Agreement.  Failure by the party to comply with or perform any agreement or 
obligation (other than an obligation to make any payment under this Agreement or delivery under 
Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation 
under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance 
with this Agreement if such failure is not remedied on or before the thirtieth day after notice of 
such failure is given to the party; 

(iii)Credit Support Default. 

(1)Failure by the party or any Credit Support Provider of such party to comply with or 
perform any agreement or obligation to be complied with or performed by it in accordance 
with any Credit Support Document if such failure is continuing after any applicable grace 
period has elapsed; 

(2)the expiration or termination of such Credit Support Document or the failing or ceasing 
of such Credit Support Document to be in full force and effect for the purpose of this Agreement 
(in either case other than in accordance with its terms) prior to the satisfaction of all obligations 
of such party under each Transaction to which such Credit Support Document relates without 
the written consent of the other party; or 

(3)the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in 
whole or in part, or challenges the validity of, such Credit Support Document; 

(iv)Misrepresentation.  A representation (other than a representation under Section 3(e) or (f)) 
made or repeated or deemed to have been made or repeated by the party or any Credit Support 
Provider of such party in this Agreement or any Credit Support Document proves to have been 
incorrect or misleading in any material respect when made or repeated or deemed to have been made 
or repeated; 

(v)Default under Specified Transaction.  The party, any Credit Support Provider of such party or 
any applicable Specified Entity of such party (l) defaults under a Specified Transaction and, after 
giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an 
acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, 
after giving effect to any applicable notice requirement or grace period, in making any payment or 
delivery due on the last payment, delivery or exchange date of, or any payment on early termination 
of, a Specified Transaction (or such default continues for at least three Local Business Days if there 
is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or 
rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity 
appointed or empowered to operate it or act on its behalf); 

5ISDA® 1992 

 

DB1/ 95864532.2

(vi)Cross Default.  If “Cross Default” is specified in the Schedule as applying to the party, the 
occurrence or existence of (l) a default, event of default or other similar condition or event (however 
described) in respect of such party, any Credit Support Provider of such party or any applicable 
Specified Entity of such party under one or more agreements or instruments relating to Specified 
Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than 
the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified 
Indebtedness becoming, or becoming capable at such time of being declared, due and payable under 
such agreements or instruments, before it would otherwise have been due and payable or (2) a default 
by such party, such Credit Support Provider or such Specified Entity (individually or collectively) 
in making one or more payments on the due date thereof in an aggregate amount of not less than the 
applicable Threshold Amount under such agreements or instruments (after giving effect to any 
applicable notice requirement or grace period); 

(vii)Bankruptcy.   The party, any Credit Support Provider of such party or any applicable Specified 
Entity of such party:  

(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes 
insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay 
its debts as they become due; (3) makes a general assignment, arrangement or composition 
with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding 
seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or 
insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its 
winding-up or liquidation, and, in the case of any such proceeding or petition instituted or 
presented against it, such proceeding or petition (A) results in a judgment of insolvency or 
bankruptcy or the entry of an order for relief or the making of an order for its winding-up or 
liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days 
of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official 
management or liquidation (other than pursuant to a consolidation, amalgamation or merger); 
(6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, 
conservator, receiver, trustee, custodian or other similar official for it or for all or substantially 
all its assets; (7) has a secured party take possession of all or substantially all its assets or has 
a distress, execution, attachment, sequestration or other legal process levied, enforced or sued 
on or against all or substantially all its assets and such secured party maintains possession, or 
any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days 
thereafter; (8) causes or is subject to any event with respect to it which, under the applicable 
laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) 
to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval 
of, or acquiescence in, any of the foregoing acts; or 

(viii)Merger Without Assumption.  The party or any Credit Support Provider of such party 
consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets 
to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:-- 

(1)the resulting, surviving or transferee entity fails to assume all the obligations of such party 
or such Credit Support Provider under this Agreement or any Credit Support Document to 
which it or its predecessor was a party by operation of law or pursuant to an agreement 
reasonably satisfactory to the other party to this Agreement; or 

(2)the benefits of any Credit Support Document fail to extend (without the consent of the 
other party) to the performance by such resulting, surviving or transferee entity of its 
obligations under this Agreement. 

(b)Termination Events.  The occurrence at any time with respect to a party or, if applicable, any Credit 
Support Provider of such party or any Specified Entity of such party of any event specified below constitutes 
an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax 
Event Upon Merger if the event is specified in (iii) below and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event 
is specified pursuant to (v) below: 

6ISDA® 1992 

 

DB1/ 95864532.2

(i)Illegality.  Due to the adoption of, or any change in, any applicable law after the date on which 
a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by 
any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after 
such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for 
such party (which will be the Affected Party): 

(1)to perform any absolute or contingent obligation to make a payment or delivery or to r
eceive a payment or delivery in respect of such Transaction or to comply with any other 
material provision of this Agreement relating to such Transaction; or 

(2)to perform, or for any Credit Support Provider of such party to perform, any contingent 
or other obligation which the party (or such Credit Support Provider) has under any Credit 
Support Document relating to such Transaction; 

(ii) Tax Event.  Due to (x) any action taken by a taxing authority, or brought in a court of competent 
jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such 
action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, 
the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on 
the next succeeding Scheduled Payment Date (l) be required to pay to the other party an additional 
amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest 
under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to 
be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 
6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under 
Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); 

(iii)Tax Event Upon Merger.  The party (the “Burdened Party”) on the next succeeding Scheduled 
Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable 
Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or 
(2) receive a payment from which an amount has been deducted or withheld for or on account of 
any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount 
(other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party 
consolidating or amalgamating with, or merging with or into, or transferring all or substantially all 
its assets to, another entity (which will be the Affected Party) where such action does not constitute 
an event described in Section 5(a)(viii); 

(iv)Credit Event Upon Merger.  If “Credit Event Upon Merger” is specified in the Schedule as applying 
to the party, such party (“X”), any Credit Support Provider of X or any applicable Specified Entity of X 
consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets 
to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the 
creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such 
Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action 
(and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or 

(v)Additional Termination Event.  If any “Additional Termination Event” is specified in the 
Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the 
Affected Party or Affected Parties shall be as specified for such Additional Termination Event in 
the Schedule or such Confirmation). 

(c)Event of Default and Illegality.  If an event or circumstance which would otherwise constitute or 
give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not 
constitute an Event of Default. 

6.Early Termination 

(a)Right to Terminate Following Event of Default.  If at any time an Event of Default with respect to 
a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting 
Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, 
designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of 
all outstanding Transactions.  If, however, “Automatic Early Termination” is specified in the Schedule as 
applying to a party, then  an Early Termination Date in respect of all outstanding Transactions will occur 
immediately upon the occurrence with respect to such party of an Event of Default specified in 
Section 5(a)(vii)(l), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately 
preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the 
occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent 
analogous thereto, (8). 

(b)Right to Terminate Following Termination Event. 

(i)Notice.  If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of 
it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction 
and will also give such other information about that Termination Event as the other party may reasonably 
require. 

(ii)Transfer to Avoid Termination Event.  If either an Illegality under Section 5(b)(i)(l) or a Tax 
Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the 
Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate 
an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require 
such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after 
it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of 
the Affected Transactions to another of its Offices or Affiliates so that such Termination Event 
ceases to exist. 

If the Affected Party is not able to make such a transfer it will give notice to the other party to that 
effect within such 20 day period, whereupon the other party may effect such a transfer within 
30 days after the notice is given under Section 6(b)(i).

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the 
prior written consent of the other party, which consent will not be withheld if such other party’s 
policies in effect at such time would permit it to enter into transactions with the transferee on the 
terms proposed.

(iii)Two Affected Parties.  If an Illegality under Section 5(b)(i)(l) or a Tax Event occurs and there 
are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days 
after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. 

(iv)Right to Terminate.  If:-- 

(1)a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may 
be, has not been effected with respect to all Affected Transactions within 30 days after an 
Affected Party gives notice under Section 6(b)(i); or 

(2)an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional 
Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not 
the Affected Party,  

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, 
any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more 
than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event 
Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not 
more than 20 days notice to the other party and provided that the relevant Termination Event is then 

7ISDA® 1992 

 

DB1/ 95864532.2

continuing, designate a day not earlier than the day such notice is effective as an Early Termination 
Date in respect of all Affected Transactions.

(c)Effect of Designation. 

(i)If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early 
Termination Date will occur on the date so designated, whether or not the relevant Event of Default 
or Termination Event is then continuing. 

(ii)Upon the occurrence or effective designation of an Early Termination Date, no further 
payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will 
be required to be made, but without prejudice to the other provisions of this Agreement.  The amount, 
if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). 

(d)Calculations. 

(i)Statement.  On or as soon as reasonably practicable following the occurrence of an Early 
Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) 
and will provide to the other party a statement (1) showing, in reasonable detail, such calculations 
(including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving 
details of the relevant account to which any amount payable to it is to be paid.  In the absence of written 
confirmation from the source of a quotation obtained in determining a Market Quotation, the records of 
the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such 
quotation. 

(ii)Payment Date.  An amount calculated as being due in respect of any Early Termination Date 
under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the 
case of an Early Termination Date which is designated or occurs as a result of an Event of Default) 
and on the day which is two Local Business Days after the day on which notice of the amount payable 
is effective (in the case of an Early Termination Date which is designated as a result of a Termination 
Event).  Such amount will be paid together with (to the extent permitted under applicable law) 
interest thereon (before as well as after judgment) in the Termination Currency, from (and including) 
the relevant Early Termination Date to (but excluding) the date such amount is paid, at the 
Applicable Rate.  Such interest will be calculated on the basis of daily compounding and the actual 
number of days elapsed. 

(e)Payments on Early Termination.  If an Early Termination Date occurs, the following provisions 
shall apply based on the parties’ election in the Schedule of a payment measure, either “Market Quotation” 
or “Loss”, and a payment method, either the “First Method” or the “Second Method”.  If the parties fail to 
designate a payment measure or payment method in the Schedule, it will be deemed that “Market Quotation” 
or the “Second Method”, as the case may be, shall apply.  The amount, if any, payable in respect of an Early 
Termination Date and determined pursuant to this Section will be subject to any Set-off. 

(i)Events of Default.  If the Early Termination Date results from an Event of Default:-- 

(1)First Method and Market Quotation.  If the First Method and Market Quotation apply, the 
Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the 
sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the 
Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing 
to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts 
owing to the Defaulting Party. 

(2)First Method and Loss.  If the First Method and Loss apply, the Defaulting Party will pay 
to the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss in respect 
of this Agreement. 

(3)Second Method and Market Quotation.  If the Second Method and Market Quotation apply, 
an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the  

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Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency 
Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination 
Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.  If that amount 
is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative 
number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting 
Party.

(4)Second Method and Loss.  If the Second Method and Loss apply, an amount will be payable 
equal to the Non-defaulting Party’s Loss in respect of this Agreement.  If that amount is a 
positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative 
number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting 
Party. 

(ii)Termination Events.  If the Early Termination Date results from a Termination Event:-- 

(1)One Affected Party.  If there is one Affected Party, the amount payable will be determined 
in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss 
applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting 
Party will be deemed to be references to the Affected Party and the party which is not the 
Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being 
terminated, Loss shall be calculated in respect of all Terminated Transactions. 

(2)Two Affected Parties.  If there are two Affected Parties: 

(A)if Market Quotation applies, each party will determine a Settlement Amount in 
respect of the Terminated Transactions, and an amount will be payable equal to (I) the 
sum of (a) one-half of the difference between the Settlement Amount of the party with 
the higher Settlement Amount (“X”) and the Settlement Amount of the party with the 
lower Settlement Amount (“Y”) and (b) the Termination Currency Equivalent of the 
Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid 
Amounts owing to Y; and 

(B)if Loss applies, each party will determine its Loss in respect of this Agreement (or, 
if fewer than all the Transactions are being terminated, in respect of all Terminated 
Transactions) and an amount will be payable equal to one-half of the difference between 
the Loss of the party with the higher Loss (“X”) and the Loss of the party with the lower 
Loss (“Y”). 

If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X 
will pay the absolute value of that amount to Y.

(iii)Adjustment for Bankruptcy.  In circumstances where an Early Termination Date occurs 
because “Automatic Early Termination” applies in respect of a party, the amount determined under 
this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to 
reflect any payments or deliveries made by one party to the other under this Agreement (and retained 
by such other party) during the period from the relevant Early Termination Date to the date for 
payment determined under Section 6(d)(ii). 

(iv)Pre-Estimate.  The parties agree that if Market Quotation applies an amount recoverable under 
this Section 6(e) is a reasonable pre-estimate of loss and not a penalty.  Such amount is payable for 
the loss of bargain and the loss of protection against future risks and except as otherwise provided 
in this Agreement neither party will be entitled to recover any additional damages as a consequence 
of such losses. 

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7.Transfer 

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement 
may be transferred (whether by way of security or otherwise) by either party without the prior written consent 
of the other party, except that:

(a)a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation 
with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without 
prejudice to any other right or remedy under this Agreement); and 

(b)a party may make such a transfer of all or any part of its interest in any amount payable to it from 
a Defaulting Party under Section 6(e). 

Any purported transfer that is not in compliance with this Section will be void.

8.Contractual Currency 

(a)Payment in the Contractual Currency.  Each payment under this Agreement will be made in the 
relevant currency specified in this Agreement for that payment (the “Contractual Currency”).  To the extent 
permitted by applicable law, any obligation to make payments under this Agreement in the Contractual 
Currency will not be discharged or satisfied by any tender in any currency other than the Contractual 
Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, 
acting in  reasonable manner and in good faith in converting the currency so tendered into the Contractual 
Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement.  
If for any reason the amount in the Contractual Currency so received falls short of the amount in the 
Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to 
the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency 
as may be necessary to compensate for the shortfall.  If for any reason the amount in the Contractual Currency 
so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party 
receiving the payment will refund promptly the amount of such excess. 

(b)Judgments.   To the extent permitted by applicable law, if any judgment or order expressed in a 
currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect 
of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this 
Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described 
in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such 
party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other 
party the amount of any shortfall of the Contractual Currency received by such party as a consequence of 
sums paid in such other currency and will refund promptly to the other party any excess of the Contractual 
Currency received by such party as a consequence of sums paid in such other currency if such shortfall or 
such excess arises or results from any variation between the rate of exchange at which the Contractual 
Currency is converted into the currency of the judgment or order for the purposes of such judgment or order 
and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in 
converting the currency received into the Contractual Currency, to purchase the Contractual Currency with 
the amount of the currency of the judgment or order actually received by such party.  The term “rate of 
exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the 
purchase of or conversion into the Contractual Currency. 

(c)Separate Indemnities.  To the extent permitted by applicable law, these indemnities constitute 
separate and independent obligations from the other obligations in this Agreement, will be enforceable as 
separate and independent causes of action, will apply notwithstanding any indulgence granted by the party 
to which any payment is owed and will not be affected by judgment being obtained or claim or proof being 
made for any other sums payable in respect of this Agreement. 

(d)Evidence of Loss.  For the purpose of this Section 8, it will be sufficient for a party to demonstrate 
that it would have suffered a loss had an actual exchange or purchase been made. 

9. Miscellaneous 

(a)Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the parties 
with respect to its subject matter and supersedes all oral communication and prior writings with respect 
thereto. 

(b)Amendments.  No amendment, modification or waiver in respect of this Agreement will be effective 
unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the 
parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. 

(c)Survival of Obligations.  Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the 
parties under this Agreement will survive the termination of any Transaction. 

(d)Remedies Cumulative.  Except as provided in this Agreement, the rights, powers, remedies and 
privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies 
and privileges provided by law. 

(e)Counterparts and Confirmations. 

(i)This Agreement (and each amendment, modification and waiver in respect of it) may be 
executed and delivered in counterparts (including by facsimile transmission), each of which will be 
deemed an original. 

(ii)The parties intend that they are legally bound by the terms of each Transaction from the moment 
they agree to those terms (whether orally or otherwise).  A Confirmation shall be entered into as 
soon as practicable and may be executed and delivered in counterparts (including by facsimile 
transmission) or be created by an exchange of telexes or by an exchange of electronic messages on 
an electronic messaging system, which in each case will be sufficient for all purposes to evidence 
a binding supplement to this Agreement.  The parties will specify therein or through another effective
 means that any such counterpart, telex or electronic message constitutes a Confirmation. 

(f)No Waiver of Rights.  A failure or delay in exercising any right, power or privilege in respect of this 
Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power 
or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or 
the exercise of any other right, power or privilege. 

(g)Headings.  The headings used in this Agreement are for convenience of reference only and are not 
to affect the construction of or to be taken into consideration in interpreting this Agreement. 

10. Offices; Multibranch Parties 

(a)If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction 
through an Office other than its head or home office represents to the other party that, notwithstanding the 
place of booking office or jurisdiction of incorporation or organization of such party, the obligations of such 
party are the same as if it had entered into the Transaction through its head or home office.  This representation 
will be deemed to be repeated by such party on each date on which a Transaction is entered into. 

(b)Neither party may change the Office through which it makes and receives payments or deliveries 
for the purpose of a Transaction without the prior written consent of the other party. 

(c)If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make 
and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the 
Office through which it makes and receives payments or deliveries with respect to a Transaction will be 
specified in the relevant Confirmation. 

11. Expenses 

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all 
reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by 
reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document 

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to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including 
but not limited to, costs of collection.

12. Notices 

(a)Effectiveness.  Any notice or other communication in respect of this Agreement may be given in any 
manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given 
by facsimile transmission or electronic messaging system) to the address or number or in accordance with 
the electronic messaging system details provided (see the Schedule) and will be deemed effective as 
indicated: 

(i)if in writing and delivered in person or by courier, on the date it is delivered; 

(ii)if sent by telex, on the date the recipient’s answerback is received; 

(iii)if sent by facsimile transmission, on the date that transmission is received by a responsible 
employee of the recipient in legible form (it being agreed that the burden of proving receipt will be 
on the sender and will not be met by a transmission report generated by the sender’s facsimile 
machine); 

(iv)if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt 
requested), on the date that mail is delivered or its delivery is attempted; or 

(v)if sent by electronic messaging system, on the date that electronic message is received, 

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business 
Day or that communication is delivered (or attempted) or received, as applicable, after the close of business 
on a Local Business Day, in which case that communication shall be deemed given and effective on the first 
following day that is a Local Business Day.

(b)Change of Addresses.  Either party may by notice to the other change the address, telex or facsimile 
number or electronic messaging system details at which notices or other communications are to 
be given to it. 

13. Governing Law and Jurisdiction 

(a)Governing Law.  This Agreement will be governed by and construed in accordance with the law 
specified in the Schedule. 

(b)Jurisdiction.  With respect to any suit, action or proceedings relating to this Agreement 
(“Proceedings”), each party irrevocably: 

(i)submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed 
by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the 
United States District Court located in the Borough of Manhattan in New York City, if this 
Agreement is expressed to be governed by the laws of the State of New York; and 

(ii)waives any objection which it may have at any time to the laying of venue of any Proceedings 
brought in any such court, waives any claim that such Proceedings have been brought in an 
inconvenient forum and further waives the right to object, with respect to such Proceedings, that 
such court does not have any jurisdiction over such party. 

Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction 
(outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined 
in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or 
re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more 
jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

(c)Service of Process.  Each party irrevocably appoints the Process Agent (if any) specified opposite 
its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings.  If for any 
reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party 
 

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and within 30 days appoint a substitute process agent acceptable to the other party.  The parties irrevocably 
consent to service of process given in the manner provided for notices in Section 12.  Nothing in this 
Agreement will affect the right of either party to serve process in any other manner permitted by law.

(d)Waiver of Immunities.  Each party irrevocably waives, to the fullest extent permitted by applicable 
law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity 
on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief 
by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets 
(whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its 
revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and 
irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any 
Proceedings. 

14. Definitions 

As used in this Agreement:--

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Tax 
Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event 
and (b) with respect to any other Termination Event, all Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or 
indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or 
indirectly under common control with the person.  For this purpose, “control” of any entity or person means 
ownership of a majority of the voting power of the entity or person.

“Applicable Rate” means:--

(a)in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) 
by a Defaulting Party, the Default Rate; 

(b)in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date 
(determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; 

(c)in respect of all other obligations payable or deliverable (or which would have been but for 
Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and 

(d)in all other cases, the Termination Rate. 

“Burdened Party” has the meaning specified in Section 5(b).

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or 
amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the 
date on which the relevant Transaction is entered into.

“consent” includes a consent, approval, action, authorization, exemption, notice, filing, registration or 
exchange control consent.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement. 

“Credit Support Provider” has the meaning specified in the Schedule.

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to 
the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus l% per annum.

“Defaulting Party” has the meaning specified in Section 6(a).

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“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

“Illegality” has the meaning specified in Section 5(b).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment 
under this Agreement but for a present or former connection between the jurisdiction of the government or 
taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient 
(including, without limitation, a connection arising from such recipient or related person being or having 
been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a 
trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of 
business in such jurisdiction, but excluding a connection arising solely from such recipient or related person 
having executed, delivered, performed its obligations or received a payment under, or enforced, this 
Agreement or a Credit Support Document).

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of 
any relevant governmental revenue authority) and “lawful” and “unlawful” will be construed accordingly.

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for 
business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any 
obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, 
as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated 
by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account 
is located and, if different, in the principal financial center, if any, of the currency of such payment, (c) in 
relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the 
city specified in the address for notice provided by the recipient and, in the case of a notice contemplated 
by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to 
Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and 
a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be 
its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement 
or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of 
bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result 
of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain 
resulting from any of them).  Loss includes losses and costs (or gains) in respect of any payment or delivery 
required to have been made (assuming satisfaction of each applicable condition precedent) on or before the 
relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)( l) or (3) or 
6(e)(ii)(2)(A) applies.  Loss does not include a party’s legal fees and out-of-pocket expenses referred to under 
Section 11.  A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably 
practicable, as of the earliest date thereafter as is reasonably practicable.  A party may (but need not) determine 
its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant 
markets.

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making the 
determination, an amount determined on the basis of quotations from Reference Market-makers.  Each 
quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) 
or by such party (expressed as a positive number) in consideration of an agreement between such party (taking 
into account any existing Credit Support Document with respect to the obligations of such party) and the 
quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would 
have the effect of preserving for such party the economic equivalent of any payment or delivery (whether 
the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable 
condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group 
of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date.  For this purpose, Unpaid Amounts in respect of the Terminated Transaction or 
group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that 
would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each 

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applicable condition precedent) after that Early Termination Date is to be included.  The Replacement 
Transaction would be subject to such documentation as such party and the Reference Market-maker may, in 
good faith, agree.  The party making the determination (or its agent) will request each Reference 
Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time 
(without regard to different time zones) on or as soon as reasonably practicable after the relevant Early 
Termination Date.  The day and time as of which those quotations are to be obtained will be selected in good 
faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after 
consultation with the other.  If more than three quotations are provided, the Market Quotation will be the 
arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values.  If 
exactly three such quotations are provided, the Market Quotation will be the quotation remaining after 
disregarding the highest and lowest quotations.  For this purpose, if more than one quotation has the same 
highest value or lowest value, then one of such quotations shall be disregarded.  If fewer than three quotations 
are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group 
of Terminated Transactions cannot be determined.

“Non-default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) 
to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.

“Non-defaulting Party” has the meaning specified in Section 6(a).

“Office” means a branch or office of a party, which may be such party’s head or home office.

“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, 
would constitute an Event of Default.

“Reference Market-makers” means four leading dealers in the relevant market selected by the party 
determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which 
satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make 
an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same 
city.

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is 
incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through 
which the party is acting for purposes of this Agreement is located, (c) in which the party executes this 
Agreement and (d) in relation to any payment, from or through which such payment is made.

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) 
with respect to a Transaction.

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right 
or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under 
this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such 
payer.

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of:--

(a)the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each 
Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; 
and 

(b)such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts) for 
each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be 
determined or would not (in the reasonable belief of the party making the determination) produce a 
commercially reasonable result. 

“Specified Entity” has the meaning specified in the Schedule.

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, 
contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

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“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect 
thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support 
Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or 
any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is 
a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or 
equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, 
cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap 
transaction, currency option or any other similar transaction (including any option with respect to any of these 
transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified 
Transaction in this Agreement or the relevant confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including 
interest, penalties and additions thereto) that is imposed by any government or other taxing authority in 
respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.

“Tax Event” has the meaning specified in Section 5(b).

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a 
Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions 
(in either case) in effect immediately before the effectiveness of the notice designating that Early Termination 
Date (or, if “Automatic Early Termination” applies, immediately before that Early Termination Date).

“Termination Currency” has the meaning specified in the Schedule.

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination 
Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other 
than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined 
by the party making the relevant determination as being required to purchase such amount of such Other 
Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case 
may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to 
the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such 
Other Currency with the Termination Currency at or about 11:00 a.m.  (in the city in which such foreign 
exchange agent is located) on such date as would be customary for the determination of such a rate for the 
purchase of such Other Currency for value on the relevant Early Termination Date or that later date.  The 
foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be 
selected in good faith by that party and otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be 
applicable, a Credit Event Upon Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or 
evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such 
amounts.

“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of 
(a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become 
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination 
Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated 
Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for 
Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date 
and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date 
for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency 
of such amounts, from (and including) the date such amounts or obligations were or would have been required 
to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate.  Such 

15ISDA® 1992 

 

DB1/ 95864532.2

amounts of interest will be calculated on the basis of daily compounding and the actual number of days 
elapsed.  The fair market value of any obligation referred to in clause (b) above shall be reasonably 
determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, 
it shall be the average of the Termination Currency Equivalents of the fair market values reasonably 
determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below 
with effect from the date specified on the first page of this document.

 

 

 

	EDF Energy Services, LLC

	Summer Energy Northeast, LLC

(formerly: REP Energy, LLC)

	(Name of Party)

	(Name of Party)

	By:/s/ C. Alexis Keene 

Name:  C. Alexis Keene

Title:   Senior Vice President & General Counsel     

	By:       /s/ Neil Leibman

Name:  Neil Leibman

Title:    CEO / Manager

 

	 

	 

16ISDA® 1992 

 

DB1/ 95864532.2

SCHEDULE

to the 

ISDA MASTER AGREEMENT

(Multicurrency - Cross Border)

dated as of February 21, 2018

between

	EDF Energy Services, LLC

	and

	Summer Energy Northeast, LLC

(formerly: REP Energy, LLC)

	(“Party A”)

	 

	(“Party B”)

	being a limited liability company organized and existing under the laws of the State of Delaware

	 

	being a limited liability company  organized and existing under the laws of the State of Texas

Part 1.  Termination Provisions

In this Agreement:

(a)“Specified Entity” means:  

in relation to Party A, for the purpose of:

	Section 5(a)(v):

	Not applicable

	Section 5(a)(vi):

	Not applicable

	Section 5(a)(vii):

	Not applicable

	Section 5(b)(iv):

	Not applicable

And in relation to Party B, for the purpose of:

	Section 5(a)(v):

	Not applicable

	Section 5(a)(vi):

	Not applicable

	Section 5(a)(vii):

	Not applicable

	Section 5(b)(iv):

	Not applicable

(b)“Specified Transaction” has the meaning specified in Section 14 of this Agreement except that such term is amended by adding after the phrase “currency option” set forth in the 8th line thereof, the phrase “agreement for the purchase, sale, exchange or transfer of any commodity or any other commodity trading transaction”.  For purposes of such definition, “commodity” means any tangible or intangible commodity of any type or description (including, without limitation, electric energy and/or capacity, ancillary services, transmission, congestion rights, renewable energy credits, emission allowances, petroleum and natural gas, coal and the products or by-products, or storage capacity or rights thereof). 

DB1/ 95864532.2

(c)The “Cross Default” provisions of Section 5(a)(vi) of this Agreement apply to both Party A and Party B.  Section 5(a)(vi) is amended by deleting the phrase “, or becoming capable at such time of being declared” from clause (1) thereof. 

If such provisions apply:

(i)“Specified Indebtedness” has the meaning specified in Section 14 of this Agreement.  

(ii)“Threshold Amount” means:  

(1)With respect to Party A: $25,000,000.00; and 

(2)With respect to Party B: $500,000.00.  

(d)The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of this Agreement apply to Party A and Party B.  Section 5(b)(iv) of this Agreement is amended by adding the following to the end thereof: 

“The foregoing does not constitute a Termination Event if (A) immediately thereafter the resulting, surviving, or transferee entity (which entity is the successor-in-interest to such party) is directly or indirectly owned or controlled by such party’s Credit Support Provider, if any, and the Credit Support Documents supporting such party’s obligations remain in full force and effect, or (B) in connection with or upon the occurrence thereof X or its successor or transferee (i) provides (or causes to be provided) to the other party (“Y”) within two (2) Local Business Days of Y’s written demand therefore, performance assurance in the form and amount acceptable to Y in its reasonable discretion or (ii) enters into an amendment to this Agreement that amends the Credit Support Annex on terms acceptable to Y in its discretion.  If performance assurance is provided pursuant to clause (i), it will be in addition to any Eligible Credit Support required under the Credit Support Annex.”

(e)The “Automatic Early Termination” provision of Section 6(a) of this Agreement does not apply to Party A or to Party B unless the Event of Default specified in Sections 5(a)(vii)(1), (3), (4), (5), (6) or to the extent analogous thereto, (8), of this Agreement is governed by a system of law which does not permit termination to take place after the occurrence of the relevant Event of Default, in which case, the Automatic Early Termination provision of Section 6(a) of this Agreement applies to both Party A and Party B. 

(f)Payments on Early Termination.  For the purpose of Section 6(e) of this Agreement 

(i)Loss will apply; and  

(ii)The Second Method will apply. 

(g)“Termination Currency” means U.S. Dollars. 

DB1/ 95864532.2

(h)Additional Termination Event means:   

(i)With respect to Party A, not applicable. 

(ii)With respect to Party B, not applicable. 

Part 2.  Tax Representations

(a)Payer Tax Representations.  For the purpose of Section 3(e) of this Agreement, Party A and Party B make the following representation: 

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement.  In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) of this Agreement by reason of material prejudice to its legal or commercial position.

(b)Payee Tax Representations. For the purpose of Section 3(f) of this Agreement, Party A and Party B make the representations specified below, if any: 

(i)Party A represents that it is a limited liability company organized and existing under the laws of the State of Delaware and is a disregarded entity for federal tax purposes.  The entity that is treated as the owner of Party A’s assets for federal tax purposes is a United States person within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended. 

(ii)Party B represents that it is a limited liability company organized and existing under the laws of the State of Texas and is a disregarded entity  for federal tax purposes.  The entity that is treated as the owner of Party B’s assets for federal tax purposes is a United States person within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended. 

Part 3.  Agreement to Deliver Documents

For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable:

(a)Tax forms, documents or certificates to be delivered are: 

	Party required to deliver document

	Form/Document/Certificate

	Date by which to be delivered

	Party A and 

Party B

 

	An executed United States Internal Revenue Service Form W-9 (or any successor thereto) of such party or such party’s owner if such party is a disregarded entity.

	(i)Upon the execution of this Agreement;  

(ii)promptly upon reasonable demand by the other party; and  

(iii)promptly upon learning that any such form previously provided by the party has become obsolete or incorrect. 

	Party A and 

Party B

	Uniform Sales & Use Tax Certificate – Multijurisdiction or other similar applicable resale certificates.

	(i)Upon the execution of this Agreement (if physical annex is attached);  

(ii)promptly upon reasonable demand by the other party; and  

(iii)promptly upon learning that any such form previously provided by the party has become obsolete or incorrect. 

(b)Other documents to be delivered are: 

	Party required to deliver document

	Form/Document/Certificate

	Date by which to be delivered

	Covered by Section 3(d) Representation

	Party A and
Party B

	A duly executed certificate reasonably acceptable to the receiving party evidencing the authority (i) of such party to execute, deliver and perform its obligations under this Agreement and any Credit Support Document to which it is a party and (ii) of its Credit Support Provider, if any, to execute, deliver and perform its obligations under each Credit Support Document to which it is a party.

	Upon execution of this Agreement

	Yes

	Party A and
Party B

	A duly executed incumbency certificate reasonably acceptable to the receiving party certifying the name, true signature and authority of each person authorized to (i) with respect to such party execute this Agreement and any Credit Support Document to which it is a party and (ii) with respect to such party’s Credit Support Provider, if any, execute any Credit Support Document to which it is a party.

	Upon execution of this Agreement

	Yes

	Party A and
Party B

	Such other reasonable documentation (including financial information) the other party requests in connection with any Transaction.

	Promptly upon request

	Yes

	Party A and
Party B

	A copy of the most recently available annual report containing audited consolidated financial statements of the party or its Credit Support Provider, as applicable.

	Promptly upon request if such financial statements are not available on “SEDAR”, “EDGAR” or on the party’s or its Credit Support Provider’s (as applicable) home page on the World Wide Web

	Yes

	Party A 

	A copy of the most recently available quarterly unaudited consolidated financial statements of Party A, or in the case of its Credit Support Provider, as applicable, a copy of its bi-annual consolidated financial statements

	Promptly upon request if such financial statements are not available on “SEDAR”, “EDGAR” or on the party’s or its Credit Support Provider’s (as applicable) home page on the World Wide Web

	Yes

	Party B

	A copy of the most recently available quarterly unaudited consolidated financial statements of Party B or its Credit Support Provider, as applicable.

	Promptly upon request if such financial statements are not available on “SEDAR”, “EDGAR” or on the party’s or its Credit Support Provider’s (as applicable) home page on the World Wide Web

	Yes

	Party A and Party B

	Duly executed copy of each Credit Support Document specified in Part 4(e) of this Schedule.

	Upon execution of this Agreement

	Yes

	Party B

	Daily Report of all amounts of accounts receivable due from Party B’s customers representing amounts due within 60-days (current plus 30-days aging POR accounts receivable) and those POR accounts receivable due 61-days and beyond to Party B in the non-recourse purchase of receivables (“POR”) market, in form and substance reasonably acceptable to Party A (the “POR Report”) 

 

	(i) On each Business Day; and 

(ii) promptly upon reasonable demand by Party A.

	Yes

	Party B

	A reconciliation statement detailing the POR accounts receivables estimated monthly in the POR Report as compared to the cash received from POR customers in the same month.

 

	(i) On the fifth Business Day of each month; and 

(ii) promptly upon reasonable demand by Party A.

	Yes

	Party B

	Legal opinion in form and substance reasonably satisfactory to Party A addressing, limited liability company power and authority, due execution and delivery, enforceability and creation, attachment and perfection issues relating to the security interests created by the Credit Support Documents of Party B.

	Upon execution of this Agreement

	No

 

Part 4.  Miscellaneous

(a)Notices. 

(i)Effectiveness.  Section 12(a) of the Agreement is amended by (A) deleting the phrase “facsimile transmission” set forth in the third line and replacing it with the word “email” and (B) deleting the phrase “if sent by telex, on the date the recipient’s answerback is received;” set forth in clause (ii) thereof and replacing it with the phrase “if sent by email, on the date it is delivered;”. 

DB1/ 95864532.2

(ii)Addresses for Notices.  For the purpose of Section 12(a) of this Agreement: 

Address for notices or other communication to Party A:

Address:EDF Energy Services, LLC 

4700 W. Sam Houston Parkway N., Suite 250

Houston, TX 77041

Attention:Contracts Administration 

Telephone:281-781-0333 

Facsimile:281-653-1454 

Email:Hou_Contract_Admin@edfenergyservices.com 

With a copy of notices or other communication under Section 5 or 6 to:

Address:EDF Energy Services, LLC 

4700 W. Sam Houston Parkway N., Suite 250

Houston, TX 77041

Attention:General Counsel 

Facsimile:281-653-1454 

Address for notices or other communication to Party B:

Address:Summer Energy Northeast, LLC 

(formerly:  REP Energy, LLC) 

5847 San Felipe Street #33700

Houston, Texas 77057

Attention:Jaleea George 

Telephone:713-375-2793 

Facsimile:713-481-8470 

Email:jgeorge@summerenergy.com 

With a copy to: 

Address:Kirton McConkie PC 

50 E. South Temple 

Salt Lake City, UT 84111

Attention:Alexander N. Pearson 

Telephone:801-328-3600 

Facsimile:801-212-2006 

Email:apearson@kmclaw.com 

 

(b)Offices.  The provisions of Section 10(a) apply to this Agreement. 

(c)Multibranch Party.  For the purpose of Section 10(c) of this Agreement: 

(i)Party A is not a Multibranch Party. 

(ii)Party B is not a Multibranch Party. 

DB1/ 95864532.2

(d)Calculation Agent.  The Calculation Agent is Party A unless an Event of Default has occurred and is continuing with respect to Party A and Party A is the sole Defaulting Party, in which case the Calculation Agent will be Party B (or any designated third party mutually agreed to by the parties) until such time as Party A is no longer the sole Defaulting Party.  The failure by a party to perform any duties of the Calculation Agent under this Agreement is not an Event of Default or Termination Event under Sections 5(a) or (b) of this Agreement. 

(e)Credit Support Document.  Details of Credit Support Documents are as follows: 

(i)With respect to Party A, the Credit Support Annex.  For purposes of this Agreement, “Credit Support Annex” means the annex to this Schedule in the form of the ISDA Credit Support Annex, as published by ISDA in 1994, that includes the version of Paragraph 13 thereto that accompanies, and forms a part of, such annex and this Schedule. 

(ii)With respect to Party B, (i) the Credit Support Annex, (ii) the Security Agreement, dated the date hereof (“Security Agreement”), between Party A and Party B, and the documents contemplated thereby, including without limitation, any and all Control Agreements (as such term is defined in the Security Agreement) and (iii) the Guaranty, dated as of the date hereof provided by Party B’s Credit Support Provider in respect of this Agreement, as may be amended, restated, supplemented or otherwise modified from time to time and any replacement thereto issued by Party B’s Credit Support Provider. 

(f)Credit Support Provider. 

(i)Credit Support Provider means in relation to Party A:  Not applicable. 

(ii)Credit Support Provider means in relation to Party B:  Summer Energy Holdings, Inc. 

(g)Governing Law.  This Agreement is governed by to be and construed in accordance with the laws of the State of New York (without giving effect to any provision of New York law that would cause another jurisdiction’s laws to be applied). 

(h)Netting of Payments.  The limitation set forth in Section 2(c)(ii) of this Agreement does not apply.  The result of the foregoing election is that the netting contemplated by Section 2(c) of this Agreement applies to all Transactions. 

(i)“Affiliate” has the meaning specified in Section 14 of this Agreement. 

Part 5.  Other Provisions

(a)Incorporation of Definitions.  Unless otherwise specified in a Confirmation, this Agreement and each Confirmation incorporates, and is subject to and governed by, the 2005 ISDA Commodity Definitions (the “Commodity Definitions”) and the 2006 ISDA Definitions (the “Definitions”), each as published by the International Swaps and Derivatives Association, Inc. and as amended, supplemented, updated and restated through the date of this Agreement.   

DB1/ 95864532.2

If there is any conflict between the provisions of this Agreement and the provisions of the Commodity Definitions or the Definitions, the provisions of this Agreement apply.  If there is any conflict between the Commodity Definitions and the Definitions, the Commodity Definitions apply.  If there is any conflict between the provisions of this Agreement and a Confirmation, the provisions of the Confirmation apply with respect to the applicable Transaction.  The references in the Definitions to “Swap Transaction” are deemed to be references to any Transaction.

(b)Additional Representations.  Section 3 of this Agreement is amended by adding the following additional representations as clauses (g), (h), and (i) thereof: 

“(g)It is an “eligible contract participant” as such term is defined in Section 1a(18) of the U.S. Commodity Exchange Act (7 U.S.C. § 1a(18)). 

(h)It is entering into this Agreement, any Credit Support Document to which it is a party, each Transaction, and each other document executed and delivered in accordance with this Agreement as principal and not as agent or in any other capacity, fiduciary or otherwise. 

(i)In connection with the negotiation of, the entering into, and the confirming of the execution of this Agreement, any Credit Support Document to which it is a party, each Transaction and any other documentation relating to this Agreement to which it is a party or that it is required by this Agreement to deliver: 

(i)the other party hereto or thereto is not acting as a fiduciary or financial or investment advisor for it; 

(ii)it is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (except such representations as may be expressly set forth in this Agreement, in such Credit Support Document or in any Confirmation); 

(iii)the other party hereto or thereto has not given to it (directly or indirectly through any other person) any assurance, guarantee, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence, or benefit (either legal, regulatory, tax, financial, accounting, or otherwise) of this Agreement, such Credit Support Document, such Transaction or other documentation; 

(iv)it has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisors to the extent it has deemed necessary, and it has made its own investment, hedging, and trading decisions (including decisions regarding the suitability of any Transaction pursuant to this Agreement) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party hereto or thereto; 

(v)all trading decisions have been the result of arm’s length negotiations between the parties; and 

DB1/ 95864532.2

(vi)it is entering into this Agreement, such Credit Support Document, each Transaction and any other documentation relating to this Agreement with a full understanding of all of the terms, conditions and risks hereof and thereof (economic and otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those risks.” 

(c)Accuracy of Specified Information.  Section 3(d) of this Agreement is amended by adding in the third line thereof after the word “respect” and before the period the phrase “or, in the case of audited or unaudited financial statements, such financial statements fairly present, as of their date, the financial condition of the relevant entity in accordance with generally accepted accounting principles in the country of such entity’s formation or incorporation, as applicable, consistently applied.” 

(d)Transaction Procedure. 

(i)The parties agree that the essential terms of each Transaction to be entered into hereunder may be orally agreed upon over the telephone, in writing via email or instant messaging system, and in accordance with any other method customary for commodity transactions of the type proposed. 

(ii)Following agreement on the terms of a Transaction, Party A shall complete and sign a Confirmation recording the agreed upon terms and forward same to Party B.  Party B shall either execute and return the Confirmation or return the Confirmation with applicable corrections, if any, within two (2) Local Business Days of receipt of the Confirmation.  Failure of Party A to complete and sign a Confirmation will not affect the validity or enforceability of the Transaction.  The Parties shall resolve any dispute in respect of a Confirmation raised within the applicable two (2) Local Business Day period in good faith and, if available, with reference to the recorded telephone negotiations of the Transaction, if any, or with reference to any written exchange confirming the terms of the Transaction at the time such Transaction was entered into.  Failure by Party B to respond to any Confirmation within the two (2) Local Business Day period after receipt will not adversely affect the binding, valid and enforceable nature of any Transaction and will, absent manifest error, be deemed to be an affirmation of the terms of the Transaction as set out in the Confirmation. 

(e)Rounding. Prices for the following will be rounded as follows: 

	Commodity Pricing in MWh:

	rounded to the nearest fourth decimal place

	Commodity Pricing in MMBtu:

	rounded to the nearest fourth decimal place

	All Dollar amounts:

	rounded to the nearest cent

(f)Bank Fees.Each party making a payment to the other party is responsible for any bank fees or charges associated with such payment and shall not deduct such fees from the payment owed to the other party. 

(g)Set-off.  The following subsection (f) is added to Section 6 of this Agreement: 

DB1/ 95864532.2

“(f)Set-off.  Any amount (“Early Termination Amount”) payable to one party (the “Payee”) by the other party (the “Payer”) under Section 6(e) of this Agreement, in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5(b)(iv) of this Agreement or any other Termination Event with respect to which all Transactions are Affected Transactions has occurred, will, at the option of the party (“X”) other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by means of set off against any amount(s) (“Other Agreement Amount”) payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by the Payee to, or in the favor of, the Payer (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it is so set-off).  X will give notice to the other party of any set-off effected under this paragraph, The failure to provide notice of set-off does not affect the validity of such set-off.  

For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency.  The term “rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the relevant currency.

If any obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other party when the obligation is ascertained.  Nothing in this subsection is effective to create a charge or other security interest.  This subsection is without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

(h)Bankruptcy Provisions.  Each party acknowledges, intends and, as applicable, agrees that: 

(i)Each transfer of funds, securities or other property under this Agreement or any Transaction constitutes a transfer that may not be avoided under Sections 544, 545, 547, 548(a)(2) or 548(b) of Title 11 of the United States Code or similar or parallel Canadian legislation (the “Bankruptcy Code”). 

(ii)The rights given to each party hereunder upon an Event of Default by the other to cause the liquidation and termination of Transactions and to set-off mutual debts and claims in connection therewith, may not be stayed, limited or avoided under the Bankruptcy Code including, without limitation, Section 362, 365(e) or 105(a) of the Bankruptcy Code. 

(iii)(A) all transactions entered into under this Agreement constitute a “forward contract” within the meaning of the Bankruptcy Code or a “swap agreement” within the meaning of the Bankruptcy Code; (B) each party hereto is a “forward  

DB1/ 95864532.2

contract merchant” within the meaning of the Bankruptcy Code; (C) all payments made or to be made by one party to the other party pursuant to this Agreement constitute “settlement payments” within the meaning of the Bankruptcy Code; (D) all transfers of Eligible Credit Support or other performance assurance by one party to the other party under this Agreement constitute “margin payments” within the meaning of the Bankruptcy Code; and (E) this Agreement constitutes a “master netting agreement” within the meaning of the Bankruptcy Code.  

(iv)For purposes of this Agreement, such party is not a “utility” as such term is used in 11 U.S.C. Section 366, and therefore each party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding wherein such party is a debtor.  In any such proceeding, each party further waives the right to assert that the other party is a provider of last resort. 

(i)Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction only, be ineffective to the limited extent of such prohibition or unenforceability unless such severance will materially impair the benefits of the remaining portions of this Agreement or materially change the reciprocal obligations of the parties.  Any severance will occur without otherwise invalidating or adversely affecting the validity or enforceability of the remainder of this Agreement in such jurisdiction or invalidating or adversely affecting the validity or enforceability of this Agreement as a whole in any other jurisdiction.  If severance is required, the parties shall in good faith negotiate a replacement for the prohibited or unenforceable provision, the economic effect of which approximates as close as possible that of the prohibited or unenforceable provision. 

(j)WAIVER OF JURY TRIAL.  EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT DOCUMENT.  EACH PARTY: 

(i)CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY OR ANY CREDIT SUPPORT PROVIDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT IN THE EVENT OF A SUIT, ACTION OR PROCEEDING SEEK TO ENFORCE THE FOREGOING WAIVER; AND  

(ii)ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND PROVIDE FOR ANY CREDIT SUPPORT DOCUMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 

(k)Termination of Agreement.  If there are no Transactions (or any present or future payment or delivery obligations, contingent or otherwise, thereunder) outstanding under this Agreement, either party may, upon thirty (30) Local Business Days’ notice to the other, terminate this Agreement.  Such termination will not prejudice any rights or obligations that may have accrued prior to such termination.   

DB1/ 95864532.2

(l)Consent to Recording.  Each party consents to the recording of all telephone conversations between its employees and agents and the employees and agents of the other party and each party represents and warrants that its employees and agents have consented to all such recordings.  Any resulting recordings and other evidence may be introduced to prove a Transaction between the parties and to establish any matters pertinent to a Transaction. 

(m)LIMITATION OF LIABILITY.  NO PARTY IS LIABLE FOR OR REQUIRED TO PAY EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES (WHETHER OR NOT ARISING FROM ITS NEGLIGENCE) TO ANY OTHER PARTY, BUT NOTHING IN THIS PROVISION AFFECTS THE ENFORCEABILITY OF SECTION 6(E) OF THIS AGREEMENT.  IF AND TO THE EXTENT ANY PAYMENT REQUIRED TO BE MADE PURSUANT TO THIS AGREEMENT IS DEEMED TO CONSTITUTE LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT IS INTENDED TO BE A REASONABLE APPROXIMATION OF THE AMOUNT OF THE DAMAGES AND NOT A PENALTY. 

(n)Confidentiality.  Each party agrees that this Agreement and all other documents relating to this Agreement and any other information provided to it or its Credit Support Provider, if any, will be kept confidential, subject to the following exceptions: 

(i)A party may disclose information to its Affiliates and its and their respective directors, employees, regulators, counsel, auditors, agents or other advisors (“Representatives”) to whom it is necessary to show the information for purposes related to its relationship with the other party, each of whom will be informed of the confidential nature of the information. 

(ii)A party may disclose information (1) in any statement or testimony pursuant to a subpoena, summons or order by any court, government body, agency or authority, or otherwise required by law, order, regulation, ruling or in connection with applicable litigation; (2) upon the request or demand of any applicable regulatory authority, self-regulatory authority, governmental agency or authority, or independent system operator or regional transmission operator; and (3) in order to comply with any applicable law, order, or regulation applicable to it.  Without limiting the foregoing, Party A acknowledges and agrees that Party B is required to disclose the terms of, and provide a copy of, this Agreement and related agreements entered into between Party A and Party B, via the EDGAR system of the Securities and Exchange Commission, pursuant to the requirements of the Securities Exchange Act of 1934, as amended.  In connection with any such disclosure pursuant to clause (1) or (2), the party shall to the extent practical and permitted provide prior notice of such disclosure to the other party in order to permit the party to take any action that it deems necessary to protect the confidentiality of such information. 

(iii)A party may disclose information to potential or actual bona fide assignees, participants and/or other transferees of an interest in extensions of credit related to any contemplated transaction, but only in connection with assignments or  

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transfers permitted under the terms of Section 7 of this Agreement (such entities will be subject to the same confidentiality provisions as those of the parties hereto).

(iv)A party may disclose information to third parties on a no name basis for the sole purpose of calculating a published index. 

(v)A party may disclose information to a ratings agency in connection with the party’s or its Credit Support Provider’s credit rating. 

(vi)The following information is not subject to the foregoing obligations of confidentiality and use:  information that (1) is or becomes generally available to the public other than as a result of a disclosure by the other party or its Representatives; (2) becomes available to the other party on a non-confidential basis from a source other than that party or one of its agents; (3) was known to the party on a non-confidential basis or independently developed by the party prior to its disclosure by the other party or one of its Representatives or (4) was independently developed by the other party without reference to the confidential information of the disclosing party. 

(o)Reference Market-makers.  The definition of “Reference Market-makers” in Section 14 of this Agreement is amended by inserting the phrase “non-affiliated” before the word “dealers” and by deleting clause (b) thereof. 

(p)Change of Account.  Section 2(b) of this Agreement is amended by adding the following at the end thereof: 

“Unless the other party consents (which consent shall not be unreasonably withheld), such new account must be in the same tax jurisdiction as the original account.” 

(q)Fully Performed Transactions.  Notwithstanding Sections 5 and 6 of this Agreement, if at any time and so long as one of the parties to this Agreement (“X”) has satisfied in full all of its payment and delivery obligations under this Agreement and has at that time no future payment or delivery obligations, whether absolute or contingent, then unless the other party (“Y”) is required pursuant to appropriate proceedings to return to X or otherwise returns to X upon demand of X any portion of any such payment or delivery, (i) the occurrence of an event described in Section 5(a) of this Agreement with respect to X, any Credit Support Provider of X or any Specified Entity of X does not constitute an Event of Default or Potential Event of Default with respect to X as the Defaulting Party and (ii) Y is entitled to designate an Early Termination Date pursuant to Section 6 of this Agreement only as a result of the occurrence of a Termination Event set forth in (x) either Section 5(b)(i) or 5(b)(ii) of this Agreement with respect to Y as the Affected Party or (y) Section 5(b)(iii) of this Agreement with respect to Y as the Burdened Party. 

(r)Events of Default.  Section 5(a)(vii) of this Agreement is amended by the insertion (a) in subclause (3) after the words “benefit of its creditors” the words “or sends out a notice convening a meeting of its creditors to propose a voluntary arrangement”, and (b) in subclause (4) after the words “instituted or presented against it” the parenthetical “(unless instituted or presented against it by any of its Affiliates)”. 

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(s)Dodd Frank Requirements - Reporting.   

 

(i)In satisfaction of the Dodd Frank Requirement that counterparties to a Reportable Swap Transaction having the same regulatory status under the Dodd Frank Requirements mutually agree as to the identity of the Reporting Party, Party A and Party B agree, as a term of each Reportable Swap Transaction, as follows: 

(1)For all Reportable Swap Transactions (if any) between Party A and Party B, Party A is the Reporting Party for all reporting required pursuant to Parts 43 and 45 of the CFTC Regulations.   

(2)For any End-User Swap Transaction with respect to which Party A is the sole electing party and, on the condition that Party B has complied with its obligations under Part 5(s)(ii)(3) below, for any End-User Swap Transaction with respect to which Party B is an electing party, Party A is responsible for all reporting required pursuant to Section 50.50(b) of the CFTC Regulations. 

(ii)In connection with the agreements of Party A above and in order to permit Party A, as the Reporting Party, to comply with the Reporting Regulations, Party B agrees that: 

(1)It will timely provide to Party A (A) notice of any change in the “primary economic terms”, as such term is used in the Reporting Regulations, of any Reportable Transaction and (B) all other information reasonably requested by Party A to allow it to comply with the Reporting Regulations. 

(2)Notwithstanding any confidentiality or other similar agreement, obligation, or requirement between the parties, Party A may disclose the information required by the Reporting Regulations to a swap data repository and Party B waives, solely to the extent necessary to permit such disclosure, any obligation of confidentiality which would otherwise bar or restrict such disclosure.   

(3)With respect to each End-User Swap Transaction with respect to which Party B is an electing party, it (A) is eligible to exercise an exception from the applicable mandatory clearing obligation, (B) it will have filed, as permitted by Section 50.50(b)(2) of the CFTC Regulations, an Annual End-User Information Report and any required amendment thereto during the three hundred sixty-five (365) day period immediately preceding the trade date for the End-User Swap Transaction and (C) will, upon request, provide Party A copy of its current Annual End-User Information Report. 

(4)It is not, as of the date of the Master Agreement, an entity registered as a “Swap Dealer” or “Major Swap Participant” and is not a “Financial Entity” (as such terms are defined in the Dodd-Frank Requirements) and, in the event it registers as or becomes such an entity, it will promptly notify Party A in writing of such change in its status and this Part 5(s) will  

DB1/ 95864532.2

be deemed deleted from this Agreement and replaced with “[RESERVED]” with no further action required of either party.  

(iii)The failure of either party to comply with its respective obligations under this Part 5(s) does not constitute an event of default or termination event (however defined or described) under, or otherwise constitute grounds on which the other party may vitiate, cancel, or otherwise terminate any Reportable Swap Transaction between the parties or any agreement (including this Agreement) governing the terms thereof, or any other agreement between the parties. Notwithstanding the agreement set forth in clause (i) above, nothing in this Agreement precludes Party A from relying on any applicable no-action or other relief. 

(iv)For purposes of this Part 5(s), the following terms have the following meanings: 

“Annual End-User Information Report” means a report of all information required to be reported under Section 50.50(b)(1)(iii) of the CFTC Regulations

“CFTC” means the Commodity Futures Trading Commission.

“CFTC Regulations” means the regulations promulgated by the CFTC and set forth in Title 17 of the Code of Federal Regulations, as amended from time to time, and any interpretations or other guidance published by the CFTC with respect thereto, as in effect from time to time.

“Dodd Frank Requirements” means the collective reference to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 11-203, as amended from time to time, and the CFTC Regulations implementing such act.

“End-User Swap Transaction” means a Reportable Swap Transaction entered into between Party A and Party B for which a party elects the exception to an applicable (if any) mandatory clearing requirement under Section 2(h)(7)(A) of the Commodity Exchange Act (7 U.S.C. § 2(h)(7)(A)).

“Reportable Swap Transaction” means a transaction that constitutes a “Swap” under, and as such term is defined in, the Dodd Frank Requirements.

“Reporting Party” means the party to a Reportable Swap Transaction responsible for complying with the mandatory data reporting provisions applicable to such Reportable Swap Transaction.

“Reporting Regulations” means the applicable mandatory data reporting obligations of Parts 43 and 45 and Section 50.50(b) of the CFTC Regulations.

(t)Legal Entity Identifier.   

Party A’s Legal Entity Identifier is 549300AGC7BAI04R6015.  

Party B’s Legal Entity Identifier is 254900V0P3NDXMN3RP59.

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(u)Commodity Trade Options.  With respect to each Transaction entered into that constitutes a “commodity option transaction” as such term is used in Part 32 of Title 17 of the Code of Federal Regulations, each party represents to the other party as of the date that such Transaction is offered and as of the date that such Transaction is entered into that (i) it is a producer, processor, or commercial user of, or a merchant handling the commodity that is the subject of such Transaction; (ii) it is entering into the Transaction solely for purposes related to its business as such; and (iii) it intends to physically settle such Transaction such that if the option associated with such Transaction is exercised, the option would result in the sale of an “exempt commodity” (as such term is defined in Section 1a(20) of the Commodity Exchange Act, as amended), for immediate or deferred delivery. 

(v)Information; Inspection.  Party B shall keep proper books of record and account which are satisfactory to Party A and in which accurate and complete entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and activities and will maintain its fiscal reporting periods on the present basis.  Party A or any representative of Party A shall have the right, with ten (10) Business Days’ written notice to Party B and at its sole expense and during normal business hours, to examine all the relevant records of Party B, including written and electronic records, to the extent necessary to verify the accuracy of the POR Report and to protect Party A’s interests in the Collateral.  Party A and its representatives shall at all times also have the right to enter into and upon any premises where any of the Collateral is located for the purpose of inspecting the same, observing its use or protecting interests of Party A therein.  

Part 6.  Physically Settled Power Transactions

Paragraphs (a) through (i) of the form of ISDA North American Power Annex, as set forth in Sub-Annex F to the 2005 ISDA Commodity Definitions, are incorporated into, supplement, and form a part of this Agreement as if set forth in this Part 6 in full without change or modification.  This Part 6 may be referred to in this Agreement and in any Confirmation as the “Power Annex” to this Agreement.  

(j)Elective Provisions. 

(1)Clause (a)(ii):  √   Applicability to Outstanding Power Transactions.  If  

not checked, not applicable.

(2)Clause (a)(iii):  √  Applicability of Outstanding Power Credit Support  

held by a party in connection with Outstanding 

Power Transactions.  If not checked, not applicable.

(3)Clause (c):  √  Accelerated Payment Damages.  If not checked, not  

applicable.

(4)Clause (d)(ii):Timeliness of Payment 

      Option A 

  √  Option B 

If neither is checked, Option B shall be deemed to 

apply.

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(5)Clause (h)(i):Wholesale Power Tariffs 

  √  Party A Electric Tariff.  Tariff/Date/Docket: 

Tariff:  Market-Based Rate Tariff

Dated:  May 16, 2016

Docket Number:  ER16-00325-001

  √  Party B Electric Tariff.  Tariff/Date/Docket: 

Tariff:  Market-Based Rate Tariff

Dated:  January 23, 2018

Docket Number:  ER18-696-000

If not checked, not applicable.

(6)Clause (h)(ii):  √  Applicability of Severability provision.  If not  

checked, not applicable.

(7)Clause (h)(iii):   √  Applicability of FERC Standard of Review and  

Certain Covenants and Waivers.  If not checked, not 

applicable.

(k)Other Modifications to this Power Annex 

(i)Mobile-Sierra Amendments.  Clause (h)(iii) of this Power Annex is amended and restated in its entirety as follows: 

“(iii) FERC Standard of Review; Mobile-Sierra Waiver; Certain Covenants and Waivers.  If elected under clause (j) of this Power Annex as being applicable:

(a)Absent the agreement of all parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a party (to the extent that any waiver in subsection (b) below is unenforceable or ineffective as to such party), a non-party or FERC acting sua sponte, will solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008) and NRG Power Marketing LLC v. Maine Pub. Util. Comm’n, 558 U.S. 165 (2010) (the “Mobile-Sierra” doctrine).  

(b)In addition, and notwithstanding the foregoing subsection (a), to the fullest extent permitted by applicable law, each party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under §§ 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the parties, it being the express intent of the parties that,  

DB1/ 95864532.2

to the fullest extent permitted by applicable law, neither party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable law or market conditions that may occur.  In the event it were to be determined that applicable law precludes the parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this subsection (b) shall not apply, provided that, consistent with the foregoing subsection (a), neither party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in the foregoing subsection (a).”

(ii)ERCOT Nodal Amendments.  Clauses (b) and (c) of this Power Annex are amended as specified in Paragraph 2 of that certain “Amendment relating to the Scheduling of Firm (LD) and Firm (No Force Majeure) Transactions in ERCOT’s Texas Nodal Market”, Version 2.0, as published by Edison Electric Institute effective November 19, 2010. 

(iii)Form of Master Agreement.  Clauses (a) through (i) of this Power Annex are amended by deleting each instance of the reference “Part [6]” and replacing it with the phrase “Power Annex” and clause (i)(ii)(B) of this Part 6 is amended by deleting the phrase “Section [5(a)(ii)][5(a)(ii)(1)]” and replacing it with the words “Section 5(a)(ii)”. 

(iv)Events of Default.  Clause (i)(ii)(A) of this Power Annex is amended by deleting the phrase “or delivery” and replacing it with the phrase “or delivery under Section 2(a)(i) or 2(e)”. 

(v)Additional Definitions.  The following definition is added to clause (i)(iv) of this Power Annex in its appropriate alphabetical order: 

““Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys’ fees and court costs, whether incurred by settlement or otherwise, and whether claims or actions are threatened or filed prior to or after the termination of the Agreement.”

(vi)Additional Product Definitions.  For purposes of defining the Product in connection with any applicable Power Transaction, the following terms have the following meanings: 

“CAISO Energy” means with respect to a Power Transaction, a Product under which the Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly quantity without Ancillary Services (as defined in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator transaction pursuant to the applicable tariff and protocol provisions of the California Independent System Operator (“CAISO”) (as amended from time to time, the “CAISO Tariff”) for which the only excuse for failure to deliver or receive is an 

DB1/ 95864532.2

“Uncontrollable Force” (as defined in the CAISO Tariff).

“West Firm” means with respect to a Power Transaction, a Product that is or will be scheduled as firm energy consistent with the most recent rules adopted by the WECC for which the only excuses for failure to deliver or receive are if an interruption is (i) due to an “Uncontrollable Force” as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller’s public utility or statutory obligations to its customers.  Notwithstanding any other provision in this Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy as provided in clause (c)(i) of this Power Annex.

“WECC” means the Western Electricity Coordinating Council.  

“WSPP Agreement” means the Western Systems Power Pool Agreement as amended and in effect from time to time.”

(l)Notice Information for Power Transactions 

	PARTY A:

EDF Energy Services, LLC

	PARTY B:

Summer Energy Northeast, LLC

(formerly:  REP Energy, LLC)

	As set forth in Part 4 of the Schedule unless otherwise set forth below:

	As set forth in Part 4 of the Schedule unless otherwise set forth below:

	Invoices:

	Invoices:

	Attn.:Power Accounting 

Phone:281.653.1061 

Email:poweracctg@edftrading.com 

	Attention: Jaleea GeorgeJaleea George 

Telephone: 713-375-2793713-375-2793 

Facsimile: 713-481-8470713-481-8470 

Email:jgeorge@summerenergy.com 

 

	Scheduling:

	Scheduling:

	Attn.:Scheduling 

Phone:281.781.0333 

 

	Attn.:Travis Andrews 

Phone:713-375-2789 

Email:tandrews@summerenergy.com 

 

	Confirmations:

	Confirmations:

	Attn.:Confirmation Department 

Phone:281.653.1683 

Email:

Confirmations@edfenergyservices.com

	Attn.:Travis Andrews 

Phone:713-375-2789 

Email:tandrews@summerenergy.com 

 

	Wire Transfer - or - ACH

(check one box):

	Wire Transfer - or - ACH

(check one box):

	As set forth in Part 4 of the Schedule unless otherwise set forth below:

	As set forth in Part 4 of the Schedule unless otherwise set forth below

	Bank:Bank of America 

ACCT :XXXXXX634 

Wire ABA:XXXXXX593 

ACH ABA:XXXXXXX012 

Other Details:Not Applicable 

	Bank:Comerica Bank 

Account:XXXXXXX50 

Wire ABA:XXXXXXX53 

ACH ABA:XXXXXXX53 

Other Details:Not Applicable 

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The parties executing this Schedule have executed the Master Agreement and have agreed as to the contents of this Schedule.

	EDF Energy Services, LLC

	Summer Energy Northeast, LLC

(formerly: REP Energy, LLC)

	By:      /s/ C. Alexis Keene 

Name:  C. Alexis Keene 

Title:    Senior Vice President & General Counsel 

 

	By:     /s/ Neil Leibman 

Name: Neil Leibman

Title:   Manager

 

	 

	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to ISDA Schedule]

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