Document:

Exhibit 10.2

 

EXECUTION COPY

 

 

 

GUARANTY AND SECURITY AGREEMENT

Dated as of January 23, 2017

 

by and among

 

NxSN
Acquisition Corp.

 

and

 

Nexsan
corporation

 

and

 

Each Other Grantor

From Time to Time Party Hereto

 

and

 

IMATION CORP.,

as Lender

 

     

     

    

 

TABLE OF
CONTENTS

 

	 	 	Page
	 	 	 
	ARTICLE I DEFINED TERMS	1
	Section 1.1	Definitions	1
	Section 1.2	Certain Other Terms	8
	 	 	 
	ARTICLE II GUARANTY	9
	Section 2.1	Guaranty	9
	Section 2.2	Limitation of Guaranty	9
	Section 2.3	Contribution	9
	Section 2.4	Authorization; Other Agreements	10
	Section 2.5	Guaranty Absolute and Unconditional	10
	Section 2.6	Waivers	11
	Section 2.7	Reliance	12
	 	 	 
	ARTICLE III GRANT OF SECURITY INTEREST	12
	Section 3.1	Collateral	12
	Section 3.2	Grant of Security Interest in Collateral	12
	 	 	 
	ARTICLE IV Representations and Warranties	13
	Section 4.1	Title; No Other Liens	13
	Section 4.2	Perfection and Priority	13
	Section 4.3	Locations of Inventory, Equipment and Books and Records	14
	Section 4.4	Pledged Collateral	14
	Section 4.5	Instruments and Tangible Chattel Paper Formerly Accounts	14
	Section 4.6	Intellectual Property	14
	Section 4.7	Commercial Tort Claims	16
	Section 4.8	Specific Collateral	16
	Section 4.9	Enforcement	16
	 	 	 
	ARTICLE V Covenants	16
	Section 5.1	Maintenance of Perfected Security Interest; Further Documentation and Consents	16
	Section 5.2	Changes in Locations, Name, Etc	17
	Section 5.3	Pledged Collateral	18
	Section 5.4	Accounts	20
	Section 5.5	Commodity Contracts	20
	Section 5.6	Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper	20
	Section 5.7	Intellectual Property	21
	Section 5.8	Notices	22
	Section 5.9	Notice of Commercial Tort Claims	23
	Section 5.10	Controlled Securities Account	23

 

    i

     

    

 

	ARTICLE VI Remedial Provisions	23
	Section 6.1	Code and Other Remedies	23
	Section 6.2	Accounts and Payments in Respect of General Intangibles	26
	Section 6.3	Pledged Collateral	27
	Section 6.4	Proceeds to be Turned over to and Held by Lender	28
	Section 6.5	Sale of Pledged Collateral	28
	Section 6.6	Deficiency	29
	 	 	 
	ARTICLE VII Agent	29
	Section 7.1	Lender’s Appointment as Attorney-in-Fact	29
	Section 7.2	Authorization to File Financing Statements	30
	Section 7.3	Authority of Lender	31
	Section 7.4	Duty; Obligations and Liabilities	31
	 	 	 
	ARTICLE VIII Miscellaneous	32
	Section 8.1	Reinstatement	32
	Section 8.2	Release of Collateral	32
	Section 8.3	Independent Obligations	32
	Section 8.4	No Waiver by Course of Conduct	33
	Section 8.5	Amendments in Writing	33
	Section 8.6	Additional Grantors; Additional Pledged Collateral	33
	Section 8.7	Notices	33
	Section 8.8	Successors and Assigns	33
	Section 8.9	Counterparts	33
	Section 8.10	Severability	34
	Section 8.11	Governing Law	34
	Section 8.12	Waiver of Jury Trial	34

 

    ii

     

    

 

ANNEXES AND SCHEDULES

 

	Annex 1	Form of Pledge Amendment
	Annex 2	Form of Joinder Agreement
	Annex 3	Form of Intellectual Property Security Agreement
	 	 
	Schedule 1	Commercial Tort Claims
	Schedule 2	Filings
	Schedule 3	Location of Inventory, Equipment, Books and Records
	Schedule 4	Pledged Collateral
	Schedule 5	Intellectual Property

 

    iii

     

    

 

GUARANTY AND SECURITY AGREEMENT, dated as of
January 23, 2017, by NXSN Acquisition Corp., a Delaware corporation (“Borrower”), and Nexsan Corporation, a
Delaware corporation (“Nexsan”), and each of the other entities listed on the signature pages hereof or that
becomes a party hereto pursuant to Section 8.6 (together with Nexsan and the Borrower, the “Grantors”
and each, a “Grantor”), Imation Corp., a Delaware corporation (“Lender” or “Secured
Party”).

 

WITNESSETH:

 

WHEREAS, pursuant to the
Senior Secured Convertible Note dated as of the date hereof (as the same may be amended, restated, supplemented and/or modified
from time to time, the “Note”) issued by the Borrower in favor of Lender, whereby the Borrower agreed to certain
repayment terms for amounts owing to Lender (the “Loan”) upon the terms and subject to the conditions set forth
therein;

 

WHEREAS, each Grantor has
agreed to guaranty the obligations of Borrower under the Note (the “Obligations”) and secure all of their Obligations
under the Note by granting to Lender a security interest in and lien upon substantially all of their Property;

 

WHEREAS, each Grantor will
derive substantial direct and indirect benefits from the making of the extensions of credit under the Note; and

 

WHEREAS, it is a condition
precedent to the obligation of the Lender to make its extension of credit to the Borrower under the Note that the Grantors shall
have executed and delivered this Agreement to Lender;

 

NOW, THEREFORE, in consideration
of the premises and to induce the Lender to enter into the Loan Documents and to induce the Lender to make its extension of credit
to the Borrower thereunder, each Grantor hereby agrees with Lender as follows:

 

ARTICLE
I

DEFINED TERMS

 

Section 1.1           Definitions.
(a) Capitalized terms used herein without definition are used as defined in the Note.

 

(b)         The
following terms have the meanings given to them in the UCC and terms used herein without definition that are defined in the UCC
have the meanings given to them in the UCC (such meanings to be equally applicable to both the singular and plural forms of the
terms defined): “account”, “account debtor”, “as-extracted collateral”,
“certificated security”, “chattel paper”, “commercial tort claim”, “commodity
contract”, “deposit account”, “electronic chattel paper”, “equipment”,
“farm products”, “fixture”, “general intangible”, “goods”,
“health-care-insurance receivable”, “instruments”, “inventory”, “investment
property”, “letter-of-credit right”, “proceeds”, “record”, “securities
account”, “security”, “supporting obligation” and “tangible chattel paper”.

 

(c)          The
following terms shall have the following meanings:

 

     

     

    

 

“Agreement”
means this Guaranty and Security Agreement.

 

“Applicable IP Office”
means the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency within
or outside the United States.

 

“Cash Collateral
Account” means a deposit account or securities account subject, in each instance, to a Control Agreement.

 

“Cash Equivalents”
means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the
United States federal government or (ii) issued by any agency of the United States federal government the obligations of which
are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations
issued by any other agency of the United States federal government, any state of the United States or any political subdivision
of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P
or at least “P-1” from Moody’s, (c) any commercial paper rated at least “A-1” by S&P or “P-1”
by Moody’s and issued by any Person organized under the laws of any state of the United States, (d) any Dollar-denominated
time deposit, insured certificate of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by (i) any
Lender or (ii) any commercial bank that is (A) organized under the laws of the United States, any state thereof or the District
of Columbia, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators)
and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 and (e) shares of any United States money
market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause
(a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and
(iii) has obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the United States;
provided, however, that the maturities of all obligations specified in any of clauses (a), (b), (c) or (d) above shall not exceed
365 days.

 

“Collateral”
has the meaning specified in Section 3.1.

 

“Contractual Obligations”
means, as to any Person, any provision of any security (whether in the nature of Stock, Stock Equivalents or otherwise) issued
by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or
agreement (other than a Loan Document) to which such Person is a party or by which it or any of its Property is bound or to which
any of its Property is subject.

 

“Control Agreement”
means each agreement establishing control over such bank accounts and lockboxes of the Grantors with financial institutions reasonably
satisfactory to Lender,

 

“Controlled Securities
Account” means each securities account (including all financial assets held therein and all certificates and instruments,
if any, representing or evidencing such financial assets) that is the subject of an effective Control Agreement.

 

    	 	2	 

     

    

 

“Copyright License”
means any agreement now or hereafter in existence, providing for the grant by, or to, any rights (including, without limitation,
the grant of rights for a party to be designated as an author or owner and/or to enforce, defend, use, display, copy, manufacture,
distribute, exploit and sell, make derivative works, and require joinder in suit and/or receive assistance from another party)
covered in whole or in part by a Copyright.

 

“Copyrights”
means, collectively, all of the following of any Grantor: (i) all copyrights, works protectable by copyright, copyright registrations
and copyright applications anywhere in the world, (ii) all derivative works, counterparts, extensions and renewals of any of the
foregoing, (iii) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing or
with respect to any of the foregoing, including, without limitation, damages or payments for past, present and future infringements,
violations or misappropriations of any of the foregoing, (iv) the right to sue for past, present and future infringements, violations
or misappropriations of any of the foregoing and (v) all rights corresponding to any of the foregoing throughout the world.

 

“Domestic Subsidiary”
means any Subsidiary incorporated, organized or otherwise formed under the laws of the United States, any state thereof or the
District of Columbia.

 

“Excluded Equity”
means any voting stock in excess of 65% of the outstanding voting stock of any Excluded Foreign Subsidiary. For the purposes of
this definition, “voting stock” means, with respect to any issuer, the issued and outstanding shares of each
class of Stock of such issuer entitled to vote (within the meaning of Treasury Regulations § 1.956-2(c)(2)).

 

“Excluded Foreign
Subsidiary” means a Foreign Subsidiary which is (a) a controlled foreign corporation (as defined in the Code) that has
not guaranteed or pledged any of its assets to secure, or with respect to which there shall not have been pledged two-thirds or
more of the voting Stock and Stock Equivalents to secure, any Indebtedness (other than the Loan) of a Grantor or (b) a Foreign
Subsidiary owned by a Foreign Subsidiary described in clause (a) of this definition.

 

“Excluded Property”
means, collectively, (i) Excluded Equity, (ii) any permit or license or any Contractual Obligation entered into by any Grantor
(A) that prohibits or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained
as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or Contractual
Obligation or any Stock or Stock Equivalent related thereto or (B) to the extent that any Requirement of Law applicable thereto
prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long
as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other Requirement
of Law, (iii) Property owned by any Grantor that is subject to a purchase money Lien or a capital lease permitted under the Note
if the Contractual Obligation pursuant to which such Lien is granted (or in the document providing for such capital lease) prohibits
or requires the consent of any Person other than the Borrower and its Affiliates which has not been obtained as a condition to
the creation of any other Lien on such equipment and (iv) any “intent to use” Trademark applications for which a statement
of use has not been filed (but only until such statement is filed); provided, however, “Excluded Property”
shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions
or replacements would otherwise constitute Excluded Property).

 

    	 	3	 

     

    

 

“Foreign Subsidiary”
means, with respect to any Person, a Subsidiary of such Person, which Subsidiary is not a Domestic Subsidiary.

 

“Fraudulent Transfer
Laws” has the meaning set forth in Section 2.2.

 

“Governmental Authority”
means any nation, sovereign or government, any state or other political subdivision thereof, any agency, authority or instrumentality
thereof and any entity or authority exercising executive, legislative, taxing, judicial, regulatory or administrative functions
of or pertaining to government, including any state attorney general, state Medicaid fraud unit, central bank, stock exchange,
regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central
Bank), any self-regulatory organization (including the National Association of Insurance Commissioners) and any Medicare administrator
or other contractor acting on behalf of a Governmental Authority, including any recovery audit contractor or zone program integrity
contractor.

 

“Guaranteed Obligations”
has the meaning set forth in Section 2.1.

 

“Guarantor”
means each Grantor.

 

“Guaranty”
means the guaranty of the Guaranteed Obligations made by the Guarantors as set forth in this Agreement.

 

“Intellectual Property”
means, collectively, all of the following of any Grantor: (i) all systems software and applications software (including source
code and object code), all documentation for such software, including, without limitation, user manuals, flowcharts, functional
specifications, operations manuals, and all formulas, processes, ideas and know-how embodied in any of the foregoing, (ii) concepts,
discoveries, improvements and ideas, know-how, technology, reports, design information, Trade Secrets, practices, specifications,
test procedures, maintenance manuals, research and development, inventions (whether or not patentable), blueprints, drawings, data,
customer lists, catalogs, and all physical embodiments of any of the foregoing, (iii) Patents and Patent Licenses, Copyrights and
Copyright Licenses, Trademarks and Trademark Licenses and (iv) other agreements with respect to any rights in any of the items
described in the foregoing clauses (i), (ii), and (iii).

 

“Internet Domain
Name” means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law
in or relating to Internet domain names.

 

“IP Agreement”
means any license or other written agreement under which any Grantor’s right to use any Material Intellectual Property arose
or pursuant to which such Grantor licenses or otherwise distributes any Material Intellectual Property to any third party, including,
without limitation, all Copyright Licenses, Patent Licenses and Trademark Licenses.

 

“Loan Documents”
means this Agreement, the Note, the Control Agreement and any other agreement, document, certificate or other instrument delivered
in connection with the transactions contemplated hereby and thereby to which the Lender is a party.

 

    	 	4	 

     

    

 

“Material Intellectual
Property” means (i) all Intellectual Property consisting of patents and related items listed in Schedule 5 hereto
and (ii) all Intellectual Property that is owned by or licensed to a Grantor and used in the Grantor’s business.

 

“Ordinary Course
of Business” means, in respect of any transaction involving any Person, the ordinary course of such Person’s business,
as conducted by any such Person in accordance with past practice and undertaken by such Person in good faith and not for purposes
of evading any covenant or restriction in any Loan Document.

 

“Organization Documents”
means, (a) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument
relating to the rights of preferred shareholders of such corporation, and any shareholder rights agreement, (b) for any partnership,
the partnership agreement and, if applicable, certificate of limited partnership, (c) for any limited liability company, the operating
agreement and articles or certificate of formation or (d) any other document setting forth the manner of election or duties of
the officers, directors, managers or other similar persons, or the designation, amount or relative rights, limitations and preference
of the Stock of a Person.

 

“Patent License”
means any agreement, now or hereafter in existence, providing for the grant by, or to, any Grantor of any rights (including, without
limitation, the right for a party to be designated as an owner and/or to enforce, defend, make, have made, make improvements, manufacture,
use, sell, import, export, and require joinder in suit and/or receive assistance from another party) covered in whole or in part
by a Patent.

 

“Patents”
means collectively, all of the following of any Grantor: (i) all patents, all inventions and patent applications anywhere in the
world, (ii) all improvements, counterparts, reissues, divisional, re-examinations, extensions, continuations (in whole or in part)
and renewals of any of the foregoing and improvements thereon, (iii) all income, royalties, damages or payments now or hereafter
due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or
payments for past, present or future infringements, violations or misappropriations of any of the foregoing, (iv) the right to
sue for past, present and future infringements, violations or misappropriations of any of the foregoing and (v) all rights corresponding
to any of the foregoing throughout the world.

 

“Person”
means any individual, partnership, corporation (including a business trust and a public benefit corporation), professional corporation
or association, joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association,
joint venture and any other entity or Governmental Authority.

 

“Pledged Certificated
Stock” means all certificated securities and any other Stock or Stock Equivalent of any Person evidenced by a certificate,
instrument or other similar document (as defined in the UCC), in each case owned by any Grantor, and any distribution of property
made on, in respect of or in exchange for the foregoing from time to time, including all Stock and Stock Equivalents listed on
Schedule 4. Pledged Certificated Stock excludes any Excluded Property and any Cash Equivalents that are not held in
Controlled Securities Accounts to the extent permitted by Section 5.10 hereof.

 

    	 	5	 

     

    

 

“Pledged Collateral”
means, collectively, the Pledged Stock and the Pledged Debt Instruments.

 

“Pledged Debt Instruments”
means all right, title and interest of any Grantor in instruments evidencing any Indebtedness owed to such Grantor or other obligations
owed to such Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time,
including all Indebtedness described on Schedule 4, issued by the obligors named therein. Pledged Debt Instruments
excludes any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10
hereof.

 

“Pledged Investment
Property” means any investment property of any Grantor, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time, other than any Pledged Stock or Pledged Debt Instruments. Pledged Investment Property
excludes any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10
hereof.

 

“Pledged Stock”
means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

 

“Pledged Uncertificated
Stock” means any Stock or Stock Equivalent of any Person that is not Pledged Certificated Stock, including all right,
title and interest of any Grantor as a limited or general partner in any partnership not constituting Pledged Certificated Stock
or as a member of any limited liability company, all right, title and interest of any Grantor in, to and under any Organization
Document of any partnership or limited liability company to which it is a party, and any distribution of property made on, in respect
of or in exchange for the foregoing from time to time, including in each case those interests set forth on Schedule 4,
to the extent such interests are not certificated. Pledged Uncertificated Stock excludes any Excluded Property and any Cash Equivalents
that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10 hereof.

 

“Property”
means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

 

“Requirement of
Law” means, with respect to any Person, the common law and any federal, state, local, foreign, multinational or international
laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions,
decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and
other determinations, directives, requirements or requests of, any Governmental Authority, in each case whether or not having the
force of law and that are applicable to or binding upon such Person or any of its Property or to which such Person or any of its
Property is subject.

 

“Related Persons”
means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, sub-agent, trustee,
representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor (including those retained
in connection with the satisfaction or attempted satisfaction of any condition set forth in Article III) and other consultants
and agents of or to such Person or any of its Affiliates.

 

    	 	6	 

     

    

 

“Secured Obligations”
has the meaning set forth in Section 3.2.

 

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

 

“Software”
means (a) all computer programs, including source code and object code versions, (b) all data, databases and compilations of data,
whether machine readable or otherwise, and (c) all documentation, training materials and configurations related to any of the foregoing.

 

“Stock”
means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership
or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless
of how designated) of or in a Person (other than an individual), whether voting or non-voting.

 

“Stock Equivalents”
means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other
rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible,
exchangeable or exercisable.

 

“Stock Purchase
Agreement” means that certain Stock Purchase Agreement entered into as of November 22, 2016, by and between the Lender
(as Seller thereunder) and the Borrower (as Purchaser thereunder), pursuant to which the Note was issued.

 

“Trademark License”
means any agreement, now or hereafter in existence, providing for the grant by, or to, any Grantor of any rights in (including,
without limitation, the right for a party to be designated as an owner and/or to enforce, defend, use, mark, police, and require
joinder in suit and/or receive assistance from another party) covered in whole, or in part, by a Trademark.

 

“Trademarks”
means, collectively, all of the following of any Grantor: (i) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, internet domain names, trade styles, service marks, logos, other business identifiers, whether
registered or unregistered, all registrations and recordings thereof, and all applications in connection therewith (other than
each United States application to register any trademark or service mark prior to the filing under applicable Law of a verified
statement of use for such trademark or service mark) anywhere in the world, (ii) all counterparts, extensions and renewals of any
of the foregoing, (iii) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing
or with respect to any of the foregoing, including, without limitation, damages or payments for past, present or future infringements,
violations, dilutions or misappropriations of any of the foregoing, (iv) the right to sue for past, present or future infringements,
violations, dilutions or misappropriations of any of the foregoing and (v) all rights corresponding to any of the foregoing (including
the goodwill) throughout the world.

 

“Trade Secret License”
means any agreement, now or hereafter in existence, providing for the grant by, or to, any Grantor of any rights in (including
without limitation, the right for a party to be designated as an owner and/or to enforce, defend, use, mark, police, and require
joinder in suit and/or receive assistance from another party) covered in whole, or in part, by a Trade Secret.

 

    	 	7	 

     

    

 

“Trade Secrets”
mean all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production
processes and techniques, inventions, research and development information, databases and data, including, without limitation,
technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer
and supplier lists and information.

 

“UCC”
means the Uniform Commercial Code as from time to time in effect in the State of Delaware; provided, however, that,
in the event that, by reason of mandatory provisions of any applicable Requirement of Law, any of the attachment, perfection or
priority of Lender’s security interest in any Collateral is governed by the Uniform Commercial Code of a jurisdiction other
than the State of Delaware, “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of the definitions related
to or otherwise used in such provisions.

 

“Vehicles”
means all vehicles covered by a certificate of title law of any state.

 

Section 1.2           Certain
Other Terms.

 

(a)          The
meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. References
herein to an Annex, Schedule, Article, Section or clause refer to the appropriate Annex or Schedule to, or Article, Section or
clause in this Agreement. Where the context requires, provisions relating to any Collateral when used in relation to a Grantor
shall refer to such Grantor’s Collateral or any relevant part thereof.

 

(b)         Other
Interpretive Provisions.

 

(i)            Defined
Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto.

 

(ii)           The
Agreement. The words “hereof”, “herein”, “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(iii)         Certain
Common Terms. The term “including” is not limiting and means “including without limitation.”

 

(iv)         Performance;
Time. Whenever any performance obligation hereunder shall be stated to be due or required to be satisfied on a day other than
a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods
of time from a specified date to a later specified date, the word “from” means “from and including”; the
words “to” and “until” each mean “to but excluding”, and the word “through” means
“to and including.” If any provision of this Agreement refers to any action taken or to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect,
of taking, or not taking, such action.

 

    	 	8	 

     

    

 

(v)          Contracts.
Unless otherwise expressly provided herein, references to agreements and other contractual instruments, including this Agreement,
the Note and any other Loan Documents, shall be deemed to include all subsequent amendments, thereto, restatements and substitutions
thereof and other modifications and supplements thereto which are in effect from time to time, but only to the extent such amendments
and other modifications are not prohibited by the terms of any Loan Document.

 

(vi)         Laws.
References to any statute or regulation are to be construed as including all statutory and regulatory provisions related thereto
or consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

 

ARTICLE
II

GUARANTY

 

Section 2.1           Guaranty.
To induce the Lender to enter into the Loan Documents and to make the Loan to or for the benefit of one or more Grantors, each
Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, the full and punctual payment when due, whether at stated maturity or earlier, by reason of acceleration, mandatory
prepayment or otherwise in accordance with any Loan Document, of all the Obligations of the Borrower whether existing on the date
hereof or hereinafter incurred or created (the “Guaranteed Obligations”). This Guaranty by each Guarantor hereunder
constitutes a guaranty of payment and not of collection.

 

Section 2.2           Limitation
of Guaranty. Any term or provision of this Guaranty or any other Loan Document to the contrary notwithstanding, the
maximum aggregate amount for which any Guarantor shall be liable hereunder shall not exceed the maximum amount for which such Guarantor
can be liable without rendering this Guaranty or any other Loan Document, as it relates to such Guarantor, subject to avoidance
under applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of title 11 of the United States Code or any applicable
provisions of comparable Requirements of Law) (collectively, “Fraudulent Transfer Laws”).Any analysis of the
provisions of this Guaranty for purposes of Fraudulent Transfer Laws shall take into account the right of contribution established
in Section 2.3 and, for purposes of such analysis, give effect to any discharge of intercompany debt as a result of
any payment made under the Guaranty.

 

Section 2.3           Contribution.
To the extent that any Guarantor shall be required hereunder to pay any portion of any Guaranteed Obligation exceeding the greater
of (a) the amount of the value actually received by such Guarantor and its Subsidiaries from the Loan and other Obligations
and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guaranteed Obligations
(excluding the amount thereof repaid by the Borrower that received the benefit of the funds advanced that constituted Guaranteed
Obligations) in the same proportion as such Guarantor’s net worth on the date enforcement is sought hereunder bears to the
aggregate net worth of all the Guarantors on such date, then such Guarantor shall be reimbursed by such other Guarantors for the
amount of such excess, pro rata, based on the respective net worth of such other Guarantors on such date.

 

    	 	9	 

     

    

 

Section 2.4           Authorization;
Other Agreements. Lender is hereby authorized, without notice to or demand upon any Guarantor and without discharging
or otherwise affecting the obligations of any Guarantor hereunder and without incurring any liability hereunder, from time to time,
to do each of the following:

 

(a)          (i)
modify, amend, supplement or otherwise change, (ii) accelerate or otherwise change the time of payment or (iii) waive or otherwise
consent to noncompliance with, any Guaranteed Obligation or any Loan Document (to the extent the Lender may do so under the Note);

 

(b)         apply
to the Guaranteed Obligations any sums by whomever paid or however realized to any Guaranteed Obligation in such order as provided
in the Loan Documents;

 

(c)          refund
at any time any payment received by any Secured Party in respect of any Guaranteed Obligation;

 

(d)         (i)
sell, exchange, enforce, waive, substitute, liquidate, terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect, impair or otherwise alter or release any Collateral for any Guaranteed Obligation or any other guaranty
therefor in any manner, (ii) receive, take and hold additional Collateral to secure any Guaranteed Obligation, (iii) add, release
or substitute any one or more other Guarantors, makers or endorsers of any Guaranteed Obligation or any part thereof and (iv) otherwise
deal in any manner with the Borrower or any other Guarantor, maker or endorser of any Guaranteed Obligation or any part thereof;
and

 

(e)          settle,
release, compromise, collect or otherwise liquidate the Guaranteed Obligations.

 

Section 2.5           Guaranty
Absolute and Unconditional. Each Guarantor (other than the Borrower) hereby waives and agrees not to assert any defense,
whether arising in connection with or in respect of any of the following or otherwise, and hereby agrees that its obligations under
this Guaranty are irrevocable, absolute and unconditional and shall not be discharged as a result of or otherwise affected by any
of the following (which may not be pleaded and evidence of which may not be introduced in any proceeding with respect to this Guaranty,
in each case except as otherwise agreed in writing by Lender):

 

(a)          the
invalidity or unenforceability of any obligation of the Borrower or any other Guarantor under any Loan Document or any other agreement
or instrument relating thereto (including any amendment, consent or waiver thereto), or any security for, or other guaranty of,
any Guaranteed Obligation or any part thereof, or the lack of perfection or continuing perfection or failure of priority of any
security for the Guaranteed Obligations or any part thereof; provided, however, that none of the Borrower’s
rights of set-off or recoupment under the Stock Purchase Agreement are hereby waived;

 

(b)          the
absence of (i) any attempt to collect any Guaranteed Obligation or any part thereof from the Borrower or any other Guarantor or
other action to enforce the same or (ii) any action to enforce any Loan Document or any Lien thereunder;

 

    	 	10	 

     

    

 

(c)          the
failure by any Person to take any steps to perfect and maintain any Lien on, or to preserve any rights with respect to, any Collateral;

 

(d)          any
workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation or dissolution by or against the Borrower,
any other Guarantor or any of the Borrower’s other Subsidiaries or any procedure, agreement, order, stipulation, election,
action or omission thereunder, including any discharge or disallowance of, or bar or stay against collecting, any Guaranteed Obligation
(or any interest thereon) in or as a result of any such proceeding;

 

(e)          any
foreclosure, whether or not through judicial sale, and any other sale or other disposition of any Collateral or any election following
the occurrence of an Event of Default by any Secured Party to proceed separately against any Collateral in accordance with such
Secured Party’s rights under any applicable Requirement of Law; or

 

(f)          any
other defense, setoff, counterclaim or any other circumstance that might otherwise constitute a legal or equitable discharge of
the Borrower, any other Guarantor or any other Subsidiary of the Borrower, in each case other than the payment in full of the Guaranteed
Obligations.

 

Section 2.6           Waivers.
Each Guarantor (other than the Borrower) hereby unconditionally and irrevocably waives and agrees not to assert any claim, defense,
setoff or counterclaim based on diligence, promptness, presentment, requirements for any demand or notice hereunder including
any of the following: (a) any demand for payment or performance and protest and notice of protest; (b) any notice of acceptance;
(c) any presentment, demand, protest or further notice or other requirements of any kind with respect to any Guaranteed Obligation
(including any accrued but unpaid interest thereon) becoming immediately due and payable; and (d) any other notice in respect of
any Guaranteed Obligation or any part thereof, and any defense arising by reason of any disability or other defense of the Borrower
or any other Guarantor. Each Guarantor (other than the Borrower) further unconditionally and irrevocably agrees not to (x) enforce
or otherwise exercise any right of subrogation or any right of reimbursement or contribution or similar right against the Borrower
or any other Guarantor by reason of any Loan Document or any payment made thereunder or (y) assert any claim, defense, setoff or
counterclaim it may have against any other Grantor or set off any of its obligations to such other Grantor against obligations
of such Grantor to such Guarantor. No obligation of any Guarantor hereunder shall be discharged other than by complete performance.
Each Guarantor further waives any right such Guarantor may have under any applicable Requirement of Law to require any Secured
Party to seek recourse first against the Borrower or any other Person, or to realize upon any Collateral for any of the Obligations,
as a condition precedent to enforcing such Guarantor’s liability and obligations under this Guaranty.

 

    	 	11	 

     

    

 

Section 2.7           Reliance.
Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower, each other
Guarantor and any other guarantor, maker or endorser of any Guaranteed Obligation or any part thereof, and of all other circumstances
bearing upon the risk of nonpayment of any Guaranteed Obligation or any part thereof that diligent inquiry would reveal, and each
Guarantor hereby agrees that no Secured Party shall have any duty to advise any Guarantor of information known to it regarding
such condition or any such circumstances. In the event any Secured Party, in its sole discretion, undertakes at any time or from
time to time to provide any such information to any Guarantor, such Secured Party shall be under no obligation to (a) undertake
any investigation not a part of its regular business routine, (b) disclose any information that such Secured Party, pursuant
to accepted or reasonable commercial finance or banking practices, wishes to maintain confidential or (c) make any future
disclosures of such information or any other information to any Guarantor.

 

ARTICLE
III

GRANT OF SECURITY INTEREST

 

Section 3.1           Collateral.
For the purposes of this Agreement, all of the following property now owned or at any time hereafter acquired by a Grantor or in
which a Grantor now has or at any time in the future may acquire any right, title or interests is collectively referred to as the
“Collateral”:

 

(a)          all
accounts, chattel paper, deposit accounts, documents (as defined in the UCC), equipment, goods, money, general intangibles, instruments,
Intellectual Property, inventory, investment property, letter of credit rights, Software, all insurance policies covering the Collateral,
and any supporting obligations related to any of the foregoing;

 

(b)          the
commercial tort claims described on Schedule 1 and on any supplement thereto received by Lender pursuant to Section 5.9;

 

(c)          all
books and records pertaining to the other property described in this Section 3.1;

 

(d)          all
property of such Grantor held by any Secured Party, including all property of every description, in the custody of or in transit
to such Secured Party for any purpose, including safekeeping, collection or pledge, for the account of such Grantor or as to which
such Grantor may have any right or power, including but not limited to cash;

 

(e)          all
other goods (including but not limited to fixtures) and personal property of such Grantor, whether tangible or intangible and wherever
located; and

 

(f)          to
the extent not otherwise included, all proceeds of the foregoing;

 

Section 3.2           Grant
of Security Interest in Collateral. Each Grantor, as collateral security for the prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Obligations (the “Secured Obligations”),
hereby mortgages, pledges and hypothecates to Lender, for the benefit of the Lender, and grants to Lender, for the benefit of the
Lender, a Lien on and security interest in, all of its right, title and interest in, to and under the Collateral of such Grantor;
provided, however, notwithstanding the foregoing, no Lien or security interest is hereby granted on any Excluded
Property; provided, further, that if and when any property shall cease to be Excluded Property, a Lien on and security
interest in such property shall be deemed granted therein. Each Grantor hereby represents and warrants that the Excluded Property,
when taken as a whole, is not material to the business operations or financial condition of the Grantors, taken as a whole.

 

    	 	12	 

     

    

 

ARTICLE
IV

Representations and Warranties

 

To induce the Lender to enter into the Loan
Documents, each Grantor hereby represents and warrants each of the following to Lender:

 

Section 4.1           Title;
No Other Liens. Except for the Lien granted to Lender pursuant to this Agreement and other Permitted Liens (except for
those Permitted Liens not permitted to exist on any Collateral) under any Loan Document (including Section 4.2), such
Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. Such Grantor (a) is the sole,
record and beneficial owner of the Collateral pledged by it hereunder constituting instruments or certificates and (b) has rights
in or the power to transfer each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any other
Lien other than Permitted Liens. Such Grantor is the sole and exclusive owner of all Intellectual Property pledged by it hereunder
and no Intellectual Property pledged by such Grantor is jointly owned.

 

Section 4.2           Perfection
and Priority. The security interest granted pursuant to this Agreement constitutes a valid and continuing perfected
security interest in favor of Lender in all Collateral subject, for the following Collateral, to the occurrence of the following:
(a) in the case of all Collateral in which a security interest may be perfected by filing a financing statement under the UCC,
the completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other
documents referred to on such schedule, have been delivered to Lender in completed and duly authorized form), (b) with respect
to any deposit account, the execution of Control Agreements, (c) in the case of all Copyrights, Trademarks and Patents for
which UCC filings are insufficient, all appropriate filings having been made with the United States Copyright Office or the United
States Patent and Trademark Office, as applicable, and all required fees and taxes to maintain and protect such Grantor’s
interest in the Intellectual Property having been paid, (d) in the case of letter-of-credit rights that are not supporting obligations
of Collateral, the execution of a Contractual Obligation granting control to Lender over such letter-of-credit rights, (e) in the
case of electronic chattel paper, the completion of all steps necessary to grant control to Lender over such electronic chattel
paper and (f) in the case of Vehicles, the actions required under Section 5.1(e). Such security interest shall be prior
to all other Liens on the Collateral except for Permitted Liens having priority over Lender’s Lien by operation of law upon
(i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof
to Lender of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property consisting of instruments
and certificates, in each case properly endorsed for transfer to Lender or in blank, (ii) in the case of all Pledged Investment
Property not in certificated form, the execution of Control Agreements with respect to such investment property and (iii) in the
case of all other instruments and tangible chattel paper that are not Pledged Certificated Stock, Pledged Debt Instruments or Pledged
Investment Property, the delivery thereof to Lender of such instruments and tangible chattel paper. Except as set forth in this
Section 4.2, all actions by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder on
the Collateral have been duly taken.

 

    	 	13	 

     

    

 

Section 4.3           Locations
of Inventory, Equipment and Books and Records. On the date hereof, such Grantor’s inventory and equipment (other
than inventory or equipment in transit) and books and records concerning the Collateral are kept at the locations listed on Schedule 3.

 

Section 4.4          Pledged
Collateral. (a) The Pledged Stock pledged by such Grantor hereunder (i) is listed on Schedule 4 and constitutes
that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on Schedule 4,
(ii) has been duly authorized, validly issued and is fully paid and non-assessable (other than Pledged Stock in limited liability
companies and partnerships) and (iii) constitutes the legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms.

 

(b)         As
of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting
of instruments and certificates has been delivered to Lender in accordance with Section 5.3(a).

 

(c)          Upon
the occurrence and during the continuance of an Event of Default, Lender shall be entitled to exercise all of the rights of the
Grantor granting the security interest in any Pledged Stock, and a transferee or assignee of such Pledged Stock shall become a
holder of such Pledged Stock to the same extent as such Grantor and be entitled to participate in the management of the issuer
of such Pledged Stock and, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation of law, cease
to be a holder of such Pledged Stock.

 

Section 4.5           Instruments
and Tangible Chattel Paper Formerly Accounts. No amount payable to such Grantor under or in connection with any account
is evidenced by any instrument or tangible chattel paper that has not been delivered to Lender, properly endorsed for transfer,
to the extent delivery is required by Section 5.6(a).

 

Section 4.6           Intellectual
Property

 

(a)          Schedule 5
sets forth a true and complete list of the following Intellectual Property such Grantor owns, licenses or otherwise has the right
to use: (i) Intellectual Property that is registered or subject to applications for registration, (ii) Internet Domain Names and
(iii) Material Intellectual Property and Software, separately identifying that owned and licensed to such Grantor and including
for each of the foregoing items (1) the owner, (2) the title, (3) the jurisdiction in which such item has been registered or otherwise
arises or in which an application for registration has been filed, (4) as applicable, the registration or application number and
registration or application date and (5) any IP Agreements or other rights (including franchises) granted by the Grantor with respect
thereto.

 

(b)         On
the Closing Date, all Material Intellectual Property owned by such Grantor is valid, in full force and effect, subsisting, unexpired
and enforceable, and no Material Intellectual Property has been abandoned.

 

(c)          No
breach or default of any IP Agreement shall be caused by any of the following, and none of the following shall limit or impair
the ownership, use, validity or enforceability of, or any rights of such Grantor in, any Intellectual Property: (i) the consummation
of the transactions contemplated by any Loan Document or (ii) any holding, decision, judgment or order rendered by any Governmental
Authority.

 

    	 	14	 

     

    

 

(d)          There
are no pending (or, to the knowledge of such Grantor, threatened) actions, investigations, suits, proceedings, audits, claims,
demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantor’s rights in, any
Material Intellectual Property of such Grantor.

 

(e)          To
such Grantor’s knowledge, no Person has been or is infringing, misappropriating, diluting, violating, conflicting with or
otherwise impairing any Intellectual Property of such Grantor.

 

(f)          Such
Grantor, and to such Grantor’s knowledge each other party thereto, is not in breach or default of any IP Agreement.

 

(g)          All
applications pertaining to the Copyrights, Patents and Trademarks of each Grantor have been duly and properly filed, and all registrations
or letters pertaining to such Copyrights, Patents and Trademarks have been duly and properly filed and issued.

 

(h)         No
Grantor has made an assignment or agreement in conflict with the security interest in the Intellectual Property of any Grantor
hereunder.

 

(i)           Each
Grantor and each of its Subsidiaries, own, or possess the right to use, all of the Intellectual Property that is reasonably necessary
for the operation of their respective businesses, without conflict with the rights of any other Person.

 

(j)           No
slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated
to be employed by any Grantor or any of its Subsidiaries infringes upon any rights held by any other Person.

 

(k)          With
respect to each IP Agreement, (i) such IP Agreement is valid and binding and in full force and effect and represents the entire
agreement between such Grantor and, to such Grantor’s knowledge, the other parties thereto with respect to the subject matter
thereof, (ii) such IP Agreement will not cease to be valid and binding and in full force and effect on terms identical to those
currently in effect as a result of the rights and interest granted herein, nor will the grant of such rights and interest constitute
a breach or default under such IP Agreement or otherwise give any party thereto a right to terminate such IP Agreement, (iii) such
Grantor has not received any written notice of termination or cancellation under such IP Agreement, (iv) such Grantor has not received
any notice of a breach or default under such IP Agreement, which breach or default has not been cured, (v) such Grantor has not
granted to any other third party any rights, adverse or otherwise, under such IP Agreement, except duly authorized licenses and
sublicenses and as permitted under the Loan Documents, and (vii) neither such Grantor nor, to such Grantor’s knowledge, any
other party to such IP Agreement is in breach or default thereof in any respect, and no event has occurred that, with notice or
lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such
IP Agreement. Except as set forth in Schedule 5, none of the Intellectual Property owned or used by such Grantor in the
operation of such Grantor’s business as presently conducted or intended to be conducted is the subject of any IP Agreement.

 

    	 	15	 

     

    

 

Section 4.7           Commercial
Tort Claims. The only commercial tort claims of any Grantor existing on the date hereof (regardless of whether the amount,
defendant or other facts can be determined and regardless of whether such commercial tort claim has been asserted, threatened or
has otherwise been made known to the obligee thereof or whether litigation has been commenced for such claims) are those listed
on Schedule 1, which sets forth such information separately for each Grantor.

 

Section 4.8           Specific
Collateral. None of the Collateral is or is proceeds or products of farm products, as-extracted collateral, health-care-insurance
receivables or timber to be cut.

 

Section 4.9           Enforcement.
No Permit, notice to or filing with any Governmental Authority or any other Person or any consent from any Person is required for
the exercise by Lender of its rights (including voting rights) provided for in this Agreement or the enforcement of remedies in
respect of the Collateral pursuant to this Agreement, including the transfer of any Collateral, except (i) as may be required in
connection with the disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities
generally or any approvals that may be required to be obtained from any bailees or landlords to collect the Collateral, and (ii)
any restrictions on foreclosure and transfer of any IP Agreements under which Grantors are licensees or any other Contractual Obligations
of Grantors (not in any event applying to Intellectual Property owned by any Grantor) which require third party consents for transfer
of Grantors’ rights and obligations thereunder.

 

Section 4.10         Exception.
Notwithstanding anything in this Agreement or any other Loan Document to the contrary, no misrepresentation or breach of any representation
or warranty made by the Borrower, or any other Grantor in this Agreement or in any of the other Loan Documents shall constitute
an Event of Default if such misrepresentation or breach was due to (in whole or in part) a misrepresentation or breach of any representation
or warranty made by the Lender in the Stock Purchase Agreement.

 

ARTICLE
V

Covenants

 

Each Grantor agrees with
Lender to the following, as long as any Obligation remains outstanding (other than contingent indemnification Obligations to the
extent no claim giving rise thereto has been asserted):

 

Section 5.1          Maintenance
of Perfected Security Interest; Further Documentation and Consents. (a) Generally. Such Grantor shall (i) not
use or permit any Collateral to be used unlawfully or in violation of any provision of any Loan Document, any Requirement of Law
or any policy of insurance covering the Collateral and (ii) not enter into any Contractual Obligation or undertaking restricting
the right or ability of such Grantor or Lender to sell, assign, convey or transfer any Collateral.

 

(b)         Such
Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest and such priority against the claims and demands of
all Persons.

 

    	 	16	 

     

    

 

(c)          Such
Grantor shall furnish to Lender from time to time statements and schedules further identifying and describing the Collateral and
such other documents in connection with the Collateral as Lender may reasonably request, all in reasonable detail and in form and
substance satisfactory to Lender.

 

(d)         At
any time and from time to time, upon the written request of Lender, such Grantor shall, for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and
have recorded, such further documents, including an authorization to file (or, as applicable, the filing) of any financing statement
or amendment under the UCC (or other filings under similar Requirements of Law) in effect in any jurisdiction with respect to the
security interest created hereby and (ii) take such further action as Lender may reasonably request, including (A) using its commercially
reasonable best efforts to secure all approvals necessary or appropriate for the assignment to or for the benefit of Lender of
any Contractual Obligation, including any IP Agreement, held by such Grantor and to enforce the security interests granted hereunder
and (B) executing and delivering any Control Agreements with respect to deposit accounts and securities accounts.

 

(e)          If
requested by Lender, the Grantor shall arrange for Lender’s first priority security interest to be noted on the certificate
of title of each Vehicle and shall file any other necessary documentation in each jurisdiction that Lender shall deem advisable
to perfect its security interests in any Vehicle.

 

(f)          To
ensure that a Lien and security interest is granted on any of the Excluded Property set forth in clause (ii) of the definition
of “Excluded Property”, such Grantor shall use its commercially reasonable best efforts to obtain any required
consents from any Person other than the Borrower and its Affiliates with respect to any permit or license or any Contractual Obligation
with such Person entered into by such Grantor that requires such consent as a condition to the creation by such Grantor of a Lien
on any right, title or interest in such permit, license or Contractual Obligation or any Stock or Stock Equivalent related thereto.

 

Section 5.2           Changes
in Locations, Name, Etc. Except upon 20 days’ prior written notice to Lender and delivery to Lender of (a) all
documents reasonably requested by Lender to maintain the validity, perfection and priority of the security interests provided for
herein and (b) if applicable, a written supplement to Schedule 3 showing any additional locations at which inventory
or equipment shall be kept, such Grantor shall not do any of the following:

 

(i)            permit
any inventory or equipment to be kept at a location other than those listed on Schedule 3, except for inventory or
equipment in transit; or

 

(ii)           change
its legal name or organizational identification number, if any, or corporation, limited liability company, partnership or other
organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.

 

    	 	17	 

     

    

 

Section 5.3          Pledged
Collateral. (a) Delivery of Pledged Collateral. Such Grantor shall (i) deliver to Lender, in suitable form for transfer
and in form and substance satisfactory to Lender, (A) all Pledged Certificated Stock, (B) all Pledged Debt Instruments and (C)
all certificates and instruments evidencing Pledged Investment Property and (ii) maintain all other Pledged Investment Property
in a Controlled Securities Account.

 

(b)         Event
of Default. During the continuance of an Event of Default, Lender shall have the right, at any time in its discretion and without
notice to the Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral or any
Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral or
any Pledged Investment Property for certificates or instruments of smaller or larger denominations.

 

(c)          Cash
Distributions with respect to Pledged Collateral. Except as provided in Article VI and subject to the limitations
set forth in the Note, such Grantor shall be entitled to receive all cash distributions paid in respect of the Pledged Collateral.

 

(d)          Voting
Rights. Except as provided in Article VI, such Grantor shall be entitled to exercise all voting, consent and corporate,
membership, partnership, limited liability company and similar rights with respect to the Pledged Collateral; provided,
however, that no vote shall be cast, consent given or right exercised or other action taken by such Grantor that would impair
the Collateral or be inconsistent with or result in any violation of any provision of any Loan Document.

 

(e)          UCC
Section 8. To the extent any of the Pledged Collateral constitutes an “uncertificated security” (as defined in
Section 8-102(a)(18) of the UCC), each Grantor shall cause the issuer thereof to acknowledge to the Lender the registration on
the books of such issuer of the pledge and security interest hereby created in the manner required by Section 8-301(b) of the UCC.

 

(f)          Membership
Interest.

 

(i)            No
Pledged Stock that is Stock or Stock Equivalent in any limited liability company (the “Pledged Membership Interest”)
shall be (i) held in a securities account as defined under Article 8 of the Uniform Commercial Code as in effect from time to time
in the jurisdiction applicable to such limited liability company, (ii) dealt in or traded on an securities exchange or in a securities
market, or (iii) an investment company security as defined under Article 8 of the Uniform Commercial Code as in effect from time
to time in the jurisdiction applicable to such limited liability company. The pledge of any Pledged Membership Interest made by
a Grantor hereunder shall be a pledge not only of profits and losses of the Person having issued the Pledged Membership Interest
(the “Pledged LLC Entity”), but also a pledge of all rights and obligations of the Pledged LLC Entity. Such
pledge or assignment shall include all voting, management and control rights and is not limited to economic rights.

 

    	 	18	 

     

    

 

(ii)           No
Pledged Membership Interest by its terms expressly provides that it is a “security” within the meaning of (i) Section
8-102(a)(15) of the Uniform Commercial Code as in effect from time to time in the State of Delaware and (ii) the Uniform Commercial
Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof
as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995.

 

(iii)          Notwithstanding
anything contained to the contrary in the LLC Agreement, until such time as the Obligations under the Note have been repaid in
full:

 

(1)         Lender
(or its designee) may, upon a foreclosure, sale or other transfer of any Pledged Membership Interest pursuant to this Agreement,
(A) become a substitute member with respect to the Pledged Membership Interest subject to this Agreement, (B) exercise any and
all voting rights allowed to the holder of any Pledged Membership Interest subject to this Agreement, (C) transfer its interest
in the Pledged LLC Entity, subject to the provisions of this Agreement, and/or (D) succeed to all other rights or interests associated
with any Pledged Membership Interest subject to this Agreement, or any part thereof, as may be provided in this Agreement;

 

(2)         no
new or additional membership interest shall be created, issued, redeemed, exchanged, diluted or modified;

 

(3)         no
Grantor shall sell, convey, transfer, assign, pledge, encumber, grant a security interest in or otherwise dispose of any Pledged
Membership Interest, except as permitted by the LLC Agreement subject to the terms of the Loan Documents;

 

(4)         a
Grantor shall give Lender not fewer than thirty (30) days prior written notice of any proposed change in the name of the Pledged
LLC Entity or such Grantor and any proposed change in the location of any Pledged Membership Interest or of such records, and no
Grantor will, without the prior written consent of Lender, move any Pledged Membership Interest or such records to a location not
previously identified to Lender or keep duplicate records with respect to any Pledged Membership Interest at any address outside
such county; and

 

(5)         except
as it relates to Lender and as otherwise may be permitted under the LLC Agreement subject to the terms of the Loan Documents, no
Grantor shall consent to or permit to occur the admission of any new member in the Pledged LLC Entity, or the issuance of any additional
membership interests or any other equity interest in the Pledged LLC Entity that would have the effect of diluting such Grantor’s
interest in the Pledged LLC Entity.

 

(iv)         Without
limiting the generality of anything in the LLC Agreement, none of the following types of provisions will be deemed to restrict,
or be applicable to, Lender or any other Secured Party in any way:

 

(1)         confidentiality
clauses;

 

    	 	19	 

     

    

 

(2)         transfer
restrictions, including without limitation: (A) requirements to offer interests to the Pledged LLC Entity, to other members or
to affiliates; (B) provisions that trigger offers or deem offers of interests to have been made; (C) provisions related to the
purchase price of interests or the payment terms of a sale of interests; (D) provisions requiring consent from other members or
managers to transfer interests; (E) drag along rights and tag along rights; (F) restrictions on transferring only a portion of
a member’s interests; and (G) restrictions on transferring voting rights;

 

(3)         provisions
waiving rights to maintain an action for dissolution or partition;

 

(4)         provisions
requiring the consent of any person other than a member of the Pledged LLC Entity to amend the limited liability company operating
agreement of the Pledged LLC Entity; or

 

(5)         clauses
that provide: (A) that a creditor will have no rights under such LLC Agreement; or (B) that none of the provisions of such LLC
Agreement are for the benefit of creditors or enforceable by a creditor.

 

Section 5.4           Accounts.

 

(a)         Such
Grantor shall not, other than in the Ordinary Course of Business, (i) grant any extension of the time of payment of any account,
(ii) compromise or settle any account for less than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any account, (iv) allow any credit or discount on any account or (v) amend, supplement or modify any
account in any manner that could adversely affect the value thereof.

 

(b)         So
long as an Event of Default is continuing, Lender shall have the right to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers advisable, and such Grantor shall furnish all such assistance and information
as Lender may reasonably require in connection therewith. Upon Lender’s reasonable request, such Grantor shall cause independent
public accountants or others satisfactory to Lender to furnish to Lender reports showing reconciliations, aging and test verifications
of, and trial balances for, the accounts.

 

Section 5.5           Commodity
Contracts. Such Grantor shall not have any commodity contract unless subject to a Control Agreement.

 

Section 5.6         Delivery
of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.
(a) If any amount in excess of $10,000 payable under or in connection with any Collateral owned by such Grantor shall be or become
evidenced by an instrument or tangible chattel paper other than such instrument delivered in accordance with Section 5.3(a)
and in the possession of Lender, such Grantor shall mark all such instruments and tangible chattel paper with the following legend:
“This writing and the obligations evidenced or secured hereby are subject to the security interest of Imation Corp., as Lender”
and, at the request of Lender, shall immediately deliver such instrument or tangible chattel paper to Lender, duly indorsed in
a manner satisfactory to Lender.

 

    	 	20	 

     

    

 

(b)         Such
Grantor shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC) over any
investment property to any Person other than Lender.

 

(c)          If
such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a supporting obligation of any Collateral
and (ii) in excess of $10,000, such Grantor shall promptly, and in any event within 2 Business Days after becoming a beneficiary,
notify Lender thereof and enter into a Contractual Obligation with Lender, the issuer of such letter of credit or any nominated
person with respect to the letter-of-credit rights under such letter of credit. Such Contractual Obligation shall assign such letter-of-credit
rights to Lender and such assignment shall be sufficient to grant control for the purposes of Section 9-107 of the UCC (or any
similar section under any equivalent UCC). Such Contractual Obligation shall also direct all payments thereunder to a Cash Collateral
Account. The provisions of the Contractual Obligation shall be in form and substance reasonably satisfactory to Lender.

 

(d)         If
any amount in excess of $10,000 payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced
by electronic chattel paper, such Grantor shall take all steps necessary to grant Lender control of all such electronic chattel
paper for the purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all “transferable
records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act.

 

Section 5.7          Intellectual
Property. (a) Within 30 days after any change to Schedule 5 for such Grantor, such Grantor shall provide
Lender notification thereof and the short-form intellectual property agreements and assignments as described in this Section 5.7
and any other documents that Lender reasonably requests with respect thereto.

 

(b)         Such
Grantor shall (and shall cause all its licensees to): (i) (1) continue to use each Trademark included in the Material Intellectual
Property in order to maintain such Trademark in full force and effect with respect to each class of goods for which such Trademark
is currently used, free from any claim of abandonment for non-use, (2) maintain at least the same standards of quality of products
and services offered under such Trademark as are currently maintained, (3) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law, (4) not adopt or use any other mark that is confusingly
similar or a colorable imitation of such Trademark unless Lender shall obtain a perfected security interest in such mark pursuant
to this Agreement and (ii) not do any act or omit to do any act whereby (A) such Trademark (or any goodwill associated therewith)
may become destroyed, invalidated, impaired or harmed in any way, (B) any Patent included in the Material Intellectual Property
may become forfeited, misused, unenforceable, abandoned or dedicated to the public, (C) any Trade Secret that is Material Intellectual
Property may become publicly available or otherwise unprotectable, or (D) any Copyright may become invalidated, otherwise impaired
or injected into the public domain.

 

(c)          Such
Grantor shall not make any assignment or agreement in conflict with the security interest in the Intellectual Property of each
Grantor hereunder (except as permitted by the Note).

 

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(d)         Such
Grantor shall notify Lender immediately if it knows, or has reason to know, that any application or registration relating to any
Intellectual Property may become forfeited, misused, unenforceable, abandoned or dedicated to the public, injected into the public
domain or of any adverse determination or development regarding the validity or enforceability or such Grantor’s ownership
of, interest in, right to use, register, own or maintain any Intellectual Property (including the institution of, or any such determination
or development in, any proceeding relating to the foregoing in any Applicable IP Office). Such Grantor, at its own expense, shall
take all actions that are necessary or reasonably requested by Lender, including, without limitation, in the Applicable IP Office,
to maintain and pursue each application (and to obtain the relevant registration or recordation) and to maintain each registration
and recordation included in the Material Intellectual Property, including, without limitation, the payment of required fees and
taxes, the filing of responses to office actions issued by the Applicable IP Office or other Governmental Authorities, the filing
of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing
of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees
and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.

 

(e)          Such
Grantor shall not knowingly do any act or omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the
Intellectual Property of any other Person. In the event that any Intellectual Property of such Grantor is or has been infringed,
misappropriated, violated, diluted or otherwise impaired by a third party, such Grantor shall notify Lender immediately and take
such action as it or the Lender reasonably deems appropriate under the circumstances in response thereto, including promptly bringing
suit and recovering all damages therefor.

 

(f)          Grantor
shall not sell or transfer any Intellectual Property.

 

(g)          Such
Grantor shall execute and deliver to Lender in form and substance reasonably acceptable to Lender and suitable for (i) filing
in the Applicable IP Office the short-form intellectual property security agreements in the form attached hereto as Annex 3
for all Copyrights, Trademarks, Patents and IP Agreements of such Grantor and (ii) recording with the appropriate Internet
domain name registrar, a duly executed form of assignment for all Internet Domain Names of such Grantor (together with appropriate
supporting documentation as may be requested by Lender).

 

(h)         Upon
the request of Lender, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents,
and papers as Lender may request to evidence Lender’s Lien upon such registered Intellectual Property and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby consistent with the terms of this Agreement.

 

(i)           Such
Grantor shall promptly notify Lender in writing if any Intellectual Property owned now or in the future ceases to be owned solely
and exclusively by such Grantor.

 

Section 5.8          Notices.
Such Grantor shall promptly notify Lender in writing of its acquisition of any interest hereafter in property that is of a type
where a security interest or lien must be or may be registered, recorded or filed under, or notice thereof given under, any federal
statute or regulation.

 

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Section 5.9          Notice
of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim (whether
from another Person or because such commercial tort claim shall have come into existence), (i) such Grantor shall, immediately
upon such acquisition, deliver to Lender, in each case in form and substance satisfactory to Lender, a notice of the existence
and nature of such commercial tort claim and a supplement to Schedule 1 containing a specific description of such commercial
tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii) such Grantor shall execute and deliver
to Lender, in each case in form and substance satisfactory to Lender, any document, and take all other action, deemed by Lender
to be reasonably necessary or appropriate for Lender to obtain a perfected security interest having at least the priority set forth
in Section 4.2 in all such commercial tort claims. Any supplement to Schedule 1 delivered pursuant to this
Section 5.9 shall, after the receipt thereof by Lender, become part of Schedule 1 for all purposes hereunder
other than in respect of representations and warranties made prior to the date of such receipt.

 

Section 5.10        Controlled
Securities Account. Each Grantor shall deposit all of its Cash Equivalents in securities accounts that are Controlled
Securities Accounts except for Cash Equivalents the aggregate value of which does not exceed $10,000.

 

ARTICLE
VI

 

Remedial Provisions

 

Section 6.1          Code
and Other Remedies. (a) UCC Remedies. During the continuance of an Event of Default, Lender may exercise, in
addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing
or relating to any Secured Obligation, all rights and remedies of a secured party under the UCC or any other applicable law.

 

(b)         Disposition
of Collateral. Without limiting the generality of the foregoing, Lender may, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), during the
continuance of any Event of Default (personally or through its agents or attorneys), (i) enter upon the premises where any Collateral
is located, without any obligation to pay rent, through self-help, without judicial process, without first obtaining a final judgment
or giving any Grantor or any other Person notice or opportunity for a hearing on Lender’s claim or action, (ii) collect,
receive, appropriate and realize upon any Collateral and (iii) sell, assign, convey, transfer, grant option or options to purchase
and deliver any Collateral (enter into Contractual Obligations to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker’s board or office of any Secured Party or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Lender shall have the right, upon any such public sale or sales and, to the extent permitted by the UCC and
other applicable Requirements of Law, upon any such private sale, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.

 

    	 	23	 

     

    

 

(c)          Management
of the Collateral. Each Grantor further agrees, that, during the continuance of any Event of Default, (i) at Lender’s
request, it shall assemble the Collateral and make it available to Lender at places that Lender shall reasonably select, whether
at such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, Lender also has the right to require that each
Grantor store and keep any Collateral pending further action by Lender and, while any such Collateral is so stored or kept, provide
such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such Collateral in
good condition, (iii) until Lender is able to sell, assign, convey or transfer any Collateral, Lender shall have the right
to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the Collateral or its value
or for any other purpose deemed appropriate by Lender and (iv) Lender may, if it so elects, seek the appointment of a receiver
or keeper to take possession of any Collateral and to enforce any of Lender’s remedies, with respect to such appointment
without prior notice or hearing as to such appointment. Lender shall not have any obligation to any Grantor to maintain or preserve
the rights of any Grantor as against third parties with respect to any Collateral while such Collateral is in the possession of
Lender.

 

(d)         Application
of Proceeds. Lender shall apply the cash proceeds of any action taken by it pursuant to this Section 6.1, after
deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping
of any Collateral or in any way relating to the Collateral or the rights of Lender and any other Secured Party hereunder, including
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, as set forth
in the Note, and only after such application and after the payment by Lender of any other amount required by any Requirement of
Law, need Lender account for the surplus, if any, to any Grantor.

 

(e)          Direct
Obligation. Neither Lender nor any other Secured Party shall be required to make any demand upon, or pursue or exhaust any
right or remedy against, any Grantor or any other Person with respect to the payment of the Obligations or to pursue or exhaust
any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof. All of the rights and remedies
of Lender and any other Secured Party under any Loan Document shall be cumulative, may be exercised individually or concurrently
and not exclusive of any other rights or remedies provided by any Requirement of Law. To the extent it may lawfully do so, each
Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against Lender
or any other Secured Party, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or
defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of any Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.

 

(f)          Commercially
Reasonable. To the extent that applicable Requirements of Law impose duties on Lender to exercise remedies in a commercially
reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for Lender to do any of the following:

 

    	 	24	 

     

    

 

(i)            fail
to incur significant costs, expenses or other Liabilities reasonably deemed as such by Lender to prepare any Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or other finished products for disposition;

 

(ii)           fail
to obtain Permits, or other consents, for access to any Collateral to sell or for the collection or sale of any Collateral, or,
if not required by other Requirements of Law, fail to obtain Permits or other consents for the collection or disposition of any
Collateral;

 

(iii)          fail
to exercise remedies against account debtors or other Persons obligated on any Collateral or to remove Liens on any Collateral
or to remove any adverse claims against any Collateral;

 

(iv)         advertise
dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized
nature, or to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring
any such Collateral;

 

(v)          exercise
collection remedies against account debtors and other Persons obligated on any Collateral, directly or through the use of collection
agencies or other collection specialists, hire one or more professional auctioneers to assist in the disposition of any Collateral,
whether or not such Collateral is of a specialized nature, or, to the extent deemed appropriate by Lender, obtain the services
of other brokers, investment bankers, consultants and other professionals to assist Lender in the collection or disposition of
any Collateral, or utilize Internet sites that provide for the auction of assets of the types included in the Collateral or that
have the reasonable capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral;

 

(vi)         dispose
of assets in wholesale rather than retail markets;

 

(vii)        disclaim
disposition warranties, such as title, possession or quiet enjoyment; or

 

(viii)       purchase
insurance or credit enhancements to insure Lender against risks of loss, collection or disposition of any Collateral or to provide
to Lender a guaranteed return from the collection or disposition of any Collateral.

 

Each Grantor acknowledges that the purpose
of this Section 6.1 is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when
exercising remedies against any Collateral and that other actions or omissions by any Secured Party shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 6.1. Without limitation upon the foregoing, nothing
contained in this Section 6.1 shall be construed to grant any rights to any Grantor or to impose any duties on Lender
that would not have been granted or imposed by this Agreement or by applicable Requirements of Law in the absence of this Section 6.1.

 

    	 	25	 

     

    

 

(g)         IP
Agreements. For the purpose of enabling Lender to exercise rights and remedies under this Section 6.1 (including
in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer
or grant options to purchase any Collateral) at such time as Lender shall be lawfully entitled to exercise such rights and remedies,
each Grantor hereby grants to Lender (i) an irrevocable, nonexclusive, worldwide license (exercisable without payment of royalty
or other compensation to such Grantor), including in such license the right to sublicense, use and practice any Intellectual Property
now owned or hereafter acquired by such Grantor and access to all media in which any of the licensed items may be recorded or stored
and to all Software and programs used for the compilation or printout thereof and (ii) an irrevocable license (without payment
of rent or other compensation to such Grantor) to use, operate and occupy all real Property owned, operated, leased, subleased
or otherwise occupied by such Grantor.

 

Section 6.2          Accounts
and Payments in Respect of General Intangibles. (a) In addition to, and not in substitution for, any similar requirement
in the Note, if required by Lender at any time during the continuance of an Event of Default, any payment of accounts or payment
in respect of general intangibles, when collected by any Grantor, shall be promptly (and, in any event, within 2 Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such Grantor to Lender, in a Cash Collateral Account, subject
to withdrawal by Lender as provided in Section 6.4. Until so turned over, such payment shall be held by such Grantor
in trust for Lender, segregated from other funds of such Grantor. Each such deposit of proceeds of accounts and payments in respect
of general intangibles shall be accompanied by a report identifying in reasonable detail the nature and source of the payments
included in the deposit.

 

(b)         At
any time during the continuance of an Event of Default:

 

(i)            each
Grantor shall, upon Lender’s request, deliver to Lender all original and other documents evidencing, and relating to, the
Contractual Obligations and transactions that gave rise to any account or any payment in respect of general intangibles, including
all original orders, invoices and shipping receipts and notify account debtors that the accounts or general intangibles have been
collaterally assigned to Lender and that payments in respect thereof shall be made directly to Lender;

 

(ii)           Lender
may, without notice, at any time, limit or terminate the authority of a Grantor to collect its accounts or amounts due under general
intangibles or any thereof and, in its own name or in the name of others, communicate with account debtors to verify with them
to Lender’s satisfaction the existence, amount and terms of any account or amounts due under any general intangible. In addition,
Lender may at any time enforce such Grantor’s rights against such account debtors and obligors of general intangibles; and

 

(iii)          each
Grantor shall take all actions, deliver all documents and provide all information necessary or reasonably requested by Lender to
ensure any Internet Domain Name is registered.

 

    	 	26	 

     

    

 

(c)         Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under each account and each payment in respect of general
intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any agreement
giving rise to an account or a payment in respect of a general intangible by reason of or arising out of any Loan Document or the
receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform
any obligation of any Grantor under or pursuant to any agreement giving rise to an account or a payment in respect of a general
intangible, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to
the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance
or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

 

Section 6.3           Pledged
Collateral. (a) Voting Rights. During the continuance of an Event of Default, upon notice by Lender to the relevant
Grantor or Grantors, Lender or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the
Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of
Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option
pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion
any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change
in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral
with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as Lender may
determine), all without liability except to account for property actually received by it; provided, however, that
Lender shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure
to do so or delay in so doing.

 

(b)         Proxies.
In order to permit Lender to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto
and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to Lender all such proxies, dividend payment orders and other instruments
as Lender may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, such Grantor
hereby grants to Lender an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights,
powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or
members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity
of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person
(including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default
and which proxy shall only terminate upon the payment in full of the Secured Obligations (other than contingent indemnification
obligations to the extent no claim giving rise thereto has been asserted).

 

    	 	27	 

     

    

 

(c)          Authorization
of Issuers.   Each Grantor hereby expressly and irrevocably authorizes and instructs, without any further instructions
from such Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any instruction received
by it from Lender in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of
this Agreement and each Grantor agrees that such issuer shall be fully protected from Liabilities to such Grantor in so complying
and (ii) unless otherwise expressly permitted hereby or the Note, pay any dividend or make any other payment with respect
to the Pledged Collateral directly to Lender.

 

Section 6.4           Proceeds
to be Turned over to and Held by Lender.   Unless otherwise expressly provided in the Note or this Agreement,
all proceeds of any Collateral received by any Grantor hereunder in cash or Cash Equivalents shall be held by such Grantor in trust
for Lender, segregated from other funds of such Grantor, and shall, promptly upon receipt by any Grantor, be turned over to Lender
in the exact form received (with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any
Collateral received by Lender in cash or Cash Equivalents shall be held by Lender in a Cash Collateral Account. All proceeds
being held by Lender in a Cash Collateral Account (or by such Grantor in trust for Lender) shall continue to be held as collateral
security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Note.

 

Section 6.5           Sale
of Pledged Collateral.   (a)   Each Grantor recognizes that Lender may be unable to effect
a public sale of any Pledged Collateral by reason of certain prohibitions contained in the Securities Act and applicable state
or foreign securities laws or otherwise or may determine that a public sale is impracticable, not desirable or not commercially
reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be
obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the
distribution or resale thereof.   Each Grantor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially reasonable manner. Lender shall be under no obligation
to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities
for public sale under the Securities Act or under applicable state securities laws even if such issuer would agree to do so.

 

(b)          Each
Grantor agrees to use its commercially reasonable best efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of any portion of the Pledged Collateral pursuant to Section 6.1 and this Section 6.5
valid and binding and in compliance with all applicable Requirements of Law.  Each Grantor further agrees that a breach of
any covenant contained herein will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the Note.   Each Grantor waives any and
all rights of contribution or subrogation upon the sale or disposition of all or any portion of the Pledged Collateral by Lender.

 

    	 	28	 

     

    

 

Section 6.6           Deficiency.   Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of any Collateral are insufficient
to pay the Secured Obligations and the fees and disbursements of any attorney employed by Lender or any other Secured Party to
collect such deficiency.

 

ARTICLE
VII

 

Agent

 

Section 7.1           Lender’s
Appointment as Attorney-in-Fact.   (a)   Each Grantor hereby irrevocably constitutes and
appoints Lender and any Related Person thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of the Loan Documents, to take any appropriate action and to execute any document or instrument
that may be necessary or desirable to accomplish the purposes of the Loan Documents, and, without limiting the generality of the
foregoing, each Grantor hereby gives Lender and its Related Persons the power and right, on behalf of such Grantor, without notice
to or assent by such Grantor, to do any of the following when an Event of Default shall be continuing:

 

(i)          in
the name of such Grantor, in its own name or otherwise, take possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due under any account or general intangible or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Lender
for the purpose of collecting any such moneys due under any account or general intangible or with respect to any other Collateral
whenever payable;

 

(ii)         in
the case of any Intellectual Property owned by or licensed to such Grantor, execute, deliver and have recorded any document that
Lender may request to evidence, effect, publicize or record Lender’s security interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

 

(iii)        pay
or discharge taxes and Liens levied or placed on or threatened against any Collateral, effect any repair or pay any insurance called
for by the terms of the Note (including all or any part of the premiums therefor and the costs thereof);

 

(iv)        execute,
in connection with any sale provided for in Section 6.1 or Section 6.5, any document to effect or otherwise
necessary or appropriate in relation to evidence the sale of any Collateral; or

 

    	 	29	 

     

    

 

(v)         (A)
direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly
to Lender or as Lender shall direct, (B) ask or demand for, and collect and receive payment of and receipt for, any moneys, claims
and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse any invoice,
freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification, notice
and other document in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law or in equity
in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (E)
defend any actions, suits, proceedings, audits, claims, demands, orders or disputes brought against such Grantor with respect to
any Collateral, (F) settle, compromise or adjust any such actions, suits, proceedings, audits, claims, demands, orders or disputes
and, in connection therewith, give such discharges or releases as Lender may deem appropriate, (G) assign any Intellectual Property
owned by such Grantor or any IP Agreements of such Grantor throughout the world on such terms and conditions and in such manner
as Lender shall in its sole discretion determine, including the execution and filing of any document necessary to effectuate or
record such assignment and (H) generally, sell, assign, convey, transfer or grant a Lien on, make any Contractual Obligation
with respect to and otherwise deal with, any Collateral as fully and completely as though Lender were the absolute owner thereof
for all purposes and do, at Lender’s option, at any time or from time to time, all acts and things that Lender deems necessary
to protect, preserve or realize upon any Collateral and the Secured Parties’ security interests therein and to effect the
intent of the Loan Documents, all as fully and effectively as such Grantor might do.

 

(vi)        If
any Grantor fails to perform or comply with any Contractual Obligation contained herein, Lender, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such Contractual Obligation.

 

(b)          The
expenses of Lender incurred in connection with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate set forth in the Note, from the date of payment by Lender to the date reimbursed by the relevant Grantor, shall
be payable by such Grantor to Lender on demand.

 

(c)          Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this Section 7.1. All
powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.

 

Section 7.2           Authorization
to File Financing Statements.   Each Grantor authorizes Lender and its Related Persons, at any time and
from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments
with respect to any Collateral in such form and in such offices as Lender reasonably determines appropriate to perfect, or continue
or maintain perfection of, the security interests of Lender under this Agreement, and such financing statements and amendments
may describe the Collateral covered thereby as “all assets of the debtor” or words of similar import.  A
copy of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing
or recording in any jurisdiction.   Such Grantor also hereby ratifies its authorization for Lender to have filed
any initial financing statement or amendment thereto under the UCC (or other similar laws) in effect in any jurisdiction if filed
prior to the date hereof.  Each Grantor hereby (i) waives any right under the UCC or any other Requirement of Law to
receive notice and/or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination
statements and (ii) releases and excuses each Secured Party from any obligation under the UCC or any other Requirement of Law to
provide notice or a copy of any such filed or recorded documents.

 

    	 	30	 

     

    

 

Section 7.3           Authority
of Lender.   Each Grantor acknowledges that the rights and responsibilities of Lender under this Agreement
with respect to any action taken by Lender or the exercise or non-exercise by Lender of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between Lender and the other
Secured Parties, be governed by the Note and by such other agreements with respect thereto as may exist from time to time among
them, but, as between Lender and any Grantor, Lender shall be conclusively presumed to be acting as agent for the Secured Parties
with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation or entitlement to
make any inquiry respecting such authority.

 

Section 7.4           Duty;
Obligations and Liabilities.   (a)   Duty of Lender.   Lender’s
sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal
with it in the same manner as Lender deals with similar property for its own account.   The powers conferred on
Lender hereunder are solely to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise
any such powers.   Lender shall be accountable only for amounts that it receives as a result of the exercise of
such powers, and neither it nor any of its Related Persons shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.   In
addition, Lender shall not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehousemen, carrier, forwarding agency, consignee or other bailee if such Person
has been selected by Lender in good faith.

 

(b)          Obligations
and Liabilities with respect to Collateral.   No Secured Party and no Related Person thereof shall be liable
for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever
with regard to any Collateral.   The powers conferred on Lender hereunder shall not impose any duty upon any other
Secured Party to exercise any such powers.   The other Secured Parties shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither they nor any of their respective officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct as finally determined by a court of competent jurisdiction.

 

    	 	31	 

     

    

 

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.1           Reinstatement.   Each
Grantor agrees that, if any payment made by any Grantor or other Person and applied to the Secured Obligations is at any time annulled,
avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid,
or the proceeds of any Collateral are required to be returned by any Secured Party to such Grantor, its estate, trustee, receiver
or any other party, including any Grantor, under any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force
and effect, as fully as if such payment had never been made.   If, prior to any of the foregoing, (a) any Lien or
other Collateral securing such Grantor’s liability hereunder shall have been released or terminated by virtue of the foregoing
or (b) any provision of the Guaranty hereunder shall have been terminated, cancelled or surrendered, such Lien, other Collateral
or provision shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall
not diminish, release, discharge, impair or otherwise affect the obligations of any such Grantor in respect of any Lien or other
Collateral securing such obligation or the amount of such payment.

 

Section 8.2           Release
of Collateral.   (a)   At the time provided in the Note, the Collateral shall be released
from the Lien created hereby and this Agreement and all obligations (other than those expressly stated to survive such termination)
of Lender and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the Grantors.   Each Grantor is hereby authorized to file UCC amendments
at such time evidencing the termination of the Liens so released.   At the request of any Grantor following any
such termination, Lender shall deliver to such Grantor any Collateral of such Grantor held by Lender hereunder and execute and
deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

 

(b)          If
Lender shall be directed or permitted pursuant to the Note to release any Lien or any Collateral, such Collateral shall be released
from the Lien created hereby to the extent provided under, and subject to the terms and conditions set forth in, such subsection.   In
connection therewith, Lender, at the request of any Grantor, shall execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such release.

 

(c)          At
the time provided in the Note and at the request of the Borrower Representative, a Grantor shall be released from its obligations
hereunder in the event that all the Stock and Stock Equivalents of such Grantor shall be sold to any Person that is not an Affiliate
of the Borrower or the Subsidiaries of the Borrower in a transaction permitted by the Loan Documents.

 

Section 8.3           Independent
Obligations.   The obligations of each Grantor hereunder are independent of and separate from the Secured
Obligations and the Guaranteed Obligations.   If any Secured Obligation or Guaranteed Obligation is not paid when
due, or upon any Event of Default, Lender may, at its sole election, proceed directly and at once, without notice, against any
Grantor and any Collateral to collect and recover the full amount of any Secured Obligation or Guaranteed Obligation then due,
without first proceeding against any other Grantor, or any other Collateral and without first joining any other Grantor in any
proceeding.

 

    	 	32	 

     

    

 

Section 8.4           No
Waiver by Course of Conduct.   No Secured Party shall by any act (except by a written instrument pursuant
to Section 8.5 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default.   No failure to exercise, nor any delay in exercising,
on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.   No
single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.   A waiver by any Secured Party of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that such Secured Party would otherwise have on any
future occasion.

 

Section 8.5           Amendments
in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with the consent of the Lender and the Borrower; provided, however, that annexes to
this Agreement may be supplemented (but no existing provisions may be modified and no Collateral may be released) through Pledge
Amendments and Joinder Agreements, in substantially the form of Annex 1 and Annex 2, respectively, in each
case duly executed by Lender and each Grantor directly affected thereby.

 

Section 8.6           Additional
Grantors; Additional Pledged Collateral.   (a)   Joinder Agreements.   If,
at the option of the Borrower or as required pursuant to the Note, the Borrower shall cause any Subsidiary that is not a Grantor
to become a Grantor hereunder, such Subsidiary shall execute and deliver to Lender a Joinder Agreement substantially in the form
of Annex 2 (each, a “Joinder Agreement”) and shall thereafter for all purposes be a party hereto
and have the same rights, benefits and obligations as a Grantor party hereto on the Closing Date.

 

(b)          Pledge
Amendments.   To the extent any Pledged Collateral has not been delivered as of the Closing Date, such Grantor
shall deliver a pledge amendment duly executed by the Grantor in substantially the form of Annex 1 (each, a “Pledge
Amendment”).   Such Grantor authorizes Lender to attach each Pledge Amendment to this Agreement.

 

Section 8.7           Notices.   All
notices, requests and demands to or upon Lender or any Grantor hereunder shall be effected in the manner provided for in the Note;
provided, however, that any such notice, request or demand to or upon any Grantor shall be addressed to the Borrower’s
notice address set forth in the Note.

 

Section 8.8           Successors
and Assigns.   This Agreement shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of each Secured Party and their successors and assigns; provided, however, that no Grantor may
assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of Lender.

 

Section 8.9           Counterparts.   This
Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.   Signature
pages may be detached from multiple separate counterparts and attached to a single counterpart.   Delivery of an
executed signature page of this Agreement by facsimile transmission or by Electronic Transmission shall be as effective as delivery
of a manually executed counterpart hereof.

 

    	 	33	 

     

    

 

Section 8.10          Severability.   Any
provision of this Agreement being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such
provision not held illegal, invalid or unenforceable, any other provision of this Agreement or any part of such provision in any
other jurisdiction.

 

Section 8.11         Governing
Law.   This Agreement and the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of Delaware without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.

 

Section 8.12         No
Effect on Stock Purchase Agreement; No Waiver of Rights.   Notwithstanding anything in this Agreement or any other
Loan Document to the contrary, no term or provision of this Agreement or any other Loan Document shall have the effect of modifying
or amending any of the rights of the Borrower (as Purchaser) under the Stock Purchase Agreement, including, without limitation,
any rights to set-off or recoup amounts under the Note or any of the obligations, including, without limitation, the indemnity
obligations, of the Lender (as Seller) under the Stock Purchase Agreement.   

 

Section 8.13         Waiver
of Jury Trial.   THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY.   THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING
WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

 

EACH GRANTOR AGREES
TO BE BOUND BY THE PROVISIONS OF SECTION (29) OF THE NOTE.

 

[SIGNATURE PAGES FOLLOW]

 

    	 	34	 

     

    

 

IN WITNESS WHEREOF,
each of the undersigned has caused this Guaranty and Security Agreement to be duly executed and delivered as of the date first
above written.

 

	 	BORROWER:
	 	 
	 	NXSN ACQUISITION CORP.
	 	 	 
	 	By: 	/s/Trevor L. Calhoun
	 	Name:	Trevor L. Calhoun
	 	Title:	Chairman

 

[Signature Page to Guaranty and Security
Agreement]

 

     

     

    

 

	 	NEXSAN CORPORATION
	 	 
	 	By:	/s/Trevor L. Calhoun
	 	Name:	Trevor L. Calhoun
	 	Title:	Duly Authorized
	 	 
	 	NEXSAN TECHNOLOGIES INCORPORATED
	 	 
	 	By:	/s/Trevor L. Calhoun
	 	Name:	Trevor L. Calhoun
	 	Title:	Duly Authorized
	 	 
	 	CONNECTED DATA, INC.
	 	 
	 	By:	/s/Trevor L. Calhoun
	 	Name:	Trevor L. Calhoun
	 	Title:	Duly Authorized

 

[Signature Page to Guaranty and Security
Agreement]

 

     

     

    

 

	ACCEPTED AND AGREED
	as of the date first above written:
	 
	IMATION CORP.,
	 	as Lender
	 	 
	By:	/s/Joseph A. De Perio	 
	 	Name: Joseph A. De Perio
	 	Title: Non-Executive Chairman

 

[Signature Page to Guaranty and Security
Agreement]

 

     

     

    

 

ANNEX 1

TO

GUARANTY AND SECURITY AGREEMENT 1 

 

FORM OF PLEDGE AMENDMENT

 

This Pledge Amendment,
dated as of __________ __, 201_, is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement,
dated as of [Closing Date under SPA] by NXSN Acquisition Corp. and the other Grantors party thereto, the undersigned Grantor and
the other Affiliates of the Borrower from time to time party thereto as Grantors in favor of Imation Corp., as Lender (the “Guaranty
and Security Agreement”).   Capitalized terms used herein without definition are used as defined in the
Guaranty and Security Agreement.

 

The undersigned hereby
agrees that this Pledge Amendment may be attached to the Guaranty and Security Agreement and that the Pledged Collateral listed
on Annex 1-A to this Pledge Amendment shall be and become part of the Collateral referred to in the Guaranty and Security
Agreement and shall secure all of the Secured Obligations.

 

The undersigned hereby
represents and warrants that each of the representations and warranties contained in Sections 4.1, 4.2, 4.4
and 4.9 of the Guaranty and Security Agreement is true and correct on and as of the date hereof as if made on and as of
such date.

 

	 	[GRANTOR]
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

  

 

 

1 
Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

 

    	 	A1-1	 

     

    

 

Annex 1-A

 

	PLEDGED STOCK
	 
	ISSUER	 	CLASS	 	
        CERTIFICATE

        NO(S).
	 	PAR VALUE	 	
        NO. OF

        SHARES,

        UNITS OR

        INTERESTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

	PLEDGED DEBT INSTRUMENTS
	 
	
        ISSUER
	 	
        DESCRIPTION
        OF 

DEBT
	 	
        CERTIFICATE

        NO(S).
	 	
        FINAL

        MATURITY
	 	
        PRINCIPAL

        AMOUNT

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

    	 	A1-2	 

     

    

 

	ACKNOWLEDGED AND AGREED
	as of the date first above written:
	 
	IMATION CORP.,
	 	as Lender

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	 	A1-3	 

     

    

 

ANNEX 2

TO

GUARANTY AND SECURITY AGREEMENT

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT,
dated as of _________ __, 201_, is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement, dated
as of [Closing Date under SPA], by NXSN Acquisition Corp. and the other Persons from time to time party thereto as Grantors in
favor of Imation Corp., as Lender (as such agreement may be amended, restated, supplemented and/or otherwise modified from time
to time, the “Guaranty and Security Agreement”).   Capitalized terms used herein without definition
are used as defined in the Guaranty and Security Agreement.

 

By executing and delivering
this Joinder Agreement, the undersigned, as provided in Section 8.6 of the Guaranty and Security Agreement, hereby
becomes a party to the Guaranty and Security Agreement as a Grantor thereunder with the same force and effect as if originally
named as a Grantor therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, hereby
mortgages, pledges and hypothecates to Lender and grants to Lender a lien on and security interest in, all of its right, title
and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities of a Grantor
thereunder.   The undersigned hereby agrees to be bound as a Grantor for the purposes of the Guaranty and Security
Agreement.

 

The information set
forth in Annex 1-A is hereby added to the information set forth in Schedules 1 through 5 to the Guaranty
and Security Agreement.   By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agrees
that this Joinder Agreement may be attached to the Guaranty and Security Agreement and that the Collateral listed on Annex 1-A
to this Joinder Amendment shall be and become part of the Collateral referred to in the Guaranty and Security Agreement and shall
secure all Secured Obligations of the undersigned.

 

The undersigned hereby
represents and warrants that each of the representations and warranties contained in Article IV of the Guaranty and
Security Agreement applicable to it is true and correct on and as of the date hereof as if made on and as of such date.

 

    	 	A2-1	 

     

    

 

In
witness whereof, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first above
written.

 

	 	[ADDITIONAL GRANTOR]
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	 	A2-2	 

     

    

 

	ACKNOWLEDGED AND AGREED	 
	as of the date first above written:	 
	 	 
	IMATION CORP.,	 
	 	as Lender	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	 	A2-3	 

     

    

 

ANNEX 3

TO

GUARANTY AND SECURITY AGREEMENT

 

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT 1 

 

THIS [COPYRIGHT] [PATENT]
[TRADEMARK] SECURITY AGREEMENT, dated as of _________ __, 201_, is made by each of the entities listed on the signature pages hereof
(each a “Grantor” and, collectively, the “Grantors”), in favor of Imation Corp (“Lender”),
as lender.

 

WITNESSETH:

 

WHEREAS, pursuant to
the Senior Secured Convertible Note dated as of [Closing Date under SPA] (as the same may be amended, restated, supplemented and/or
modified from time to time, the “Note”) issued by the Borrower for the benefit of the Lender, the Lender has
agreed to enter into the Loan Documents and to make a loan to the Borrower upon the terms and subject to the conditions set forth
in the Note;

 

WHEREAS, each Grantor
has agreed, pursuant to a Guaranty and Security Agreement dated [Closing Date under SPA], in favor of Lender (as such agreement
may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty and Security Agreement”),
to guarantee the Obligations of Borrower;

 

WHEREAS, all of the
Grantors are party to the Guaranty and Security Agreement pursuant to which the Grantors are required to execute and deliver this
[Copyright] [Patent] [Trademark] Security Agreement; and

 

WHEREAS, it is a condition
precedent to the obligation of the Lender to enter into the Loan Documents and make the loan to the Borrower that the Borrower
shall have executed and delivered this Agreement to Lender;

 

NOW, THEREFORE, in
consideration of the premises and to induce the Lender and Lender to enter into the Loan Documents and to induce the Lender to
make its loan to the Borrower, each Grantor hereby agrees with Lender as follows:

 

Section 1.   Defined
Terms.   Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.

 

Section 2.   Grant
of Security Interest in [Copyright] [Trademark] [Patent] Collateral.   Each Grantor, as collateral security
for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations (as defined in the Guaranty and Security Agreement), hereby mortgages, pledges and hypothecates to Lender and
grants to Lender a Lien on and security interest in, all of its right, title and interest in, to and under the following Collateral
of such Grantor (the “[Copyright] [Patent] [Trademark] Collateral”):

 

 

 1 
Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

 

    	 	A3-1	 

     

    

 

(a)          [all
of its Copyrights and all IP Agreements providing for the grant by or to such Grantor of any right under any Copyright, including,
without limitation, those referred to on Schedule 1 hereto;

 

(b)          all
renewals, reversions and extensions of the foregoing; and

 

(c)          all
income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

or

 

(a)          [all
of its Patents and all IP Agreements providing for the grant by or to such Grantor of any right under any Patent, including, without
limitation, those referred to on Schedule 1 hereto;

 

(b)          all
reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and

 

(c)          all
income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

or

 

(a)          [all
of its Trademarks and all IP Agreements providing for the grant by or to such Grantor of any right under any Trademark, including,
without limitation, those referred to on Schedule 1 hereto;

 

(b)          all
renewals and extensions of the foregoing;

 

(c)          all
goodwill of the business connected with the use of, and symbolized by, each such Trademark; and

 

(d)          all
income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

Section 3.   Guaranty
and Security Agreement.   The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security
Agreement is granted in conjunction with the security interest granted to Lender pursuant to the Guaranty and Security Agreement
and each Grantor hereby acknowledges and agrees that the rights and remedies of Lender with respect to the security interest in
the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the Guaranty and Security Agreement,
the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

 

    	 	A3-2	 

     

    

 

Section 4.   Grantor
Remains Liable.   Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor
shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions
in connection with their [Copyrights] [Patents] [Trademarks] and IP Agreements subject to a security interest hereunder.

 

Section 5.   Counterparts.   This
[Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute
one and the same agreement.   Signature pages may be detached from multiple separate counterparts and attached to
a single counterpart.

 

Section 6.   Governing
Law.   This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Delaware.

 

[SIGNATURE PAGES FOLLOW]

 

    	 	A3-3	 

     

    

 

IN WITNESS WHEREOF,
each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.

 

	 	[GRANTOR]
	 	as Grantor
	 	 
	 	By:  	 
	 	 	Name:
	 	 	Title:

 

	ACCEPTED AND AGREED	 
	as of the date first above written:	 
	 	 
	imation corp.,	 
	 	as Lender	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	 	A3-4	 

     

    

 

SCHEDULE I

TO

[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

[Copyright] [Patent] [Trademark] Registrations

 

1.          REGISTERED
[COPYRIGHTS] [PATENTS] [TRADEMARKS]

 

[Include Registration Number and Date]

 

2.          [COPYRIGHT]
[PATENT] [TRADEMARK] APPLICATIONS

 

[Include Application Number and Date]

 

3.          IP
AGREEMENTS

 

[Include complete legal description of
agreement (name of agreement, parties and date)]

 

     

     

    

 

Schedule 1 to Guaranty and Security
Agreement

 

Commercial Tort Claims

 

None.

 

     

     

    

 

Schedule 2 to Guaranty and Security
Agreement

 

Filings

 

	ENTITY 	 	JURISDICTIONS
	Nexsan Corporation	 	Delaware
	Nexsan Technologies, Inc.	 	Delaware
	Connected Data, Inc.	 	California
	 	 	 
	NXSN Acquisition Corp.	 	Delaware
	 	 	 
	 	 	 
	 	 	 

 

     

     

    

 

Schedule 3 to Guaranty and Security
Agreement

 

Location of Inventory, Equipment, Books
and Records

 

All books and records are located either the locations set forth
below or located at 900 E Hamilton Ave, Ste 230 Campbell, CA 95008.   All inventory and equipment is located at
the following:

 

	Grantor	 	Use	 	Location	 	Landlord
	Nexsan Corporation	 	Corporate Headquarters	 	
        900 E Hamilton Ave, Ste 230

        Campbell, CA 95008
	 	Legacy III Campbell, LLC
	Nexsan Technologies Incorporated	 	Corporate Headquarters	 	
        900 E Hamilton Ave, Ste 230

        Campbell, CA 95008
	 	 
	 	 	 	
        1445 Lawrence Drive

        Thousand Oaks, CA 91320
	 	Voit Conejo Partners, LLC
	 	 	 	
        302 Enterprise Street, Ste A

        Escondido, CA 92029
	 	Enterprise Heights Industrial Centre Associates
	Connected Data, Inc.	 	Corporate Headquarters	 	
        900 E Hamilton Ave, Ste 230

        Campbell, CA 95008
	 	 
	NXSN Acquisition Corp.	 	 	 	
        c/o Spear Point Capital Management LLC

        400 Poydras St., Suite 2100

        New Orleans, LA 70130
	 	 

 

     

     

    

 

Schedule 4 to Guaranty and Security
Agreement

 

Pledged Collateral

 

	Entity	 	Jurisdiction	 	Stock	 	Issued 

Shares/Units	 	Cert #	 	Ownership (org 

chart)
	Nexsan Corporation	 	Delaware	 	Common	 	1,000	 	N-1	 	NXSN Acquisition Corp.
	Nexsan Technologies Incorporated	 	Delaware	 	Common	 	1,000	 	N-1	 	Nexsan Corporation
	Connected Data, Inc.	 	California	 	Common	 	1,000	 	N-1	 	Nexsan Corporation
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

 

     

     

    

 

Schedule 5 to Guaranty and Security
Agreement

 

Intellectual Property

 

PATENTS

 

	Title	 	Country	 	Status	 	Application

        Number
	 	Filing

        Date
	 	Publication

        Number
	 	Pub

        Date
	 	Patent

        Number
	 	Issue

        Date
	 	Owner
	Journaling raid system	 	International Application	 	Entered	 	US2012/031823	 	04/02/12	 	 	 	 	 	 	 	 	 	Nexsan Corporation
	Journaling raid system	 	United States	 	Issued	 	14/041,975	 	09/30/13	 	 	 	 	 	8,838,893	 	09/16/14	 	Nexsan Corporation
	Journaling RAID System	 	United States	 	Abandoned	 	14/041,814	 	09/30/13	 	20140173186	 	06/19/14	 	 	 	 	 	Nexsan Corporation
	Journaling RAID System	 	European Convention	 	Abandoned	 	12848123	 	02/04/12	 	2695066	 	12/02/14	 	 	 	 	 	Nexsan Corporation
	System for displaying hierarchical information	 	United States	 	Issued	 	13/076,218	 	03/30/11	 	20120254805	 	10/04/12	 	9,256,350	 	02/09/16	 	Nexsan Technologies Incorporated
	System for displaying hierarchical information	 	International Application	 	Abandoned	 	US2012/031506	 	03/30/12	 	2012135649	 	10/04/12	 	 	 	 	 	Nexsan Technologies Incorporated
	Distributed File System Management	 	United States	 	Used	 	61/638,866	 	4/26/12	 	 	 	 	 	 	 	 	 	Connected Data, Inc.
	System and Method for Managing User Data in a Plurality of Storage Appliances Over a Wide
    Area Network for Collaboration, Protection, Publication, or Sharing	 	United States	 	Used	 	61/731,517	 	11/30/12	 	 	 	 	 	 	 	 	 	Connected Data, Inc.
	System and Method for Socially Organized Storage	 	United States	 	Used	 	61/731,518	 	11/30/12	 	 	 	 	 	 	 	 	 	Connected Data, Inc.
	Storage Appliance	 	United States	 	Issued	 	29/437,875	 	11/21/12	 	 	 	 	 	D706,755	 	6/10/14	 	Connected Data, Inc.
	Storage Appliance	 	European Convention	 	Issued	 	002240515	 	5/21/13	 	 	 	 	 	002240515-0001	 	5/21/13	 	Connected Data, Inc.
	Storage Appliance	 	Japan	 	Issued	 	2013-11097	 	5/21/13	 	 	 	 	 	1496144	 	3/28/14	 	Connected Data, Inc.
	Assembly for Digital Storage Appliance	 	United States	 	Abandoned	 	13/688,995	 	11/29/12	 	20140145571	 	5/29/14	 	 	 	 	 	Connected Data, Inc.
	Assembly for Digital Storage Appliance	 	International Application	 	Expired	 	US2013/071898	 	11/26/13	 	2014085400	 	6/5/14	 	 	 	 	 	Connected Data, Inc.
	System and Method for Managing User Data in a Plurality of Storage Appliances Over a Wide
    Area Network for Collaboration, Protection, Publication, or Sharing	 	United States	 	Issued	 	13/804,019	 	3/14/13	 	20130290256	 	10/31/13	 	9,218,406	 	12/22/15	 	Connected Data, Inc.

 

     

     

    

 

	Title	 	Country	 	Status	 	Application

        Number
	 	Filing

        Date
	 	Publication

        Number
	 	Pub

        Date
	 	Patent

        Number
	 	Issue

        Date
	 	Owner
	System and Method for Managing User Data in a Plurality of Storage
    Appliances Over a Wide Area Network for Collaboration, Protection, Publication, or Sharing	 	International Application	 	Used	 	US2013/038427	 	4/26/13	 	2013163550	 	10/31/13	 	 	 	 	 	Connected Data, Inc.
	System and Method for Managing User Data in a Plurality of Storage
    Appliances Over a Wide Area Network for Collaboration, Protection, Publication, or Sharing	 	Great Britain	 	Pending	 	1419101.9	 	4/26/13	 	2515703	 	12/31/14	 	 	 	 	 	Connected Data, Inc.
	System and Method for Managing User Data in a Plurality of Storage
    Appliances Over a Wide Area Network for Collaboration, Protection, Publication, or Sharing	 	France	 	Pending	 	1353867	 	4/26/13	 	2990036	 	11/11/13	 	 	 	 	 	Connected Data, Inc.
	System and Method for Socially Organized Storage and Shared Access
    to Storage Appliances 	 	United States	 	Issued	 	13/804,436	 	3/14/13	 	20130290464	 	10/31/13	 	9,396,156	 	7/19/16	 	Connected Data, Inc.
	Method of Reducing Bandwidth Required for Sharing of Files on a
    Server	 	United States	 	Issued	 	14/322,447	 	7/2/14	 	 	 	 	 	8,959,242	 	2/17/15	 	Connected Data, Inc.
	Method of Reducing Bandwidth Required for Sharing of Files on a
    Server	 	International Application	 	Published	 	US2015/015640	 	2/12/15	 	 	 	 	 	 	 	 	 	Connected Data, Inc.
	System and Method for Geographically Displaying Storage Appliances
    and Applications Sharing Data on a Peer-to-Peer Basis	 	United States	 	Pending	 	15/082,936	 	3/28/16	 	 	 	 	 	 	 	 	 	Connected Data, Inc.
	System and Method for Managing User Data in a Plurality of Storage
    Appliances Over a Wide Area Network for Collaboration, Protection, Publication, or Sharing	 	United States	 	Pending	 	14/977,506	 	12/21/15	 	20160117377	 	04/28/16	 	 	 	 	 	Connected Data, Inc.

 

     

     

    

 

TRADEMARKS

 

	Trademark	 	Country	 	Current

        Owner
	 	Status	 	Class

        Number
	 	Goods	 	Current
        

        Application

        Number
        
	 	Current
        

        Application

        Date
	 	Current
        

        Registration

        Number
	 	Current

        Registration

        Date

	A DIFFERENT KIND OF STORAGE EXPERIENCE	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND DOWNLOADABLE SOFTWARE USED FOR DATA STORAGE
    AND DATA MANAGEMENT.	 	85131337	 	9/16/2010	 	4119264	 	3/27/2012
	ASSUREON	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	A COMPUTER HARDWARE AND SOFTWARE SOLUTION WHICH PERFORMS MANAGEMENT
    FOR DATA STORAGE	 	78658909	 	6/27/2005	 	3175479	 	11/21/2006
	ASSUREON	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE SOLUTION WHICH PERFORMS MANAGEMENT
    FOR DATA STORAGE.	 	78658769	 	6/27/2005	 	3175478	 	11/21/2006
	AutoMAID	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER SOFTWARE FOR THE REDUCTION OF POWER CONCUMPTION IN DATA
    STORAGE SYSTEMS.	 	77465350	 	5/5/2008	 	3709663	 	11/10/2009
	DEDUPE SG	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN DE-DUPLICATION WITH RESPECT
    TO STORED DATA.	 	77789073	 	7/24/2009	 	3901459	 	1/4/2011
	E	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE USED FOR DATA STORAGE AND DAT	 	85139885	 	9/28/2010	 	4003906	 	7/26/2011
	E-CENTRE	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	A COMPUTER HARDWARE AND SOFTWARE SOLUTION WHICH PERFORMS MANAGEMENT
    FOR DATA STORAGE	 	85211029	 	1/5/2011	 	4094613	 	1/31/2012
	FASTIER	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	A COMPONENT OF DATA STORAGE SYSTEMS, COMPRISED OF HARDWARE AND SOFTWARE,
    USED TO IMPROVE PERFORMANCE.	 	85338153	 	6/4/2011	 	4180640	 	7/24/2012
	NEXSAN	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN DE-DUPLICATION WITH RESPECT
    TO STORED DATA.	 	77666170	 	2/9/2009	 	3675948	 	9/1/2009
	NEXSAN UNITY	 	Canada	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	1801387	 	9/21/2016	 	 	 	 
	NEXSAN UNITY	 	China	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE FOR USE IN MANAGING, STORING, TRANSFERRING, ACCESSING,
    AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT; COMPUTER SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIRONMENT	 	Not yet assigned	 	9/22/2016	 	 	 	 

 

     

     

    

 

	Trademark	 	Country	 	Current

        Owner
	 	Status	 	Class

        Number
	 	Goods	 	Current
        

        Application

        Number
        
	 	Current
        

        Application

        Date
	 	Current
        

        Registration

        Number
	 	Current

        Registration

        Date

	NEXSAN UNITY	 	Europe	 	Nexsan Technologies Inc.	 	Published	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	15853906	 	9/21/2016	 	 	 	 
	NEXSAN UNITY	 	Japan	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	T2016-103171	 	9/23/2016	 	 	 	 
	NEXSAN UNITY	 	United States	 	Nexsan Technologies Inc.	 	Opposed	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	86/948,652	 	3/22/2016	 	 	 	 
	NEXSAN ("E"  IS A DESIGN)	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE USED FOR DATA STORAGE AND DATA MANAGEMENT	 	85052305	 	6/1/2010	 	3982616	 	6/21/2011
	NST	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE AND SOFTWARE USED FOR DATA STORAGE IN CLASS 9	 	85540270	 	2/11/2012	 	4243620	 	11/13/2012
	SASBeast	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE USED FOR DATA STORAGE.	 	77505136	 	6/23/2008	 	3775512	 	4/13/2010
	SASBoy	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	COMPUTER HARDWARE USED FOR DATA STORAGE.	 	77505120	 	6/23/2008	 	3775511	 	4/13/2010
	SATABeast	 	United States	 	Nexsan Technologies, Inc.	 	Registered	 	9	 	A COMPUTER HARDWARE AND SOFTWARE SOLUTION WHICH PERFORMS MANAGEMENT
    FOR DATA STORAGE.	 	78698045	 	8/23/2005	 	3238324	 	4/4/2006
	UNITY	 	Canada	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	1801386	 	9/21/2016	 	UNITY	 	Canada
	UNITY	 	China	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE FOR USE IN MANAGING, STORING, TRANSFERRING, ACCESSING,
    AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT; COMPUTER SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIRONMENT	 	Not yet assigned	 	9/22/2016	 	UNITY	 	China

 

     

     

    

 

	Trademark	 	Country	 	Current

        Owner
	 	Status	 	Class

        Number
	 	Goods	 	Current
        

        Application

        Number
        
	 	Current
        

        Application

        Date
	 	Current
        

        Registration

        Number
	 	Current

        Registration

        Date

	UNITY	 	Europe	 	Nexsan Technologies Inc.	 	Published	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	15853799	 	9/21/2016	 	UNITY	 	Europe
	UNITY	 	Japan	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	T2016-103170	 	9/23/2016	 	UNITY	 	Japan
	UNITY	 	United States	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	86/948,640	 	3/22/2016	 	UNITY	 	United States
	UNITY	 	Canada	 	Nexsan Technologies Inc.	 	Pending	 	9	 	COMPUTER HARDWARE AND SOFTWARE FOR USE IN MANAGING, STORING, TRANSFERRING,
    ACCESSING, AND SHARING DATA IN AN ENTERPRISE PRIVATE CLOUD ENVIORNMENT	 	1801386	 	9/21/2016	 	UNITY	 	Canadae75742257ex4_2.htm

 

EXHIBIT 4.2

 

 

 

 

 

 

 

 

 

 

 

THIRD SUPPLEMENTAL INDENTURE

 

Dated as of January 26, 2017,

 

among

 

UNITED CONTINENTAL HOLDINGS, INC.,

 

UNITED AIRLINES, INC.,

 

and

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

 

as Trustee

 

 

 

 

 

 

 

 

  

  

  

TABLE OF CONTENTS

 

Page

	
 

Section 1.  Defined Terms

	
1

	
 

Section 2.  Relation to Original Indenture

	
1

	
 

Section 3.  Terms of the Notes

	
1

	
3.1  Issuer

	
1

	
3.2  Title and Form

	
1

	
3.3  Aggregate Principal Amount

	
1

	
3.4  Principal Payment

	
1

	
3.5  Interest

	
1

	
3.6  Method of Payment

	
2

	
3.7  Optional Redemption

	
2

	
3.8  Global Notes

	
3

	
3.9  Legends on Notes

	
3

	
3.10  Note Denominations

	
4

	
3.11  No Sinking Fund 

	
4

	
3.12  Indenture Covenants

	
4

	
3.13  Note Guarantee

	
4

	
3.14  Amendments

	
5

	
3.15  Further Issuances

	
5

	
3.16  No Reissuance of Notes

	
5

	
 

Section 4.  Additional Covenants Applicable to the Notes

	
5

	
4.1  Offer to Repurchase Upon Change of Control

	
5

	
4.2  Restricted Payments

	
7

	
4.3  Incurrence of Indebtedness and Issuance of Preferred Stock

	
13

	
4.4  Designation of Restricted and Unrestricted Subsidiaries

	
18

	
 

Section 5.  Changes in Events of Default Applicable to the Notes

	
19

	
 

Section 6.  Acceleration

	
20

	
 

Section 7.  Additional Definitions

	
20

	
 

Section 8.  Miscellaneous

	
39

	
8.1  Governing Law

	
39

	
8.2  Counterparts

	
39

	
8.3  Trustee Not Responsible for Recitals

	
39

	
8.4  Confirmation of Indenture

	
40

	
8.5  Conflict with Trust Indenture Act

	
40

 

 

 

  

i

  

 

EXHIBITS

Exhibit A                      Form of Note

Exhibit B                      Form of Notation of Note Guarantee

  

ii

  

 

THIRD SUPPLEMENTAL INDENTURE, dated as of January 26, 2017 (the “Third Supplemental Indenture”), among United Continental Holdings, Inc. (“UAL” or the “Issuer”), United Airlines, Inc. (“United”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), to the Indenture, dated as of May 7, 2013 (the “Original Indenture”), among UAL, United and the Trustee.  The Original Indenture as supplemented by this Third Supplemental Indenture is hereinafter called the “Indenture.”

 

WHEREAS, Section 9.01 of the Original Indenture permits supplements thereto to establish the form or terms of Securities pursuant to Article II of the Original Indenture; and

 

WHEREAS, as contemplated by Section 2.02 of the Original Indenture, UAL wishes to establish the terms of a new Series of Securities (the “Notes”) pursuant to this Third Supplemental Indenture.

 

NOW, THEREFORE, this Third Supplemental Indenture witnesseth:

 

Section 1. Defined Terms.  For purposes of this Third Supplemental Indenture, all terms defined in the Original Indenture and used herein have such defined meanings unless otherwise defined herein.  In addition, Section 7 hereof sets forth certain defined terms for purposes of this Third Supplemental Indenture.

 

Section 2. Relation to Original Indenture.  The Original Indenture is supplemented and modified as set forth in this Third Supplemental Indenture for purposes of the Notes.  This Third Supplemental Indenture shall not affect any Series of Securities other than the Notes.

 

Section 3. Terms of the Notes.  The terms of the Notes shall be as follows:

 

3.1 Issuer.  The issuer of the Notes shall be UAL.

 

3.2 Title and Form.  The title of the Notes is 5.00% Senior Notes due 2024.  The Notes shall be in registered form and in substantially the form attached hereto as Exhibit A.

 

3.3 Aggregate Principal Amount.  The aggregate principal amount of the Notes which may be authenticated and delivered under the Indenture is initially limited to $300,000,000, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes, and subject to increase as set forth in Section 3.15 hereof.

 

3.4 Principal Payment.  The outstanding principal amount of the Notes shall be due and payable on February 1, 2024.

 

3.5 Interest.  The outstanding principal amount of the Notes shall bear interest at the rate of 5.00% per annum, payable in arrears on February 1 and August 1 of each year (each, an “Interest Payment Date”), commencing on August 1, 2017, to the Persons in whose names the Notes are registered at the close of business on the January 15 and July 15, respectively, next preceding such Interest Payment Date (each, a “Regular Record Date”).  Interest shall accrue from the most recent date to which interest has been paid or for which interest has been provided,

  

1

  

 

or, if no interest has been paid or provided for, from January 26, 2017.  Interest due on any date shall be the amount accrued to but excluding such due date.  Interest shall be calculated on the basis of a 360-day year of twelve 30-day months.  Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day without any interest or other payment due to the delay.

 

3.6 Method of Payment.  Principal of, premium (if any) and interest on the Notes shall be payable as provided in Section 2.15 of the Original Indenture.  Notwithstanding the foregoing, payments of principal of, premium (if any) and interest on the Notes represented by one or more Global Notes will be made as provided in Section 3.8 hereof.

 

3.7 Optional Redemption.  The Issuer, at its option, may redeem the Notes in whole at any time or in part from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the Notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on such Notes (excluding accrued and unpaid interest to the redemption date) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points, plus, in case of either the preceding clause (1) or (2), accrued and unpaid interest on the principal amount being redeemed to such redemption date.  Article III of the Original Indenture shall apply to any such redemption, except that the third sentence of Section 3.02 of the Original Indenture shall be amended to read as follows:  “Notes and portions thereof that the Trustee selects shall be in principal amounts of $2,000 or integral multiples of $1,000 in excess thereof.”  If less than all outstanding Notes are to be redeemed, any selection of Notes to be redeemed shall be subject to applicable procedures of The Depository Trust Company (“DTC”) so long as it is the Depositary.  For purposes of any redemptions pursuant to this Section 3.7, the following terms shall have the respective specified meanings:

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.

 

“Comparable Treasury Price” means, with respect to any redemption date for Notes, the average of two Reference Treasury Dealer Quotations for such redemption date.

 

“Quotation Agent” means the Reference Treasury Dealer appointed by the Issuer.

 

“Reference Treasury Dealer” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary United States Government securities dealer in New York City (a

 

  

2

  

 

“Primary Treasury Dealer”), the Issuer will substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Issuer, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Issuer by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

 

“Treasury Rate” means, with respect to any redemption date, (1) the yield to maturity calculated by taking the simple average of the yields to maturity for the applicable Comparable Treasury Issue for each of the five Business Days immediately preceding the third Business Day before the calculation date as reported on the most recent H.15 page available through the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update, or any successor site or publication, for the applicable Comparable Treasury Issue and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the maturity date of the Notes to be redeemed, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (2) if such report (or any successor site or publication) is not available during any of such five Business Days or does not contain such yields, the rate per year equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate will be calculated on the third Business Day preceding the redemption date.

 

3.8 Global Notes.  The Notes shall initially be issued in the form of one or more Global Securities registered in the name of DTC, which shall be the initial Depositary with respect to the Notes, or its nominee (a “Global Note”), which shall be delivered to the Trustee as custodian for the Depositary or its nominee.  The Paying Agent shall make payments of principal, premium, if any, or interest due on the Notes represented by one or more Global Notes to the Depositary or its nominee, as the case may be, as the registered owner of the related Global Note or Global Notes, by wire transfer of immediately available funds to the account designated by such registered holder.

 

3.9 Legends on Notes.

 

(a) In addition to the legend set forth in Section 2.14(c) of the Original Indenture, so long as DTC is the Depositary, each Global Note registered in the name of DTC or its nominee shall bear a legend in substantially the following form:

  

3

  

 

“UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

(b) All Notes shall bear a legend substantially in the following form:

 

“BY ACCEPTANCE OF THIS NOTE OR ANY INTEREST HEREIN, EACH PURCHASER AND SUBSEQUENT TRANSFEREE OF THIS NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED TO THE ISSUER AND THE TRUSTEE THAT EITHER (I) SUCH PURCHASER OR TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF THE CODE OR ERISA (COLLECTIVELY, “SIMILAR LAWS”), OR AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS AND ARRANGEMENTS (COLLECTIVELY, “PLANS”), AND NO PORTION OF THE ASSETS USED BY SUCH PURCHASER OR TRANSFEREE TO ACQUIRE AND HOLD THIS NOTE OR ANY INTEREST HEREIN CONSTITUTES ASSETS OF ANY PLAN OR (II) THE PURCHASE AND HOLDING OF THIS NOTE OR ANY INTEREST HEREIN BY SUCH PURCHASER OR TRANSFEREE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A VIOLATION OF ANY APPLICABLE SIMILAR LAW.”

 

3.10 Note Denominations.  The Notes shall be issued in denominations of $2,000 or an integral multiple of $1,000 in excess thereof.

 

3.11 No Sinking Fund.  The Notes will not be entitled to the benefit of any sinking fund.

 

3.12 Indenture Covenants.  The covenants set forth in Article IV and Article V of the Original Indenture shall apply to the Notes.

 

3.13 Note Guarantee.  United (the “Guarantor”) fully and unconditionally guarantees the Notes pursuant to Article X of the Original Indenture (the “Note Guarantee”).

 

  

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The Notation of Note Guarantee substantially in the form attached hereto as Exhibit B shall be executed by United and attached to each Note authenticated pursuant to the Indenture.

 

3.14 Amendments.

 

(a) Section 9.01(1) of the Original Indenture shall be amended to insert the following at the end thereof:

 

“, or to evidence the succession of another Person to the Guarantor pursuant to Section 10.04 and the assumption by such successor of the Guarantor’s covenants, agreements and obligations in this Indenture and with respect to the Securities;”

 

(b) Section 9.02(7) of the Original Indenture shall be amended and restated to read as follows:

 

“except as provided under Article VIII hereof or in connection with a consolidation, merger or conveyance, transfer or lease of assets pursuant to this Indenture, release any Securities Guarantor from any of its obligations under its Securities Guarantee or make any change in a Securities Guarantee that would adversely affect such Holder; or”

 

        3.15 Further Issuances.  The Issuer may, from time to time, without notice to or the consent of the Holders of the Notes, increase the principal amount of the Notes under the Indenture and issue such increased principal amount (or any portion thereof), in which case any additional Notes so issued will have the same form and terms (other than the date of issuance and, under certain circumstances, the date from which interest thereon will begin to accrue), and will carry the same right to receive accrued and unpaid interest, as the Notes previously issued, and such additional Notes will form a single series with the Notes.

 

3.16 No Reissuance of Notes.  The Issuer may not reissue a Note that has matured, been redeemed, been purchased by the Issuer at the Holder’s option upon a Change of Control or otherwise been canceled, except for registration of transfer, exchange or replacement of such Note.

 

Section 4. Additional Covenants Applicable to the Notes.  The following covenants shall be applicable for purposes of the Notes:

 

4.1 Offer to Repurchase Upon Change of Control.

 

(a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Issuer to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes pursuant to an offer (a “Change of Control Offer”) at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest on the Notes repurchased to the date of purchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Within 30 days

  

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following any Change of Control, the Issuer shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating:

 

(1)           that the Change of Control Offer is being made pursuant to this Section 4.1 and that all Notes tendered will be accepted for payment;

 

(2)           the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);

 

(3)           that any Note not tendered will continue to accrue interest;

 

(4)           that, unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;

 

(5)           that Holders of Notes electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer such Notes by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

 

(6)           that Holders of Notes will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing its election to have the Notes purchased; and

 

(7)           that Holders of Notes whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.

 

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.1, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.1 by virtue of such compliance.  The Issuer will provide a copy of such notice to the Trustee.

 

(b) On the Change of Control Payment Date, the Issuer will, to the extent lawful:

  

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(1)           accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

 

(2)           deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

 

(3)           deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

 

The Paying Agent will promptly mail (or pay by wire transfer) (but in any case not later than five days after the Change of Control Payment Date) to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Issuer shall issue, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each such Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any.  The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

 

(c) Notwithstanding anything to the contrary in this Indenture or the Notes:

 

(1)           the Issuer shall not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.1 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer or (2) notice of redemption with respect to all Notes has been given pursuant to Section 3.01 of the Indenture, unless and until there is a default in payment of the applicable redemption price; and

 

(2)           a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.

 

(d) For the avoidance of doubt, the Issuer’s failure to make a Change of Control Offer would constitute a Default under clause (3) of Section 6.01 of the Indenture and not clause (1) or (2) thereof, but the failure of the Issuer to pay the Change of Control Payment when due shall constitute a Default under clause (1) of Section 6.01 thereof.

 

4.2 Restricted Payments.

 

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

 

(1)           declare or pay any dividend or make any other payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity

 

  

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Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than (A) dividends, distributions or payments payable in Qualifying Equity Interests or, in the case of preferred stock of the Issuer, an increase in the liquidation value thereof and (B) dividends, distributions or payments payable to the Issuer or a Restricted Subsidiary of the Issuer);

 

(2)           purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Issuer;

 

(3)           make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value (collectively for purposes of this clause (3), a “purchase”) any Indebtedness of the Issuer or the Guarantor that is contractually subordinated to the Notes or the Note Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries), except any scheduled payment of interest and any purchase within two years of the Scheduled Maturity thereof; or

 

(4)           make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

 

unless, at the time of and after giving effect to such Restricted Payment:

 

(i)           no Default has occurred and is continuing;

 

(ii)           the Issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.3(a) hereof; and

 

(iii)           such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries since the Closing Date (excluding Restricted Payments permitted by clauses (2) through (20) of Section 4.2(b) hereof) is less than the sum, without duplication, of:

 

(A)           50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) from July 1, 2011, to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

  

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(B)           100% of the aggregate net cash proceeds and the Fair Market Value of non-cash consideration received by the Issuer since May 7, 2013 as a contribution to its common equity capital or from the issue or sale of Qualifying Equity Interests (other than Qualifying Equity Interests sold to a Subsidiary of the Issuer and excluding Excluded Contributions); plus

 

(C)           100% of the aggregate net cash proceeds and the Fair Market Value of non-cash consideration received by the Issuer or a Restricted Subsidiary of the Issuer from the issue or sale of convertible or exchangeable Disqualified Stock of the Issuer or a Restricted Subsidiary of the Issuer or convertible or exchangeable debt securities of the Issuer or a Restricted Subsidiary of the Issuer (regardless of when issued or sold) or in connection with the conversion or exchange thereof, in each case that have been converted into or exchanged since May 7, 2013 for Qualifying Equity Interests (other than Qualifying Equity Interests and convertible or exchangeable Disqualified Stock or debt securities sold to a Subsidiary of the Issuer); plus

 

(D)           to the extent that any Restricted Investment that was made after May 7, 2013 (other than in reliance on clause (16) of Section 4.2(b) hereof) is (i) sold for cash or otherwise cancelled, liquidated or repaid for cash or (ii) made in an entity that subsequently becomes a Restricted Subsidiary of the Issuer, the initial amount of such Restricted Investment (or, if less, the amount of cash received upon repayment or sale); plus

 

(E)           to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the Closing Date is redesignated as a Restricted Subsidiary after the Closing Date, the lesser of (i) the Fair Market Value of the Issuer’s Restricted Investment in such Subsidiary (made other than in reliance on clause (16) of Section 4.2(b) hereof) as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Closing Date; plus

 

(F)           100% of any dividends received in cash by the Issuer or a Restricted Subsidiary of the Issuer after May 7, 2013 from an Unrestricted Subsidiary of the Issuer, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the Issuer for such period.

  

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(b) The provisions of Section 4.2(a) hereof will not prohibit:

 

(1)           the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with the provisions of the Indenture;

 

(2)           the making of any Restricted Payment in exchange for, or out of or with the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Qualifying Equity Interests or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will not be considered to be net proceeds of Qualifying Equity Interests for purposes of Section 4.2(a)(iii)(B) hereof and will not be considered to be Excluded Contributions;

 

(3)           the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution), distribution or payment by a Restricted Subsidiary of the Issuer to the holders of its Equity Interests on a pro rata basis;

 

(4)           the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or the Guarantor that is contractually subordinated to the Notes or to the Note Guarantee with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

 

(5)           the repurchase, redemption, acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any current or former officer, director, consultant or employee (or their estates or beneficiaries of their estates) of the Issuer or any of its Restricted Subsidiaries pursuant to any management equity plan or equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $50.0 million in any twelve-month period (except to the extent such repurchase, redemption, acquisition or retirement is in connection with (x) the acquisition of a Permitted Business or merger, consolidation or amalgamation otherwise permitted by the Indenture and in such case the aggregate price paid by the Issuer and its Restricted Subsidiaries shall not exceed $100.0 million in connection with such acquisition of a Permitted Business or merger, consolidation or amalgamation or (y) the Continental/UAL Merger, in which case no dollar limitation shall be applicable); provided further, that the Issuer or any of its Restricted Subsidiaries may carry over and make in subsequent twelve-month periods, in addition to the amounts permitted for such twelve-month period, up to $25.0 million of unutilized capacity under this clause (5) attributable to the immediately preceding twelve-month period;

  

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(6)           the repurchase of Equity Interests or other securities deemed to occur upon (A) the exercise of stock options, warrants or other securities convertible or exchangeable into Equity Interests or any other securities, to the extent such Equity Interests or other securities represent a portion of the exercise price of those stock options, warrants or other securities convertible or exchangeable into Equity Interests or any other securities or (B) the withholding of a portion of Equity Interests issued to employees and other participants under an equity compensation program of the Issuer or its Subsidiaries to cover withholding tax obligations of such persons in respect of such issuance;

 

(7)           so long as no Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends, distributions or payments to holders of any class or series of Disqualified Stock or subordinated debt of the Issuer or any preferred stock of any Restricted Subsidiary of the Issuer in each case either outstanding on the Closing Date or issued on or after the Closing Date in accordance with Section 4.3 hereof;

 

(8)           payments of cash, dividends, distributions, advances, common stock or other Restricted Payments by the Issuer or any of its Restricted Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (A) the exercise of options or warrants, (B) the conversion or exchange of Capital Stock of any such Person or (C) the conversion or exchange of Indebtedness or hybrid securities into Capital Stock of any such Person;

 

(9)           the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Issuer or any Disqualified Stock or preferred stock of any Restricted Subsidiary of the Issuer to the extent such dividends are included in the definition of “Fixed Charges” for such Person;

 

(10)           in the event of a Change of Control, and if no Default shall have occurred and be continuing, the payment, purchase, redemption, defeasance or other acquisition or retirement of any subordinated Indebtedness of the Issuer or the Guarantor, in each case, at a purchase price not greater than 101% of the principal amount of such subordinated Indebtedness, plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Issuer or the Guarantor (or a third party to the extent permitted by the Indenture) has made a Change of Control Offer as a result of such Change of Control (it being agreed that the Issuer or the Guarantor may pay, purchase, redeem, defease or otherwise acquire or retire such subordinated Indebtedness even if the purchase price exceeds 101% of the principal amount of such subordinated Indebtedness; provided that the amount paid in excess of 101% of such principal amount is otherwise permitted under the Restricted Payments covenant);

 

(11)           Restricted Payments made with Excluded Contributions;

  

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(12)           the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Issuer or any of its Restricted Subsidiaries by, any Unrestricted Subsidiary;

 

(13)           the distribution or dividend of assets or Capital Stock of any Person in connection with any full or partial “spin-off” of a Subsidiary or similar transactions; provided that (i) the Issuer would, on the date of such distribution after giving pro forma effect thereto as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.3(a) hereof, (ii) such pro forma Fixed Charge Coverage Ratio referred to in the preceding clause (i) would be greater than or equal to such Fixed Charge Coverage Ratio immediately prior to such transaction or (iii) if such Subsidiary is not the Guarantor, no Default has occurred and is continuing;

 

(14)           the distribution or dividend of assets or Capital Stock of any Person in connection with any full or partial “spin-off” of a Subsidiary or similar transactions having an aggregate Fair Market Value not to exceed $500.0 million since the Closing Date;

 

(15)           so long as no Default has occurred and is continuing, other Restricted Payments in an aggregate amount not to exceed $1.0 billion, such aggregate amount to be calculated from the Closing Date;

 

(16)           so long as no Default has occurred and is continuing, any Restricted Investment by the Issuer and/or any Restricted Subsidiary of the Issuer;

 

(17)           the payment of any amounts in respect of any restricted stock units or other instruments or rights whose value is based in whole or in part on the value of any Equity Interests issued to any directors, officers or employees of the Issuer or any Restricted Subsidiary of the Issuer;

 

(18)  so long as no Default has occurred and is continuing, Restricted Payments (i) made to purchase or redeem Equity Interests of Issuer or (ii) consisting of payments in respect of any Indebtedness (whether for purchase or prepayment thereof or otherwise);

 

 (19)  any Restricted Payment so long as both before and after giving effect to such Restricted Payment, Issuer and its Restricted Subsidiaries have Liquidity in the aggregate of at least $2.2 billion; and

 

(20)  Restricted Payments in an aggregate amount which do not exceed 5.0% of the Consolidated Tangible Assets of Issuer and its Restricted Subsidiaries (calculated at the time of such Restricted Payment).

 

(c)       In the case of any Restricted Payment that is not cash, the amount of such non-cash Restricted Payment will be the Fair Market Value on the date of the Restricted

 

  

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Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary of the Issuer, as the case may be, pursuant to the Restricted Payment.

 

(d)       For purposes of determining compliance with this Section 4.2, if a proposed Restricted Payment (or portion thereof) meets the criteria of more than one of the categories of Restricted Payments set forth in clauses (1) through (20) of Section 4.2(b) hereof, or is entitled to be made pursuant to Section 4.2(a) hereof, the Issuer will be entitled to classify on the date of its payment or later reclassify such Restricted Payment (or portion thereof) in any manner that complies with this Section 4.2.

 

(e)       For the avoidance of doubt, the following shall not constitute Restricted Payments and therefore will not be subject to any of the restrictions set forth in this Section 4.2:

 

(1)           the payment on or with respect to, or purchase, redemption, defeasance or other acquisition or retirement for value of any Indebtedness of the Issuer or any Restricted Subsidiary of the Issuer that is not contractually subordinated to the Notes and the Note Guarantee;

 

(2)           the payment of regularly scheduled amounts in respect of, and the issuance of common stock of the Issuer upon conversion of, the 6% Convertible Preferred Securities, Term Income Deferred Equity Securities (TIDES)SM issued by Continental Airlines Finance Trust II or the underlying 6% Convertible Junior Subordinated Debentures due 2030 issued by Continental; and

 

(3)           the conversion of the Capital Stock of the Issuer or the Guarantor pursuant to the Airline/Parent Merger.

 

(f)       Notwithstanding anything in this Indenture to the contrary, if a Restricted Payment is made at a time when a Default has occurred and is continuing and such Default is subsequently cured, the Default or Event of Default arising from the making of such Restricted Payment during the existence of such Default shall simultaneously be deemed cured.

 

4.3 Incurrence of Indebtedness and Issuance of Preferred Stock.

 

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Issuer’s Fixed Charge Coverage Ratio for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least 1.1 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.

  

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(b) The provisions of Section 4.3(a) hereof shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(1)           the incurrence by the Issuer and the Guarantor of the Notes and the Note Guarantee in the aggregate principal amount to be issued on the Closing Date and any Permitted Refinancing Indebtedness that is incurred to renew, refund, refinance, replace, defease, extend or discharge any other Indebtedness incurred pursuant to this clause (1);

 

(2)           the incurrence by the Issuer or any of its Restricted Subsidiaries of the Existing Indebtedness and any Indebtedness that is incurred pursuant to or in lieu of a commitment in existence as of the Closing Date;

 

(3)           the incurrence by the Issuer or any of its Restricted Subsidiaries of (A) Indebtedness and letters of credit (and reimbursement obligations with respect thereto) under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (3) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer and its Restricted Subsidiaries thereunder) not to exceed $5.0 billion and (B) Indebtedness and letters of credit (and reimbursement obligations with respect thereto) under Credit Facilities secured on a junior priority basis by some or all of the collateral securing Indebtedness under Credit Facilities contemplated by clause (A) of this clause (3) in an aggregate principal amount at any one time outstanding under this clause (3)(B) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer and its Restricted Subsidiaries thereunder) not to exceed $3.0 billion;

 

(4)           the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness represented by, or incurred in connection with, Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing (or reimbursing the Issuer or any of its Restricted Subsidiaries for) all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment (including, without limitation, airport, maintenance, training and office facilities, ground support equipment and tooling) used in the business of the Issuer or any of its Restricted Subsidiaries;

 

(5)           the incurrence by the Issuer or any of its Restricted Subsidiaries of (A) Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, extend, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.3(a) hereof or clauses (2), (4), (5), (6), (13), (20), (21), (24) or (25) of Section 4.3(b) hereof and (B) Permitted Refinancing Indebtedness secured by aircraft, airframes, engines, spare parts, flight simulators, flight training devices or other assets replacing, renewing, refunding, extending, refinancing, defeasing or discharging any other Indebtedness of the Issuer or any of its Restricted Subsidiaries that was secured

 

  

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by aircraft, airframes, engines, spare parts, flight simulators, flight training devices or other assets;

 

(6)           the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness, Disqualified Stock or preferred stock (including Acquired Debt) (A) as part of, or to finance, the acquisition (including by way of merger) of any Permitted Business, (B) incurred in connection with, or as a result of, the merger, consolidation or amalgamation of any Person (including the Issuer or any of its Restricted Subsidiaries) that owns a Permitted Business with or into the Issuer or a Restricted Subsidiary of the Issuer, or into which the Issuer or a Restricted Subsidiary of the Issuer is merged, consolidated or amalgamated, or (C) that is an outstanding obligation of a Person that owns a Permitted Business at the time that such Person is acquired by the Issuer or a Restricted Subsidiary of the Issuer and becomes a Restricted Subsidiary of the Issuer;

 

(7)           the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and/or any of its Restricted Subsidiaries;

 

(8)           the issuance by any Restricted Subsidiaries of the Issuer to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock;

 

(9)           the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;

 

(10)           the Guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 4.3; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then such Guarantee must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

 

(11)           the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness or reimbursement obligations in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance bonds and surety bonds in the ordinary course of business (including, without limitation, in respect of customs obligations, landing fees, taxes, airport charges, overfly rights and any other obligations to airport and governmental authorities);

 

(12)           the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness in respect of any overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearing house transfers of funds;

 

(13)           Indebtedness (A) constituting credit support or financing from aircraft or engine manufacturers or their affiliates or (B) incurred to finance the acquisition of aircraft, airframes, engines, spare parts, flight simulators, flight

 

  

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training devices, QEC Kits or other operating assets; provided that no Indebtedness may be incurred in reliance on subsection (B) of this clause (13) more than twenty-four months after such acquisition;

 

(14)           Indebtedness issued to current or former directors, consultants, managers, officers and employees and their spouses or estates (a) to purchase or redeem Capital Stock of the Issuer issued to such director, consultant, manager, officer or employee in an aggregate principal amount not to exceed $10.0 million in any twelve-month period or (b) pursuant to any deferred compensation plan approved by the Board of Directors of the Issuer;

 

(15)           reimbursement obligations in respect of standby or documentary letters of credit or banker’s acceptances;

 

(16)           surety and appeal bonds that do not secure judgments that constitute an Event of Default;

 

(17)           Indebtedness of the Issuer or any of its Restricted Subsidiaries to credit card processors in connection with credit card processing services incurred in the ordinary course of business of the Issuer and its Restricted Subsidiaries;

 

(18)           the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse to the Issuer or to any other Restricted Subsidiary of the Issuer or their assets (other than such Receivables Subsidiary and its assets and, as to the Issuer or any other Restricted Subsidiary of the Issuer, other than Standard Securitization Undertakings) and is not guaranteed by any such Person;

 

(19)           the incurrence of Indebtedness of the Issuer or any of its Restricted Subsidiaries owed to one or more Persons in connection with the financing of insurance premiums in the ordinary course of business;

 

(20)           the incurrence of obligations under the Co-Branded Agreement to the extent such obligations may be deemed to constitute Indebtedness of the Issuer or any of its Restricted Subsidiaries;

 

(21)           the incurrence by the Issuer or the Guarantor (or, in the case of the “Co-Branded Secured Obligations” (as defined in the Credit Agreement as in effect on the Closing Date), any Restricted Subsidiary of the Issuer) of Indebtedness and letters of credit (and reimbursement obligations with respect thereto) secured by a Lien on the “Collateral” (as defined in the Credit Agreement as in effect on the Closing Date) that is junior to the Liens securing the “Obligations” (as defined in the Credit Agreement as in effect on the Closing Date) (including, without limitation, the “Co-Branded Secured Obligations”), and Permitted Refinancing Indebtedness that is incurred to renew, refund, refinance, replace, defease, extend or discharge any other Indebtedness incurred pursuant to this clause (21);

  

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(22)           Indebtedness arising from agreements of the Issuer or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary; provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds, including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Issuer or any of its Restricted Subsidiaries in connection with such disposition;

 

(23)           Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of take-or-pay obligations contained in supply agreements entered into in the ordinary course of business and consistent with past practices of the Issuer or the applicable Restricted Subsidiary of the Issuer;

 

(24)           the incurrence by the Issuer or any of its Restricted Subsidiaries of additional Indebtedness that is either (A) unsecured and expressly contractually subordinated to the prior payment in full in cash of all Notes and Guarantor Obligations on terms not materially less favorable to the Holders of the Notes than those customary at the time of incurrence (determined in good faith by a senior financial officer of the Issuer) for senior subordinated “high yield” debt securities or (B) unsecured, pari passu with all Notes and Guarantor Obligations and convertible into common stock of the Issuer; provided that the aggregate principal amount of Indebtedness incurred pursuant to clauses (A) and (B) together, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, extend, defease or discharge any Indebtedness incurred pursuant to this clause (24), does not exceed $1.5 billion at any time outstanding; and

 

(25)           the incurrence by the Issuer or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, extend, defease or discharge any Indebtedness incurred pursuant to this clause (25), not to exceed $3.0 billion, at any time outstanding.

 

For purposes of determining compliance with this Section 4.3, if an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt set forth in clauses (1) through (25) of Section 4.3(b) hereof or is entitled to be incurred pursuant to Section 4.3(a) hereof, the Issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.3; provided that (A) all “Junior Secured Debt” (as defined in the Credit Agreement as in effect on the Closing Date) will at all times be deemed to have been incurred in reliance on the exception provided by Section 4.3(b)(21) hereof and (B) the term “Existing Indebtedness” will not include any Indebtedness that is permitted to be incurred under clauses (1), (3) or (21) of Section 4.3(b) hereof.

  

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None of the following will constitute an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.3:

 

(1)           the accrual of interest or preferred stock dividends;

 

(2)           the accretion or amortization of original issue discount (“OID”);

 

(3)           the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms;

 

(4)           the reclassification of preferred stock as Indebtedness due to a change in accounting principles; and

 

(5)           the payment of dividends on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock.

 

For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.3, the maximum amount of Indebtedness that the Issuer or any of its Restricted Subsidiaries may incur pursuant to this Section 4.3 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

 

The amount of any Indebtedness outstanding as of any date will be:

 

(1)           the accreted value of the Indebtedness as of such date, in the case of any Indebtedness issued with OID;

 

(2)           the principal amount of the Indebtedness as of such date, in the case of any other Indebtedness; and

 

(3)           in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

 

(A)           the Fair Market Value of such assets as of such date; and

 

(B)           the amount of the Indebtedness of the other Person as of such date.

 

4.4 Designation of Restricted and Unrestricted Subsidiaries.

 

(a) The Board of Directors may designate any Restricted Subsidiary of the Issuer (other than the Guarantor) to be an Unrestricted Subsidiary if that designation would not cause a Default.  If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation.  That designation will be permitted only if the

  

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Investment would be permitted at that time under Section 4.2 hereof and if the Restricted Subsidiary otherwise meets the definition of an “Unrestricted Subsidiary.”

 

(b) Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions.  The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Issuer; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will be permitted only if (i) such Indebtedness is permitted under Section 4.3 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable reference period and (ii) no Default would be in existence following such designation.

 

Section 5. Changes in Events of Default Applicable to the Notes.

 

(a) Clauses (3), (4) and (5) of Section 6.01 of the Original Indenture shall be amended and restated to read as follows:

 

“(3) failure by UAL or any of its Restricted Subsidiaries to comply with any of the covenants or agreements applicable to the Notes to which UAL or such Restricted Subsidiary is subject (other than those referred to in (1) or (2) above) and such failure continues for 60 days after the notice specified below;

 

(4) the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(A) commences a voluntary case;

 

(B) consents to the entry of an order for relief against it in an involuntary case;

 

(C) consents to the appointment of a Custodian of it or for all or substantially all of its property; or

 

(D) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency;

 

(5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law, which remains unstayed and in effect for 90 days, that:

 

(A) is for relief against the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case;

  

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(B) appoints a Custodian of the Issuer, any of the Issuer’s Restricted Subsidiaries that is a Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or all or substantially all of the property of the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; or

 

(C) orders the winding up or liquidation of the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or any similar relief is granted under any foreign laws.”

 

(b) The following shall be added to Section 6.01 of the Original Indenture following clause (5):

 

“(6)           except as permitted by the Indenture, the Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or the Guarantor denies or disaffirms in writing its obligations under the Note Guarantee.”

 

Section 6. Acceleration.  Section 6.02 of the Original Indenture shall be amended and restated to read as follows:

 

“Acceleration. If an Event of Default with respect to the Notes (other than an Event of Default specified in Section 6.01(4) or (5) of the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes outstanding may, by written notice to the Issuer (and to the Trustee if such notice is given by the Holders), declare the principal amount of, and accrued and unpaid interest on all the Notes to be due and payable. Upon such a declaration, such amounts shall be due and payable immediately. If an Event of Default specified in Section 6.01(4) or (5) of the Indenture occurs, the principal amount of, and accrued and unpaid interest on all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in principal amount of the Notes by notice to the Trustee may rescind an acceleration of the Notes and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default with respect to such Notes have been cured or waived except nonpayment of the principal amount of, and accrued and unpaid interest on all Notes that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.”

 

Section 7. Additional Definitions.  The following definitions shall be applicable for purposes of this Third Supplemental Indenture (and, if any term defined below is also defined in the Original Indenture, the definition below shall supersede the definition of such term in the Original Indenture):

 

“Acquired Debt” means, with respect to any specified Person:

 

(1)           Indebtedness, Disqualified Stock or preferred stock of any other Person existing at the time such other Person is merged, consolidated or amalgamated with or into such

  

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specified Person, or became a Subsidiary of such specified Person, to the extent such Indebtedness is incurred or such Disqualified Stock or preferred stock is issued in connection with, or in contemplation of, such other Person merging, consolidating or amalgamating with or into, or becoming a Subsidiary of, such specified Person; and

 

(2)           Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings. No Person (other than the Issuer or any Subsidiary of the Issuer) in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Issuer or any of its Subsidiaries solely by reason of such Investment. A specified Person shall not be deemed to control another Person solely because such specified Person has the right to determine the aircraft flights operated by such other Person under a code sharing, capacity purchase or similar agreement.

 

“Airline/Parent Merger” means the merger or consolidation, if any, of United and UAL.

 

“Airlines Merger” means the merger of Continental and Old United completed on March 31, 2013.

 

“Banking Product Obligations” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person in respect of any treasury, depository and cash management services, netting services and automated clearing house transfers of funds services, including obligations for the payment of fees, interest, charges, expenses, attorneys’ fees and disbursements in connection therewith.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.

 

“Board of Directors” means the board of directors of the Issuer or any committee thereof duly authorized to act on behalf of the board of directors of the Issuer.

 

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized and reflected as a liability on a balance sheet prepared in accordance with GAAP, and the Scheduled Maturity thereof shall be the date of the last payment of rent or any other amount

  

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due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

 

“Capital Stock” means:

 

(1)           in the case of a corporation, corporate stock;

 

(2)           in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

 

(3)           in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

 

(4)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person,

 

but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

 

“Cash Equivalents” means:

 

(1)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof;

 

(2)           direct obligations of state and local government entities, in each case maturing within one year from the date of acquisition thereof, which have a rating of at least A- (or the equivalent thereof) from S&P or A3 (or the equivalent thereof) from Moody’s;

 

(3)           obligations of domestic or foreign companies and their subsidiaries (including, without limitation, agencies, sponsored enterprises or instrumentalities chartered by an Act of Congress, which are not backed by the full faith and credit of the United States), including, without limitation, bills, notes, bonds, debentures, and mortgage-backed securities, in each case maturing within one year from the date of acquisition thereof;

 

(4)           Investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-2 (or the equivalent thereof) from S&P or P-2 (or the equivalent thereof) from Moody’s;

 

(5)           Investments in certificates of deposit (including Investments made through an intermediary, such as the certificated deposit account registry service), banker’s acceptances, time deposits, eurodollar time deposits and overnight bank deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any other commercial bank of recognized standing organized under the laws of the United States or any State thereof that has a combined capital and surplus and undivided profits of not less than $100.0 million;

  

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(6)           fully collateralized repurchase agreements with a term of not more than six (6) months for underlying securities that would otherwise be eligible for investment;

 

(7)           Investments in money in an investment company registered under the Investment Company Act of 1940, as amended, or in pooled accounts or funds offered through mutual funds, investment advisors, banks and brokerage houses which invest their assets in obligations of the type described in clauses (1) through (6) above. This could include, but not be limited to, money market funds or short-term and intermediate bonds funds;

 

(8)           money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA (or the equivalent thereof) by S&P and Aaa (or the equivalent thereof) by Moody’s and (iii) have portfolio assets of at least $5.0 billion;

 

(9)           deposits available for withdrawal on demand with commercial banks organized in the United States (or any foreign jurisdiction in which the Issuer or any Restricted Subsidiary operates) having capital and surplus in excess of $100.0 million;

 

(10)           securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A- by S&P or A3 by Moody’s; and

 

(11)           any other securities or pools of securities that are classified under GAAP as cash equivalents or short-term investments on a balance sheet.

 

“Change of Control” means the occurrence of any of the following:

 

(1)           the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)); or

 

(2)           the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any Person (including any “person” (as defined above)) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer (measured by voting power rather than number of shares), other than (i) any such transaction where the Voting Stock of the Issuer (measured by voting power rather than number of shares) outstanding immediately prior to such transaction constitutes or is converted into or exchanged for a majority of the outstanding shares of the Voting Stock of such Beneficial Owner (measured by voting power rather than number of shares) or (ii) any merger or consolidation of the Issuer with or into any Person (including any “person” (as defined above)) which owns or operates (directly or indirectly through a contractual arrangement) a Permitted Business (a “Permitted Person”) or a Subsidiary of a Permitted Person, in each case, if immediately after such transaction no Person (including any “person” (as defined above)) is the Beneficial

  

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Owner, directly or indirectly, of more than 50% of the total Voting Stock of such Permitted Person (measured by voting power rather than number of shares).

 

“Change of Control Offer” has the meaning assigned to that term in the first paragraph in Section 4.1(a) hereof.

 

“Change of Control Payment” has the meaning assigned to that term in the first paragraph in Section 4.1(a) hereof.

 

“Change of Control Payment Date” has the meaning assigned to that term in Section 4.1(a)(2) hereof.

 

“Closing Date” means the date of original issuance of the Notes.

 

“Co-Branded Agreement” means that certain Second Amended and Restated Co-Branded Card Marketing Services Agreement, dated as of September 11, 2015, among the Issuer, United (formerly known as Continental and as successor by merger to Old United), Mileage Plus Holdings, LLC, and Chase Bank USA, N.A., as may be further amended, amended and restated, modified, supplemented, replaced or extended from time to time.

 

“Comparable Treasury Issue” has the meaning assigned to that term in Section 3.7.

 

“Comparable Treasury Price” has the meaning assigned to that term in Section 3.7.

 

“Consolidated EBITDAR” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:

 

(1)           an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with any Disposition of assets, to the extent such losses were deducted in computing such Consolidated Net Income; plus

 

(2)           provision for taxes based on income or profits of such Person and its Restricted Subsidiaries, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

 

(3)           the Fixed Charges of such Person and its Restricted Subsidiaries, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus

 

(4)           any foreign currency translation losses (including losses related to currency remeasurements of Indebtedness) of such Person and its Restricted Subsidiaries for such period, to the extent that such losses were deducted in computing such Consolidated Net Income; plus

 

(5)           depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges and expenses (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior

  

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period) of such Person and its Restricted Subsidiaries to the extent that such depreciation, amortization and other non-cash charges or expenses were deducted in computing such Consolidated Net Income; plus

 

(6)           extraordinary, non-recurring or unusual losses (including charges with respect to the grounding or retirement of aircraft) for such period to the extent that such losses were deducted in computing such Consolidated Net Income; plus

 

(7)           the amortization of debt discount to the extent that such amortization was deducted in computing such Consolidated Net Income; plus

 

(8)           deductions for grants to any employee of the Issuer or its Restricted Subsidiaries of any Equity Interests during such period to the extent deducted in computing such Consolidated Net Income; plus

 

(9)           any net loss arising from the sale, exchange or other disposition of capital assets by the Issuer or its Restricted Subsidiaries (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities) to the extent such loss was deducted in computing such Consolidated Net Income; plus

 

(10)           any losses arising under fuel hedging arrangements entered into prior to the Closing Date and any losses actually realized under fuel hedging arrangements entered into after the Closing Date, in each case to the extent deducted in computing such Consolidated Net Income; plus

 

(11)           cash restructuring charges in an aggregate amount not to exceed $15.0 million in any fiscal year to the extent such charges were deducted in computing such Consolidated Net Income; plus

 

(12)           all cost-savings, integration costs, transactional costs, expenses and charges incurred in connection with the consummation of any transaction related to any permitted acquisition, merger, disposition, issuance of Indebtedness, issuance of Equity Interests, or any Investment (including but not limited to any one or more of the Continental/UAL Merger, the Airlines Merger and the Airline/Parent Merger), in each case, to the extent (a) permitted under the Indenture and (b) deducted in computing such Consolidated Net Income; plus

 

(13)           proceeds from business interruption insurance for such period, to the extent not already included in computing such Consolidated Net Income; plus

 

(14)           any expenses and charges that are covered by indemnification or reimbursement provisions in connection with any permitted acquisition, merger, disposition, incurrence of Indebtedness, issuance of Equity Interests or any investment to the extent (a) actually indemnified or reimbursed and (b) deducted in computing such Consolidated Net Income; plus

  

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(15)           costs and expenses, including fees, incurred directly in connection with the consummation of this offering of the Notes to the extent deducted in computing such Consolidated Net Income; minus

 

(16)           non-cash items, other than the accrual of revenue in the ordinary course of business, to the extent such amount increased such Consolidated Net Income; minus

 

(17)           the sum of (i) income tax credits, (ii) interest income and (iii) extraordinary, non-recurring or unusual gains included in computing such Consolidated Net Income,

 

in each case, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis (excluding the net income (or loss) of any Unrestricted Subsidiary of such Person), determined in accordance with GAAP and without any reduction in respect of preferred stock dividends; provided that:

 

(1)           all net after tax extraordinary, non-recurring or unusual gains or losses and all gains or losses realized in connection with any Disposition of assets of such Person or the disposition of securities by such Person or the early extinguishment of Indebtedness of such Person, together with any related provision for taxes on any such gain, will be excluded;

 

(2)           the net income (but not loss) of any Person that is not the specified Person or a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included for such period only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the specified Person;

 

(3)           the net income (but not loss) of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

 

(4)           the cumulative effect of a change in accounting principles on such Person will be excluded;

 

(5)           the effect of non-cash gains and losses of such Person resulting from Hedging Obligations, including that attributable to movement in the mark-to-market valuation of Hedging Obligations pursuant to Financial Accounting Standards Board Accounting Standards Codification 815 - Derivatives and Hedging, will be excluded;

 

(6)           any non-cash compensation expense recorded from grants by such Person of stock appreciation or similar rights, stock options or other rights to officers, directors or employees, will be excluded;

  

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(7)           the effect on such Person of any non-cash items resulting from any amortization, write-up, write-down or write-off of assets (including intangible assets, goodwill and deferred financing costs) in connection with any acquisition, disposition, merger, consolidation or similar transaction (including but not limited to any one or more of the Continental/UAL Merger, the Airlines Merger and the Airline/Parent Merger) or any other non-cash impairment charges incurred subsequent to the Closing Date resulting from the application of Financial Accounting Standards Board Accounting Standards Codifications 205 - Presentation of Financial Statements, 350 - Intangibles - Goodwill and Other, 360 - Property, Plant and Equipment and 805 - Business Combinations (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period except to the extent such item is subsequently reversed), will be excluded; and

 

(8)           any provision for income tax reflected on such Person’s financial statements for such period will be excluded to the extent such provision exceeds the actual amount of taxes paid in cash during such period by such Person and its consolidated Subsidiaries.

 

“Consolidated Tangible Assets” means, as of any date of determination,  Consolidated Total Assets of the Issuer and its consolidated Restricted Subsidiaries excluding goodwill, patents, trade names, trademarks, copyrights, franchises and any other assets properly classified as intangible assets, in accordance with GAAP.

 

“Consolidated Total Assets” means, as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Issuer and its consolidated Restricted Subsidiaries as the total assets of the Issuer and its Restricted Subsidiaries in accordance with GAAP.

 

“Continental” means Continental Airlines, Inc., a Delaware corporation (now known as United Airlines, Inc.).

 

“Continental/UAL Merger” means the merger in which Continental became a Subsidiary of the Issuer.

 

 “Credit Agreement” means the Credit and Guaranty Agreement, dated as of March 27, 2013, among United (on its own behalf and as successor to Old United by merger), as borrower, the Issuer, as a guarantor, the Subsidiaries of the Issuer party thereto from time to time other than United, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent.

 

“Credit Facilities” means one or more debt facilities, commercial paper facilities, reimbursement agreements or other agreements providing for the extension of credit, whether secured or unsecured, in each case, with banks, insurance companies, financial institutions or other lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit, surety bonds or insurance products, in each case, as amended, restated, modified, renewed, extended, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities) in whole or in part from time to time.

  

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“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

“Disposition” means, with respect to any property, any sale, lease, sale and leaseback, conveyance, transfer or other disposition thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale), is convertible or exchangeable for Indebtedness or Disqualified Stock, or is redeemable at the option of the holder of the Capital Stock, in whole or in part (other than as a result of a change of control or asset sale), on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.2 hereof. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the Indenture will be the maximum amount that the Issuer and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

 

“DTC” has the meaning assigned to that term in Section 3.7.

 

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

 

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

 

“Excluded Contributions” means net cash proceeds received by the Issuer after the Closing Date from:

 

(1)           contributions to its common equity capital (other than from any Subsidiary); or

 

(2)           the sale (other than to a Subsidiary or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Issuer or any Subsidiary) of Qualifying Equity Interests,

 

in each case designated as Excluded Contributions pursuant to an Officers’ Certificate executed on or around the date such capital contributions are made or the date such Equity Interests are sold, as the case may be. Excluded Contributions will not be considered to be net proceeds of Qualifying Equity Interests for purposes of Section 4.2(a)(iii)(B) hereof.

  

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“Existing Indebtedness” means all Indebtedness of the Issuer and its Subsidiaries (other than Indebtedness incurred under clauses (1) or (3) of the definition of Permitted Debt) in existence on the Closing Date, until such amounts are repaid.

 

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by an officer of the Issuer; provided that any such officer shall be permitted to consider the circumstances existing at such time (including, without limitation, economic or other conditions affecting the United States airline industry generally and any relevant legal compulsion, judicial proceeding or administrative order or the possibility thereof) in determining such Fair Market Value in connection with such transaction.

 

“Fixed Charge Coverage Ratio” means, with respect to any specified Person for any specified period, the ratio of the Consolidated EBITDAR of such Person for such period to the Fixed Charges of such Person for such period. If the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect (as determined in good faith by a responsible financial or accounting officer of the Issuer) to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.

 

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

 

(1)           acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including all related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, or that are to be made on the Calculation Date, will be given pro forma effect (as determined in good faith by a responsible financial or accounting officer of the Issuer and certified in an Officers’ Certificate delivered to the Trustee, and including any operating expense reductions for such period resulting from such acquisition that have been realized or for which all of the material steps necessary for realization have been taken) as if they had occurred on the first day of the four-quarter reference period;

 

(2)           the Consolidated EBITDAR attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

 

(3)           the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein)

  

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disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

 

(4)           any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;

 

(5)           any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and

 

(6)           if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).

 

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

 

(1)           the consolidated interest expense (net of interest income) of such Person and its Restricted Subsidiaries for such period to the extent that such interest expense is payable in cash (and such interest income is receivable in cash); plus

 

(2)           the interest component of leases that are capitalized in accordance with GAAP of such Person and its Restricted Subsidiaries for such period to the extent that such interest component is related to lease payments payable in cash; plus

 

(3)           any interest expense actually paid in cash for such period by such specified Person on Indebtedness of another Person that is guaranteed by such specified Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such specified Person or one of its Restricted Subsidiaries; plus

 

(4)           the product of (a) all cash dividends accrued on any series of preferred stock of such Person or any of its Restricted Subsidiaries for such period, other than to the Issuer or a Restricted Subsidiary of the Issuer, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP; plus

 

(5)           the aircraft rent expense of such Person and its Restricted Subsidiaries for such period to the extent that such aircraft rent expense is payable in cash,

 

all as determined on a consolidated basis in accordance with GAAP.

 

“GAAP” means generally accepted accounting principles in the United States of America which are in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, statements and pronouncements of the Financial Accounting Standards Board, such

  

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other statements by such other entity as have been approved by a significant segment of the accounting profession and the rules and regulations of the SEC governing the inclusion of financial statements in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. Notwithstanding the foregoing definition, with respect to leases (whether or not they are required to be capitalized on a Person’s balance sheet under generally accepted accounting principles in the United States of America in effect as of the date of the Indenture) and with respect to financial matters related to leases, including assets, liabilities and items of income and expense, “GAAP” shall mean (other than for purposes of the covenant described in Section 4.02 of the Original Indenture), and determinations and calculations shall be made in accordance with, generally accepted accounting principles in the United States of America, which are in effect as of the date of the Indenture.

 

“Global Note” has the meaning assigned to that term in Section 3.8.

 

“Guarantee” means a guarantee (other than (i) by endorsement of negotiable instruments for collection or (ii) customary contractual indemnities, in each case in the ordinary course of business), direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions).

 

“Guarantor” means United.

 

“Guarantor Obligations” means the due and punctual payment of the principal of (and premium, if any) and interest (including, in case of default, interest on principal and, to the extent permitted by applicable law, on overdue interest and including any additional interest required to be paid according to the terms of the Notes), if any, on the Notes, when and as the same shall become due and payable, whether at Stated Maturity, upon redemption, upon acceleration, upon tender for repayment at the option of any Holder or otherwise, according to the terms thereof and of the Indenture and all other obligations of the Issuer with respect to the Notes to the Holder or the Trustee hereunder or thereunder.

 

“Hedging Obligations” means, with respect to any Person, all obligations and liabilities of such Person under:

 

(1)           interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

 

(2)           other agreements or arrangements designed to manage interest rates or interest rate risk; and

 

(3)           other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, fuel prices or other commodity prices, but excluding (x) clauses in purchase agreements and maintenance agreements pertaining to future prices and (y) fuel purchase agreements and fuel sales that are for physical delivery of the relevant commodity.

  

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“incur” has the meaning assigned to that term in Section 4.3(a).

 

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:

 

(1)           in respect of borrowed money;

 

(2)           evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

 

(3)           in respect of banker’s acceptances;

 

(4)           representing Capital Lease Obligations;

 

(5)           representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed, but excluding in any event trade payables arising in the ordinary course of business; or

 

(6)           representing any Hedging Obligations,

 

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP.  In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. Indebtedness shall be calculated without giving effect to the effects of Financial Accounting Standards Board Accounting Standards Codification 815 - Derivatives and Hedging and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under the Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.

 

For the avoidance of doubt, Banking Product Obligations and a deferral of pre-delivery payments relating to the purchases of aircraft or aircraft engines do not constitute Indebtedness.

 

“Interest Payment Date” has the meaning assigned to that term in Section 3.5.

 

“Investments” means, with respect to any Person, all direct or indirect investments made from and after the Closing Date by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), capital contributions or advances (but excluding advance payments and deposits for goods and services and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities of other Persons, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer after the Closing Date such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the

  

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date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.2(c) hereof.  Notwithstanding the foregoing, any Equity Interests retained by the Issuer or any of its Subsidiaries after a disposition or dividend of assets or Capital Stock of any Person in connection with any partial “spin-off” of a Subsidiary or similar transactions shall not be deemed to be an Investment. The acquisition by the Issuer or any Restricted Subsidiary of the Issuer after the Closing Date of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Issuer or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 4.2(c) hereof.  Except as otherwise provided in the Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or similar encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any option or other agreement to sell or give a security interest in and, except in connection with any Qualified Receivables Transaction, any agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

 

“Liquidity” shall mean the sum of (i) all unrestricted cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries and (ii) the aggregate principal amount committed and available to be drawn by the Issuer and its Restricted Subsidiaries (taking into account all borrowing base limitations or other restrictions) under all revolving credit facilities of the Issuer and its Restricted Subsidiaries.

 

 “Moody’s” means Moody’s Investors Service, Inc.

 

“Non-Recourse Debt” means Indebtedness:

 

(1)           as to which neither the Issuer nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise; and

 

(2)           as to which the holders of such Indebtedness do not otherwise have recourse to the stock or assets of the Issuer or any of its Restricted Subsidiaries (other than the Equity Interests of an Unrestricted Subsidiary).

 

“Note Guarantee” has the meaning assigned to that term in Section 3.13.

 

“OID” has the meaning assigned to that term in Section 4.3.

 

“Old United” means United Air Lines, Inc., a Delaware corporation, which merged into Continental pursuant to the Airlines Merger.

  

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“Permitted Business” means any business that is the same as, or reasonably related, ancillary, supportive or complementary to, the business in which the Issuer and its Restricted Subsidiaries are engaged on the Closing Date.

 

“Permitted Debt” has the meaning assigned to that term in Section 4.3(b).

 

“Permitted Investments” means:

 

(1)           any Investment in the Issuer or in a Restricted Subsidiary of the Issuer;

 

(2)           any Investment in cash, Cash Equivalents and any foreign equivalents;

 

(3)           any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person, if as a result of such Investment:

 

(a)           such Person becomes a Restricted Subsidiary of the Issuer; or

 

(b)           such Person, in one transaction or a series of related and substantially concurrent transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary of the Issuer;

 

(4)           any Investment made as a result of the receipt of non-cash consideration from a Disposition of assets;

 

(5)           any acquisition of assets or Capital Stock in exchange for the issuance of Qualifying Equity Interests;

 

(6)           any Investments received in compromise or resolution of (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or (b) litigation, arbitration or other disputes;

 

(7)           Investments represented by Hedging Obligations;

 

(8)           loans or advances to officers, directors or employees made in the ordinary course of business of the Issuer or any Restricted Subsidiary of the Issuer in an aggregate principal amount not to exceed $20.0 million at any one time outstanding;

 

(9)           redemption or purchase of the Notes;

 

(10)           any Guarantee of Indebtedness permitted to be incurred by Section 4.3 hereof other than a Guarantee of Indebtedness of an Affiliate of the Issuer that is not a Restricted Subsidiary of the Issuer;

 

(11)           any Investment existing on, or made pursuant to binding commitments existing on, the Closing Date and any Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the Closing Date; provided that the amount of any such Investment may be

  

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increased (a) as required by the terms of such Investment as in existence on the Closing Date or (b) as otherwise permitted under the Indenture;

 

(12)           Investments acquired after the Closing Date as a result of the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of another Person, including by way of a merger, amalgamation or consolidation with or into the Issuer or any of its Restricted Subsidiaries in a transaction that is not prohibited by Section 5.01 or 10.04 of the Original Indenture after the Closing Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

 

(13)           the acquisition by a Receivables Subsidiary in connection with a Qualified Receivables Transaction of Equity Interests of a trust or other Person established by such Receivables Subsidiary to effect such Qualified Receivables Transaction; and any other Investment by the Issuer or a Subsidiary of the Issuer in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction;

 

(14)           accounts receivable arising in the ordinary course of business;

 

(15)           Investments in connection with outsourcing initiatives in the ordinary course of business;

 

(16)           Investments having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value other than a reduction for all returns of principal in cash and capital dividends in cash), when taken together with all Investments made pursuant to this clause (16) that are at the time outstanding, not to exceed 30% of the total consolidated assets of the Issuer and its Restricted Subsidiaries at the time of such Investment; and

 

(17) any Investment by the Issuer or any of its Subsidiaries so long as no Default has occurred and is continuing when such Investment is made.

 

“Permitted Refinancing Indebtedness” means any Indebtedness (or commitments in respect thereof) of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, extend, refinance, replace, defease or discharge other Indebtedness of the Issuer or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

 

(1)           the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the original principal amount (or accreted value, if applicable) when initially incurred of the Indebtedness renewed, refunded, extended, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith); provided that with respect to any such Permitted Refinancing Indebtedness that is refinancing secured Indebtedness and is secured by the same collateral, the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness shall not exceed the greater of the preceding amount and the Fair Market Value of the assets securing such Permitted Refinancing Indebtedness;

  

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(2)           if such Permitted Refinancing Indebtedness has a maturity date that is after the maturity date of the Notes (with any amortization payment comprising such Permitted Refinancing Indebtedness being treated as maturing on its amortization date), such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity that is (a) equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being renewed, refunded, extended, refinanced, replaced, defeased or discharged or (b) more than 60 days after the final maturity date of the Notes;

 

(3)           if the Indebtedness being renewed, refunded, extended, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, extended, refinanced, replaced, defeased or discharged; and

 

(4)           notwithstanding that the Indebtedness being renewed, refunded, refinanced, extended, replaced, defeased or discharged may have been repaid or discharged by the Issuer or any of its Restricted Subsidiaries prior to the date on which the new Indebtedness is incurred, Indebtedness that otherwise satisfies the requirements of this definition may be designated as Permitted Refinancing Indebtedness so long as such renewal, refunding, refinancing, extension, replacement, defeasance or discharge occurred not more than 36 months prior to the date of such incurrence of Permitted Refinancing Indebtedness.

 

“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

“QEC Kits” means the quick engine change kits of the Issuer or any of its Subsidiaries.

 

“Qualified Receivables Transaction” means any transaction or series of transactions entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries sells, conveys or otherwise transfers to (1) a Receivables Subsidiary or any other Person (in the case of a transfer by the Issuer or any of its Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the future) of the Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all Equity Interests and other investments in the Receivables Subsidiary, all collateral securing such accounts receivable, all contracts and all Guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.

 

“Qualifying Equity Interests” means Equity Interests of the Issuer other than Disqualified Stock.

 

“Quotation Agent” has the meaning assigned to that term in Section 3.7.

  

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“Receivables Subsidiary” means a Subsidiary of the Issuer which engages in no activities other than in connection with the financing of accounts receivable and which is designated by the Board of Directors of the Issuer (as provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any Restricted Subsidiary of the Issuer (other than comprising a pledge of the Capital Stock or other interests in such Receivables Subsidiary (an “incidental pledge”), and excluding any Guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction), (ii) is recourse to or obligates the Issuer or any Restricted Subsidiary of the Issuer in any way other than through an incidental pledge or pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction or (iii) subjects any property or asset of the Issuer or any Subsidiary of the Issuer (other than accounts receivable and related assets as provided in the definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction, (b) with which neither the Issuer nor any Subsidiary of the Issuer has any material contract, agreement, arrangement or understanding (other than pursuant to the Qualified Receivables Transaction) other than (i) on terms no less favorable to the Issuer or such Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer, and (ii) fees payable in the ordinary course of business in connection with servicing accounts receivable and (c) with which neither the Issuer nor any Subsidiary of the Issuer has any obligation to maintain or preserve such Subsidiary’s financial condition, other than a minimum capitalization in customary amounts, or to cause such Subsidiary to achieve certain levels of operating results. Any such designation by the Board of Directors of the Issuer will be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

 

“Reference Treasury Dealer” has the meaning assigned to that term in Section 3.7.

 

“Regular Record Date” has the meaning assigned to that term in Section 3.5.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

“Restricted Payments” has the meaning assigned to that term in Section 4.2(a)(4).

 

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

 

“S&P” means Standard & Poor’s Ratings Services.

 

“Scheduled Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Closing Date, and will not

  

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include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

“Significant Subsidiary” means any Restricted Subsidiary of the Issuer that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such Regulation is in effect on the Closing Date.

 

“Standard Securitization Undertakings” means all representations, warranties, covenants, indemnities, performance Guarantees and servicing obligations entered into by the Issuer or any Subsidiary (other than a Receivables Subsidiary), which are customary in connection with any Qualified Receivables Transaction.

 

“Stated Maturity” means the date specified in the Notes as the fixed date on which an amount equal to the principal amount of the Notes is due and payable.

 

“Subsidiary” means, with respect to any Person:

 

(1)           any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person (or a combination thereof); and

 

(2)           any partnership, joint venture or limited liability company of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder as in effect on the date of the Indenture.

 

“UAL” means United Continental Holdings, Inc., a Delaware corporation.

 

“United” means United Airlines, Inc., a Delaware corporation formerly known as Continental Airlines, Inc., the survivor of the Airlines Merger.

 

“Unrestricted Subsidiary” means any Subsidiary of the Issuer that is designated by the Board of Directors of the Issuer as an Unrestricted Subsidiary in compliance with Section 4.4 hereof pursuant to a resolution of the Board of Directors, but only if such Subsidiary:

 

(1)           has no Indebtedness other than Non-Recourse Debt;

  

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(2)           is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer;

 

(3)           is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

 

(4)           has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any of its Restricted Subsidiaries.

 

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

 

(1)           the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

 

(2)           the then outstanding principal amount of such Indebtedness.

 

Section 8. Miscellaneous.

 

8.1 Governing Law.  THIS THIRD SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. UAL AND UNITED EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE NOTES.

 

8.2 Counterparts.  This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed to be an original and all of them together shall represent the same agreement.

 

8.3 Trustee Not Responsible for Recitals.  The recitals herein contained are made by UAL and United and not by the Trustee, and the Trustee does not assume any responsibility for the correctness thereof.  The Trustee makes no representation as to the validity or sufficiency of this Third Supplemental Indenture, the Notes or the Note Guarantee.  All of the provisions

  

39

  

 

contained in the Indenture in respect of the rights, privileges, immunities, powers, and duties of the Trustee shall be applicable in respect of this Third Supplemental Indenture as fully and with like force and effect as though fully set forth in full herein.

 

8.4 Confirmation of Indenture.  The Original Indenture, as supplemented and amended by this Third Supplemental Indenture, is in all respects ratified and confirmed, and this Third Supplemental Indenture shall be deemed part of the Original Indenture in the manner and to the extent herein and therein provided.

 

8.5 Conflict with Trust Indenture Act.  If any provision of this Third Supplemental Indenture limits, qualifies or conflicts with another provision which is required to be included by the Trust Indenture Act, the required provision shall control.

 

[Signature page follows.]

  

40

  

 

IN WITNESS WHEREOF, the parties have caused this Third Supplemental Indenture to be duly executed as of the date first written above.

	  	
UNITED CONTINENTAL HOLDINGS, INC.

	  	  
	  	  
	  	
By:

	
/s/ Gerald Laderman

	  
	  	  	
Name: Gerald Laderman

Title: Senior Vice President Finance, Procurement and Treasurer

	  

 

 

	  	
UNITED AIRLINES, INC.

	  	  
	  	  
	  	
By:

	
/s/ Gerald Laderman

	  
	  	  	
Name: Gerald Laderman

Title: Senior Vice President Finance, Procurement and Treasurer

	  

[Signature Page to Third Supplemental Indenture]

  

  

  

	  	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

	  	  
	  	  
	  	
By:

	
/s/ Richard Tarnas

	  
	  	  	
Name: Richard Tarnas

Title: Vice President

	  

[Signature Page to Third Supplemental Indenture]

 

 

 

  

  

  

 

EXHIBIT A

 

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07 OF THE ORIGINAL INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE ORIGINAL INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER (AS DEFINED IN THE INDENTURE).

 

UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

BY ACCEPTANCE OF THIS NOTE OR ANY INTEREST HEREIN, EACH PURCHASER AND SUBSEQUENT TRANSFEREE OF THIS NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED TO THE ISSUER AND THE TRUSTEE THAT EITHER (I) SUCH PURCHASER OR TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF THE CODE OR ERISA (COLLECTIVELY, “SIMILAR LAWS”), OR AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS AND ARRANGEMENTS (COLLECTIVELY, “PLANS”), AND NO PORTION OF THE ASSETS USED BY SUCH PURCHASER OR TRANSFEREE TO ACQUIRE AND HOLD THIS NOTE OR ANY INTEREST HEREIN CONSTITUTES ASSETS OF ANY PLAN OR (II) THE PURCHASE AND HOLDING OF THIS NOTE OR ANY INTEREST HEREIN BY SUCH PURCHASER OR TRANSFEREE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A VIOLATION OF ANY APPLICABLE SIMILAR LAW.

 

  

3

  

 

CUSIP No.: [________]

 

UNITED CONTINENTAL HOLDINGS, INC.

 

5.00% SENIOR NOTES DUE 2024

 

No. [_]

 

UNITED CONTINENTAL HOLDINGS, INC., a Delaware corporation (the “Issuer,” which term includes any successor entity), for value received promises to pay to

[___] or registered assigns, the principal sum of $[____], on February 1, 2024.

 

Interest Payment Dates: February 1 and August 1, beginning on August 1, 2017.

 

Record Dates: January 15 and July 15.

 

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

 

[Signature Page on Next Page]

  

4

  

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officers.

	  	
UNITED CONTINENTAL HOLDINGS, INC.

	  	  
	  	  
	  	
By:

	  	  
	  	  	
Name:

Title:

	  
	  	  
	  	
By:

	  	  
	  	  	
Name:

Title:

	  

 

 

  

5

  

Certificate of Authentication

 

This is one of the 5.00% Senior Notes due 2024 referred to in the within-mentioned Indenture.

	  	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

	  	  
	  	  
	  	
By:

	  	  
	  	  	
Authorized Signatory

	  

Dated: [________]

  

6

  

(REVERSE OF SECURITY)

 

5.00% SENIOR NOTES DUE 2024

 

(1)           Interest.  United Continental Holdings, Inc., a Delaware corporation (the “Issuer”), shall pay interest on the outstanding principal amount of this Note at a rate per annum of 5.00% (calculated on the basis of a 360-day year of twelve 30-day months), payable semi-annually in arrears, on each Interest Payment Date until the principal thereof has been paid in full, commencing on August 1, 2017, to the Person in whose name this Note is registered at the close of business on the Record Date next preceding such Interest Payment Date.  Interest shall accrue on this Note from the most recent date to which interest on this Note has been paid or for which interest has been provided or, if no interest has been paid or provided for hereon, from January 26, 2017.

 

(2)           Terms of Payment.  Interest on the Notes which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name the Note is registered at the close of business on the Record Date next preceding such Interest Payment Date at the office or agency of the Issuer maintained for such purpose under the Indenture (as such term is defined below); provided, however, that each installment of interest on any Note may be paid at the Issuer’s option by mailing a check for such interest, payable to or upon the written order of the Person entitled thereto, to the address of such Person as it appears on the register for such Note or by wire transfer of immediately available funds to an account of the Person entitled thereto as such account shall be provided to the Registrar for such Notes and shall appear on the applicable register.  Payments of principal (and premium, if any) of a Note shall be made against surrender of such Note at the office or agency of the Issuer maintained for such purpose pursuant to the Indenture at the Issuer’s option by check payable to or upon the written order of the Person entitled thereto or by wire transfer to an account of the Person entitled thereto as such account shall be provided to the Registrar for such Notes.  All amounts payable by the Issuer with respect to the Notes shall be in U.S. dollars.

 

(3)           Registrar and Paying Agent.  Initially, The Bank of New York Mellon Trust Company, N.A., a national banking association, not in its individual capacity but solely as trustee (the “Trustee”), will act as Paying Agent and Registrar for the Notes.  The Issuer may remove any Paying Agent or Registrar without notice to the Holders.

 

(4)           Indenture.  The Issuer issued the Notes under the Indenture dated as of May 7, 2013 (the “Original Indenture”), among (a) the Issuer, (b) United Airlines, Inc. (the “Guarantor”) and (c) the Trustee, as supplemented by the Third Supplemental Indenture, dated as of January 26, 2017 (the “Third Supplemental Indenture”), among the Issuer, the Guarantor, and the Trustee  (the Original Indenture, as supplemented by the Third Supplemental Indenture, the “Indenture”).  This Note is one of a duly authorized series of notes of the Issuer designated as its 5.00% Senior Notes due 2024.  The Notes are initially limited in aggregate principal amount to $300,000,000.  Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein.  The terms of the Notes include those stated in the Indenture and made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture.  Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the

  

  

  

 

Indenture and the TIA for a statement of them.  To the extent any provision of the Notes limits, qualifies or conflicts with another provision which is required to be included in the Indenture by the TIA, the required provision shall control.  Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

 

(5)           Optional Redemption; Change of Control Repurchase.

 

(a)           The Notes will be redeemable, at the Issuer’s option, in whole at any time or in part from time to time, pursuant to the terms of the Indenture at a redemption price equal to the greater of (1) 100% of the principal amount of the Notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on such Notes (excluding accrued and unpaid interest to the redemption date) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, plus, in either case, accrued and unpaid interest on the principal amount being redeemed to such redemption date.

 

(b)           Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Issuer to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of the Notes pursuant to a Change of Control Offer at a purchase price of 101% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest on the Notes repurchased to the date of purchase.

 

(6)           Denominations; Transfer; Exchange.  The Notes shall be issuable in denominations of $2,000 or an integral multiple of $1,000 in excess thereof.  Where Notes are presented to the Registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes, the Registrar shall register the transfer of or make the exchange if its requirements for such transactions are met.  To permit registrations of transfers and exchanges, the Trustee shall authenticate the Notes at the Registrar’s request.  No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted in the Indenture), but the Issuer may require the payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than with respect to exchanges of temporary securities, securities redeemed in part, or to amend the terms of a Note).  Neither the Issuer nor the Registrar shall be required (a) to register the transfer of, or exchange of any Notes for the period beginning at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of any Notes selected for redemption and ending at the close of business on the day of such mailing or (b) to register the transfer of or exchange of any Notes selected, called or being called for redemption as a whole or the portion being redeemed of any such Notes selected, called or being called for redemption in part.

 

(7)           Persons Deemed Owners.  The Person in whose name a Note is registered shall be treated as the owner of it for the purpose of receiving payment of principal of (and premium, if any) and interest, if any, on this Note and for all other purposes whatsoever.

 

(8)           Unclaimed Money.  Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of principal of, or premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or

  

  

  

 

interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) shall be discharged from such trust.  Thereafter, the Holder of such Note shall look only to the Issuer for payment thereof, and all liability of the Trustee and such Paying Agent with respect to such money, and all liability of the Issuer as trustee thereof, shall cease.

 

(9)           Satisfaction and Discharge Prior to Redemption or Stated Maturity.  Subject to certain conditions, the Issuer may terminate some or all of its obligations under the Notes and the Indenture if the Issuer deposits with the Trustee as trust funds in cash or non-callable Government Securities, or a combination thereof, in an amount sufficient to pay the principal of, and premium if any, and interest on the Notes to redemption or Stated Maturity.

 

(10)           Amendment; Supplement; Waiver.  Subject to certain exceptions, the provisions of the Indenture relating to the Notes may be amended or supplemented without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default relating to the Notes may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding.  Without notice to or consent of any Holder, the Issuer, the Guarantor and the Trustee may amend the Indenture as it applies to any Notes or any of the other terms of such Notes to, among other things, cure any ambiguity or correct or supplement any provision contained in the Indenture or in any Notes which may be defective or inconsistent with any other provision contained therein.

 

(11)           Defaults and Remedies.  If an Event of Default with respect to the Notes occurs and is continuing (other than an Event of Default relating to certain events of bankruptcy and similar matters with respect to the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary), the Trustee or the Holders of at least 25% in principal amount of Notes then outstanding, by written notice to the Issuer (and to the Trustee, if such notice is given by the Holders), may declare the principal amount of, and accrued and unpaid interest on, all the Notes to be due and payable.  Upon such a declaration, such amounts shall be due and payable immediately.  If an Event of Default relating to certain events of bankruptcy and similar matters with respect to the Issuer, any Significant Subsidiary or any group of the Issuer’s Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary occurs, the principal amount of, and accrued and unpaid interest on, all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.  Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to the terms of the Indenture, the Trustee is not obligated to exercise any of its rights or powers under the Indenture unless the Holders have offered security or indemnity satisfactory to the Trustee.  The Indenture permits, subject to certain limitations therein provided, Holders of a majority in principal amount of the Notes then outstanding to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to the Notes.  The Trustee may withhold from Holders of Notes notice of any continuing Default with respect to the Notes (except a Default in payment of principal, or premium if any, or accrued and unpaid interest with respect to the Notes) in accordance with the provisions of the Indenture if a committee of the Trustee’s Trust Officers in good faith determines that withholding notice is in the interest of the Holders.

  

  

  

 

(12)           Trustee Dealings With Issuer.  Subject to certain limitations provided in the Indenture, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee.

 

(13)           No Recourse Against Others.  A director, officer, employee or shareholder, as such, of the Issuer or of the Guarantor shall not have any liability for any obligations of the Issuer or the Guarantor under the Notes, the Note Guarantee or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Holder waives and releases all such liability.  The waiver and release are part of the consideration for the issuance of the Notes and the Note Guarantee.

 

(14)           Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

(15)           Governing Law.  The laws of the State of New York shall govern this Note and the Indenture, without regard to principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.

 

(16)           Abbreviations and Defined Terms.  Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as:  TEN CON (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

(17)           CUSIP Numbers.  The Issuer has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes.  No representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice to Holders.  Reliance may be placed only on the other elements of identification printed on the Notes, and any such notice shall not be affected by any defect or omission of such CUSIP numbers.

  

  

  

ASSIGNMENT FORM

 

If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed:

 

I or we assign and transfer this Note to:

 

	  
	  
	  

(Print or type name, address and zip code and social security or tax ID number of assignee)

 

and irrevocably appoint                                      , agent to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.

	
Dated:

	  	  	
Signed:

	  
	  	  	  	  	
(Sign exactly as name appears on the other side of this Note)

	
Signature Guarantee*:

	  

 

	
*

	
Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

  

  

  

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.1 of the Third Supplemental Indenture, check the box below:

 

£ Section 4.1

 

If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.1 of the Third Supplemental Indenture, state the amount you elect to have purchased:

 

$_______________

	
Date:

	  	  	  	  
	  	  	  	
Your Signature:

	  
	  	  	  	  	
(Sign exactly as your name appears on the face of this Note)

	  	  	  	  	  

 

	  	  	  	
Tax Identification No.:

	  
	  	  	  	  	  

 

Signature Guarantee*:  ___________________________________________________________

 

	
*

	
Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

  

  

  

EXHIBIT B

NOTATION OF NOTE GUARANTEE

 

For value received, United Airlines, Inc. (the “Guarantor”, which term includes any successor Person under the Indenture) has fully and unconditionally guaranteed, to the extent set forth in the Indenture, dated as of May 7, 2013, among United Continental Holdings, Inc. (the “Issuer”), the Guarantor and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (the “Original Indenture”), as supplemented by the Third Supplemental Indenture, dated as of January 26, 2017, among the Issuer, the Guarantor, and the Trustee (the “Third Supplemental Indenture”) (the Original Indenture, as supplemented by the Third Supplemental Indenture, the “Indenture”), the due and punctual payment of the principal of (and premium, if any) and interest, if any, on the Notes, when and as the same shall become due and payable, whether at Stated Maturity, upon redemption, upon acceleration, upon tender for repayment at the option of any Holder or otherwise, according to the terms thereof and of the Indenture and all other obligations of the Issuer with respect to the Notes to the Holders or the Trustee under the Notes or the Indenture.  In case of the failure of the Issuer or any successor thereto punctually to pay any such principal, premium, if any, or interest, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at Stated Maturity, upon redemption, upon declaration of acceleration, upon tender for repayment at the option of any Holder or otherwise, as if such payment were made by the Issuer.  The obligations of the Guarantor to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article X of the Original Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee.

 

Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein.

  

  

  

	
Dated: [___________]

	
UNITED AIRLINES, INC.

	  	  
	  	  
	  	
By:

	  	  
	  	
Name:

Title:

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