Document:

Exhibit 10.6

 

CONFIDENTIAL

 

[AMENDED AND RESTATED]1 SUBORDINATED PROMISSORY NOTE

 

[·], 2015

 

Section 1.                               FUNDAMENTAL PROVISIONS.

 

Terms not otherwise defined herein shall have the meaning provided in Annex I hereto. The following terms will be used as defined terms in this Subordinated Promissory Note (as it may be amended, modified, extended and renewed from time to time, this “Note”):

 

	
Issuer:
    	
 
    	
Houlihan   Lokey, Inc., a Delaware corporation (“Issuer”).
    
	
 
    	
 
    	
 
    
	
Holder:
    	
 
    	
[HLHZ   Holding Company, LLC, a Delaware limited liability company] [ORIX USA   Corporation, a Delaware corporation.]2
    
	
 
    	
 
    	
 
    
	
Principal Amount:
    	
 
    	
USD   $45,000,000.00 (“Principal Amount”).
    

 

Section 2.                               PROMISE TO PAY.

 

The Issuer promises to pay to the order of Holder, in accordance with the payment procedure set forth herein, the outstanding Principal Amount, together with accrued interest from the date of disbursement on the unpaid principal balance at the applicable Interest Rate.

 

Section 3.                               INTEREST; PAYMENTS.

 

(a)                               Subject to the terms and conditions of Section 12 and except as otherwise set forth herein, the Note shall bear interest on the unpaid principal amount hereof from the date made through repayment hereof (whether by acceleration or otherwise) at the Interest Rate.  Interest on the Note shall accrue on a daily basis.  Interest will be calculated daily on the basis of a 360-day year comprised of twelve 30 day months.  In computing interest on the Note, the date of the issuance of the Note shall be excluded and the date of repayment of the Note (including the repayment of any portion of the Note) shall be included.

 

(b)                              The Note will be payable in installments of USD $7,500,000.00 payable on each Payment Date, commencing on June 30, 2016.

 

(c)                               If any payment of principal and interest or any other amount payable hereunder is not paid when due, whether on the scheduled due date for such Payment, the Maturity Date or any earlier date as a result of acceleration of this Note after Default, then the amount then due and unpaid shall thereafter bear interest until

 

1                   NTD:  The initial note will be payable to HLHZ Holding Company, and after certain transactions, the ultimate holder of that note will be ORIX USA Corporation.  The parties currently intend that when ORIX USA Corporation becomes the holder of the initial note, it will be replaced with an amended and restatement note.

 

2                   NTD:  For the initial note, HLHZ Holding Company will be listed as the Holder.  For the amended and restated note, ORIX USA Corporation will be listed as the Holder.

 

 

paid at a rate (“Default Interest Rate”) per annum (based on a 360-day year, comprised of twelve 30 day months) equal to the applicable Interest Rate plus two percent (2%) per annum, and such accrued interest at the Default Interest Rate shall, subject to the terms and conditions of Section 12, be due and payable by the Issuer on demand by Holder.

 

(d)                             The Issuer shall make payment of all unpaid principal, interest, and any other amounts due hereunder on the Maturity Date, in same day funds, not later than 12:00 noon (New York time). If any payment of principal and interest to be made by the Issuer hereunder shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing the interest in such payment.

 

(e)                               Except as specifically hereinafter set forth, all payments made by the Issuer under this Note shall be made by wire transfer to the account listed below for Holder, or at such other place as Holder designates to the Issuer, in immediately available funds before 12:00 noon, New York time (or such later time as Holder shall agree) on the date such payment is required to be made.

 

To Holder:

 

The Bank of Tokyo-Mitsubishi UFJ Trust Company
 ABA No. 0260-0968-7
 Account Number 310 062 381
 For the account of ORIX USA Corporation

 

Section 4.                               OPTIONAL PREPAYMENT.

 

Subject to the terms and conditions of Section 12, the Issuer may optionally prepay the Note in whole or in part (in integral multiples of $100,000 or such lesser amount as Holder shall agree), without premium or penalty, at any time and from time to time by providing Holder notice of optional prepayment.

 

Section 5.                               LAWFUL MONEY.

 

Principal and interest are payable in lawful money of the United States of America.

 

Section 6.                               APPLICATION OF PAYMENTS.

 

Absent the occurrence of an Event of Default hereunder or under any of the Note, any payments received by Holder pursuant to the terms hereof shall be applied first to sums, other than principal and interest due Holder hereunder, second to the accrued and unpaid interest due hereunder and the balance, if any, to the payment of principal. Any payments received by the holder hereof during the continuation of an Event of Default shall be applied to the amounts specified in this Section 6 in such order as Holder may, in its sole discretion, elect.

 

Section 7.                               RESERVED.

 

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Section 8.                               REPRESENTATIONS AND WARRANTIES.

 

Issuer represents and warrants to Holder that:

 

(a)                               Due Organization.  It is duly formed and validly existing, and is in good standing under the laws of its jurisdiction of organization.

 

(b)                              Authority.  It has the power and authority to execute and deliver the Note and to perform its obligations thereunder.  The execution, delivery and performance of the Note and the consummation of the transactions contemplated hereby have been duly authorized by all of its necessary corporate or similar action, and no other action or proceeding on its part or on the part of its members is necessary to authorize the execution or delivery the Note and consummation of the transactions contemplated hereby.  The Note has been duly and validly executed and delivered by the Issuer.

 

(c)                               Binding Effect.  The Note constitutes a valid and binding obligation, enforceable against it in accordance with the terms hereof subject to applicable bankruptcy, insolvency, fraudulent transfer and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(d)                             No Conflicts or Default.  Its execution, delivery and performance of the Note do not and will not result in a breach or violation of, or constitute a default under, any of the terms and provisions of its organizational documents, any material law applicable to the Issuer or, except as could not reasonably be expected to result in a Material Adverse Effect on the Issuer or on its ability to perform its obligations under the Note, any agreement to which the Issuer is a party.

 

(e)                               Compliance with Laws and Agreements.  The Issuer is in compliance with (a) all applicable laws and all judgments, decrees and orders of any governmental authority and (b) all indentures, agreements or other instruments binding upon it or its properties, except where non-compliance, either singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect on the Issuer or on its ability to perform its obligations under the Note.

 

Section 9.                               COVENANTS.

 

(a)                               Payment and Performance of Note Obligations. The Issuer covenants and agrees that, from the date hereof until the Discharge of Obligations with respect to the Note, it shall pay and perform all Note Obligations arising under, and in accordance with, the terms of the Note.

 

(b)                              Tax Matters.

 

(i)                                  If the Issuer shall be required by law to deduct any Covered Taxes from or in respect of any sum payable hereunder such sum shall be increased as may be necessary so that, after making all such deductions, Holder receive an amount equal to the sum they would have received had no such

 

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deduction for Covered Taxes been made.  If the Issuer shall be required by law to deduct or withhold any taxes other than Covered Taxes from or in respect of any sum payable hereunder, Holder shall be treated for all purposes of this Note as having received any such amounts so deducted or withheld.

 

(ii)                              If Holder is entitled to an exemption from or reduction of withholding tax with respect to payments made under this Note, Holder shall deliver to the Issuer, at the time or times reasonably requested by the Issuer, such properly completed and executed documentation reasonably requested by the Issuer as will permit such payments to be made without withholding or at a reduced rate of withholding or to determine whether or not Holder is subject to backup withholding or information reporting requirements, including, without limitation, an Internal Revenue Service Form W-9 or applicable Internal Revenue Service Form W-8

 

(iii)                          If a payment made to Holder under this Note would be subject to U.S. federal withholding tax imposed by FATCA if Holder were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), Holder shall deliver to the Issuer at the time or times prescribed by law and at such time or times reasonably requested by the Issuer such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Issuer as may be necessary for the Issuer to comply with its obligations under FATCA and to determine that Holder has complied with Holder’s obligations under FATCA or to determine the amount to deduct and withholding from such payment.

 

(c)                               Continuation of Business and Maintenance of Corporate Existence and Licenses. The Issuer covenants and agrees that, from the date hereof until the Discharge of Obligations with respect to the Note, it shall preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, their existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

(d)                             Dividends and Other Payments in Respect of Equity Interests. The Issuer covenants and agrees that, from the date hereof until the Discharge of Obligations with respect to the Note, (i) during the continuance of an Event of Default, or (ii) if any payments required to have been made pursuant to Section 3(b) have not been made, in each case it shall not (a) declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests or any warrants, rights or options to acquire such Equity Interests, now or hereafter outstanding, return any equity to its stockholders as such, make any distribution of assets, capital stock, warrants, rights, options, Obligations or securities to its equity holders as such, or (b) permit any of its Subsidiaries to purchase, redeem,

 

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retire, defease or otherwise acquire for value any Equity Interests of the Issuer or any warrants, rights or options to acquire such equity interests.  [This section 9(d) shall not restrict the payment of the IPO Dividend.]3

 

Section 10.                       EVENTS OF DEFAULT.  The occurrence of any of the following events shall constitute an “Event of Default”.

 

(a)                               Payment under Note. The Issuer shall fail to make payment of any principal or interest or fee when due under this Note, or a default shall be made in the payment of any other portion of the Note Obligations as and when the same shall be due and payable, and such failure or default shall continue for three (3) days after notice to the Issuer from Holder (it being understood that the failure of the Issuer to make any such payment as a result of a prohibition thereon under Section 12 shall not constitute an Event of Default).

 

(b)                              Observance of Terms under Note. A default in the due observance or performance of any term, covenant, condition or agreement on the part of the Issuer to be observed or performed pursuant to the terms of this Note, if such default (other than a default with respect to the payment of any amount due to Holder) shall have occurred and continued for fifteen (15) days after notice to the Issuer from Holder.

 

(c)                               Voluntary Actions. The Issuer or any Significant Subsidiary of the Issuer shall: (i) apply for or consent to the appointment of a receiver, trustee or liquidator for itself or any of its properties or assets; (ii) admit in writing the inability to pay its debts as they mature; (iii) make a general assignment for the benefit of creditors; (iv) suffer an order for relief to be entered against it or be declared to be insolvent; or (v) file a voluntary petition in bankruptcy, or a petition seeking reorganization or take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or if action shall be taken by the Issuer or any Significant Subsidiary of the Issuer for the purpose of effecting any of the foregoing.

 

(d)                             Involuntary Actions. The expiration of sixty (60) days after the filing of any involuntary petition against the Issuer or any Significant Subsidiary of the Issuer seeking relief under the Bankruptcy Code, without the petition being dismissed prior to that time, or an order, judgment or decree shall be entered, without the application, approval or consent of the Issuer or Significant Subsidiary of the Issuer by any court of competent jurisdiction approving a petition seeking a reorganization of the Issuer or any Significant Subsidiary or of all or a substantial part of the properties or assets of the Issuer or any Significant Subsidiary of the Issuer or appointing a receiver, trustee or liquidator of the Issuer or any Significant Subsidiary of the Issuer and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days or more.

 

3                   NTD: Bracketed language to be included only in the initial note.

 

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(e)                               Cross Acceleration. (i) The Issuer shall fail to pay any principal of, premium or interest on or any other amount payable in respect of the Senior Debt Obligations at the maturity thereof, and such failure shall continue after the applicable grace period, if any, specified in the Senior Debt Documents; or (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to the Senior Debt Obligations and shall continue after the applicable grace period, if any, specified in the Senior Debt Documents, if the effect of such event or condition is to accelerate the maturity of the Senior Debt Obligations or otherwise to cause the Senior Debt Obligations to mature; or the Senior Debt Obligations shall be declared to be due and payable or required to be prepaid or redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease the Senior Debt Obligations shall be required to be made, in each case under this clause (ii) prior to the stated maturity thereof, in each case other than by a regularly scheduled required prepayment, mandatory prepayment or redemption of all or any portion of the Senior Debt Obligations.

 

Section 11.                       REMEDIES.

 

(a)                               If an Event of Default specified in Section 10(c) or 10(d) of this Note occurs, then, subject to the terms and conditions set forth in Section 12, the entire balance of principal together with all accrued interest thereon, and all other Note Obligations payable by the Issuer hereunder shall become immediately due and payable, both as to principal and interest.

 

(b)                              If any Event of Default other than the Events of Default referred to in Section 10(a) of this Note occurs, then, subject to the terms and conditions set forth in Section 12, at any time thereafter during the continuance of such Event of Default, at the option of the holder hereof, such holder may, by written notice to the Issuer, declare immediately due and payable the entire balance of principal together with all accrued interest thereon, and all other amounts payable by the Issuer under the Note.

 

Section 12.                       SUBORDINATION.

 

(a)                               Restriction on Payments.  Prior to the Final Discharge Date, the Issuer shall not, and the Issuer shall procure that none of its Subsidiaries will, make any payment of any Note Obligation hereunder at any time unless the making or receipt of that payment is permitted under Section 12(b).

 

(b)                              Permitted Payments.

 

(i)                                  Subject to Section 12(b)(ii) and to the extent permitted by all applicable Senior Debt Documents, the Issuer may make payments in respect of the Note Obligations (whether principal, interest or otherwise) from time to time when due, and Holder may accept or agree to accept such payments at any time.

 

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(ii)                              Notwithstanding the foregoing, no payment in respect of the Note Obligations described in Section 12(b)(i) above may be made if (i) such payment would result in a breach of any Senior Debt Document or (ii) an event of default under any Senior Debt Document has occurred and is continuing (for the avoidance of doubt, after the expiration of all applicable cure or grace periods), unless, solely in the case of clause (ii) above, (x) the prior consent of each applicable Senior Agent is obtained or (y) such payment occurs in connection with the Final Discharge Date regarding payment of any Senior Debt Obligations.

 

(c)                               Payment Obligations Continue.  The Issuer shall not be released from the liability to make any payment (including of Default Interest, which shall continue to accrue) in relation to any Note Obligations by the operation of Section 12(a) and Section 12(b) even if the Issuer’s obligation to make that payment is restricted at any time by the terms of either of those Sections (it being understood that the failure of the Issuer to make any such payment as a result of a prohibition thereon under Section 12 shall not constitute an Event of Default).

 

(d)                             Restriction on Enforcement.  Holder hereby agrees that until the Final Discharge Date:

 

(i)                                  It shall not, without the prior written consent of the Senior Agents, commence, or join or participate in, any Enforcement Action.

 

(ii)                              In the event (i) any event of default under any Senior Debt Document then exists or would result from such payment on the Note Obligations, or (ii) Holder receives any payment or prepayment of principal, interest or any other amount, in whole or in part, of (or with respect to) the Note Obligations in violation of the terms of the Senior Debt Documents, then, and in any such event, any payment or distribution of any kind or character, whether in cash, property or securities, which shall be payable or deliverable with respect to any or all of the Note Obligations or which has been received by Holder shall be held in trust by Holder for the benefit of the Senior Debt Parties and shall forthwith be paid or delivered directly to the applicable Senior Agents for application to the payment of the Senior Debt Obligations (after giving effect to the relative payment priorities of such Senior Debt Obligations), to the extent necessary to make payment in full in cash of all sums due under the Senior Debt Obligations remaining unpaid and not cash collateralized after giving effect to any concurrent payment or distribution to the Senior Agents or the Senior Debt Parties. In any such event, the Senior Agents may, but shall not be obligated to, demand, claim and collect any such payment or distribution that would, but for these subordination provisions, be payable or deliverable with respect to the Note Obligations. Notwithstanding the foregoing, if one or more events of default shall exist under the Senior Debt Documents, the Senior Agents may agree in writing that payments

 

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may be made with respect to the Note Obligations which would otherwise be prohibited pursuant to this Agreement.

 

(iii)                          If Holder shall acquire by grant, indemnification, subrogation or otherwise, any lien or other interest in any of the assets or properties of the Issuer or any subsidiary thereof, such lien or other interest shall be subordinate in right of payment to the Senior Debt Obligations and any liens in respect of the Senior Debt Obligations as provided herein, and Holder hereby waives any and all rights it may acquire by subrogation or otherwise to any lien in respect of the Senior Debt Obligations or any portion thereof until such time as the Final Discharge Date shall have occurred.  In the event that a lien described in this subsection (iii) exists, until the Final Discharge Date, the Senior Agents are granted a power of attorney to execute any and all documentation necessary to release such lien and any filings perfecting such lien.

 

(iv)                          If, at any time, all or part of any payment with respect to Senior Debt Obligations theretofore made (whether by the Issuer, any affiliate or subsidiary thereof or any other person or enforcement of any right of setoff or otherwise) is rescinded or must otherwise be returned by the holders of Senior Debt Obligations for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Issuer or such other persons), the subordination provisions set forth herein shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made.

 

(v)                              Holder waives any marshalling rights with respect to the Senior Debt Parties in any Insolvency or Liquidation Proceeding.

 

(e)                               Guarantees and Security.  Any payments made to, or received by, Holder in respect of any guaranty or security in support of the Note Obligations shall be subject to the terms of this Agreement and applied on the same basis as payments made directly by the obligor under the Note Obligations. To the extent that the Issuer or any of its subsidiaries provides a guaranty or any security in support of any Note Obligations, Holder will cause each such person to become a party hereto (if such person is not already a party hereto) promptly after the date of the execution and delivery of the respective guarantee or security documentation, provided that any failure to comply with the foregoing requirements of this Section 12(e) will have no effect whatsoever on the subordination provisions contained herein (which shall apply to all payments received with respect to any guarantee or security for any Note Obligations, whether or not the person furnishing such guarantee or security is a party hereto).

 

(f)                                Prohibited Payments.  Holder hereby acknowledges and agrees that no payments will be accepted by it in respect of the Note Obligations (unless promptly turned over to the Senior Agents as contemplated by Section 12(d) above), to the extent

 

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such payments would be prohibited under any Senior Debt Obligations (or the Senior Debt Documents).

 

(g)                              Subordination.

 

(i)                                  Anything to the contrary notwithstanding, all Note Obligations shall be subordinate and junior in right of payment, to the extent and in the manner herein set forth, to the prior payment in full, in cash, and performance of all Senior Debt Obligations. The foregoing shall apply notwithstanding the availability of collateral to the Senior Debt Parties or the holders Note Obligations or the actual date and time of execution, delivery, recordation, filing or perfection of any liens granted with respect to the Senior Debt Obligations, or the lien or priority of payment thereof, and in any instance wherein the Senior Debt Obligations or any claim for the Senior Debt Obligations is subordinated, avoided or disallowed, in whole or in part, under any debtor relief law. In the event of an Insolvency or Liquidation Proceeding with respect to the Issuer, (i) the lenders or holders of any Senior Debt Obligations shall be entitled to the Discharge of Obligations with respect to the Senior Debt Obligations before Holder is entitled to receive any payment on account of any Note Obligations, (ii) the lenders or holders of any Senior Debt Obligations shall be entitled to receive any payment or distribution of any kind or character, whether in cash, property or securities or by set-off or otherwise, which may be payable or deliverable in any Insolvency or Liquidation Proceeding in respect of any Note Obligations, (iii) until the Final Discharge Date, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, to which Holder would be entitled, except for payments permitted under Section 12(b), shall be paid or delivered by Holder directly to the Senior Agents for application in accordance with the Senior Debt Documents, (iv) Holder shall execute, verify, deliver and file any proofs of claim in respect of the Note Obligations requested by any Senior Agent in connection with any such Insolvency or Liquidation Proceeding and hereby irrevocably authorizes, empowers and appoints each Senior Agent as its agent and attorney-in-fact (and to the extent required by applicable law, grant a power of attorney to the Senior Agents on such terms as the Senior Agents may reasonably require) to execute, verify, deliver and file such proofs of claim upon the failure of Holder to do so prior to 15 days before the expiration of the time to file any such proof of claim; provided that (x) no Senior Agent shall have an obligation to execute, verify, deliver, file and vote any such proof of claim and (y) if a Senior Agent is not entitled to execute, verify, deliver, file or vote any such proof of claim and a Senior Agent requests Holder or Issuer to take that action, Holder or Issuer shall take that action itself in accordance with the instructions of such Senior Agent.  In the event that a Senior Agent votes any claim in accordance with the authority granted hereby, Holder shall not be entitled to change or withdraw such vote.

 

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(ii)                              In any Insolvency or Liquidation Proceeding relating to the Issuer, Holder agrees that the lenders or holders of Senior Debt Obligations shall be entitled to the Discharge of Obligations with respect to the Senior Debt Obligations (including interest accrued on or accruing after the commencement of any Insolvency or Liquidation Proceeding, regardless of whether allowed or allowable in such proceeding and any premium stated to be payable) before Holder receives payment of any amount in respect of the Note Obligations.  No right of the Senior Agents to enforce the subordination of the Issuer’s obligations hereunder may be impaired by any act or failure to act by the Issuer or Holder or by the failure of the Issuer or the Holder to comply with the terms of this Note.  No failure or delay on the part of any party hereto or any holder of Senior Debt Obligations in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  If the Issuer or Holder violates any of the terms of this Section 12, in addition to any remedies in law, equity or otherwise, each Senior Agent may restrain such violation in any court of law and may interpose this Note as a defense in any action by Holder.  Holder hereto acknowledges that to the extent that no adequate remedy at law exists for breach of its obligations under this Note, in the event Holder fails to comply with its obligations hereunder, the Senior Agents shall have the right to obtain specific performance of the obligations of Holder, injunctive relief or such other equitable relief as may be available. Holder hereby acknowledges that the Senior Agents and the holders of the Senior Debt Obligations are intended third party beneficiaries of this Section 12 and shall be entitled to enforce the same against Holder, the Issuer or any guarantor of the Note Obligations.

 

(iii)                          If payment hereunder is accelerated because of an Event of Default, Holder will promptly notify holders of Senior Debt Obligations of the acceleration.  The provisions of this Section 12, the interest rate for the Note Obligations and the repayment terms of this Note may not be amended or modified without the written consent of the Senior Agents; provided that without such consent of the Senior Agents, the interest rate may be reduced and the payment terms of the Note Obligations may be modified to reduce or extend any amortization or otherwise relax the terms, conditions and covenants set forth in the Note.  Until the Final Discharge Date, without the written consent of the Senior Agents, the Note may not be modified to add any covenants or obligations or to amend the covenants and obligations of the Issuer in a manner which is more restrictive to the Issuer than as set forth in the Note as of the date hereof.

 

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Section 13.                       WAIVER.

 

The Issuer, endorsers, guarantors and sureties of this Note hereby waive diligence, demand for payment, presentment for payment, protest, notice of nonpayment, notice of protest, notice of intent to accelerate, notice of acceleration, notice of dishonor, and notice of nonpayment, and all other notices or demands of any kind (except notices specifically provided for herein) and expressly agree that, without in any way affecting the liability of the Issuer, endorsers, guarantors or sureties, the holder hereof may extend any maturity date or the time for payment of any installment due hereunder, otherwise modify this Note, accept additional security, release any Person liable, and release any security or guaranty. The Issuer, endorsers, guarantors and sureties waive, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense.

 

Section 14.                       RESERVED.

 

Section 15.                       ATTORNEYS’ FEES.

 

If this Note is not paid when due or if any Event of Default occurs, the Issuer promises to pay all costs of enforcement and collection and preparation therefor, including but not limited to, reasonable attorneys’ fees, whether or not any action or proceeding is brought to enforce the provisions hereof (including without limitation, all such costs incurred in connection with any bankruptcy, receivership or other court proceedings, whether at the trial or appellate level).

 

Section 16.                       SEVERABILITY.

 

If any provision of this Note is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect.

 

Section 17.                       NUMBER AND GENDER.

 

In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa.

 

Section 18.                       HEADINGS.

 

Headings at the beginning of each numbered section of this Note are intended solely for convenience and are not part of this Note.

 

Section 19.                       NOTICES.

 

(a)                               Any notice or other communication required or permitted to be given or made under this Note (i) shall be in writing, (ii) shall refer specifically to this Note, (iii) may be delivered by (A) hand delivery, (B) First Class U.S. Mail (regular, certified, registered or expedited delivery), (C) Federal Express or UPS Overnight, or other nationally recognized delivery service, (D) fax, or (E) e-mail or other electronic transmission, and (iv) shall be delivered or transmitted to the appropriate address as set forth in clause (b) below.

 

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(b)                              Each notice or other communication shall be delivered or addressed to a party at its address set forth below. A party’s address for notice may be changed from time-to-time only by notice given to the other party.

 

If to Holder:

 

ORIX USA Corporation
 1717 Main Street, Suite 900
 Dallas, Texas 75201
 Attention: Treasury
 Fax Number: Fax (214) 237-2018
 Email Address: treasury@orix.com

 

If to the Issuer:

 

Houlihan Lokey, Inc.
 1930 Century Park West
 Los Angeles, CA 90067
 Attention: [  ] 
 Fax Number: [  ] 
 Email Address: [  ]

 

Section 20.                       APPLICABLE LAW.

 

This Note and the transactions contemplated thereby are being executed and delivered and are intended to be performed in the State of New York, and shall be construed in accordance with and governed by the local laws of the State of New York, and enforceable in the federal and state courts in the State of New York.  EACH PARTY HERETO WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE OR ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH, AND SHALL NOT SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

Section 21.                       NON WAIVER.

 

Neither any failure nor any delay on the part of Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege, nor shall any course of dealing between the Issuer and Holder operate as a waiver of any right or rights of Holder.

 

Section 22.                       MODIFICATION, AMENDMENT, ETC.

 

No modification, amendment or waiver of any provision of this Note, nor consent to any departure by the Issuer, shall in any event be effective unless the same shall be in writing and signed by Holder and then such waiver or consent shall be effective only in the

 

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specific instance and for the specific purpose for which given. No notice or demand on the Issuer in any case shall entitle the Issuer to any other or further notice or demand in the same, similar or other circumstance.

 

Section 23.                       COUNTERPARTS.

 

This Note may be executed in two or more counterparts, each of which shall constitute but one agreement. This Note shall be effective when counterparts which, when taken together, bear the signature (including execution by facsimile) of all parties hereto, shall have been delivered to and received by Holder and the Issuer.

 

Section 24.                       INTEGRATION.

 

This Note contains the complete understanding and agreement of the holder hereof and the Issuer and supersedes all prior representations, warranties, agreements, arrangements, understandings and negotiations.

 

Section 25.                       BINDING EFFECT; ASSIGNMENTS.

 

This Note will be binding upon, and inure the benefit of, the holder hereof, the Issuer, and its respective successors and assigns. The Issuer may not delegate its obligations under this Note.  Holder may not assign or otherwise transfer any of its rights or obligations hereunder without the written consent of the Issuer.  [The Issuer hereby consents to the transfer of this Note, first to Fram and then to ORIX USA and/or its Affiliates, in each case in order to effect the IPO Dividend.]4

 

Section 26.                       SURVIVAL.

 

The representations, warranties and covenants of the Issuer in this Note shall survive the execution and delivery of this Note.

 

Section 27.                       RIGHT TO DEFEND.

 

Holder shall have the right, at the sole cost and expense of the Issuer, to appear in or defend any action or proceeding in which named or joined or otherwise purporting to affect the rights or duties of the parties hereunder and in connection therewith recover from the Issuer all necessary costs and expenses (including reasonable attorneys’ fees), with counsel reasonably satisfactory to Holder.

 

Section 28.                       INDEMNIFICATION.

 

The Issuer hereby protects, indemnifies, defends and holds harmless Holder from and against any and all liability, expense or damage of any kind or nature from any suits, claims or demands, including reasonable attorneys’ fees and expenses, on account of any matter or thing, whether in suit or not, arising out of this Note and the transactions contemplated hereby, other than taxes (which shall be governed exclusively by Section

	
 
    	
 
    
	
 
    	
 
    

4                   NTD: Bracketed language to be included only in the initial note.

 

13

 

9(b) hereof). The parties hereto recognize that no indemnity is intended to indemnity a Person’s gross negligence, unexcused failure to perform or unlawful acts.

 

Section 29.                       INTEREST RATE LIMITATION.

 

The Issuer hereby agrees to pay an effective rate of interest that is the sum of the interest rate provided for herein, together with any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the Note, including, without limitation, any fees to be paid by the Issuer pursuant to the provisions of the Note. Holder and the Issuer agree that none of the terms and provisions contained herein shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of New York. In such event, if any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate of this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of New York, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of the holder, be credited to the payment of other amounts payable under the Note or returned to the Issuer. All agreements between the Issuer and Holder, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any indebtedness governed hereby or otherwise, shall the interest contracted for, charged or received by Holder exceed the maximum amount permitted under law. If, from any circumstances whatsoever, interest would otherwise be payable to Holder in excess of the maximum lawful amount, the interest payable to Holder shall be reduced to the maximum amount permitted under applicable law; and, if from any circumstance Holder shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal of the Note and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of the Loan such excess shall be refunded to the Issuer. All interest paid or agreed to be paid to Holder shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full period until payment in full of the principal of the Note (including the period of any renewal or extension thereof) so that interest thereon for such full period shall not exceed the maximum amount permitted by applicable law.

 

(Signature Page Follows)

 

14

 

	
 
    	
Holder:
    
	
 
    	
 
    
	
 
    	
[HLHZ   HOLDING COMPANY, LLC, a
   Delaware limited liability company] [ORIX USA
   CORPORATION, a Delaware corporation]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ISSUER:
    
	
 
    	
 
    
	
 
    	
HOULIHAN   LOKEY, INC., a Delaware
   corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

ANNEX A

 

GLOSSARY OF DEFINED TERMS

 

In addition to the other terms defined elsewhere in this Agreement, for the purposes of same, the following words and terms shall have the meaning set forth below (such meanings being equally applicable to both the singular and plural form of the terms defined):

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person.  For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting interests, by contract or otherwise.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors, conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and any similar federal, state or foreign law for the relief of debtors affecting the rights of creditors generally.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, common stock, preferred stock, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Covered Taxes” means any tax of any kind, but excluding (a) franchise taxes, branch profits and taxes imposed on or measured by the net income or receipts of Holder under the law of any jurisdiction, (b) any such withholding tax that is in effect and would apply to a payment to Holder at the time Holder becomes a party to this Agreement, (c) taxes attributable to Holder’s failure to comply with Section 9(b)(ii) or Section 9(b)(iii) and (d) any withholding taxes imposed under FATCA.

 

“Default” means any of the events or circumstances specified in Section 10 hereof, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

“Default Interest Rate” is defined in Section 3(c).

 

A-1

 

“Discharge of Obligations” means, with respect to any Obligations (other than contingent or indemnification obligations not yet due and payable and for which no claim has been made or asserted), (a) the full cash payment thereof, including any interest, fees, premium and other charges accruing during an insolvency proceeding (whether or not allowed in the proceeding) and (b) the termination or expiration of all commitments, in each case, in accordance with the applicable debt documents.

 

“Enforcement Action” means in relation to the Note Obligations:

 

(a)                               the acceleration of any Note Obligations or the making of any declaration that any Note Obligations are prematurely due and payable;

 

(b)                              the making of any declaration that any Note Obligations are payable on demand;

 

(c)                               the making of a demand in relation to a Note Obligation that is payable on demand (other than a demand made by Holder in relation to any Note Obligations which are on-demand Note Obligations to the extent that any resulting payment would be permitted under Section 12(b));

 

(d)                             the exercise of any right to require the Issuer or any affiliate or subsidiary thereof to acquire any Note Obligations (including exercising any put or call option against any such affiliate or subsidiary for the redemption or purchase of any such Note Obligations);

 

(e)                               the exercise of any right of set-off or recoupment, bankers’ lien, account combination or payment netting against the Issuer or any affiliate or subsidiary thereof in respect of any Note Obligations other than the exercise of any such right which is otherwise expressly permitted under or not prohibited by the Senior Debt Documents to the extent that the exercise of that right gives effect to a payment permitted under Section 12(b);

 

(f)                                the suing for, commencing or joining of any legal or arbitration proceedings against the Issuer or any affiliate or subsidiary thereof to recover any Note Obligations; and

 

(g)                              any foreclosure proceeding, the exercise of any power of sale, the obtaining of a receiver, the seeking of default interest, the suing on, or otherwise taking any action to enforce the obligation of the Issuer or any affiliate or subsidiary thereof to pay any amounts relating to any Note Obligations or the taking of any other enforcement action against any asset or property of the Issuer or any such affiliate or subsidiary.

 

“Equity Interests” means, with respect to any Person, shares in (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares in (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares in (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person

 

A-2

 

of such shares (or such other interests), and other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting.

 

“Event of Default” means any of the events or circumstances specified in Section 10 hereof, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Note (or any successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement between a non-U.S. jurisdiction and the United States of America with respect to the foregoing and any law, regulation or practice adopted pursuant to any such intergovernmental agreement.

 

“Final Discharge Date” means the date on which the Discharge of Obligations with respect to the Senior Debt Obligations shall have occurred.

 

“Fram” means Fram Holdings, Inc., a Delaware corporation.

 

“FRAM Notes” means the promissory notes issued pursuant to the Third Amended and Restated Stockholders Agreement dated as of February 17, 2009, by and among Fram, ORIX USA Corporation, and the Holders identified therein.

 

“HLHZ” means HLHZ Holding Company, LLC, a Delaware limited liability company.

 

[“IPO Dividend” means the dividends and distributions payable (a) by the Issuer to HLHZ, (b) by HLHZ to Fram and (c) by Fram to the holders of record of Fram’s common stock as of the “open of business” on the day of pricing of the Issuer’s initial public offering and any dividends, distributions of other transfers of this Note that occur on such day in connection therewith.]5

 

“Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or proceeding under any debtor relief law with respect to the Issuer or any Significant Subsidiary of the Issuer, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, administration, administrative receivership, liquidation, reorganization, dissolution or other similar case or proceeding or declaration of a moratorium in any applicable jurisdiction with respect to the Issuer or any Significant Subsidiary of the Issuer or with respect to any of its assets or (c) any liquidation, dissolution, reorganization or winding up of the Issuer or any Significant Subsidiary of the Issuer whether voluntary or involuntary and whether or not involving insolvency or bankruptcy and including the passing of a resolution or making of an order for any of the foregoing. Notwithstanding the foregoing, any liquidation, dissolution, reorganization, consolidation or other transaction that is permitted by a Senior Debt Document shall not be deemed to be an “Insolvency or Liquidation Proceeding.”

 

 

	
 
    	
 
    
	
 
    	
 
    

5                   NTD: Bracketed language to be included only in the initial note.

 

A-3

 

“Interest Period” means (a) initially, the period commencing on the date hereof and ending on September 30, 2015; and (b) thereafter, each period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the third calendar month thereafter; provided that, in each of the case of clauses (a) and (b), (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (iii) no Interest Period shall extend beyond the date on which the Loan hereunder is repaid in full.

 

“Interest Rate” means a rate per annum equal to the London Interbank Offer Rate (rounded upwards, if necessary, to the nearest 1/100th) appearing on Reuters Screen LIBOR01 Page (or any successor or substitute page of such service) as the London interbank offered rate for deposits in Dollars for a three month term at approximately 11:00 a.m. on the date which is two (2) Business Days prior to the commencement of the applicable Interest Period, plus 165 basis points.

 

“Issuer” is defined in Section 1.

 

“Material Adverse Effect” means a material adverse effect on (a) the business, financial condition, operations, assets or liabilities of the Issuer and its Subsidiaries, taken as a whole; (b) the rights and remedies of the Holder under the Note or (c) the ability of the Issuer to perform its Note Obligations.

 

“Maturity Date” means the date that is the second anniversary of the date hereof.

 

“Note” is defined in Section 1.

 

“Note Obligations” means all Obligations of every nature of the Issuer now or hereafter existing under or arising out of or in connection with this Note, together with all extensions or renewals thereof, whether for principal, interest, any fees, any costs, expenses, damages, indemnities, taxes, payments otherwise contemplated, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Holder as a preference, fraudulent transfer, transfer at under value or otherwise (including interest that, but for the filing of a petition in bankruptcy or insolvency with respect to the Issuer, would accrue on such obligations, whether or not a claim is allowed against the Issuer for such amounts in the related bankruptcy or insolvency proceeding).

 

“Obligation” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to

 

A-4

 

judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding under Bankruptcy Law.

 

“Holder” means [ORIX USA Corporation], a Delaware corporation, together with its successors and assigns.

 

“Payment Date” means each June 30, September 30, December 31, and March 31, commencing June 30, 2016, and continuing until the payment in full of all Note Obligations.

 

“Person” means an individual, a partnership, a company, a limited liability company, a corporation, a business trust, a joint stock company, a trust, an unincorporated association, a joint venture, a governmental authority or any other entity.

 

“Principal Amount” is defined in Section 1.

 

“Senior Agent” means the administrative agent, trustee or collateral agent appointed under any Senior Debt Document and shall specifically include Bank of America, N.A. in its capacity as the Lender under the Senior Credit Agreement.

 

“Senior Debt Documents” shall mean any documents governing the terms of Senior Debt Obligations.

 

“Senior Debt Obligations” means the Issuer’s Obligations under the Senior Credit Agreement and any other indenture, agreement or instrument evidencing indebtedness for borrowed money, unless the indenture, agreement or instrument under which such indebtedness is incurred provides that it is (a) on parity with or subordinated in right of payment to this Note, or (b) subordinated in right of payment to the obligations under the Senior Credit Agreement, provided that in no case shall the FRAM Notes constitute Senior Debt Obligations.

 

“Senior Debt Parties” means each Person party to the Senior Debt Documents as a lender, and shall include, without limitation, the lender parties to the Senior Credit Agreement.

 

“Senior Credit Agreement” means the $75,000,000 senior credit facility to be entered into in connection with the Issuer’s public offering, by and among Houlihan Lokey, Inc., as borrower, and Bank of America, N.A., as the lender thereunder, as it may be amended, amended and restated, replaced or refinanced from time to time.

 

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as it may be amended from time to time.

 

“Subsidiary” means, with respect to any specified Person: (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or

 

A-5

 

one or more of the other Subsidiaries of that Person (or a combination thereof); or (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

 

A-6Exhibit 10.8

 

INDEMNIFICATION AGREEMENT

 

 

 

This Indemnification Agreement (“Agreement”) is made as of [ · ], 2015 by and between Houlihan Lokey, Inc., a Delaware corporation (the “Company”), and ______________ (“Indemnitee”).

 

RECITALS

 

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.  The Bylaws of the Company (the “Bylaws”) require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification;

 

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

 

WHEREAS, Indemnitee does not regard the protection available under the Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity.  Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                                Services to the Company.  Indemnitee agrees to serve as [a director/an officer] of the Company.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.  Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Company’s Certificate of Incorporation, the Bylaws, and the General Corporation Law of the State of Delaware.  The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as [a director/an officer] of the Company.

 

Section 2.                                Definitions.   As used in this Agreement:

 

(a)                               A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

(i)                                  Acquisition of Stock by Third Party.  Any Person (as defined below) (other than any Beneficial Owner as of the date of this Agreement) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities;

 

(ii)                              Change in Board of Directors.  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

 

 

(iii)                          Corporate Transactions.  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

 

(iv)                          Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

 

(v)                              Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

For purposes of this Section 2(a), the following terms shall have the following meanings:

 

(A)                          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(B)                           “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(C)                           “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(b)                              “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

 

 

(c)                               “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(d)                             “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

 

(e)                               “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedes bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(f)                                “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, Liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(g)                              “Liabilities” means all claims, liabilities, damages, losses, judgments (including pre- and post-judgment interest), orders, fines, penalties and other amounts payable in connection with, arising out of, or in respect of or relating to any Proceeding, including, without limitation, amounts paid in settlement in any Proceeding and all costs and Expenses in complying with any judgment, order or decree issued or entered in connection with any Proceeding or any settlement agreement, stipulation or consent decree entered into or issued in settlement of any Proceeding.

 

(h)                              The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or of any action on his part while acting as director or officer of the

 

 

Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by a Indemnitee to enforce his rights under this Agreement.

 

(i)                                  Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

Section 3.                                Indemnity in Third-Party Proceedings.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that his conduct was unlawful.

 

Section 4.                                Indemnity in Proceedings by or in the Right of the Company.   The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

 

Section 5.                                Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in

 

 

connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter.  If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 6.                                Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

Section 7.                                Additional Indemnification.

 

(a)                               Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

 

(b)                              For purposes of Section 7(a), the meaning of the phrase “to the fullest extent permitted by law” shall include, but not be limited to:

 

i.                                        to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

 

(ii)                              to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

 

Section 8.                                Exclusions.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

(a)                               for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

 

(b)                              for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

 

 

(c)                               in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

Section 9.                                Advances of Expenses.  Notwithstanding any provision of this Agreement to the contrary, the Company shall advance the expenses incurred by Indemnitee in connection with any Proceeding within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company.  This Section 9 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.

 

Section 10.                        Procedure for Notification and Defense of Claim.

 

(a)                               To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification, not later than thirty (30) days after receipt by Indemnitee of notice of the commencement of any Proceeding.  The omission to notify the Company will not relieve the Company from any liability which it may have to Indemnitee otherwise than under this Agreement.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

 

(b)                              The Company will be entitled to participate in the Proceeding at its own expense.

 

Section 11.                        Procedure Upon Application for Indemnification.

 

(a)                               Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case:  (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such

 

 

Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(b)                              In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(b).  If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected.  If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(c)                               Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be

 

 

made prior to the final disposition of the Proceeding; provided that, in absence of any such determination with respect to such Proceeding, the Company shall pay all Liabilities and advance Expenses with respect to such Proceeding as if the Company had determined the Indemnitee to be entitled to indemnification and advancement of Expenses with respect to such Proceeding.

 

Section 12.                        Presumptions and Effect of Certain Proceedings.

 

(a)                               In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                              If the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 12(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 11(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) of this Agreement.

 

(c)                               The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the

 

 

right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)                             Reliance as Safe Harbor.  For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise.  The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(e)                               Actions of Others.  The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

Section 13.                        Remedies of Indemnitee.

 

(a)                               In the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a) of this Agreement within 45 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by a court of his entitlement to such indemnification or advancement of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                              In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced

 

 

pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

 

(c)                               If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)                             The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.  The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

 

Section 14.                        Non-exclusivity; Survival of Rights; Insurance; Subrogation.

 

(a)                               The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)                              To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage

 

 

available for any such director, officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)                               In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(d)                             The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(e)                               The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

Section 15.                        Duration of Agreement.  This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as [a director/an officer] of the Company or (b) 1 year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement relating thereto.  This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

 

Section 16.                        Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

 

Section 17.      Enforcement.

 

(a)        The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

 

(b)        This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

Section 18.      Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

Section 19.      Notice by Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

 

Section 20.      Notices.   All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(a)        If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

 

(b)        If to the Company to:

 

Houlihan Lokey, Inc.

10250 Constellation Blvd., 5th Floor

Los Angeles, CA 90067

Attention: J. Lindsey Alley, Managing Director

Email: LAlley@HL.com

 

With a copy to:

 

Houlihan Lokey, Inc.

10250 Constellation Blvd., 5th Floor

Los Angeles, CA 90067

Attention: Christopher Crain, Esq., Managing Director, General Counsel

Email: CCrain@HL.com

 

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

Section 21.      Contribution.  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

Section 22.      Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 10(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably RL&F Service Corp., One Rodney Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 23.      Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

Section 24.      Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

 

	
HOULIHAN   LOKEY, INC.
    	
 
    	
INDEMNITEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
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Name:
    	
 
    	
Name:
    
	
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Address:

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