Document:

magex10-1_20111219

Exhibit 10.1 
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated effective as of December 15, 2011, amends and supplements that certain Credit Agreement dated as of November 6, 2007, as amended to date (as so amended, the "Credit Agreement"), by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association (the "Bank"), and MAGNETEK, INC., a Delaware corporation (the "Company").
RECITAL
The Company and the Bank desire to amend and supplement the Credit Agreement as provided below.
AGREEMENTS
In consideration of the Recital and the promises and agreements set forth in the Credit Agreement, as amended hereby, the parties agree as follows:
a.Definitions and References.  Capitalized terms not otherwise defined herein have the meanings assigned in the Credit Agreement.  All references to the Credit Agreement contained in the Collateral Documents and the other Loan Documents, as amended or amended and restated, shall, upon the execution of this Amendment, mean the Credit Agreement as amended by this Amendment.

b.Amendments to Credit Agreement.  

(a)The defined term "Adjusted EBITDA" appearing in section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows:

"Adjusted EBITDA" means, as to any Person, for any period for which such amount is being determined, an amount equal to (a) Net Income, plus (b) to the extent in determining Net Income the sum of        (i) depreciation expense, (ii) amortization expense, (iii) non-cash stock compensation expense, (iv) non-cash pension expense and (v) losses from discontinued operations, all as determined without duplication for the Company and its Consolidated Subsidiaries.
(b)The last sentence of the defined term "Commitment" appearing in section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows:  

The Commitment of the Bank is $12,500,000; provided that the Company may only borrow up to $7,500,000 unless and until the Bank has conducted a field exam (at the Company's sole cost and expense), the results of which must be acceptable to the Bank in its sole but reasonable discretion.  The Commitment is subject to reduction from time to time pursuant to section 2.4.
(c)The defined term "LIBOR Rate" appearing in section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows:

"LIBOR Rate" means the per annum rate of interest for a period equal to one month described as the "London interbank offered rate, or Libor" for such period that is in effect two Business Days prior to the first day of each month as reported in The Wall Street Journal, “Money Rates” table (and currently defined as the British Bankers' Association average of interbank offered rates for dollar deposits in the London market), rounded upward to the nearest 1/8th of 1% or, if The Wall Street Journal or another authoritative source is not available, as LIBOR is otherwise determined by the Bank in its sole and absolute discretion. The LIBOR Rate shall re-set on the first day of each calendar month, and shall remain in effect until the last day of each calendar month.
(d)The defined term "Maturity Date" appearing in section 1.1 of the Credit Agreement is amended by deleting the date "December 15, 2011" appearing therein and inserting the date "June 15, 2013" in its place.

(e)The defined term "Permitted Liens" appearing in section 1.1 of the Credit Agreement is amended by deleting the word "and" at the end of clause (f) thereof, deleting the "." at the end of clause (g) thereof and inserting the following clause (h) to appear in proper alphabetical order therein:

; and (h) liens in favor of the Pension Benefit Guaranty Corporation; provided that such liens are subordinated to the lien in favor of the Bank.
(f)Clause (c) of the defined term "Qualified Account" appearing in Section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows:

(c) which is not more than 90 days past due from the date of the relevant invoice and which original due date is not more than 60 days after the date of the relevant invoice;
(g)The defined term "Qualified Account" appearing in Section 1.1 of the Credit Agreement is further amended by deleting the word "and" after clause (i) thereof, deleting the "." after clause (j) thereof and inserting the following clauses (k) and (l) to appear in proper alphabetical order therein:
; (k) by an account debtor as to which 25% or more of all accounts owing by such account debtor are ineligible because of the application of clause (c) above; and (l) by an account debtor to the extent the aggregate amount of accounts owing from such account debtor exceeds 25% of all Qualified Accounts.
(h)The defined term "Qualified Inventory" appearing in Section 1.1 of the Credit Agreement is hereby amended by deleting the parenthetical "(other than inventory which is defective but including inventory which is works in process)" therein and inserting the parenthetical "(excluding inventory which is defective and inventory which is works-in-process)" in its place.

(i)Section 2.5(a) of the Credit Agreement is hereby amended by deleting the rate "two percent (2.0%)" appearing therein and inserting the rate "two and three-quarters of one percent (2.75%)" in its place.
(j)Section 6.10 of the Credit Agreement is amended in its entirety to read as follows:

6.10.    Maximum Pension Payments.  Make cash contributions to the defined benefit retirement plan maintained by the Company, except for payments during the following periods not exceeding the amounts (measured on a cash basis) for such periods:

	
		
	Period
	Maximum Contribution

	Three-month period ending December 31, 2011
	$4,000,000

	Three-month period ending March 31, 2012
	$4,000,000

	Three-month period ending June 30, 2012
	$4,000,000

	Three-month period ending September 30, 2012
	$4,000,000

	Three-month period ending December 31, 2012
	$4,000,000

	Three-month period ending March 31, 2013
	$5,000,000

(k)Section 6.13 of the Credit Agreement is amended in its entirety to read as follows:

6.13    Adjusted EBITDA.  Permit the Adjusted EBITDA of the Company and its Consolidated Subsidiaries to be less than the following amounts for the following periods:
	
		
	Period
	Minimum Amount

	Three-month period ending December 31, 2011 and each three-month period ending as of the last day of each calendar quarter thereafter.
	$2,500,000

(l)Exhibit A attached hereto shall be deemed to be an Exhibit to the Credit Agreement and shall replace Exhibit A to the Credit Agreement in its entirety.

(m)Exhibit D attached hereto shall be deemed to be an Exhibit to the Credit Agreement and shall replace Exhibit D to the Credit Agreement in its entirety.

3.Closing Conditions.  This Amendment shall become effective upon the execution and delivery by the parties of this Amendment and receipt by the Bank of: 

(a)an amended and restated revolving note in the form of Exhibit A attached hereto (the "Restated Note");

(b)a certificate of good standing of the Company issued by the Delaware Secretary of State and a certificate of status issued by the Wisconsin Department of Financial Institutions, in each case dated within ten (10) days of the date hereof (the "Good Standing Certificates");

(c)payment in cash of an amendment fee in the amount of $1,500.00; 

(d)a certificate of the Company, dated the date hereof and executed by an officer of the Company, which shall certify (i) the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of this Amendment, the Restated Note and the transactions contemplated hereby and thereby, (ii) a true, correct and complete copy of the Company's Certificate of Incorporation and by-laws, (iii) the name, title and true signatures of the officers of the Company, authorized by the resolutions to execute, deliver and perform the Company's obligations under this Amendment, the Restated Note and the transactions contemplated hereby and thereby and (iv) the Good Standing Certificates; and

(e)such other forms, certificates, agreements, documents and instruments as the Bank may reasonably requests.

4.No Waiver.   The Company agrees that nothing contained herein shall be construed by the Company as a waiver by the Bank of the Company's compliance with each representation, warranty and/or covenant contained in the Credit Agreement, the Collateral Documents and the other Loan Documents and that no waiver of any provision of the Credit Agreement, the Collateral Documents or the other Loan Documents by the Bank has occurred.  The Company further agrees that nothing contained herein shall impair the right of the Bank to require strict performance by the Company of the Credit Agreement.

5.Representations and Warranties.  The Company represents and warrants to the Bank that:

(a)The execution and delivery of this Amendment and the Restated Note is within its corporate power, has been duly authorized by proper corporate action on the part of the Company, is not in violation of any existing law, rule or regulation of any governmental agency or authority, any order or decision of any court, the Certificate of Incorporation or By-Laws of the Company or the terms of any agreement, restriction or undertaking to which the Company is a party or by which it is bound, and does not require the approval or consent of the stockholders of the Company, any governmental body, agency or authority or any other person or entity, except for those approvals and consents which have already been obtained and are in full force and effect;

(b)This Amendment and the Restated Note have been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law; and

(c)The representations and warranties of the Company contained in the Credit Agreement, the Collateral Documents and the Loan Documents are true and correct in all material respects as of the date of this Amendment (except to the extent such representations and warranties relate to an earlier date in which case they are true and correct in all material respects as of such earlier date).

6.Covenant.  The Company covenants and agrees that is shall within 180 days of the date hereof obtain a lien subordination agreement from the Pension Benefit Guaranty Corporation, in form and substance reasonably satisfactory to the Bank.  The failure to obtain such lien subordination agreement as set forth herein shall be deemed to be an Event of Default.

7.Miscellaneous.  

(a)Charges, Expenses and Fees.  The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses paid or incurred by the Bank in connection with the negotiation, preparation, execution and delivery of this Amendment and all forms, certificates, agreements, documents and instruments hereto or otherwise contemplated hereby, including the reasonable fees and expenses of the Bank's counsel.

(b)Amendments and Waivers.  This Amendment may not be changed or amended orally, and no waiver hereunder may be oral, and any change or amendment hereto or any waiver hereunder must be in a writing which is identified as an amendment or waiver of this Amendment and signed by the party or parties against whom such change, amendment or waiver is sought to be enforced.

(c)Headings.  The headings in this Amendment are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Amendment.

(d)Affirmation.  Each party hereto affirms and acknowledges that the Credit Agreement as amended by this Amendment remains in full force and effect in accordance with its terms.

(e)Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute one and the same instrument.  Delivery of an executed counterpart by facsimile or by e-mail of a portable document file (PDF) shall be as effective as delivery of an original counterpart hereof.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to Credit Agreement as of the date first written above.
COMPANY:
	
			
	 
	MAGNETEK, INC.

	 
	 

	 
	 

	 
	/s/ Marty J. Schwenner

	 
	By:
	Marty J. Schwenner

	 
	 
	Vice President and Chief Financial Officer

BANK:
	
			
	 
	ASSOCIATED BANK, NATIONAL ASSOCATION

	 
	 

	 
	 

	 
	/s/ Marylou J. Schirpke

	 
	By:
	Marylou J. Schirpke

	 
	 
	Vice President

EXHIBIT A
Form of Note
AMENDED AND RESTATED REVOLVING NOTE
	
					
	$
	12,500,000.00
	

	 
	Milwaukee, Wisconsin

	 
	 
	December 15, 2011

FOR VALUE RECEIVED, on or before the Maturity Date (as defined in the Credit Agreement referred to below), the undersigned, MAGNETEK, INC., a Delaware corporation (the "Company"), promises to pay to the order of ASSOCIATED BANK, NATIONAL ASSOCIATION (the "Bank") the principal sum of Twelve Million Five Hundred Thousand Dollars and 00/100 Dollars ($12,500,000.00), or such lesser amount as is shown to be outstanding according to the records of the Bank, together with interest on the principal balance outstanding from time to time at such rates and payable at such times as set forth in the Credit Agreement referred to below.
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of the Bank, 330 East Kilbourn Avenue, Milwaukee, Wisconsin, or such other place as the holder hereof shall designate to the undersigned in writing.
This Note is the Note issued pursuant to that certain Credit Agreement dated as of November 6, 2007, as amended to date (as so amended and as further amended, restated supplemented or otherwise modified from time to time, the "Credit Agreement") by and between the Company and the Bank, to which Agreement reference is made for rights and obligations as to prepayment and acceleration of maturity.  This Note amends, restates and replaces that certain Revolving Note dated November 6, 2007 issued by the Company in the stated principal amount of $10,000,000 payable to the order of the Bank and the Company acknowledges that the indebtedness evidenced thereby has not been extinguished and that no novation has occurred.
The undersigned agrees to pay all costs of collection, including reasonable attorneys' fees.
	
				
	MAGNETEK, INC.

	 
	By:

	 
	 
	Name:

	 
	 
	Title:

 EXHIBIT D

Revised Form of Borrowing Base Certificate

	
														
	BORROWING BASE CERTIFICATE

	 
	 
	 
	 
	 
	 
	 
	 
	 

	          Reference is made to that certain Credit Agreement, dated as of November 7, 2007 (as amended or modified from time to time, the "Credit Agreement"), by and between ASSOCIATED BANK, NATIONAL ASSOCIATION (the "Bank") and MAGNETEK, INC., a Delaware corporation (the "Company").  Unless otherwise defined herein, capitalized terms used herein have the respective meanings assigned to them in the Credit Agreement.

	          The undersigned hereby certifies, as of the date hereof, that he/she is the _________________________ of the Company and, as such, he/she is authorized to execute and deliver this Certificate to the Bank on behalf of the Company and the information in paragraphs 1 through 5 is true and accurate based upon the books and records of the Company as of ________________, ____ and the information in paragraphs 6 through 10 is true and accurate as of the date of this Certificate.

	 
	 
	 
	 
	 
	 
	 
	 
	 

	1
	Qualified Accounts.
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	(a)
	Gross Accounts Receivable
	 
	 $______________

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	(b)
	Less Ineligible Accounts:
	 
	 

	 
	 
	(i)
	Receivables subject to Liens
	 
	 

	 
	 
	 
	other than those in favor of
	 
	 

	 
	 
	 
	 the Bank
	 
	 
	 $_____________
	 

	 
	 
	(ii)
	Affiliate receivables
	     ____________
	 

	 
	 
	(iii)
	> 90 days past due from invoice date
	     ____________
	 

	 
	 
	(iv)
	>60 days due date for an invoice
	     ____________
	 

	 
	 
	(v)
	Cross-aging at 25%
	     ____________
	 

	 
	 
	(vi)
	Concentration at 25%
	     ____________
	 

	 
	 
	(iv)
	Other ineligible receivables
	     ____________
	 

	 
	 
	Total Ineligible Receivables
	 
	    (_____________)

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	(d)
	Qualified Accounts
	 
	 
	 $_______________

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	(e)
	Advance Rate
	 
	 
	 
	80%

	 
	 
	 
	 
	 
	 
	 
	 
	 

	2
	Borrowing Base Availability - Accounts
	 
	$_______________

	 
	 
	 
	 

	3
	Qualified Inventory (exclusive of WIP)
	 
	$_______________

	 
	 
	 
	 

	 
	Advance Rate
	 
	40%

	 
	 
	 
	 

	4
	Borrowing Base Availability - Qualified Inventory
	 
	$_______________

	 
	 
	 
	 

	5
	Total Borrowing Base Availability (sum of 2 and 4)
	 
	 $_______________

	 
	 
	 
	 
	 
	 
	 
	 
	 

	
															
	 	6
	Commitment
	 
	 
	 
	 
	$12,500,000.00

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	7
	Lesser of (5) or (6)
	 
	 
	$

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	8
	Total Outstanding:
	 
	 
	$_____________

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	 
	(a)
	Unpaid Principal Balance of the Note
	 
	 $____________

	 	 
	(b)
	LOC Exposure
	 
	 
	 
	_______________

	 	9
	 
	TOTAL
	 
	 
	 
	 
	 $______________

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	10
	Availability (overadvance) ((7) - (9))
	 
	 $

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	          The undersigned further represents and warrants that to the best of their knowledge, the Company is in compliance with all covenants set forth in the Credit Agreement.

	 
	 
	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	          IN WITNESS WHEREOF, the parties have executed this Borrowing Base Certificate on the ___ day of ____________, 20__.

	 
	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	 
	 
	 
	 
	 
	 
	MAGNETEK, INC.
	 

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	 
	 
	 
	 
	 
	 
	 
	 
	 

	 	 
	 
	 
	 
	 
	 
	By:__________________________________

	 	 
	 
	 
	 
	 
	 
	      Name: _____________________________

	 	 
	 
	 
	 
	 
	 
	      Title: ______________________________ex10-1.htm

EXHIBIT 10.1

 

TRANSFER OF CLAIM AGREEMENT

 

	
“SELLER”:

	
collectively, GP 1, LLC; GP 3, LLC; and GP 4, LLC

	  	  
	
Address:

	
626 West Jackson

	  	
Chicago, Illinois 60661

	  	  
	
Telephone:

	
(800) 217-7955

	
Facsimile:

	
(312) 756-4452

	
Attention:

	
David M. Kavanagh

	  	  
	
“BUYER”:

	
Dearborn Capital Management, L.L.C.

	  	  
	
Address:

	
626 West Jackson

	  	
Chicago, Illinois 60661

	  	  
	
Telephone:

	
(800) 217-7955

	
Facsimile:

	
(312) 756-4452

	
Attention:

	
Patrick Meehan

	 	 
	
DATE OF THIS AGREEMENT:

	
December 16, 2011

	 	 
	
“DEBTOR”:

	
MF Global Inc.

	 	 
	
FILING/PETITION DATE:

	
October 31, 2011

	 	 
	
“BANKRUPTCY COURT”:

	
Southern District of New York

	 	 
	
“BANKRUPTCY CASE”:

	
No. 11-02790 (MG) (SIPA)

 

 

  

  

  

 

AGREEMENT

 

1.   Assignment.  On the Effective Date (as defined below), SELLER hereby irrevocably sells, conveys, transfers and assigns unto BUYER all of SELLER’s right, title and interest in and to, or arising under or in connection with (i) SELLER’s claims (as the term “claim” is defined in Section 101(5) of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., the “Bankruptcy Code” and as otherwise supplemented by the relevant provisions of (x) the Securities Investor Protection Act of 1970, as amended, 15 U.S.C. § 78aaa et seq., “SIPA,” and/or (y) 17 C.F.R. §§ 190.01 through 190.10, the “Part 190 Regulations”) (such claims are hereinafter referred to as, the “Claim”) consisting of the aggregate amount of $12,374,301 of SELLER’s Customer Property (as the term “customer property” is defined in Section 761(9) of the Bankruptcy Code and as otherwise supplemented by the relevant provisions of SIPA and/or the Part 190 Regulations), claims, property, foreign secured accounts (and value thereof), and customer segregated accounts (and value thereof) against and/or held by Debtor as of the Effective Date, (ii) to the extent of the Claim, each of the documents, agreements, bills, invoices, stipulations and/or orders of the Bankruptcy Court which evidence, create and/or give rise to or affect in any material way the Claim (such documents, agreements, bills and invoices, agreements, stipulations and/or orders of the Bankruptcy Court, the “Claim Documents”), (iii) to the extent of the Claim, all rights to receive any cash, interest, fees, expenses, damages, penalties, security, property and/or other amounts in respect of or in connection with the Claim, including without limitation, any securities and/or other distributions made by the Debtor and/or James W. Giddens, as Trustee for the Debtor’s liquidation under SIPA (the “Trustee”) in respect of the Claim under or pursuant to any plan of reorganization or liquidation in the Bankruptcy Case, interim or final distribution(s) or otherwise, (iv) to the extent of the Claim, any and all claims, causes of action and/or voting and other rights and benefits arising under or relating to the Claim, (v) any and all proceeds of any of the foregoing.  All of the foregoing rights described in the preceding clauses (i) through and including (v) are hereinafter collectively referred to as the “Transferred Claim Rights”.

 

2.   Payment of Purchase Price.  The consideration paid by BUYER to SELLER for the Transferred Claim Rights, the receipt and sufficiency of which are hereby acknowledged by SELLER, is the purchase price set forth in Schedule I (the “Purchase Price”).  SELLER and BUYER acknowledge and agree that the Purchase Price shall be paid by wire transfer of immediately available funds to SELLER’s account set forth on Schedule II hereto no later than December 22, 2011.  The date on which BUYER pays the Purchase Price to SELLER is hereinafter referred to as the “Effective Date”.

 

3.   Seller Representations.  SELLER hereby represents and warrants to BUYER, that:  (i) SELLER is duly authorized and empowered to execute and perform this Agreement and the Evidence of Transfer (as defined below); (ii) this Agreement and the Evidence of Transfer constitute a valid, legal and binding agreement of SELLER, enforceable against SELLER in accordance with their respective terms; (iii) SELLER is the sole owner of and has good legal and beneficial title to the Transferred Claim Rights, free and clear of all liens, claims, security interests or encumbrances of any kind or nature whatsoever (“Liens”) and upon the consummation of the transactions contemplated hereby, BUYER will own and have good legal and beneficial title to the Claim, free and clear of all Liens; (iv) SELLER has not previously sold or assigned the Claim, in whole or in part, to any party; (v) neither the execution, delivery or 

 

 

  

  

  

 

performance of this Agreement or Evidence of Transfer nor consummation of the transactions contemplated hereby or thereby will violate or contravene any law, rule, regulation, order, agreement, or instrument affecting the SELLER or the Claim; (vi) except for any notice requirement under Rule 3001 of the Federal Rules of Bankruptcy Procedure and the court order allowing the Claim, no consent of, registration with, or approval of, or any other action by, any relevant person or entity (including any state or federal regulatory agency or commission) is or will be required for SELLER to execute, deliver, and perform its obligations under, this Agreement, or for the assignment contemplated herein to become effective; (vii) no payment has been received (by setoff or otherwise) by or on behalf of SELLER in full or partial satisfaction of the Claim; (viii) SELLER is not an insider of the Debtor within the meaning of Section 101(31) of the Bankruptcy Code, and is not a member of any creditors’ committee appointed in the Bankruptcy Case; (ix) SELLER is entitled to receive, and following the Effective Date BUYER shall be entitled to receive, all interest on the Claim, whenever accrued; (x) SELLER has agreed to the Purchase Price based on its own independent investigation and credit determination and has consulted with such advisors as it believes appropriate and has not relied on any representations made by BUYER; (xi) SELLER is aware that information which may be pertinent to SELLER’s decision to transfer the Transferred Claim Rights is available to SELLER and can be obtained from the Bankruptcy Court’s files or other publicly available sources; (xii) SELLER is aware that the consideration received herein for the sale of the Transferred Claim Rights may differ both in kind and amount from any distributions made pursuant to any plan of reorganization or liquidation confirmed by the Bankruptcy Court, or a court supervised liquidation, in the Bankruptcy Case; (xiii) other than the Bankruptcy Case, no litigation, arbitration or adversarial proceeding is pending or threatened against SELLER which may have a material adverse effect on the Claim or the enforceability of this Agreement or the transactions contemplated hereby; (xiv) SELLER has taken no action or engaged in any act, conduct or omission, or had any relationship with the Debtor, that could result in distributions being paid in respect of the Claim in a time or manner, or pro rata amount, different from other Customers (as the term “Customer” is defined in Section 761(9) of the Bankruptcy Code and as otherwise supplemented by the relevant provisions of SIPA and/or the Part 190 Regulations); (xv) SELLER (i) is a sophisticated entity with respect to the sale of the Transferred Claim Rights, (ii) has adequate information concerning the business and financial condition of the Debtor and its affiliates and the status of the Bankruptcy Case to make an informed decision regarding the sale of the Transferred Claim Rights and (iii) has independently and without reliance on BUYER, and based on such information as SELLER has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that SELLER has relied on BUYER’s express representations, warranties, covenants, agreements and indemnities in this Agreement; and (xvi) SELLER is an “accredited investor” as defined in Rule 501 under the Securities Act of 1933, as amended (“Securities Act”).  Without characterizing the Transferred Claim Rights as a “security” within the meaning of applicable securities laws, SELLER has not made any offers to sell, or solicitations of any offer to buy, all or any portion of the Transferred Claim Rights in violation of any applicable securities laws; and (xvii) SELLER has not received any written notice other than those publicly available in the Bankruptcy Case or otherwise that (i) any payment or other transfer made to or for the account of SELLER from or on account of Debtor under the Transferred Claim Rights is or may be void or voidable as an actual or constructive fraudulent transfer or as a preferential transfer or (ii) the Transferred Claim Rights, or any portion of them, are void, voidable, unenforceable or subject to any impairment.  As of 

 

 

  

2

  

 

 

the Effective Date, (xviii) Seller has received certain interim distributions in connection with the Bankruptcy Case from the Trustee in the aggregate amount of $9,173,949 (the “Prior Distributions”), including all distributions authorized under the Bankruptcy Court’s December 12, 2011 Order Granting Expedited Motion to Approve Further Transfers and Distributions for MF Global Inc. United States Commodity Futures Customers (the “Third Bulk Transfer Order”).

 

4.   Buyer Representations.  BUYER hereby represents and warrants to SELLER, as of the Effective Date, that:  (i) BUYER is duly authorized and empowered to execute and perform this Agreement and the Evidence of Transfer; (ii) this Agreement and the Evidence of Transfer constitute a valid, legal and binding agreement of BUYER, enforceable against BUYER in accordance with their respective terms; (iii) neither the execution, delivery or performance of this Agreement or Evidence of Transfer nor consummation of the transactions contemplated hereby or thereby will violate or contravene any law, rule, regulation, order, agreement, or instrument affecting the BUYER or the Claim; (iv) except for any notice requirement under Rule 3001 of the Federal Rules of Bankruptcy Procedure, and the court order allowing the Claim, no consent of, registration with, or approval of, or any other action by, any relevant person or entity (including any state or federal regulatory agency or commission) is or will be required for BUYER to execute, deliver, and perform its obligations under, this Agreement, or for the assignment contemplated herein to become effective; (v) BUYER is not an insider of the Debtor within the meaning of Section 101(31) of the Bankruptcy Code, and is not a member of any creditors’ committee appointed in the Bankruptcy Case; (vi) BUYER has agreed to the Purchase Price based on its own independent investigation and credit determination and has consulted with such advisors as it believes appropriate and has not relied on any representations made by SELLER, with respect to such investigation; (vii) BUYER is aware that information which may be pertinent to BUYER’s decision to purchase the Transferred Claim Rights is available to BUYER and can be obtained from the Bankruptcy Court’s files or other publicly available sources; (viii) BUYER is aware that the consideration paid herein for the purchase of the Transferred Claim Rights may differ both in kind and amount from any distributions made pursuant to any plan of reorganization or liquidation confirmed by the Bankruptcy Court, or a court supervised liquidation, in the Bankruptcy Case; (ix) no litigation, arbitration or adversarial proceeding is pending or threatened against BUYER which may have a material adverse effect on the enforceability of this Agreement or the transactions contemplated hereby; (x) BUYER (i) is a sophisticated entity with respect to the purchase of the Transferred Claim Rights, (ii) is able to bear the economic risk associated with the purchase of the Transferred Claim Rights, (iii) has adequate information concerning the business and financial condition of the Debtor and its affiliates and the status of the Bankruptcy Case to make an informed decision regarding the purchase of the Transferred Claim Rights, (iv) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the purchase of rights and the assumption of liabilities of the type contemplated by the Agreement and (v) has independently and without reliance on  SELLER, and based on such information as BUYER has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that BUYER has relied on SELLER’s express representations, warranties, covenants, agreements and indemnities in this Agreement; and (xi) BUYER is an “accredited investor” as defined in Rule 501 under the Securities Act of 1933, as amended (“Securities Act”).  Without characterizing the Transferred Claim Rights as a “security” within the meaning of applicable securities laws, BUYER is not purchasing the Transferred Claim rights with a view towards the sale or distribution thereof in violation of the Securities Act 

 

 

  

3

  

 

provided, however, that BUYER may resell the Transferred Claim Rights if such resale is in compliance with Section 15.

 

5.   Condition.  In addition to the other provisions set forth in this Agreement, BUYER’s agreement to pay the Purchase Price for the Transferred Claim Rights is expressly subject to and conditioned upon SELLER’s receipt of the Prior Distributions including, but not limited to, SELLER’s receipt of all interim distributions authorized to be paid to SELLER pursuant to the Third Bulk Transfer Order.

 

6.   Claim Adjustment.  If (A) all or any part of the Prior Distributions is avoided, disallowed, subordinated, reduced, objected to or otherwise impaired, in whole or in part, in the Bankruptcy Case for any reason whatsoever, or (B) all or a portion of the Prior Distributions is listed on the Debtor’s schedule of liabilities as unliquidated, contingent or disputed or a lesser amount than the Prior Distributions (each a “Disallowance”), then SELLER acknowledges and agrees that SELLER shall have no recourse against the BUYER, and BUYER (x) shall have no obligation whatsoever to reimburse, indemnify or otherwise make SELLER whole from such Disallowance and (y) the Claim shall not be adjusted; provided, however, if all or any part of the Claim is avoided, disallowed, subordinated, reduced, objected to or otherwise impaired, in whole or in part, in the Bankruptcy Case by reason of the determination of the Trustee, after the Effective Date, that revises his pre-Effective Date (i) calculations, (ii) settlement prices, (iii) valuations and/or (iv) reconciliation with the Debtor’s books and records, which determination impacts the calculation of the Claim (each a “Revised Trustee’s Claim Determination”), then SELLER agrees to immediately reimburse BUYER, on demand of BUYER, an amount equal to the portion of the Claim subject to any Revised Trustee’s Claim Determination, plus interest thereon at the Interest Rate (as defined below) from the Effective Date to the date of such repayment by SELLER to BUYER; provided, further, that such demand by BUYER shall not be deemed an election of remedies or any limitation on any other rights that BUYER may have hereunder or under applicable law.  If an order is entered in the Bankruptcy Court disapproving the transfer of the Claim or any portion thereof or if the Bankruptcy Court does not substitute BUYER for SELLER as the owner of the Claim, SELLER agrees to immediately repay, upon demand of BUYER, the consideration paid by BUYER hereunder, plus interest thereon at the Interest Rate from the date hereof to the date of such repayment by SELLER to BUYER.

 

7.  (a)    Seller’s Acknowledgements.  SELLER hereby acknowledges that (i) BUYER currently may have, and later may come into possession of, information with respect to the Transferred Claim Rights, the Debtor or any of its affiliates, the Bankruptcy Case and/or any state or federal regulatory review concerning the Debtor that is not known to SELLER and that may be material to a decision to sell the Transferred Claim Rights (“Seller Excluded Information”), (ii) SELLER has determined to sell the Transferred Claim Rights notwithstanding its lack of knowledge of the Seller Excluded Information and (iii) BUYER shall have no liability to SELLER, and SELLER waives and releases any claims that it might have against BUYER or any indemnitee of BUYER whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Seller Excluded Information in connection with the transactions contemplated hereby; provided, however, that SELLER Excluded Information shall not affect the truth or accuracy of BUYER’s representations or warranties in this Agreement.

 

 

  

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(b)  Buyer’s Acknowledgements.  BUYER hereby acknowledges that (i) SELLER currently may have, and later may come into possession of, information with respect to the Transferred Claim Rights, the Debtor or any of its affiliates, the Bankruptcy Case and/or any state or federal regulatory review concerning the Debtor that is not known to BUYER and that may be material to a decision to purchase the Transferred Claim Rights (“Buyer Excluded Information”), (ii) BUYER has determined to buy the Transferred Claim Rights notwithstanding its lack of knowledge of the Buyer Excluded Information and (iii) SELLER shall have no liability to BUYER, and BUYER waives and releases any claims that it might have against SELLER with respect to the nondisclosure of the Buyer Excluded Information in connection with the transactions contemplated hereby; provided, however, that BUYER Excluded Information shall not affect the truth or accuracy of SELLER’s representations or warranties in this Agreement.

 

8.   Payments After Effective Date.  From and after the Effective Date, SELLER shall remit to BUYER any payments and/or other distributions in respect of the Transferred Claim Rights, and shall deliver to BUYER any notices or other documents delivered to SELLER (and not publicly available), SELLER shall accept the same on behalf of BUYER, and will hold the same on behalf of and in trust for BUYER and will deliver same forthwith to BUYER in the same form received, with the endorsement of SELLER where necessary or appropriate.  If SELLER fails to remit to BUYER any such payments within ten (10) business days of its receipt thereof, SELLER shall pay interest on such unpaid amounts from the date of its receipt to the date of payment to BUYER at the overnight Federal Funds Rate applicable at such time (“Interest Rate”).  If all or any portion of a payment or distribution received by SELLER and transferred to BUYER pursuant to this Section 8 is required to be returned or disgorged by SELLER to Debtor or any other entity, BUYER shall promptly return such payment or distribution to SELLER together with all related interest and charges payable by SELLER in respect thereof.

 

9.   Seller Covenants.  SELLER hereby covenants and agrees that, from and after the Effective Date:  (i) SELLER shall not take or engage in any act or conduct, or make any omission, that will result in any counterclaim, defense or claim (including any preference or fraudulent conveyance claim) or right of set-off, reduction, recoupment, disgorgement, impairment, avoidance, and disallowance or subordination by Debtor or any other entity (including without limitation by any state or federal governmental agency or commission),  of the Transferred Claim Rights or any distributions and/or payments made in respect thereof; (ii) SELLER shall execute and deliver, or to cause to be executed and delivered, all such instruments and documents (including any invoices, bills or other supporting documents evidencing the Claim), and to take all such action as BUYER may reasonably request in order to effectuate the intent and purposes of, and to carry out the terms of this Agreement, and to cause BUYER to become the legal and beneficial owner of the Claim.  Contemporaneously with the occurrence of the Effective Date and the delivery of  BUYER of its signature to this Agreement, SELLER shall execute and deliver to BUYER a Notice and Evidence of Transfer of Claim substantially in the form annexed hereto as Exhibit A (the “Evidence of Transfer”)

 

10.   Filing of and Defense of Claim.  SELLER hereby irrevocably appoints BUYER as its true and lawful attorney to demand, sue for, compromise and recover all such sums of money which now are, or may hereafter become due and payable for, or on account of the Claim 

 

 

  

5

  

 

herein assigned.  SELLER grants unto BUYER full authority to do all things necessary to enforce the Claim and SELLER’s rights thereunder pursuant to this Agreement.  SELLER agrees that the powers granted by this paragraph are discretionary in nature and exercisable at the sole option of BUYER.  BUYER shall have no obligation to take any action to prove, defend or demand or take any action with respect to the Claim or otherwise in the Bankruptcy Case.  SELLER agrees to execute, acknowledge and deliver all such further certificates, instruments and other documents, and to take all such reasonable further action as may be necessary or appropriate to effect assignment of the Claim and all interest therein to BUYER (including execution of the Evidence of Transfer of Claim attached to this Agreement), to cooperate with and assist BUYER in enforcing the Claim and to otherwise effectuate the intent of this Agreement.  SELLER agrees that BUYER may sell, transfer or assign the Claim together with all right, title and interest of BUYER in and to this Agreement and may transfer or assign its rights and obligations hereunder without the consent of SELLER.

 

11.  (a)      Seller Indemnity.  SELLER hereby agrees to indemnify, defend and hold BUYER and its respective officers, directors, employees, agents and controlling persons harmless from and against any and all losses, claims, damages and liabilities, including, without limitation, reasonable attorneys’ fees and expenses which result from (i) SELLER’s breach of any of its representations, warranties, covenants or agreements set forth in this Agreement; and (ii) any obligation of BUYER or SELLER to disgorge, in whole or in part, or otherwise reimburse (by setoff or otherwise) the Debtor or any other entity for any payments, property, setoffs or recoupments received, applied or effected by or for the account of SELLER under or in connection with the Prior Distributions and/or a Revised Trustee’s Claim Determination with respect to the Claim.

 

(b)  Buyer Indemnity.  BUYER hereby agrees to indemnify, defend and hold SELLER and its respective officers, directors, employees, agents and controlling persons harmless from and against any and all losses, claims, damages and liabilities, including, without limitation, reasonable attorneys’ fees and expenses which result from BUYER’s breach of any of its representations, warranties, covenants or agreements set forth in this Agreement.

 

12.   No Assumption of Obligations.  SELLER and BUYER acknowledge and agree that BUYER is not assuming hereunder or otherwise, and BUYER shall not be responsible for, any liabilities or obligations of SELLER to the Debtor or to any other person.

 

13.   Notice.  All payments and deliveries of cash, securities or other amounts to be paid, made and/or delivered under or pursuant to this Agreement, shall be paid, made and/or delivered, as the case may be, in accordance with the parties’ instructions set forth on Schedule II hereto.  All communications between SELLER and BUYER, or notices or other information sent under this Agreement shall be in writing, hand-delivered or sent by overnight courier or telecopier, and addressed to the relevant party at its address or facsimile number specified above, or at such other address or facsimile number as such party may request in writing.  All such communications and notices shall be effective upon receipt.

 

14.   Further Assurances.  Subject to Section 10 hereof, each of the Parties hereto agrees, at the cost and expense of the requesting Party, to execute and deliver, or to cause to be executed and delivered, all such instruments (including all necessary endorsements) and to take 

 

 

  

6

  

 

 

all such action as the other Party may reasonably request (including delivery of such documents as may be necessary to support the Claim) in order to (i) effectuate the intent and purposes of, and to carry out the terms of this Agreement, and (ii) further effect the transfer of legal, beneficial and record ownership of the Claim to BUYER.

 

15.   Miscellaneous.  All representations, warranties, covenants and agreements contained herein shall survive the execution and delivery of this Agreement and the purchase and sale of the Claim.  This Agreement shall inure to the benefit of, be binding upon shall be enforceable by the parties hereto and their respective successors; provided that, the obligations of SELLER contained herein shall continue and remain in full force and effect until fully paid, performed and satisfied by SELLER.  BUYER shall have the right to sell, assign, convey and/or participate all or any portion of the Transferred Claim Rights without the consent of or notice to SELLER.  This Agreement and the Evidence of Transfer may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute one agreement binding all of the parties hereto.  This Agreement and the Evidence of Transfer constitute the complete agreement of the parties hereto with respect to the subject matter referred to herein and supersedes all prior or contemporaneous negotiations, promises, covenants, agreements or representations of any nature whatsoever with respect thereto, all of which have become merged and finally integrated into this Agreement.  This Agreement cannot be amended, modified or supplemented except by an instrument in writing executed by the parties hereto.  If any provision of this Agreement or any other agreement or document delivered in connection with this Agreement is partially or completely invalid or unenforceable in any jurisdiction, then that provision shall be ineffective in that jurisdiction only to the extent of its invalidity or unenforceability, but the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall be construed and enforced as if that invalid or unenforceable provision were omitted, nor shall the invalidity or unenforceability of that provision in one jurisdiction affect its validity or enforceability in any other jurisdiction.

 

THIS AGREEMENT AND THE EVIDENCE OF TRANSFER SHALL BE CONSTRUED AND THE OBLIGATIONS OF THE PARTIES SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO ANY CONFLICT OF LAWS PROVISIONS THEREOF).  THE PARTIES CONSENT TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF NEW YORK AND THE STATE WHERE THE BANKRUPTCY CASE IS PENDING IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

SELLER HEREBY WAIVES ANY NOTICE REQUIREMENT IMPOSED BY RULE 3001(e) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE, AND CONSENTS TO THE SUBSTITUTION OF BUYER FOR SELLER FOR ANY PURPOSE IN THE BANKRUPTCY CASE RELATING TO THE CLAIM, INCLUDING, WITHOUT LIMITATION, FOR VOTING AND DISTRIBUTION PURPOSES WITH RESPECT TO THE CLAIM.

 

(Signatures On Next Page)

 

 

  

7

  

 

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement by their duly authorized representatives as of the date first written above.

 

	
DEARBORN CAPITAL MANAGEMENT, L.L.C.

 

 

By:  /s/David M. Kavanagh                      

       David M. Kavanagh

       President

	
GP 1, LLC

 

By:   Dearborn Capital Management, L.L.C., its Manager

  

By:  /s/David M. Kavanagh                      

       David M. Kavanagh

       President

                                                            

 

	
 

 

  	
GP 3, LLC

 

By:    Dearborn Capital Management, L.L.C., its Manager                                                          

  

By:  /s/David M. Kavanagh                       

       David M. Kavanagh

       President

                                                 

	
 

 

	      GP 4, LLC

 

By:    Dearborn Capital Management, L.L.C., its Manager         

 

By:  /s/David M. Kavanagh                      

       David M. Kavanagh

       President

 

 

  

8

  

 

SCHEDULE I

 

PURCHASE PRICE

 

	
SELLER / CLAIMANT:

	
GP 1, LLC

	 	 
	
GP 1, LLC CLAIM AMOUNT:

	
$5,826,209

	 	 
	
GP 1, LLC PURCHASE PRICE

	
$5,826,209

	 	 
	 *            *            *	 
	 	 
	
SELLER / CLAIMANT:

	
GP 3, LLC

	 	 
	
GP 3, LLC CLAIM AMOUNT:

	
$2,438,902

	 	 
	
GP 3, LLC PURCHASE PRICE

	
$2,438,902

	 	 
	 *            *            *	 
	 	 
	
SELLER / CLAIMANT:

	
GP 4, LLC

	 	 
	
CLAIM AMOUNT:

	
$4,109,190

	 	 
	
PURCHASE PRICE

	
$4,109,190

	 	 
	
*            *            *

	 
	 	 
	Total Claim Amount:	
$12,374,301

	 	 
	
Total Purchase Price:

	
$12,374,301

 

 

 

  

9

  

 

EXHIBIT A

 

EVIDENCE OF TRANSFER OF CLAIM

 

	
TO:

	
THE DEBTOR  AND THE BANKRUPTCY COURT

	
Assignor:

	
collectively, GP 1, LLC; GP 3, LLC; and GP 4, LLC

	
Assignee:

	
Dearborn Capital Management, L.L.C.

For value received, the adequacy and sufficiency of which are hereby acknowledged, Assignor hereby unconditionally and irrevocably sells, transfers and assigns to Assignee all of its right, title, interest, claims and causes of action in and to, or arising under or in connection with, Assignor’s claims (as the term “Claim” is defined in Section 101(5) of the U.S. Bankruptcy Code and as otherwise supplemented by the relevant provisions of (x) the Securities Investor Protection Act of 1970, as amended, 15 U.S.C. § 78aaa et seq., “SIPA,” and/or (y) 17 C.F.R. §§ 190.01 through 190.10, the “Part 190 Regulations”) consisting of the aggregate amount of $12,374,3011 of SELLER’s customer property (as the term “Customer Property” is defined in Section 761(9) of the Bankruptcy Code and as otherwise supplemented by the relevant provisions of SIPA and/or the Part 190 Regulations), claims, property, foreign secured accounts (and value thereof), and customer segregated accounts (and value thereof) against and/or held by MF Global Inc. (“Debtor”) in the bankruptcy case No. 11-02790 (MG) (SIPA), in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and any and all proofs of claim or other proof filed by Assignor with the Bankruptcy Court and/or sent to James W. Giddens, as Trustee for the Debtor’s liquidation under SIPA (the “Trustee”), in respect of the foregoing claim (the “Transferred Claim”).

 

Assignor hereby waives any objection to the transfer of the Transferred Claim to Assignee on the books and records of the Debtor and the Bankruptcy Court, and hereby waives to the fullest extent permitted by law any notice or right to a hearing as may be imposed by Rule 3001 of the Federal Rules of Bankruptcy Procedure, the Bankruptcy Code, applicable local bankruptcy rules or applicable law.  Assignor acknowledges and understands, and hereby stipulates, that an order of the Bankruptcy Court may be entered without further notice to Assignor transferring to Assignee the foregoing claim and recognizing the Assignee as the sole owner and holder of the claim.  Assignor further directs the Debtor, the Trustee, the Bankruptcy Court and all other interested parties that all further notices relating to the claim, and all payments or distributions of money or property in respect of claim, shall be delivered or made to the Assignee.

 

SIGNATURE PAGE FOLLOWS

 

 

 

_________________________

1 The total claim of $12,374,301 includes the claims of GP 1, LLC ($5,826,209), GP 3, LLC ($2,438,902) and GP 4, LLC ($4,109,190).

  

 

  

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IN WITNESS WHEREOF, this EVIDENCE OF TRANSFER OF CLAIM IS EXECUTED THIS ___ day of December 2011.

 

 

	  

ASSIGNOR:

GP 1, LLC

 

By:  ___________________________________                                                           

Name:

Title:

 

	  

ASSIGNEE:

Dearborn Capital Management, L.L.C.

 

 

By:  __________________________________                                                            

Name:

Title:

	  

GP 3, LLC

 

By:  ___________________________________                                                            

Name:

Title:

 

	 
	
 

GP 4, LLC

 

By:  ___________________________________                                                            

Name:

Title:

 

 

	 

 

  

11

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