Document:

Exhibit 4.2

	
 
    
	
 
    
	
FIRST SUPPLEMENTAL INDENTURE
    
	
 
    
	
Dated as of December 31, 2015
    
	
 
    
	
To
    
	
 
    
	
JUNIOR SUBORDINATED INDENTURE
    
	
 
    
	
Dated as of October 20, 2010
    
	
 
    
	
Among
    
	
 
    
	
CIFC CORP. (f/k/a DEERFIELD CAPITAL CORP.)
    
	
 
    
	
As the Company,
    
	
 
    
	
CIFC LLC,
    
	
 
    
	
CIFC HOLDINGS II LLC,
    
	
 
    
	
and
    
	
 
    
	
CIFC HOLDINGS III LLC
    
	
 
    
	
As Guarantors,
    
	
 
    
	
and
    
	
 
    
	
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION
    
	
 
    
	
As Trustee
    
	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1   AMENDMENTS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Amendment to Definitions in Base   Indenture
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2   GUARANTEE OF THE SECURITIES
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Guarantee
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.2
    	
Limitation of Guarantee
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.3
    	
Release of Guarantors
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.4
    	
Right of Contribution
    	
4
    
	
 
    	
 
    	
 
    
	
Section 2.5
    	
No Subrogation
    	
4
    
	
 
    	
 
    	
 
    
	
Section 2.6
    	
Execution and Delivery of   Guarantee
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE 3   SUBORDINATION OF NOTE GUARANTEES
    	
4
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Agreement to Subordinate
    	
4
    
	
 
    	
 
    	
 
    
	
Section 3.2
    	
No   Payment When Guarantor Senior Debt in Default; Payment Over of Proceeds Upon   Dissolution, Etc.
    	
5
    
	
 
    	
 
    	
 
    
	
Section 3.3
    	
Payment Permitted If No Default
    	
6
    
	
 
    	
 
    	
 
    
	
Section 3.4
    	
Subrogation to Rights of Holders   of Guarantor Senior Debt
    	
6
    
	
 
    	
 
    	
 
    
	
Section 3.5
    	
Provisions Solely to Define   Relative Rights
    	
7
    
	
 
    	
 
    	
 
    
	
Section 3.6
    	
Trustee to Effectuate   Subordination
    	
7
    
	
 
    	
 
    	
 
    
	
Section 3.7
    	
No Waiver of Subordination   Provisions
    	
7
    
	
 
    	
 
    	
 
    
	
Section 3.8
    	
Notice to Trustee
    	
7
    
	
 
    	
 
    	
 
    
	
Section 3.9
    	
Reliance on Judicial Order or   Certificate of Liquidating Agent
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.10
    	
Trustee Not Fiduciary for Holders   of Guarantor Senior Debt
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.11
    	
Rights of Trustee as Holder of   Guarantor Senior Debt; Preservation of Trustee’s Rights
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.12
    	
Article Applicable to Paying   Agents
    	
8
    

 

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ARTICLE 4   MISCELLANEOUS
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Governing Law, Waiver of Trial by   Jury
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.2
    	
Separability Clause
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.3
    	
Counterparts
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.4
    	
Effect of Headings and Table of   Contents
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.5
    	
Definitions
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.6
    	
Execution as Supplemental   Indenture
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.7
    	
Relationship with Base Indenture
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.8
    	
Trustee
    	
9
    

 

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FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture” and, together with the Base Indenture (as defined below), the “Indenture”), dated as of December 31, 2015, among CIFC Corp. (f/k/a Deerfield Capital Corp.), a Delaware corporation (the “Company”), CIFC LLC, a Delaware limited liability company (“CIFC LLC”), CIFC Holdings II LLC, a Delaware limited liability company (“CIFC Holdings II”) and CIFC Holdings III LLC, a Delaware limited liability company (“CIFC Holdings III” and together with CIFC LLC and CIFC Holdings II, the “Guarantors”), and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee (the “Trustee”).

 

RECITALS

 

A.                                    The Company and the Trustee are party to the Junior Subordinated Indenture, dated as of October 20, 2010 (the “Base Indenture”), pursuant to which the Company has issued $25.0 million aggregate principal amount of its unsecured junior subordinated notes (the “Securities”).

 

B.                                    The Company desires and has requested the Trustee, pursuant to clauses (c) and (e) of Section 9.1 of the Base Indenture, to join in the execution and delivery of this First Supplemental Indenture in order that the Guarantors may become party to the Indenture and guarantee the obligations of the Company under the Base Indenture and the Securities issued thereunder.

 

C.                                    The Company and each of the Guarantors have duly authorized the execution and delivery of this First Supplemental Indenture and all things necessary have been done to make this First Supplemental Indenture a valid and legally binding agreement of the Company and the Guarantors, in accordance with its terms.

 

NOW, THEREFORE, the Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Securities:

 

ARTICLE 1

 

AMENDMENTS

 

Section 1.1                                    Amendment to Definitions in Base Indenture. The following definitions are added to Section 1.1 of the Base Indenture:

 

“Guarantors” means CIFC LLC, CIFC Holdings II LLC and CIFC Holdings III LLC, as guarantors of the Securities.”

 

“Guarantor Senior Debt” means, with respect to a Guarantor (a) any guarantee by such Guarantor of Senior Debt of the Company or Guarantor Senior Debt of any other Guarantor; and (b) the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Guarantor, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of such Guarantor, whether incurred on or prior to the date of the First Supplemental Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture or the obligations of such Guarantee under its Note Guarantee; provided, that Guarantor Senior Debt shall not be deemed to include any other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with such Guarantor that is a financing vehicle of such Guarantor (a “financing entity”) in connection with the

 

 

issuance by such financing entity of equity securities or other securities pursuant to an instrument that ranks pari passu with or junior in right of payment to the Indenture.

 

“Note Guarantee” means any guarantee of the Company’s obligations under the Securities and the Indenture provided by a Guarantor pursuant to Article 2 of the First Supplemental Indenture.”

 

ARTICLE 2

 

GUARANTEE OF THE SECURITIES

 

Section 2.1                                    Guarantee. Subject to the provisions of this Article 2, each Guarantor hereby fully, unconditionally and irrevocably guarantees, on a junior subordinated unsecured basis, as primary obligor and not merely as surety, jointly and severally with each other Guarantor, to each Holder, and the Trustee, the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Securities and all other monetary obligations and liabilities of the Company under the Indenture (including without limitation interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”).

 

Pursuant to the provisions of Article 3 of this First Supplemental Indenture, the Note Guarantee issued by any Guarantor shall be a junior subordinated unsecured obligation of such Guarantor and shall be subordinated in right of payment to all existing and future Senior Debt of such Guarantor, if any.

 

Each Guarantor further agrees (to the extent permitted by law) that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article 2 notwithstanding any extension or renewal of any Guaranteed Obligation.

 

Each Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Guaranteed Obligations.

 

Each Guarantor further agrees that its Note Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guaranteed Obligations.

 

Except as set forth in Section 2.3, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guaranteed Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the Guaranteed Obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder for the

 

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Guaranteed Obligations; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Company; (g) any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

 

Each Guarantor agrees that its Note Guarantee herein shall remain in full force and effect until payment in full of all the Guaranteed Obligations or such Guarantor is released from its Guarantee in compliance with Section 2.3 of this First Supplemental Indenture. Each Guarantor further agrees that its Note Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, interest on any of the Guaranteed Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

 

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and will pay, or cause to be paid, in cash, to the Holders or the Trustee on behalf of the Holders an amount equal to the sum of (1) the unpaid amount of such Guaranteed Obligations then due and owing and (2) accrued and unpaid interest on such Guaranteed Obligations then due and owing (but only to the extent not prohibited by law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Company or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

 

Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in the Indenture for the purposes of its Note Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guaranteed Obligations, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of its Note Guarantee.

 

Section 2.2                                    Limitation of Guarantee. Any term or provision of the Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Note Guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, foreign or state law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally.

 

Section 2.3                                    Release of Guarantors. The obligations of each Guarantor set forth in Section 2.1 will be automatically and unconditionally released and discharged in the event:

 

(a)                                 of the repayment in full of all outstanding principal of the Securities or the satisfaction and discharge of the Securities as provided in Article 4 of the Base Indenture;

 

(b)                                 there is a sale or other disposition of Capital Stock of a Guarantor (other than CIFC LLC) following which such Guarantor is no longer a direct or indirect Subsidiary of CIFC LLC; or

 

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(c)                                  there is a sale of all or substantially all of the assets of a Guarantor (other than CIFC LLC) (including by way of merger, stock purchase, asset sale or otherwise as permitted by the Indenture) to a Person that is not (either before or after giving effect to such transaction) CIFC LLC or a direct or indirect Subsidiary of CIFC LLC.

 

Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the foregoing effect, the Trustee shall execute any documents reasonably requested by the Company in order to evidence the release of each Guarantor from its obligation under its Note Guarantee.

 

Section 2.4                                    Right of Contribution. Each Guarantor hereby agrees that to the extent that any Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Note Guarantees, such Guarantor shall be entitled, upon payment in full of all Guaranteed Obligations under the Indenture, to seek and receive contribution from and against the Company and/or each other Guarantor who has not paid its proportionate share of such payment in an amount such that after receipt of such contribution payments, each Guarantor shall have directly or indirectly paid its pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment, as determined in accordance with GAAP. The provisions of this Section 2.4 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders and each Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Guarantor hereunder.

 

Section 2.5                                    No Subrogation. Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guaranteed Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Guaranteed Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guaranteed Obligations.

 

Section 2.6                                    Execution and Delivery of Guarantee. Each Guarantor agrees that its obligations set forth in Section 2.1 shall remain in full force and effect and apply to all Securities without regard to whether a notation of guarantee is endorsed on any such Security.

 

ARTICLE 3

 

SUBORDINATION OF NOTE GUARANTEES

 

Section 3.1                                    Agreement to Subordinate. Each Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article 3, the obligations of such Guarantor under its Note Guarantee are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Company and Guarantor Senior Debt. Notwithstanding anything to the contrary contained herein, any guarantee by a Guarantor of the Company’s securities (the “March 4 Securities”) issued under the Junior Subordinated Indenture dated as of March 4, 2010 between the Company and the Trustee (the “March 4 Indenture”) shall not be Guarantor Senior Debt or otherwise be

 

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entitled to the subordination provisions of this Article 3, and the obligations of a Guarantor under its Note Guarantee shall be pari passu in right of payment with respect to any such guarantee of the March 4 Securities. For the avoidance of doubt, the Note Guarantees are not “Guarantor Senior Debt” as defined in the first supplemental indenture to the March 4 Indenture or otherwise entitled to the subordination provisions of Article 3 of the first supplemental indenture to the March 4 Indenture.

 

Section 3.2                                    No Payment When Guarantor Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

 

(a)                                 In the event and during the continuation of any default by a Guarantor in the payment of any principal of or any premium or interest on any Guarantor Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to such Guarantor by the holders of such Guarantor Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the Note Guarantee of such Guarantor.

 

(b)                                 In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default with respect to a Guarantor (each such event, if any, herein sometimes referred to as a “Guarantor Proceeding”), all Guarantor Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account of the Note Guarantee of such Guarantor. Any payment or distribution, whether in cash, securities or other property (other than securities of such Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the obligations of such Guarantor under its Note Guarantee, to the payment of all Guarantor Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Note Guarantee of such Guarantor shall be paid or delivered directly to the holders of Guarantor Senior Debt in accordance with the priorities then existing among such holders until all Guarantor Senior Debt (including any interest thereon accruing after the commencement of any Guarantor Proceeding) shall have been paid in full.

 

(c)                                  In the event of any Guarantor Proceeding, after payment in full of all sums owing with respect to Guarantor Senior Debt, the Holders of the Securities, together with the holders of any obligations of such Guarantor ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of such Guarantor the amounts at the time due and owing on account of the Note Guarantee of such Guarantor and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of such Guarantor ranking junior to its obligations under its Note Guarantee and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character on any security, whether in cash, securities or other property (other than securities of such Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the obligations of such Guarantor under its Note Guarantee, to the payment of all Guarantor Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Guarantor Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Guarantor Senior Debt

 

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at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Guarantor Senior Debt remaining unpaid, to the extent necessary to pay all such Guarantor Senior Debt (including any interest thereon accruing after the commencement of any Guarantor Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Guarantor Senior Debt is hereby irrevocably authorized to endorse or assign the same.

 

(d)                                 The Trustee (as directed by a majority of the Holders) and the Holders, at the expense of such Guarantor, shall take such reasonable action (including the delivery of the Indenture to an agent for any holders of Guarantor Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the Opinion of Counsel designated by the holders of a majority in principal amount of the Guarantor Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

 

(e)                                  The provisions of this Section 3.2 shall not impair any rights, interests, remedies or powers of any secured creditor of a Guarantor in respect of any security interest the creation of which is not prohibited by the provisions of the Indenture.

 

(f)                                   The securing of any obligations of a Guarantor, otherwise ranking on a parity with the obligations of such Guarantor under its Note Guarantee or ranking junior to such obligations, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the obligations of such Guarantor under its Note Guarantee or ranking junior to such obligations.

 

Section 3.3                                    Payment Permitted If No Default. Nothing contained in this Article 3 or elsewhere in the Indenture or in any of the Securities shall prevent (a) a Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 3.2 or of any Guarantor Proceeding referred to in Section 3.2, from making payments at any time on the Note Guarantee of such Guarantor or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the Note Guarantee of such Guarantor or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 3.8) that such payment would have been prohibited by the provisions of this Article 3, except as provided in Section 3.8.

 

Section 3.4                                    Subrogation to Rights of Holders of Guarantor Senior Debt. Subject to the payment in full of all amounts due or to become due on all Guarantor Senior Debt of the applicable Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of such Guarantor Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Guarantor Senior Debt pursuant to the provisions of this Article 3 (equally and ratably with the holders of all indebtedness of such Guarantor that by its express terms is subordinated to Guarantor Senior Debt of such Guarantor to substantially the same extent as the obligations under its Note Guarantee are subordinated to the Guarantor Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Guarantor Senior Debt) to the rights of the holders of such Guarantor Senior Debt to receive payments and distributions of cash, property and securities applicable to the Guarantor Senior Debt until the obligations of such Guarantor under its Note Guarantee shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of Guarantor Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article 3, and no payments made pursuant to the provisions of this Article 3 to the holders of Guarantor Senior Debt by Holders of the Securities or the Trustee, shall, as among the applicable Guarantor, its creditors other than holders of such Guarantor Senior Debt, and the

 

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Holders of the Securities, be deemed to be a payment or distribution by such Guarantor to or on account of such Guarantor Senior Debt.

 

Section 3.5                                    Provisions Solely to Define Relative Rights. The provisions of this Article 3 are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Guarantor Senior Debt on the other hand. Nothing contained in this Article 3 or elsewhere in the Indenture or in the Securities is intended to or shall (a) impair, as between a Guarantor and the Holders of the Securities, the obligations of such Guarantor in respect of its Note Guarantee, which are absolute and unconditional, to make payments to the Holders of the Securities under its Note Guarantee in accordance with its terms; (b) affect the relative rights against a Guarantor of the Holders of the Securities and creditors of such Guarantor other than their rights in relation to the holders of Guarantor Senior Debt; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, including filing and voting claims in any Guarantor Proceeding, subject to the rights, if any, under this Article 3 of the holders of Guarantor Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

 

Section 3.6                                    Trustee to Effectuate Subordination. Each Holder of a Security by his, her or its acceptance thereof authorizes and directs the Trustee on his, her or its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article 3 and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

 

Section 3.7                                    No Waiver of Subordination Provisions.

 

(a)                                 No right of any present or future holder of any Guarantor Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of a Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by such Guarantor with the terms, provisions and covenants of the Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

 

(b)                                 Without in any way limiting the generality of paragraph (a) of this Section 3.7, the holders of Guarantor Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article 3 or the obligations hereunder of such Holders of the Securities to the holders of Guarantor Senior Debt, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner Guarantor Senior Debt or any instrument evidencing the same or any agreement under which Guarantor Senior Debt is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Guarantor Senior Debt; (3) release any Person liable in any manner for the payment of Guarantor Senior Debt; and (4) exercise or refrain from exercising any rights against a Guarantor and any other Person.

 

Section 3.8                                    Notice to Trustee.

 

(a)                                 Each Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to such Guarantor that would prohibit the making of any payment to or by the Trustee in respect of its Note Guarantee. Notwithstanding the provisions of this Article 3 or any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Note Guarantee of any Guarantor, unless and until a Responsible Officer of the Trustee shall have received written notice

 

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thereof from such Guarantor or a holder of Guarantor Senior Debt or from any trustee, agent or representative therefor; provided that if the Trustee shall not have received the notice provided for in this Section 3.8 at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable under such Note Guarantee for any purpose, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.

 

(b)                                 The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself, herself or itself to be a holder of Guarantor Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Guarantor Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Guarantor Senior Debt to participate in any payment or distribution pursuant to this Article 3, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 3, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

 

Section 3.9                                    Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of a Guarantor referred to in this Article 3, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Guarantor Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Guarantor Senior Debt and other indebtedness of such Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 3.

 

Section 3.10                             Trustee Not Fiduciary for Holders of Guarantor Senior Debt. The Trustee, in its capacity as trustee under the Indenture, shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to a Guarantor or to any other Person cash, property or securities to which any holders of Guarantor Senior Debt shall be entitled by virtue of this Article 3 or otherwise. For the avoidance of doubt, nothing in this Article 3 (or in the correlative Article XII of the Base Indenture) shall apply to amounts owed to the Trustee under Section 6.6 of the Base Indenture.

 

Section 3.11                             Rights of Trustee as Holder of Guarantor Senior Debt; Preservation of Trustee’s Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article 3 with respect to any Guarantor Senior Debt that may at any time be held by it, to the same extent as any other holder of Guarantor Senior Debt, and nothing in the Indenture shall deprive the Trustee of any of its rights as such holder.

 

Section 3.12                             Article Applicable to Paying Agents. If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this Article 3 shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article 3 in addition to or in place of the Trustee; provided

 

8

 

that Sections 3.8 and 3.11 shall not apply to the Company, a Guarantor or any Affiliate of the Company or a Guarantor if the Company, such Guarantor or such Affiliate acts as Paying Agent.

 

ARTICLE 4
 MISCELLANEOUS

 

Section 4.1                                    Governing Law, Waiver of Trial by Jury. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state. The Company, each Guarantor and the Trustee hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in any legal proceeding arising out of or relating to the Indenture, the Notes or the transactions contemplated hereby.

 

Section 4.2                                    Separability Clause. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 4.3                                    Counterparts. This First Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 4.4                                    Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 4.5                                    Definitions. Capitalized terms used but not defined in this First Supplemental Indenture shall have the meanings assigned to them in the Base Indenture.

 

Section 4.6                                    Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Base Indenture and, as provided in the Base Indenture, this First Supplemental Indenture forms a part thereof.

 

Section 4.7                                    Relationship with Base Indenture. The terms and provisions contained in the Base Indenture will constitute, and are hereby expressly made, a part of this First Supplemental Indenture. However, to the extent any provision of the Base Indenture conflicts with the express provisions of this First Supplemental Indenture, the provisions of this First Supplemental Indenture will govern and be controlling.

 

Section 4.8                                    Trustee. The Trustee is not responsible for the validity or sufficiency of this First Supplemental Indenture or the recitals contained herein.

 

[Signature Page Follows]

 

9

 

SIGNATURES

 

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

 

	
 
    	
CIFC   CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Julian Weldon
    
	
 
    	
 
    	
Julian   Weldon
    
	
 
    	
 
    	
General   Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Julian Weldon
    
	
 
    	
 
    	
Julian   Weldon
    
	
 
    	
 
    	
General   Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC   HOLDINGS II LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
CIFC LLC,   its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Julian Weldon
    
	
 
    	
 
    	
Julian   Weldon
    
	
 
    	
 
    	
General   Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC   HOLDINGS III LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
CIFC LLC,   its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Julian Weldon
    
	
 
    	
 
    	
Julian   Weldon
    
	
 
    	
 
    	
General   Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE BANK   OF NEW YORK MELLON TRUST
   COMPANY, N.A.
    
	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ R.   Tarnas
    
	
 
    	
 
    	
R. Tarnas
    
	
 
    	
 
    	
Vice   Presidentexhibit10.1.empl agr_Mitchell4

		
			Exhibit 10.1
		

		
			 
		

		
			UQM TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
		

		
			THIS AGREEMENT dated as of January 4, 2015, is between UQM Technologies, Inc., a Colorado corporation (“Employer”), and Joseph R. Mitchell  (“Executive”).
		

		
			Recitals
		

		
			A.Executive and Employer are currently parties to an Employment Agreement, dated July 20, 2015 (the “Prior Agreement”).
		

		
			B.Executive has been serving as the Chief Operating Officer of Employer and acting as Employer’s interim President and Chief Executive Officer since July 20, 2015.
		

		
			C.The Board of Directors of Employer has determined to elect Executive as Employer’s President and Chief Executive Officer and as a member of Employer’s Board of Directors effective as of Tuesday, January 5, 2016 (the “Effective Date”).
		

		
			D.Employer and Executive wish to enter into a new employment agreement to reflect Executive’s  new position.
		

		
			Agreement
		

		
			In consideration of the mutual promises, covenants and conditions hereinafter set forth, Employer and Executive agree as follows:
		

			
	
			
				 1.
			New Agreement.  As of the Effective Date, this Agreement replaces the Prior Agreement, which Prior Agreement shall hereby be terminated as of the Effective Date, and shall govern the terms of Executive’s employment from the Effective Date through the term specified in Section 5.

			
	
			
				 2.
			Employment.  Employer hereby agrees to employ Executive as its President and Chief Executive Officer for the term of employment set forth herein, and Executive hereby accepts such employment, all upon the terms and conditions hereinafter set forth.     

			
	
			
				 3.
			Duties.   Executive shall perform the duties assigned to him by Employer’s  Board of Directors.  Executive shall be furnished with appropriate office space, secretarial assistance, and such other facilities and services as are suitable to Executive’s position and adequate for the performance of Executive’s duties.

			
	
			
				 4.
			Executive’s Performance. During the term of Executive’s employment under this Agreement, Executive shall devote Executive’s best efforts and full working time and attention exclusively to the performance of the duties hereunder and to promoting and furthering the business of Employer, and shall not, during the term of employment, be engaged in any other business activity for personal pecuniary advantage without the approval of the Board of 
		

		 

 

			Directors. This Section shall not be construed as preventing Executive from investing Executive’s assets in such form or manner as will not require any services on the part of Executive in the operation of the affairs of the companies in which such investments are made, subject to the provisions of Section 12 hereof. Notwithstanding the foregoing, Executive may perform and assume other activities and obligations as the Board of Directors shall from time to time approve.

			
	
			
				 5.
			Term of Agreement. The term of employment of Executive pursuant to this Agreement shall commence on the Effective Date and shall continue through June 30, 2017 (the “Term of Employment”), unless otherwise terminated by either party pursuant to Section 7 below.

			
	
			
				 6.
			Compensation; Reimbursement.

			
	
			
				 a.
			Base Salary. Employer agrees to pay Executive during the Term of Employment an annual base salary of $330,000  (“Base Salary”), which amount may be increased but may not be decreased, without the consent of Executive, during the Term of Employment. Executive’s base salary shall be paid in equal semi-monthly installments on the 15th and final day of each month during the Term of Employment.

			
	
			
				 b.
			Annual Bonus. For each fiscal year, Executive shall be eligible to receive a discretionary annual bonus (“Discretionary Cash Bonus”) payable in cash based on a target level of 75% of Executive’s Base Salary. (Currently, Employer’s fiscal year commences on April 1 and ends on March 31.) The Discretionary Cash Bonus will be determined based on the performance goals and rules established by the Compensation Committee of the Board of Directors of Employer (the “Compensation Committee”). The Discretionary Cash Bonus, if any, will be payable within four months of the end of the fiscal year. Executive is not guaranteed any Discretionary Cash Bonus payment.

			
	
			
				 c.
			Long-term Equity Incentive Compensation. Employer has adopted long-term equity incentive compensation plans that are administered by the Compensation Committee. For each fiscal year, Executive shall be eligible to receive an award of long-term equity incentive compensation in the form of common stock of Employer, options to acquire common stock of Employer or any combination of the foregoing based on a target level of 100% of Executive’s Base Salary. Long-term equity incentive compensation will be determined based on performance goals and rules established by the Compensation Committee and such awards, if any, will be made within four months of the end of the fiscal year. Executive is not guaranteed any long-term equity compensation.

			
	
			
				 d.
			Additional Benefits. Executive shall receive usual and customary additional benefits in accordance with Employer’s policies and practices for employees generally (including, without limitation, participation in any stock option plans, stock purchase plans, life and disability insurance plans, health care and hospitalization plans, medical and dental reimbursement plans, profit sharing plans, retirement plans and other employee benefit plans) for which Executive is qualified. Employer shall reimburse Executive for one medical exam every year. In addition to the foregoing, Executive shall receive an automobile allowance of $810 per month for the use of an automobile for combined business and personal use.

		 

		

			2

		

		

			 

		

 

			
	
			
				 e.
			Annual Review of Compensation. No later than the end of the second quarter of its fiscal year, Employer shall review Executive’s performance under this Agreement and establish goals and objectives for Executive’s performance for the next fiscal year. In such review, Employer, in its reasonable discretion, shall consider increasing Executive’s Base Salary and other compensation based on relevant factors such as Executive’s performance, Employer’s accomplishments, increase or decrease in Executive’s responsibilities, and cost of living increases. Any Base Salary increases normally are to be effective on such date as may be specified by Employer.

			
	
			
				 f.
			Reimbursement. Employer shall reimburse Executive for all reasonable expenses that Executive incurs in connection with the business of Employer or any of its subsidiaries and in the performance of Executive’s duties under this Agreement. Employer shall also reimburse Executive for membership fees and expenses related to Executive’s membership in professional organizations, clubs, societies and groups as may be approved by the Board of Directors from time to time, subject to such rules, regulations and record-keeping requirements as may be established from time to time by the Board.

			
	
			
				 g.
			Special Retention Bonus.  If Executive shall remain an employee of Employer continuously from July 20, 2015 through June 30, 2017 (the “Retention Period Date”), no later than five business days following the Retention Period Date, Employer shall pay Executive in cash the amount of $100,000 as a retention bonus.  If Executive intends to terminate his employment at any time on or after the Retention Period Date and before January 1, 2018, Executive shall provide notice of such planned termination at least six months prior to the termination date.  

			
	
			
				 7.
			Termination. The provisions of this Section 7 shall apply during the Term of Employment.

			
	
			
				 a.
			Termination for Cause.   Employer may terminate Executive’s employment for “Cause” (as defined below), effective 14 days following written notice to Executive from Employer reasonably describing the basis for the contemplated termination. Executive shall have a right during this 14-day period to respond in writing and in person prior to Employer’s final determination of Cause. During the period between such notice and final determination, the Board may suspend the performance of Executive’s duties under this Agreement and direct Executive’s non-attendance at work. However, Executive’s right to compensation under this Agreement shall continue through and to any final termination of employment for cause. Any termination under this Section 7(a) shall serve to relieve Executive of all his duties and authority on behalf of Employer as of the date such notice states the termination is to take effect. All obligations of Employer to Executive hereunder shall terminate as of the effective date of any such termination, except for obligations accrued prior to such effective date.

			
	
			
				 (i)
			For purposes of this Agreement, termination for “Cause” shall include any of the following:

			
	
			
				 A.
			Fraud, malfeasance, or embezzlement against Employer’s assets or conviction of any felony;

		 

		

			3

		

		

			 

		

 

			
	
			
				 B.
			Except under circumstances of disability contemplated by the provisions of Section 7(f), cessation of Executive’s performance of Executive’s duties hereunder or deliberate and substantial failure to perform them in a capable and conscientious manner;

			
	
			
				 C.
			Violation of the provisions of Sections 12 or 13; or

			
	
			
				 D.
			Deliberate and substantial breach of Executive’s material obligations under any other provision hereof that is not cured within 30 days after notice to Executive of the breach.

			
	
			
				 b.
			Termination Without Cause.  The Company may terminate Executive’s employment for any reason other than Cause and if it does so shall pay Executive a lump sum equal to twelve month’s Base Salary. If Executive terminates his employment and this Agreement for “Good Reason,” he will be entitled to the payments and benefits under this Section 7(b). For purposes of this Section 7(b), “Good Reason” means (i) a material change in the location where Executive is required to work or (ii) a material breach of this Agreement by Employer. Notwithstanding the foregoing, neither condition shall constitute “Good Reason” unless Executive provides notice to Employer within 90 days of the initial existence of the condition and Employer fails to cure the condition within 30 days of the date of Executive’s notice, upon which failure to cure Executive’s employment shall terminate immediately with Good Reason. If Employer cures the condition within the 30-day period, Employer shall have no obligation to pay the amount described in this Section 7(b). The lump sum payable under this Section 7(b) shall be paid within 30 days after Executive’s termination of employment, subject to the provisions of Section 7(g).

			
	
			
				 c.
			Termination Upon Certain Changes in Control.   If a Change in Control Event (as defined below in Section 7(c)(iv)) shall occur and, if within the twelve-month period immediately following the Change in Control Event, (1) the Company or its successor terminates Executive’s employment without Cause, or  (2) Executive terminates his employment on account of a Material Change (as defined below in Section 7(c)(iii)), Executive shall receive a lump sum severance payment equal to two times the sum of (a) the amount otherwise payable under Section 7(b), (b) the average annual Cash Bonus paid to the Executive for the preceding three fiscal years (or since the Executive’s date of hire if less than three years), and (c) the retention bonus otherwise payable pursuant to Section 6(g). Executive shall be entitled to the accelerated vesting of all options and restricted stock awards issued to Executive and all options held by Executive on the termination date shall be exercisable for the remainder of their original term. The lump sum payment shall be made within 30 days following Executive’s termination of employment, subject to the provisions of Section 7(g).

			
	
			
				 (i)
			Notwithstanding anything to the contrary herein, if the aggregate amounts payable pursuant to Section 7(c)(i), either alone or together with any other payments which Executive has the right to receive either directly or indirectly from Employer or any of its affiliates, would be subject to an excise tax as an “excess parachute payment” under Section 4999 of the Internal Revenue Code (the “Code”), Executive hereby agrees that such aggregate amounts payable hereunder shall be reduced to an amount that does not exceed 2.99 times Executive’s  “base amount,” as defined in Code Section 280G(b)(3) and the regulations 
		

		 

		

			4

		

		

			 

		

 

			promulgated thereunder. The aggregate amount shall be reduced in the following order: first, the amount determined under Section 7(c)(i)(b), next the amount determined under Section 7(c)(i)(a), and finally, the amount attributable to the acceleration of vesting of options and restricted stock. All determinations of, and reductions in “excess parachute payments” called for in this Section 7(c)(ii) shall be made by an independent public accounting firm with a national reputation as shall be selected by Employer. Employer shall bear all costs associated with obtaining such determinations.

			
	
			
				 (ii)
			For purposes of this Agreement, a “Material Change” shall occur if, without Executive’s consent:

			
	
			
				 A.
			There is a material diminution in Executive’s Base Salary (from the amount in effect on the date of the Change in Control);

			
	
			
				 B.
			There is a material diminution in Executive’s authority, duties, or responsibilities;

			
	
			
				 C.
			There is a material diminution in the authority, duties, or responsibilities of the supervisor (the Chief Executive Officer) to whom Executive is required to report;

			
	
			
				 D.
			There is a material diminution in the budget over which Executive retains authority;

			
	
			
				 E.
			There is a material change in the geographic location at which Executive is required to perform services; or

			
	
			
				 F.
			There is any other action or inaction that constitutes a material breach of this Agreement.

			
	
			
				 G.
			There is any other action or inaction by the Company that, in Executive’s sole judgment, represents a material diminution in the characteristics of Executive’s employment, including but not limited to the quality, work hours required, travel required or other material aspect of Executive’s employment.

		
			The occurrence of any of the conditions constitute a Material Change provided the Executive gives written notice to Employer of the existence of the condition giving rise to a Material Change and the Employer fails to cure such condition to Executive’s reasonable satisfaction within 10 days following the date of Executive’s notice.
		

			
	
			
				 (iii)
			“Change in Control Event” means the occurrence of any of the following:

			
	
			
				 A.
			The acquisition by any individual, entity or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% of either (1) the then outstanding shares of common stock of Employer (the “Outstanding Company Common Stock”) or (2) the 
		

		 

		

			5

		

		

			 

		

 

			combined voting power of the then outstanding voting securities (assuming the conversion of all securities of Employer held by the Person that are convertible into voting securities of Employer) of Employer entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from Employer as authorized by the board of directors of Employer of an amount of shares less than 50% of the Company’s then outstanding common stock on a fully diluted basis, (2) any acquisition by Employer, including any acquisition which, by reducing the number of shares outstanding, is the sole cause for increasing the percentage of shares beneficially owned by any such Person to more than the applicable percentage set forth above, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Employer or any entity controlled by Employer or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of Section 7(c)(iv)(C).

			
	
			
				 B.
			Individuals who, as of the date hereof, constitute the board of directors of Employer (the “Incumbent Board”) cease for any reason within any period of 24 months to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Employer’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the board of directors of Employer.

			
	
			
				 C.
			Consummation by Employer of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Employer or the acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, (1) more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including without limitation, a corporation which as a result of such transaction owns Employer or all or substantially all of Employer’s assets either directly or through one or more subsidiaries) is represented by Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Outstanding Company Common Stock and Outstanding Company Voting Securities were converted pursuant to such Business Combination) and such ownership of common stock and voting power among the holders thereof is in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan (or related trust) of Employer or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that the amount (measured as a percentage of such ownership) existed prior to the Business Combination and (3) at least a majority of the members of the board 
		

		 

		

			6

		

		

			 

		

 

			of directors of the corporation resulting from such Business Combination and continually in place during the one year period following the Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

			
	
			
				 D.
			Approval by the stockholders of Employer of a complete liquidation or dissolution of Employer.

			
	
			
				 d.
			Termination For Disability. If Executive is unable to perform Executive’s services by reason of illness or incapacity for a period of more than six consecutive months, Employer may terminate Executive’s employment. Employer shall receive a credit against Executive’s Base Salary for any disability compensation benefit for the same calendar period received by Executive from Worker’s Compensation or any commercial insurance carrier under Sections 9 and 10 while Executive is employed with Employer. If Executive’s employment is terminated under this Section 7(d) Executive shall receive a lump sum equal to six month’s Base Salary. For this purpose, “illness or incapacity” or “disability” shall mean a medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of at least twelve months and that prevents Executive from engaging in any substantial gainful activity.

			
	
			
				 e.
			Death During Employment. If Executive dies during the term of his employment under this Agreement, Employer shall pay to the estate or trust of Executive the Base Salary that would otherwise be payable to Executive up to the end of the sixth month after the month in which his death occurs. If, by that time, Executive’s estate or trust has not received any proceeds of the life insurance provided for in Section 9, Employer shall continue Executive’s Base Salary hereunder for up to an additional three months, or until such life insurance proceeds are received, whichever is earlier (“Reimbursable Payments”), provided that Executive’s estate or trust shall reimburse Employer for any such Reimbursable Payments made from the proceeds of such life insurance. All payments of compensation under this Section 7(e) shall be paid on the 15th and final day of each month according to Employer’s customary payroll practices.

			
	
			
				 f.
			Return of Documents. Upon the expiration or termination of Executive’s employment, Executive or Executive’s legal representative upon request shall promptly deliver to Employer all originals and all duplicates or copies of all documents, records, notebooks and similar repositories of or containing Confidential Information as defined in Section 13 then in his possession, whether prepared by Executive or not.

			
	
			
				 g.
			Section 409A. It is the intent of the parties that all payments and benefits under this Agreement shall comply with Section 409A of the Internal Revenue Code (“Section 409A”), to the extent subject thereto, and to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance with Section 409A.

			
	
			
				 A.
			Notwithstanding anything in this Agreement to the contrary, Executive shall not be considered to have terminated employment with the Employer for purposes of any payments under this Agreement that are subject to Section 409A until Executive has had a “separation from service” from Employer within the meaning of Section 409A.

		 

		

			7

		

		

			 

		

 

			
	
			
				 B.
			Each amount to be paid or benefit to be provided under this Agreement shall be treated as a “separate payment” for purposes of Section 409A.

			
	
			
				 C.
			To the extent required in order to avoid accelerated taxation and penalties, amounts that would otherwise be payable and benefits that would otherwise be provided during the six month period immediately following Executive’s separation from service shall instead be paid on the first business day after the date that is six months after Executive’s separation from service (or, if earlier, Executive’s death).

			
	
			
				 D.
			Payments under Sections 7(b) and (c) are intended to qualify to the maximum extent possible as “short-term deferrals” exempt from the application of Section 409A. Any payments and benefits that do not so qualify are intended to qualify for the Section 409A exemption set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii) (which exempts from Section 409A certain payments made upon an “involuntary separation from service”). To the extent that payments made pursuant to Sections (b) and (c) are made upon an “involuntary separation from service” but exceed the exemption threshold set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii), the exemption will be first applied to any continued health and welfare benefits payable (to the extent such benefits are subject to Section 409A and are payable within six months from Executive’s separation from service as defined for purposes of Section 409A (the “Delayed Payment Date”) and thereafter to any cash payments until the exemption has been applied in full. Any payments under Sections 7(b) and (c) that are not exempted form Section 409A and that are payable prior to the Delayed Payment Date shall be withheld by Employer and paid to Executive on the Delayed Payment Date or as soon thereafter as administratively feasible.

			
	
			
				 E.
			To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits to Executive) during one year shall not affect amounts reimbursable or provided in any subsequent year.

			
	
			
				 F.
			Nothing in this Section 7(g)  shall prohibit Employer or Executive from making use of any Section 409A exemption that may be applicable to a payment or benefit under this Agreement.

			
	
			
				 G.
			Employer makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A. Employee acknowledges that Employer has advised Employee to seek his own counsel with respect to the federal, state, or local tax treatment of any payments or benefits under this Agreement, including the treatment of payments under Section 409A.

			
	
			
				 H.
			COBRA Payment upon Termination.  If Executive’s employment is terminated pursuant to Sections 7(b), 7(c) or 7(d), and provided that the Executive has timely elected continuation coverage under COBRA for the Executive and any covered dependents under the Employer’s group health plans, Employer shall pay two-thirds of the cost of the COBRA premiums for Executive’ and any covered dependents from the date of 
		

		 

		

			8

		

		

			 

		

 

			termination through the earlier of six months following termination of employment or until Executive is employed by a different employer (the “Post-Termination Period”), and the Executive shall be responsible for the remaining cost of such COBRA premiums.

			
	
			
				 8.
			Paid Time Off. Executive shall be entitled each year to 28 vacation paid days off, of which up to eight days must be used for mandatory personal time off, plus six holiday paid days off during which time his compensation shall be paid in full. Paid time off accrued during each calendar year must be used by the end of each calendar year, or will be lost, and will not accrue from one calendar year to the next, provided however that Executive shall be eligible to receive payment from Employer for any unused paid time off in accordance with any such Company policy then in effect. Exceptions to the foregoing non-accrual policy may be provided under terms and conditions approved in writing by resolution of the Board of Directors or its compensation committee in such body’s sole discretion based on prolonged extra-ordinary work demands preventing Executive’s timely taking vacation.

			
	
			
				 9.
			Insurance for the Benefit of Executive.

			
	
			
				 a.
			Medical Insurance. Executive and his dependents shall be covered by Employer’s medical insurance in accordance with Employer’s health care/medical insurance and hospitalization plan(s), in effect from time to time, the premiums for which shall be paid by Executive. Executive shall be covered by Employer’s disability insurance in accordance with Employer’s disability plan, in effect from time to time, the premiums for which shall be paid for by Employer.

			
	
			
				 b.
			Life Insurance. Employer shall at its expense continuously maintain without interruption in the name of Executive or Executive’s designee or for the benefit of Executive or Executive’s designee, life insurance coverage in an amount equal to three times Executive’s then current base salary.

			
	
			
				 10.
			Insurance for the Benefit of Employer. In addition to the rights to the insurance specified in Section 9(b), Employer shall have the right from time to time to apply for and take out in its name and at its own expense, life, health or other insurance upon Executive in any sum or sums which may be deemed necessary by Employer to protect its interest under this Agreement and Executive shall do all such things as may be necessary to assist in the procuring of such insurance by making a proper application therefore as may be required by the insurance company and submitting to the usual and customary medical examinations. Executive, in Executive’s capacity as Executive, shall have no right, title or interest in or to such insurance, but the same shall be solely for the benefit of Employer and any amounts payable thereunder shall be solely payable to such Employer.

			
	
			
				 11.
			Representation and Warranty. Executive represents and warrants that he is not now, and will not be on the date of commencement of this Agreement, a party to any agreement, contract or understanding, whether of employment, agency or otherwise, which would in any way restrict or prohibit Executive from undertaking and performing Executive’s duties in accordance with the terms and provisions of this Agreement.

		 

		

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				 12.
			Restrictive Covenant.

			
	
			
				 a.
			Non-Competition. Executive agrees and covenants that, without the Board’s prior written consent and except on behalf of Employer, he will not in any manner, directly or indirectly, own, manage, operate, control, be employed by, participate in, assist or be associated in any manner with any person, firm or corporation anywhere in the world whose business competes with Employer or any subsidiary of Employer. This covenant shall remain in effect until (i) if his employment is terminated pursuant to Sections 7(a), (c), (d) or (e), a date one year after the date Executive’s employment is terminated, or (ii) if his employment is terminated pursuant to Section 7(b), until the termination date. Notwithstanding any other provision of this Agreement, Executive may own up to 3% of the outstanding stock of a competing publicly traded corporation so long as he takes no other action furthering the business of such corporation.

			
	
			
				 b.
			Non-Solicitation. Until a date one year after the termination date, Executive shall not (i) solicit any other employee of Employer to leave the employ of Employer, or in any way interfere with the relationship between Employer and any other employee of Employer, or (ii) induce any customer, supplier, licensee, or other business relation of Employer to cease doing business with Employer, or in any way interfere with the relationship between any customer or business relation and Employer.

			
	
			
				 13.
			Confidentiality.

			
	
			
				 a.
			Definitions. For purposes of this Section 13, the following definitions shall apply:

			
	
			
				 (i)
			“Inventions” shall mean all inventions, improvements, modifications, and enhancements, whether or not patentable, made by Executive within the scope of Executive’s duties during Executive’s employment by Employer.

			
	
			
				 (ii)
			“Confidential Information” shall mean Employer’s proprietary know-how and information disclosed by Employer to Executive or acquired by Executive from Employer during Executive’s employment with Employer about Employer’s plans, products, processes and services, which Employer protects against disclosure to third parties. Confidential Information shall not include Executive’s general knowledge and experience possessed prior to or obtained during his employment with Employer.

			
	
			
				 b.
			Restrictions on Disclosure.   During the Term of Employment and thereafter, Executive shall not disclose Confidential Information to any third parties other than Employer, its employees, agents, consultants, contractors and designees without the prior written permission of Employer, or use Confidential Information for any purpose other than the conduct of Employer’s business.

			
	
			
				 (i)
			The restrictions on disclosure and use set forth herein shall not apply to any Confidential Information which:

		 

		

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				 A.
			at the time of disclosure to Executive by Employer is generally available to the public or thereafter becomes generally known to the public, through no fault of Executive;

			
	
			
				 B.
			was known by Executive prior to his employment with Employer;

			
	
			
				 C.
			Executive at any time receives from a third party not under any obligation of secrecy or confidentiality to Employer;

			
	
			
				 D.
			Employer discloses to a third party not under any obligation of secrecy or confidentiality to it; and

			
	
			
				 E.
			Executive is requested or required to disclose pursuant to a subpoena or order of a court or other governmental agency, in which case Executive shall notify Employer as far in advance of disclosure as is practicable.

			
	
			
				 c.
			Obligations Regarding Inventions. Without any royalty or any other additional consideration to Executive: (i) Executive shall promptly inform Employer of any Inventions by a written report, setting forth the conception and reduction to practice of all inventions; (ii) Executive hereby agrees to assign and assigns to Employer all of his right, title and interest: (A) to any Inventions made during the term of his employment by Employer (including without limitation the right to license or sell such Invention to others), (B) to applications for United States and foreign letters patent, and (C) to United States and foreign letters patent granted upon such Inventions; and (iii) Executive agrees upon request and at the sole cost and expense of Employer to, at all times, do such acts (such as giving testimony in support of his inventorship) and execute and deliver promptly to Employer such papers, instruments, and documents as from time to time may be necessary or useful to apply for, secure, maintain, reissue, extend or defend Employer’s interest in any Inventions or any or all United States and foreign letters patent, so as to secure Employer the full benefits of any Inventions or discoveries or otherwise to carry into full force and effect the intent of the assignment set out in Section 13(c)(ii).

			
	
			
				 d.
			Remedies. Executive acknowledges and agrees that Executive’s disclosure of any Confidential Information would result in irreparable injury to Employer. Executive acknowledges and agrees that the Confidential Information is non-public information which Executive has expended substantial time, money and effort to develop and is property considered “Trade Secrets” of Employer within the meaning of Colorado law. Therefore, upon the breach or threatened breach of the covenants in this Section 13 by Executive, Employer shall be entitled to obtain from any court of competent jurisdiction a preliminary and permanent injunction prohibiting such disclosure and any other equitable relief that the court deems appropriate. In addition, Employer shall be entitled to seek damages.

			
	
			
				 e.
			Property of Employer. Any Confidential Information that is directly or indirectly originated, developed or perfected to any degree by Executive during the term of his employment by Employer shall be and remain the sole property of Employer.

		 

		

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				 14.
			Resolution of Disputes. In addition to any other remedies available to Employer, Employer shall be entitled to specific performance of the covenants contained in Sections 12 and 13. If either party is successful in enforcing its rights under this Section 14, the unsuccessful party shall reimburse the successful party for all of the costs of such enforcement, including but not limited to costs, litigation expenses and reasonable attorneys’ fees. Except for an action to interpret or enforce Sections 12 or 13, any controversy or claim arising out of or relating to the interpretation, alleged breach or enforcement of this Agreement shall be settled by arbitration before a single arbitrator in Denver, Colorado, in accordance with the commercial rules then in effect of the American Arbitration Association, Colorado Revised Statutes pertaining to the arbitration of civil disputes. The arbitrator, who shall be a person experienced in negotiating and making employment agreements and resolving employment disputes and in any other pertinent areas of law, shall make reasonably detailed findings to support any decision and award. The award of the arbitrator shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. As part of the award in any arbitration or judicial proceedings, the prevailing party may be awarded its reasonable attorneys’ fees, witness fees, expert witness fees and related costs and expenses in the discretion of the arbitrator.

			
	
			
				 15.
			Notices. All notices under this Agreement shall be delivered by hand or by registered or certified mail. Notices intended for Executive shall be addressed to Executive at 4120 Specialty Place, Longmont, Colorado 80504. Notices intended for Employer shall be addressed to it at 4120 Specialty Place, Longmont, Colorado 80504. All notices shall be effective upon actual delivery if by hand, or, if by mail, three days after being deposited in the United States mail, postage prepaid and addressed as required by this Section 15. Either party may by notice accomplished in accordance with this Section 15 change the address to which future notices may be sent.

			
	
			
				 16.
			Miscellaneous Provisions.

			
	
			
				 a.
			This Agreement contains the entire agreement between the parties and supersedes all prior agreements and it shall not be amended or otherwise modified in any manner except by an instrument in writing executed by both parties.

			
	
			
				 b.
			Neither this Agreement nor any rights or duties under this Agreement may be assigned or delegated by either party unless the other party consents in writing.

			
	
			
				 c.
			Except as otherwise provided herein, this Agreement shall be binding upon the inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

			
	
			
				 d.
			This Agreement has been entered into in Colorado and shall be governed by the laws of that state.

			
	
			
				 e.
			In fulfilling their respective obligations under this Agreement and conducting themselves pursuant to it, each party shall act reasonably and in good faith.

			
	
			
				 f.
			If any provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the invalid or unenforceable provision shall be deemed severed 
		

		 

		

			12

		

		

			 

		

 

			from this Agreement and the balance of this Agreement shall remain in full force and effect and be enforceable in accordance with its terms.

			
	
			
				 g.
			To the extent necessary, the provisions of this Agreement shall be construed and administered in compliance with the requirements of Section 409A and the regulations and any other guidance promulgated thereunder.

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			[Signature Page to Follow]
		

		
			 
		

		

		

		 

		

			13

		

		

			 

		

 

		
		

		
			 
		

		
			 
		

		
			IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.
		

		
			 
		

			
					
						EXECUTIVE:

				
	
					
						 

				
	
					
						 

					
						/s/JOSEPH R. MITCHELL

				
	
					
						Joseph R. Mitchell

				
	
					
						 

				
	
					
						 

				
	
					
						EMPLOYER:

				
	
					
						 

				
	
					
						UQM TECHNOLOGIES, INC.

				
	
					
						By:

					
					
						/s/DAVID I. ROSENTHAL

				
	
					
						 

					
					
						David I. Rosenthal

				
	
					
						 

					
					
						Chief Financial Officer

				

		
			 
		

		 

		

			14

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