Document:

exhibit_4-2.htm

Exhibit 4.2

 

 

This FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”), dated as of June 18, 2014, among GENERAL FINANCE CORPORATION, a Delaware corporation (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Trustee”).

 

                                                                                                                                                                                                                           RECITALS

 

WHEREAS, the Company and the Trustee have heretofore executed and delivered an indenture, dated as of June 18, 2014 (the “Indenture”), providing for the issuance by the Company from time to time of its debt securities to be issued in one or more series;

 

WHEREAS, Sections 2.1 and 9.1 of the Indenture provide, among other things, that the Company and the Trustee may, without the consent of Holders, enter into indentures supplemental to the Indenture to provide for specific terms applicable to any series of Securities;

 

WHEREAS, Section 2.1 of the Indenture provides, among other things, that there shall be established in or pursuant to a Board Resolution, and set forth, or determined in the manner provided, in an Officers’ Certificate of the Company or in a Company Order, or established in one or more indentures supplemental to the Indenture, prior to the issuance of Securities of any series, or any exceptions to or changes to those set forth in Article X of the Indenture;

 

WHEREAS, the Company intends by this First Supplemental Indenture to create and provide for the issuance of a new series of debt securities to be designated as the “8.125% Senior Securities due 2021” (the “Securities”);

 

WHEREAS, pursuant to Section 9.1(9) and (11) of the Indenture, the Trustee and the Company are authorized to execute and deliver this First Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder of Securities; and

 

WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered by the Trustee, issued upon the terms and subject to the conditions set forth hereinafter and in the Indenture and delivered as provided in the Indenture against payment therefor, valid, binding and legal obligations of the Company according to their terms, and all actions required to be taken by the Company under the Indenture to make this First Supplemental Indenture a valid, binding and legal agreement of the Company, have been done.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01   Definitions.

 

(a) All capitalized terms used herein and not otherwise defined below shall have the meanings ascribed thereto in the Indenture.

 

(b) The following are definitions used in this First Supplemental Indenture, and to the extent that a term is defined both herein and in the Indenture, the definition in this First Supplemental Indenture shall govern with respect to the Securities.

 

“Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation.

“Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase or other acquisition (whether by means of a merger, amalgamation, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all of the Capital Stock of any other Person.

“Additional Issue Date” means the date or dates on which the Company issues Additional Securities issued as a result of the exercise by the underwriters of the offering of the Securities of their right to purchase up to $9 million aggregate principal amount of Securities within 30 days of the date of the prospectus relating to the offering of the Securities.

“Additional Securities” means Securities issued pursuant to Article II of the Indenture and in compliance with Section 4.04 hereof, in addition to and having substantially the same terms as the Securities issued on the Issue Date.

“Asset Acquisition” means (1) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (2) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.

“Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any Restricted Subsidiary (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of: (1) any Capital Stock of any Restricted Subsidiary; or (2) any other property or assets of the Company or any Restricted Subsidiary other than in the ordinary course of business; provided, however, that asset sales or other dispositions shall not include: (a) a transaction or series of related transactions for which the Company or a Restricted Subsidiary receive aggregate consideration (exclusive of any indemnities) of less than $5.0 million; (b) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under Article V hereof; (c) any Restricted Payment permitted by Section 4.02 or that constitutes a Permitted Investment; (d) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; (e) the sale of or other disposition of cash or Cash Equivalents; (f) any sale or disposition deemed to occur in connection with creating or granting any Liens pursuant to Section 4.07; (g) the lease, assignment or sublease of any real or personal property in the ordinary course of business; (h) sales of Unrestricted Subsidiaries; (i) disposals, trade-ins or replacements of obsolete or worn-out equipment or other assets; (j) the sale, lease or other disposition of inventory in the ordinary course of business; and (k) the surrender, or waiver of contract rights or settlement, release or surrender of contract, tort or other claims.

“Borrowing Base” shall have the meaning given such term in the Credit Agreement.

“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)           marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and 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)           marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s;

(3)           commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s;

(4)           certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250 million;

(5)           repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and

(6)           investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above.

“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

“Change of Control” means the occurrence of one or more of the following events:

(1)           the direct or indirect 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 assets of the Company and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Company or one of its Subsidiaries;

(2)           the consummation of any transaction (including without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of the Company, measured by voting power rather than number of shares;

(3)           the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction;

(4)           the first day on which the majority of the members of the board of directors of the Company cease to be Continuing Directors; or

(5)           the adoption of a plan relating to the liquidation or dissolution of the Company.

“Commission” means the Securities and Exchange Commission.

“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.

 “Comparable Treasury Issue” means the United States treasury security selected by an Independent Investment Bank as having an actual or interpolated  maturity comparable to the remaining term of the Securities 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 Securities.

“Comparable Treasury Price” means, with respect to any Redemption Date:

(1)           the average of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such Redemption Date, as set forth in the most recently published statistical release designated “H.15 (519)” (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” or

(2)           if such release (or any successor release) is not published or does not contain such prices on such business day, the average of the Reference Treasury Dealer Quotations for such Redemption Date.

“Consolidated Assets” means, as of the date of determination, the total assets (less goodwill and intangible assets) of the Company and its Restricted Subsidiaries as shown on the balance sheet of the Company and its Subsidiaries for the most recently ended fiscal quarter for which financial statements are available, determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDA” means, with respect to any Person, for any period, the sum (without duplication) of:

(1)           Consolidated Net Income; and

(2)           to the extent Consolidated Net Income has been reduced thereby:

(a)           all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business);

(b)           Consolidated Interest Expense;

(c)           Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, and

(d)           any expenses, charges or other costs related to any equity offering, Permitted Investment, acquisition (including amounts paid in connection with the acquisition or retention of one or more individuals comprising part of a management team retained to manage the acquired business, provided that such payments are made at the time of such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), disposition, incurrence or refinancing of Indebtedness permitted to be incurred by the Indenture, (whether or not successful)

all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP.

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the “Four Quarter Period”) ending prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the “Transaction Date”) to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(1)           the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period; and

(2)           any asset sales or other dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions and other operating improvements or synergies (x) calculated on a basis consistent with Regulation S-X under the Exchange Act) or (y) as determined in good faith by a responsible financial or accounting officer of the Company for which steps have been taken or are reasonably expected to be taken within six (6) months of such transaction and are supportable and quantifiable and as set forth on an Officer’s Certificate) attributable to the assets which are the subject of the Asset Acquisition or asset sale or other disposition during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such asset sale or other disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness.

Furthermore, in calculating “Consolidated Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”:

(1)           interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and

(2)           notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Hedge Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

Furthermore, in calculating “Consolidated EBITDA” for purposes of determining the “Consolidated Fixed Charge Coverage Ratio,” the net income (or loss) of a Restricted Subsidiary that has become a Guarantor during the relevant Four Quarter Period shall be included from the beginning of such Four Quarter Period.

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

(1)           Consolidated Interest Expense; plus

(2)           the product of (x) the amount of all dividend payments to any Person other than the Company or a Restricted Subsidiary on any series of Preferred Stock of such Person and, to the extent permitted under this Indenture, its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum of, without duplication:

(1)           The aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation: (a) any amortization of debt discount and amortization or write-off of deferred financing costs; (b) the net costs under Hedge Agreements incurred in the fiscal quarter beginning after the Issue Date; (c) all capitalized interest; and (d) the interest portion of any deferred payment obligation; and

(2)           the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP; less

(3)           interest income for such period.

“Consolidated Net Income” means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that

(a)           there shall be included thereto (without duplication) the amount of cash dividends or distributions actually received by the referent Person or a Wholly Owned Restricted Subsidiary of the referent Person from any Person that is not a Restricted Subsidiary; and

(b)           there shall be excluded therefrom (without duplication):

(1)           after-tax gains from Asset Sales (without regard to the $5.0 million limitation set forth in the definition thereof) or abandonments or reserves relating thereto;

(2)           after-tax items classified as extraordinary or nonrecurring gains;

(3)           the net income (but not loss) of any Restricted Subsidiary (other than a Guarantor of the Securities)of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is restricted by a contract, operation of law or otherwise;

(4)           any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date;

(5)           income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);

(6)           in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person’s assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets;

(7)           fees and expenses incurred in connection with the refinancing or repayment of indebtedness;

(8)           the amount of extraordinary, nonrecurring or unusual losses or charges (including all fees, expenses or charges incurred in connection with acquisitions, mergers of consolidations after the Issue Date);

(9)           any non-cash compensation charge or expense, including any such charge or expense arising from the grants of stock appreciation or similar rights, stock options, restricted stock or other rights or equity incentive programs;

(10)           any net after-tax effect of income (loss) from the early extinguishment or conversion of (a) Indebtedness, (b) Hedging Obligations or (c) other derivative instruments;

(11)           any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to goodwill, intangible assets, long-lived assets, investments in debt and equity securities or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP;

(12)           any non-cash income (or loss) related to the recording of the fair market value of Hedge Agreements entered into in the ordinary course of business and not for speculative purposes; and

(13)           the cumulative effect of a change in accounting principles.

“Consolidated Non-cash Charges” means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge which requires an accrual of or a reserve for cash charges for any future period).

“Consolidated Secured Leverage Ratio” means, as of the date of determination (the “Secured Leverage Ratio Calculation Date”), the ratio of (a) the total Indebtedness of the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter for which internal financial statements are available that is secured by Liens (other than property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby) to (b) Consolidated EBITDA of the Company and its Restricted Subsidiaries for the most recently ended four fiscal quarters ending immediately prior to such date for which internal financial statements are available, with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

“Continuing Director” means, as of any date of determination, any member of the board of directors of the Company who:

(1)           was a member of such board of directors on the Issue Date; or

(2)           was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were members of such board of directors at the time of such nomination or election.

“Credit Agreement” means the amended and restated credit agreement, dated as of April 7, 2014, as amended to date, by and among Wells Fargo Bank, National Association, as Administrative Agent, Wells Fargo Bank, National Association and HSBC Bank USA, N.A., as Co-Lead Arrangers, Wells Fargo Bank, National Association, as Book Runner, HSBC Bank USA, N.A., as Syndication Agent, the lenders that are parties thereto, Pac-Van, Inc., Lone Star Tank Rental Inc. and  the Subsidiaries that are signatories thereto, as borrowers, together with the related documents thereto (including, without limitation, any notes, guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including one or more credit agreements, loan agreements, indentures or similar agreements extending the maturity of, refinancing, replacing, renewing or otherwise restructuring (including increasing the amount of available credit thereunder or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.

“Credit Facilities” means one or more of (i) the Credit Agreement and (ii) any other facilities or arrangements designated by the Company, in each case with one or more banks or other lenders or institutions, providing for revolving credit loans, term loans, receivables or fleet financings (including without limitation through the sale of receivables or fleet assets to such institutions or to special purpose entities formed to borrow from such institutions against such receivables or fleet assets or the creation of any Liens in respect of such receivables or fleet assets in favor of such institutions), letters of credit or other Indebtedness, in each case, including all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing, including but not limited to any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledge agreements, security agreements and collateral documents, in each case as the same may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original banks, lenders or institutions or other banks, lenders or institutions or otherwise, and whether provided under any original Credit Agreement or one or more other credit agreements, indentures, financing agreements or other Credit Facilities or otherwise). Without limiting the generality of the foregoing, the term “Credit Facility” shall include any agreement (i) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (ii) adding Subsidiaries as additional borrowers or guarantors thereunder, (iii) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof.

“Disqualified Capital Stock” means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the final maturity date of the Securities.

“Domestic Restricted Subsidiary” means a Restricted Subsidiary incorporated or otherwise organized or existing under the laws of the United States, any state thereof or any territory or possession of the United States.

“Earn-Outs” shall mean unsecured liabilities of the Company or a Restricted Subsidiary arising under an agreement to make any deferred payment as a part of the purchase price for a Permitted Acquisition, including performance bonuses or consulting payments in any related services, employment or similar agreement, in an amount that is subject to or contingent upon the revenues, income, cash flow or profits (or the like) of the target of such Permitted Acquisition.

“Equity Offering” means a public or private offering of Qualified Capital Stock of the Company or any of its Subsidiaries other than:

(1)           public offerings with respect to the common stock of the Company or any Subsidiary registered on Form S-8;

(2)           the registration of common stock of the Company on Form S-4 issued in connection with acquisitions by the Company or any Subsidiary of the Company.

(3)           issuances to any Subsidiary of the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

“fair market value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free-market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.

“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Restricted Subsidiary.

“guarantee” means, as to any Person, a guarantee, 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 of another Person, but excluding endorsements for collection or deposit in the normal course of business.

“Guarantor” means any Restricted Subsidiary of the Company that fully and unconditionally guarantees the payment of principal of, premium, if any, and accrued and unpaid interest on the Notes by executing and delivering to the Trustee a supplemental indenture, until such time as such Restricted Subsidiary is released from its Subsidiary Guarantee.

“Hedge Agreement” means a “swap agreement” as that term is defined in the Bankruptcy Code.

“Indebtedness” means with respect to any Person, without duplication:

(1)           all Obligations of such Person for borrowed money;

(2)           all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3)           all Capitalized Lease Obligations of such Person;

(4)           all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted);

(5)           all Obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction;

(6)           guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;

(7)           all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured;

(8)           all Obligations under Hedge Agreements of such Person; and

(9)           all Disqualified Capital Stock issued by such Person or any Preferred Stock of any Restricted Subsidiary with the amount of Indebtedness represented by such Disqualified Capital Stock or Preferred Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock.

“Independent Financial Advisor” means a firm: (1) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company; and (2) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.

“Independent Investment Bank” means one of the Reference Treasury Dealers appointed by the Company.

“Investment” means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. “Investment” shall exclude (i) extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be; (ii) the acquisition of property and assets from suppliers and other vendors in the normal course of business and consistent with past practice; and (iii) prepaid expenses and workers’ compensation, utility, lease and similar deposits, in the normal course of business and consistent with past practice. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of.

“Issue Date” means June 18, 2014.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:

(1)           reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);

(2)           taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements;

(3)           repayment of Indebtedness that is secured by the property or assets that are the subject of such Asset Sale;

(4)           amounts required to be paid to any Person owning a beneficial interest in or having a Lien on the assets subject to the Asset Sale; and

(5)           appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.

“Obligations” means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

 “Pari Passu Debt” means any Indebtedness of the Company that ranks pari passu in right of payment with the Securities, as applicable.

“Permitted Acquisition” means any Acquisition so long as:

(1)           no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition,

(2)           no Indebtedness will be incurred, assumed, or would exist with respect to the Company or any Restricted Subsidiary as a result of such Acquisition, other than (A) Indebtedness permitted under clause (7) of the definition of Permitted Indebtedness or (B) such Indebtedness is incurred in compliance with Section 4.04(a);

(3)           no Liens will be incurred, assumed, or would exist with respect to the assets of the Company or any Restricted Subsidiary as a result of such Acquisition other than Permitted Liens; and

 (4)           the assets being acquired (other than a de minimis amount of assets in relation to the Company and its Restricted Subsidiaries’ total assets), or the Person whose Capital Stock is being acquired, constitute a Permitted Business.

“Permitted Business” means any business conducted by the Company on the Issue Date, any reasonable extension thereof, and any additional business reasonably ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the business conducted by the Company and the Restricted Subsidiaries on the Issue Date, in each case, as determined in good faith by the Board of Directors of the Company.

“Permitted Indebtedness” means, without duplication, each of the following:

(1)           Indebtedness under the Securities issued on the Issue Date or Additional Issue Date;

 

 

 (2)           Indebtedness incurred pursuant to the Credit Agreement, including any permitted refinancing thereof, in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $200 million (or $225 million upon the exercise of the $25 million accordion increase under the Credit Agreement) less the amount of all required permanent repayments (which are accompanied by a corresponding permanent commitment reduction thereunder) and (ii) the Borrowing Base, including any permitted refinancing thereof;

 

 

(3)           other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon;

(4)           Permitted Purchase Money Indebtedness;

(5)           endorsement of instruments or other payment items for deposit;

(6)           Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds, completion guarantee and similar obligations; (ii) unsecured guarantees arising with respect to customary indemnification obligations to purchasers in connection with dispositions in the ordinary course of business; and (iii) unsecured guarantees with respect to Indebtedness of the Company or a Restricted Subsidiary, to the extent that the Person that is obligated under such guaranty could have incurred such underlying Indebtedness,

(7)           Acquired Indebtedness of the Company or any Restricted Subsidiary including any permitted refinancing thereof, in an aggregate principal amount not to exceed $10.0 million outstanding at any one time and any refinancing thereof;

(8)           Indebtedness incurred in the ordinary course of business under performance, surety, statutory, or appeal bonds;

(9)           Indebtedness owed to any Person providing property, casualty, liability, or other insurance to the Company or any Restricted Subsidiary, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year;

 

 

(10)           Indebtedness under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with Company and its Subsidiaries’ operations and not for speculative purposes as determined in good faith by the Board of Directors of the Company;

 

 

  (11)           Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”), or Cash Management Services;

(12)           unsecured Subordinated Indebtedness owing to former employees, officers, or directors (or any spouses, ex-spouses, or estates of any of the foregoing) of the Company or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment of such employees or termination of their seat on our Board of Directors, so long as (i) no Default or Event of Default has occurred and is continuing or would result from the incurrence of such Indebtedness and (ii) the aggregate amount of all such Indebtedness outstanding at any one time does not exceed $250,000;

(13)           unsecured Indebtedness owing to sellers of assets or Capital Stock to the Company or a Restricted Subsidiary that is incurred by the Company or a Restricted Subsidiary in connection with the consummation of one or more Permitted Acquisitions so long as the aggregate principal amount for all such unsecured Indebtedness does not exceed $15 million at any one time outstanding;

(14)           contingent liabilities in respect of any indemnification obligation, adjustment of purchase price, non-compete, or similar obligation of the Company or any Restricted Subsidiary Party incurred in connection with the consummation of one or more Permitted Acquisitions;

(15)           Indebtedness composing Permitted Investments;

(16)           unsecured Indebtedness incurred in respect of netting services, overdraft protection, and other like services, in each case, incurred in the ordinary course of business,

(17)           unsecured Indebtedness of the Company or any Restricted Subsidiary in respect of Earn-Outs owing to sellers of assets or Capital Stock to the Company or a Restricted Subsidiary that is incurred in connection with the consummation of one or more Permitted Acquisitions;

(18)           accrual of interest, accretion or amortization of original issue discount, or the payment of interest in kind, in each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,

(19)           (i) a guarantee by the Company of any Indebtedness of any Restricted Subsidiary, provided that such Indebtedness was incurred in accordance with Section 4.04 and (ii) a guarantee by any Restricted Subsidiary of any Indebtedness of the Company provided that (a) such Indebtedness was incurred in accordance with Section 4.04 and (b) the Restricted Subsidiary concurrently guarantees the Securities in accordance with Section 4.08;

 

(20)           the incurrence by the Company or any Restricted Subsidiary of Indebtedness in respect of workers’ compensation and claims arising under similar legislation, captive insurance companies, or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit;

 

(21)           Indebtedness of a Restricted Subsidiary to the Company or to a Restricted Subsidiary for so long as such Indebtedness is held by the Company or a Restricted Subsidiary or the holder of a Lien permitted under the Indenture, in each case subject to no Lien held by a Person other than the Company or a Restricted Subsidiary or the holder of a Lien permitted under the Indenture; provided that if as of any date any Person other than the Company or a Restricted Subsidiary or the holder of a Lien permitted under the Indenture owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (21) by the issuer of such Indebtedness;

 

 

(22)           Indebtedness of the Company to a Restricted Subsidiary for so long as such Indebtedness is held by a Restricted Subsidiary or the holder of a Lien permitted under the Indenture, in each case subject to no Lien other than a Lien permitted under the Indenture; provided that (a) any Indebtedness of the Company to any Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company’s obligations under the Indenture and the Securities and (b) if as of any date any Person other than a Restricted Subsidiary or the holder of a Lien permitted under the Indenture owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (22) by the Company;

(23)     Indebtedness incurred pursuant to that certain Facility Agreement dated March 31, 2014 among the Company, GFN U.S. Australasia Holdings, Inc. and Credit Suisse AG in an aggregate principal amount at any time outstanding not to exceed $25 million thereunder;

(24)           Indebtedness incurred pursuant to the Master Lease Agreement number 27026-90000 dated April 29, 2014 by and among Banc of America Leasing & Capital, LLC, Pac-Van, Inc. and Lone Star Tank Rental Inc. in an aggregate amount at any time outstanding not to exceed $10 million.

(25)           Indebtedness incurred pursuant to the Credit and Security Agreement, dated October 1, 2012, by and among Southern Frac, LLC,  GFN Manufacturing Corporation, the Company and Wells Fargo Bank, National Association, as amended as of the date hereof, including any permitted refinancing thereof, in an aggregate principal amount at any time outstanding not to exceed $15 million, less the amount of all required permanent repayments (which are accompanied by a corresponding permanent commitment reduction thereunder).

(26)           Indebtedness consisting of (i) Acquired Indebtedness and/or (ii) Additional Securities or any unsecured Indebtedness of the Company represented by notes or bonds (A) with terms substantially identical to the Securities and (B) having a final maturity date no earlier that the final maturity date of the Securities (and no optional redemption prior to the final maturity date of the Securities), in all cases incurred by the Company to finance (or refinance within 180 days of the incurrence thereof of any Indebtedness incurred to finance) the acquisition of any assets used in a Permitted Business or all or substantially all of the Capital Stock of a Person engaged in a Permitted Business; provided that in the case of both clauses (i) and (ii) on the date of the incurrence (or refinancing) of such Indebtedness, after giving effect to the incurrence thereof and the use of proceeds therefrom, either

(a)           the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Section 4.04(a) or

(b)           the Consolidated Fixed Charge Coverage Ratio of the Company would not be less than the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to the incurrence of such Indebtedness.

(27)           Refinancing Indebtedness;

(28)           (i) any other unsecured Indebtedness incurred by the Company or any of its Restricted Subsidiaries, including any permitted refinancing thereof, and (ii) guarantees by the Company of amounts borrowed under the credit facility described in clause (25) above, in either case in an aggregate outstanding amount not to exceed at any one time outstanding the greater of (x) $4.0 million and (y) 1% of Consolidated Assets of the Company (which amount may, but need not, be incurred in whole or in part under the Credit Agreement).

 

 

For purposes of determining compliance with Section 4.04, (1) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (27) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of Section 4.04, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with this definition; provided that all Indebtedness outstanding under the Credit Agreement up to the maximum amount permitted under clause (2) of this definition above shall be deemed to have been incurred pursuant to clause (2) of this definition. For the avoidance of doubt the foregoing will not prohibit the Company or any of its Restricted Subsidiaries from incurring Indebtedness in an amount in excess of the amount permitted to be incurred under clause (2) so long as such Debt is otherwise Permitted Indebtedness; (2) the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any guarantee, lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded; (3) the maximum amount of Indebtedness that the Company or a Restricted Subsidiary may incur pursuant to Section 4.04 shall not be deemed to be exceeded, with respect to any outstanding Indebtedness, due solely to the result of fluctuations in the exchange rates of currencies; and (4) the accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section 4.04.

“Permitted Investments” means:

(1)           Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Restricted Subsidiary of the Company or that will merge or consolidate into the Company or a Restricted Subsidiary of the Company;

(2)           Investments in the Company by any Restricted Subsidiary of the Company;

(3)           investments in cash and Cash Equivalents;

(4)           loans and advances to employees, directors and officers of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $1.0 million at any one time outstanding;

(5)           Hedge Agreements entered into in the ordinary course of the Company’s or its Restricted Subsidiaries’ businesses and otherwise in compliance with this Indenture;

(6)           additional Investments in an aggregate principal amount not to exceed the greater of (x) $5.0 million and (y) 1.0% of Consolidated Assets of the Company at any one time outstanding; provided, that if an Investment is made pursuant to this clause in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is subsequently designated a Restricted Subsidiary, such Investment, if applicable, shall thereafter be deemed to have been made pursuant to clause (1) or (2) above and not this clause;

(7)           investments in the Securities and any other Indebtedness of the Company or any Restricted Subsidiary;

(8)      Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in good faith settlement of delinquent obligations of such trade creditors or customers;

(9)           Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.10;

(10)           Investments represented by guarantees of Indebtedness that are otherwise permitted under this Indenture;

(11)           Investments made by the Company or its subsidiaries in the Capital Stock of Royal Wolf Holdings Limited;

(12)           Investments the payment for which is Qualified Capital Stock of the Company; and

(13)           Investments in existence on the date of this Indenture and an Investment in any Person to the extent such Investment replaces or refinances an Investment in such Person existing on the date of this Indenture in an amount not exceeding the amount of the Investment being replaced or refinanced; provided, however, that the new Investment is on terms and conditions no less favorable to the Company and its Restricted Subsidiaries than the Investment being renewed or replaced.

“Permitted Liens” means the following types of Liens:

(1)           Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(2)           statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

(3)           Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, warranty requirements, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(4)           judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

(5)           easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

(6)           any interest or title of a lessor under any Capitalized Lease Obligation; provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation other than proceeds thereof;

(7)           Liens securing Purchase Money Indebtedness incurred or in the ordinary course of business; provided, however, that (a) such Purchase Money Indebtedness shall not exceed the purchase price or other cost of such property or equipment and shall not be secured by any property or equipment of the Company or any Restricted Subsidiary of the Company other than the property and equipment so acquired and (b) the Lien securing such Purchase Money Indebtedness shall be created within 90 days of such acquisition;

(8)           Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of letters of credit or bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(9)           Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(10)           Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(11)           Liens securing Hedge Agreements which Hedge Agreements relate to Indebtedness that is otherwise permitted under this Indenture;

(12)           Liens securing Acquired Indebtedness incurred in accordance with Section 4.04; provided that:

(a)           such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company, and

(b)           such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company;

(13)           Liens on assets of a Restricted Subsidiary of the Company that is not a guarantor of the Securities to secure Indebtedness of such Restricted Subsidiary that is otherwise permitted under this Indenture;

(14)           leases, subleases, licenses and sublicenses granted to others that do not materially interfere with the ordinary cause of business of the Company and its Restricted Subsidiaries;

(15)           banker’s Liens, rights of setoff and similar Liens with respect to cash and Cash Equivalents on deposit in one or more bank accounts in the ordinary course of business;

(16)           Liens arising from filing Uniform Commercial Code financing statements regarding leases;

(17)           Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods;

(18)           other Liens securing obligations or Indebtedness for borrowed money with respect to property or assets with an aggregate fair market value (valued at the time of creation thereof) of not more than $10.0 million at any time in the aggregate; and

(19)           Liens existing on the Issue Date securing the repayment of amounts borrowed under the Credit Agreement;

(20)           deposits made in the ordinary course of business to secure liability to insurance carriers.

“Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

“Purchase Date” means, with respect to any Security to be repurchased, the date fixed for such repurchase by or pursuant to this Indenture.

“Purchase Price” means the amount payable for the repurchase of any Security on a Purchase Date, exclusive of accrued and unpaid interest thereon to the Purchase Date, unless otherwise specifically provided.

“Permitted Purchase Money Indebtedness” means, as of any date of determination, Indebtedness  incurred after the Issue Date and at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof, in an aggregate principal amount outstanding at any one time not in excess of $3 million.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock.

“Reference Treasury Dealer” means a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”) chosen by the Company; provided that if such dealer shall cease to be a Primary Treasury Dealer, the Company shall 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 Company, 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 Company by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third business day preceding such Redemption Date.

“Refinance” means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means any Refinancing by the Company or any Restricted Subsidiary of Indebtedness incurred in accordance with the Section 4.04(a) or described in clauses (1), (2), (3), (4), (7), (24), (25), (26), (27) and (28) of the definition of Permitted Indebtedness), in each case that does not:

 

 

(1)           result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing above the sum of (i) the aggregate principal amount of such Indebtedness, plus (ii) the accrued interest on and amount of any premium required to be paid under the terms of the instrument governing such Indebtedness, plus (iii) the amount of reasonable expenses incurred by the Company in connection with such Refinancing; or

(2)           create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity earlier than the final maturity of the Indebtedness being Refinanced;

provided that (x) if such Indebtedness being Refinanced is Indebtedness solely of the Company (and is not otherwise guaranteed by a Restricted Subsidiary of the Company), then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced is subordinate or junior to the Securities, then such Refinancing Indebtedness shall be subordinate to the Securities at least to the same extent and in the same manner as the Indebtedness being Refinanced.

“Restricted Subsidiary” means any Subsidiary that has not been designated as an “Unrestricted Subsidiary” in accordance with this Indenture.

“Sale and Leaseback Transaction” means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property.

“Significant Subsidiary”, with respect to any Person, means any Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1.02(w) of Regulation S-X under the Exchange Act.

“Subordinated Indebtedness” means Indebtedness of the Company that is subordinated or junior in right of payment to the Securities.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.

“Subsidiary Guarantee” means any guarantee of the Securities by any Restricted Subsidiary.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the yield to maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

“Unrestricted Subsidiary” of any Person means:

(1)           unless otherwise designated by the Company’s Board of Directors, Royal Wolf Holdings Limited, an Australian corporation, and its subsidiaries;

(2)           any Subsidiary of the Company that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

(3)           any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided that:

(1)           the Company certifies to the Trustee that such designation complies with Section 4.7; and

(2)           each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.

For purposes of making the determination of whether any such designation of a Subsidiary as an Unrestricted Subsidiary complies with Section 4.7, the portion of the fair market value of the net assets of such Subsidiary of the Company at the time that such Subsidiary is designated as an Unrestricted Subsidiary that is represented by the interest of the Company and its Restricted Subsidiaries in such Subsidiary, in each case as determined in good faith by the Board of Directors of the Company, shall be deemed to be an Investment. Such designation will be permitted only if such Investment would be permitted at such time under Section 4.7.

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if:

(1)           immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.04; and

(2)           immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

“Wholly Owned Restricted Subsidiary” of any Person means any Wholly Owned Subsidiary of such Person which at the time of determination is a Restricted Subsidiary of such Person.

“Wholly Owned Subsidiary” of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a foreign Subsidiary, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person.

Section 1.02   Other Definitions.

 

	
Term                                                                                                            Defined in Section

	
“Affiliate Transaction”                                                                                                

	
4.06(a)

	
“Change of Control Offer”                                                                                                

	
3.02(a)

	
“Change of Control Period”                                                                                                

	
3.02(d)

	
“incur”                                                                                                

	
4.04

	  	  
	
“Interest Payment Date”                                                                                                

	
2.04(c)

	
“Maturity Date”                                                                                                

	
2.04(b)

	
“Net Proceeds Offer”                                                                                                

	
4.05(b)

	
“Net Proceeds Offer Trigger Date”                                                                                                

	
4.05(B)

	
“Regular Record Date”                                                                                                

	
2.04(c)

Section 1.03   Incorporation by Reference of Trust Indenture Act.

 

This First Supplemental Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this First Supplemental Indenture.  The following TIA terms have the following meanings:

 

“Commission” means the SEC.

 

“indenture securities” means the Securities.

 

“indenture security holder” means a Holder.

 

“indenture to be qualified” means this First Supplemental Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

 

All other TIA terms used in this First Supplemental Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rules promulgated under the TIA have the meanings assigned to them by such definitions.

 

ARTICLE II

 

APPLICATION OF SUPPLEMENTAL INDENTURE

 

AND CREATION, FORMS, TERMS AND CONDITIONS OF SECURITIES

 

Section 2.01   Application of this First Supplemental Indenture.  Notwithstanding any other provision of this First Supplemental Indenture, the provisions of this First Supplemental Indenture, including the covenants set forth herein, are expressly and solely for the benefit of the Holders of the Securities.  The Securities constitute a separate series of Securities as provided in Section 2.1 of the Indenture.

 

Section 2.02   Creation of the Securities.  In accordance with Section 2.1 of the Indenture, the Company hereby creates the Securities as a separate series of its Securities issued pursuant to the Indenture.  The Securities shall be issued initially in an aggregate principal amount of up to $72,000,000.

 

Section 2.03   Form of the Securities.  The Securities shall each be issued in the form of a Global Security, duly executed by the Company and authenticated by the Trustee, which shall be deposited with the Trustee as custodian for DTC and registered in the name of “Cede & Co.,” as the nominee of DTC.  The Securities shall be substantially in the form of Exhibit A attached hereto.  So long as DTC, or its nominee, is the registered owner of a Global Security, DTC or its nominee, as the case may be, shall be considered the sole owner or Holder of the Securities represented by such Global Security for all purposes under the Indenture and under such Securities.  Ownership of beneficial interests in such Global Security shall be shown on, and transfers thereof will be effective only through, records maintained by DTC or its nominee (with respect to beneficial interests of participants) or by participants or Persons that hold interests through participants (with respect to beneficial interests of beneficial owners).  The Securities shall not be issuable in temporary global form.

 

Section 2.04   Terms and Conditions of the Securities.

 

The Securities shall be governed by all the terms and conditions of the Indenture, as supplemented by this First Supplemental Indenture.  In particular, the following provisions shall be terms of the Securities:

 

(a) Title and Conditions of the Securities.  The title of the Securities shall be as specified in the Recitals; and the aggregate principal amount of the Securities shall be as specified in Section 2.02 of this Article II, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, the Securities pursuant to Sections 2.8, 2.9, 2.13, 2.16, 5.7 or 9.5 of the Indenture.

 

(b) Stated Maturity.  The Securities shall mature, and the principal of the Securities shall be due and payable in U.S. Dollars to the Holders thereof, together with all accrued and unpaid interest thereon, on July 31, 2021 (the “Maturity Date”).

 

(c) Payment of Principal and Interest.  The Securities shall bear interest at 8.125% per annum, from and including June 18, 2014, or from the most recent Interest Payment Date (as defined hereafter) on which interest has been paid or provided for until the principal thereof becomes due and payable, and on any overdue principal.  Interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.   Interest on the Securities shall be payable quarterly in arrears in U.S. Dollars on January 31, April 30, July 31 and October 31 of each year, commencing on July 31, 2014 (each such date, a “Interest Payment Date” for the purposes of the Securities under this First Supplemental Indenture).  Payments of interest shall be made to the Person in whose name a Security (or predecessor Security) is registered (which shall initially be the Depositary) at the close of business on the January 15, April 15, July 15 and October 15 (whether or not that date is a Business Day), as the case may be, immediately preceding such Interest Payment Date (each such date, a “Regular Record Date” for the purposes of the Securities under this First Supplemental Indenture).

 

(d) Registration and Form.  The Securities shall be issuable as registered securities as provided in Section 2.03 of this Article II.  The form of the Securities shall be as set forth in Exhibit A attached hereto.  The Securities shall be issued and may be transferred only in minimum denomination of $25 and integral multiples of $25 in excess thereof.  All payments of principal, Redemption Price, any purchase price relating to a Change of Control Offer and accrued unpaid interest in respect of the Securities shall be made by the Company as set forth in the Securities.

 

(e) Legal Defeasance and Covenant Defeasance.  The provisions for legal defeasance in Section 8.2 of the Indenture, and the provisions for covenant defeasance in Section 8.3 of the Indenture, shall be applicable to the Securities.

 

(f) Further Issuance.  Notwithstanding anything to the contrary contained herein or in the Indenture, the Company may, from time to time, without the consent of or notice to the Holders, create and issue further securities having the same interest rate, maturity and other terms (except for the issue date, the public offering price and the first Interest Payment Date) as, ranking equally and ratably with, the Securities.  Additional Securities issued in this manner shall be consolidated with and shall form a single series with the previously outstanding Securities.

 

(g) Redemption.  The Securities are subject to redemption by the Company in whole or in part in the manner described herein.

 

(h) Ranking.  The Securities will be the Company’s unsecured and unsubordinated obligations and will rank equally with all of its current and future unsecured and unsubordinated indebtedness and senior to all of its current and future subordinated debt.

 

(i) Sinking Fund.  The Securities are not entitled to any sinking fund.

 

(j) Additional Amounts.  No Additional Amounts shall be payable with respect to the Securities.

 

(k) Other Terms and Conditions.  The Securities shall have such other terms and conditions as provided herein.

 

ARTICLE III

 

REDEMPTION AND REPURCHASE

 

Section 3.01   Optional Redemption.

 

(a) Prior to July 31, 2017, the Securities are subject to redemption, in whole or in part, from time to time, at the Company’s option at a Redemption Price equal to the sum of:

 

(i) 100% of the principal amount of the Securities to be redeemed, and

 

	
(ii)  

	
the excess, if any, of (A) the present value at such redemption date of (i) the redemption price of such Security on July 31, 2017 (as described in the immediately succeeding paragraph but excluding accrued and unpaid interest to the redemption date) plus (ii) all remaining scheduled interest payments due on the Securities through July 31, 2017 (but excluding accrued and unpaid interest to the redemption date), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, over (B) the principal amount of the Securities on the redemption date.

 

plus, in either case, accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date).

 

           On and after July 31, 2017, the Securities are subject to redemption, in whole or in part, from time to time, at the Company’s option at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on July 31 of the year set forth below:

	
Year

	
Percentage

	
2017

	
106.094%

	
2018

	
104.063%

	
2019

	
102.031%

	
2020 and thereafter

	
100.000%;

plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date).

(b) Redemption Following Equity Offering.  Prior to July 31, 2017, upon not less than 30 nor more than 60 days’ written notice, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the Securities at a redemption price equal to 108.125% of the principal amount of the Securities being redeemed plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the rights of holders of Securities on the relevant record date to receive interest on the relevant interest payment date), with the net cash proceeds from one or more Equity Offerings. The Company may only do this, however, if:

 

(i)           at least 65% of the aggregate principal amount of the Securities that were initially issued under the Indenture (excluding Securities held by the Issuer or any of its Subsidiaries) would remain outstanding immediately after the occurrence of such proposed redemption; and

(ii)    the redemption occurs within 180 days after the closing of such Equity Offering.

Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

Section 3.02            Repurchase upon Change of Control Offer.

 

(a) Upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest thereon to the Purchase Date.

 

(b) The Company will not be required to make a Change of Control Offer upon a Change of Control if 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 Supplemental Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.

 

(c) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Securities pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 3.02, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.02 by virtue thereof.

 

(d) The Change of Control Offer shall remain open for a period from the date of the mailing of the notice of the Change of Control Offer described in paragraph (c) until a date determined by the Company which is at least 30 but no more than 60 days from the date of mailing of such notice and no longer, except to the extent that a longer period is required by applicable law (the “Change of Control Offer Period”). On the Purchase Date, which shall be no earlier than 30 days prior to the last day of the Change of Control Offer Period and no later than such last day, the Company shall purchase the principal amount of Securities properly tendered in response to the Change of Control Offer. Payment for any Securities so purchased shall be made in the same manner as interest payments are made.

 

(e) Within 30 days following any Change of Control, the Company shall send, by first class mail (or, in the case of Securities held in book-entry form, by electronic transmission) , a notice to the Trustee and the Paying Agent and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Change of Control Offer. The Change of Control Offer shall be made to all Holders. The notice, which shall govern the terms of the Change of Control Offer, shall state:

 

(i) the transaction or transactions that constitute the Change of Control, providing information, to the extent publicly available, regarding the Person or Persons acquiring control, and stating that the Change of Control Offer is being made pursuant to this Section 3.02 and that, to the extent lawful, all Securities properly tendered will be accepted for payment;

 

(ii) the Purchase Price, the last day of the Change of Control Offer Period, and the Purchase Date;

 

(iii) that any Security not properly tendered or otherwise not accepted for repurchase will continue to accrue interest;

 

(iv) that, unless the Company defaults in the payment of the amount due on the Purchase Date, all Securities or portions thereof accepted for repurchase pursuant to the Change of Control Offer shall cease to accrue interest after the Purchase Date;

 

(v) that Holders electing to have any Securities purchased pursuant to the Change of Control Offer will be required to tender the Securities, with the form entitled Option of Holder to Elect Purchase on the reverse of the Securities completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice not later than the third Business Day preceding the Purchase Date;

 

(vi) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Change of Control Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of Securities delivered for repurchase, and a statement that such Holder is withdrawing his election to have the Securities redeemed in whole or in part;

 

(vii) that Holders whose Securities are being repurchased only in part will be issued new Securities equal in principal amount to the portion of the Securities tendered (or transferred by book-entry transfer) that is not to be repurchased, which portion must be equal to $25 in principal amount or an integral multiple of $25 in excess thereof; and

 

(viii)           that, notwithstanding anything herein to the contrary, all Securities held in book entry form shall be tendered and withdrawn in accordance with the applicable procedures of the Depositary.

.

(f) On or before 10:00 A.M. (New York City time) on the Purchase Date, the Company shall to the extent lawful, (i) accept for payment all Securities or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Purchase Price, together with accrued and unpaid interest thereon to the Purchase Date in respect of all Securities or portions thereof so tendered and accepted for repurchase and (iii) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof being repurchased by the Company. The Paying Agent shall promptly (but in any case not later than five days after the Purchase Date) mail to each Holder of Securities so repurchased the amount due in connection with such Securities, and the Company shall promptly issue a new Security, and the Trustee, upon written request from the Company in the form of an Officer’s Certificate shall authenticate and mail or deliver (or cause to transfer by book entry) to each relevant Holder a new Security, in a principal amount equal to any unpurchased portion of the Securities surrendered to the Holder thereof; provided that each such new Security shall be in a principal amount of $25 or an integral multiple of $25 in excess thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Purchase Date.

 

(g) If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest in each case to the Purchase Date, shall be paid to the Person in whose name a Security is registered at the close of business on such record date, and no additional interest shall be payable to Holders pursuant to the Change of Control Offer.

 

Section 3.03 Repurchase upon Application of Net Proceeds.

 

(a) In the event that, pursuant to Section 4.05, the Company shall be required to commence a Net Proceeds Offer, it shall follow the procedures specified in this Section 3.03.

 

(b) The notice of a Net Proceeds Offer shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Net Proceeds Offer. Each Net Proceeds Offer will be sent to all record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Securities in whole or in part in a principal amount of $25 (or integral multiples of $25 in excess thereof) in exchange for cash. A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law. Upon the expiration of that period, the Company shall promptly (but in any event within three Business Days following such expiration) purchase the Securities and any such other pari passu Indebtedness properly tendered in accordance with this Section 3.03 and Section 4.05. The notice, which shall govern the terms of the Net Proceeds Offer, shall state:

 

(i) that the Net Proceeds Offer is being made pursuant to this Section 3.03 and Section 4.05;

 

(ii) the Net Proceeds Offer Amount, the Purchase Price and the Purchase Date;

 

(iii) that any Security not properly tendered or otherwise not accepted for repurchase shall continue to accrue interest;

 

(iv) that, unless the Company defaults in the payment of the amount due on the Purchase Date, all Securities or portions thereof accepted for repurchase pursuant to the Net Proceeds Offer shall cease to accrue interest after the Purchase Date;

 

(v) that Holders electing to have any Securities repurchased pursuant to any Net Proceeds Offer shall be required to tender the Securities, with the form entitled Option of Holder to Elect Purchase on the reverse of the Securities completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Purchase Date;

 

(vi) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than expiration time by facsimile transmission a letter setting forth the name of the Holder, the principal amount of the Securities delivered for repurchase and a statement that such Holder is withdrawing his election to have such Securities repurchased in whole or in part; and

 

(vii) that, to the extent Holders properly tender Securities (along with any other pari passu Indebtedness of the Company properly tendered) in an amount exceeding the Net Proceeds Offer Amount, the tendered Securities will be purchased pro rata based on the aggregate amounts of Securities and other pari passu Indebtedness of the Company properly tendered (and the Trustee shall select the tendered Securities of tendering Holders pro rata based on the amount of Securities and other pari passu Indebtedness of the Company properly tendered).

 

(c) On or before 10:00 A.M. (New York City time) on the Purchase Date, the Company shall to the extent lawful, (i) accept for payment, pro rata in accordance with this Indenture to the extent necessary, the Net Proceeds Offer Amount of Securities or portions thereof properly tendered pursuant to the Net Proceeds Offer (along with any other pari passu Indebtedness of the Company properly tendered), or if less than the Net Proceeds Offer Amount has been tendered, all Securities properly tendered, (ii) deposit with the Paying Agent an amount equal to the Purchase Price, plus accrued and unpaid interest thereon to the Purchase Date in respect of all Securities or portions thereof so tendered and accepted for repurchase and (iii) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof being repurchased by the Company. The Paying Agent shall promptly (but in any case not later than five days after the Purchase Date) mail to each Holder of Securities so repurchased the amount due in connection with such Securities, and the Company shall promptly issue a new Security, and the Trustee, upon written request from the Company in the form of an Officer’s Certificate shall authenticate and mail or deliver such new Security to such Holder, in a principal amount equal to any unpurchased portion to the Holder thereof; provided that each such new Security shall be in a principal amount of $25 or an integral multiple of $25 in excess thereof. The Company shall publicly announce the results of the Net Proceeds Offer on or as soon as practicable after the Purchase Date.

 

(d) If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest to the Purchase Date, shall be paid to the Person in whose name a Security is registered at the close of business on such record date, and no additional interest shall be payable to Holders to the Net Proceeds Offer.

 

(e) Notwithstanding anything herein to the contrary, all Securities held in book entry form shall be tendered and withdrawn in accordance with the applicable procedures of the Depositary.

 

ARTICLE IV

 

COVENANTS

 

The covenants set forth in this Article IV shall be applicable to the Company in addition to the covenants in Article III of the Indenture, which shall in all respects be applicable in respect of the Securities.

 

Section 4.01            Reports.

 

(a) Whether or not required by the rules and regulations of the Commission, so long as any Securities are outstanding, the Company will furnish the Trustee, for delivery to the Holders of the Securities upon their written request therefor:

 

(i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants; and

 

(ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission’s rules and regulations. The Company shall at all times comply with TIA § 314(a).

 

Provided that, the delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder or under the Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(b) In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

 

Section 4.02            Limitation on Restricted Payments.

 

(a) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly (each of the actions set forth in clauses (i), (ii), (iii) and (iv) below being referred to as a “Restricted Payment”):

 

(i) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company’s Capital Stock to holders of such Capital Stock;

 

(ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (other than any such Capital Stock or warrants, rights or options owned by the Company or any Restricted Subsidiary of the Company);

 

(iii) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Indebtedness; or

 

(iv) make any Investment (other than Permitted Investments);

 

if at the time of such Restricted Payment or immediately after giving effect thereto,

 

(a) a Default or an Event of Default shall have occurred and be continuing; or

 

(b) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.04(a); or

 

(c) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined in good faith by the Board of Directors of the Company) shall exceed the sum of:

 

	
(i)  

	
50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company from April 1, 2014 to the date the Restricted Payment occurs (the “Reference Date”) (treating such period as a single accounting period); plus

 

	
(ii)  

	
100% of the aggregate net cash proceeds (or the fair market value of any marketable securities or other property) received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to July 1, 2014 and on or prior to the Reference Date of (1) Qualified Capital Stock of the Company, (2) warrants, options or other rights to acquire Qualified Capital Stock of the Company (but excluding any debt security that is convertible into, or exchangeable for, Qualified Capital Stock) or (3) convertible or exchangeable Disqualified Capital Stock or debt securities that have been converted or exchanged in accordance with their terms for Qualified Capital Stock; plus

 

	
(iii)  

	
without duplication of any amounts included in clause (c)(ii) above, 100% of the aggregate net cash proceeds (or the fair market value of any marketable securities or other property) from any equity contribution received by the Company from a holder of the Company’s Capital Stock subsequent to July 1, 2014 and on or prior to the Reference Date; plus

 

	
(iv)  

	
without duplication, the sum of:

 

	
  

	
(A)

	
the aggregate amount returned in cash on or with respect to Investments (other than Permitted Investments) made subsequent to July 1, 2014 whether through interest payments, principal payments, dividends or other distributions or payments;

	
  

	
(B)

	
the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the disposition of all or any portion of such Investments (other than to a Restricted Subsidiary of the Company); and

	
  

	
(C)

	
upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary;

provided, however, that the sum of clauses (A), (B) and (C) above shall not exceed the aggregate amount of all such Investments made subsequent to the Issue Date.

 

(b) Notwithstanding the foregoing, the provisions of paragraph (a) of this Section 4.02 do not prohibit:

 

(i) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration;

 

(ii) the redemption, repurchase, purchase, retirement, defeasance or other acquisition of any shares of Capital Stock of the Company, either (A) solely in exchange for shares of Qualified Capital Stock of the Company or (B) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Restricted Subsidiary of the Company) of shares of Qualified Capital Stock of the Company, provided that such net proceeds are not included in the calculation described in clause (c) of the preceding paragraph;

 

(iii) the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Indebtedness either (A) solely in exchange for shares of Qualified Capital Stock of the Company, or (B) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Restricted Subsidiary of the Company) of (I) shares of Qualified Capital Stock of the Company or (II) Refinancing Indebtedness provided that such net proceeds are not included in the calculation described in clause (c) of the preceding paragraph;

 

(iv) so long as no Default or Event of Default shall have occurred and be continuing redemption, repurchase, retirement, defeasance or other acquisition by the Company of Common Stock of the Company from officers, directors and employees of the Company or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment of such employees or termination of their seat on the board of the Company, in an aggregate amount not to exceed the sum of (x) $250,000 plus (y) $100,000 in any calendar year since the Issue Date, with any unused amounts in such calendar year being carried forward to the next succeeding calendar year; provided that the aggregate amount of repurchases that may be made pursuant to this clause (4) in any calendar year shall not exceed $250,000 in any calendar year;

 

(v) so long as no Default or Event of Default shall have occurred and be continuing, Restricted Payments in an aggregate amount not to exceed $6.0 million;

 

(vi) repurchases of Qualified Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible or exchangeable securities to the extent such Qualified Capital Stock represents a portion of the exercise price of those stock options, warrants or other convertible or exchangeable securities;

 

(vii) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Company to the holders of its Capital Stock on a pro rata basis;

 

(viii) the repurchase of Capital Stock deemed to occur upon the exercise of stock options to the extent such Capital Stock represents a portion of the exercise price of those stock options;

 

(ix) payments of cash in lieu of issuing fractional shares upon (i) the exercise of options or warrants or (ii) the exchange or conversion of Qualified Capital Stock of any such Person; and

 

(x) the declaration and payment of dividends to holders of any class or series of Disqualified Capital Stock of the Company or any Preferred Stock of any Restricted Subsidiary incurred in accordance with the Section 4.04.

 

If the Company makes a Restricted Payment which, at the time of the making of such Restricted Payment, in the good faith determination of the Board of Directors of the Company, would be permitted under the requirements of this Indenture, such Restricted Payment shall be deemed to have been made in compliance with this Indenture notwithstanding any subsequent adjustment made in good faith to the Company’s financial statements affecting Consolidated Net Income.

 

In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (c) of Section 4.02(a), amounts expended pursuant to clauses (i), (ii)(B), (iii)(B)(II) and (iv) shall be included in such calculation.

 

Section 4.03            Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to:

 

(i) pay dividends or make any other distributions on or in respect of its Capital Stock;

 

(ii) make loans or advances to the Company or any other Restricted Subsidiary or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or

 

(iii) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company,

 

except in each case for such encumbrances or restrictions existing under or by reason of:

 

(b) applicable law, rule, regulation or order;

 

(c) the Indenture and the Securities;

 

(d) the Credit Agreement;

 

(e) customary non-assignment and similar provisions of any contract,  lease or license entered into in the ordinary course of business;

 

(f) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

 

(g) agreements existing on the Issue Date and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements to the extent and in the manner such agreements are in effect on the Issue Date; provided that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date (as determined in good faith by the Board of Directors of the Company);

 

(h) any encumbrance or restriction on the transfer of assets subject to any Lien permitted under the Indenture imposed by the holder of such Lien;

 

(i) restrictions imposed by any agreement to sell assets or Capital Stock permitted under the Indenture to any Person pending the closing of such sale;

 

(j) Permitted Purchase Money Indebtedness and mortgage financings for property acquired in the ordinary course of business and  Capitalized Lease Obligations that only impose restrictions on the property so acquired;

 

(k) any agreement pursuant to which Indebtedness was issued if (i) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant contained in such Indebtedness, (ii)(A) the encumbrance or restriction is not materially more disadvantageous to the holders of the Securities than is customary in comparable financings (as determined by the Company) and (B) the Company determines that any such encumbrance or restriction will not materially affect its ability to make principal or interest payments on the Securities;

 

(l) Indebtedness permitted to be incurred subsequent to the date of the Indenture pursuant to Section 4.04; provided that such encumbrances or restrictions are no less favorable to the Company, taken as a whole, in any material respect than the encumbrances or restrictions contained in the Credit Agreement as in effect on the Issue Date;

 

(m) customary provisions in joint venture agreements, Sale and Leaseback Transactions and other similar agreements (in each case relating solely to the respective joint venture or similar entity or the equity interests therein) entered into in the ordinary course of business; and

 

(n) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clauses (b) and (d) through (k) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company in any material respect as determined by the Company’s Board of Directors in their reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clauses (b) and (d) through (k).

 

Section 4.04            Limitation on Incurrence of Additional Indebtedness.

 

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, “incur”) any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company or any of its Restricted Subsidiaries may incur Indebtedness (including, without limitation, Acquired Indebtedness), in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0.

 

(b) The Company will not, and will not permit any Restricted Subsidiary to directly or indirectly, incur any Indebtedness which by its terms (or by the terms of any agreement governing such Indebtedness) is expressly subordinated in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the Securities to the same extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Restricted Subsidiary, as the case may be.

 

Section 4.05 Limitation on Asset Sales.

 

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

 

(i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company’s Board of Directors);

 

(ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash, Cash Equivalents and/or Replacement Assets (as defined below) (or a combination thereof) and is received at the time of such disposition; provided that

 

	
  

	
(A)

	
the amount of any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Securities) that are assumed by the transferee of any such assets;

 

	
  

	
(B)

	
the fair market value of any securities or other assets received by the Company or any such Restricted Subsidiary in exchange for any such assets that are converted into cash within 180 days after such Asset Sale; and

 

	
  

	
(C)

	
any of the assets described in clauses (iii)(B) and (C)

 

	
  

	
shall be deemed to be cash for purposes of this provision; and

 

(iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof either:

 

	
  

	
(A)

	
to repay (i) any Obligations under the Credit Agreement and effect a permanent reduction in the availability under such Credit Agreement and (ii) in the case of an Asset Sale by a Restricted Subsidiary, Obligations of such Restricted Subsidiary;

	
  

	
(B)

	
to invest or commit to invest in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets (including Capital Stock) that will be used in the business of the Company and its Restricted Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto (“Replacement Assets”);

	
  

	
(C)

	
to acquire or commit to acquire all or substantially all of the assets of, or a majority of the voting Capital Stock of a Permitted Business; and/or

	
  

	
(D)

	
a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) through (iii)(C);

provided that in the case of a commitment under clauses (B) and (C) above made prior to the expiration of such 365-day period, such investment or acquisition shall be deemed to comply with this covenant if consummated within six months after such commitment.

 

(b) When the Net Cash Proceeds from Asset Sales not applied or invested as provided in the preceding paragraph total $5.0 million or more (each, a “Net Proceeds Offer Trigger Date”), the Company will, within 30 days, make an offer to purchase (the “Net Proceeds Offer”) to all Holders and, to the extent required by the terms of any Pari Passu Debt, an offer to purchase to all holders of such Pari Passu Debt, on a date (the “Net Proceeds Offer Payment Date”) not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders (and holders of any Pari Passu Debt) on a pro rata basis, that amount of Securities (and Pari Passu Debt) equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Securities (and Pari Passu Debt) to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than as contemplated by clause 2(b) above and other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant.

 

(c) In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under Article V hereof, which transaction does not constitute a Change of Control, the successor corporation shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.

 

(d) Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Securities in whole or in part in a principal amount of $25 and integral multiples of $25 in excess thereof in exchange for cash. To the extent Holders properly tender Securities in an amount exceeding the Net Proceeds Offer Amount, Securities of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law. If any Net Cash Proceeds remain after the consummation of any Net Proceeds Offer, the Company may use those Net Cash Proceeds for any purpose not otherwise prohibited by this Indenture. Upon completion of each Net Proceeds Offer, the amount of Net Cash Proceeds will be reset at zero.

 

(e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Securities pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.05 or Section 3.03, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.05 or Section 3.03 by virtue thereof.

 

Section 4.06            Limitations on Transactions with Affiliates.

 

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each, an “Affiliate Transaction”), other than (x) Affiliate Transactions permitted under paragraph (c) of this Section and (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary (as determined in good faith by the Board of Directors of the Company).

 

(b) All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a fair market value in excess of $1.0 million must be approved by the Company’s Board of Directors or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Restricted Subsidiary enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value of more than $2.5 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a written opinion stating that the Affiliate Transaction or series of related Affiliate Transactions  is (i) fair to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor or (ii) on terms not less favorable than might have been obtained in a comparable transaction at such time on an arm’s length basis from a Person who is not an Affiliate, and file the same with the Trustee.

 

(c) The restrictions set forth in paragraphs (a) and (b) shall not apply to:

 

(i) reasonable fees and compensation (including the payment of reasonable and customary benefits (including retirement, health, option, deferred compensation and other benefits plans) to officers and employees of the Company) paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company’s Board of Directors or senior management;

 

(ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by this Indenture;

 

(iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date;

 

(iv) Restricted Payments or Permitted Investments permitted by this Indenture; and

 

(v) the issuance of Qualified Capital Stock of the Company otherwise permitted hereunder.

 

Section 4.07            Limitation on Liens.

 

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless:

 

(a) in the case of Liens securing Subordinated Indebtedness or the Securities, as the case may be, are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; and

 

(b) in all other cases, the Securities are equally and ratably secured,

 

except for:

 

(i) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date;

 

(ii) Liens securing Indebtedness and other Obligations under Credit Facilities in an aggregate amount not to exceed the amount permitted to be incurred pursuant to clause (2) of the definition of “Permitted Indebtedness”;

 

(iii) Liens securing the Securities or any guarantee thereof;

 

(iv) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company;

 

(v) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; provided, however, that such Liens: (i) are no less favorable to the Holders in any material respect and are not more favorable to the lienholders in any material respect with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced;

 

(vi) Liens securing Indebtedness (including Liens securing any Obligations in respect thereof) consisting of Indebtedness incurred in compliance with Section 4.04, provided that after giving effect to such incurrence of Indebtedness (or on the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness), the Consolidated Secured Leverage Ratio shall not exceed 3.0 to 1.0; and

 

(vii) Permitted Liens.

 

Section 4.08            Limitation on Subsidiary Guarantees of Company Indebtedness.  The Company shall not permit any Restricted Subsidiary, directly or indirectly, to guarantee any Indebtedness of the Company (other than the Securities) unless such Restricted Subsidiary executes and delivers to the Trustee a supplemental indenture providing for the guarantee of the Securities by such Subsidiary, which guarantee of the Securities will rank equally in right of payment with such Subsidiary’s guarantee of the Company Indebtedness (unless the Company Indebtedness is subordinated in right of payment to the Securities, in which case the guarantee of the Indebtedness of the Company shall be subordinated to the guarantee of the Securities to the same extent as the Indebtedness of the Company is subordinated to the Securities). Any guarantee of the Securities provided pursuant to this Section 4.08 will be automatically released when the Indebtedness is no longer outstanding or the guarantee of the Indebtedness is released or terminated, in each case, other than as a result of a payment thereon by the Restricted Subsidiary.

 

Section 4.09 Payments for Consent.

 

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Securities for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid and is paid to all Holders of the Securities that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

 

Section 4.10            Limitation on Preferred Stock of Restricted Subsidiaries.

 

The Company will not permit any Restricted Subsidiary to issue any Preferred Stock other than Preferred Stock issued to the Company or a Wholly Owned Restricted Subsidiary. The Company will not sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary or permit a Restricted Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary, other than to the Company or a Wholly Owned Restricted Subsidiary. Notwithstanding the foregoing, nothing in this Section 4.10 will prohibit Preferred Stock issued by a Person prior to the time:

(A)           such person becomes a Restricted Subsidiary;

(B)           such person merges with or into a Restricted Subsidiary; or

(C)           a Restricted Subsidiary merges with or into such person;

provided, however, that such Preferred Stock was not issued or incurred by such person in anticipation of a transaction contemplated by subclause (B) or (C) above.

Section 4.11 Conduct of Business.

 

The Company and its Restricted Subsidiaries will not engage in any businesses other than a Permitted Business, except to the extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.

 

ARTICLE V

 

SUCCESSORS

 

Section 5.01            Merger, Consolidation and Sale of Assets.  Section 4.1 of the Indenture shall be deleted in its entirety and replaced with the following:

 

(a) The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company’s assets (determined on a consolidated basis for the Company and the Company’s Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:

 

(i) either:

 

(A)           the Company shall be the surviving or continuing corporation; or

(B)           the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company’s Restricted Subsidiaries substantially as an entirety (the “Surviving Entity”):

	
  

	
(x)

	
shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and

 

	
  

	
(y)

	
shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Securities and the performance of every covenant of the Securities and this Indenture on the part of the Company to be performed or observed;

 

(ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(B)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), either (x) the Company or such Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4..04(a) or (y) the Consolidated Fixed Charge Coverage Ratio of the Company would be no less than such ratio immediately prior to such transaction;

 

(iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i)(B)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and

 

(iv) the Company or the Surviving Entity shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied and constitutes the legal, valid and binding obligation of the Company or the Surviving Entity, enforceable against it in accordance with its terms.

 

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

 

(b) Notwithstanding the foregoing clauses (i), (ii) and (iii) of Section 5.1(a), the Company may merge with an Affiliate that is a Person that has no material assets or liabilities and which was organized solely for the purpose of reorganizing the Company in another jurisdiction.

 

Any merger or consolidation of a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor that is a Restricted Subsidiary of the Company need only comply with clause (iv) of Section 5.1(a).

 

Section 5.02            Successor Corporation Substituted.

 

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.1 in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Securities with the same effect as if such Surviving Entity had been named as such. When a successor corporation assumes all of the obligations of the predecessor hereunder and under the Securities and the Security Documents and agrees in writing to be bound hereby and thereby, the predecessor shall be released from such obligations.

 

ARTICLE VI

 

[RESERVED]

 

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01   Ratification of  Indenture.

 

This First Supplemental Indenture is executed and shall be constructed as an indenture supplement to the Indenture, and as supplemented and modified hereby, the Indenture is in all respects ratified and confirmed, and the Indenture and this First Supplemental Indenture shall be read, taken and constructed as one and the same instrument.

 

Section 7.02   Trust Indenture Act Controls.

 

If any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision that is required or deemed to be included in this First Supplemental Indenture by the TIA, the required or deemed provision shall control.

 

Section 7.03   Notices.

 

All notices and other communications shall be given as provided in the Indenture; provided that notices to a Guarantor shall be given to such Guarantor in care of the Company.

 

Section 7.04   Governing Law.

 

THIS FIRST SUPPLEMENTAL INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE COMPANY, THE TRUSTEE AND THE HOLDERS HEREBY 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 THIS FIRST SUPPLEMENTAL INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

Section 7.05   Successors.

 

All agreements of the Company in this First Supplemental Indenture and the Securities shall bind their successors.  All agreements of the Trustee in this First Supplemental Indenture shall bind its successors.

 

Section 7.06   Multiple Originals.

 

The parties may sign any number of copies of this First Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this First Supplemental Indenture.  The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 7.07   Headings.

 

The headings of the Articles and Sections of this First Supplemental Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

 

Section 7.08   Trustee Not Responsible for Recitals

 

The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture, but on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee.  Without limiting the generality of the foregoing, the recitals contained herein shall be taken as statements of the Company, and the Trustee does not assume any responsibility for their correctness.  The Trustee makes no representations as to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company by action or otherwise, (iii) the due execution hereof by the Company or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters, except that the Trustee represents that it is duly authorized to execute and deliver this First Supplemental Indenture and perform its obligations hereunder.

 

Section 7.09 .  Binder Nature of Supplemental Indenture.

 

The Company hereby represents and warrants that this First Supplemental Indenture is its legal, valid and binding obligation, enforceable against it in accordance with its terms.

700123395

  

  

  

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

 

COMPANY:

GENERAL FINANCE CORPORATION

By:  /s/ Charles E. Barrantes                                                                                           

      Name: Charles E. Barrantes

      Title:   Executive Vice President & Chief Financial Officer

Signature page to the First Supplemental Indenture

700123395                                                                    

  

  

  

TRUSTEE:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By: /s/ Maddy Hall                                                                                           

      Name: Maddy Hall

      Title:   Vice President

Signature page to the First Supplemental Indenture

700123395                                                                     

  

  

  

SCHEDULE I

 

 

EXHIBIT A

 

FORM OF NOTE

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

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

CUSIP NO.

GENERAL FINANCE CORPORATION

●% SENIOR NOTE DUE 2021

$●                                                                                                                     No.: R-1

GENERAL FINANCE CORPORATION, a Delaware corporation (herein called the “Company”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of _______ MILLION DOLLARS or such other principal amount as shall be set forth on Schedule I hereto on June ●, 2021 and to pay interest thereon at the rate of ●% per annum from and including ●, 2014, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, on January 31. April 30, July 31 and October 31 of each year, commencing on July 31, 2014 (each, an “Interest Payment Date”), until the principal hereof is paid or made available for payment.

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, except as provided in the Indenture hereinafter referred to, be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for such interest, which will be the January 15, April 15, July 15 and October 15 (whether or not that date is a Business Day), as the case may be (each, a “Regular Record Date”), immediately preceding each Interest Payment Date.  Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and either may be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to the Holders not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner, all as more fully provided in the Indenture. Payment of the principal of and interest on this Security (including, without limitation, any Redemption Price, Special Mandatory Redemption Price or purchase price relating to a Change of Control Offer) will be made at the office or agency of the Company maintained for that purpose pursuant to the Indenture (initially the Corporate Trust Office of the Trustee), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer to an account maintained by the Person entitled thereto as specified in the Securities Register. Payments of principal and interest at maturity will be made against presentation of this Security at the Corporate Trust Office (or such other office as may be established pursuant to the Indenture), by check or wire transfer.

Reference is hereby made to the further provisions of this Security set forth on the reverse side hereof, which further provisions shall for all purposes have the same effect as though fully set forth at this place.

Unless the Certificate of Authentication hereon has been executed by the Trustee or an authenticating agent under the Indenture referred to on the reverse hereof by the manual signature of one of its authorized signatories, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[Signature Pages Follow]

Exhibit A – Page 

700123395

  

  

  

IN WITNESS WHEREOF, the Company has caused this Security to be to be duly executed as of the date set forth below.

GENERAL FINANCE CORPORATION

 

 

 

By:  _____________________________

Name:

Title:

By:  _____________________________

Name:

Title:

Exhibit A – Page 

700123395

  

  

  

Trustee’s Certificate of Authentication

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated:  June 18, 2014

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

By:  ___________________________

Authorized Signatory

Exhibit A – Page 

700123395

  

  

  

(Reverse of Security)

GENERAL FINANCE CORPORATION

●% SENIOR NOTE DUE 2021

1.           This Security is one of a duly authorized issue of securities of the Company designated as its ●% Senior Notes due 2021 (the “Securities”) limited in aggregate principal amount to $● issued and to be issued under an indenture, dated as of June ●, 2014, between the Company and Wells Fargo Bank, National Association, as trustee (herein called the “Trustee,” which term includes any successor Trustee under the Indenture), and the first supplemental indenture, dated as of June ●, 2014 (the “Base Indenture,” as so supplemented and as it may be further supplemented or amended from time to time, is herein referred to as the “Indenture”), between the Company and the Trustee.  Reference is hereby made to the Indenture for a statement of the respective rights thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered. The indebtedness of the Company evidenced by the Securities, including the principal thereof and interest thereon (including post-default interest), will constitute unsecured and unsubordinated indebtedness of the Company and will rank equally in right of payment with all of the Company's current and future unsecured and unsubordinated indebtedness.

2.           The Securities are subject to redemption, in whole or in part, from time to time, at the Company’s option at the Redemption Prices set forth in the Indenture.

 

3.           Upon the occurrence of a Change of Control Triggering Event, unless the Company has given written notice with respect to a redemption of the Securities pursuant to paragraph 2 of this Security, each Holder of Securities will have the right to require the Company to purchase all or a portion of such Holder’s Securities pursuant to the Change of Control Offer, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.

4.           When the Net Cash Proceeds from Asset Sales not applied or invested as provided in the Indenture total $5.0 million or more, the Company will be required to make an offer to purchase an amount of Securities (and Pari Passu Debt) equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Securities (and Pari Passu Debt) to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase.

5.           If an Event of Default with respect to the Securities shall occur and be continuing, the principal of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture.

6.           The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantors and the rights of the Holders of Securities under the Indenture at any time by the Company, the Guarantors and the Trustee with the consent of the Holders of a majority in aggregate principal amount of Securities at the time outstanding. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of Securities at the time outstanding, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

7.           No reference herein to the Indenture and no provisions of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed.

8.           As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security may be registered on the Securities Register of the Company, upon surrender of this Security for registration of transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a written instruction of transfer in form satisfactory to the Company, and duly executed by the Holder hereof or such Holder’s attorney, duly authorized in writing, on which instruction the Company can rely, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

9.           The Securities are issuable only in fully registered form, without coupons, in minimum denominations of $25 or any amount in excess thereof which is an integral multiple of $25. As provided in the Indenture, and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities in authorized denominations, as requested by the Holder surrendering the same.

10.           No service charge shall be made to the Holder for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

11.           Prior to the due presentment of this Security for registration of transfer or exchange, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee, nor any such agent shall be affected by notice to the contrary.

12.           Interest on the Securities shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

13.           The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

14.           No past, present or future director, manager, officer, employee, incorporator, member, partner, stockholder or other owner of Capital Stock of the Company or any Guarantor, as such, shall have any liability for any obligations of  the Company or of the Guarantors under the Securities, the Indenture, the Securities Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities. The waiver and release may not be effective to waive or release liabilities under the federal securities laws. 

15.           This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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

17.           Each Holder of this Security covenants and agrees by such Holder’s acceptance thereof to comply with and be bound by the foregoing provisions.

18.           THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE COMPANY, THE TRUSTEE AND THE HOLDERS HEREBY 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 THIS NOTE.

 

19.           All capitalized terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

Exhibit A – Page 

700123395

  

  

  

ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE

	  	  

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

 

______________________________________

 

______________________________________

 

______________________________________

 

the within Security and all rights thereunder, hereby irrevocably constituting and appointing ______ _____________________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises.

 

Dated:                    __________________________

 

Signature: ____________________________

 

	
  

	
NOTICE:  THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature Guarantee:

SIGNATURE GUARANTEE

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

Exhibit A – Page 

700123395

  

  

  

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Issuer pursuant to Section 3.02 or Section 4.05 of the Supplemental Indenture, check the appropriate box:

Section 3.02                       [     ] Change of Control Offer

Section 4.05                       [     ] Net proceeds Offer

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.02 or Section 4.05 of the Supplemental Indenture, state the amount you elect to have purchased:

$

Dated:                                                                                     ________________________________________

NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed.

Signature Guarantee:

Exhibit A – Page 

700123395

  

  

  

Schedule I

 

SCHEDULE OF TRANSFERS AND EXCHANGES

 

The following increases or decreases in principal amount of this Global Security have been made:

	
Date of Exchange

	  	
Amount of Decrease in Principal Amount of this Global Security

	  	
Amount of Increase in Principal Amount of this Global Security

	  	
Principal Amount of this Global Security following such Decrease or Increase

	  	
Signature of Authorized Signatory of trustee or Custodian

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  

 

 

Exhibit A – Schedule IMortimerEmploymentAgreementAsFiled

EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “Agreement”) is entered into on June 17, 2014 (the “Effective Date”) by and between Annie’s, Inc., a Delaware Corporation (the “Company”), and Mark Mortimer (the “Executive”) with reference to the following:
RECITALS
WHEREAS, Executive has been serving as the Company’s President and Chief Customer Officer; 
WHEREAS, the Company desires to continue to employ the Executive as its President and Chief Customer Officer, subject to the terms and conditions hereof, and the Executive desires to continue to be employed by the Company in such capacity;
NOW, THEREFORE, in consideration of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: 
1.TERM; COMMENCEMENT OF EMPLOYMENT.
This Agreement shall be effective for the period commencing on the Effective Date and ending on the date the Executive’s employment is terminated pursuant to Section 8 hereof (the “Employment Term”).
2.    POSITION AND DUTIES.
a.    The Executive shall be employed as the President and Chief Customer Officer of the Company.  The Executive shall report directly to the Chief Executive Officer (“CEO”) and shall have such duties and responsibilities as the CEO shall designate that are consistent with the Executive’s status and position.  The Executive’s duties will be conducted principally from the Company’s headquarters, which currently are located in Berkeley, California, with travel to such other locations from time to time as the CEO may reasonably prescribe.
b.    During the Employment Term, the Executive shall devote his full business time, energy and skill to the performance of his duties with the Company.
3.    SALARY AND BONUS.
a.    Base Salary.  During the Employment Term, as compensation for the services to be rendered by the Executive to the Company pursuant to this Agreement, the Company shall pay to the Executive a base salary at the annual rate of $340,000 (such amount, together with any increase or decrease thereto as may be determined from time to time in the sole discretion of the Board of Directors of the Company (the “Board”) or the Compensation Committee of the Board (the “Compensation Committee”), the “Base Salary”).  Any Base 

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Salary payable hereunder shall be paid in accordance with the Company’s regular payroll practices, as in effect from time to time.
b.    Annual Bonus.  The Executive is eligible to earn annual bonus compensation from the Company in respect of each full “Fiscal Year” (as of the Effective Date, each 12 month period beginning on April 1 and ending on March 31) of the Company that ends during the Employment Term (“Annual Bonus”) if certain performance targets established by the Compensation Committee are achieved, as determined by the Compensation Committee in its sole discretion, with the target amount of the Annual Bonus to be equal to 50% of the Executive’s Base Salary paid during the applicable Fiscal Year.  Any Annual Bonus shall be paid by the earlier of (x) 30 days after the date the Company’s annual report is filed on Form 10-K for the Fiscal Year in respect of which such Annual Bonus is payable (or, in the event the Company is not obligated to file an annual report on Form 10-K with respect to such Fiscal Year, 30 days after the date of the completion of the Company’s audited financial statements for such Fiscal Year); or (y) the last day of the calendar year in which the Fiscal Year in respect of which such Annual Bonus is payable ends.  In order to be eligible to earn any Annual Bonus payment (including, for the avoidance of doubt, a pro-rated Annual Bonus in respect of the Fiscal Year ending March 31, 2014), Executive must be employed by the Company on the date the Annual Bonus is paid, except to the extent expressly provided in Sections 8.b, 8.c or 8.d hereof.
4.    EQUITY GRANTS.
During the Employment Term, the Executive will continue to vest in those applicable stock option grants and equity incentive awards that Executive held as of the Effective Date of this Agreement, pursuant to the terms and conditions of such options and awards as in effect or amended from time to time.  Additionally, subject to the Executive remaining employed through and on the last day of the applicable Fiscal Year, the Executive will be eligible to participate in the Annie’s, Inc. Omnibus Incentive Plan (the “Plan”) pursuant to the applicable terms and conditions as may be provided in that Plan; provided, that any such awards shall be granted under the Plan in the sole discretion of the Compensation Committee. 
5.    EMPLOYEE BENEFITS.
During the Employment Term, the Executive shall be entitled to participate in or receive benefits under the employee benefit plans of the Company commensurate with other senior executives of the Company, subject to the terms and conditions set forth in the applicable plans and in this Agreement.  In addition, the Company shall provide the Executive with (a) a monthly automobile allowance in the amount of $500 and (b) a monthly travel allowance in the amount of $4,500, each paid in accordance with the Company’s regular payroll practices.  The Company reserves the right, in its sole discretion, to terminate or modify any employee benefit plan at any time.  The Executive shall not participate in any severance plan, policy or program of the Company and only shall be entitled to receive severance, if any, as expressly provided by this Agreement.
6.    PAID TIME OFF.

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The Company uses a paid time off (“PTO”) system under which days off can be taken for any personal purpose, such as vacation, sickness family emergency or other reasons.  The Executive shall be eligible to accrue PTO at the rate of five weeks per annum, subject to a cap on maximum PTO accrual.  The accrual and use of PTO is subject to the Company’s applicable PTO policies as in effect from time to time.
7.    EXPENSE REIMBURSEMENT.
During the Employment Term, the Company shall reimburse the Executive for his reasonable business expenses in accordance with the Company’s expense reimbursement policies, as they may be amended from time to time.  In the event the Executive’s employment should terminate for any reason as set forth in Section 8 below, the Company shall reimburse the Executive for his reasonable business expenses incurred prior to the date of such termination, in accordance with the terms of the Company’s expense reimbursement policy as in effect at the time, provided that Executive submits a proper expense reimbursement request within 30 days after the date of such termination.
8.    TERMINATION AND CONSEQUENCES OF TERMINATION.
Notwithstanding any other provision of the Agreement, the Employment Term and the Executive’s employment hereunder shall terminate on the first to occur of the events described in Sections 8.a through 8.d:
a.    Resignation by Executive without Good Reason; Termination by the Company for Cause.  The date (x) as of which the Executive resigns from his employment with the Company without Good Reason, which date shall be no less than 60 days following the date on which the Executive provides the Company with written notice of his intent to so resign, or (y) on which the Company provides the Executive with written notice that his employment has been terminated for Cause.
If the Executive’s employment is terminated pursuant to this Section 8.a:
(i)    The Executive shall be entitled to receive (x) his Base Salary earned through the date of such termination, (y) payment for any earned but unused PTO in accordance with Section 6, and (z) any compensation or benefits to which the Executive may otherwise be entitled under the terms of the Company’s compensation and benefit plans as in effect at the time of such termination (collectively, the “Accrued Benefits”); and
(ii)    The Executive shall not be entitled to receive any unpaid Annual Bonus for any Fiscal Year preceding the year in which such termination occurs and the Executive shall not be entitled to receive any Annual Bonus or portion thereof for the Fiscal Year in which such termination occurs.

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b.    Death or Disability.  Upon (x) the date of the Executive’s death or (y) the date following the Executive’s Disability on which the Company elects, by written notice to the Executive, that his employment has been terminated due to Disability.
If the Executive’s employment is terminated pursuant to this Section 8.b:
(i)    The Executive shall be entitled to receive the Accrued Benefits; and
(ii)    The Executive (or his estate, as applicable) shall be entitled to receive any Annual Bonus that the Executive would have earned for any completed Fiscal Year preceding the Fiscal Year in which such termination occurs had he remained employed through the payment date of such Annual Bonus.  Additionally, provided that the applicable performance targets for the Annual Bonus in respect of the Fiscal Year in which such termination occurs shall have been achieved, as determined by the Compensation Committee in its sole discretion, Executive (or his estate, as applicable) shall be entitled to receive a pro-rated portion of any Annual Bonus that the Executive would have earned for such Fiscal Year had he remained employed through the payment date of such Annual Bonus, such pro-ration to be determined by multiplying any such Annual Bonus by a fraction, the numerator of which is the number of days in the Fiscal Year in which such termination occurs during which the Executive was employed by the Company and the denominator of which is 365.  Any Annual Bonus, or portion thereof, payable pursuant to this section shall be paid at the time the applicable annual bonuses are paid to the Company’s employees, generally.
c.    Without Cause by the Company; By the Executive for Good Reason.  The date (x) the Company provides the Executive with written notice that his employment has been terminated without Cause or (y) the Executive resigns from his employment with the Company for Good Reason.
If the Executive’s employment is terminated pursuant to this Section 8.c, and except as otherwise provided in Section 8.d below:
(i)    The Executive shall be entitled to receive the Accrued Benefits; and
(ii)    subject to the Executive’s execution and delivery to the Company of a written general release, substantially in the form attached as Exhibit A, and provided that the release has become effective and non-revocable on or prior to the 60th day following the date of the Executive’s termination of employment, and further provided the Executive has been in continuous compliance with the terms of such release and of Section 9 hereof, the Company shall (A) pay the Executive an amount equal to 12 months’ of his annual Base Salary in accordance with the Company’s ordinary payroll practices during the twelve month period that begins on the date of such termination; (B) pay the Executive any Annual Bonus for a completed Fiscal Year and a pro-rated portion of any Annual Bonus in respect of the Fiscal Year in which such termination occurs, subject to the same conditions and determined and paid in the same manner as described under Section 8.b(ii); and (C) provided that the Executive timely elects COBRA 

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coverage, reimburse the Executive, upon submission of proof of payment by the Executive, for the Executive’s COBRA premiums based on Executive’s coverage on the date of termination of employment until the earlier of (x) the date that is 12 months following the date of such termination of employment and (y) the date on which the Executive becomes eligible to receive comparable coverage from another employer.
d.    Without Cause by the Company or For Good Reason by Executive Following a Change in Control.  Notwithstanding the provisions of Section 8.c above, if the Executive’s employment is terminated Without Cause by the Company (or any successor) or for Good Reason by Executive within 24 months after the date of a “Change in Control” (as defined in the Plan), then the periods described in Sections 8.c(ii)(A) and 8.c(ii)(C) each shall be increased from 12 months to 18 months and the pro-rated bonus described in Section 8.c(ii)(B) shall be paid at the target level.
e.    Treatment of Equity Awards Upon Termination of Employment. All options and other equity awards held by the Executive as of the date of the termination of the Executive’s employment shall be treated in accordance with the terms and conditions set forth in the Plan and the applicable award documentation.
Except as expressly provided in Sections 8.a through 8.e hereof, upon the termination of the Executive’s employment, the Executive shall have no further rights to any compensation or benefits from the Company.  The Company reserves the right to relieve Executive of all duties during any notice period that is required pursuant to the provisions of this Section 8 and provide Executive with comparable salary and benefits in lieu of notice during any such notice period.  Upon the termination of Executive’s employment for any reason, Executive will be deemed to have voluntarily resigned from any officer position or the membership of any board of directors of the Company or its subsidiaries effective automatically as of the date of termination of employment, without any further required action by Executive or the Company, and Executive, at the Company’s request, will execute any documents reasonably necessary to reflect such resignations.
f.    Definitions.
(i)    “Cause” shall mean: (1) the failure of the Executive to perform his material employment-related duties (other than any such failure as a result of the Executive’s “Disability” (as defined below) or death), which failure has not been cured by the Executive within 30 business days of the Executive’s receipt of written notice of such failure from the Company, (2) the Executive’s engaging in misconduct that has caused or is reasonably expected to result in material injury to, or materially impair the goodwill of, the Company or any of its affiliates, (3) the Executive’s knowing and intentional violation of any material Company policy; (4) the Executive’s personal dishonesty or breach of fiduciary duty; (5) the Executive’s indictment or conviction of, or entering a plea of guilty or nolo contendere to, a crime that constitutes a felony, or (6) the breach by the Executive of any of his material obligations under any written agreement or covenant with the Company or any of its affiliates (including, but not limited to, this Agreement and any other written covenant or agreement with the Company or any 

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of its subsidiaries not to disclose any information pertaining to the Company or any of its subsidiaries or not to compete or interfere with the Company or any of its subsidiaries).
(ii)    “Disability” shall have the meaning provided for in the long term disability plan of the Company in which the Executive participates, and if no such plan exists, “Disability” shall mean the Executive’s inability, due to physical or mental illness or incapacity, to perform his material duties, with reasonable accommodation after engaging in an interactive process with the Company, for a period of more than 120 days in any 365-day period, and in accordance with applicable law.
(iii)    “Good Reason” shall mean: (A) a material and adverse reduction in the title, authority, duties or responsibilities of the Executive as set forth in this Agreement without Executive’s prior consent (and at a time when there are no circumstances pending that would permit the Company to terminate the Executive for Cause); (B) material reduction in the Executive’s Base Salary unless the salary reduction is part of a general reduction applied to all executive employees; (C) the relocation of the Executive’s primary worksite more than 50 miles from the location of the Company’s headquarters as of the Effective Date without his prior consent; or (D) any material breach or material violation of a material provision of this Agreement by the Company (or any successor) to the Company.  Notwithstanding the foregoing, before the Executive may resign for Good Reason, (1) the Executive must provide the Company with written notice within 90 days after the initial event that the Executive believes constitutes “Good Reason” specifically identifying the facts and circumstances claimed to constitute the grounds for the Executive’s resignation for Good Reason and the proposed termination date (which will not be less than 45 days or more than 60 days after the giving of written notice hereunder by Executive to the Company), and (2) the Company must have an opportunity of at least 30 days following delivery of such notice to cure the Good Reason condition and the Company must have failed to cure such Good Reason condition during that 30 day period.
9.    RESTRICTIVE COVENANTS.
The Executive acknowledges that: (i) the Executive’s work for the Company will bring the Executive into close contact with “Confidential Information” (as defined below); and (ii) the agreements and covenants contained in this Section 9 are essential to protect the business interests of the Company and that the Company will not enter into this Agreement but for such agreements and covenants.  Accordingly, the Executive covenants and agrees to the following:
a.    Confidential Information.  Both during the term of the Executive’s employment and indefinitely after the Executive is no longer employed by the Company, the Executive shall not, directly or indirectly, (i) knowingly use for an improper personal benefit any “Confidential Information” (as defined below) that was acquired by, learned by or disclosed to Executive by reason of the Executive’s employment with the Company, or (ii) disclose any such Confidential Information to any person, business or entity, except in the proper course of the Executive’s duties as an employee of the Company.  As used in this Agreement, “Confidential Information” means any and all confidential or proprietary information of the Company and its affiliates that is not generally known to the public, including, without limitation, business, financial, marketing, technical, developmental, operating, performance, know-how, and process 

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information, drawings and designs, customer information, and other trade secret information, now existing or hereafter discovered or developed.  Confidential Information shall include information in any form whatsoever, including, without limitation, any digital or electronic record-bearing media containing or disclosing such information.  The provisions of this Section 9.a shall not apply to information that has become generally available to the public other than as a result of a disclosure by the Executive.  In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, then the Executive will notify the Company within two business days of the request or requirement so that the Company may seek an appropriate protective order.  If, in the absence of a protective order or the receipt of a waiver hereunder, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive shall use the Executive’s reasonable best efforts to obtain, at the expense and reasonable request of the Company, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Company shall designate.  The Executive acknowledges that all Confidential Information is the exclusive property of the Company.  The Executive acknowledges that the Executive’s entire work product, including working drafts and work sheets, shall be the sole property of the Company, and that the Executive will have no rights, title or interest in any such material whether prepared by the Executive alone, by others or by the Executive in conjunction with others.
b.    Duty of Loyalty and Non-Competition.  During the Employment Term, the Executive shall not, without the prior written consent of the Company, participate, directly or indirectly, as an individual proprietor, partner, stockholder, officer, employee, director, manager, joint venturer, investor, lender, consultant or in any capacity whatsoever (within the United States of America, or in any country where the Company or its affiliates do business or have reasonable plans to do business) in a business engaged in competition with the Company or any of its affiliates, or in a business that the Company or any of its affiliates has taken reasonable steps to engage in (including, but not limited to, meeting with management teams or entering into preliminary or definitive term sheets, letters of intent, purchase agreements, or other similar arrangements or agreements) of which the Executive has knowledge at the time of Executive’s employment; provided, however, that such participation shall not include the mere ownership of not more than 1% of the total outstanding stock of a publicly held company.  
c.    Non-Solicitation.  For a period beginning on the Effective Date and ending two years after the date on which the Executive is no longer employed by the Company, the Executive shall not in any capacity, either independently or in association with others: (i) solicit for employment or service or endeavor in any way to entice away from employment or service with the Company or its subsidiaries any employee or consultant of the Company or its subsidiaries, or any person or entity that had been an employee or consultant of the Company or its subsidiaries within the six month period preceding the commencement of such activity; or (ii) solicit, induce or influence any vendor or supplier of the Company to discontinue, reduce or modify its relationship with the Company.

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d.    Nondisparagement.  The Executive shall not (whether during or after Executive’s employment with the Company) issue, circulate, publish or utter any comments or statements to the press or other media, the Company’s or any of its affiliates’ employees or consultants, any individual or entity with whom the Company or any of its affiliates has a business relationship, or any other person, which comments or statements could reasonably be expected to adversely affect in any manner: (i) the conduct of the business of the Company or any of its affiliates (including, without limitation, any products or business plans or prospects); or (ii) the business reputation of the Company or any of its affiliates, or of any of their respective products, or of their respective past or present officers, directors or employees.
e.    Return of Property.  Upon termination of his employment with the Company and its affiliates or at any time as the Company requests, the Executive will promptly deliver to the Company all documents (whether prepared by the Company, an affiliate, the Executive or a third party) relating to the Company, an affiliate or any of their businesses or property that the Executive may possess or have under the Executive’s direction or control other than documents provided to the Executive in the Executive’s capacity as a participant in any employee benefit plan, policy or program of the Company.
f.    Remedies.  The Executive acknowledges that (i) the Executive has had an opportunity to seek the advice of counsel in connection with this Agreement; (ii) the restrictive covenants set forth in this Section 9 (the “Restrictive Covenants”) are reasonable in scope and in all other respects; (iii) any violation of the Restrictive Covenants will result in irreparable injury to the Company; (iv) money damages may not be an adequate remedy for the Company in the event of a breach of any of the Restrictive Covenants by the Executive; and (v) specific performance in the form of injunctive relief in aid of arbitration would be an appropriate remedy for the Company.  If the Executive breaches or threatens to breach a Restrictive Covenant, the Company shall be entitled, in addition to all other remedies, to seek an injunction in aid of arbitration restraining any such breach, without any bond or other security being required and without the necessity of showing actual damages.
g.    Severability.  If any of the Restrictive Covenants, or any part thereof, are held to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid or unenforceable portions.  Without limiting the generality of the foregoing, if any of the Restrictive Covenants, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties hereto agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, such provision shall then be enforceable.
10.    ARBITRATION
All claims, disputes, demands, or controversies of any nature whatsoever arising out of, or relating to, this Agreement, or its interpretation, enforcement, breach, performance or execution, the Executive’s employment with the Company, or the termination of such employment, including but not limited to any statutory claims, shall be resolved, to the fullest extent permitted by law, and subject to Section 9.f, by final, binding and confidential arbitration 

8

in Berkeley, California (applying California law) in accordance with the Employment Arbitration Rules and Procedures of the American Arbitration Association then in effect (available at www.adr.org).  To the fullest extent permitted by law, any arbitration under this Agreement will take place on an individual basis only; class arbitrations and class actions are not agreed to or permitted under this Agreement.  By entering into this Agreement, the Executive and the Company each are waiving the right to participate in a class, collective or representative action for all employment-related disputes, and they specifically waive the right to receive any recovery as a result of such actions.  As such, neither party may initiate a proposed class, collective or representative action against the other, nor may they participate in proposed class, collective or representative action (e.g., as a class member) or receive any recovery as a result of such actions.  The foregoing shall not bar the Executive from participating in a representative action brought by a governmental agency; provided, that the Executive expressly waives any right to recovery in such action. The parties shall be permitted to conduct discovery as allowed under the Federal Code of Civil Procedure. The decision of the arbitrator shall be in writing, shall be reasoned, and shall be final and binding upon the parties thereto.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  In connection with any such arbitration and regardless of outcome, each party shall bear its own costs and expenses, including without limitation its own legal fees and expenses, except that the Company shall bear the arbitrator’s fees and costs and any costs in excess of what the Executive would have paid to bring suit in court. Nothing in this Agreement is intended to prevent either the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any arbitration.
11.    CODE SECTION 409A
a.    Notwithstanding anything to the contrary in this Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to this Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A.  Similarly, no severance payable to Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a “separation from service” within the meaning of Section 409A.
b.    Any severance payments or benefits under this Agreement that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 61st day following Executive’s separation from service, or, if later, such time as required by Section 11.c.  Except as required by Section 11.c, any installment payments that would have been made to Executive during the 60 day period immediately following Executive’s separation from service, but for the preceding sentence, will be paid to Executive on the 61st day following Executive’s separation from service and the remaining payments shall be made as provided in this Agreement.
c.    Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s 

9

termination (other than due to death), then the Deferred Payments, if any, that are payable within the first six months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six months and one day following the date of Executive’s separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment, installment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
d.    The foregoing provisions are intended to be exempt from or comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply.  The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.
e.    Executive agrees and understands that he is not relying upon the Company or its counsel for any tax advice regarding the tax treatment of the payments made or benefits received pursuant to this Agreement and, except for any tax withholding obligation of the Company with respect to such payments, Executive agrees that he is responsible for determining the tax consequences of all such payments and benefits hereunder, including but not limited to those which may arise under Section 409A of the Code, and for paying taxes, if any, that he may owe with respect to such payments or benefits.
f.    Notwithstanding the foregoing, this Section 11 will not apply to (1) all payments on separation from service that satisfy the short term deferral rule of Treas. Reg. §1.409A-1(b)(4), (2) the portion of the payments on separation from service that satisfy the requirements for separation pay due to an involuntary separation from service under Treas. Reg. §1.409A-1(b)(9)(iii), and (3) any payments that are otherwise exempt from the six month delay requirement of the Treasury Regulations under Section 409A.  Notwithstanding anything to the contrary herein, except to the extent any expense, reimbursement or in-kind benefit provided pursuant to this Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code: (x) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar year, (y) the reimbursements for expenses for which Executive is entitled to be reimbursed will be made on or before the last day of the calendar year following the calendar year in which the 

10

applicable expense is incurred, and (z) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
12.    ADJUSTMENT OF PAYMENTS FOLLOWING A CHANGE IN CONTROL.
a.    Notwithstanding any other provision of this Agreement to the contrary, in the event that any economic benefit, payment or distribution by the Company to or for the benefit of the Executive, whether paid, payable, distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest or penalties related to such excise tax, referred to in this Agreement as the “Excise Tax”), then the value of any such Payments which constitute “parachute payments” within the meaning of Section 280G of the Code, as determined by the Accounting Firm (as defined below), will be reduced by such amount (the “Payment Reduction”) so that the present value of all Payments (calculated in accordance with Section 280G of the Code and the regulations thereunder), in the aggregate, equals 2.99 times Executive’s “base amount” (within the meaning of Section 280G(b)(3) of the Code); provided, however, that the preceding sentence will not be applicable and Executive’s Payments will not be reduced under this provision if the Accounting Firm (defined below) determines that, on an after-tax basis, Executive would retain a greater amount of compensation following payment of the Excise Tax on the unreduced amount of any Payments than the amount of compensation retained following reduction of the Payments as required under the preceding sentence.  The determination of how such Payments are to be reduced will be made by the Company in accordance with applicable law.
b.    All determinations required to be made under this Section 12, including whether and when a Payment is subject to Section 4999 and the assumptions to be utilized in arriving at such determination and in determining an appropriate Payment Reduction, will be made by the Company’s outside auditing firm at the time of such determination (the “Accounting Firm”), which Accounting Firm will provide detailed supporting calculations to the Executive and the Company within 15 business days of the receipt of notice from the Company or the Executive that there will be a Payment that the party giving notice believes may be subject to the Excise Tax.  All fees and expenses of the Accounting Firm will be borne by the Company.  Any determination by the Accounting Firm will be binding upon the Company and the Executive in determining whether a Payment Reduction is required and the amount thereof, in the absence of material mathematical or legal error.
c.    If, as a result of any uncertainty in the application of Section 4999 at the time of the initial determination by the Accounting Firm under Section 12.a, the Accounting Firm subsequently determines that (i) the Payments should have been reduced or reduced by a larger amount (an “Overpayment”), any such Overpayment, to the extent actually paid or provided to Executive, shall be repaid by Executive to the Company in full within 30 days after Executive receives notice of the Accounting Firm’s determination; provided, however, that the amount of the Overpayment to be repaid by Executive to the Company shall be reduced to the extent that the Accounting Firm determines that any portion of the Overpayment to be repaid will not be 

11

offset by a corresponding reduction in the amount of Executive’s “excess parachute payments” for purposes of Section 280G by reason of such repayment, or (ii) the Payments should not have been reduced or should have been reduced by a smaller amount (an “Underpayment”), any such Underpayment shall be deemed vested and payable by the Company to Executive within 30 days after the Company receives notice of the Accounting Firm’s determination, or such later date that such payment becomes vested and due under its terms.
13.    MISCELLANEOUS.
a.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to agreements made and to be wholly performed within that State, without regard to the conflict of laws provisions of any jurisdiction which would cause the application of any law other than that of the State of California.
b.    Successors.  This Agreement shall be binding on, and inure to the benefit of, the Company and its successors and assigns and any person acquiring the Company, whether by merger, consolidation, or otherwise without further action by the Executive.
c.    Waiver of Breach; Rights Cumulative.  The waiver by either the Company or the Executive of a breach of any provision of this Agreement shall not operate as, or be deemed a waiver of, any subsequent breach by either the Company or the Executive. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by a duly authorized representative of the Company (other than Executive). The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies.
d.    Notices.  Any notice to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given when received or, when deposited in the U.S.  mail, certified or registered mail, postage prepaid:
if to the Executive, to the address on file with the Company;
if to the Company addressed as follows:
Annie’s, Inc. 
1610 Fifth Street 
Berkeley, California 94710 
Attn: General Counsel
e.    Entire Agreement; Modification.  This Agreement constitutes the entire agreement and supersedes and replaces all prior or contemporaneous agreements and understandings, both written and oral, among the parties or any of them, with respect to the subject matter of this Agreement.  This Agreement may not be amended except by mutual 

12

agreement of the parties in writing, in the case of the Company, by a duly authorized representative of the Company (other than Executive).
f.    Representations by the Executive.  The Executive represents that (i) he is not under any contractual or other obligation which would make it unlawful for the Executive to work for the Company as described in this Agreement, (ii) if the Executive is obligated to keep confidential the proprietary information of prior employers or other parties that the Executive will do so and will not disclose such information to the Company, and (iii) the Executive is lawfully eligible to work in the United States.  
g.    Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects by interpreting that invalid or unenforceable provision as nearly to the original meaning as possible so as to make it valid and enforceable or, if that is not possible or permitted by applicable law, by omitting that invalid or unenforceable provision.  To the extent any provision of this Agreement is determined by a court, arbitrator or regulatory body to be invalid or unenforceable, the parties shall use their good faith efforts to address the implications of that invalidity or unenforceability to preserve the essential understanding of the parties with respect to such provision.
h.    Withholding Taxes.  The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
i.    Prevailing Party.  If any claim, controversy, action or dispute arises between Executive and Company or its affiliates relating to this Agreement or an asserted breach of its terms, the prevailing party in any such proceeding shall be entitled to recover its costs and reasonable attorneys’ fees.
j.    Survival.  All rights and obligations of any party in Sections 8 through 13 of this Agreement not fully satisfied or performed, as applicable, on the date Executive’s employment is terminated, shall survive the termination of Executive’s employment and the expiration or termination of this Agreement.
k.    Counterparts; Electronic Signatures.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  The parties agree that the signatures of the person executing this Agreement may be transmitted via facsimile or other electronic means and shall be sufficient evidence of the execution of the Agreement.
l.    Interpretation.  The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement.  The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against the Company or Executive.  As used herein:  (i) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms 

13

thereof; (ii) reference to any law, rule or regulation means such law, rule or regulation as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any law, rule or regulation means that provision of such law, rule or regulation from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision; (iii) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular article, section or other provision hereof; (iv) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (v) “or” is used in the inclusive sense of “and/or”; and (vi) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto.
m.    Each Party the Drafter.  Executive understands the terms and conditions set forth in this Agreement and acknowledges having had adequate time to consider whether to agree to the terms and conditions and to consult a lawyer or other advisor of Executive’s choice.  This Agreement and the provisions contained herein shall not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above.
	
			
	ANNIE’S, INC.
	 
	MARK MORTIMER

	By:   /s/ John Foraker
	 
	/s/ Mark Mortimer   

	Name:    John Foraker
Title:   Chief Executive Officer
	 
	 

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EXHIBIT A
FORM OF GENERAL RELEASE

This General Release and Waiver (this “Release”) is entered into as of _________ by Mark Mortimer (the “Executive”), on the one hand, and Annie’s, Inc. (the “Company”), on the other hand (the Executive and the Company are referred to collectively as the “Parties”). Capitalized terms used but not defined herein shall have the same meaning as set forth in the Executive Employment Agreement between the Executive and the Company entered into as of June 17, 2014 (the “Employment Agreement”).
1.General Release and Waiver. In consideration of the payments or benefits referenced in Section 8 of the Employment Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Executive, for himself and for his heirs, executors, administrators, trustees and legal representatives, and their respective successors and assigns (collectively, the “Releasors”), hereby releases, remises, and acquits the Company and its subsidiaries and affiliates and all of their respective past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, any of their respective assets, employee benefit plans or funds, or past, present or future directors, officers, fiduciaries, agents, trustees, administrators, managers, supervisors, shareholders, investors, employees, legal representatives, agents or counsel, and their respective successors and assigns, whether acting on behalf of the Company or its subsidiaries or affiliates or, in their individual capacities (collectively, the “Releasees” and each a “Releasee”) from any and all claims, known or unknown, which the Releasors have or may have against any Releasee arising on or prior to the date that the Executive executes this Release, and any and all liability which any such Releasee may have to the Releasors, whether denominated claims, demands, causes of action, obligations, damages or liabilities arising from any and all bases, however denominated, including but not limited to (a) any claim under the Age Discrimination in Employment Act of 1967 (including the Older Workers Benefit Protection Act), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act of 1964, the Civil Rights Act of 1991, Section 1981 of the Civil Rights Act of 1866, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Immigration Reform and Control Act of 1986, the Employee Retirement Income Security Act of 1974, (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Company, subject to the terms and conditions of such plan and applicable law), the Uniform Trade Secrets Act, the Sarbanes-Oxley Act of 2002, the Fair Labor Standards Act, the California Fair Employment and Housing Act, the Unruh Civil Rights Act, the California Family Rights Act, and the California Labor, Government, and Business and Professions Codes, all as amended; (b) any and all claims arising from or relating to, as applicable, the Executive’s service as an officer of the Company or any of its subsidiaries or affiliates and the termination or resignation of such officer positions, or the Executive’s employment with the Company or the termination of such employment; (c) all claims related to the Executive’s compensation or benefits from the Company or the Releasees, including salary, bonuses, commissions, vacation pay, leave pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company or the Releasees; (d) all claims for breach of contract, wrongful termination and breach of the implied covenant of 

16

good faith and fair dealing; (e) all tort claims, including claims for fraud, defamation, privacy rights, emotional distress, and discharge in violation of public policy and all other claims under common law; and (f) all federal, state and local statutory or constitutional claims, including claims for compensation, discrimination, harassment, whistleblower protection, retaliation, attorneys’ fees, costs, disbursements, or other claims (referred to collectively as the “Released Claims”). 
The Executive expressly waives all rights afforded by Section 1542 of the Civil Code of the State of California, which states as follows:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”
The Executive understands the significance of the Executive’s release of unknown claims and waiver of statutory protection against a release of unknown claims.  The Executive expressly assumes the risk of such unknown and unanticipated claims and agrees that this Release applies to all Released Claims, whether known, unknown or unanticipated.
Notwithstanding the foregoing, this Release does not release claims that cannot be released as a matter of law, or the right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission (“EEOC”), or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company. However, by executing this Release, the Executive hereby waives the right to monetary recovery, no matter how denominated, including, but not limited to, wages, back pay, front pay, compensatory damages or punitive damages, in any proceeding the Executive may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on the Executive’s behalf.
In addition, this Release shall not apply to (i) the Executive’s rights under any written agreement between the Executive and the Company that provides for indemnification, the Executive’s rights, if any, to be covered under any applicable insurance policy with respect to any liability the Executive incurred or might incur as an employee, officer or director of the Company, or the Executive’s rights, if any, to indemnification under the by-laws or articles of incorporation of the Company; or (ii) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against the Executive as a result of any act or failure to act for which the Executive, on the one hand, and Company or any other Releasee, on the other hand, are jointly liable. 
2.Acknowledgement of Payments Provided.  The payments and benefits provided in Section 8 of the Employment Agreement (the “Consideration”), exceed any wages, payment, insurance, benefit, or other thing of value to which the Executive otherwise is entitled under any policy, plan or procedure of the Company or any other agreement between the Executive and the Company, but for this Release.  The Company has paid the Executive’s final wages (including any accrued, unused PTO) and all other accrued benefits in full and that the 

17

Executive has submitted and been reimbursed in full for all reasonable and necessary business expenses incurred through the date of the Executives termination of employment. 
3.No Claims.  The Executive represents that there are no claims or actions currently filed or pending relating to the subject matter of the Release, the Employment Agreement or any Released Claims.  The Executive shall not file or permit to be filed on the Executive’s behalf any such claims or actions.  The Executive hereby requests all administrative agencies having jurisdiction over employment and labor law matters and courts to honor the Executive’s release of claims under this Release.  Should the Company ever request the Executive to execute any administrative dismissal forms, the Executive shall immediately execute the form and return it to the Company.  Should the Executive file any claim or action relating to the subject matter of this Release, the Separation Agreement or any Released Claims, such filing shall be considered an intentional breach of the Release and the Executive will be liable for the Company’s damages and costs, including without limitation, the amount of any payments paid to the Executive pursuant to Section 8 of the Employment Agreement, and in addition the Company will retain the right to pursue any other remedy available to it under law and equity.  The Executive further represents that Executive has not failed to report any work-related occupational injuries or diseases arising out of or in the course of employment with the Company. 
4.No Admission. This Release does not constitute an admission of liability or wrongdoing of any kind by the Company or any other Releasee.  This Release is not intended, and shall not be construed, as an admission that any Releasee has violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever against any Releasor. 
5.Miscellaneous.  This Release will be construed and enforced in accordance with the laws of the State of California without regard to the principles of conflicts of law.  If any provision of this Release is held by a court of competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect; however, the remaining provisions will be enforced to the maximum extent possible.  Should any provision of this Release require interpretation or construction, it is agreed by the Parties that the entity interpreting or constructing this Release shall not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the Party who prepared the document.  The Parties agree to bear their own attorneys’ fees and costs with respect to this Release. 
6.Knowing and Voluntary Waiver.  The Executive: (a) has carefully read this Release in its entirety; (b) has had an opportunity to consider it for at least 21 calendar days, or has waived all or any portion of such 21-day period; (c) is hereby advised by the Company in writing to consult with an attorney of his choosing in connection with this Release; (d) fully understands the significance of all of the terms and conditions of this Release and has discussed them with his independent legal counsel, or had a reasonable opportunity to do so; (e) has had answered to his satisfaction any questions he has asked with regard to the meaning and significance of any of the provisions of this Release and has not relied on any statements or explanations made by any Releasee or their counsel; (f) understands that he has seven calendar 

18

days in which to revoke this Release after signing it and (g) is signing this Release voluntarily and of his own free will and agrees to abide by all the terms and conditions contained herein. 
7.Return of Company Property.  The Executive represents that he has made a diligent search for any Company property in his possession or control and that he has returned all such property to the Company.  
8.Counterparts. This Release may be signed in multiple counterparts, each of which shall be deemed an original.  Any executed counterpart returned by facsimile or electronic transmission shall be deemed an original executed counterpart.

IN WITNESS WHEREOF, the Executive has executed this Agreement as of the _____ day of ______________, _______.

MARK MORTIMER 

    

19

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