Document:

ex_133168.htm

Exhibit 10.4

 

 

EXECUTION COPY

 

 

 

 

 

 

 

ADMINISTRATION AGREEMENT

 

 

between

 

 

HERCULES CAPITAL FUNDING TRUST 2019-1,

as Issuer,

 

 

 

HERCULES CAPITAL, INC.,

as Administrator

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Owner Trustee

 

 

and

 

 

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 

 

Dated as of January 22, 2019

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	
			1.

				
			Duties of the Administrator

				
			2

			
	
			2.

				
			Records

				
			3

			
	
			3.

				
			Compensation; Payment of Fees and Expenses

				
			3

			
	
			4.

				
			Independence of the Administrator

				
			3

			
	
			5.

				
			No Joint Venture

				
			3

			
	
			6.

				
			Other Activities of the Administrator

				
			4

			
	
			7.

				
			Representations and Warranties of the Administrator

				
			4

			
	
			8.

				
			Administrator Termination Events; Termination of the Administrator

				
			5

			
	
			9.

				
			Action upon Termination or Removal

				
			6

			
	
			10.

				
			Liens

				
			6

			
	
			11.

				
			Notices

				
			6

			
	
			12.

				
			Amendments

				
			6

			
	
			13.

				
			Governing Law; Submission to Jurisdiction; Waiver of Jury Trial

				
			7

			
	
			14.

				
			Headings

				
			8

			
	
			15.

				
			Counterparts

				
			8

			
	
			16.

				
			Severability of Provisions

				
			8

			
	
			17.

				
			Not Applicable to Hercules in Other Capacities; Merger of Administrator

				
			8

			
	
			18.

				
			Benefits of the Administration Agreement

				
			9

			
	
			19.

				
			Assignment

				
			9

			
	
			20.

				
			Nonpetition Covenant

				
			9

			
	
			21.

				
			Limitation of Liability

				
			10

			

 

 

 

 

THIS ADMINISTRATION AGREEMENT (as amended, supplemented or otherwise modified and in effect from time to time, this “Agreement”) dated as of January 22, 2019, is between HERCULES CAPITAL FUNDING TRUST 2019-1, a Delaware statutory trust (the “Issuer”), HERCULES CAPITAL, INC., a Maryland corporation, as administrator (“Hercules” or the “Administrator”), U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as owner trustee (the “Owner Trustee”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned such terms in the Sale and Servicing Agreement dated as of January 22, 2019 (the “Sale and Servicing Agreement”) by and among the Issuer, Hercules, as seller and as servicer, Hercules Capital Funding 2019-1 LLC, as trust depositor (the “Trust Depositor”) and U.S. Bank National Association, as the trustee, backup servicer, custodian and paying agent.

 

W I T N E S S E T H :

 

WHEREAS, Trust Depositor and the Owner Trustee have entered into the Amended and Restated Trust Agreement dated as of January 22, 2019 (the “Trust Agreement”).

 

WHEREAS, the Issuer has issued the Notes pursuant to the Indenture and has entered into certain agreements in connection therewith, including, (i) the Sale and Servicing Agreement and (ii) the Indenture (the Trust Agreement, the Sale and Servicing Agreement and the Indenture are referred to herein collectively as the “Issuer Documents”);

 

WHEREAS, to secure payment of the Notes, the Issuer has pledged the Collateral to the Trustee pursuant to the Indenture;

 

WHEREAS, pursuant to the Issuer Documents, the Issuer and the Owner Trustee are required to perform certain duties;

 

WHEREAS, the Issuer and the Owner Trustee desire to have the Administrator perform certain of the duties of the Issuer and the Owner Trustee (in its capacity as owner trustee under the Trust Agreement), and to provide such additional services consistent with this Agreement and the Issuer Documents as the Issuer may from time to time request;

 

WHEREAS, the Administrator has the capacity to provide the services required hereby and is willing to perform such services for the Issuer and the Owner Trustee on the terms set forth herein;

 

 

 

 

NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

 

1.       Duties of the Administrator.

 

(a)     Duties with Respect to the Issuer Documents. The Administrator shall perform all of its duties specifically enumerated herein as Administrator under this Agreement and the Issuer Documents and the duties and obligations of the Issuer and the Owner Trustee (in its capacity as owner trustee under the Trust Agreement) under the Issuer Documents and no additional duties shall be read to be included herein; provided, however, except as otherwise provided in the Issuer Documents, that the Administrator shall have no obligation to make any payment required to be made by the Issuer under any Issuer Document. In addition, the Administrator shall consult with the Issuer and the Owner Trustee regarding its duties and obligations under the Issuer Documents. The Administrator shall monitor the performance of the Issuer and the Owner Trustee and shall advise the Issuer and the Owner Trustee when action is necessary to comply with the Issuer’s and the Owner Trustee’s duties and obligations under the Issuer Documents. The Administrator shall perform such calculations, and shall prepare for execution by the Issuer or shall cause the preparation by other appropriate persons of all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Issuer and the Owner Trustee (in its capacity as owner trustee) to prepare, file or deliver pursuant to the Issuer Documents. In furtherance of the foregoing, the Administrator shall take all appropriate action that is the duty of the Issuer and the Owner Trustee (in its capacity as owner trustee) to take pursuant to the Issuer Documents, and shall prepare, execute, file and deliver on behalf of the Issuer (but not, for the avoidance of doubt, the Owner Trustee in its individual capacity) all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Issuer Documents or otherwise by law.

 

(b)     Notices to Rating Agencies. The Administrator shall give notice to the Rating Agency of (i) any merger or consolidation of the Owner Trustee pursuant to Section 10.04 of the Trust Agreement; (ii) any merger or consolidation of the Trustee pursuant to Section 6.09 of the Indenture; (iii) any resignation or removal of the Trustee pursuant to Section 6.08 of the Indenture; (iv) any Event of Default of which it has been provided notice pursuant to Section 5.01 of the Indenture; (v) the termination of, and/or appointment of a successor to, the Servicer pursuant to Section 8.02 of the Sale and Servicing Agreement; and (vi) any supplemental indenture pursuant to Sections 9.01 or 9.02 of the Indenture; which notice shall be given, in the case of each of (i) through (vi), promptly upon the Administrator being notified thereof by the Owner Trustee, the Trustee or the Servicer, as applicable.

 

(c)     No Action by Administrator. Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not, take any action that the Issuer directs the Administrator not to take or which would result in a violation or breach of the Issuer’s covenants, agreements or obligations under any of the Issuer Documents.

 

(d)     Non-Ministerial Matters; Exceptions to Administrator Duties.

 

(i)     Notwithstanding anything to the contrary in this Agreement, with respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless, within a reasonable time before the taking of such action, the Administrator shall have notified the Issuer of the proposed action and the Issuer shall not have withheld consent or provided an alternative direction. For the purpose of the preceding sentence, “non-ministerial matters” shall include, without limitation:

 

2

 

 

(A)     the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer;

 

(B)     the appointment of successor Note Registrars (as defined in the Indenture), successor paying agents, successor Trustees, a successor Administrator or Successor Servicers, or the consent to the assignment by the Note Registrar, any paying agent or Trustee of its obligations under the Indenture; and

 

(C)     the removal of the Trustee.

 

(ii)     Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not, (w) make any payments to the Noteholders under the Transaction Documents, (x) except as provided in the Transaction Documents, sell the Trust Estate, (y) provide any consent or approval specifically required to be given by the Issuer or the Owner Trustee under the Transaction Documents or (z) take any other action that the Issuer directs the Administrator not to take on its behalf.

 

2.     Records. The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Issuer, the Owner Trustee and the Trustee at any time during normal business hours.

 

3.     Compensation; Payment of Fees and Expenses. As compensation for the performance of the Administrator’s obligations under this Agreement, the Administrator shall be entitled to receive an annual fee, which shall be solely an obligation of the Servicer; provided, however, notwithstanding the foregoing such compensation shall in no event exceed the Servicing Fee for the related annual period. The Administrator shall pay all expenses incurred by it in connection with its activities hereunder.

 

4.     Independence of the Administrator. For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority to act for or to represent the Issuer in any way (other than as permitted hereunder) and shall not otherwise be deemed an agent of the Issuer.

 

5.     No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Administrator and the Issuer as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others.

 

3

 

 

6.       Other Activities of the Administrator. Nothing herein shall prevent the Administrator or its Affiliates from engaging in other businesses or, in their sole discretion, from acting in a similar capacity as an Administrator for any other Person even though such Person may engage in business activities similar to those of the Issuer, the Owner Trustee or the Trustee.

 

7.       Representations and Warranties of the Administrator. The Administrator represents and warrants to the Issuer, the Owner Trustee and the Trustee as follows:

 

(a)     Existence and Power. The Administrator is a corporation validly existing and in good standing under the laws of its state of incorporation and has, in all material respects, full power and authority to own its assets and operate its business as presently owned or operated, and to execute, deliver and to perform its obligations under the Transaction Documents to which it is a party. The Administrator has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would reasonably be expected to materially and adversely affect the ability of the Administrator to perform its obligations under the Transaction Documents or affect the enforceability or collectibility of the Loans or any other part of the Collateral.

 

(b)     Authorization and No Contravention. The execution, delivery and performance by the Administrator of the Transaction Documents to which it is a party have been duly authorized by all necessary action on the part of the Administrator and do not contravene or constitute a default under (i) any applicable law, rule or regulation, (ii) its organizational documents or (iii) any material agreement or instrument to which the Administrator is a party by which its properties are bound (other than violations of such laws, rules, regulations or agreements which do not affect the legality, validity or enforceability of any of such agreements and which, individually or in the aggregate, would not reasonably be expected to materially and adversely affect the transactions contemplated by, or the Administrator’s ability to perform its obligations under, the Transaction Documents).

 

(c)     No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Administrator of any Transaction Document other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not reasonably be expected to have a material adverse effect on the enforceability or collectibility of the Loans or any other part of the Collateral or would not materially and adversely affect the ability of the Administrator to perform its obligations under the Transaction Documents.

 

(d)     Binding Effect. Each Transaction Document to which the Administrator is a party constitutes the legal, valid and binding obligation of the Administrator enforceable against the Administrator in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors’ rights generally and, if applicable, the rights of creditors of corporations from time to time in effect or by general principles of equity.

 

4

 

 

8.        Administrator Termination Events; Termination of the Administrator.

 

(a)     Subject to clause (d) below, the Administrator may resign its duties hereunder by providing the Issuer with at least thirty (30) days’ prior written notice.

 

(b)     Subject to clauses (c) and (d) below, the Issuer may remove the Administrator without cause by providing the Administrator with at least thirty (30) days’ prior written notice.

 

(c)     The occurrence of any one of the following events (each, an “Administrator Termination Event”) shall also entitle the Issuer, subject to Section 19 hereof, to terminate and replace the Administrator:

 

(i)     any failure by the Administrator to deliver or cause to be delivered any required payment to the Trustee for distribution to the Noteholders, which failure continues unremedied for two (2) Business Days after discovery thereof by a Responsible Officer of the Administrator or receipt by the Administrator of written notice thereof from the Trustee or Noteholders evidencing at least 25% of the Aggregate Outstanding Principal Balance of the Notes;

 

(ii)     any failure by the Administrator to duly observe or perform in any respect any other of its covenants or agreements in this Agreement, which failure materially and adversely affects the rights of the Issuer or the Noteholders, and which continues unremedied for 60 days after discovery thereof by a Responsible Officer of the Administrator or receipt by the Administrator of written notice thereof from the Trustee or Majority Noteholders; or

 

(iii)     the Administrator suffers an Insolvency Event;

 

provided, however, that (A) if any delay or failure of performance referred to under clause (c)(i) above shall have been caused by force majeure or other similar occurrence, the two (2) Business Day grace period referred to in such clause (c)(i) shall be extended for an additional 60 calendar days and (b) if any delay or failure of performance referred to under clause (c)(ii) above shall have been caused by force majeure or other similar occurrence, the 60-day grace period referred to in such clause (c)(ii) shall be extended for an additional 60 calendar days.

 

(d)     If the Administrator resigns or if an Administrator Termination Event shall have occurred, the Issuer may, subject to Section 19 hereof, by notice given to the Administrator and the Owner Trustee, terminate all or a portion of the rights and powers of the Administrator under this Agreement, including the rights of the Administrator to receive the annual fee for services hereunder for all periods following such termination; provided, however that such termination shall not become effective until such time as the Issuer, subject to Section 19 hereof, shall have appointed a successor Administrator in the manner set forth below. Upon any such termination, all rights, powers, duties and responsibilities of the Administrator under this Agreement shall vest in and be assumed by any successor Administrator appointed by the Issuer, subject to Section 19 hereof, pursuant to a management agreement between the Issuer and such successor Administrator, containing substantially the same provisions as this Agreement (including with respect to the compensation of such successor Administrator), and the successor Administrator is hereby irrevocably authorized and empowered to execute and deliver, on behalf of the Administrator, as attorney-in-fact or otherwise, all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect such vesting and assumption. Further, in such event, the Administrator shall use its commercially reasonable efforts to effect the orderly and efficient transfer of the administration of the Issuer to the new Administrator.

 

5

 

 

(e)     The Issuer, subject to Section 19 hereof, may waive in writing any Administrator Termination Event by the Administrator in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past Administrator Termination Event, such Administrator Termination Event shall cease to exist, and any Administrator Termination Event arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other Administrator Termination Event or impair any right consequent thereon.

 

9.       Action upon Termination or Removal. Promptly upon the effective date of termination of this Agreement pursuant to Section 8, or the removal of the Administrator pursuant to Section 8, the Administrator shall be entitled to be paid by the Servicer all fees accruing to it to the date of such termination or removal.

 

10.      Liens. The Administrator will not directly or indirectly create, allow or suffer to exist any Lien on the Collateral other than Permitted Liens.

 

11.     Notices. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first class United States mail, postage prepaid, hand delivery, prepaid courier service, email or by facsimile, and addressed at such address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder.

 

12.       Amendments.

 

(a)     Any term or provision of this Agreement may be amended by the Administrator without the consent of the Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person subject to the delivery of an Officer’s Certificate of the Servicer to the Trustee by the Administrator to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; provided, that no amendment shall be effective which affects the rights, protections or duties of the Trustee or the Owner Trustee without the prior written consent of such Person.

 

6

 

 

(b)     This Agreement may also be amended from time to time by the Issuer, the Administrator and the Trustee, with the consent of the Majority Noteholders and with notice to the Owner Trustee, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders. It will not be necessary for the consent of Noteholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders will be subject to such reasonable requirements as the Trustee may prescribe, including the establishment of record dates.

 

(c)     Any term or provision of this Agreement may also be amended from time to time by the Administrator to correct a material misstatement or omission of the terms of this Agreement in the Offering Memorandum without the consent of the Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person, provided, however, the Administrator shall provide written notification of the substance of such amendment to the Issuer, the Owner Trustee and the Trustee and promptly after the execution of any such amendment, the Administrator shall furnish a copy of such amendment to the Issuer, Owner Trustee and the Trustee.

 

(d)     Prior to the execution of any amendment pursuant to this Section 12, the Administrator shall provide written notification of the substance of such amendment to any Rating Agency and the Owner Trustee; and promptly after the execution of any such amendment, the Administrator shall furnish a copy of such amendment to the Rating Agency, the Owner Trustee and the Trustee.

 

(e)     Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Trustee may, but shall not be obligated to, enter into any such amendment which adversely affects the Owner Trustee’s or the Trustee’s, as applicable, own rights, duties or immunities under this Agreement.

 

13.      Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAWS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

7

 

 

(b)      Each of the parties hereto hereby irrevocably and unconditionally:

 

(i)      submits for itself and its property in any legal action or proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;

 

(ii)     consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(iii)     agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 11 of this Agreement;

 

(iv)     agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(v)      to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.

 

14.     Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.

 

15.     Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

 

16.     Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

 

17.      Not Applicable to Hercules in Other Capacities; Merger of Administrator.

 

(a)     Nothing in this Agreement shall affect any obligation Hercules may have in any other capacity.

 

8

 

 

(b)     Any entity (i) into which the Administrator may be merged or converted or with which it may be consolidated, to which it may sell or transfer its business and assets as a whole or substantially as a whole or any entity resulting from any merger, sale, transfer, conversion or consolidation to which the Administrator shall be a party, or any entity succeeding to the business of the Administrator or (ii) of which more than 50% of the voting stock or voting power and 50% or more of the economic equity is owned directly or indirectly by Hercules and which executes an agreement of assumption to perform every obligation of the Administrator under this Agreement, shall be the successor to the Administrator under this Agreement, in each case, without the execution or filing of any paper of any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

 

18.     Benefits of the Administration Agreement. Nothing in this Agreement, expressed or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 6.10 of the Indenture and the Noteholders, any benefit or any legal or equitable right, remedy or claim under this Agreement.

 

19.     Assignment; Rights of Trustee. Each party hereto hereby acknowledges and consents to the mortgage, pledge, assignment and grant of a security interest by the Issuer to the Trustee pursuant to the Indenture for the benefit of the Noteholders of all of the Issuer’s rights under this Agreement. In addition, the Administrator hereby acknowledges and agrees that for so long as any Notes are outstanding, the Trustee will have the right to exercise all waivers and consents, rights, remedies, powers, privileges and claims of the Issuer under this Agreement.

 

20.     Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one (1) year and one (1) day after payment in full of all obligations of the Issuer in respect of all securities issued by the Issuer (i) such party shall not authorize the Issuer to commence a voluntary winding-up or other voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to such bankruptcy remote party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such bankruptcy remote party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against such bankruptcy remote party, or to make a general assignment for the benefit of, its creditors generally, any party hereto or any other creditor of such bankruptcy remote party, and (ii) such party shall not commence, join with any other Person in commencing or institute with any other Person, any proceeding against the Issuer under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.

 

9

 

 

21.     Limitation of Liability. It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as Owner Trustee on behalf of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (iii) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties to this Agreement and by any person claiming by, through or under them and (iv) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaking by the Issuer under this Agreement or any related documents. For the purposes of this Agreement, in the performance of its duties or obligations hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement.

 

[SIGNATURES ON NEXT PAGE]

 

 

 

 

 

 

 

10

 

 

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

 

 

	 	
			HERCULES CAPITAL FUNDING TRUST 

			2019-1

			
	 	 	 
	 	
			By: Wilmington Trust, National Association, not in

			its individual capacity but solely as Owner Trustee

			
	 	 	 
	 	 	 
	 	By:	 
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

Hercules Capital Funding Trust 2019-1

Administration Agreement

S-1

 

 

	 	HERCULES CAPITAL, INC.,

			as Administrator
	 	 	 
	 	 	 
	 	By:	 
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

Hercules Capital Funding Trust 2019-1

Administration Agreement

S-2

 

 

	 	
			WILMINGTON TRUST, NATIONAL 

			ASSOCIATION, not in its individual capacity but

			solely as Owner Trustee

			
	 	 	 
	 	 	 
	 	By:	 
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

Hercules Capital Funding Trust 2019-1

Administration Agreement

S-3

 

 

	 	
			U.S. BANK NATIONAL ASSOCIATION, as

			Trustee

			
	 	 	 
	 	 	 
	 	By:	 
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

Hercules Capital Funding Trust 2019-1

Administration Agreement

S-4

 

 

Joinder of Servicer:

 

Hercules Capital, Inc., as Servicer, joins in this Agreement solely for purposes of Section 3.

 

 

	 	HERCULES CAPITAL, INC.,

			as Servicer
	 	 	 
	 	 	 
	 	By:	 
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

Hercules Capital Funding Trust 2019-1

Administration Agreement

S-5ex_133142.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 18th day of January, 2019, by and between NOJO BABY & KIDS, INC., a Delaware corporation (“Employer”), and DONNA SHERIDAN, an individual resident of the State of California (“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, Employer desires to hire Employee, and Employee desires to be employed by Employer, on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

SECTION 1.      Effectiveness. The rights and obligations of the parties set forth herein shall become effective on the date hereof (the “Commencement Date”).

 

SECTION 2.      Employment. Subject to the terms hereof, Employer hereby agrees to employ Employee as President and Chief Executive Officer of Employer, and Employee hereby accepts such employment. In such capacity, Employee shall perform such duties and shall have such responsibilities as are normally associated with such positions, and as otherwise may be assigned to Employee from time to time by Employer or the board of directors (the “Board”) of Crown Crafts, Inc., a Delaware corporation and the sole shareholder of Employer (“Crown Crafts”), or the President and Chief Executive Officer of Crown Crafts. While employed by Employer, Employee shall devote substantially all of her business time and efforts to Employer’s business; provided, however, that the foregoing shall not be deemed to restrict Employee from devoting a reasonable amount of time and attention to the management of her personal affairs and investments, so long as such activities do not interfere with the responsible performance of her duties hereunder.

 

SECTION 3.      Term of Employment. The term (the “Term”) of Employee’s employment under this Agreement shall commence as of the Commencement Date and shall continue until the earliest to occur of the following:

 

(a)     December 31, 2019, provided that, subject to the other terms and conditions of this Agreement, beginning on February 1, 2019 and continuing on the first (1st) day of each calendar month thereafter, the Term shall be extended automatically for one additional calendar month so that the Term shall always be for one (1) full year as of the commencement of each calendar month (such one (1) period, as in effect at any given time, the “Severance Protection Period”), unless Employer or Employee shall affirmatively decide and notify the other to the contrary in writing of its or her intention that the Term shall not be so extended, in which event the Term shall terminate at the end of the one (1) year period following such notice;

 

(b)     the termination of Employee’s employment in accordance with Section 7.2 or Section 7.3 hereof;

 

 

 

 

(c)     Employee’s resignation other than for Good Reason (as defined below);

 

(d)     the death of Employee; and

 

(e)     upon the election of either Employer or Employee in the event of the Incapacity (as defined below) of Employee. If Employer or Employee elects to terminate Employee’s employment upon the Incapacity of Employee, it is expressly understood that Employer’s obligations under this Agreement shall then cease, notwithstanding that Employee may be entitled to certain benefits, including any long-term disability insurance benefits. For purposes of this Agreement, “Incapacity” means the failure of Employee to perform Employee’s normal required services hereunder due to a disability for a period of three (3) months during any consecutive twelve (12) month period during the Term.

 

SECTION 4.      Compensation; Benefits; Expenses.

 

4.1     Salary. During the Term, Employee shall be paid a salary (the “Salary”) of $300,000 per annum, less deductions and withholdings required by applicable law. The Salary shall be paid to Employee in accordance with the normal payroll practices of Employer. Employee shall be eligible to receive salary increases at the discretion of the Board or a committee thereof.

 

4.2     Bonus. During the Term, commencing with Employer’s 2020 fiscal year which begins April 1, 2019, Employee shall be eligible to receive, with respect to each fiscal year of Employer during the Term, an annual bonus equal to as much as forty percent (40%) of Employee’s Salary at target performance and as much as sixty percent (60%) of Employee’s salary at maximum performance, pursuant to Crown Crafts’ bonus plan for its highly compensated employees, which bonus plan shall be based upon Employer’s annual EBITDA targets; provided, however, that the specific terms of such bonus plan shall be in the sole and absolute discretion of the Board or a committee thereof. Any such bonus will be paid during July next following the completion of the applicable fiscal year, provided that Employee continues to be employed with Employer on the date the applicable fiscal year ends.

 

4.3     Additional Employment Benefits. During the Term, Employer will provide Employee with such other fringe benefits, and Employee will participate in such other employee benefit plans and arrangements, subject to the applicable eligibility and other terms and provisions of such plans and arrangements, as are generally provided to other similarly situated, highly compensated employees of Employer or Crown Crafts. During the Term, Employer will also provide Employee the use of an Employer-owned automobile (including Employer’s payment of all associated expenses for insurance, maintenance and gasoline). In the discretion of the Board or a committee thereof, Employee may also receive awards under any equity compensation plans established by Crown Crafts, subject to the applicable eligibility and other terms and provisions of such plans and awards.

 

4.4     Vacations and Holidays. Employee shall be entitled to fifteen (15) days vacation each year during the Term (or such greater number of vacation days to which she shall be entitled under Employer’s policies), as well as holidays consistent with Employer’s policies.

 

 

 

 

4.5     Expenses. Employer shall reimburse Employee for all reasonable and necessary expenses incurred by Employee at the request of and on behalf of Employer. All such expenses shall be documented and submitted in accordance with Employer’s business expense policy.

 

4.6     Stock Award. Effective as of the Commencement Date, Crown Crafts shall grant Employee 25,000 shares of Crown Crafts’ common stock pursuant to Crown Crafts’ 2014 Omnibus Equity Compensation Plan, which shares shall be subject to vesting on the second (2nd) anniversary of the Commencement Date. The remaining terms and conditions of such stock award shall be commensurate with other stock awards granted to similarly situated, highly compensated employees of Crown Crafts.

 

SECTION 5.      Restrictive Covenants.

 

5.1     Non-Disclosure of Confidential Information.

 

(a)     Employee recognizes and agrees that the business of the Crown Crafts Companies (as defined below) is highly competitive and that in the course of Employee’s employment Employee will become acquainted with Confidential Information (as defined below) belonging to the Crown Crafts Companies which is valuable, specialized and a unique asset of the Crown Crafts Companies.

 

(b)     For purposes of this Agreement, the terms set forth below will have the following meanings:

 

(i)     “Crown Crafts Companies” shall mean Crown Crafts and each of its direct and indirect subsidiaries (including Employer) as to which Employee received any Confidential Information, performed any services or was employed.

 

(ii)     “Trade Secret” means information, without regard to form, including technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers, which is not commonly known by or available to the public and which information:

 

(A)     derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

 

(B)     is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

(iii)     “Confidential Information” means data and information:

 

(A)     relating to the business of the Crown Crafts Companies, regardless of whether the data or information constitutes a Trade Secret;

 

 

 

 

(B)     disclosed to Employee by any of the Crown Crafts Companies or of which Employee became aware as a consequence of Employee’s relationship with any of the Crown Crafts Companies;

 

(C)     having value to the Crown Crafts Companies;

 

(D)     not generally known to competitors of the Crown Crafts Companies; and

 

(E)     which includes, Trade Secrets, methods of operation, names of customers and suppliers, price lists and methodologies, strategies, financial information, technical information, projections, route books, personnel data, and similar information;

 

provided, however, that such term shall not mean data or information (1) which has been voluntarily disclosed to the public by the Crown Crafts Companies, except where such public disclosure has been made without authorization from the Crown Crafts Companies; (2) which has been independently developed and disclosed by others; or (3) which has otherwise entered the public domain through lawful means and without any action or omission on the part of Employee.

 

(c)     Employee agrees that while Employee is employed by Employer or any of the other Crown Crafts Companies and following the termination of Employee’s employment, regardless of whether the employment ends voluntarily or involuntarily and regardless of whether the Term has expired, Employee shall treat and maintain as confidential any Confidential Information, regardless of the medium in which it is maintained or stored, and shall not disclose to any unauthorized persons or entities or use for Employee’s own account or for the benefit of any third party any Confidential Information, without the prior written consent of Employer, in each case for so long as the information remains Confidential Information or a Trade Secret, as applicable.

 

(d)     In the event that Employee is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, then Employee shall notify Employer promptly of the request or requirements so Employer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.1. If, in the absence of a protective order or receipt of a waiver hereunder, Employee is, on the written advice of counsel, compelled to disclose any Confidential Information to any tribunal or government agency or else stand liable for contempt or penalties, then Employee may disclose the Confidential Information to such tribunal or government agency; provided, however, that Employee shall use Employee’s reasonable efforts to obtain, at the request and expense of Employer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Employer shall designate.

 

5.2     Non-Competition.

 

(a)     Employee agrees that the Crown Crafts Companies are engaged in the highly competitive business of manufacturing, marketing and distributing infant, toddler and juvenile bedding and blankets, and infant and toddler bibs, soft bath products, disposable products and accessories. Employee agrees that due to Employee’s position and training and Employee’s access to the Confidential Information, Employee’s engaging in any business that is competitive with the Crown Crafts Companies will cause the Crown Crafts Companies great and irreparable harm.

 

 

 

 

(b)     Employee further acknowledges and agrees that her employment with Employer may include (i) having a primary duty in managing the enterprise of Employer or of a customarily recognized department or subdivision thereof, (ii) customarily and regularly directing the work of two or more other employees or (iii) having the authority to hire or fire other employees or having particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change to the status of other employees. Employee further acknowledges and agrees that by reason of Employer’s investment of time, money, training, trust, exposure to the public, exposure to customers, vendors and other business relationships during the course of employment with Employer, Employee has gained or will gain a high level of notoriety, fame, reputation or public persona as Employer’s representative or spokesperson, and has gained or will gain a high level of influence or credibility with Employer’s customers, vendors or other business relationships or is and will be intimately involved in the planning for or direction of Employer’s business or a defined unit of the business of Employer.

 

(c)     Employee agrees that Employee’s work for or on behalf of the Crown Crafts Companies will bring Employee into close contact with many of the customers, prospective customers, Trade Secrets and Confidential Information of the Crown Crafts Companies. Employee further agrees that the covenants in Sections 5.1, 5.2, 5.3 and 5.4 of this Agreement are reasonable and necessary to protect the Crown Crafts Companies’ legitimate business interests in their customer relationships, Trade Secrets and Confidential Information. Employee acknowledges that to protect adequately the interest of the Crown Crafts Companies in their business it is essential that any noncompetition covenant with respect thereto cover all Business Activities and the entire Territory (as such terms are defined below).

 

(d)     For purposes of this Agreement, the terms set forth below will have the following meanings:

 

(i)     “Business Activities” shall mean all activities of the type engaged in by Employee for any of the Crown Crafts Companies during the immediately preceding two (2) years of Employee’s employment with Employer.

 

(ii)     “Competitive” shall mean products, activities or services that are the same as or similar to the products, activities or services of Employer or any of the other Crown Crafts Companies.

 

(iii)     The term “customer” shall include (A) the person or entity that purchases products or services from Employer or any other Crown Crafts Company, (B) any division, subsidiary, affiliate, franchisee or franchisor of such entity that subsequently acquires or uses any such product or service, (C) any other subsequent purchaser or end user of such product or service, and (D) each separate store or location of the foregoing that purchases or uses such product or service.

 

 

 

 

(iv)     “Territory” shall mean the geographic area consisting of each state in the United States in which, during the immediately preceding two (2) years prior to the date of the termination of Employee’s employment with Employer, (A) Employee engaged in, supervised or assisted in any Business Activities or (B) were present any customers that Employer or any of the other Crown Crafts Companies serviced, marketed to or sold to, or actively sought prospective customers, and with whom Employee had Material Contact (as defined below). For purposes of reference, Employer and Employee acknowledge and agree that such geographic area at the date of this Agreement is comprised of the District of Columbia and each and every state within the Continental United States.

 

(e)     Employee agrees that during her employment with Employer and until (i) the expiration of the Severance Protection Period if Employee’s employment under this Agreement is terminated by Employer without Cause or by Employee for Good Reason or (ii) one (1) year following the termination of Employee’s employment with Employer other than by Employer without Cause or by Employee for Good Reason, but excluding termination upon the expiration of the Term (such period in each of clause (i) or clause (ii), as applicable, the “Restricted Period”), Employee shall not, directly or indirectly, on Employee’s own behalf or another’s behalf, within the Territory, engage in Business Activities that are Competitive with those engaged in by any of the Crown Crafts Companies or their successors within two (2) years prior to the termination of Employee’s employment, without the prior written consent of Employer.

 

5.3     Non-Solicitation of Customers.

 

(a)     Employee agrees that while employed by Employer or any of the other Crown Crafts Companies, Employee will have contact with and become aware of the Crown Crafts Companies’ customers and the representatives of those customers, their names and addresses, specific customer needs and requirements, and leads and references to prospective customers. Employee further agrees that loss of such customers will cause the Crown Crafts Companies great and irreparable harm.

 

(b)     Employee agrees that, during the Restricted Period, Employee shall not directly or by assisting others, solicit, or attempt to solicit, any customers of any of the Crown Crafts Companies, including actively sought prospective customers, with whom Employee had Material Contact at any time during the two (2) year period prior to the date of the termination of Employee’s employment with any of the Crown Crafts Companies, for the purpose of providing products or services that are Competitive with those provided by any of the Crown Crafts Companies within two (2) years prior to such termination. For purposes of this Agreement, “Material Contact” means contact between Employee and a customer or prospective customer: (i) with whom or which Employee dealt on behalf of Employer or any of the other Crown Crafts Companies; or (ii) whose dealings with Employer or any of the other Crown Crafts Companies were coordinated or supervised by Employee; or (iii) about whom Employee obtained Confidential Information in the ordinary course of business as a result of Employee’s association with Employer or any of the other Crown Crafts Companies; or (iv) who receives products or services authorized by Employer or any of the other Crown Crafts Companies, the sale or provision of which results or resulted in compensation, commissions or earnings for Employee.

 

 

 

 

5.4     Non-Solicitation of Employees. Employee agrees that, during the Restricted Period, Employee (on Employee’s own behalf or that of any other person or entity) shall not directly or indirectly hire, recruit, attempt to hire or recruit, solicit, induce or influence any person who is an employee of Employer or any of the other Crown Crafts Companies as of, or within six (6) months prior to, Employee’s termination of employment, to discontinue, reduce, reject or otherwise change in any manner adverse to the interests of Employer or such other Crown Crafts Company the nature or extent of their employment relationship.

 

5.5     Severability. If any provision of this Section 5 is determined to be invalid, illegal or unenforceable, in whole or in part, then such provision shall be modified so as to be enforceable to the maximum extent permitted by law. If such provision cannot be modified to be enforceable, the provision shall be severed from this Agreement to the extent unenforceable. In this regard, Employer and Employee hereby agree that any judicial authority construing this Agreement shall be empowered to sever any portion of the geographic restrictions, any prohibited business activity or any time period from the coverage of this Section 5 and to apply the provisions of this Section 5 to the remaining portion of the geographic restrictions, the remaining business activities and the remaining time period not so severed by such judicial authority.

 

5.6     Third-Party Beneficiary. The parties acknowledge and agree that Employee’s obligations under this Section 5 are intended to directly benefit each of the Crown Crafts Companies, and that in the event of Employee’s breach of any obligation under this Section 5 involving, concerning or relating to any of the Crown Crafts Companies, other than Employer, such Crown Crafts Company shall be deemed a third-party beneficiary of this Agreement and may bring an action to enforce its terms directly against Employee.

 

5.7     Injunctive Relief. Employee hereby agrees that any remedy at law for any breach of the provisions contained in Sections 5.1, 5.2, 5.3 or 5.4 hereof shall be inadequate and that the Crown Crafts Companies shall be entitled to injunctive relief in addition to any other remedy that any of the Crown Crafts Companies might have under this Agreement. Employee further acknowledges and agrees that the existence of any claim or cause of action by Employee against Employer or any of the other Crown Crafts Companies, whether or not predicated upon Employee’s employment relationship, shall not relieve Employee of Employee’s obligations under Section 5 hereof and otherwise shall not operate as a defense to the enforcement of Section 5 hereof.

 

SECTION 6.      Intellectual Property, Inventions and Patents.

 

6.1     Work Product. Employee acknowledges and agrees that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, methods of doing business, processes, programs, designs, analyses, drawings, reports, data, software, trade secrets, firmware, logos, patent applications, copyrightable work and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) which relate to Employer’s or any of its affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed, acquired, contributed to, made or reduced to practice by Employee (whether alone or jointly with others) while employed by Employer or any of its affiliates (collectively, “Work Product”), belong to Employer or such affiliate. Employee shall promptly disclose Work Product to Employer and, at Employer’s expense, perform all actions reasonably requested by Employer or any of its affiliates (whether during or after the Term) to establish and confirm such ownership (including providing testimony and executing assignments, consents, powers of attorney and other instruments). The provisions of this Section 6 will apply to all Work Product, including that which is first reduced to practice and developed during the Term, whether or not further development or reduction to practice may take place after termination of this Agreement.

 

 

 

 

6.2     Work Made for Hire. Any copyrightable work falling within the definition of Work Product shall be deemed a “work made for hire” under the copyright laws of the United States, and ownership of all rights therein shall vest in Employer or its applicable affiliate. To the extent that any Work Product is not deemed to be a “work made for hire,” Employee hereby assigns and agrees to assign to Employer or such affiliate all right, title and interest, including the intellectual property rights that Employee may have, in and to such Work Product. Employee agrees to execute any documents and take any actions (at Employer’s expense) that may be legally required to effect and confirm such transfer and assignment and waiver.

 

SECTION 7.      Termination.

 

7.1     Definitions of Cause and Good Reason.

 

(a)     “Cause” shall exist if:

 

(i)     Employee is convicted of, pleads guilty or nolo contendere to, or confesses to any felony or any act of fraud, misappropriation, misrepresentation or embezzlement;

 

(ii)     Employee has engaged in any dishonest act to the material damage or prejudice of any of the Crown Crafts Companies or in any conduct or activities materially damaging to the property, business or reputation of any of the Crown Crafts Companies;

 

(iii)     Employee has engaged in habitual substance abuse;

 

(iv)     Employee breaches the terms and conditions of this Agreement (including Section 5 hereof) and, after receiving written notice from Employer, stating the nature of the breach and affording Employee at least ten (10) days to correct the act or omission complained of to the reasonable satisfaction of Employer (if curable), such breach is not cured, or after having received such notice, Employee at any time thereafter again so breaches;

 

(v)     Employee violates any rule, regulation or policy of Employer and, after receiving written notice from Employer, stating the nature of the violation and affording Employee at least ten (10) days to correct the act or omission complained of to the reasonable satisfaction of Employer (if curable), such violation is not cured, or after having received such notice, Employee at any time thereafter again so breaches; or

 

(vi)     Employee willfully and continually fails to substantially perform Employee’s duties (other than any such failure resulting from inability due to illness or Incapacity) and, after receiving written notice from Employer, stating the nature of the violation and affording Employee at least ten (10) days to correct the act or omission complained of to the reasonable satisfaction of Employer (if curable), such failure is not cured, or after having received such notice, Employee at any time thereafter again so fails.

 

 

 

 

(b)     “Good Reason” shall exist if, without the consent of Employee:

 

(i)     Employer requires Employee to relocate or otherwise establish her principal daily work location more than fifty (50) miles outside of the location where Employee principally works as of the Commencement Date (other than a change in such location to a location closer to Employee’s home residence);

 

(ii)     there is a material diminution in Employee’s authority, duties or responsibilities; or

 

(iii)     Employer takes any other action, or fails to take any action, that constitutes a material breach by Employer of the terms of this Agreement;

 

provided, however, that none of the foregoing events or conditions will constitute Good Reason unless: (A) Employee provides Employer with a written objection of the event or condition within thirty (30) days following the initial existence of such event or condition; (B) Employer does not reverse or otherwise cure the event or condition to the extent curable within thirty (30) days of receiving such written objection; and (C) Employee resigns from her position with Employer within thirty (30) days following the expiration of such cure period.

 

7.2     Termination by Employer. Employer may terminate Employee’s employment under this Agreement effective immediately for Cause. Subject to the other provisions contained in this Agreement, Employer may terminate Employee’s employment for any reason (or no reason) other than Cause upon thirty (30) days’ written notice to Employee.

 

7.3     Termination by Employee. Employee may terminate Employee’s employment under this Agreement for Good Reason by written notice to Employer, provided the requirements of Good Reason are fully satisfied or complied with.

 

7.4     Benefits Payable Upon Termination.

 

(a)     If Employee’s employment under this Agreement is terminated as a result of Employee’s voluntary resignation (other than for Good Reason), retirement, death or Incapacity or by Employer for Cause, then, on or by the next regular payday for the pay period in which such termination occurs, Employer shall pay Employee Employee’s Salary through the effective date of such termination plus credit for any vacation earned but not taken or paid, and Employer shall thereafter have no further obligation to Employee under this Agreement.

 

(b)     If, during the Severance Protection Period (and whether or not a change of control of Crown Crafts or Employer occurs at, or has occurred prior to, the time of the termination of Employee’s employment), Employee’s employment under this Agreement is terminated by Employer without Cause or is terminated by Employee for Good Reason, then Employer shall:

 

(i)     pay to Employee, on or by the next regular payday for the pay period in which termination occurs, Employee’s accrued but unpaid Salary through the end of the calendar month in which such termination occurs plus credit for any vacation earned but not taken, plus any bonus earned at the end of the prior fiscal year but which has not yet been paid as of the date of termination; and

 

 

 

 

(ii)     pay to Employee, as severance, equal installment payments payable in accordance with Employer’s normal payroll practices and cycles (commencing on the next regular payday for the pay period in which termination occurs), which are in the aggregate equal to the sum of (A) Employee’s Salary (at the rate in in effect as of the date of termination) and (B) the highest annual bonus paid or payable to Employee in respect of any of the three (3) full fiscal years ended immediately prior to the date of termination, and Employer shall thereafter have no further obligation to Employee under this Agreement.

 

(c)     Employer will deduct and withhold all necessary withholding taxes from Employee’s benefits provided under this Section 7.4.

 

(d)     Notwithstanding anything in this Agreement to the contrary, Employer’s obligation to make severance payments under this Section 7.4 shall terminate immediately if Employee takes any actions that violate the provisions of Section 5 hereof, and the termination of Employer’s obligation to make such severance payments shall not relieve Employee of Employee’s obligations under Section 5 hereof.

 

SECTION 8.      Compliance with Code Section 409A.

 

8.1     General Compliance. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. In no event shall Employee, directly or indirectly, designate the calendar year of payment. Notwithstanding the foregoing, Employer makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall Employer be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Employee on account of non-compliance with Section 409A.

 

8.2     Specified Employees. Notwithstanding any provision in this Agreement to the contrary, if, at the time of Employee’s separation from service with Employer, Employee is a “specified employee” (as defined for purposes of Section 409A) and it is necessary to postpone the commencement of any severance payments otherwise payable pursuant to this Agreement as a result of such separation from service to prevent any accelerated or additional tax under Section 409A, then Employer will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise exempt from Section 409A until the first payroll date that occurs after the date that is six (6) months following Employee’s separation from service with Employer (as determined under Section 409A). If any payments are postponed pursuant to this Section 8.2, then such postponed amounts will be paid in a lump sum to Employee on the first payroll date that occurs after the date that is six (6) months following Employee’s separation from service with Employer. If Employee dies during the postponement period prior to the payment of any postponed amount, such amount shall be paid to the personal representative of Employee’s estate within sixty (60) days after the date of Employee’s death.

 

 

 

 

8.3     Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

 

(a)     the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(b)     any reimbursement of an eligible expense shall be paid to Employee on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

 

(c)     any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

SECTION 9.      Miscellaneous.

 

9.1     Return of Materials. Upon the request of Employer and, in any event, upon the termination of Employee’s employment with Employer, Employee shall deliver to Employer all property belonging to any of the Crown Crafts Companies then in Employee’s possession and all memoranda, notes, records, manuals or other documents, including all copies of such materials and all documentation prepared or produced in connection therewith, pertaining to the performance of Employee’s services hereunder or the business of the Crown Crafts Companies or containing Confidential Information or Trade Secrets of or regarding the business of the Crown Crafts Companies, whether made or compiled by Employee or furnished to Employee from another source by virtue of Employee’s employment with Employer.

 

9.2     Cooperation. During the Term and thereafter, unless Employee is advised by Employee’s separate legal counsel not to do so because of an actual or potential conflict of interest between Employee and Employer or its affiliates, Employee agrees to cooperate reasonably with Employer and its affiliates in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by Employer (including being available to Employer upon reasonable notice for interviews and factual investigations, appearing at Employer’s reasonable request to give testimony without requiring service of a subpoena or other legal process, volunteering to Employer all reasonably pertinent information and turning over to Employer all relevant documents which are or may come into Employee’s possession, all at times and on schedules that are reasonably consistent with Employee’s other permitted activities and commitments). In the event Employer requires Employee’s cooperation in accordance with this Section 9.2, and Employee deems it appropriate to hire her own legal counsel, Employer shall reimburse Employee for the reasonable costs for such legal counsel and Employee’s reasonable travel expenses upon submission of receipts, and Employee will be entitled to receive reasonable compensation agreed to by the parties for any such cooperation Employee provides after her employment with Employer. Any such payments shall be paid within thirty (30) days after Employee’s submission of receipts for such costs. For avoidance of doubt, the obligations on Employee in this Section 9.2 shall not apply in any dispute or proceeding between Employee and Employer or its affiliates.

 

 

 

 

9.3     Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Employee and Employee’s executor, administrator, heirs and personal representative and Employer and its successors and assigns. Employer may assign this Agreement to any of the Crown Crafts Companies or to any of its or their successors or assigns, in which case the term “Employer” as used in this Agreement shall be deemed to mean and refer to such entity. This Agreement is personal to Employee, and Employee may not assign or delegate any of Employee’s obligations or rights hereunder, unless Employee should die or become disabled while any rights remain under this Agreement, in which case Employee’s rights under this Agreement shall inure to the benefit of and be enforceable by Employee’s representatives, executors, administrators, successors, heirs, distributees, devisees, legatees or estate.

 

9.4     Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the internal laws of the State of California, without giving effect to any conflict of laws provisions thereof that would cause the application of the domestic substantive laws of any other jurisdiction.

 

9.5     Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the others. In the execution of this Agreement, facsimile or scanned and e-mailed manual signatures shall be fully effective for all purposes.

 

9.6     Headings. The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

9.7     Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile, e-mail (followed by overnight courier) or by registered or certified mail (postage prepaid, return receipt requested) to the intended recipient as follows:

 

	 	
			(a)

				
			If to Employee, addressed to:

			

 

Donna Sheridan

419 South Irena Avenue

Redondo Beach, CA 90277

E-mail: dsheridan@crowncrafts.com               

 

 

 

 

	 	
			(b)

				
			If to Employer, addressed to:

			

 

Physical address:

 

NoJo Baby & Kids, Inc.

c/o Crown Crafts, Inc.

916 South Burnside Avenue

Gonzales, Louisiana 70737

Attn: Mr. E. Randall Chestnut

E-mail: rchestnut@crowncrafts.com

Fax: (225) 647-9112

 

or

 

Mailing address:

 

NoJo Baby & Kids, Inc.

c/o Crown Crafts, Inc.

P.O. Box 1028

Gonzales, Louisiana 70707

Attn: Mr. E. Randall Chestnut

E-mail: rchestnut@crowncrafts.com

Fax: (225) 647-9112

 

Any party hereto may change the address to which notices, requests, claims, demands and other communications hereunder are to be delivered by giving the other parties hereto notice in the manner herein set forth.

 

9.8     Entire Agreement; Amendment; Interpretation. This Agreement is intended by the parties hereto to be the final expression of their agreement with respect to the subject matter hereof and is the complete and exclusive statement of the terms thereof, notwithstanding any representations, statements or agreements to the contrary heretofore made. This Agreement may be modified or amended only by a written instrument signed by each of the parties hereto. The parties hereto acknowledge and agree that each party reviewed and participated in the drafting and preparation of this Agreement and that this Agreement shall not be construed against either party by virtue of its role or its counsel’s role in drafting it. For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole.

 

9.9     Survival. Sections 5, 6, 7.4, 8 and 9 shall survive and continue in full force in accordance with their terms notwithstanding the expiration or termination of the Term.

 

[Remainder of page intentionally left blank; signature page follows.]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	EMPLOYER:
	 	 
	 	NOJO BABY & KIDS, INC.
	 	 
	 	 
	 	By:	/s/ E. Randall Chestnut
	 	 	
			E. Randall Chestnut

			Vice President

			

 

 

	 	EMPLOYEE:
	 	 
	 	 
	 	 
	 	/s/ Donna E. Sheridan
	 	DONNA SHERIDAN

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00291-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00291-of-00352.parquet"}]]