Document:

SEMG 9.30.2012 10-Q Exh 10.2 1st Amendment to RRMS Credit Agreement

EXHIBIT 10.2

        
FIRST AMENDMENT
TO THE CREDIT AGREEMENT

THIS FIRST AMENDMENT, dated as of September 26, 2012 (this “Amendment”), to the Credit Agreement, dated as of November 10, 2011 (as previously amended, the “Credit Agreement”), and entered into by, among others, Rose Rock Midstream, L.P., as the Borrower (the “Borrower”), certain subsidiaries of the Borrower, as Guarantors, the lenders party thereto (the “Lenders”) and The Royal Bank of Scotland plc, as administrative agent and collateral agent (in such capacities, the “Administrative Agent”) for the Lenders.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Borrower desires to amend the Credit Agreement to (i) permit Incremental Revolving Commitments in an aggregate amount not to exceed $400.0 million (the “Incremental Increase”), (ii) acquire, directly or indirectly, in one or more related or unrelated transactions, equity interests of SemCrude Pipeline, L.L.C., a Delaware limited liability company (“SemCrude Pipeline”, such acquisitions, the “SCP Acquisitions”), (iii) invest, subject to the prior acquisition of SemCrude Pipeline, up to $71.0 million in SemCrude Pipeline for the prompt contribution or other funding thereof to White Cliffs Pipeline, L.L.C., (“White Cliffs”), for the purposes of funding certain expansion projects by White Cliffs (the “White Cliffs Investment”), and (iv) amend certain other provisions of the Credit Agreement as specified below (the “Specified Amendments”); 

WHEREAS the Loan Parties have requested that the Required Lenders agree to amend certain provisions of the Credit Agreement in order to permit each of the Incremental Increase, the SCP Acquisitions, the White Cliffs Investment and the Specified Amendments; and

WHEREAS, subject to certain conditions, the Required Lenders are willing to agree to such amendment relating to the Credit Agreement. 

NOW, THEREFORE, in consideration of the promises and covenants 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.Amendments

(a)Section 1.01 of the Credit Agreement is hereby amended by amending the definition of “Unrestricted Subsidiary” by inserting immediately after “shall mean” the following:

“(i) if White Cliffs becomes a Subsidiary, White Cliffs and (ii)”

(b)Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in alphabetical order therein:

“Consolidated Net Tangible Assets” shall mean with respect to any Person at any date of determination, the aggregate amount of total assets included in such Person's most recent quarterly or annual consolidated balance sheet prepared in accordance with GAAP less applicable reserves 

EXHIBIT 10.2

reflected in such balance sheet, after deducting the following amounts: (i) all current liabilities reflected in such balance sheet (excluding any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed), and (ii) the value (net of any applicable reserves and accumulated amortization) of all goodwill, trademarks, patents, unamortized debt discounts and expenses and other like intangibles reflected in such balance sheet.

“SemCrude Pipeline” shall mean SemCrude Pipeline, L.L.C., a Delaware limited liability company.

“White Cliffs” shall mean White Cliffs Pipeline, L.L.C., a Delaware limited liability company.

(c)Section 2.20(a) of the Credit Agreement is hereby amended by deleting “U.S.$200.0 million” in the fifth line thereof and replacing it with “U.S.$400.0 million” in lieu thereof.

(d)Section 6.02(hh) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(hh)    Liens on the Equity Interests of any Unrestricted Subsidiary (other than Liens on the Equity Interests of White Cliffs if it becomes a Subsidiary) which secure indebtedness of such Unrestricted Subsidiary (other than indebtedness of White Cliffs if it becomes a Subsidiary); and”

(e)Section 6.04(j) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(j)    (i) Investments constituting Permitted Business Acquisitions, so long as any Person acquired in connection with such Permitted Business Acquisitions and each of such Person's Subsidiaries becomes a Subsidiary Loan Party to the extent required by Section 5.10, and (ii) Investments constituting acquisitions of a portion of the Equity Interests of SemCrude Pipeline; provided that (A) such Investment satisfies each requirement of an acquisition constituting a Permitted Business Acquisition (other than the requirement that an acquisition of Equity Interests be of all of the Equity Interests in a Person), and (B) after becoming a Subsidiary, SemCrude Pipeline becomes a Subsidiary Loan Party to the extent required by Section 5.10;”

(f)Section 6.04 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (n) therein, (ii) deleting the “.” at the end of clause (o) therein and replacing it with a “;” in lieu thereof, and (iii) inserting the following clauses (p) and (q) at the end as follows:

“(p)     if the Borrower has acquired the Equity Interests of SemCrude Pipeline, Investments in SemCrude Pipeline in an aggregate amount not to exceed U.S.$71.0 million; provided that SemCrude Pipeline promptly contributes or otherwise funds an amount equal to the amount of such Investment to White Cliffs and delivers evidence reasonably satisfactory to the Administrative Agent demonstrating the funding of such Investment to White Cliffs; provided further, that if SemCrude Pipeline has become a Subsidiary Loan Party and Guarantor hereunder, such Investments may be made by SemCrude Pipeline in White Cliffs; and

EXHIBIT 10.2

(q)    Investments by Loan Parties not otherwise permitted by the other clauses of this Section 6.04 in an aggregate amount (valued at the time of the making thereof and without giving effect to any write-downs or write-offs thereof) not to exceed the greater of (i) U.S.$40.0 million and (ii) 10% of Consolidated Net Tangible Assets of the Borrower plus any return of capital actually received by the Loan Parties in respect of investments previously made by them pursuant to this clause (q), so long as immediately before and immediately after giving effect to such Investment, no Default or Event of Default shall have occurred and be continuing.”

(g)Section 6.05(h) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(h)    any merger or consolidation in connection with a Permitted Business Acquisition or an acquisition of Equity Interests of SemCrude Pipeline permitted by Section 6.04; provided, that following any such merger or consolidation (i) involving the Borrower, the Borrower is the surviving corporation, and (ii) involving a Restricted Subsidiary, the surviving or resulting entity shall be a Loan Party;”

Section 2.Conditions Precedent to the Effectiveness of this Amendment

This Amendment shall become effective as of the date on which each of the following conditions precedent shall have been satisfied (the date of satisfaction of such conditions being referred to herein as the “First Amendment Effective Date”):

(a)the Administrative Agent shall have received this Amendment, duly executed by each of the Borrower, the Guarantors and the Required Lenders;

(b)the representations and warranties set forth in Article III of the Credit Agreement are and will be true and correct in all material respects on and as of the First  Amendment Effective Date, to the same extent as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); 

(c)as of the First Amendment Effective Date, no Event of Default or Default shall have occurred and be continuing; and

(d)the Borrower shall have paid (i) an amendment fee in an amount equal to 0.125% of the Commitments of each Lender that has consented to this Amendment prior to the deadline for submission of signature pages specified by the Administrative Agent and (ii) all fees and expenses payable to the Lenders and the Administrative Agent hereunder or under any other Loan Document, including as set forth in Section 4 hereof. 

Section 3.Acknowledgment and Consent.

(a)     Each Guarantor acknowledges and agrees that any of the Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations 

EXHIBIT 10.2

thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. 

(b)     Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this  Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement.

Section 4.Reference to and Effect on the Loan Documents

(a)This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with the terms and provisions thereof.  The Borrower agrees to pay any applicable costs and expenses incurred in connection with this Amendment in accordance with the terms set forth in the Credit Agreement, including Section 9.05 thereof.  

(b)Except as specifically amended above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.

(c)The execution, delivery, effectiveness and performance of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders, the Borrower or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any other provision of any of the Loan Documents or for any purpose.

(d)Each of the Loan Documents, including the Credit Agreement, and any and all other agreements, documents or instruments now or hereafter executed and/or delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Credit Agreement, whether direct or indirect, shall mean a reference to the Credit Agreement as amended hereby.

Section 5.Execution in Counterparts

This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Delivery of an executed counterpart by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

Section 6.Governing Law

THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF, THE STATE OF NEW YORK.

EXHIBIT 10.2

Section 7.Headings

Section and Subsection headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

Section 8.Notices

All communications and notices hereunder shall be given as provided in the Credit Agreement.

Section 9.Severability

The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.

Section 10.Successors

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

Section 11.Waiver of Jury Trial 

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.

Section 12.Jurisdiction 

Each of the parties to this Amendment hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Amendment or the transactions contemplated hereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court.

[SIGNATURE PAGES FOLLOW]

EXHIBIT 10.2

In Witness Whereof, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above.
   
THE ROYAL BANK OF SCOTLAND plc,
 as Administrative Agent

By:    _______________________________________        
Name:    
Title:
    
    

_______________________________________,
as a Lender

By:    _______________________________________        
Name:    
Title:
    

[If a second signature is required]

By:    _______________________________________        
Name:    
Title:EMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 29th day of June 2012, between David Fann
(“Executive”) and Solar Energy Initiatives, Inc., a Delaware corporation (the “Company”).

 

WHEREAS,
the Company desires to employ Executive and Executive desires to be employed by the Company upon the terms and conditions
set forth herein.

 

NOW,
THEREFORE, in consideration of the promises and mutual agreements hereafter set forth, and upon the terms and conditions
contained in this Agreement. Executive and the Company hereby agree as follows:

 

1.        Certain
Definitions.

 

“Business
of the Company” shall at any time mean any line of business then engaged in. or planned to be engaged in by the
Company or any of its affiliates and subsidiaries.

 

“Common
Stock” shall mean the common stock of the Company.

 

“Competing
Enterprise” shall at any time mean any person, firm, corporation or other individual or entity that is engaged,
directly or indirectly, wholly or in part, in any line of business then engaged in, or then planned to be engaged in, by the Company
or any of its affiliates and subsidiaries.

 

“Corporate
Transaction” shall mean (A) any merger or consolidation of the Company with another entity, whether or not the Company
is the continuing or surviving entity, in which forty percent (40%) or more of the Company’s voting capital stock is transferred
to holders different from persons or their affiliates who held the stock immediately prior to such transaction or (B) any sale
of all or substantially all of the Company’s assets to another entity or person of which forty percent (40%) or more of
the capital stock is held by holders different from persons or their affiliates who hold voting capital stock of the Company.

 

All
other capitalized terms used herein arc defined in other provisions of this Agreement.

 

2.        Duties.

 

2.1        Capacity. Executive shall serve as CEO of the Company reporting to the Board of Directors and shall perform such customary,
appropriate and reasonable executive duties as are usually performed by a President or as may be delegated to him from time to
time by
the Board. Executive shall principally perform his duties hereunder at the executive offices of the Company. Executive
shall serve in the same employee position set forth in this Section 2.1 to the extent set forth in this Section 2.1 of any successor
entity or holding company resulting from a reorganization of the Company other than a Corporate Transaction. Such obligation does
not apply to Executive’s status as a Director of the Company.

 

    	 

    	 

    

 

David
Fann Employment Agreement

 

3.        Cash Compensation and Benefits.

 

3.1        Salary.

 

Executive
shall be paid an annual base salary of One Hundred Twenty Thousand Dollars ($120,000.00) (“Base Compensation”), payable
in accordance with the Company’s general payroll practices commencing July I, 2012 (the “Effective Date. Such base
salary shall be subject to increase from time to time in the sole discretion of the Board of Directors, or if established the
Compensation Committee thereof based on Executive’s performance and that of the Company.

 

3.2        Annual
Bonus.

 

Commencing
with the Company’s 2012 fiscal year and for each fiscal year of the Company thereafter during the Term, the Executive shall
be eligible to receive, in addition to his Base Compensation, an annual bonus, to be determined
and awarded in the sole discretion of the Board (or compensation committee thereof), payable within sixty’ (60) days
of the end of each such fiscal year (the “Annual Bonus”).

 

3.3        Benefits.

 

In
addition to the Base Compensation and any Annual Bonus, Executive shall further be entitled to participate in any employee benefits
programs offered generally from time to time to senior management employees of the Company
to the extent Executive qualifies for participation under such programs. In any event the Company shall pay for, at no
cost to Executive a health and dental insurance plan.

 

3.4        Business
Expenses.

 

The
Company shall pay the reasonable and necessary business expenses incurred by Executive in performing his duties hereunder in accordance
with such policies regarding employee expenses generally as the Company may have in effect from time to time.

 

3.5        Vacation
and Holidays.

 

Executive
shall be entitled to fully paid vacation time of eight (8) weeks per calendar year. In addition, Executive shall be entitled to
all holidays provided under the Company’s regular holiday schedule.

 

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David
Fann Employment Agreement

 

3.6        Severance
Compensation.

 

a).
If Executive’s employment with the Company is terminated by the Company without Cause at any time prior to July I, 2015,
Executive shall receive from the Company severance pay in an amount equal to the greater of his then-current Base Compensation
in effect at the time of such termination through either June 30, 2015 or eighteen (18) months from the date of notice, whichever
is greater, in a lump sum payable no later than the termination date and (ii) all unpaid
benefits such as accrued vacation, and (iii) all outstanding expenses, and (iv) any declared but unpaid Annual Bonus. If
Executive’s employment with the Company is terminated by the Company by virtue of the expiration of this Agreement on June
30, 2015. Executive shall be entitled to continue to receive from the Company severance pay in an amount equal to the greater
of his then-current Base Compensation in effect at the time of such termination through June 30. 2015 in accordance with the Company’s
general payroll practices; and (ii) any declared but unpaid Annual Bonus. .In the event of a Corporate Transaction, the amount
of severance pay will be equal to his then current Base Compensation for twenty four (24) months plus any annual bonus due plus
all PTO time in a lump sum payable no later than the closing date of the Corporate Transaction. Additionally, the Company will
continue to pay the premiums for Executive’s health benefits and life insurance for twenty four months.

 

b)
During any period in which Executive is receiving severance compensation pursuant to subsection
(a) of this Section 3.6. the Company shall use reasonable efforts to obtain reasonably and to pay for comparable medical,
life and disability insurance and other benefits on the same terms and conditions and to the same extent as theretofore provided
by the Company to Executive prior to the effective date of the termination of his employment.

 

3.7        Compensation
Upon a Corporate Transaction.

 

If
Executive is terminated without Cause within a twelve (12) month period following the consummation of a Corporate Transaction
(i) Executive’s right to receive any earned but unpaid Annual Bonus shall immediately
vest, but not less than a pro rata amount of the immediately preceding year’s Annual Bonus if no Annual Bonus shall have
been earned for the then current year, (ii) the Company or its successor in interest shall use reasonable efforts to obtain reasonably
comparable medical, life and disability insurance and other benefits on the same terms and conditions and to the same extent as
immediately theretofore provided by the Company to Executive prior to the consummation of the Corporate Transaction for a period
of two (2) years following such termination and (iii) all severance compensation provided for in Section 3.6 will be due and payable
at time of termination.

 

4.        Stock Options.

 

4.1        
Stock Grants.

 

The
Company grants to Executive 4.99% of the issue and outstanding stock of the company beginning July 1, 2012 and 4.99% of the company
stock on each anniversary date of the employment agreement. Any future stock or stock option grants will be determined by the
Compensation Committee and will be reviewed on an annual basis.

 

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David
Fann Employment Agreement

 

5.        Conversion
to Consulting Agreement

 

The
Executive may select to become a consultant to the Company rather than be an employee. The Executive must provide the Company
with a 60 day notice after which the Executive will become a consultant to the Company for
the remaining term as stated in Item 7 of this Agreement The Executive will report to the then C.E.O. and will perform
agreed upon services on a part-time basis (not to exceed 40 hours per month). The compensation paid on the first of the each and
every month thereafter until June 1, 2017 will be ten thousand dollars. The Company will
also pay to Executive all expenses incurred on behalf of the Company after receipt and approval of an expense report submitted
by Executive. Any required travel in excess of three and one half hours will be business class.

 

6.        Restrictive
Covenants and Confidentiality.

 

6.1        Non-Solicitation.
The Executive agrees that during the Term and for a period of one (1) year thereafter and in any event during any period in which
he is receiving severance compensation pursuant to Section 3.6, he shall not solicit, entice, encourage or induce any person,
other than persons known prior to Executive’s employment, who at any time within one (1) year prior to the Executive’s
termination of employment shall have been an employee of the Company or any of its subsidiaries, to become employed by or associated
with any person, firm or corporation other than the Company, and the Executive shall not approach any such employee for such purpose
or authorize or knowingly approve the taking of such actions by any other person, firm or corporation or assist any such person,
firm or corporation in taking such action.

 

6.2        Non-Compete.
The Executive agrees that during the Term and during any period in which he is receiving severance compensation pursuant
to Section 3.6. the Executive shall not, directly or indirectly, engage or participate or make any financial investments in, or
become employed by, or act as an agent or principal of, or render advisory or other services to or for, any Competing Enterprise.
Nothing herein contained, however, shall restrict the Executive from overseeing personal and family investments, including, without
limitation, any investments in not more than three percent (3%) of the voting securities in any Competing Enterprise whose stock
is listed on a national securities exchange or is actively traded on the NASDAQ so long as in connection with such investments
the Executive does not render services, directly or indirectly, to a Competing Enterprise.

 

6.3        Confidentiality.
Executive shall not, directly or indirectly, publish. disclose or use, or authorize anyone else to publish, disclose or use, any
secret or confidential matter, or proprietary or other information not otherwise available in the public domain relating to any
aspect of the operations, activities, or obligations of the Company, including, without limitation, any confidential material
or information relating to the Company’s business, customers,
suppliers, arrangements with Practitioners, trade or industrial practices, trade secrets-technology. know-how or intellectual
property. All records, files, data, documents and the like relating to suppliers, customers, costs, prices, systems, methods,
personnel, equipment and other materials relating to the Company shall be and remain the sole property of the Company. Upon termination
of Executive’s employment with the Company, Executive shall not remove from the Company’s premises or retain any of
the materials described in this Section 5.3 without the prior written consent of the Company, and all such materials in Executive’s
possession shall be delivered promptly to the Company.

 

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David
Fann Employment Agreement

 

6.4        Survival
and Company Definition. This Section 5 shall survive the termination of the Executive’s employment with the Company,
irrespective of the reason therefore. For purposes of this Section 5, the term “Company” shall include all affiliates
and subsidiaries.

 

6.5        Remedies.
The Executive acknowledges that the services to be rendered by the Executive are of a special, unique and extraordinary character
and, in connection with such services, the Executive will have access to confidential information vital to the Company’s
business. By reason of this access, the Executive consents and agrees that if the Executive violates any of the provisions of
this Section 5. the Company shall be entitled, without the need to show actual damages,
to an injunction and a temporary restraining order from any court of competent jurisdiction restraining the Executive from
committing or continuing any such violation of this Agreement. The Executive acknowledges that damages at law would not be an
adequate remedy for violation of this Section 5, and the Executive therefore agrees that the provisions of tins Agreement may
be specifically enforced against the Executive in any court of competent jurisdiction. The rights, powers and remedies of the
Company under this Agreement are cumulative and not exclusive of any other right, power
or remedy which the Company may-have under any other agreement or by law.

 

7        Term and Termination.

 

7.1        Term.
The term of this Agreement shall be for three (3) years . With respect to the Executive’s employment period (the “Employment
Period”), the term of this Agreement shall terminate June 30, 2015. After such Employment Period, the Board of Directors
in its sole discretion may extend the term with Executive’s consent. The initial term and any term established after July
1, 2012, is each referred to as a “Term.” and. for purposes of Section 3.6, severance payments through the end of
the Term means through the end of the applicable Term in which Executive is terminated.

 

7.2        Death.
This Agreement shall terminate automatically upon Executive’s death and upon complete payment to Executives estate . all
accrued and unpaid Base Compensation including amounts due as earned but unpaid Annual Bonus
and any unpaid travel expenses and PTO due. The Company agrees to pay alt premiums for an additional two years the health
and dental insurance policy outlined in paragraph 3.3 .

 

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David
Farm Employment Agreement

 

7.3        Disability.
In the event that Executive, because of accident, disability or physical or mental illness, is incapable of performing his usual
duties hereunder, the Company shall have the right to terminate Executive’s employment.. For purposes of this Section 7.3,
Executive shall be deemed to have become incapable of performing his usual duties hereunder if the
Board shall determine that Executive is, by reason of any medically-determinable physical or mental impairment expected
to result in death or to be of continuous duration of not less than six (6) consecutive months or more, unable to perform his
usual duties for the Company. If Executive’s employment hereunder is terminated pursuant to this Section 7.3, the Company
shall pay to Executive, two years of his then current Base Compensation as his sole and exclusive right and remedy under this
Agreement (i) all accrued and unpaid Base Compensation through the date of termination pursuant
to this Section 7.3, (ii) any earned but unpaid Annual Bonus and (iii) continuation of Company benefits for thirty six
(36) months to Executive’s family at no cost to Executive or his family.

 

7.4        Cause
and Voluntary Termination. The Company shall have the right to terminate this Agreement and Executive’s employment hereunder
for Cause. Cause” shall mean any of the following occurrences: (1) Executive’s
conviction of (A) a felony or (B) another serious crime involving material harm to the standing or reputation of the Company;
(2) Executive’s gross negligence or willful misconduct in the performance of his duties for the Company which causes or
may cause material harm to the Company; (3) conduct by the Executive which brings the Company into public disgrace or disrepute,
including, without limitation, dishonesty and fraud; or (4) a material breach by Executive of any of the terms or conditions of
this Agreement or any other agreement between the Company and the Executive, which, if curable, is not cured to the Company’s
reasonable satisfaction within thirty (30) days of written notice thereof The Executive shall have the right to voluntarily terminate
this Agreement at any time upon fifteen (15) days prior written notice. If Executive voluntarily terminates his employment hereunder
or the Company terminates Executive’s employment for Cause, the Executive’s sole and exclusive right and remedy hereunder
shall be the right to receive his Base Compensation through the date of such termination only and the Company shall have no responsibility
for the payment of any other compensation or benefits to the Employee for any time period subsequent to such termination, including,
without limitation, any Annual Bonus or other employee benefits. Nothing herein shall affect the Company’s obligation to
provide benefits as required by COBRA or any other applicable federal or state law.

 

7.5        Termination
Without Cause. The Company may terminate Executive’s employment with the Company pursuant to this Agreement without
cause by giving written notice to Executive at least sixty (60) days prior to the effective date of such termination, subject
to the provisions of Section 3.6.

 

8.        
Miscellaneous.

 

8.1        Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the parties hereto and their heirs,
executors, legal representatives, successors and assigns. Neither party shall have the right to assign its obligations, or all
or any portion of their rights or interests under this Agreement without the prior written consent of the other party hereto,
and any attempt to do so will be null and void; provided, that the Company shall have the right to assign this Agreement
in connection with any Corporate Transaction.

 

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David
Fann Employment Agreement

 

8.2        Notices.
Any notice, request, demand or other communication required or permitted by this Agreement shall be in writing and shall be
deemed to have been properly given upon the earlier of receipt or five (5) days after being sent by certified or
registered mail with postage prepaid, return receipt requested, addressed to the parties as follows:

 

	If
    to Executive:	David
    Fann
	 	570
    Walnut Valley Parkway 
	 	Arden, NC 28704
	 	 
	If
    to Company:	Solar
    Energy Initiatives, Inc.
	 	2500
    Regency Parkway
	 	Cary,
    NC 27518
	 	Attention:
    Board of Directors

 

Only
giving written notice of such change in the manner provided herein for giving notices may change the addresses for purposes of
this Section 7.2.

 

8.3        Withholding.
Executive hereby agrees to make appropriate arrangements with the Company for the satisfaction of all Federal, State or local
income tax withholding requirements and Federal social security employee tax requirements applicable to this

 

8.4        Governing
Law. Venue and Attorney Fees. This Agreement is made and entered into and is to be governed by the laws of the State
of Florida applicable to agreements made within such State, without regard to the conflicts of law principles of such State. The
Venue for all purposes in connection with this Agreement shall be the County of St. John, State of Florida. In the event any party
hereto reasonably retains counsel for the purpose of enforcing or preventing the breach
of this Agreement or any provision hereof, including, but not limited to, instituting any action or proceeding to enforce
any provision hereof, for damages by reason of any alleged breach of any provision hereof, for a declaration of such party’s
rights or obligations hereunder, for an action seeking injunctive relief to enforce any
provision herein, or for any other judicial remedy, then the prevailing party shall be entitled, in addition to such other
relief as may be granted, to be reimbursed by the non-prevailing party for all costs and expenses incurred thereby, including
reasonable attorney’s fees.

 

8.5         Waiver.
The failure of either party at any time to require performance by the other party of any provision hereof shall not affect in
any way the full right to require such performance at any lime thereafter, nor shall a waiver by either party of a breach of any
provision hereof be taken or held to be a continuing waiver of such provision, or waiver of any other breach under any other provision
of this Agreement.

 

8.6        Captions.
The captions of the sections referenced herein are inserted as a matter of convenience only and in no way define, limit, or describe
the scope of this Agreement or any provisions hereof.

 

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David
Fann Employment Agreement

 

8.7        Entire
Agreement. This Agreement and any Exhibits hereto set forth the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersede all prior contracts, agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, between the parties with respect to such subject matter. This Agreement
may be amended only by a written instrument signed by both parties hereto making specific reference to this Agreement and expressing
the plan or intention to modify it.

 

8.8        Severability.
If any provision of this Agreement shall be adjudicated to be invalid, ineffective or unenforceable, the remaining provisions
of this Agreement shall not be affected thereby. The invalid, ineffective and unenforceable provision shall, without further action
by the parties, be automatically amended to effect the original purpose and intent of the invalid, ineffective or unenforceable
provision; provided, that such amendment shall apply only with respect to the operation
of such provision in the particular jurisdiction with respect to which such adjudication is made.

 

8.9        Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same Agreement.

 

8.10       No
Conflict. Executive covenants and represents that he is not a party to any agreement or understanding which impairs or prohibits
his ability to enter into and perform services under this Agreement.

 

    	Page 8 of 9

    	 

    
 

David
Fann Employment Agreement

 

The
undersigned, do hereby certify that we are members of the Board of Directors of the Corporation; that the attached is a true and
correct copy of resolutions duly adopted and ratified at a meeting of the Board of Directors of the Corporation duly convened
and held in accordance with its by-laws and the laws of the State of Delaware, as transcribed by us from the minutes: and the
same have not in any way been modified, repealed or rescinded and are in full force and effect.

 

IN
WITNESS WHEREOF, We have hereunto set our hands as Members of the Board of Directors of the Corporation.

 

Dated
June 29, 2012

 

	 	Solar
    Energy Initiatives, Inc..
	 	 	 
	 	By:	/s/
    DAVID FANN
	 	 	DAVID
    FANN,
	 	 	Chief
    Executive Officer/ Member of the Board

 

	 	Signature:	 
	 	 	Name:
	 	 	Member
    of the Board
	 	 	 
	 	Print
    Name:	 

 

 

    	Page 9 of 9

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