Document:

ex10-1.htm

Exhibit 10.1

 

	
Citibank, N.A.

390 Greenwich Street

New York, New York 10013

	

Execution Copy

 

	
Date:

	
December 17, 2012 (amended and restated as of March 22, 2016)

 

	
To:

	
Flatiron Funding, LLC

c/o CĪON Investment Corporation

100 Fifth Avenue, 4th Floor

3 Park Avenue, 36th Floor

New York, NY 10016

Attention: General Counsel

Facsimile:  (212) 418-4739

 

	
From:

	
Citibank, N.A.

	

	
333 West 34th Street

	

	
2nd Floor

	

	
New York, New York 10001

	

	
Attention: Director Derivative Operations

	

	
Facsimile: 212-615-8594

 

Transaction Reference Number: [__________]

 

Ladies and Gentlemen:

 

The purpose of this letter agreement (this "Agreement") is to set forth the terms and conditions of the Transactions entered into between Citibank, N.A. ("Citibank") and Flatiron Funding, LLC, a limited liability company formed under the law of the State of Delaware ("Counterparty"), on the Trade Date specified below (each, a "Transaction" and, collectively, the "Transactions"). This letter constitutes a "Confirmation" as referred to in the Master Agreement specified below.

 

The definitions and provisions contained in the 2000 ISDA Definitions (the "Definitions"), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation shall govern. Capitalized terms used but not defined in this Confirmation have the meanings assigned to them in Annex A. Capitalized terms used but not defined in this Confirmation or in Annex A have the meanings assigned to them in the Definitions.

 

With effect from and after the Twelfth Amendment Effective Date (as defined below), this Confirmation amends and restates the prior Confirmation dated December 17, 2012 and amended and restated as of December 9, 2013, February 18, 2014, April 30, 2014, July 30, 2014, September 5, 2014, November 18, 2014, January 20, 2015, March 4, 2015, October 2, 2015, December 22, 2015, and February 18, 2016 between Citibank and Counterparty (the "Original Confirmation") relating to the Transactions described herein, which Original Confirmation is hereby superseded and shall be of no further force or effect with respect to the period from and after the Twelfth Amendment Effective Date.

Page 1

 

1.           Agreement

 

This Confirmation supplements, forms a part of and is subject to, the ISDA 2002 Master Agreement, dated as of December 17, 2012 (as amended, supplemented and otherwise modified and in effect from time to time, the "Master Agreement"), between Citibank and Counterparty. All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below.

 

2.           Terms of Transactions

 

The terms of the particular Transactions to which this Confirmation relates are as follows:

 

	
General Terms:

	  
	 	 
	
Trade Date:

	
December 17, 2012

	 	 
	
Effective Date:

	
December 17, 2012

	 	 
	Amendment Effective Date:	December 9, 2013 
	 	 
	
Second Amendment Effective Date:

	
February 18, 2014

	 	 
	Third Amendment Effective Date:	April 30, 2014
	 	 
	
Fourth Amendment Effective Date:             

	
July 30, 2014

	 	 
	Fifth Amendment Effective Date:	September 5, 2014
	 	 
	Sixth Amendment Effective Date:	November 18, 2014
	 	 
	Seventh Amendment Effective Date:	January 20, 2015
	 	 
	Eighth Amendment Effective Date:	March 4, 2015
	 	 
	Ninth Amendment Effective Date:	October 2, 2015
	 	 
	Tenth Amendment Effective Date:	December 22, 2015
	 	 
	Eleventh Amendment Effective Date:	February 18, 2016
	 	 
	Twelfth Amendment Effective Date:	March 22, 2016
	
 

	 
	
Scheduled Termination Date:

	
The latest date for the final scheduled payment (or, if there is only one scheduled payment, for the scheduled payment) of principal of any Reference Obligation at any time included in the Reference Portfolio, as such date may be accelerated pursuant to the first sentence of Clause 3(c).

	 	 
	
Citibank Call Date:

	
The one-year anniversary of the Eleventh Amendment Effective Date; provided that Citibank and Counterparty may agree in writing to extend the Citibank Call Date.

	 	 
	
Termination Date:

	
The final Scheduled Settlement Date (as defined in the Master Agreement) with respect to all Transactions (other than any Counterparty Fourth Floating Rate Payer Payment Date).  The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date.

	 	 
	
Obligation Termination Date:

	
(a) In relation to any Repaid Obligation, the related Repayment Date; and

 

(b) In relation to any Terminated Obligation, the related Termination Settlement Date.

	 	 
	
Reference Portfolio:

	
As of any date of determination, all Reference Obligations with respect to all Transactions outstanding on such date.

Page 2

 

	
Reference Obligation:

	
Each obligation listed on Annex I as revised from time to time pursuant to this Confirmation having a Reference Amount equal to the "Reference Amount" indicated on Annex I for such obligation (and, in the case of a Committed Obligation, having an Outstanding Principal Amount equal to the "Outstanding Principal Amount" indicated on Annex I for such Committed Obligation), in each case, subject to adjustment by the Calculation Agent in accordance with the terms of this Confirmation.  Each Reference Obligation shall be the subject of a Transaction hereunder.

	 	 
	  	
Counterparty may, by notice to Citibank on any Business Day on or after the Trade Date (each, an "Obligation Trade Date"), designate that any obligation (each, a "Reference Obligation") shall become the subject of a Transaction hereunder.  Any such notice shall specify the proposed Reference Obligation, Reference Entity, Reference Amount and Initial Price in relation to such Transaction.

 

Notwithstanding the foregoing, no such designation by Counterparty will be effective unless:

 

(a)  Citibank consents on or prior to the Obligation Trade Date to the relevant Reference Obligation becoming the subject of a Transaction hereunder, such consent not to be unreasonably withheld or delayed, with effect as set forth in the second and third succeeding paragraphs;

 

(b)  on the Obligation Trade Date (i) the relevant Reference Obligation satisfies the Obligation Criteria set forth in Annex II and (ii) the Portfolio Criteria set forth in Annex II are satisfied (or, if any Portfolio Criterion is not satisfied immediately prior to such designation, then the extent of compliance with such Portfolio Criterion is maintained or improved); and

 

(c)  if the relevant Reference Obligation would be a Specified Reference Obligation, Counterparty gives notice of such fact to Citibank in such notice of designation (provided that any failure to give such notice shall not affect the effectiveness of such designation).

Page 3

 

	 	
Without limiting the generality of the foregoing clause (a), Citibank may reasonably withhold its consent to any such designation based on any legal, accounting, tax or other similar issues that are adverse to Citibank in any material respect and that would or could reasonably be expected to arise as a result of the entry into such Transaction or any purchase by the Citibank Holder of such Reference Obligation as a hedge for such Transaction.  In the event that Citibank determines not to hold, or cause to be held, all or any portion of any such Reference Obligation as a hedge for the such Transaction on the Obligation Settlement Date for such Transaction, Citibank shall no later than the Obligation Trade Date give notice thereof to Counterparty.  In addition, Citibank will promptly respond to any notice from Counterparty requesting that Citibank identify whether Citibank is holding, or causing to be held, the relevant Reference Obligation as a hedge for one or more Transactions identified in such notice from Counterparty.

 

The "Obligation Settlement Date" for a Transaction shall be the date following the Obligation Trade Date for such Transaction that is customary for settlement of the related Reference Obligation substantially in accordance with the then-current market practice in the principal market for the related Reference Obligation (as determined by the Calculation Agent).

 

On the Obligation Trade Date for a Transaction, the Reference Amount of such Transaction shall, for all purposes hereof other than calculating Rate Payments, be increased by the "Reference Amount" specified in such notice from Counterparty.  On the Obligation Settlement Date for a Transaction, the Reference Amount of such Transaction shall, solely for the purposes of calculating Rate Payments, be increased by the "Reference Amount" specified in such notice from Counterparty.

 

Once a Reference Obligation becomes the subject of a Transaction hereunder, Citibank shall promptly prepare and deliver to Counterparty a revised Annex I reflecting the Reference Portfolio as of the related Obligation Trade Date.

 

Page 4

 

	  	
If any payment of interest on a Reference Obligation that would otherwise be made during the period from and including the Obligation Trade Date to but excluding the Termination Trade Date is not made but is capitalized as additional principal (without default), then the amount of interest so capitalized as principal shall become a new Transaction hereunder (a "PIK Transaction") having the same terms and conditions as the Transaction relating to the Reference Obligation in respect of which such interest is capitalized, except that (1) the Initial Price in relation to such PIK Transaction shall be zero, (2) the Obligation Trade Date and Obligation Settlement Date for such PIK Transaction shall be the date on which such interest is capitalized and (3) the Reference Amount of such PIK Transaction will be the amount of interest so capitalized as principal. Citibank shall give notice to Counterparty after a PIK Transaction becomes outstanding as provided above, which notice shall set forth the information in the foregoing clauses (2) and (3).

	 	 
	
Reference Entity:

	
The borrower of the Reference Obligation identified as such in Annex I. In addition, "Reference Entity", unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Reference Obligation.

	 	 
	
Ramp-Up Period:

	
The period from and including the Amendment Effective Date and ending on and including the date occurring 90 days after the Amendment Effective Date.

	 	 
	
Ramp-Down Period:

	
The period from and including the date 30 days prior to the Scheduled Termination Date and ending on and including the Scheduled Termination Date.

	 	 
	
Portfolio Notional Amount:

	
As of any date of determination, the sum of the Notional Amounts for all Reference Obligations as of such date.

	 	 
	
Notional Amount:

	
(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), as of any date of determination, the Reference Amount of the related Reference Obligation as of such date multiplied by the Initial Price in relation to such Reference Obligation; and

 

(b) In relation to any Transaction with respect to a Terminated Obligation or Repaid Obligation, the amount of the reduction in the Reference Amount of the related Reference Obligation determined, in the case of a Terminated Obligation, pursuant to Clause 3 or, in the case of a Repaid Obligation, pursuant to Clause 5, in each case multiplied by the Initial Price in relation to the related Reference Obligation.

Page 5

 

	
Outstanding Principal Amount:

	
In relation to any Reference Obligation as of any date of determination, the outstanding principal amount of such obligation as shown in the then current Annex I, as increased pursuant to this Clause 2 (or, in the case of any Committed Obligation, pursuant to any borrowing in respect of such Committed Obligation after the Obligation Settlement Date) and reduced pursuant to Clauses 3 and 5. Except as otherwise expressly provided below with respect to Counterparty First Floating Amounts, the principal amount of any Committed Obligation outstanding on any date shall include the aggregate stated face amount of all letters of credit, bankers' acceptances and other similar instruments issued in respect of such Committed Obligation to the extent that the holder of such Committed Obligation is obligated to extend credit in respect of any drawing or other similar payment thereunder.

	 	 
	
Commitment Amount:

	
In relation to any Reference Obligation that is a Committed Obligation (and the related Transaction) as of any date of determination, the maximum outstanding principal amount of such Reference Obligation that a registered holder thereof would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).

	 	 
	
Notional Funded Amount:

	
In relation to any Reference Obligation that is a Committed Obligation (and to the related Transaction) as of any date of determination, the greater of (a) zero and (b) the sum of (i) the Outstanding Principal Amount of such Reference Obligation as of the Obligation Trade Date multiplied by the Initial Price in relation to such Reference Obligation minus (ii) the product of (x) the excess, if any, of the Commitment Amount of such Reference Obligation as of the Obligation Trade Date over the Outstanding Principal Amount of such Reference Obligation as of the Obligation Trade Date multiplied by (y) 100% minus the Initial Price in relation to such Reference Obligation plus (iii) any increase in the Outstanding Principal Amount of such Reference Obligation during the period from but excluding the Obligation Trade Date to and including such date of determination minus (iv) any decrease in the Outstanding Principal Amount of such Reference Obligation during the period from but excluding the Obligation Trade Date to and including such date of determination.

 

In relation to any Reference Obligation that is a Term Obligation (and the related Transaction) as of any date of determination, the Notional Amount of such Reference Obligation.

Page 6

 

	
Portfolio Notional Funded Amount:

	
As of any date of determination, the aggregate of all Notional Funded Amounts with respect to all Reference Obligations in the Reference Portfolio on such date of determination.

	 	 
	
Reference Amount:

	
In relation to (a) any Term Obligation, the Outstanding Principal Amount thereof and (b) any Committed Obligation, the Commitment Amount thereof.

	 	 
	
Utilization Amount:

	
In relation to any Calculation Period, the daily average of the Portfolio Notional Funded Amount during such Calculation Period.

	 	 
	
Maximum Portfolio Notional Amount:

	
USD800,000,000, or such greater amount as the parties may agree to in writing.

	 	 
	
Minimum Portfolio Notional Amount:

	
80% of the Maximum Portfolio Notional Amount.

	 	 
	
Business Day:

	
New York

	 	 
	
Business Day Convention:

	
Following (which shall apply to any date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not a Business Day).

 

If any anniversary date specified herein would fall on a day on which there is no corresponding day in the relevant calendar month, then such anniversary date shall be the last day of such calendar month.

	 	 
	Floating Rate Index:	Whenever in this Confirmation reference is made to any Floating Rate Option (including any floating rate index specified in any Reference Obligation Credit Agreement) or to USD-LIBOR-BBA (each, a "Floating Rate Index"), in no event may such Floating Rate Index be less than zero.  In addition, with respect to any Counterparty First Floating Amount, if payment of interest on a Reference Obligation (or any portion thereof) is subject to the payment of a specified minimum rate regardless of the level of the relevant Floating Rate Index, then, without limiting the effect of the preceding sentence, such Floating Rate Index will be determined without regard to such specified minimum rate.
	 	 
	
Monthly Period:

	
Each period from and including the 12th day of any calendar month to but excluding the same day of the immediately succeeding calendar month.

	 	 
	
Calculation Agent:

	
Citibank; provided that, if an Event of Default described in Section 5(a)(vii) occurs with respect to Citibank as Defaulting Party and no Event of Default has occurred with respect to Counterparty as Defaulting Party, then Counterparty may designate any of Bank of America, NA, The Bank of Montreal, Barclays Bank plc, Canadian Imperial Bank of Commerce, Credit Suisse, Deutsche Bank AG, JPMorgan Chase Bank, N.A., UBS AG and Wells Fargo Bank, National Association as Calculation Agent, which designation shall be effective only (a) if such designated entity accepts such appointment and agrees to perform the duties of the Calculation Agent hereunder and (b) so long as such Event of Default with respect to Citibank as Defaulting Party continues.  Unless otherwise specified, the Calculation Agent shall make all determinations, calculation s and adjustments required pursuant to this Confirmation in good faith and on a commercially reasonable basis.

Page 7

 

	
Calculation Agent City:

	
New York

	 	 
	
Initial Price:

	
In relation to any Reference Obligation (and the related Transaction), the Initial Price specified in Annex I.  The Initial Price will be determined as of the related Obligation Trade Date exclusive of accrued interest and will be expressed as a percentage of the Reference Amount.  The Initial Price will be determined exclusive of Costs of Assignment that would be incurred by a buyer in connection with any purchase of the Reference Obligation and exclusive of any Delay Compensation.

	  	  
	
Payments by Counterparty

	  
	 	 
	
Counterparty First Floating Amounts:

	  
	 	 
	
First Floating Amount Payer:

	
Counterparty

	 	 
	
First Floating Amount:

	
In relation to any First Floating Rate Payer Payment Date, the sum, for each Transaction for which such date is a First Floating Rate Payer Payment Date, of the products of (a) the First Floating Rate Payer Calculation Amount for such Transaction for the related First Floating Rate Payer Calculation Period multiplied by (b) the Floating Rate Option for such Transaction during the related First Floating Rate Payer Calculation Period plus the Spread multiplied by (c) the Floating Rate Day Count Fraction; provided that, for purposes of the foregoing calculation, the percentage specified in the foregoing clause (b) shall be the Spread (and not the Floating Rate Option plus the Spread) with respect to any portion of a First Floating Rate Payer Calculation Amount constituting the undrawn stated face amount of all letters of credit, bankers' acceptances and other similar instruments issued in respect of a related Committed Obligation.

 

If the Floating Rate Option in relation to any Transaction varies during any First Floating Rate Payer Calculation Period, then the Floating Rate Option for such Calculation Period shall be equal to (a) the sum, for each day during such Calculation Period, of the products of the Notional Funded Amount of such Transaction for such Calculation Period multiplied by the Floating Rate Option in effect on such day divided by (b) the sum of the Notional Funded Amount of such Transaction on each such day.

Page 8

 

	
First Floating Rate Payer

Calculation Amount:

	
In relation to any First Floating Rate Payer Payment Date and any Transaction, the daily average of the Notional Funded Amount of such Transaction during the related First Floating Rate Payer Calculation Period.

	 	 
	
First Floating Rate Payer

Calculation Period:

	
In relation to any Transaction, each period from and including any date upon which a payment of interest is scheduled or otherwise required to be made on the related Reference Obligation to but excluding the next such date, except that (a) the initial First Floating Rate Payer Calculation Period will commence on, and include, the Obligation Settlement Date for such Transaction and (b) the final First Floating Rate Payer Calculation Period will end on, but exclude, the related Obligation Termination Date.

	 	 
	
First Floating Rate

Payer Payment Dates:

	
(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), the fifth Business Day following the last day of any Monthly Period during which any payment of interest is scheduled or otherwise required to be made on the related Reference Obligation, commencing with the first such date after the Obligation Settlement Date for such Transaction and ending with the last such date occurring prior to the related Obligation Termination Date; and

 

(b) In relation to any Transaction with respect to a Terminated Obligation or Repaid Obligation, the related Total Return Payment Date.

Page 9

 

	
Floating Rate Option:

	
In relation to any Transaction, the floating rate index specified in the term loan agreement, revolving loan agreement or other similar credit agreement governing the related Reference Obligation (the "Reference Obligation Credit Agreement") that is used to determine the rate of interest payable on such Reference Obligation; provided that (a) if more than one interest rate setting is at any time used to determine the rate of interest payable on a Reference Obligation (i.e., an interest rate election for a specific interest period relating to such Reference Obligation), then a separate First Floating Amount shall be calculated for each portion of such Reference Obligation as to which a separate interest rate setting has been effected, (b) any interest that has accrued to a specified date but is permitted under the Reference Obligation Credit Agreement to be capitalized or deferred as of such date (without default) shall be deemed to be scheduled to be paid on such date, (c) any Reference Obligation Credit Agreement that provides for the payment of interest less frequently than quarterly will be deemed to provide for a scheduled quarterly payment of interest on each date specified by Citibank, which date so specified shall be the calendar day of the month corresponding to other payment dates applicable to the related Reference Obligation and (d) notwithstanding the foregoing, if the floating rate index for such Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate, then the Floating Rate Option for such Reference Obligation (or such portion) shall equal USD-LIBOR-BBA.

	 	 
	
Designated Maturity:

	
In relation to any Transaction, the Floating Rate Option will have a Designated Maturity and Reset Dates that correspond to the maturity and reset dates specified in the related Reference Obligation Credit Agreement, except that, if the floating rate index specified in the related Reference Obligation Credit Agreement that is used to determine the rate of interest payable on the Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate, then for purposes of determining USD-LIBOR-BBA the "Designated Maturity" shall be one month and the first day of each First Floating Rate Payer Calculation Period will be a Reset Date.

	 	 
	
Spread:

	
1.40%.

Page 10

 

	
Floating Rate Day

Count Fraction:

	
In relation to any Transaction, the Floating Rate Day Count Fraction will be the day count basis for the computation of interest specified in the related Reference Obligation Credit Agreement, except that, if the floating rate index specified in the related Reference Obligation Credit Agreement that is used to determine the rate of interest payable on the Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate, then the Floating Rate Day Count Fraction will be Actual/360.

	 	 
	
Reset Dates:

	
As set forth in "Designated Maturity" above

	 	 
	
Compounding:

	
Inapplicable

	  	  
	
Counterparty Second Floating Amounts:

	  
	 	 
	
Second Floating Amount Payer:

	
Counterparty

	 	 
	
Second Floating Amount:

	
In relation to any Second Floating Rate Payer Payment Date, the product of (a) the Second Floating Rate Payer Calculation Amount for the related Second Floating Rate Payer Calculation Period multiplied by (b) the Spread multiplied by (c) the Floating Rate Day Count Fraction.

 

Notwithstanding the foregoing:

 

(a) no Second Floating Amount shall be payable with respect to any Second Floating Rate Payer Payment Date occurring on or after any date on which an Event of Default has occurred under Section 5(a)(i) or 5(a)(vii) with respect to Citibank as Defaulting Party; and

 

(b) no Second Floating Amount shall be payable on any Second Floating Rate Payer Payment Date, and no amount shall be payable under Clause 4(c) on any date after the last day of the Ramp-Up Period, following any date on which (i) Counterparty has designated at least 20 Designated Reference Obligations to become the subject of Transactions hereunder (as contemplated opposite the caption "Reference Obligation" above) and (ii) the aggregate Notional Amount of all Designated Reference Obligations as to which Citibank has not given its consent to such Reference Obligations becoming the subject of Transactions hereunder (as contemplated opposite the caption "Reference Obligation" above) exceeds 50% of the aggregate Notional Amount of all Reference Obligations that Counterparty has designated are to become the subject of Transactions hereunder (as contemplated opposite the caption "Reference Obligation" above).

Page 11

 

	
Second Floating Rate Payer

Calculation Amount:

	
In relation to any Second Floating Rate Payer Calculation Period, the excess, if any, of (a) the Minimum Portfolio Notional Amount over (b) the Utilization Amount for such Second Floating Rate Payer Calculation Period.

	 	 
	
Second Floating Rate Payer

Calculation Period:

	
Each Monthly Period; provided that (a) the initial Second Floating Rate Payer Calculation Period shall begin on the last day of the Ramp-Up Period and (b) the final Second Floating Rate Payer Calculation Period shall end on the last Second Floating Rate Payer Payment Date.

	 	 
	
Second Floating Rate

Payer Payment Dates:

	
The fifth Business Day following the last day of each Monthly Period; provided that (a) the initial Second Floating Rate Payer Payment Date will be the first such Business Day after the last day of the Ramp-Up Period and (b) the final Second Floating Rate Payer Payment Date will be the date 180 days prior to the Scheduled Termination Date (whether or not the Termination Date occurs prior to the Scheduled Termination Date).

	 	 
	
Spread:

	
1.40%.

	 	 
	
Floating Rate Day

Count Fraction:

	
Actual/365.

	 	 
	
Compounding:

	
Inapplicable

	  	  
	
Counterparty Third Floating Amounts:

	  
	 	 
	
Third Floating Amount Payer:

	
Counterparty

	 	 
	
Third Floating Amount:

	
In relation to any Third Floating Rate Payer Payment Date, the product of (a) the Third Floating Rate Payer Calculation Amount for the related Third Floating Rate Payer Calculation Period multiplied by (b) the Spread multiplied by (c) the Floating Rate Day Count Fraction.

Page 12

 

	
Third Floating Rate Payer

Calculation Amount:

	
In relation to any Third Floating Rate Payer Calculation Period, the excess, if any, of (a) the Maximum Portfolio Notional Amount over (b) the greater of (i) the Utilization Amount for such Third Floating Rate Payer Calculation Period plus (ii) the Minimum Portfolio Notional Amount.

 

If the Maximum Portfolio Notional Amount varies during any Third Floating Rate Payer Calculation Period, then the Maximum Portfolio Notional Amount for such Calculation Period shall be equal to the daily average of the Maximum Portfolio Notional Amount during such Calculation Period.

	 	 
	
Third Floating Rate Payer

Calculation Period:

	
Each Monthly Period; provided that (a) the initial Third Floating Rate Payer Calculation Period shall begin on the day immediately following the Ramp-Up Period and (b) the final Third Floating Rate Payer Calculation Period shall end on the last Third Floating Rate Payer Payment Date.

	 	 
	
Third Floating Rate

Payer Payment Dates:

	
The fifth Business Day following the last day of each Monthly Period; provided that (a) the initial Third Floating Rate Payer Payment Date will be the first such Business Day after the end of the Ramp-Up Period and (b) the final Third Floating Rate Payer Payment Date will be the Termination Date.

	 	 
	
Spread:

	
0.15%

	 	 
	
Floating Rate Day

Count Fraction:

	
Actual/360.

	 	 
	
Compounding:

	
Inapplicable

	  	  
	
Counterparty Fourth Floating Amounts:

	  
	 	 
	
Fourth Floating Amount Payer:

	
Counterparty

	 	 
	
Fourth Floating Amount:

	
Each Expense or Other Payment.

	 	 
	
Fourth Floating Rate

Payer Payment Dates:

	
In relation to any Transaction, (a) the fifth Business Day following the last day of each Monthly Period, beginning with the first such Business Day after the Obligation Settlement Date for such Transaction, (b) the related Obligation Termination Date and (c) after the related Obligation Termination Date, the fifth Business Day after notice of a Fourth Floating Amount from Citibank to Counterparty; provided that, prior to the fifth Business Day after the related Obligation Termination Date, if Counterparty has received fewer than five Business Days' notice from Citibank that such Fourth Floating Amount is due and payable, such Fourth Floating Rate Payer Payment Date shall be the fifth Business Day following the last day of the next succeeding Monthly Period. The obligation of Counterparty to pay Fourth Floating Amounts in respect of any Transaction shall survive the related Obligation Termination Date.

Page 13

 

	  	  
	
Counterparty Fifth Floating Amounts:

	  
	 	 
	
Fifth Floating Amount Payer:

	
Counterparty

	 	 
	
Fifth Floating Amount:

	
In relation to any Terminated Obligation or Repaid Obligation, Capital Depreciation, if any.

	 	 
	
Fifth Floating Rate

Payer Payment Dates:

	
Each Total Return Payment Date.

	  	  
	
Counterparty Sixth Floating Amounts:

	 
	 	 
	Sixth Floating Amount Payer:	Counterparty
	 	 
	Sixth Floating Amount:	$30,000
	 	 
	Sixth Floating Rate	Eighth Amendment Effective Date
	Payer Payment Dates:	 
	 	 
	
Payments by Citibank:

	  
	 	 
	
Citibank Fixed Amounts:

	  
	 	 
	
Fixed Amount Payer:

	
Citibank

	 	 
	
Fixed Amount:

	
In relation to any Transaction, the Interest and Fee Amount with respect to such Transaction for the related Fixed Amount Payer Payment Date.

	 	 
	
Fixed Amount Payer Calculation Periods:

	
In relation to each Reference Obligation in the Reference Portfolio, each period from and including any date upon which a payment of interest is made on such Reference Obligation to but excluding the next such date; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Obligation Settlement Date for such Reference Obligation and (b) the final Fixed Amount Payer Calculation Period shall end on, but exclude, the related Obligation Termination Date.

	 	 
	
Fixed Amount Payer Payment Dates:

	
(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), the fifth Business Day following the last day of any Monthly Period during which any payment of interest is made on the related Reference Obligation, commencing with the first such date after the Obligation Settlement Date for such Transaction and ending with the last such date occurring prior to the related Obligation Termination Date; and

 

(b) In relation to any Transaction with respect to any Terminated Obligation or Repaid Obligation, the related Total Return Payment Date.

Page 14

 

	  	  
	
Citibank Floating Amounts:

	  
	 	 
	
Floating Amount Payer:

	
Citibank

	 	 
	
Floating Amount:

	
In relation to any Terminated Obligation or Repaid Obligation, Capital Appreciation, if any.

	 	 
	
Floating Rate Payer Payment Dates:

	
Each Total Return Payment Date.

	  	  

 

3.           Reference Obligation Removal; Accelerated Termination.

 

Reference Obligation Removal

 

(a)         A Transaction may be terminated in whole by either party (or in part by Counterparty) in accordance with this Clause 3 by the giving of notice (an "Accelerated Termination Notice") to the other party (each such termination, an "Accelerated Termination").

 

	
(i)

	
Counterparty shall be entitled to terminate any Transaction or any portion thereof by delivering an Accelerated Termination Notice to Citibank that is given (i) on the proposed Termination Trade Date and (ii) no more than 30 days prior to the proposed Termination Settlement Date; provided that, except in the case of the termination of all Transactions, the Net Collateral Value Percentage would be greater than or equal to the Termination Threshold (in each case, after giving effect to such termination). The Accelerated Termination Notice shall specify the Reference Obligation that is the subject of such Accelerated Termination, the amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed Termination Settlement Date.

 

	
(ii)

	
Following the occurrence of a Credit Event (as determined by the Calculation Agent) with respect to the related Reference Entity (including any guarantor or other obligor referred to in the definition thereof), Citibank shall, at any time after the Obligation Trade Date for the Reference Obligation, be entitled to propose, by notice to Counterparty, an increased Independent Amount Percentage with respect to the related Transaction.  If Counterparty does not, by notice to Citibank within five Business Days after such notice from Citibank, agree to such increase, then Citibank may terminate the related Transaction by delivering an Accelerated Termination Notice to Counterparty that is given (i) on the Termination Trade Date and (ii) no fewer than 10 days prior to the proposed Termination Settlement Date. The Accelerated Termination Notice shall specify the Reference Obligation that is the subject of such Accelerated Termination, the amount of the Terminated Obligation, the Termination Trade Date and the Termination Settlement Date.

Page 15

 

Elective Termination by Citibank due to Certain Events

 

(b)        If:

 

	

	
(i)

	
any Reference Obligation (including any Exchange Consideration) fails to satisfy the Obligation Criteria at any time,

 

	

	
(ii)

	
the Portfolio Criteria (other than clause (v) thereof) are not satisfied at any time,

 

	

	
(iii)

	
Counterparty fails to perform when due any obligation to Transfer Eligible Collateral under Clause 9(a) or

 

	

	
(iv)

	
Counterparty does not, by the deadline specified therefor in Clause 9(e), effect the Transfer to Citibank as Secured Party of Eligible Collateral contemplated by Clause 9(e),

 

then Citibank may notify Counterparty in writing of such event. In the case of the foregoing clause (i) or (ii), if such event continues for 30 days following the delivery of such notice, then Citibank will have the right but not the obligation to terminate the related Transaction.  In the case of the foregoing clause (iii) or (iv), if such event continues for two Business Days following delivery of such notice, Citibank will have the right but not the obligation to terminate each Transaction that is the subject of this Confirmation. Citibank may exercise this termination right with respect to each Terminated Obligation by delivering an Accelerated Termination Notice to Counterparty that is given, as to any Terminated Obligation, (1) on the proposed Termination Trade Date and (2) no fewer than 10 days prior to the proposed Termination Settlement Date for the related Terminated Obligation. The Accelerated Termination Notice shall specify each Reference Obligation that is the subject of such Accelerated Termination and, with respect to each such Reference Obligation, the amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed Termination Settlement Date.

 

Acceleration of Scheduled Termination Date by Citibank

 

(c)        Citibank will have the right, but not the obligation, to accelerate the Scheduled Termination Date to a Business Day occurring no earlier than the Citibank Call Date.  Any such acceleration shall be effected by giving notice to Counterparty on a Business Day occurring no fewer than 180 days prior to the Citibank Call Date, which notice shall specify the accelerated Scheduled Termination Date.

 

Early Termination Date under Master Agreement

 

(d)        If there is effectively designated an Early Termination Date under the Master Agreement, then (i) each Transaction will be terminated in its entirety, (ii) notwithstanding any contrary or otherwise inconsistent provision of the Master Agreement, the provisions set forth in Section 6(e) of the Master Agreement shall not apply to any Transaction (except that amounts that become due and payable on or prior to such Early Termination Date with respect to any Transaction as provided in this Confirmation will constitute Unpaid Amounts) and (iii) the Termination Trade Date for each Transaction will be the date specified by the Calculation Agent occurring on or promptly after such Early Termination Date; provided that, if such Early Termination Date is designated by reason of an Event of Default as to which Citibank is the Defaulting Party, Counterparty may specify the Termination Trade Date with respect to any Transaction as to which the Calculation Agent has not specified the Termination Trade Date within 10 days after such Early Termination Date. The Calculation Agent shall give notice (an "Accelerated Termination Notice") to each party (such termination, an "Accelerated Termination") on or prior to such Early Termination Date, which Accelerated Termination Notice shall specify each Reference Obligation that is the subject of such Accelerated Termination and, with respect to each such Reference Obligation, the amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed Termination Settlement Date. The amount, if any, payable in respect of such Early Termination Date will be determined in accordance with Clause 4(a) or 4(b) of this Confirmation (as applicable) based upon the delivery of such Accelerated Termination Notice.

Page 16

 

Effect of Termination

 

(e)        With respect to any Transaction terminated in whole pursuant to this Clause 3, (i) as of the relevant Termination Trade Date the Reference Amount shall, for all purposes hereof other than calculating Rate Payments, be reduced to zero (and, in the case of a Committed Obligation, the Outstanding Principal Amount thereof shall be reduced to zero) and (ii) as of the relevant Termination Settlement Date the Reference Amount, for purposes of calculating Rate Payments, shall be reduced to zero (and, in the case of a Committed Obligation, the Outstanding Principal Amount thereof shall be reduced to zero). With respect to any Transaction terminated in part pursuant to this Clause 3, (i) as of the relevant Termination Trade Date the Reference Amount shall, for all purposes hereof other than calculating Rate Payments, be reduced by the amount of the reduction of the Reference Amount specified in the Accelerated Termination Notice (and, in the case of a Committed Obligation, the Outstanding Principal Amount shall be reduced by an amount equal to the product of the Outstanding Principal Amount in effect immediately prior to such reduction multiplied by the amount of the reduction of the Reference Amount divided by the Reference Amount in effect immediately prior to such reduction) and (ii) as of the relevant Termination Settlement Date the Reference Amount shall, for purposes of calculating Rate Payments, be reduced by the amount of the reduction of the Reference Amount specified in the Accelerated Termination Notice (and, in the case of a Committed Obligation, the Outstanding Principal Amount shall be reduced by an amount equal to the product of the Outstanding Principal Amount in effect immediately prior to such reduction multiplied by the amount of the reduction of the Reference Amount divided by the Reference Amount in effect immediately prior to such reduction). Following any Termination Trade Date (other than the Termination Trade Date in respect of the Termination Date), Citibank shall promptly prepare and deliver to Counterparty a revised Annex I.

 

4.           Final Price Determination

 

Following the termination of any Transaction in whole or in part pursuant to Clause 3 or by reason of the occurrence of the Scheduled Termination Date (other than in connection with a Repayment), the Final Price for the relevant Terminated Obligation will be determined in accordance with this Clause 4.

 

Determination by Counterparty

 

(a)        In order to determine the Final Price for any Terminated Obligation then held by or on behalf of Citibank as a hedge for the related Transaction (other than pursuant to Clause 3(a)(ii), 3(b) or, with respect to any Early Termination Date designated by reason of an Event of Default, Credit Event Upon Merger or Additional Termination Event as to which Counterparty is the Defaulting Party or the sole Affected Party, 3(d)), Counterparty may arrange for the sale of such Terminated Obligation by giving notice of such sale to Citibank; provided that Counterparty shall have no right to arrange a sale of a Terminated Obligation pursuant to this Clause 4(a) if, as a result of such termination and the termination of all other Transactions as to which the Total Return Payment Date has not yet occurred, (i) the aggregate Value (as defined in the Credit Support Annex) of all Posted Credit Support (as so defined) held by Citibank as Secured Party (as so defined) plus the aggregate of all Citibank Floating Amounts payable in connection with such terminations would be less than (ii) the aggregate of all Counterparty Fifth Floating Amounts payable in connection with such terminations. Such notice must be given at least three Business Days prior to the related Termination Settlement Date in the case of any Terminated Obligation and at least 10 days prior to the Scheduled Termination Date if all Transactions are to be terminated in connection with the Scheduled Termination Date. Any sale (i) must be to an Approved Buyer or another buyer approved in advance by Citibank, such approval not to be unreasonably withheld or delayed, and (ii) must be scheduled to occur no later than the date customary for settlement, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation (as determined by the Calculation Agent), following the Termination Trade Date and prior to the Scheduled Termination Date if all Transactions are to be terminated in connection with the Scheduled Termination Date. If Counterparty so arranges any sale, the net cash proceeds received from the sale of any Terminated Obligation (exclusive of accrued interest), net of the related Costs of Assignment and adjusted by any Delay Compensation as provided in Clause 6(b), shall be the "Final Price" for that Terminated Obligation.

Page 17

 

Determination by Calculation Agent

 

(b)        If the Final Price for any Terminated Obligation is not determined according to Clause 4(a), the Calculation Agent shall attempt to obtain Firm Bids for such Terminated Obligation with respect to the applicable Termination Trade Date from two or more Dealers. The Calculation Agent will give Counterparty notice of its intention to obtain Firm Bids pursuant to this Clause 4(b) (such notice to be given telephonically and via electronic mail) not later than three hours prior to the bid submission deadline specified below. By notice to Citibank not later than the bid submission deadline specified below, Counterparty may, but shall not be obligated to, designate an Approved Buyer to provide a Firm Bid (and the Calculation Agent will seek a Firm Bid from such designee if so designated by Counterparty on a timely basis). A "Firm Bid" shall be a good and irrevocable bid for value, to purchase all or a portion of the applicable Terminated Obligation, expressed as a percentage of the Reference Amount of such Terminated Obligation and exclusive of accrued interest, for scheduled settlement substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation, as determined by the Calculation Agent, submitted as of 11 a.m. New York time or as soon as practicable thereafter. If there is more than one Terminated Obligation at any time, then the Calculation Agent shall obtain Firm Bids solely with respect to each separate Terminated Obligation (but not with respect to any group or groups of such Terminated Obligations). Citibank may, but is not obligated to, sell or cause the sale of any portion of any Terminated Obligation to any Dealer that provides a Firm Bid.

 

If the Calculation Agent is unable to obtain from Dealers at least one Firm Bid or combination of Firm Bids for all of the Reference Amount of any Terminated Obligation with respect to the relevant Termination Trade Date, the Calculation Agent will attempt to obtain a Firm Bid or combination of Firm Bids for all of the Reference Amount of such Terminated Obligation from two or more Dealers until the earlier of (i) the second Business Day (inclusive) following such Termination Trade Date and (ii) the date a Firm Bid or combination of Firm Bids is obtained for all of the Reference Amount of such Terminated Obligation.

 

If the Calculation Agent is able to obtain at least one Firm Bid or combination of Firm Bids for all or any portion of the Reference Amount of any Terminated Obligation, the Final Price for such Terminated Obligation or portion thereof shall be determined by reference to such Firm Bid or Firm Bids pursuant to the last paragraph of this Clause 4(b). If no Firm Bids are obtained on or before such second Business Day for all or a portion of the applicable Terminated Obligation, the Final Price shall be deemed to be zero with respect to each portion of such Terminated Obligation for which no Firm Bid was obtained. The Calculation Agent will conduct the bid process in accordance with the procedures set forth in this Clause 4(b) and otherwise in good faith and in a commercially reasonable manner. Other than in the case of a termination pursuant to Clause 3(d), Citibank and Counterparty will make commercially reasonable efforts to accomplish the assignment to Counterparty (free of payment by Counterparty) of the related Terminated Obligation or portion thereof held by or on behalf of Citibank as a hedge for the related Transaction for which the Final Price is deemed to be zero (including as provided below); provided that Citibank shall not be liable for any losses related to any delay in or failure of such assignment beyond its control.

Page 18

 

Notwithstanding anything to the contrary herein,

 

	
(i)

	
the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in the Calculation Agent's commercially reasonable judgment, (x) such Dealer is ineligible to accept assignment or transfer of the related Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market practice in the principal market for the Terminated Obligation, as determined by the Calculation Agent, or (y) as a result of the terms of any agreement or instrument governing the related Terminated Obligation or any order of a court of competent jurisdiction relating to such Terminated Obligation, such Dealer is prohibited or restricted from obtaining any consent required for the assignment or transfer of the related Terminated Obligation or portion thereof, as applicable, to it; and

 

	
(ii)

	
if the Calculation Agent determines that the highest Firm Bid obtained in connection with any Termination Trade Date is not bona fide as a result of (x) the occurrence of an Event of Default described in Section 5(a)(vii) with respect to the bidder, (y) the inability, failure or refusal of the bidder to settle the purchase of the related Terminated Obligation or portion thereof, as applicable, or otherwise settle transactions in the relevant market or perform its obligations generally or (z) the Calculation Agent not having pre-approved trading lines with the bidder that would permit settlement of the purchase of the related Terminated Obligation or portion thereof, as applicable,

 

that Firm Bid shall be disregarded and the next highest Firm Bid that is not disregarded shall be used to determine the Final Price. If there is no such Firm Bid, then the Calculation Agent shall designate a new Termination Trade Date; provided that the Calculation Agent shall designate a new Termination Trade Date pursuant to this paragraph only once. If the highest Firm Bid for any portion of the related Terminated Obligation determined in connection with the second Termination Trade Date is disregarded pursuant to this paragraph, the Calculation Agent shall have no obligation to obtain further bids, and the applicable "Final Price" for the portion which was so disregarded shall be deemed to be zero.

 

If Citibank transfers, or causes the transfer of, all or any portion of the Terminated Obligation to the Dealer or Dealers providing the highest Firm Bid or highest combination of Firm Bids for such Terminated Obligation (or portion thereof) or to such other party as provided above, the net cash proceeds received from the sale of such Terminated Obligation or portion thereof (which sale shall be scheduled to settle substantially in accordance with the then-current market practice in the principal market for the related Reference Obligation as determined by the Calculation Agent), net of the related Costs of Assignment and adjusted by any Delay Compensation as provided in Clause 6(b), shall be the "Final Price" for that Terminated Obligation (or the portion thereof that is sold).

 

If Citibank has determined not to hold, or cause to be held, all or any portion of any Terminated Obligation as a hedge for the related Transaction or otherwise determines, in its sole discretion, not to sell or cause the sale of any portion of any Terminated Obligation to a Dealer providing the highest Firm Bid or combination of Firm Bids, the "Final Price" for such Terminated Obligation or portion thereof shall be equal to the highest Firm Bid (or highest combination of Firm Bids) for such Terminated Obligation (or portion thereof) multiplied by the Reference Amount of such Terminated Obligation (or the respective portions of the Reference Amount to which such Firm Bids relate). The Calculation Agent may perform any of its duties under this Clause 4(b) through any Affiliate designated by it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b).

Page 19

 

Early Termination of Facility

 

(c)        For the avoidance of doubt, if the Termination Date occurs prior to the Citibank Call Date, each Counterparty Second Floating Amount shall continue to be payable by Counterparty on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Citibank Call Date; provided that, if either party shall so specify in writing to the other party prior to any final Termination Trade Date, then on such final Termination Trade Date (i) the obligation of Counterparty to continue to pay each Counterparty Second Floating Amount on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Citibank Call Date shall terminate and be replaced by the obligation in the following clause and (ii) Counterparty shall pay to Citibank an amount equal to the present value (as calculated by the Calculation Agent with discounting on a continuous basis) of each Counterparty Second Floating Amount payable (without regard to the termination of such obligation under the foregoing clause) on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Citibank Call Date, discounted to such final Termination Trade Date at a discount rate per annum equal to the Discount Rate.  For this purpose, the "Discount Rate" means the zero coupon swap rate (as determined by the Calculation Agent) implied by the fixed rate offered to be paid by Citibank under a fixed for floating interest rate swap transaction with a remaining Term equal to the period from such final Termination Trade Date to the final Second Floating Rate Payer Payment Date in exchange for the receipt of payments indexed to USD-LIBOR-BBA.

 

5.           Repayment.

 

If all or a portion of the Reference Amount of any Reference Obligation is repaid or otherwise reduced (in the case of a Committed Obligation, only if the Reference Amount thereof is permanently reduced) (including, without limitation, through any exercise of any right of set-off, reduction, or counterclaim that results in the satisfaction of the obligations of such Reference Entity to pay any principal owing in respect of such Reference Obligation) on or prior to the Scheduled Termination Date (the amount of such repayment or other reduction, a "Repayment"; the portion of the related Reference Obligation so repaid or otherwise reduced, a "Repaid Obligation"; and the date of such Repayment, the "Repayment Date"):

 

	
(a)

	
the Total Return Payment Date with respect to the Repaid Obligation will be the fifth Business Day next succeeding the last day of the Monthly Period in which the Repayment Date occurred;

 

	
(b)

	
as of the related Repayment Date, the Reference Amount of such Reference Obligation shall be decreased by an amount equal to the principal amount of the Repaid Obligation; and

 

	
(c)

	
the related Final Price in relation to the Repaid Obligation shall be (i) in the case of a Committed Obligation, the portion of the Reference Amount that is permanently reduced on such Repayment Date and (ii) in the case of a Term Obligation, the amount of principal and premium in respect of principal paid by such Reference Entity on the Repaid Obligation to holders thereof (or the amount by which the Reference Obligation was otherwise reduced) on such Repayment Date. Following any Repayment Date, Citibank shall promptly prepare and deliver to Counterparty a revised Annex I showing the revised Reference Amount for the related Reference Obligation.

 

6.           Adjustments.

 

(a)        If any Reference Obligation or portion thereof is irreversibly converted or exchanged into or for any securities, obligations, cash or other assets or property ("Exchange Consideration"), thereafter such Exchange Consideration will constitute such Reference Obligation or portion thereof, and, unless Citibank shall otherwise agree in writing, (i) if such Exchange Consideration fails to satisfy the Obligation Criteria, then Clause 3(b)(i) shall apply and (ii) if the Portfolio Criteria (other than clause (v) thereof) set forth in Annex II would not be satisfied after giving effect to such exchange, then Clause 3(b)(ii) shall apply.

Page 20

 

(b)        Delay Compensation (as defined below) shall result in an adjustment (i) as contemplated by the definition of "Interest and Fee Amount" in connection with the establishment by the Citibank Holder of a related hedge in respect of a Transaction, if the actual settlement of the purchase of the related hedge occurs after the Obligation Settlement Date and (ii) of a Final Price with respect to a Terminated Obligation in connection with the termination by the Citibank Holder of a related hedge, if the actual settlement of the sale of the related hedge occurs after the Termination Settlement Date. "Delay Compensation" shall accrue (x) in the case of clause (i) above, from and including the Obligation Settlement Date to but excluding the actual settlement of the purchase effected to establish the related hedge (and, during such period, (A) the Counterparty First Floating Amount shall be calculated by reference to the Spread and not the Floating Rate Option and (B) Interest and Fee Amounts will be determined without regard to payments in respect of the interest rate index, but will be determined inclusive of the applicable spread above such interest rate index, used in the Reference Obligation Credit Agreement to calculate interest payments in respect of the related Reference Obligation and in effect during such period) and (y) in the case of clause (ii) above, from and including the Termination Settlement Date to but excluding the actual settlement of the sale effected to terminate the related hedge (and, during such period, (A) the Counterparty First Floating Amount shall be calculated by reference to the Floating Rate Option and not the Spread and (B) Interest and Fee Amounts shall be reduced by interest accrued during such period in excess of the interest rate index used in the Reference Obligation Credit Agreement to calculate interest payments in respect of the related Reference Obligation and in effect during such period). In connection with any adjustment by reason of Delay Compensation, (i) any initial Payment Date in this Confirmation determined by reference to the "Obligation Settlement Date" shall be determined as if the Obligation Settlement Date were the actual settlement of the purchase of the related hedge and (ii) any final Payment Date in this Confirmation determined by reference to the "Termination Settlement Date" shall be determined as if the Termination Settlement Date were the actual settlement of the termination of the related hedge.

 

(c)        If (i) Citibank elects to establish a hedge as a result of the addition or increase in the Reference Amount of any Reference Obligation that is the subject of a Transaction and (ii) the Citibank Holder is unable after using commercially reasonable efforts to effect the settlement of such hedge, then, by notice to Counterparty, Citibank may in its sole discretion, specify that such addition or increase in the Reference Amount of such Reference Obligation will not be effective.

 

7.           Representations, Warranties and Agreements.

 

(a)        Each party hereby agrees as follows, so long as either party has or may have any obligation under any Transaction:

 

	
(i)

	
Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into such Transaction and as to whether such Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into such Transaction; it being understood that information and explanations related to the terms and conditions of such Transaction shall not be considered investment advice or a recommendation to enter into such Transaction. It has not received from the other party any assurance or guarantee as to the expected results of such Transaction;

 

	
(ii)

	
Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of such Transaction. It is also capable of assuming, and assumes, the financial and other risks of such Transaction;

Page 21

 

	
(iii)

	
Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of such Transaction; and

 

	
(iv)

	
Reliance on its Own Advisors. Without limiting the generality of the foregoing, in making its decision to enter into, and thereafter to maintain, administer or terminate, such Transaction, it will not rely on any communication from the other party as, and it has not received any representation or other communication from the other party constituting, legal, accounting, business or tax advice, and it will consult its own legal, accounting, business and tax advisors concerning the consequences of such Transaction.

 

(b)        Each party acknowledges and agrees that, so long as either party has or may have any obligation under any Transaction:

 

	
(i)

	
such Transaction does not create any direct or indirect obligation of any Reference Entity or any direct or indirect participation in any Reference Obligation or any other obligation of any Reference Entity;

 

	
(ii)

	
each party and its Affiliates may deal in any Reference Obligation and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with any Reference Entity, any Affiliate of any Reference Entity, any other person or entity having obligations relating to any Reference Entity and may act with respect to such business in the same manner as if such Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to any Reference Entity, regardless of whether any such action might have an adverse effect on such Reference Entity, the value of the related Reference Obligation or the position of the other party to such Transaction or otherwise;

 

	
(iii)

	
except as provided in Clause 7(d)(iii), each party and its Affiliates and the Calculation Agent may, whether by virtue of the types of relationships described herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding any Reference Entity or any Affiliate of any Reference Entity that is or may be material in the context of such Transaction and that may or may not be publicly available or known to the other party. In addition, except as provided in Clause 7(b)(vii), this Confirmation does not create any obligation on the part of such party and its Affiliates to disclose to the other party any such relationship or information (whether or not confidential);

 

	
(iv)

	
neither Citibank nor any of its Affiliates shall be under any obligation to hedge such Transaction or to own or hold any Reference Obligation as a result of such Transaction, and Citibank and its Affiliates may establish, maintain, modify, terminate or re-establish any hedge position or any methodology for hedging at any time without regard to Counterparty. Counterparty acknowledges and agrees that it is not relying on any representation, warranty or statement by Citibank or any of its Affiliates as to whether, at what times, in what manner or by what method Citibank or any of its Affiliates may engage in any hedging activities;

 

	
(v)

	
notwithstanding any other provision in this Confirmation or any other document, Citibank and Counterparty (and each employee, representative, or other agent of Citibank or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the U.S. Internal Revenue Code of 1986, as amended (the "Code")), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws. To the extent not inconsistent with the previous sentence, Citibank and Counterparty will each keep confidential (except as required by law) all information unless the other party has consented in writing to the disclosure of such information;

Page 22

 

	
(vi)

	
if Citibank chooses to hold a Reference Obligation as a result of any Transaction, Citibank shall hold such Reference Obligation directly or through an Affiliate (the "Citibank Holder"). The Citibank Holder may deal with such Reference Obligation as if the related Transaction did not exist, provided that, so long as the Citibank Holder remains the lender of record with respect to such Reference Obligation, upon any occasion permitting the Citibank Holder to exercise any right in relation to such Reference Obligation to give or withhold consent (an "Election") to an action proposed to be taken (or to be refrained from being taken), the Citibank Holder shall, insofar as permitted under (x) applicable laws, rules and regulations and (y) each provision of any agreement or instrument evidencing or governing such Reference Obligation (and, in the case of any participation interest, governing such participation interest), give its consent to the action proposed to be taken (or to be refrained from being taken), unless (A) Counterparty, by timely notice to Citibank, requests (a "Counterparty Election Request") that the Citibank Holder withhold such consent and (B) the Citibank Holder, in its sole discretion, elects to withhold such consent in accordance with the Counterparty Election Request. Notwithstanding the foregoing: (1) the Citibank Holder shall have no obligation to respond to, or consult with Counterparty in relation to, a Counterparty Election Request (failure to respond to a Counterparty Election Request being deemed a denial); (2) the Citibank Holder shall have no other duties or obligations to Counterparty of any nature with respect to any Election or any Counterparty Election Request; (3) the Citibank Holder shall not be liable to Counterparty or any of its Affiliates for the consequences of any consent given or withheld by the Citibank Holder in connection with such Reference Obligation (whether or not pursuant to a Counterparty Election Request); and (4) if the Citibank Holder elects in its sole discretion to withhold its consent in accordance with a Counterparty Election Request, the Citibank Holder may subsequently determine to give such consent at any time without notice to Counterparty; and

 

	
(vii)

	
in connection with each Reference Obligation that is held by a Citibank Holder as a result of any Transaction, the Citibank Holder will promptly (and in any event within one Business Day after receipt) deliver or cause to be delivered to Counterparty the following information and documentation, in each case, to the extent actually received by the Citibank Holder from the Reference Entity or its agents under the related Reference Obligation Credit Agreement: all notices of any borrowings, prepayments and interest rate settings, all amendments, waivers, tenders, exchanges and other modifications (whether final or proposed) in relation to the terms of the Reference Obligation; and all notices given by the Reference Entity to the lenders or their agent or by the lenders or their agent to the Reference Entity in relation to the exercise of remedies.

 

(c)        Each of the parties hereby represents that, on each date on which a Transaction is entered into hereunder:

 

	
(i)

	
it is entering into such Transaction for investment, financial intermediation, hedging or other commercial purposes; and

 

	
(ii)

	
(x) it is an "eligible contract participant" as defined in Section 1a of the U.S. Commodity Exchange Act, as amended (the "CEA"), (y) the Master Agreement and each Transaction are subject to individual negotiation by each party, and (z) neither the Master Agreement nor any Transaction will be executed or traded on a "trading facility" within the meaning of Section 1a of the CEA.

Page 23

 

(d)        Counterparty hereby represents to Citibank that:

 

	
(i)

	
its financial condition is such that it has no need for liquidity with respect to its investment in any Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness. Its investments in and liabilities in respect of any Transaction, which it understands is not readily marketable, are not disproportionate to its net worth, and it is able to bear any loss in connection with any Transaction, including the loss of its entire investment in such Transaction;

 

	
(ii)

	
it understands that no obligations of Citibank to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Citibank or any governmental agency;

 

	(iii)	  it is not an Affiliate of any Reference Entity;

 

	
(iv)

	
as of (x) the relevant Obligation Trade Date and (y) any date on which a sale is effected pursuant to Clause 4(a) or on which the Calculation Agent solicits Firm Bids pursuant to Clause 4(b), neither Counterparty nor any of its Affiliates, whether by virtue of the types of relationships described herein or otherwise, is on such date in possession of information regarding any related Reference Entity or any Affiliate of such Reference Entity that is or may be material in the context of such Transaction or the purchase or sale of any related Reference Obligation unless such information either (x) is publicly available or (y) has been made available to each registered owner of such Reference Obligation on a basis that permits such registered owner to disclose such information to any assignee of or participant (whether on a funded or unfunded basis) in, or any prospective assignee of or participant (whether on a funded or unfunded basis) in, any rights or obligations under the related Reference Obligation Credit Agreement;

 

	
(v)

	
it is a wholly owned subsidiary of CĪON Investment Corporation, a Maryland corporation (the "Sole Owner"), and the Sole Owner is a corporation that has elected to be treated as a regulated investment company for U.S. Federal income tax purposes;

 

	
(vi)

	
it has delivered to Citibank on or prior to the date hereof (and it will, prior to any expiration of any such form previously so delivered, deliver to Citibank) a United States Internal Revenue Service Form W-9 (or applicable successor form) with respect to the Sole Owner (indicating that Counterparty is a disregarded entity of the Sole Owner), properly completed and signed (which representation shall also be made for purposes of Section 3(f) of the Master Agreement);

 

	
(vii)

	
it could have received all payments on the Reference Obligation without U.S. Federal or foreign witholding tax if it owned the Reference Obligation (which representation shall also be made for purposes of Section 3(f) of the Master Agreement); and 

 

	
(viii)

	
for U.S. Federal income tax purposes, the Sole Owner is neither a tax-exempt organization nor a pass-through entity.

Page 24

 

(e)        Except for disclosure authorized pursuant to Clause 7(b)(v), Counterparty agrees to be bound by the confidentiality provisions of the related Reference Obligation Credit Agreement with respect to all information and documentation in relation to a Reference Entity or a Reference Obligation delivered to Counterparty hereunder. Counterparty acknowledges that such information may include material non-public information concerning the Reference Entity or its securities and agrees to use such information in accordance with applicable law, including Federal and State securities laws.

 

(f)        Section 2(c)(ii) of the Master Agreement shall not apply to the Transactions to which this Confirmation relates. Multiple Transaction Payment Netting under Section 2(c) of the Master Agreement will apply to the Transactions to which this Confirmation relates.

 

(g)        Notwithstanding anything in the Master Agreement to the contrary, Citibank will not be required to pay any additional amount under Section 2(d)(i) of the Master Agreement in respect of any deduction or withholding for or on account of any Tax in relation to any payment under any Transaction that is determined by reference to interest or fees payable with respect to any Reference Obligation. If Citibank is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding for or on account of any Tax in relation to any payment under any Transaction that is determined by reference to interest or fees payable with respect to any Reference Obligation and Citibank does not so deduct or withhold, then Section 2(d)(ii) of the Master Agreement shall be applicable.

 

8.           Adjustments Relating to Certain Unpaid or Rescinded Payments.

 

(a)        If (i) Citibank makes any payment to Counterparty as provided under Clause 2 and the corresponding Interest and Fee Amount is not paid (in whole or in part) when due or (ii) any Interest and Fee Amount in respect of a Reference Obligation is required to be returned (in whole or in part) by a holder of such Reference Obligation (including, without limitation, the Citibank Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then Counterparty will pay to Citibank, upon request by Citibank, such amount (or portion thereof) so not paid or so required to be returned, paid or otherwise rescinded. If such returned, paid or otherwise rescinded amount is subsequently paid, Citibank shall pay such amount (subject to Clause 8(c)) to Counterparty within five Business Days after the date of such subsequent payment.

 

(b)        If, with respect to any Repaid Obligation, the corresponding payment of principal of the Repaid Obligation is required to be returned (in whole or in part) by a holder thereof (including, without limitation, the Citibank Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (i) the parties hereto shall be restored severally and respectively to their former positions hereunder and thereafter all rights and obligations of the parties hereunder shall continue as though no Repayment had occurred and (ii) without limiting the generality of the foregoing, if either party has made a payment to the other party in respect of Capital Appreciation or Capital Depreciation related to such Repayment as provided under Clause 2, then the party that received the payment in respect of such Capital Appreciation or Capital Depreciation, as applicable, shall repay such amount (subject to Clause 8(c)) to the other party. If such returned, paid or otherwise rescinded amount is subsequently paid by the related Reference Entity or any such other person or entity, then the relevant party shall pay the amount of such Capital Appreciation or Capital Depreciation, as applicable, within five Business Days after the date of such subsequent payment.

Page 25

 

(c)        Amounts payable pursuant to this Clause 8 shall be subject to adjustment by the Calculation Agent in good faith and on a commercially reasonable basis, as agreed by Citibank and Counterparty, in order to preserve for the parties the intended economic risks and benefits of the relevant Transaction.

 

(d)        The payment obligations of Citibank and Counterparty pursuant to this Clause 8 shall survive the termination of all Transactions.

 

9.           Credit Support.

 

Notwithstanding anything in the Credit Support Annex (the "Credit Support Annex") to the Schedule to the Master Agreement to the contrary, the following collateral terms shall apply to each Transaction to which this Confirmation relates (capitalized terms used in this Clause 9 but not otherwise defined in this Confirmation have the respective meanings given to such terms in the Credit Support Annex):

 

	
(a)

	
With respect to each Transaction to which this Confirmation relates, an "Independent Amount" shall be applicable to Counterparty on each date of determination in an amount equal to the Notional Amount of such Transaction on such date of determination multiplied by the relevant Independent Amount Percentage (determined in accordance with the table set forth below).

 

	 	
Condition

	
Independent Amount Percentage

	 	
(i) Except as provided in clause (iii) below, with respect to any Transaction not relating to a Specified Reference Obligation

	
25%

	 	
(ii) Except as provided in clause (iii) below, with respect to any Transaction relating to a Specified Reference Obligation 

	Such percentage as Citibank shall specify on or prior to the Obligation Trade Date for such Transaction 
	 	
(iii) With respect to any Reference Obligation whose Independent Amount Percentage is agreed in writing as provided in Clause 3(a)(ii)

	
Such Independent Amount Percentage as is agreed in writing as provided in Clause 3(a)(ii)

 

	

	
Not later than (i) the Effective Date and (ii) the date of any increase in the Independent Amount Percentage applicable to any Transaction, Counterparty as Pledgor will Transfer to Citibank as Secured Party Eligible Collateral having a Value as of the date of Transfer equal to the related Independent Amount (or increase in the related Independent Amount) determined pursuant this Clause 9(a).

 

	
(b)

	
In no event shall Citibank as Secured Party be obligated to Transfer Posted Credit Support in respect of a Return Amount to Counterparty as Pledgor if the Value as of any Valuation Date of all Posted Credit Support held by Citibank as Secured Party would be less than the Independent Amount determined pursuant to Clause 9(a).

Page 26

 

	
(c)

	
In no event shall Counterparty as a Secured Party have any positive "Exposure" to Citibank with respect to the Transactions to which this Confirmation relates.

 

	
(d)

	
Without limiting Clause 3(b)(iv), in no event shall Citibank as a Secured Party shall have any positive "Exposure" to Counterparty with respect to the Transactions to which this Confirmation relates.

 

	
(e)

	
If (i) the Net Collateral Value Percentage on any Valuation Date is less than the Termination Threshold on such Valuation Date and (ii) Citibank gives notice thereof to Counterparty on any Business Day, Counterparty will, not later than the close of business on the Business Day following the date of such notice from Citibank, effect the Transfer to Citibank as Secured Party of Eligible Collateral such that the Net Collateral Value Percentage after giving effect to such Transfer is at least equal to the Cure Threshold.  In addition, Counterparty may, on any Business Day, effect the Transfer to Citibank as Secured Party of any additional Eligible Collateral.

 

	
(f)

	
If Counterparty enters into any Transaction under the Master Agreement other than the Transactions contemplated by this Confirmation (each, a "Separate Transaction"), then the Credit Support Amount with respect to Counterparty as Pledgor shall never be less than the "Credit Support Amount" with respect to Counterparty as Pledgor calculated (i) solely with reference to all Separate Transactions and (ii) without regard to the Independent Amount applicable to Counterparty as Pledgor under this Confirmation.

 

	
(g)

	
Each Business Day shall be a Valuation Date.

 

10.         Notice and Account Details.

 

	
Notices to Citibank:

	  	
 

Citibank, N.A., New York Branch

390 Greenwich Street, 4th Floor

New York, New York 10013

Tel: (212) 723-6181

Fax: (646) 291-5779

Attn: Mitali Sohoni

 

with a copy to:

 

Office of the General Counsel

Fixed Income and Derivatives Sales and Trading

Citibank, N.A., New York Branch

388 Greenwich Street, 17th Floor

New York, New York 10013

Tel: (212) 816-2121

Fax: (646) 862-8431

Attn: Craig Seledee

Page 27

 

	
Notices to Counterparty:

	  	
 

Flatiron Funding, LLC

c/o CĪON Investment Corporation

3 Park Avenue, 36th Floor

New York, NY 10016

Attention: General Counsel

Facsimile:  (212) 418-4739

 

	
Payments to Citibank:

	  	
 

Citibank, N.A., New York

ABA No.: 021-000-089

Account No.: 00167679

Ref: Financial Futures

 

	
Payments to Counterparty:

	  	
 

Account Name: CION Investment Corporation

Bank: U.S. Bank, N.A., Minneapolis, MN

ABA No.: 091-000-022

Account: 1047-9089-5668

FFC: 163276-200

 

11.         Offices.

 

	
(a)

	
The Office of Citibank for each Transaction:

 

New York

 

(b)        The Office of Counterparty for each Transaction:

 

New York

Page 28

Please confirm that the foregoing correctly sets forth the terms of our agreement by having a duly authorized officer of Counterparty execute this Confirmation and return the same by facsimile to the attention of the individual at Citibank indicated on the first page hereof.

 

Very truly yours,

 

 

CITIBANK, N.A.

 

 

 

By: /s/ David Santos                                                               

Name: David Santos

Title: Authorized Signatory

 

CONFIRMED AND AGREED

 

AS OF THE DATE FIRST ABOVE WRITTEN:

 

FLATIRON FUNDING, LLC

 

 

 

By: /s/ Michael A. Reisner                                                             

 Name: Michael A. Reisner

 Title: Co-President & Co-CEO

Page 29

 

ANNEX A

 

ADDITIONAL DEFINITIONS

 

"Affiliate", for purposes of this Confirmation only, has the meaning given to such term in Rule 405 under the Securities Act of 1933, as amended.

 

"Approved Buyer" means (a) any entity listed in Annex III hereto (as such Annex may be amended by mutual written consent of the parties hereto from time to time) so long as its long-term unsecured and unsubordinated debt obligations on the "trade date" for the related purchase or submission of a Firm Bid contemplated hereby are rated at least "A2" by Moody's and at least "A" by S&P and (b) if an entity listed in Annex III hereto is not the principal banking or securities Affiliate within a financial holding company group, the principal banking or securities Affiliate of such listed entity within such financial holding company group so long as such obligations of such Affiliate have the rating indicated in clause (a) above.

 

"Capital Appreciation" and "Capital Depreciation" mean, for any Total Return Payment Date, the amount determined according to the following formula for the applicable Terminated Obligation or Repaid Obligation:

 

Final Price – Applicable Notional Amount

 

where

 

"Final Price" means (a) in the case of any Terminated Obligation, the amount determined pursuant to Clause 4, and (b) in the case of any Repaid Obligation, the amount determined pursuant to Clause 5, and

 

"Applicable Notional Amount" means the Notional Funded Amount (determined immediately prior to the related Repayment Date or Termination Trade Date) for such Terminated Obligation or Repaid Obligation, as applicable.

 

If such amount is positive, such amount is "Capital Appreciation" and if such amount is negative, the absolute value of such amount is "Capital Depreciation".

 

"Committed Obligation" means (a) any Delayed Drawdown Reference Obligation and (b) any Revolving Reference Obligation.

 

"Costs of Assignment" means, in the case of any Terminated Obligation, the sum of (a) any actual costs of transfer or assignment paid by the seller under the terms of any Terminated Obligation or otherwise actually imposed on the seller by any applicable administrative agent, borrower or obligor incurred in connection with the sale of such Terminated Obligation and (b) any reasonable expenses incurred by the seller in connection with such sale and, if transfers of the Terminated Obligation are subject to the Standard Terms and Conditions for Distressed Trade Confirmations, as published by the LSTA and as in effect on the Obligation Trade Date, reasonable legal costs incurred by the seller in connection with such sale, in each case to the extent not already reflected in the Final Price.

 

"Credit Event" means the occurrence of a Bankruptcy or Failure to Pay. For purposes of the determination of whether a Credit Event has occurred, the Obligation Category will be Borrowed Money, the Payment Requirement will be USD1,000,000 and no Obligation Characteristics will be specified. Capitalized terms used in this definition but not defined in this Confirmation shall have the meanings specified in the 2003 ISDA Credit Derivatives Definitions.

Page 30

 

"Cure Threshold" means, on any date of determination, (a) the sum, determined with respect to all Transactions, of the products of (i) the Independent Amount Percentage with respect to such Transaction multiplied by (ii) the Notional Amount with respect to such Transaction on such date of determination divided by (b) the Portfolio Notional Amount on such date of determination.

 

"Current Price" means, with respect to any Reference Obligation on any date of determination, the Calculation Agent's determination of the net cash proceeds that would be received from the sale on such date of determination of such Reference Obligation, net of the related Costs of Assignment. If Counterparty disputes the Calculation Agent's determination of the Current Price of any Reference Obligation, then Counterparty may, no later than three hours after Counterparty is given notice of such determination, (a) designate two Dealers and (b) provide to Citibank within such three-hour period with respect to each such Dealer either (i) a Firm Bid with respect to not less than the Quotation Amount of the Reference Obligation or (ii) a Bloomberg screen page indicating that such Dealer has made during the Quotation Period both a bid and an offer quotation with respect to not less than the Quotation Amount of the Reference Obligation (with such bid quotation being a "Firm Bid" for purposes of the next sentence).  The highest of such two Firm Bids will be the Current Price. The "Current Price" shall be expressed as a percentage of par and will be determined exclusive of accrued interest.

 

"Dealer" means (a) any nationally recognized independent dealer in the related Reference Obligation chosen by the Calculation Agent or its designated Affiliate, (b) any Approved Buyer and (c) any other entity designated by the Calculation Agent or its designated Affiliate.

 

"Delayed Drawdown Reference Obligation" means a Reference Obligation that (a) requires the holder thereof to make one or more future advances to the borrower under the instrument or agreement pursuant to which such Reference Obligation was issued or created, (b) specifies a maximum amount that can be borrowed on one or more fixed borrowing dates and (c) does not permit the re-borrowing of any amount previously repaid; provided that, on any date on which all commitments by the holder thereof to make advances to the borrower under such Delayed Drawdown Reference Obligation expire or are terminated or reduced to zero, such Reference Obligation shall cease to be a Delayed Drawdown Reference Obligation.

 

"Designated Reference Obligation" means any Reference Obligation that (a) is not a Specified Reference Obligation, (b) has as of the Obligation Trade Date a Moody's Rating of at least B2 and an S&P Rating of at least B, (c) is on the Obligation Trade Date part of a fungible class of debt obligations (as to issuance date and all economic terms) of at least USD500,000,000, (d) has an Initial Price as of the Obligation Trade Date of at least 90% and (e) is on the Obligation Trade Date the subject of at least five bid quotations from nationally recognized independent dealers in the related obligation as reported on a nationally recognized pricing service.

 

"Expense or Other Payment" means the aggregate amount of any payments (other than extensions of credit) due from the lender(s) in respect of any Reference Obligation, including, without limitation, (a) any expense associated with any amendment, modification or waiver of the provisions of a credit agreement, (b) any reimbursement of any agents under the provisions of a credit agreement, and (c) any indemnity or other similar payment, including amounts owed on or after the related Obligation Termination Date in respect of amounts incurred or any event that occurred before the related Obligation Termination Date.

Page 31

 

"Interest and Fee Amount" means, for any Citibank Fixed Amount Payer Payment Date and any Transaction, the aggregate amount of interest (including interest breakage costs), fees (including, without limitation, amendment, consent, tender, facility, letter of credit and other similar fees) and other amounts (other than in respect of principal and premium paid in respect of principal) paid with respect to the related Reference Obligation (after deduction of any withholding taxes for which the Reference Entities are not obligated to reimburse holders of the related Reference Obligation, if applicable) during the relevant Citibank Fixed Amount Payer Calculation Period; provided that Interest and Fee Amounts:

 

	
(a)

	
in the case of "Interest and Accruing Fees" (as defined in the "Standard Terms and Conditions for Par/Near Par Trade Confirmations" or "Standard Terms and Conditions for Distressed Trade Confirmations", as applicable to the relevant Reference Obligation, most recently published by the LSTA prior to the Trade Date), shall not include any amounts that accrue prior to the Obligation Settlement Date for the related Reference Obligation or that accrue on or after the Obligation Termination Date for the related Reference Obligation or portion thereof,

 

	
(b)

	
in the case of "Non-Recurring Fees" (as so defined), shall not include any amounts that accrue prior to the Obligation Trade Date for the related Reference Obligation or that accrue on or after the Termination Trade Date for the related Reference Obligation or portion thereof,

 

	
(c)

	
shall be determined after deducting any Costs of Assignment that would be incurred by a buyer in connection with any purchase of the Reference Obligation as a hedge for such Transaction and, in connection with the establishment by the Citibank Holder of a related hedge in respect of such Transaction, shall be adjusted by any Delay Compensation as provided in Clause 6(b); and

 

	
(d)

	
in the case of any Transaction as to which the related Reference Obligation is a Committed Obligation, shall include only 75% of fees that are stated to accrue on or in respect of the unfunded portion of any Commitment Amount.

 

"Loan" means any obligation for the payment or repayment of borrowed money that is documented by a term loan agreement, revolving loan agreement or other similar credit agreement.

 

"LSTA" means The Loan Syndications and Trading Association, Inc. and any successor thereto.

 

"Moody's" means Moody's Investors Service, Inc. or any successor thereto.

 

"Moody's Rating" means, with respect to a Reference Obligation, as of any date of determination:

 

	
(i)

	
if the Reference Obligation itself is rated by Moody's (including pursuant to any credit estimate), such rating,

 

	
(ii)

	
if the foregoing paragraph is not applicable, then, if the Reference Obligation is a Loan and the related Reference Entity has a corporate family rating by Moody's, the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Loan:

 

	 	
Loan

	
Relevant Rating

	 	
The Loan is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by Moody's that is one rating subcategory above such corporate family rating

	 	
The Loan is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating by Moody's that is one rating subcategory below such corporate family rating

	 	
The Loan is Subordinate

	
The rating by Moody's that is two rating subcategories below such corporate family rating

Page 32

 

	
(iii)

	
if the foregoing paragraphs are not applicable, but there is a rating by Moody's on a secured obligation of the Reference Entity that is not a Second Lien Loan and is not Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

 

	
The rating by Moody's that is one rating subcategory below the rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating by Moody's that is two rating subcategories below the rating assigned by Moody's to the other obligation

 

 

	
(iv)

	
if the foregoing paragraphs are not applicable, but there is a rating by Moody's on an unsecured obligation of the Reference Entity (or, failing that, an obligation that is a Second Lien Loan) but is not Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by Moody's that is one rating subcategory above the rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating by Moody's that is one rating subcategory below the rating assigned by Moody's to the other obligation

 

 

	
(v)

	
if the foregoing paragraphs are not applicable, but there is a rating by Moody's on an obligation of the Reference Entity that is Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by Moody's that is two rating subcategories above the rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating by Moody's that is one rating subcategory above the rating assigned by Moody's to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating assigned by Moody's to the other obligation

Page 33

 

	
(vi)

	
if a rating cannot be assigned pursuant to clauses (i) through (v), the Moody's Rating may be determined using any of the methods below:

 

	

	
(A)

	 	
for up to 5% of the Portfolio Target Amount, Counterparty may apply to Moody's for a shadow rating or public rating of such Reference Obligation, which shall then be the Moody's Rating (and Counterparty may deem the Moody's Rating of such Reference Obligation to be "B3" pending receipt of such shadow rating or public rating, as the case may be); provided that (x) a Reference Obligation will not be included in the 5% limit of the Portfolio Target Amount if Counterparty has assigned a rating to such Reference Obligation in accordance with clause (B) below and (y) upon receipt of a shadow rating or public rating, as the case may be, such Reference Obligation will not be included in the 5% limit of the Portfolio Target Amount;

 

	

	
(B)

	 	
for up to 5% of the Portfolio Target Amount, if there is a private rating of an obligor that has been provided by Moody's to Citibank and Counterparty, Counterparty may impute a Moody's Rating that corresponds to such private rating; provided that a Reference Obligation will not be included in the 5% limit of the Portfolio Target Amount if Counterparty has applied to Moody's for a shadow rating; or

 

	

	
(C)

	 	
for up to 10% of the Portfolio Target Amount, the Moody's Rating may be determined in accordance with the methodologies for establishing the S&P Rating except that the Moody's Rating of such obligation will be (1) one sub-category below the Moody's equivalent of the S&P Rating if such S&P Rating is "BBB-" or higher and (2) two sub-categories below the Moody's equivalent of the S&P Rating if such S&P Rating is "BB+" or lower.

 

For purposes of the foregoing, a "private rating" shall refer to a rating obtained by Citibank, by Counterparty or by or on behalf of an obligor on a Reference Obligation that is not disseminated publicly; whereas a "shadow rating" shall refer to a credit estimate obtained upon application of Counterparty or a holder of a Reference Obligation. Any private rating or shadow rating shall be required to be refreshed annually. If Counterparty applies to Moody's for a shadow rating or public rating of a Reference Obligation, Counterparty shall provide evidence to Citibank of such application and shall notify Citibank of the expected rating. Counterparty shall notify Citibank of the shadow rating or public rating assigned by Moody's to a Reference Obligation.

 

"Net Collateral Value" means, as of any date of determination, an amount equal to (a) the aggregate Value (as defined in the Credit Support Annex) on such date of all Posted Credit Support (as so defined) held by Citibank as Secured Party (as so defined) plus (b) the aggregate of all Unrealized Capital Gains on such date with respect to the Reference Portfolio minus (c) the aggregate of all Unrealized Capital Losses on such date with respect to the Reference Portfolio.

Page 34

 

"Net Collateral Value Percentage" means, as of any date of determination, an amount (expressed as a percentage) equal to (a) the Net Collateral Value on such date divided by (b) the Portfolio Notional Amount on such date.

 

"Portfolio Target Amount" means (a) during the Ramp-Up Period and the Ramp-Down Period, USD150,000,000 and (b) at any other time, the Portfolio Notional Amount.

 

"Quotation Amount" means, with respect to any Reference Obligation relating to any Transaction, the lesser of (a) the related Reference Amount and (b) USD3,000,000.

 

"Quotation Period" means, with respect to any notice of any dispute by Counterparty of the Calculation Agent's determination of the Current Price, the period from and including 3:00 p.m. New York time on the immediately preceding Business Day to and including the time occurring three hours after Counterparty is given notice of the Calculation Agent's determination of the Current Price.

 

"Rate Payments" means Counterparty First Floating Amounts, Counterparty Second Floating Amounts, Counterparty Third Floating Amounts and Citibank Fixed Amounts.

 

"Revolving Reference Obligation" means a Reference Obligation that (a) requires the holder thereof to make one or more future advances to the borrower under the instrument or agreement pursuant to which such Reference Obligation was issued or created, (b) specifies a maximum aggregate amount that can be borrowed and (c) permits, during any period on or after the date on which the holder thereof acquires such Reference Obligation, the re-borrowing of any amount previously repaid; provided that, on the date that all commitments by the holder thereof to make advances to the borrower under such Revolving Reference Obligation expire or are terminated or reduced to zero, such Reference Obligation shall cease to be a Revolving Reference Obligation.

 

"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, or any successor thereto.

 

"S&P Rating" means, with respect to a Reference Obligation:

 

	
(i)

	
if the Reference Obligation itself is rated by S&P (including pursuant to any credit estimate), such rating,

 

	
(ii)

	
if the foregoing paragraph is not applicable, then, if the Reference Obligation is a Loan and the related Reference Entity has a corporate issuer rating by S&P, the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Loan:

 

	 	
Loan

	
Relevant Rating

	 	
The Loan is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by S&P that is one rating subcategory above such corporate issuer rating

	 	
The Loan is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating by S&P that is one rating subcategory below such corporate issuer rating

	 	
The Loan is Subordinate

	
The rating by S&P that is two rating subcategories below such corporate issuer rating

Page 35

 

	
(iii)

	
if the foregoing paragraphs are not applicable, but there is a rating by S&P on a secured obligation of the Reference Entity that is not a Second Lien Loan and is not Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating assigned by S&P to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating by S&P that is two rating subcategories below the rating assigned by S&P to the other obligation

 

 

	
(iv)

	
if the foregoing paragraphs are not applicable, but there is a rating by S&P on an unsecured obligation of the Reference Entity (or, failing that, an obligation that is a Second Lien Loan) but is not Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating assigned by S&P to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation

 

 

	
(v)

	
if the foregoing paragraphs are not applicable, but there is a rating by S&P on an obligation of the Reference Entity that is Subordinate (the "other obligation"), the rating specified in the applicable row of the table below under "Relevant Rating" opposite the row in the table below that describes such Reference Obligation:

 

	 	
Reference Obligation

	
Relevant Rating

	 	
The Reference Obligation is a secured obligation, but is not a Second Lien Loan and is not Subordinate

	
The rating by S&P that is two rating subcategories above the rating assigned by S&P to the other obligation

	 	
The Reference Obligation is an unsecured obligation or is a Second Lien Loan, but is not Subordinate

	
The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation

	 	
The Reference Obligation is Subordinate

	
The rating assigned by S&P to the other obligation

Page 36

 

	
(vi)

	
if the foregoing paragraphs are not applicable, then the S&P Rating shall be "CC"; provided that:

 

(A) if application has been made to S&P to rate a Reference Obligation and such Reference Obligation has a Moody's Rating, then the S&P Rating with respect to such Reference Obligation shall, pending the receipt of such rating from S&P, be equal to the S&P Rating that is equivalent to such Moody's Rating and (y) Reference Obligations in the Reference Portfolio constituting no more, by aggregate Notional Amount, than 10% of the Portfolio Target Amount may be given a S&P Rating based on a rating given by Moody's as provided in clause (x) (after giving effect to the addition of the relevant Reference Obligation, if applicable); and

 

(B) for up to 10% of the Portfolio Target Amount, the S&P Rating may be determined in accordance with the methodologies for establishing the Moody's Rating except that the S&P Rating of such obligation will be (1) one sub-category below the S&P equivalent of the Moody's Rating if such Moody's Rating is "Baa3" or higher and (2) two sub-categories below the S&P equivalent of the Moody's Rating if such Moody's Rating is "Ba1" or lower

 

"Second Lien Loan" means a Loan that is secured by collateral, but as to which the beneficiary or beneficiaries of such collateral security agree for the benefit of the holder or holders of other indebtedness secured by the same collateral ("First Lien Debt") as to one or more of the following: (1) to defer their right to enforce such collateral security either permanently or for a specified period of time while First Lien Debt is outstanding, (2) to permit a holder or holders of First Lien Debt to sell such collateral free and clear of the security in favor of such beneficiary or beneficiaries, (3) not to object to sales of assets by the obligor on such Loan following the commencement of a bankruptcy or other insolvency proceeding with respect to such obligor or to an application by the holder or holders of First Lien Debt to obtain adequate protection in any such proceeding and (4) not to contest the creation, validity, perfection or priority of First Lien Debt; provided that Citibank and Counterparty may agree in writing on or prior to the related Trade Date that a Reference Obligation that would otherwise fall within this definition shall not be a Second Lien Loan.

 

"Specified Reference Obligation" means any Reference Obligation whose inclusion in the Reference Portfolio (other than as a "Specified Reference Obligation") would not on the related Obligation Trade Date satisfy one or more of clauses (ix) through (xiii) of the Obligation Criteria.

 

"Subordinate" means, with respect to an obligation (the "Subordinated Obligation") and another obligation of the obligor thereon to which such obligation is being compared (the "Senior Obligation"), a contractual, trust or similar arrangement (without regard to the existence of preferred creditors arising by operation of law or to collateral, credit support, lien or other credit enhancement arrangements or provisions regarding the application of proceeds of any of the foregoing) providing that (i) upon the liquidation, dissolution, reorganization or winding up of the obligor, claims of the holders of the Senior Obligation will be satisfied prior to the claims of the holders of the Subordinated Obligation or (ii) the holders of the Subordinated Obligation will not be entitled to receive or retain payments in respect of their claims against the obligor at any time that the obligor is in payment arrears or is otherwise in default under the Senior Obligation.

Page 37

 

"Term Obligation" means any Reference Obligation that is not a Committed Obligation.

 

"Terminated Obligation" means any Reference Obligation or portion of any Reference Obligation that is terminated pursuant to Clause 3.

 

"Termination Settlement Date" means, for any Terminated Obligation, the date customary for settlement, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation (as determined by the Calculation Agent), of the sale of such Terminated Obligation with the trade date for such sale occurring on the related Termination Trade Date.

 

"Termination Threshold" means, on any date of determination, (a) the Cure Threshold on such date minus (b) 5%.

 

"Termination Trade Date" means, with respect to any Terminated Obligation, the date so designated in the related Accelerated Termination Notice; provided that:

 

	
(a)

	
except as provided in the following clause (b), if the related Final Price is not determined in accordance with Clause 4(a), the "Termination Trade Date" will be the bid submission deadline for the Firm Bid or combination of Firm Bids for all of the Reference Amount of such Terminated Obligation that are to be the basis for determining the Final Price of such Terminated Obligation as designated by the Calculation Agent in order to cause the related Total Return Payment Date to occur as promptly as practicable (in the discretion of the Calculation Agent) after the date originally designated as the "Termination Trade Date" in the related Accelerated Termination Notice; and

 

	
(b)

	
in respect of the Scheduled Termination Date, if the related Final Price is not determined in accordance with Clause 4(a), the "Termination Trade Date" will be the date so designated by the Calculation Agent in its discretion, occurring during the 60 calendar days preceding the Scheduled Termination Date (or earlier in the case of any Terminated Obligation determined by the Calculation Agent in its sole discretion to be a distressed loan or other obligation) in a manner reasonably likely to cause the final Total Return Payment Date to occur on the Scheduled Termination Date.

 

The Calculation Agent shall notify the parties of any Termination Trade Date designated by it pursuant to the foregoing proviso.

 

"Total Return Payment Date" means, with respect to any Terminated Obligation or Repaid Obligation, the fifth Business Day next succeeding the last day of the Monthly Period during which the related Obligation Termination Date occurs.

 

"Unrealized Capital Gain" means, with respect to any Reference Obligation, if the Current Price of such Reference Obligation is greater than the Initial Price in relation to such Reference Obligation, then (a) such Current Price minus such Initial Price multiplied by (b) the Reference Amount of such Reference Obligation. For purposes of computing any Unrealized Capital Gain, a Repaid Obligation or Terminated Obligation will be deemed to continue to be outstanding in an amount equal to its Reference Amount until (but excluding) the related Total Return Payment Date (and after the determination of the related Final Price will have a Current Price equal to such Final Price).

Page 38

 

"Unrealized Capital Loss" means, with respect to any Reference Obligation, if the Initial Price in relation to such Reference Obligation is greater than the Current Price of such Reference Obligation, then (a) such Initial Price minus such Current Price multiplied by (b) the Reference Amount of such Reference Obligation. For purposes of computing any Unrealized Capital Loss, a Repaid Obligation or Terminated Obligation will be deemed to continue to be outstanding in an amount equal to its Reference Amount until (but excluding) the related Total Return Payment Date (and after the determination of the related Final Price will have a Current Price equal to such Final Price).

Page 39

ANNEX I

 

	
Reference Obligation

	
Reference Entity

	
Reference Amount

	
Outstanding Principal Amount

	
Initial Price (%)

	
Obligation Trade Date

	
Obligation Settlement Date

	
Independent Amount Percentage (if a Specified Reference Obligation)

	  	  	  	  	  	  	  	  

Page 40

ANNEX II

 

OBLIGATION CRITERIA

 

Except as Counterparty and Citibank may from time to time otherwise agree in writing in connection with a specified Reference Obligation, the "Obligation Criteria" are as follows:

 

	
(i)  

	
The obligation is a Loan.

 

	
(ii)  

	
The obligation is denominated in USD.

 

	
(iii)  

	
The obligation constitutes a legal, valid, binding and enforceable obligation of the applicable Reference Entity, enforceable against such person in accordance with its terms.

 

	
(iv)  

	
The obligation does not require any future advances to be made to the related issuer or obligor on or after the relevant Obligation Trade Date, except for any Delayed Drawdown Reference Obligation or Revolving Reference Obligation.

 

	
(v)  

	
Except for any Second Lien Loan, the obligation is not Subordinate.

 

	
(vi)  

	
The obligation is secured.

 

	
(vii)  

	
On the relevant Obligation Trade Date for the Transaction relating to the obligation, the obligation is in the form of, and is treated as, indebtedness for U.S. Federal income tax purposes.

 

	
(viii)  

	
Transfers thereof on the Obligation Trade Date may be effected pursuant to the Standard Terms and Conditions for Par/Near Par Trade Confirmations and not the Standard Terms and Conditions for Distressed Trade Confirmations, in each case as published by the LSTA and as in effect on the Obligation Trade Date.

 

	
(ix)  

	
Except for any Specified Reference Obligation, the obligation is not a Second Lien Loan.

 

	
(x)  

	
Except for any Specified Reference Obligation, on the Obligation Trade Date the obligation is part of a fungible class of debt obligations (as to issuance date and all economic terms) of at least USD125,000,000.

 

	
(xi)  

	
Except for any Specified Reference Obligation, the obligation has an Initial Price of at least 80%.

 

	
(xii)  

	
Except for any Specified Reference Obligation, the obligation has as of the Obligation Trade Date a Moody's Rating of at least B3 and an S&P Rating of at least B-.

 

	
(xiii)  

	
Except for any Specified Reference Obligation, the obligation is on the Obligation Trade Date the subject of at least two bid quotations from nationally recognized independent dealers in the related obligation as reported on a nationally recognized pricing service.

Page 41

PORTFOLIO CRITERIA

 

Except as Counterparty and Citibank may from time to time otherwise agree in writing, the "Portfolio Criteria" are as follows:

 

	
(i)  

	
The Portfolio Notional Amount does not exceed the Maximum Portfolio Notional Amount.

 

	
(ii)  

	
The sum of the Notional Amounts for Reference Obligations of any single Reference Entity or any of its Affiliates does not exceed 5% of the Portfolio Target Amount.

 

	
(iii)  

	
The sum of the Notional Amounts for Reference Obligations of Reference Entities in any single Moody's Industry Classification Group does not exceed 15% of the Portfolio Target Amount; provided that the sum of the Notional Amounts for Reference Obligations of Reference Entities in one Moody's Industry Classification Group may be up to 20% of the Portfolio Target Amount.

 

	
(iv)  

	
The sum of the Notional Amounts for Specified Reference Obligations does not exceed 20% of the Portfolio Target Amount.

 

	
(v)  

	
After the Ramp-Up Period and prior to the Ramp-Down Period, the Reference Portfolio has a Weighted Average Rating of at most 2,720.

 

For purposes hereof:

 

"Moody's Industry Classification Groups" means each of the categories set forth in Table 1 below.

 

"Weighted Average Rating" means, as of any date of determination, the number obtained by (a) multiplying the Notional Amount of each Reference Obligation by the applicable Rating Factor (as set forth in Table 2 below) for the related Reference Entity; (b) summing the products obtained in clause (a) for all Reference Obligations; and (c) dividing the sum obtained in clause (b) by the aggregate of the Notional Amounts of all Reference Obligations.

Page 42

 

TABLE 1

 

MOODY'S INDUSTRY CLASSIFICATION GROUPS

 

Aerospace & Defense

Automotive

Banking, Finance, Insurance and Real Estate

Beverage, Food, & Tobacco

Capital Equipment

Chemicals, Plastics, & Rubber

Construction & Building

Consumer goods: durable

Consumer goods: non-durable

Containers, Packaging, & Glass

Energy: Electricity

Energy: Oil & Gas

Environmental Industries

Forest Products & Paper

Healthcare & Pharmaceuticals

High Tech Industries

Hotel, Gaming, & Leisure

Media: Advertising, Printing & Publishing

Media: Broadcasting & Subscription

Media: Diversified & Production

Metals & Mining

Retail

Services: Business

Services: Consumer

Sovereign & Public Finance

Telecommunications

Transportation: Cargo

Transportation: Consumer

Utilities: Electric

Utilities: Oil & Gas

Utilities: Water

Wholesale

Page 43

 

TABLE 2

 

RATING FACTORS

 

 

	Moody's Rating	Rating Factor
	 Aaa	 1
	 Aa1	 10
	 Aa2	 20
	 Aa3	 40
	 A1	 70
	 A2	 120
	 A3	 180
	 Baa1	 260
	 Baa2	 360
	 Baa3	 610
	 Ba1	 940
	 Ba2	 1,350
	 Ba3	 1,766
	 B1	 2,220
	 B2	 2,720
	 B3	 3,490
	 Caa1	 4,770
	 Caa2	 6,500
	 Caa3 or below	 10,000

Page 44

 

ANNEX III

 

APPROVED BUYERS

 

Bank of America, NA

The Bank of Montreal

The Bank of New York Mellon, N.A.

Barclays Bank plc

BNP Paribas

Broadpoint Securities

Canadian Imperial Bank of Commerce

Citibank, N.A.

Credit Agricole S.A.

Credit Suisse

Deutsche Bank AG

Goldman Sachs & Co.

HSBC Bank

Imperial Capital LLC

JPMorgan Chase Bank, N.A.

Lloyds TSB Bank

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Morgan Stanley & Co.

Natixis

Northern Trust Company

Royal Bank of Canada

The Royal Bank of Scotland plc

Societe Generale

The Toronto-Dominion Bank

UBS AG

U.S. Bank, National Association

Wells Fargo Bank, National Association

Page 45SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of March 21 2016, between Rhino Resource Partners,
L.P., a Delaware limited partnership (the “Company”), and Royal Energy Resources, Inc., a Delaware corporation
(the “Purchaser”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in
this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

	1.	Purchase
    of Securities. Subject and pursuant to the terms and condition set forth in this Agreement, the Purchaser hereby subscribes
    for, and at the Closing described in Section 3 herein, will purchase from the Company, 60,000,000 Common Units of the Company
    (the “Units” and each a “Unit”) at a price of $0.15 per Unit, and for the aggregate
    purchase price of $9,000,000.00 (the “Purchase Price”).
	 	 
	2.	Purchase
    Price and Payment. The Purchaser hereby agrees to purchase the Units for the Purchase Price. At the Closing, the Purchaser
    shall pay the Purchase Price as follows:

 

	 	a.	$2,000,000.00
    by wire transfer to the Company on the Closing Date;
	 	 	 
	 	b.	$7,000,000
    by execution of a promissory note payable to the Company in the form attached hereto as Exhibit “A” (the “Purchase
    Note”), and a pledge agreement in the form attached hereto as Exhibit “B.”

 

	3.	Closing.
    The Closing will occur no later than 4:00 p.m. (Eastern Daylight Time) on March 22, 2016 (the “Closing Date”),
    unless otherwise agreed by the parties hereto. At the Closing, and subject to the conditions set forth in Section 14 of this
    Agreement, (a) the Purchaser will pay the portion of the payable in cash (less deduction permitted by Section 4 of this Agreement)
    by wire transfer to the Company, (b) the Purchaser will execute and deliver the Purchase Note to the Company; and (c) the
    Company will instruct its transfer agent to issue and deliver certificates representing the Units to the Purchaser by overnight
    courier.
	 	 
	4.	Reimbursement
    of Purchaser Expenses. The Company shall reimburse the Purchaser for $5,000 in legal fees incurred by the Purchaser (which
    the Purchaser may deduct and withhold from the Purchase Price).
	 	 
	5.	Rescission
    Rights of Company. In the event the disinterested members of the board of directors of the general partner (the “Board
    of Directors”) of the Company conclude that the Company does not need the capital that will be provided by the installment
    of the Purchase Note that is due on September 30, 2016 prior to the Purchaser’s payment thereof, the Company shall have
    the option to rescind the purchase of 13,333,333 Common Units owned by the Purchaser by written notice thereto, in which event
    the installment of the Purchase Note due on such date (i.e., $2,000,000) shall not be payable. In the event the disinterested
    members of the Board of Directors of the Company conclude that the Company does not need the capital that will be provided
    by the installment of the Purchase Note that is due on December 31, 2016 prior to the Purchaser’s payment thereof, the
    Company shall have the option to rescind the purchase of 13,333,333 Common Units owned by the Purchaser by written notice
    thereto, in which event the installment of the Purchase Note due on such date (i.e., $2,000,000) shall not be payable. The
    rescission rights granted to the Purchaser in the preceding two sentences are hereinafter referred to as the “Rescission
    Rights.” The Purchaser will provide the Company with at least ten (10) days prior notice in the event the Purchaser
    intends to prepay the September 30, 2016 and December 31, 2016 installments of the Purchase Note prior to the due date thereof.
    In the event the Company exercises its Rescission Rights as to any installment of the Purchase Note, the Purchaser shall surrender
    for cancellation certificates for the appropriate number of Common Units, and execute such documents that the Company may
    reasonably request to effectuate the cancellation of the appropriate number of Common Units.

 

    	 

     

    

 

	6.	Repurchase
    Rights of Company. In the event the Company fails to exercise its Rescission Rights as to the installment of the Purchase
    Note due on September 30, 2016, the Company will have the option to purchase 13,333,333 Common Units owned by the Purchaser
    for $0.30 per Common Unit. In the event the Company fails to exercise its Rescission Rights as to the installment of the Purchase
    Note due on December 31, 2016, the Company will have the option to purchase 13,333,333 Common Units owned by the Purchaser
    for $0.30 per Common Unit. The repurchase rights granted to the Company in the preceding two sentences are hereinafter referred
    to as the “Rescission Options.” The Repurchase Options shall terminate on December 31, 2017, and may only
    be exercisable in full as to each installment of the Purchase Note and not in part. The Repurchase Option price shall be payable
    first by cancellation of any portion of the Purchase Note which remains unpaid, with any remaining Repurchase Option price
    being payable in cash at the time the Repurchase Option is exercised. The Repurchase Options shall be exercised by written
    notice to the Purchaser accompanied by payment of the cash portion of the Repurchase Option price by wire transfer to the
    account of the Purchaser. In the event the Company exercises either of the Repurchase Options, the Purchaser shall surrender
    for cancellation certificates for the appropriate number of Common Units, and execute such documents that the Company may
    reasonably request to effectuate the cancellation of the appropriate number of Common Units.
	 	 
	7.	Adjustment
    of Common Unit Amounts. If the Company shall at any time after the date of this Agreement subdivide its outstanding Common
    Units, by split-up or otherwise, or combine its outstanding Common Units, or issue additional Common Units in payment of a
    dividend in respect of its Common Units, the number of Common Units subject to the Rescission Rights and the Repurchase Option
    shall forthwith be proportionately increased in the case of a subdivision or Common Unit dividend, or proportionately decreased
    in the case of a combination, and the Repurchase Option price then applicable to Common Units shall forthwith be proportionately
    decreased in the case of a subdivision or Common Unit dividend, or proportionately increased in the case of combination.
	 	 
	8.	Rescission
    Rights of Purchaser. In the event the conditions set forth in Section 16 of this Agreement are not satisfied as of the
    date each installment is due on the Purchase Note, the Purchaser shall have the right and option, but not the obligation,
    to cancel the remaining unpaid balance of the Purchase Note, which right must be exercised in writing to the Company within
    thirty (30) days of the date the installment was first due. In the event the Purchaser cancels any part of the Purchase Note
    pursuant to this Section, the Purchaser shall surrender for cancellation that number of certificates for Common Units equal
    to the principal balance of the Purchase Note that is cancelled divided by $0.15.
	 	 
	9.	Registration
    Rights. At Closing, the Company and the Purchaser will enter into the Registration Rights Agreement in the form attached
    as Exhibit “C” to this Agreement.
	 	 
	10.	Representations
    and Warranties of the Purchaser. The Purchaser represents and warrants to the Company, acknowledging that the Company
    will be relying upon such representations and warranties in entering into this Agreement as follows:

 

    	2

     

    

 

	 	(a)	the
    Company is a Delaware corporation, and is validly subsisting and in good standing with respect to the filing of annual returns
    under the laws of the jurisdiction in which it is incorporated and has all the requisite corporate power and capacity to carry
    on its business as now conducted and as presently proposed to be conducted by it and to own its assets;
	 	 	 
	 	(b)	the
    Purchaser has all requisite power and capacity and good and sufficient right and authority to enter into, deliver and carry
    out its obligations under this Agreement and to complete the transactions contemplated under this Agreement on the terms and
    conditions set forth herein;
	 	 	 
	 	(c)	this
    Agreement has been authorized, executed and delivered by the Purchaser and constitutes a valid and legally binding obligation
    of the Purchaser enforceable against the Purchaser in accordance with their respective terms (except as such enforceability
    may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally
    and by general equitable principles);
	 	 	 
	 	(d)	it
    is acquiring the Units for its own account and not on behalf of any other person for investment purposes only and not with
    a view to any resale, distribution or other disposition of the Units in violation of the United States federal and state securities
    laws;
	 	 	 
	 	(e)	it
    is an “accredited investor,” as that term is defined in Rule 501(a), because the Purchaser is a corporation not
    formed for the specific purpose of acquiring the Units, with total assets in excess of $5,000,000;
	 	 	 
	 	(f)	it
    is solely responsible for obtaining such tax and legal advice as it considers appropriate in connection with the execution,
    delivery and performance by it of this Agreement and the transactions contemplated hereunder (including the resale and transfer
    restrictions referred to in this Agreement);
	 	 	 
	 	(g)	except
    as otherwise provided herein, none of the Units have been or will be registered under the United States Securities Act of
    1933, as amended (the “1933 Act”) or the securities laws of any state, and will be subject to restrictions on
    resale pursuant to Rule 144 under the 1933 Act and may not be sold, transferred or traded except in compliance with Rule 144,
    or in compliance with another exemption from the registration requirements under the 1933 Act, or if the Units are registered
    under the 1933 Act for resale; and
	 	 	 
	 	(h)	upon
    the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the 1933
    Act or applicable U.S. state laws, the certificates representing the Units and all securities issued in exchange therefore
    or in substitution thereof, will bear a legend in substantially the following form:

 

THIS
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

    	3

     

    

 

	 	(i)	in
    addition to the restrictive legend described in Section 10(h), 46,666,667 of the Common Units shall be subject to a restrictive
    legend indicating that the Common Units are subject to a lien in favour of the Company to secure the Purchase Note, and 26,666,666
    Common Units shall be subject to a restrictive legend indicating that such Common Units are subject to the Rescission Right
    and the Repurchase Right; provided, that the Company will cooperate with the Purchaser in obtaining reissuance of the Common
    Units without either of the restrictive legends required by this Section 10(i) to the extent the circumstances requiring such
    restrictive legend no longer exist;
	 	 	 
	 	(j)	the
    Purchaser has had the opportunity to review the SEC Documents (as hereinafter defined), and has had the opportunity to ask
    questions of and receive answers from the Company regarding the investment, and has received all the information regarding
    the Company that it has requested;
	 	 	 
	 	(k)	has
    not received any written or oral representations:

 

	 	(i)	that
    any person will resell or repurchase the Units;
	 	 	 
	 	(ii)	that
    any person will refund the purchase price of the Units;
	 	 	 
	 	(iii)	as
    to the future price or value of the Units; or
	 	 	 
	 	(iv)	that
    the Units will be listed and posted for trading on a stock exchange or that application has been made to list and post the
    Units for trading on a stock exchange;

 

	 	(l)	is
    capable of assessing and evaluating the risks and merits of an investment in the Units as a result of the Purchaser’s
    financial, investment or business experience or as a result of advice received from a registered person other than the Company
    or an affiliate thereof, and the Purchaser is able to bear the economic loss of its investment;
	 	 	 
	 	(m)	to
    its knowledge, the Purchaser has not purchased the Units as a result of any form of general solicitation or general advertising
    as these terms are defined in Rule 502(c) of Regulation D under the 1933 Act. The solicitation of an offer to purchase the
    Units was directly communicated to the Purchaser. At no time was the Purchaser presented with or solicited by or through any
    leaflet, public promotional meeting, circular, newspaper or magazine article, radio or television advertisement or any other
    form of general advertising in connection with such communicated offer;
	 	 	 
	 	(n)	acknowledges
    that (i) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Units; (ii)
    there is no government or other insurance covering the Units; (iii) there are risks associated with the purchase of the Units;
    (iv) and there are restrictions on the Purchaser’s (or beneficial purchaser’s, if applicable) ability to re-sell
    the Units and it is the responsibility of the Purchaser to comply with those restrictions before selling or trading the Units;

 

    	4

     

    

 

	 	(o)	the
    Purchaser understands and agrees that the Company prohibits the investment of funds by any persons or entities that are acting,
    directly or indirectly, (i) in contravention of any U.S. or international laws and regulations, including anti-money laundering
    regulations or conventions, (ii) on behalf of terrorists or terrorist organizations, including those persons or entities that
    are included on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department’s
    Office of Foreign Assets Control[1] (“OFAC”), as such list may be amended from time to time, (iii)
    for a senior foreign political figure, any member of a senior foreign political figure’s immediate family or any close
    associate of a senior foreign political figure[2], unless the Company, after being specifically notified by the
    Purchaser in writing that it is such a person, conducts further due diligence, and determine that such investment shall be
    permitted, or (iv) for a foreign shell bank[3] (such persons or entities in (i) – (iv) are collectively referred to
    as “Prohibited Persons”).

 

	11.	Reliance
    Upon Representations, Warranties, and Covenants. The Purchaser acknowledges that the foregoing representations and warranties
    are made by it with the intent that they may be relied upon by the Company and its counsel in determining its eligibility
    to purchase the Units under the relevant securities laws. The Company and its counsel shall be entitled to rely on the representations
    and warranties of the Purchaser contained hereto and the Purchaser shall indemnify and hold harmless the Company and its counsel
    for any direct losses, claims, costs, expenses, damages or liabilities they may suffer or incur which are caused by or arise
    from, directly or indirectly, their reliance thereon.
	 	 
	12.	Representations,
    Warranties and Agreements of the Company. As of the date of this Agreement, and as of the date each installment of the
    Purchase Note is due, the Company represents, warrants, and covenants to the Purchaser, and agrees with the Purchaser, that:

 

	 	(a)	each
    of the Company and its subsidiaries (collectively, the “Subsidiaries” and individually, a “Subsidiary”),
    if any, has been duly incorporated, continued or amalgamated and is validly subsisting and in good standing with respect to
    the filing of annual returns under the laws of the jurisdictions in which it is incorporated, continued or amalgamated and
    has all the requisite corporate power and capacity to carry on its business as now conducted and as presently proposed to
    be conducted by it and to own its assets;

  

 

1        The
OFAC list may be accessed on the web at http://www.treas.gov/ofac.

 

2        Senior
foreign political figure means a senior official in the executive, legislative, administrative, military or judicial branches
of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive
of a foreign government-owned corporation. In addition, a senior foreign political figure includes any corporation, business or
other entity that has been formed by, or for the benefit of, a senior foreign political figure. The immediate family of a senior
foreign political figure typically includes the political figure’s parents, siblings, spouse, children and in-laws. A close
associate of a senior foreign political figure is a person who is widely and publicly known internationally to maintain an unusually
close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial
domestic and international financial transactions on behalf of the senior foreign political figure.

 

3        Foreign
shell bank means a foreign bank without a physical presence in any country, but does not include a regulated affiliate. A post
office box or electronic address would not be considered a physical presence. A regulated affiliate means a foreign shell bank
that: (1) is an affiliate of a depository institution, credit union, or foreign bank that maintains a physical presence in the
United States or a foreign country, as applicable; and (2) is subject to supervision by a banking authority in the country regulating
such affiliated depository institution, credit union, or foreign bank.

 

    	5

     

    

 

	 	(b)	the
    Company has all requis ite power and capacity and good and sufficient right and authority to enter into, deliver and carry
    out its obligations under this Agreement and to complete the transactions contemplated under this Agreement on the terms and
    conditions set forth herein;
	 	 	 
	 	(c)	this
    Agreement has been authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation
    of the Company enforceable against the Company in accordance with their respective terms (except as such enforceability may
    be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally
    and by general equitable principles);
	 	 	 
	 	(d)	The
    Units have been duly authorized and, when issued upon payment thereof in accordance with this Agreement, will have been validly
    issued, fully paid and non-assessable. The partners in the Company have no preemptive or similar rights with respect to the
    Units;
	 	 	 
	 	(e)	Immediately
    prior to the Closing, the authorized capitalization of the Company is as disclosed in the Company’s Form 10-Q for the
    nine months ended September 30, 2015, except as disclosed in SEC Documents filed subsequent to such Form 10-Q. Other than
    as disclosed in the SEC Documents, (x) no Common Units or Subordinated Units of the Company are subject to rights of first
    refusal, preemptive rights, right of participation or any other similar rights or any liens suffered or permitted by the Company,
    (y) the issuance and sale of the Units will not obligate the Company to issue Common Units or Subordinated Units or other
    securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to
    adjust the exercise, conversion, exchange or reset price under any of such securities, (z) all of the outstanding Common and
    Subordinated Units of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all
    federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or
    similar rights to subscribe for or purchase securities;
	 	 	 
	 	(f)	The
    Company’s Common Units are registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken
    no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common
    Units under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
    such registration;
	 	 	 
	 	(g)	During
    the two (2) years prior to the date hereof, the Company has timely (including within any additional time periods provided
    by Rule 12b-25 under the Exchange Act) filed all reports on Form 10-K and Form 10-Q, and to the Company’s knowledge
    during the two (2) years prior to the date hereof, the Company has filed all reports, schedules, forms, statements and other
    documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing
    filed prior to the date hereof or prior to the Closing Date, all exhibits included therein and financial statements, notes
    and schedules thereto and documents incorporated by reference therein, all amendments thereto and all schedules and exhibits
    thereto and to any such amendments being hereinafter referred to as the “SEC Documents”). Except as corrected
    by subsequent amendments thereto, as of their respective filing dates, the SEC Documents complied in all material respects
    with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the
    SEC Documents. As of their respective filing dates, none of the SEC Documents contained any untrue statement of a material
    fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
    in the light of the circumstances under which they were made, not misleading. As of their respective filing dates, the financial
    statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting
    requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been
    prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except
    (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim
    statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all
    material respects the financial position of the Company as of the dates thereof and the results of its operations and cash
    flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments);

 

    	6

     

    

 

	 	(h)	Except
    as set forth in the SEC Documents, since September 30, 2015, there has been no material adverse change and no material adverse
    development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects
    of the Company or its Subsidiaries;
	 	 	 
	 	(i)	The
    execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions
    contemplated hereby and thereby will not (i) result in a violation of the Certificate of Limited Partnership of the Company,
    in effect on the date hereof (the “Partnership Certificate”), the Company’s Third Amended and Restated
    Limited Partnership Agreement dated December 30, 2015 (the “LPA”), any memorandum of association, certificate
    of incorporation, articles of association, bylaws, certificate of formation, certificate of designation or other constituent
    documents of the Company or any of its Subsidiaries, (ii) conflict with, or constitute an event of default or a default (or
    an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination,
    amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease
    agreement, instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or
    any of its Subsidiaries or their properties or assets are bound, or (iii) conflict with or result in a violation of any law,
    rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
    the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
    or asset of the Company or a Subsidiary is bound or affected. No further approval or authorization of any limited or general
    partner or others is required for the issuance and sale of the Units;
	 	 	 
	 	(j)	The
    Company is not obligated to pay any brokerage or finder’s fees or commissions to any broker, financial advisor or consultant,
    finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction
    Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf
    of other persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated
    by the Transaction Documents.

 

	13.	Reliance
    Upon Representations, Warranties, and Covenants. The Company and the Purchaser each acknowledge that the foregoing representations
    and warranties and covenants made by each to the other were made with the intent that they may be relied upon by the other
    party.

 

    	7

     

    

 

	14.	Survival
    of Representations and Warranties. The representations and warranties of the Purchaser contained in this Agreement shall
    be true at the Closing Date as though they were made at the Closing Date and they shall survive the Closing Date and remain
    in full force and effect thereafter for the benefit of the Company for a period of one year. The representations and warranties
    of the Company contained in this Agreement shall be true at the Closing Date as though they were made at the Closing Date
    and they shall survive the Closing Date and remain in full force and effect thereafter for the benefit of the Purchaser for
    a period of one year.
	 	 
	15.	Conditions
    Precedent to Closing. The closing of the purchase and sale of the Units shall be subject to the following conditions being
    satisfied at or prior to the Closing:

 

	 	a)	receipt
    by the Company of this Agreement and attached Exhibits, as applicable, all duly completed and executed by the Purchaser;
	 	 	 
	 	b)	the
    Company not being aware of any representation or warranty made by the Purchaser in this Agreement not being true and correct
    as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties
    that speak as of a specific date);
	 	 	 
	 	c)	receipt
    of such other documents relating to the transactions contemplated by this Agreement as the Company or its counsel may reasonably
    request; and
	 	 	 
	 	d)	there
    being no order or decree preventing the Company from issuing the Units.

 

	16.	Conditions
    Precedent to Each Installment of Purchase Note. The Purchaser’s obligation to pay any installment of the
    Purchase Note shall be conditioned on the Company providing a certificate of its chief executive officer certifying as follows:

 

	 	a)	the
    chief executive officer is not aware of any fact or circumstance that would render any representation, warranty or agreement
    made by the Company in Section 12 to not be true and correct as of the date of the certification;
	 	 	 
	 	b)	the
    Company’s subsidiary, Rhino Energy, LLC, has entered into an agreement to extend the expiration date of its Credit Agreement
    with PNC Bank, N.A., as Administrative Agent, and the lenders party to the Credit Agreement (the “Credit Agreement”),
    to a date no sooner than December 31, 2017; and
	 	 	 
	 	c)	the
    Company is not in default under such Credit Agreement as of the date the installment is due.

 

	17.	Amendment.
    This Agreement may not be modified, changed, discharged or terminated except by an instrument in writing, signed by the
    parties against whom any waiver, change, discharge or termination is sought.
	 	 
	18.	Assignability.
    This Agreement and any right, remedy, obligation or liability arising hereunder or by reason hereof may not be assigned
    by the Company without the prior written consent of the Purchaser. This Agreement and any right, remedy, obligation or liability
    arising hereunder or by reason hereof may be assigned by the Purchaser to an investment fund to which the Purchaser contributes
    the Units.

 

    	8

     

    

 

	19.	Applicable
    Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, and any dispute
    will be referred to the courts of State of Delaware unless otherwise agreed in writing between the parties.
	 	 
	20.	Interpretation.
    The sections and other headings contained in this Agreement are for reference purposes only and will not affect the meaning
    or interpretation of this Agreement. Words imparting the neuter gender include the masculine or feminine gender and words
    in the singular include the plural and vice versa.
	 	 
	21.	Notices.
    All notices and other communications provided for herein will be in writing and will be deemed to have been duly given
    if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid or by facsimile
    or other electronic means indicating the date of receipt and the signatures of the parties:

 

(a)   If
to the Company, at the following address:

 

Rhino
Resource Partners, LP

424
Lewis Hargett Circle, Suite 250

Lexington,
KY 40503

Facsimile:

Attention:
Chief Executive Officer

 

If
to the Purchaser, at the following address:

 

Royal
Energy Resources, Inc.

56
Broad Street, Suite 2

Charleston,
SC 29401

Attention:
William L. Tuorto

Telephone:
(843) 900-7693

Facsimile:
(843) 501-1528

Email:
Williamtuorto@royalenergy.us

 

	22.	Binding
    Effect. The provisions of this Agreement will be binding upon and accrue to the benefit of the parties hereto and their
    respective heirs, legal representatives, successors and permitted assigns, as the case may be.
	 	 
	23.	Notification
    of Changes. The parties hereby covenant and agree to notify the other party upon the occurrence of any event prior to
    the Closing which would cause any party’s representations, warranties or covenants contained in this Agreement to be
    false or incorrect.
	 	 
	24.	Entire
    Agreement. This Agreement including all schedules hereto constitutes the entire agreement between the Purchaser and the
    Company with respect to the Units, and there are no other agreements, warranties, representations, conditions or covenants,
    written or oral, express or implied, in respect of, or which affect, the transaction herein contemplated.
	 	 
	25.	Costs.
    The Purchaser acknowledges and agrees that except as may otherwise be provided for in this Agreement, all costs and expenses
    incurred by the Purchaser (including any fees and disbursements of any special counsel retained by the Purchaser) relating
    to the sale of the Units to the Purchaser will be borne by the Purchaser.
	 	 
	26.	Further
    Assurances. The Purchaser and Company will execute such further assurances and other documents and instruments and do
    such further and other things as may be necessary to implement and carry out the intent of this Agreement.

 

    	9

     

    

 

	27.	Counterparts
    and Facsimile. This Agreement may be executed in counterparts or by facsimile or both, each counterpart or facsimile of
    which will be deemed to be an original, but all of which, taken together, and delivered will constitute one and the same agreement.
    This Agreement will not be effective as to any party hereto until such time as this Agreement or a counterpart thereof has
    been executed and delivered, by facsimile or otherwise, by each party hereto.

 

IN
WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement as of the date first above written.

 

Rhino
Resource Partners, LP

 

	By:
    Rhino GP, LLC, its general partner	 
	 	 	 
	 	 
	Name:	Joseph
    Funk	 
	Title:	Chief
    Executive Officer	 
	 	 	 
	Royal
    Energy Resources, Inc.	 
	 	 
	 	 
	Name:	William
    L. Tuorto	 
	Title:	Chief
    Executive Officer	 

 

    	10

     

    

 

Exhibit
“A”

 

NOTE

 

FOR
VALUE RECEIVED, Royal Energy Resources, Inc., a Delaware corporation (the “Maker”), promises to pay to the
order of Rhino Resource Partners, LP., a Delaware limited partnership (the “Holder”), or any subsequent Holder,
the sum of SEVEN MILLION DOLLARS and NO CENTS ($7,000,000.00), without interest. This Note is subject to the following additional
provisions:

 

1.
Installment Due Dates. This Note shall be payable in three installments pursuant to the following schedule:

 

		a.	$3,000,000.00
                                         on July 31, 2016;
	 	 	 
		b.	$2,000,000
                                         on or before September 30, 2016; and
	 	 	 
		c.	$2,000,000
                                         on or before December 31, 2016.

 

2.
Securities Purchase Agreement. This Note is being issued as part payment by Maker for the purchase of 60,000,000 Common
Units of the Holder pursuant to a Securities Purchase Agreement between the Maker and the Holder of even date herewith. The Maker’s
obligation to pay each of the installments described in Section 1 is subject to the satisfaction or waiver of the conditions set
forth in Section 16 of the Securities Purchase Agreement, which are incorporated herein by reference.

 

3.
Interest on Late Payments. In the event any payment due on this Note is not made by its due date, interest shall accrue
on such payment at the rate of 8% per annum, simple interest, from the due date of the payment until the payment is actually received
by the Holder.

 

4.
Security Agreement. This Note is given by the Maker as payment for the issuance of 46,666,667 Common Units (the “Common
Units”) by the Holder to the Maker, and is secured by a first lien on the Common Units pursuant to a Pledge Agreement
dated of even date herewith.

 

5.
Prepayment. The Maker may prepay any amount due on this Note in part or whole without premium or penalty upon thirty days
prior written notice to the Holder at any time.

 

6.
Usury Savings Clause. If from any circumstances whatsoever fulfillment of any provision of this Note at the time performance
of such provision shall be due shall involve transcending the limit prescribed by any applicable usury statute or any other applicable
law, with regard to obligations of like character and amount, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, so that in no event shall any exaction be possible under this Note or under any other instrument
evidencing or securing the indebtedness evidenced hereby, that is in excess of the current limit of such validity, but such obligation
shall be fulfilled to the limit of such validity.

 

7.
Waiver of Certain Rights by Maker. Presentment for payment, demand, protest and notice of demand, notice of dishonor and
notice of nonpayment and all other notices are hereby waived by Maker. No failure to accelerate the debt evidenced hereby by reason
of default hereunder, acceptance of a past due installment, or indulgences granted from time to time shall be construed (1) as
a novation of this Note or as a restatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration
or of the right of the Holder thereafter to insist upon strict compliance with the terms of this Note, or (2) to prevent the exercise
of such right of acceleration or any other right granted hereunder or by applicable law; and Maker hereby expressly waives the
benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time for the payment of this Note or any installment due hereunder,
made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the original liability of the Maker under this Note, either in whole or in part, unless the Holder agrees otherwise
in writing. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.

 

    	 

     

    

 

8.
Withholding Rights. The Maker shall be entitled to withhold from all payments of interest on this Note any amounts required
to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such
payments, and Holder shall execute and deliver all required documentation in connection therewith.

 

9.
Obligation of Maker Only. No recourse shall be had for the payment of the principal of, or the interest on, this Note,
or for any claim based hereon, or otherwise in respect hereof, against any incorporator, general partner, manager, shareholder,
employee, officer or director, as such, past, present or future, of the Maker or any successor entity, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

 

10.
Attorney’s Fees. In the event this Note is collected by or through an attorney or by the order of a court of competent
jurisdiction, all cost of collection, including but not limited to court costs and reasonable attorneys’ fees, shall be
paid by Maker.

 

11.
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware.

 

Dated:
_______________

 

	 	 	ROYAL
    ENERGY RESOURCES, INC., a Delaware corporation
	 	 	 	 
	 	 	 
	Witness	 	By:	William
    L. Tuorto
	 	 	Chief
    Executive Officer

 

    	 

     

    

 

Exhibit
“B”

 

PLEDGE
AGREEMENT

 

THIS
PLEDGE AGREEMENT (this “Pledge Agreement”) is made and entered into this ____ day of March, 2016, by and between
ROYAL ENERGY RESOURCES, INC. (the “Borrower”), and RHINO RESOURCE PARTNERS, LP (“Lender”).

 

R
E C I T A L S:

 

A.
On the date of this Pledge Agreement, Borrower has executed a promissory note (the “Note”) in favor of Lender
to evidence the terms under which Borrower has agreed to repay a loan of $7,000,000 from the Lender to the Borrower as consideration
for the purchase of 46,666,667 Common Units in the Lender (the “Collateral”), and Borrower has agreed to pledge
and grant Lender a security interest in the Collateral to secure Borrower’s obligation under the Note.

 

A
G R E E M E N T S:

 

In
consideration of the foregoing Recitals and of the mutual agreements contained herein, the parties agree as follows:

 

SECTION
1. GRANT OF SECURITY INTEREST; PLEDGE.

 

1.1
Pledged Collateral. The Borrower hereby grants a security interest to the Lender in, and pledges, assigns and sets over
to the Lender, all of the Collateral, together with any certificates representing the same, and all substitutions therefor, proceeds
thereof and therefrom, and all cash dividends in respect thereof, as well as all stock or other securities at any time and from
time to time receivable or otherwise distributable in respect thereof, exchanged therefor, derived therefrom, substituted therefor,
or otherwise issued pursuant to stock split, recapitalization, stock dividend or similar corporate act affecting the Collateral
and all distributions, whether cash or otherwise, in the nature of a partial or complete liquidation affecting the Collateral
(all of which Collateral, dividends, cash, property, securities, and liquidating distributions are herein called the “Pledged
Collateral”).

 

1.2
Possession of Pledged Collateral. Except as otherwise expressly permitted herein, all of the Pledged Collateral (to the
extent it is certificated form) shall be held by the Lender, in its capacity as a first lienholder on the Pledged Collateral,
accompanied by proper instruments of assignment duly executed in blank by the Borrower and by such other instruments or documents
as the Lender or its counsel may reasonably request sufficient to transfer the title thereto to the Lender or its nominee.

 

1.3
Obligations Secured. The security interest of the Lender under this Pledge Agreement secures (a) the full and prompt performance
of all of the obligations of Borrower under the Note, whether now existing or hereafter arising (including, in each case, interest
accruing in respect of any of such obligations after the commencement of any case or proceeding under any federal or state bankruptcy
or insolvency law (a “Proceeding” and “Post-Petition Interest”, respectively)); (b) performance
by the Borrower of the covenants and agreements set forth herein; (c) all payments made or reasonable expenses incurred by the
Lender, including, without limitation, reasonable attorney’s fees and legal expenses incurred by the Lender in the collection
or enforcement of the aforementioned obligations; and (d) any renewals, supplements, substitutions, continuations or extensions
of any of the foregoing ((a) through (d) described above are referred to as the “Pledge Obligations”).

 

1.4
Release of Collateral. In the event the Borrower makes the Note installment due on July 31, 2016 in full, the Lender shall
release its security interest on 20,000,000 Common Units. In the event the Borrower makes the Note installment due on September
30, 2016 in full, the Lender shall release its security interest on 13,333,333 Common Units.

 

    	 

     

    

 

SECTION
2. VOTING RIGHTS; DIVIDENDS; ETC. So long as no Event of Default (as defined in Section 6 hereof) shall have occurred:

 

	 	(a)	The
    Borrower shall have the right, from time to time, for any purpose not inconsistent with this Pledge Agreement, to vote and
    give proxies and consents in respect of the Collateral and any additional Common Units owned by the Borrower comprising part
    of the Pledged Collateral and to consent to or ratify action taken at, or waive notice of, any meeting of shareholders or
    partners with the same force and effect as if such Common Units were not pledged hereunder; and
	 	 	 
	 	(b)	The
    Borrower shall be entitled to retain and use any and all cash dividends paid on the Pledged Collateral in a manner consistent
    with this Pledge Agreement; provided, however, that any and all liquidating distributions, other distributions in property,
    return of capital or other distributions made on or in respect of the Pledged Collateral, whether resulting from a subdivision,
    combination or reclassification of stock of the Company or received in exchange for Pledged Collateral or any part thereof
    or as a result of any merger, consolidation, acquisition or other exchange of assets or on the liquidation, whether voluntary
    or involuntary, of the Company, or otherwise, any and all of which shall be and become part of the Pledged Collateral pledged
    hereunder and, if received by the Borrower, shall forthwith be delivered to the Lender to be held subject to the terms of
    this Pledge Agreement.

 

SECTION
3. WARRANTIES AND AGREEMENTS. The Borrower represents and warrants and, where appropriate, covenants as follows:

 

	 	(a)	The
    pledge of the Pledged Collateral hereunder will not contravene any agreement binding upon the Borrower;
	 	 	 
	 	(b)	The
    Borrower has good right and legal authority to pledge the Pledged Collateral in the manner hereby done or contemplated and
    the Borrower will warrant and defend his title thereto and the lien created hereunder against the claims of any persons whomsoever;
	 	 	 
	 	(c)	The
    pledge of the Pledged Collateral hereunder is effective to vest in the Lender the rights of the Lender in the Pledged Collateral
    as set forth herein;
	 	 	 
	 	(d)	The
    Borrower is the owner of the Pledged Collateral free and clear of all liens of every kind and nature whatsoever; and
	 	 	 
	 	(e)	The
    Borrower shall not sell, assign, transfer or otherwise dispose of, or grant any option in respect of, the Pledged Collateral,
    nor will the Borrower create, incur or permit to exist any lien in respect of the Pledged Collateral, or any interest therein,
    or the proceeds thereof, other than the lien provided for in this Pledge Agreement.

 

SECTION
4. RIGHTS OF LENDER UPON DEFAULT. Upon (i) the occurrence of an Event of Default (hereinafter defined) hereunder and so
long as such Event of Default is continuing and (ii) compliance with all applicable requirements of the law, the Lender shall
have all of the rights and remedies of a secured party under the Uniform Commercial Code and, without limiting the generality
of the foregoing, shall also have the rights set forth in this Section 4:

 

    	 

     

    

 

4.1
Voting Rights. The Lender shall have the right (but not the obligation) to vote any and all Common Units included in the
Pledged Collateral and to give all consents, waivers and ratifications in respect thereof, and in such event and for such purpose,
the Borrower hereby irrevocably constitutes and appoints the Lender, as the Borrower’s proxy and attorney-in-fact (which
appointment shall be coupled with an interest) with full power of substitution, to do so.

 

4.2
Sale of Pledged Collateral.

 

	 	(a)	Upon
    compliance with any mandatory requirements of law, and upon at least ten (10) days prior written notice to the Borrower (except
    as provided below) of the time and place of any public sale thereof or of the time after which any private sale or other intended
    disposition thereof is to be made, the Lender shall have the right to sell, assign and deliver the whole or any part of the
    Pledged Collateral, at any time or times, within or without Cuyahoga County, Ohio, at public or private sale or at any broker’s
    board or on any securities exchange, for cash, on credit, or for other property, for immediate or future delivery, and for
    such price or prices and on such terms as are commercially reasonable and not in violation of any applicable securities law,
    and in connection therewith the Lender at any sale may bid for or purchase the whole or any part of the Pledged Collateral
    so offered for sale, free from any right of redemption, stay or appraisal on the part of the Borrower, all of which rights
    the Borrower hereby waives and releases. The Borrower hereby agrees that the ten (10) day notice of sale provided for in this
    subsection 4.2(a) is commercially reasonable.
	 	 	 
	 	(b)
    	The
    Lender shall be authorized at any sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers
    to persons who will represent and agree that they are purchasing the Pledged Collateral for their own account in compliance
    with the Securities Act of 1933, the rules and regulations thereunder, and all applicable state “Blue Sky” laws.
    the Lender may take all such further acts as it may in its sole good faith discretion deem necessary or advisable for the
    Lender’s protection or for compliance with any provision of law, even if such act might, whether by limiting the market
    or by adding to the costs of sale or otherwise, depreciate prices that might otherwise be obtained for the Pledged Collateral
    being sold or otherwise restrict the net proceeds available from the sale thereof. Upon consummation of any such sale, the
    Lender shall have the right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the Pledged Collateral
    so sold. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the
    part of the Borrower, and the Borrower hereby waives, to the extent permitted by law, all rights of stay or appraisal which
    the Borrower now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
    For purposes of this subsection 4.2(b), an agreement to sell all or any part of the Pledged Collateral shall be treated as
    a sale of such Pledged Collateral, and the Lender shall be free to carry out the sale of any Pledged Collateral pursuant to
    any such agreement and the Borrower shall not be entitled to the return of any such Pledged Collateral subject thereto, notwithstanding
    that after the Lender shall have entered into such an agreement, all Events of Default may have been remedied.
	 	 	 
	 	(c)	The
    proceeds of any sale of Pledged Collateral shall be applied first to the Lender’s costs and expenses of sale and then
    to the Pledge Obligations then due (in such order as the Lender may determine). The balance of the proceeds of any sale of
    the Pledged Collateral remaining after payment in full of the costs and expenses of sale and the Pledge Obligations then due
    shall be held by the Lender as additional security for any Pledge Obligations not then due and payable. The Borrower shall
    nevertheless remain liable for any deficiency.

 

    	 

     

    

 

4.3
Rights to Accept Pledged Collateral in Full or Partial Satisfaction. The Lender shall have the right to accept the Pledged
Collateral in full or partial satisfaction of the Pledge Obligations in accordance with the applicable provisions of the Uniform
Commercial Code, provided that nothing contained in this Pledge Agreement shall relieve the Lender of any consent, notice or other
obligations of a secured party required in connection with the exercise of such remedies.

 

4.4
Rights Cumulative. The rights and the remedies provided in this Pledge Agreement are cumulative and in addition to any
rights and remedies which the Lender may have under the Note or any collateral agreement entered into in connection therewith,
or at law or in equity.

 

4.5
Rights as to Final Two Installments. Notwithstanding the foregoing, the Lender and the Borrower agree that the Lender’s
sole recourse in the event the Borrower defaults on the Note installment due on September 30, 2016, shall be to cancel 13,333,333
Common Units issued to the Borrower, and the Lender’s sole recourse in the event the Borrower defaults on the Note installment
due on December 31, 2016, shall be to cancel 13,333,334 Common Units issued to the Borrower. The parties agree that the Lender
shall not, in relation to the Note installments due on September 30, 2016 and December 31, 2016, be entitled to (a) seek a judgment
against the Borrower which is recoverable from any assets of the Borrower other than the Common Units to be cancelled in relation
to the Note installment, and (b) sell such Common Units to any third party or on any market on which the Common Units are trading,
except to the extent the Borrower consents in writing in its sole discretion. In the event the Lender exercises its right to cancel
Common Units as a result of the Borrower’s default on the Note installments due on September 30, 2016 and/or December 31,
2016, the Borrower agrees that it shall not be entitled (y) to any difference between the market price of the Common Units cancelled
and the amount of the Note installment for which the cancellation occurred, or (y) to assert any claim that the Lender failed
to act in a commercially reasonably manner in disposing of the Common Units so cancelled.

 

SECTION
5. WAIVER. The Borrower hereby waives, releases and discharges, to the extent permitted by law, any right which the Borrower
has or may have at law, in equity or by statute, to require the Lender to pursue or otherwise avail itself of any rights or remedies
which it has or may have against the Borrower or any other person or entity in respect of the payment or performance of the Pledge
Obligations or to pursue or exhaust any of its rights or remedies in respect of any other security at any time held by it for
the payment or performance of the Pledge Obligations. The obligations of the Borrower hereunder shall remain in full force and
effect without regard to, and shall not be released or discharged or in any way affected by (i) the institution of any bankruptcy,
insolvency, reorganization, debt arrangement, readjustment, composition, receivership or liquidation proceedings by or against
the Borrower or Company; or (ii) any other circumstance which otherwise might constitute a defense to, or a discharge of, the
Borrower or the Company with respect to the Pledge Obligations.

 

SECTION
6. EVENT OF DEFAULT DEFINED. The occurrence of any one or more of the following events shall be an “Event of Default”
under this Pledge Agreement:

 

(a)
The Borrower shall be in default of the Borrower’s obligations under the Note.

 

(b)
The Borrower shall fail or omit to observe, perform or satisfy or be in compliance with any term, provision, covenant or agreement
in respect of any of the Pledge Obligations.

 

(c)
Any representation or warranty made or furnished to the Lender by the Borrower pursuant hereto shall prove to have been false
in any material respect when made or furnished.

 

    	 

     

    

 

(d)
The Borrower shall, or shall attempt to, encumber, subject to any further lien, sell, transfer or otherwise dispose of any of
the Pledged Collateral or any interest therein, except as may be permitted herein.

 

(e)
All or any part of the Pledged Collateral shall be attached, levied upon or seized in any legal proceedings, or held by virtue
of any security interest or distress, and such attachment, levy or seizure shall not be discharged within a period of thirty (30)
days, unless (i) the Borrower shall contest such attachment, levy or seizure diligently and in good faith by appropriate proceedings,
and the Lender shall reasonably determine that such contest will not endanger the security interest granted herein, and (ii) the
Borrower shall provide to the Lender a bond in the full amount of the claim giving rise to such attachment, levy or seizure.

 

SECTION
7. DISCHARGE OF THE BORROWER. At such time as the Note has been paid and discharged in full, then all rights and interests
in such Pledged Collateral as shall not have been sold or otherwise applied by the Lender pursuant to the terms hereof and shall
still be held by it shall forthwith be transferred and delivered to the Borrower, and the right, title and interest of the Lender
therein shall cease.

 

SECTION
8. NOTICES. Whenever any notice or other communication (a “Delivery”) is required to be given or delivered
under the terms of this Pledge Agreement, it shall be in writing and delivered by hand delivery or Federal Express or registered
or certified United States mail, postage prepaid and return receipt requested, and will be deemed to have been given or delivered
on the date such notice or other communication is so delivered. Any Delivery to the Borrower shall be addressed to Royal Energy
Resources, Inc., 56 Broad Street, Suite 2, Charleston, SC 29401, or to such other address as the Borrower may hereafter designate
to the Lender in writing; any Delivery to the Lender shall be addressed to Rhino Resource Partners, LP, 424 Lewis Hargett Circle,
Suite 250, Lexington, KY 40503, or to such other address as the Lender may hereafter designate to the Borrower in writing.

 

SECTION
9. INDEMNITY. The Borrower hereby agrees to indemnify and hold harmless the Lender (to the full extent permitted by law)
from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever
nature, and to reimburse the Lender for all costs and reasonable expenses, including reasonable legal fees and disbursements,
growing out of or resulting from any lawful action taken in respect of the Pledged Collateral, this Pledge Agreement or the administration,
enforcement or exercise of any right or remedy granted to the Lender hereunder, except for the gross negligence or willful misconduct
of the Lender. In no event shall the Lender be liable to the Borrower for any action, matter or thing in connection with this
Pledge Agreement other than to account for moneys actually received by it in accordance with the terms hereof.

 

SECTION
10. FURTHER ASSURANCES. The Borrower further agrees that the Borrower will join with the Lender in executing and that the
Borrower shall pay all reasonable expenses of filing or recording such notices, financing statements or other documents or instruments,
in form and substance reasonably satisfactory to the Lender and its counsel, as the Lender may deem necessary for the perfection
of the security interest of the Lender hereunder. In addition, the Borrower will do such further acts and things and execute and
deliver to the Lender such additional conveyances, assignments, agreements and instruments as the Lender may at any time reasonably
request in connection with the administration and enforcement of this Pledge Agreement or relative to the Pledged Collateral or
any part thereof or in order to assure and confirm unto the Lender its rights, powers and remedies hereunder.

 

    	 

     

    

 

SECTION
11. NO LIABILITY OF LENDER. Nothing in this Pledge Agreement shall be construed as an undertaking by the Lender of any
of the liabilities or obligations of the Borrower as a shareholder of the Company, including but not limited to, any obligation
to make contributions to the capital of the Company or any obligation to make any other payment to, for or on behalf of the Company.
The Lender’s rights and obligations in respect of the Pledged Collateral are those only of a secured party under the Uniform
Commercial Code.

 

SECTION
12. NO WAIVER. No failure on the part of the Lender to exercise, and no delay on its part in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or the further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder
are cumulative and are not exclusive of any other remedies at law or in equity.

 

SECTION
13. GOVERNING LAW; AMENDMENTS. This Pledge Agreement shall in all respects be construed in accordance with and governed
by the laws of the State of Delaware. The invalidity of any provision of this Pledge Agreement shall not affect the validity of
any other provision. This Pledge Agreement may not be amended or modified nor may any of the Pledged Collateral be released, except
in a writing signed by the Borrower and the Lender.

 

SECTION
14. PERSONS BOUND. This Pledge Agreement shall be binding upon the Borrower and the Lender and their respective heirs,
administrators, successors and assigns, and shall inure to the benefit of and be enforceable by the Borrower and the Lender, their
respective heirs, administrators, successors and assigns.

 

SECTION
15. HEADINGS. Section headings used herein are for convenience only and are not to affect the construction of or be taken
into consideration in interpreting this Pledge Agreement.

 

SECTION
16. ENFORCEMENT. The Borrower (a) hereby irrevocably submits to the jurisdiction of the state courts of the Charleston,
South Carolina, and to the jurisdiction of the United States District Court for the District of South Carolina, for the purpose
of any suit, action or other proceeding arising out of or based upon this Pledge Agreement or the subject matter hereof brought
by the Lender or its successors or assigns and (b) hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that the Borrower is not subject personally to the jurisdiction of
the above-named courts, that the Borrower’s property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Pledge
Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby waives and agrees not to seek any
review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such Ohio
state or federal court. The Borrower hereby consents to service of process by certified or registered mail at the address to which
notices are to be given. The Borrower agrees that the Borrower’s submission to jurisdiction and his consent to service of
process by mail are made for the express benefit of the Lender. Final judgment against the Borrower in any such action, suit or
proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided
by or pursuant to the laws of such other jurisdiction; provided, however, that the Lender may at its option bring
suit, or institute other judicial proceedings, against the Borrower in any state or federal court of the United States or of any
country or place where the Borrower may be found.

 

SECTION
17. PRONOUNS. Any pronoun used herein shall be construed in the person, number and gender which is appropriate in the context.

 

SECTION
18. COUNTERPARTS. This Pledge Agreement may be executed in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same instrument.

 

    	 

     

    

 

IN
WITNESS WHEREOF, the parties have caused this Pledge Agreement to be executed and delivered on the date first above written intending
to be legally bound hereby.

 

	LENDER:	 	BORROWER:
	 	 	 
	RHINO
    RESOURCE PARTNERS, LP, a Delaware limited partnership	 	ROYAL
    ENERGY RESOURCES, INC., a Delaware corporation
	 	 	 	 	 
	By:
    Rhino GP, LLC, its general partner 	 	 	 
	 	 	 	 
	 	 	 	 	 
	By:	 	 	By:	 
	Title:	 	 	Title:	 

 

    	 

     

    

 

 

Exhibit
“C”

 

REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made this ________day of March, 2016, by Rhino Resource
Partners, LP, a Delaware limited partnership (the “Company”) and Royal Energy Resources, Inc., a Delaware corporation
(the “Purchaser”).

 

1.
Registration Rights.

 

1.1
Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

	 	(a)	“Commission”
    shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
	 	 	 
	 	(b)	“Common
    Units” shall mean the common units of the Company.
	 	 	 
	 	(c)	The
    terms “Register,” “Registered” and “Registration” refer to a registration effected by
    preparing and filing a Registration Statement in compliance with the Securities Act, and the declaration or ordering of the
    effectiveness of such Registration Statement.
	 	 	 
	 	(d)	“Registrable
    Units” shall mean the Units.
	 	 	 
	 	(e)	“Registration
    Expenses” shall mean all expenses incurred by the Company in complying with Section 2, including, without limitation,
    all federal and state registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for
    the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such Registration
    and the reasonable fees and disbursements of counsel for the Selling Unitholders, as selling shareholders.
	 	 	 
	 	(f)	“Registration
    Statement” shall mean Form S-1 or Form S-3, whichever is applicable, in the form promulgated by the Commission or any
    substantially similar or successor form then in effect.
	 	 	 
	 	(g)	“Restriction
    Termination Date” shall mean, with respect to any Registrable Units, the earliest of (i) the date that such Registrable
    Units shall have been Registered and sold or otherwise disposed of in accordance with the intended method of distribution
    by the seller or sellers thereof set forth in the Registration Statement covering such securities or transferred in compliance
    with Rule 144 or another available exemption, and (ii) the date that an opinion of counsel to the Company containing reasonable
    assumptions (which opinion shall be subject to the reasonable approval of counsel to any affected Purchaser) shall have been
    rendered to the effect that any restrictive legend placed upon the Registrable Units under the Securities Act can be properly
    removed and such legend shall have been removed.
	 	 	 
	 	(i)
    	“Rule
    144” shall mean Rule 144 promulgated by the Commission pursuant to the Securities Act and any successor rules thereto.
	 	 	 
	 	(j)
    	“Securities
    Act” shall mean the Securities Act of 1933, as amended.

 

    	 

     

    

 

	 	(k)	“Securities
    Purchase Agreement” means the Securities Purchase Agreement entered into between the Purchaser and the Company and to
    which this Registration Rights Agreement is attached as Exhibit “C.”
	 	 	 
	 	(l)
    	“Selling
    Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Units
    pursuant to this Agreement.
	 	 	 
	 	(m)
    	“Selling
    Unitholder” shall mean a holder of Registrable Units.
	 	 	 
	 	(n)
    	“Units”
    shall mean the Common Units issuable or issued to the Purchaser pursuant to the Securities Purchase Agreement.

 

Capitalized
terms used but not defined herein shall have the meanings ascribed to such terms in the Unit Purchase Agreement.

 

1.2
Piggyback Registration

  

	 	(a)	Each
    time that the Company proposes to Register a public offering of its Common Units (including an offering of Common Units issuable
    upon conversion or exercise of other securities), the Company shall promptly give written notice of such proposed Registration
    to all holder of Registrable Units, which shall offer such holders the right to request inclusion of any Registrable Units
    in the proposed Registration.
	 	 	 
	 	(b)	Each
    holder of Registrable Units shall have ten (10) days or such longer period as shall be set forth in the notice from the receipt
    of such notice to deliver to the Company a written request specifying the number of shares of Registrable Units such holder
    intends to sell and the holder’s intended plan of disposition.
	 	 	 
	 	(c)	Upon
    receipt of a written request pursuant to Section 1.2 (b), the Company shall promptly use its best efforts to cause all such
    Registrable Units to be Registered, to the extent required to permit sale or disposition as set forth in the written request.

 

1.3
Preparation and Filing.

 

If
and whenever the Company is under an obligation pursuant to the provisions of Section 1.2 to include the Registration of any Registrable
Units, the Company shall:

 

	 	(a)	prepare
    and file with the Commission a Registration Statement with respect to such Registrable Units and use its best efforts to cause
    such Registration Statement to become and remain effective in accordance with Section 1.3(b) hereof, keeping each Selling
    Unitholder advised as to the initiation, progress and completion of the Registration;
	 	 	 
	 	(b)	prepare
    and file with the Commission such amendments and supplements to such Registration Statements and the prospectus used in connection
    therewith as may be necessary to keep such Registration Statement effective for nine months and to comply with the provisions
    of the Securities Act with respect to the sale or other disposition of all Registrable Units covered by such registration
    statement;
	 	 	 
	 	(c)	furnish
    to the Selling Unitholder such number of copies of any summary prospectus or other prospectus, including a preliminary prospectus,
    in conformity with the requirements of the Securities Act, and such other documents as such Selling Unitholder may reasonably
    request in order to facilitate the public sale or other disposition of such Registrable Units;

 

    	 

     

    

 

	 	(d)	at
    any time when a prospectus covered by such Registration Statement is required to be delivered under the Securities Act within
    the appropriate period mentioned in Section 2.3 (b) hereof, notify each Selling Unitholder of the happening of any event as
    a result of which the prospectus included in such Registration, as then in effect, includes an untrue statement of a material
    fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading
    in the light of the circumstances then existing and, if prepared by the Company, furnish to such seller a reasonable number
    of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the
    purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material
    fact required to be stated therein or necessary to make the statement therein not misleading in the light of the circumstances
    then existing.

 

1.4
Expenses.

 

The
Company shall pay all Registration Expenses incurred by the Company in complying with this Section 2; provided however that all
underwriting discounts and selling commissions applicable to the Registrable Units covered by registrations shall be borne by
the seller thereof.

 

1.5
Information Furnished by Purchaser.

 

It
shall be a condition precedent to the Company’s obligations under this Agreement as to the Selling Unitholder that such
Selling Unitholder furnish to the Company in writing such information regarding such Selling Unitholder and the distribution proposed
by such Selling Unitholder as the Company may reasonably request.

 

1.6
Indemnification.

 

1.6.1
Company’s Indemnification of Purchasers.

 

The
Company shall indemnify the Selling Unitholder, each of its officers, directors and constituent partners, and each person controlling
such Selling Unitholder, and each underwriter thereof, if any, and each of its officers, directors, constituent partners, and
each person who controls such underwriter, against all claims, losses, damages or liabilities (or actions in respect thereof)
suffered or incurred by any of them, to the extent such claims, losses, damages or liabilities arise out of or are based upon
any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus or any related Registration
Statement incident to any such Registration, or any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to actions or inaction required of the Company in
connection with any such Registration; and the Company will reimburse such Selling Unitholder, each such underwriter, each of
their officers, directors and constituent partners and each person who controls such Selling Unitholder or underwriter, for any
legal and any other expenses as reasonably incurred in connection with investigating or defending any such claim, loss, damage,
liability or action; provided however, that the indemnity contained in this Section 1.6.1 shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if settlement is effected without the consent of the Company (which consent
shall not unreasonably be withheld); and provided however, that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is based upon any untrue statement or omission based
upon written information furnished to the Company by such Selling Unitholder, underwriter, controlling person or other indemnified
person and stated to be for use in connection with the offering of securities of the Company.

 

    	 

     

    

 

1.6.2
Selling Unitholder’s Indemnification of Company.

 

The
Selling Unitholder shall indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s
Registrable Units covered by a Registration Statement, each person who controls the Company or such underwriter within the meaning
of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) suffered or incurred
by any of them and arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained
in such Registration Statement or related prospectus, or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading, or any violation by such Selling Unitholder of
any rule or regulation promulgated under the Securities Act applicable to such Selling Unitholder and relating to actions or inaction
required of such Selling Unitholder in connection with the Registration of the Registrable Units pursuant to such Registration
Statement; and will reimburse the Company, such directors, officers, partners, persons, underwriters and controlling persons for
any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage,
liability or action; such indemnification and reimbursement shall be to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement or prospectus in reliance
upon and in conformity with written information furnished to the Company by such Selling Unitholder and stated to be specifically
for use in connection with the offering of Registrable Units. Anything in the foregoing to the contrary notwithstanding, in no
event shall the aggregate obligations of a Selling Unitholder under this Section 1.6.2 to all parties that may be entitled to
indemnification hereunder exceed the amount of proceeds received by such Selling Unitholder in connection with such offering of
Registrable Units.

 

1.6.3
Indemnification Procedure.

 

Promptly
after receipt by an indemnified party under this Section 1.6 of notice of the commencement of any action which may give rise to
a claim for indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 1.6, notify the indemnifying party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to assume the defense of such claim, and shall be entitled
to select counsel for the defense of such claim with the approval of any parties entitled to indemnification, which approval shall
not be unreasonably withheld. Notwithstanding the foregoing, the parties entitled to indemnification shall have the, right to
employ, separate counsel (reasonably satisfactory to the indemnifying party) to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such indemnified parties unless the named parties to such action or proceedings
include both the indemnifying party and the indemnified parties and the indemnifying party or such indemnified parties shall have
been advised by counsel that there are one or more legal defenses available to the indemnified parties which are different from
or additional to those available to the indemnifying party (in which case, if the indemnified parties notify the indemnifying
party in writing that they elect to employ separate counsel at the reasonable expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified parties, it being
understood, however, that the indemnifying party shall not, in connection with any such action or proceeding or separate or substantially
similar or related action or proceeding in the same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate counsel at any time for all indemnified parties, which
counsel shall be designated in writing by the Purchasers of a majority of the Registrable Units).

 

    	 

     

    

 

1.6.4
Contribution.

 

If
the indemnification provided for in this Section 1.6 from an indemnifying party is unavailable to an indemnified party hereunder
in respect to any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the statements or omissions which result in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or indemnified
party and the parties’ relative intent, knowledge, access to information supplied by such indemnifying party or indemnified
party and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending any action, suit, proceeding or claim.

 

2.
Covenants of the Company.

 

The
Company agrees to:

 

	 	(a)	Notify
    the holders of Registrable Units included in a Registration Statement of the issuance by the Commission of any stop order
    suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose. The Company
    will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the
    lifting thereof at the earliest possible time.
	 	 	 
	 	(b)	Take
    all other reasonable actions necessary to facilitate disposition of the Registrable Units by the holders thereof pursuant
    to the Registration Statement.
	 	 	 
	 	(c)
    	Prior
    to the filing of the Registration Statement or any amendment thereto (whether pre-effective or post-effective), and prior
    to the filing of any prospectus or prospectus supplement related thereto, the Company will provide the Selling Unitholder
    with copies of all pages thereto, if any, which reference such Selling Unitholder.

 

3.
Miscellaneous.

 

	 	(a)	Notices
    required or permitted to be given hereunder shall be given in accordance with the notice provision of the Securities Purchase
    Agreement.
	 	 	 
	 	(b)	Failure
    of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right
    or remedy, will not operate as a waiver thereof. No waiver will be effective unless and until it is in writing and signed
    by the party giving the waiver.
	 	 	 
	 	(c)	This
    Agreement shall be governed and construed in all respects in accordance with the laws of the State of Delaware. In the event
    that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision
    shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such
    statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity
    or enforceability of any other provision hereof.

 

    	 

     

    

 

	 	(d)	This
    Agreement may not be assigned by the Purchaser unless notice of the assignment is provided to the Company, and the Company
    consents to the assignment thereof, which the Company will in all cases provide if the assignment is to an affiliate of the
    Purchaser or there is no change in beneficial holder.
	 	 	 
	 	(e)	This
    Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be
    amended only by a writing executed by the parties hereto.
	 	 	 
	 	(f)	This
    Agreement may be executed in two or more counterparts, each of which when so executed and delivered shall be deemed to be
    an original and all of which together shall be deemed to be one and the same Agreement.

 

IN
WITNESS WHEREOF, the Company has executed this Agreement for the benefit of the Purchasers by its duly authorized officer as of
the date first above written.

 

	Rhino
    Resource Partners, LP	 
	 	 
	By:
    Rhino GP, LLC, its general partner	 
	 	 	 
	 	 
	Name:
    	Joseph
    Funk	 
	Title:	 Chief
    Executive Officer	 
	 	 	 
	Royal
    Energy Resources, Inc.	 
	 	 	 
	 	 
	Name:	William
    L. Tuorto	 
	Title:
    	Chief
    Executive Officer

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