Document:

Exhibit 10.1

 

EXECUTION COPY

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

This AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of May 12, 2014 (this “Amendment”), is by and among Corinthian Colleges, Inc. (the “Domestic Borrower”), Everest Colleges Canada, Inc. (the “Canadian Borrower”; the Domestic Borrower and the Canadian Borrower are referred to herein collectively as the “Borrowers”), the Guarantors party hereto, the Lenders party hereto and Bank of America, N.A., as Domestic Administrative Agent  (in such capacity, the “Domestic Administrative Agent”) and Canadian Agent (in such capacity, the “Canadian Administrative Agent”; the Domestic Administrative Agent and the Canadian Administrative Agent are referred to herein collectively as the “Administrative Agents”). Capitalized terms which are used in this Amendment without definition and which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement.

 

R E C I T A L S:

 

WHEREAS, the Borrowers, the lenders party thereto from time to time (the “Lenders”) and the Administrative Agents are parties to that certain Fourth Amended and Restated Credit Agreement, dated as of May 17, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrowers have requested that the Administrative Agents and Lenders amend the Credit Agreement in certain respects; and

 

WHEREAS, the Administrative Agents and the Lenders party hereto are willing to amend the Credit Agreement on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, and subject to the terms and conditions hereof, the parties hereto agree as follows:

 

SECTION 1.                         AMENDMENTS TO CREDIT AGREEMENT.  Subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, the Credit Agreement is hereby amended as follows:

 

1.1                               The definition of “Applicable Rate” is hereby amended and restated in its entirety as follows:

 

“Applicable Rate” means (a) with respect to any Eurodollar Rate Committed Loan or Letter of Credit Fee, 5.00%, (b) with respect to any Base Rate Loan, 4.00% and (c) with respect to the Commitment Fee, 0.40%.

 

1.2                               The definition of “Consolidated Net Worth” set forth in Section 1.01 of the Credit Agreement is hereby amended to insert at the end thereof the following phrase:

 

plus (c) all non-cash charges related to deferred tax asset valuation allowances incurred during the fiscal quarter ended March 31, 2014 in an aggregate amount not to exceed $76,500,000.

 

 

1.3                               The definition of “Default Rate” set forth in Section 1.01 of the Credit Agreement is hereby amended to delete therefrom each reference to “2%” and insert therefor “6%”.

 

1.4                               The definition of “Domestic Collateral” set forth in Section 1.01 of the Credit Agreement is hereby amended to restate clause (iii) thereof in its entirety as follows: “(iii) all owned and leased real estate”.

 

1.5                               The definition of “Excluded Property” set forth in Section 1.01 of the Credit Agreement is hereby amended to restate clause (b) thereof in its entirety as follows: “(b) [Reserved]”.

 

1.6                               The definition of “Permitted Acquisitions” set forth in Section 1.01 of the Credit Agreement is hereby amended to restate the language prior to clause (i) thereof in its entirety as follows:

 

“Permitted Acquisitions” means Acquisitions by any Borrower or any of its Subsidiaries of Persons and/or assets that meet each of the following criteria (A) consummated prior to the Amendment No. 1 Effective Date or (B) consummated after the Amendment No. 1 Effective Date in an aggregate amount of up to (inclusive of, and not in addition to, all such Acquisitions referred to in clause (ix) of this definition) $15,000,000:

 

1.7                               The following definitions are hereby added in appropriate alphabetical order in Section 1.01 of the Credit Agreement:

 

“Agent Financial Advisor” has the meaning specified in Section 6.16.

 

“Amendment No. 1” means that certain Amendment No. 1, dated as of May 12, 2014, among the Borrowers, the Guarantors, the Lenders party thereto and the Administrative Agents.

 

“Amendment No. 1 Effective Date” means May 12, 2014.

 

“Borrower Financial Advisor” has the meaning specified in Section 6.15.

 

“Investment Bank”  has the meaning specified in Section 6.14.

 

“Specified Maximum Amount” means (a) from July 18, 2014 to but excluding August 1, 2014, $105,000,000, (b) from August 1, 2014 to but excluding August 15, 2014, $93,000,000 and (c) from and after August 15, 2014, $90,000,000.

 

“Waiver Agreement” means that certain Waiver Agreement, dated as of May 12, 2014, among the Borrowers, the Guarantors, the Lenders party thereto and the Administrative Agents.

 

2

 

1.8                               Section 2.02(c) of the Credit Agreement is hereby amended to insert the following sentence at the end thereof:

 

Notwithstanding anything to the contrary herein, from and after the Amendment No. 1 Effective Date, no Loans may be requested as, converted to or continued as Eurodollar Rate Committed Loans.

 

1.9                               Section 2.07 of the Credit Agreement is hereby amended to add the following new clause (c) immediately after clause (b) thereof and renumber the existing clause (c) as a new clause (d) thereof:

 

(c)                              From and after July 18, 2014, in the event the Total Outstandings exceed the Specified Maximum Amount as of any date, the Borrowers shall immediately make a mandatory prepayment of the Loans and/or Cash Collateralize Acceptances and L/C Obligations in an amount equal to such excess (without any reduction in the Lenders’ Commitments).

 

1.10                        Section 4.02 of the Credit Agreement is hereby amended to add the following clause (d) immediately after clause (c) thereof:

 

(d)                                 In the case of any Credit Extension occurring on and after July 18, 2014, after giving effect to such Credit Extension, the Total Outstandings shall not exceed the Specified Maximum Amount as of such date.

 

1.11                        Section 6.01 of the Credit Agreement is hereby amended to (i) delete the “and” located at the end of clause (c) thereof, (ii) replace the “.” located at the end of clause (d) thereof with “; and” and (iii) insert the following new clause (e) immediately following clause (d) thereof:

 

(e)                                  as soon as available, but in any event within 45 days after the end of the fiscal quarter ended June 30, 2014, a consolidated balance sheet of the Domestic Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the figures for the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Domestic Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Domestic Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, together with a duly completed Compliance Certificate signed by a Responsible Officer of the Domestic Borrower (such certificate to be modified to reflect that such financial statements are unaudited and no audit opinion has been issued, it being understood and agreed that such financial statements and Compliance Certificate shall be used to determine the Borrowers’ compliance with Section 7.11 as of the end of such fiscal quarter).

 

3

 

1.12                        Section 6.02 of the Credit Agreement is hereby amended to (i) delete the “and” located at the end of clause (e) thereof, (ii) renumber clause (f) thereof as clause (g) and (iii) insert the following new clause (f) immediately following clause (e) thereof:

 

(f)    within one (1) Business Day after any material communication with the U.S. Department of Education, the U.S. Securities and Exchange Commission or any other regulatory agency or accreditor, (i) notice to the Administrative Agents and the Lenders of such communication and (ii) copies of all such communication when in written form; and

 

1.13                        Article VI of the Credit Agreement is hereby amended to insert at the end thereof the following new Sections 6.14, 6.15, 6.16 and 6.17:

 

6.14                        Investment Bank.  On or prior to May 30, 2014 and at all times thereafter, engage Barclays Bank PLC (or another investment bank selected by the Borrowers and reasonably acceptable to the Required Lenders) (the “Investment Bank”) to assist the Borrowers in arranging a transaction to refinance the Obligations in full and otherwise with a scope, and subject to terms, reasonably satisfactory to the Administrative Agents and the Borrowers.  The Borrowers shall cause the Investment Bank to provide the Lenders with a monthly update call regarding the refinancing process.

 

6.15                        Financial Advisor. On or prior to May 30, 2014 and at all times thereafter, engage a financial advisor reasonably acceptable to the Required Lenders (the “Borrower Financial Advisor”) to assist the Borrowers in developing initiatives to increase free cash flow and otherwise with a scope, and subject to terms, reasonably satisfactory to the Administrative Agents.

 

6.16                        Access and Cooperation.  (a)  Promptly, upon reasonable advance notice, provide each Administrative Agent and its professionals and advisors (including Carl Marks or such other financial advisor as shall be engaged by any Administrative Agent or its counsel (the “Agent Financial Advisor”)) (i) access during normal business hours to the Loan Parties’ and their respective Subsidiaries’ property and business locations, their books and records and their management, and (ii) such information as any Administrative Agent or its professionals and advisors shall reasonably request.

 

(b)                                 Cooperate fully with each Administrative Agent and its professionals and advisors and provide assistance with any and all diligence such Administrative Agent or its professionals and advisors may require.

 

(c)                                  Authorize the Investment Bank, the Borrower Financial Advisor and the Loan Parties’ auditor, on the one hand, and the Administrative Agents and the Lenders, on the other, to communicate directly with each other regarding the Loan Parties and their respective Subsidiaries (provided that the Loan Parties and/or their representatives may require that they be present and/or participate in

 

4

 

any such communications at the election of the Loan Parties so long as the Loan Parties or such representatives use commercially reasonable efforts to be available for such communications).  The Loan Parties shall provide to the Administrative Agents and the Lenders prompt reasonable access to (i) the Investment Bank, the Borrower Financial Advisor, such auditor and any other consultant or professional retained by the Loan Parties and (ii) all related diligence materials, data rooms, opinions, reports and other communications provided by the Investment Bank, the Borrower Financial Advisor, such auditor or any other consultant or professional (other than counsel) retained by the Loan Parties.

 

6.17                        Cash Management.  Maintain all of their cash balances with Bank of America and its Affiliates, which shall be subject to a control agreement in a form reasonably acceptable to the Domestic Administrative Agent and the Domestic Borrower, except for (a) deposit accounts the balance of which consists exclusively of (i) withheld income taxes and federal state or local employment taxes required to be paid to the IRS or a Governmental Authority with respect to employees of any Loan Party and (ii) amounts required to be paid over to an employee benefit plan pursuant to applicable law on behalf of or for the benefit of employees of any Loan Party, (b) all segregated deposit accounts constituting (and the balance of which consists solely of funds set aside in connection with) payroll accounts, trust accounts, and accounts dedicated to the payment of accrued employee benefits, medical, dental and employee benefits claims to employees of any Loan Party, and (c) other deposit accounts maintained in the ordinary course of business containing cash amounts that do not exceed at any time $8,000,000 (which amount may be exceeded provided that, prior to exceeding such cap, the Borrowers shall have provided the Domestic Administrative Agent with written explanations of the reasons such cap will be exceeded and the Domestic Administrative Agent shall have consented to such increase (which consent shall not be unreasonably withheld)) for any such account and in the aggregate for all such accounts.

 

1.14                        Section 7.01(d) of the Credit Agreement is hereby amended to delete the phrase “and (ii)” and insert therefor the following phrase: “, (ii) such Liens do not encumber any real property and (iii)”.

 

1.15                        Section 7.02(b) of the Credit Agreement is hereby amended to delete the amount “$1,500,000” and insert therefor “$250,000”.

 

1.16                        Section 7.02(h) of the Credit Agreement is hereby amended to delete the amount “$20,000,000” and insert therefor “$10,000,000”.

 

1.17                        Section 7.03 of the Credit Agreement is hereby amended to (i) delete the “and” located at the end of clause (i) thereof, (ii) delete the “.” located at the end of clause (j) thereof and insert “; and” therefor and  (iii) add the following clause (k) thereof:

 

5

 

(k) Indebtedness in respect of a purchasing card program with American Express or other provider of similar services for payment of corporate expenses in the ordinary course of business consistent with past practice.

 

1.18                        Section 7.05 of the Credit Agreement is hereby amended to (i) delete the “.” located at the end of clause (l) thereof and insert “;” therefor and (ii) insert at the end thereof the following proviso:

 

provided, that, from and after the Amendment No. 1 Effective Date, neither any Borrower nor any Subsidiary thereof shall Dispose of any real property pursuant to this Section 7.05 other than the real property located at 2401 N .Harbor City Blvd., Melbourne, FL.

 

1.19                        Section 7.06 of the Credit Agreement is hereby amended to (i) insert “and” at the end of clause (b) thereof, (ii) replace the “;” with a “.” at the end of clause (c) thereof and (iii) delete in their entirety clauses (d) and (e) thereof.

 

1.20                        Section 8.01(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(b)                                 Any Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.12, 6.14, 6.15, 6.16, 6.17 or Article VII or the Waiver Agreement; or

 

1.21                        Section 10.04(a) of the Credit Agreement is hereby amended to (i) delete therefrom the phrase “and (iii)” and insert therefor the following phrase: “, (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agents from time to time in connection with ongoing monitoring of the Loan Parties and their operations, including the reasonable fees and expenses of the Agent Financial Advisor (including with respect to preparation of an enterprise valuation report that shall be shared with the Lenders but not the Borrowers) and (iv)” and (ii) delete therefrom the phrase “or any L/C Issuer)” and insert therefor the following phrase: “or any L/C Issuer and the fees and expenses of the Agent Financial Advisor)”.

 

1.22                        Section 10.04(e) of the Credit Agreement is hereby amended to insert the following phrase at the end thereof: “(and, in the case of any out-of-pocket costs and expenses, delivery of a summary invoice therefor)”.

 

SECTION 2.                         CONDITIONS.  This Amendment shall become effective as of the date hereof (the “Effective Date”) upon receipt by the Administrative Agent of:

 

(a)                                 duly executed counterparts to this Amendment from the Borrowers, the Guarantors, the Administrative Agents and the Required Lenders;

 

(b)                                 a Certificate of the Secretary or Assistant Secretary of each Borrower certifying resolutions of the Board of Directors or analogous governing body of such Borrower authorizing the execution and delivery of this Amendment and performance of this Amendment and the Credit Agreement as amended hereby; and

 

6

 

(c)                                  a duly executed Waiver Agreement dated the date hereof (the “Waiver Agreement”) by and among the Borrowers, the Guarantors party thereto, the Lenders party thereto and the Administrative Agents.

 

SECTION 3.                         AMENDMENT FEE.  The Borrowers shall pay to the Administrative Agents, for the account of each Lender that executes and delivers a signature page hereto prior to 5:00 PM (Pacific time) on May 9, 2014 (or such later date or time as the Administrative Agents may specify), an amendment fee (the “Amendment Fee”) in an amount equal to 1.50% of such Lender’s Commitment as of the Effective Date.  The Amendment Fee shall be fully earned as of the Effective Date and shall be payable in cash on July 8, 2014.

 

SECTION 4.                         REPRESENTATION AND WARRANTIES.

 

4.1                               Enforceability.  Each Loan Party hereby represents and warrants that each of this Amendment and (in the case of the Borrowers) the Credit Agreement as amended hereby is the legal, valid and binding obligation of such Loan Party and is enforceable against such Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

4.2                               Authorization; No Conflicts.  Each Loan Party hereby represents and warrants that its execution and delivery of this Amendment and performance of this Amendment and  (in the case of the Borrowers) the Credit Agreement as amended hereby (i) have been duly authorized by all necessary corporate or other organizational action on the part of such Loan Party and are within such Loan Party’s corporate or other organizational power and authority, (ii) do not (A) contravene the terms of such Loan Party’s Organization Documents, (B) conflict with or result in any breach or contravention of, or the creation of any Lien under (i) any Contractual Obligation to which such Loan Party is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Loan Party or its property is subject; or (C) violate any Law.

 

4.3                               No Default; Representations and Warranties in Loan Documents.  Each Loan Party hereby represents and warrants that, after giving effect to Section 1 hereof and the Waiver Agreement, (i) no Default has occurred and is continuing and (ii) all of the representations and warranties of such Loan Party contained in each Loan Document to which it is a party are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (except that, for purposes of this Section 4.3, the representations and warranties contained in subsection (a) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent financial statements furnished pursuant to subsection (a) and (b), respectively of Section 6.01 of the Credit Agreement).

 

SECTION 5.                         RATIFICATION AND RELEASE.

 

5.1                               Ratification.  Each Loan Party hereby (a) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, and each grant of security interests and liens in favor of each Administrative Agent, the L/C Issuers or the Lenders, as the case may be,

 

7

 

under each Loan Document, (b) agrees and acknowledges that the liens in favor of each Administrative Agent, the L/C Issuers or the Lenders under each Loan Document constitute valid, binding, enforceable and perfected first priority liens and security interests and are not subject to avoidance, disallowance or subordination pursuant to any requirement of Law, (c) agrees and acknowledges the Obligations constitute legal, valid and binding obligations of the Loan Parties and that (x) no offsets, defenses or counterclaims to the Obligations or any other causes of action with respect to the Obligations or the Loan Documents exist and (y) no portion of the Obligations is subject to avoidance, disallowance, reduction or subordination pursuant to any requirement of Law, (d) agrees that such ratification and reaffirmation is not a condition to the continued effectiveness of the Loan Documents, and (e) agrees that neither such ratification and reaffirmation, nor the Administrative Agents’, the L/C Issuers’ nor any Lender’s solicitation of such ratification and reaffirmation, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or reaffirmation from each party to the Loan Documents with respect to any subsequent modifications, consent or waiver with respect to the Credit Agreement or other Loan Documents.  This Amendment shall not constitute a waiver of, or forbearance with respect to, any Default, whether known or unknown, and the Administrative Agent and the Lenders shall reserve all rights and remedies in respect thereof. This Amendment shall constitute a “Loan Document” for purposes of the Credit Agreement.

 

5.2                               Release; Covenant Not to Sue; Acknowledgement.  (a)  Each Loan Party hereby absolutely and unconditionally releases and forever discharges each Administrative Agent, each L/C Issuer, each Swing Line Lender, each Lender and each of their respective Related Parties (each a “Released Party”) from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which any Loan Party has had, now has or has made claim to have against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever arising out of or with respect to the Obligations, the Credit Agreement, this Amendment or any other Loan Document from the beginning of time to and including the Effective Date, whether such claims, demands and causes of action are matured or unmatured or known or unknown.  It is the intention of each Loan Party in providing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified.  Each Loan Party acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agrees that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.  Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.  Nothing in this Section 5.2 shall relieve any Administrative Agent or Lender of any continuing contractual obligations under this Amendment.

 

(b)                                 Each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Released Party above that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Released Party on the basis of any claim released, remised and discharged by any Loan Party pursuant to the above release.  If any Loan Party or any of their

 

8

 

successors, assigns or other legal representatives violates the foregoing covenant, each Loan Party, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Released Party may sustain as a result of such violation, all reasonable attorneys’ fees and costs incurred by such Released Party as a result of such violation.

 

(c)                                  Each Loan Party represents and warrants that, to its knowledge, there are no liabilities, claims, suits, debts, liens, losses, causes of action, demands, rights, damages or costs, or expenses of any kind, character or nature whatsoever, fixed or contingent, which any Loan Party may have or claim to have against any Released Party arising with respect to the Obligations, the Credit Agreement, this Amendment or any other Loan Document.

 

(d)                                 Each of the Loan Parties has been advised by counsel with respect to the release contained in this Section 5.2.  Upon advice of such counsel, each of the Loan Parties hereby waives and relinquishes all of the rights and benefits each Loan Party has, or may have, with respect to the claims released under Section 1542 of the California Civil Code or any other similar statute.  Section 1542 states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

SECTION 6.                         MISCELLANEOUS.

 

6.1                               Effect.

 

(a)                                 Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import shall mean and be a reference to the Credit Agreement as modified hereby and each reference in the other Loan Documents to the Credit Agreement, “thereunder,” “thereof,” or words of like import shall mean and be a reference to the Credit Agreement as modified hereby.  This Amendment shall constitute a Loan Document.

 

(b)                                 Except as specifically set forth in this Amendment, the execution, delivery and effectiveness of this Amendment shall not (i) limit, impair, constitute an amendment, forbearance or waiver by, or otherwise affect any right, power or remedy of, any Administrative Agent or any Lender under the Credit Agreement or any other Loan Document or waive, affect or diminish any right of any Administrative Agent or any Lender to demand strict compliance and performance therewith, (ii) constitute a waiver of, or forbearance with respect to, any Default, whether known or unknown or (iii) alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or in any of the other Loan Documents, all of which are ratified and affirmed in all respects and shall continue in full force and effect.

 

6.2                               Severability.  Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable in any jurisdiction shall not impair or invalidate the

 

9

 

remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable and will not affect the effectiveness thereof in any other jurisdiction.

 

6.3                               Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument.  This Amendment may also be executed by facsimile or electronic transmission and each facsimile or electronic transmission signature hereto shall be deemed for all purposes to be an original signatory page.

 

6.4                               GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

6.5                               Section Titles.  The Section titles contained in this Amendment are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

6.6                               Reimbursement of each Administrative Agent’s Expenses.  Without limiting any of the Administrative Agents’ rights, or any of Borrowers’ obligations, under Section 10.04(a) of the Credit Agreement, each Borrower agrees to reimburse the Administrative Agents for all reasonable and documented out-of-pocket fees, costs and expenses, including the reasonable fees, costs, and expenses of the Agent Financial Advisor and Sidley Austin LLP for advice, assistance or other representation in connection with this Amendment.

 

6.7                               Entire Agreement.  This Amendment contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings or agreements.

 

[Signature Pages Follow]

 

10

 

WITNESS the due execution hereof by the respective duly authorized officers of the undersigned of this Amendment as of the date first written above.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
CORINTHIAN   COLLEGES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name:   Jack D. Massimino
    
	
 
    	
 
    	
Title:   Chairman and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EVEREST   COLLEGES CANADA, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name: Jack D. Massimino
    
	
 
    	
 
    	
Title: Executive Chairman
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
ASHMEAD   EDUCATION, INC.
    
	
 
    	
CAREER   CHOICES, INC.
    
	
 
    	
CDI   EDUCATION USA, INC.
    
	
 
    	
CORINTHIAN   PROPERTY GROUP, INC.
    
	
 
    	
CORINTHIAN   SCHOOLS, INC.
    
	
 
    	
ECAT   ACQUISITION, INC.
    
	
 
    	
ETON   EDUCATION, INC.
    
	
 
    	
FLORIDA   METROPOLITAN UNIVERSITY, INC.
    
	
 
    	
GRAND   RAPIDS EDUCATIONAL CENTER, INC.
    
	
 
    	
HEALD   CAPITAL, LLC
    
	
 
    	
HEALD   EDUCATION, LLC
    
	
 
    	
HEALD   REAL ESTATE, LLC
    
	
 
    	
MJB   ACQUISITION CORPORATION
    
	
 
    	
PEGASUS   EDUCATION, INC.
    
	
 
    	
RHODES   BUSINESS GROUP, INC.
    
	
 
    	
RHODES   COLLEGES, INC.
    
	
 
    	
SD   III-B HEALD HOLDINGS CORP.
    
	
 
    	
SEQUOIA   EDUCATION, INC.
    
	
 
    	
SOCLE   EDUCATION, INC.
    
	
 
    	
SP PE   VII-B HEALD HOLDINGS CORP.
    
	
 
    	
TITAN   SCHOOLS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name: Jack D. Massimino
    
	
 
    	
 
    	
Title: Chairman, President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
CAREER   CANADA C.F.P. LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name: Jack D. Massimino
    
	
 
    	
 
    	
Title: Executive Chairman
    
	
 
    	
 
    
	
 
    	
EVEREST   COLLEGE PHOENIX, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name: Jack D. Massimino
    
	
 
    	
 
    	
Title: Chairman, President and Chief Executive Officer
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
HEALD   COLLEGE, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Diana Scherer
    
	
 
    	
 
    	
Name: Diana Scherer
    
	
 
    	
 
    	
Title: Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
QUICKSTART   INTELLIGENCE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jack D. Massimino
    
	
 
    	
 
    	
Name: Jack D. Massimino
    
	
 
    	
 
    	
Title: Chairman of the Board
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
BANK   OF AMERICA, N.A., as Domestic   Administrative Agent 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joan Mok
    
	
 
    	
 
    	
Name: Joan Mok
    
	
 
    	
 
    	
Title: Vice President
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
BANK   OF AMERICA, N.A., acting through its Canada Branch, as Canadian Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Sylwia Durkiewicz
    
	
 
    	
 
    	
Name: Sylwia Durkiewicz
    
	
 
    	
 
    	
Title: Vice President
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
BANK   OF AMERICA, N.A., as a Domestic Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: 
    
	
 
    	
 
    	
Title:
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
BANK   OF AMERICA, N.A., acting through its Canada Branch, as a Canadian Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: 
    
	
 
    	
 
    	
Title:
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as a Domestic Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Saqib Khawaja
    
	
 
    	
 
    	
Name: Saqib Khawaja
    
	
 
    	
 
    	
Title: Vice President
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION,
    
	
 
    	
as   a Canadian Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph Rauhala
    
	
 
    	
 
    	
Name: Joseph Rauhala
    
	
 
    	
 
    	
Title: Principal Officer
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION,
    
	
 
    	
acting   through its Canada branch
    
	
 
    	
as   a Canadian Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph Rauhala
    
	
 
    	
 
    	
Name:   Joseph Rauhala
    
	
 
    	
 
    	
Title:   Principal Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Saqib Khawaja
    
	
 
    	
 
    	
Name:   Saqib Khawaja
    
	
 
    	
 
    	
Title:   Vice President
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
UNION   BANK, N.A.,
    
	
 
    	
as   a Domestic Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew Jarvic
    
	
 
    	
 
    	
Name: Andrew Jarvic
    
	
 
    	
 
    	
Title: AVP
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
BANK   OF THE WEST,
    
	
 
    	
as   a Domestic Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christiana Creekpaum
    
	
 
    	
 
    	
Name: Christiana Creekpaum
    
	
 
    	
 
    	
Title: Vice President
    

 

Signature Page to
 Amendment No. 1

 

 

	
 
    	
ONEWEST   BANK, FSB,
    
	
 
    	
as   a Domestic Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John   Farrace
    
	
 
    	
 
    	
Name: John Farrace
    
	
 
    	
 
    	
Title: EVP
    

 

Signature Page to
 Amendment No. 1Exhibit 10.35

 

Anacor Pharmaceuticals, Inc.

1020 East Meadow Circle

Palo Alto, CA  94303

 

March 18, 2014

 

VIA PDF

Paul Berns

 

Re:  Employment Terms

 

Dear Paul:

 

Anacor Pharmaceuticals, Inc. (the “Company”) is pleased to offer you the position of President and Chief Executive Officer (collectively, “CEO”) on the following terms. Your employment shall commence on March 18, 2014 or such other date as you and the Company’s Board of Directors (the “Board”) mutually agree.

 

POSITION

 

You will serve in an executive capacity and shall perform the duties of CEO as commonly associated with this position and as required by the Company. In this key position, you will primarily be responsible for general management of all operations and business of the Company. You will also serve as leader of the management team and report to the Board.  In addition, you will continue as Chairman of the Board, and the Board will continue to nominate you to serve as a member of the Board for so long as you remain the CEO of the Company.

 

During your employment with the Company, you will devote your best efforts and substantially all of your business time and attention (except for vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s general employment policies or applicable law) to the business of the Company.

 

Your employment relationship with the Company shall also be governed by the general employment policies and practices of the Company (except that if the terms of this letter differ from or are in conflict with the Company’s general employment policies or practices, this letter will control), and you will be required to abide by the general employment policies and practices of the Company made available to you.

 

COMPENSATION

 

Your initial base salary will be paid at the rate of $48,333.33 per month, which is equivalent to $580,000 annually, less standard payroll deductions and withholdings. You will be paid semi-monthly in accordance with Company practice and policy. As a full-time exempt employee, you will be expected to work the Company’s normal business hours and such additional time as may be required by the nature of your work assignments; and you will not be eligible for overtime compensation.

 

In addition, you will be eligible to earn an annual performance bonus of up to sixty-five percent (65%) of your annual base salary (“Performance Bonus”) based on the achievement of the Company’s

 

 

goals, to be established by the Board or the Compensation Committee in consultation with you.  The Performance Bonus, if earned, will be paid less all applicable taxes and withholdings. As a condition precedent to earning and receiving a Performance Bonus, you must remain an active employee with the Company through the date the bonus is paid. If your employment has been terminated for any reason before such date, whether by you or the Company, then, except as provided herein, you will not be entitled to any Performance Bonus.

 

Your compensation package will be reviewed on an annual or more frequent basis by the Board (or any authorized committee thereof), and is subject to change in the discretion of the Board (or any authorized committee thereof).

 

EQUITY

 

Subject to approval by the Board, the Company will grant you two options totaling 400,000 shares of common stock of the Company as follows:  (a) an option (the “Base Option”) to purchase 300,000 shares of the Company’s common stock, subject to vesting as described below; and (b) an option (the “Performance Option”, collectively, with the Base Option, the “Options”) to purchase 100,000 shares of the Company’s common stock, subject to vesting as described below.  Each of the Options will be granted pursuant to the Company’s 2010 Equity Incentive Plan (the “Plan”) and the Company’s standard form of Stock Option Grant Notice and Stock Option Agreement (collectively, the “Options Agreements”).  The Options will have an exercise price per share equal to the closing trading price per share of the Company’s common stock as of the date of grant. The Options will be governed in full by the terms and conditions of this letter, the Plan and your individual Option Agreements.

 

The Base Option will be subject to a four-year vesting period with twenty-five percent (25%) of the shares subject to the Option vesting on the one year anniversary of your commencement of employment, and one-forty-eighth (1/48 th) of the shares subject to the Option vesting each month thereafter, such that all of the Base Option shares shall have vested and become exercisable as of the fourth anniversary of the vesting commencement date, provided that in each instance you remain in the Company’s “Continuous Service” (as defined in the Option Agreement) through such vesting dates.

 

The Performance Option will have a term of four years from the date of grant and be subject to vesting in full if during such four-year term the volume-weighted average price (“VWAP” on Bloomberg) for the Company’s common stock exceeds $30 per share (using the VAP function on Bloomberg for the Company “ANAC US EQUITY VAP”, or successor thereof) for 30 consecutive trading days prior to the expiration date of the Performance Option, provided that you remain in the Company’s “Continuous Service” through such vesting date.  The price per share shall be adjusted proportionately in the event of any split, dividend, combination or reclassification of shares of the Company’s common stock.

 

In addition, subject to approval by the Board, you will be granted two grants of restricted stock units for a total of 350,000 shares of the Company’s common stock as follows:  (a) a restricted stock unit award of 300,000 shares of the Company’s common stock (the “Base RSU Award”), subject to vesting as described below; and (b) a restricted stock unit award of 50,000 shares of the Company’s common stock (the “Performance RSU Award” and collectively with the Base RSU Award, the “RSU Awards”), subject to vesting as described below.  The RSU Awards will be granted pursuant to the terms of the Plan and the Company’s standard form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (the “RSU Agreement”) and governed in full by the terms of this letter, the Plan and your individual RSU Agreement.

 

The Base RSU Award shall be subject to a four-year vesting period with 25% of the shares subject to the Base RSU Award vesting on the one year anniversary of your employment commencement date, and

 

 

one-fourth (1/4th) of the shares subject to the Base RSU Award vesting annually on each anniversary of your employment commencement date thereafter, provided that you remain in the Company’s “Continuous Service” (as defined in the RSU Agreement) through such vesting date.

 

The Performance RSU Award will have a term of four years from the date of grant and be subject to vesting in full if during such four-year term the volume-weighted average price (“VWAP” on Bloomberg) for the Company’s common stock exceeds $30 per share (using the VAP function on Bloomberg for the Company “ANAC US EQUITY VAP”, or successor thereof) for 30 consecutive trading days prior to the expiration date of the Performance RSU Award, provided that you remain in the Company’s “Continuous Service” through such vesting date.  The price per share shall be adjusted proportionately in the event of any split, dividend, combination or reclassification of shares of the Company’s common stock.

 

BENEFITS

 

You will be eligible to participate in the Company’s standard employee benefit plans in accordance with the terms and conditions of the plans and applicable policies that may be in effect from time to time, and provided by the Company to its executive employees generally, including but not limited to group health insurance coverage, disability insurance, life insurance, and 401(k) Plan. In addition, in accordance with the Company’s paid time off (“PTO”) policies, you will accrue PTO at an annual rate of four (4) weeks or twenty (20) days, subject to a maximum permitted accrual cap of thirty (30) days. In your fifth (5th) year of employment with the Company, you will accrue PTO at an annual rate of five (5) weeks or twenty-five (25) days, subject to a maximum permitted accrual cap of thirty-eight (38) days. The Company may modify its benefits programs from time to time in its discretion.

 

AT-WILL EMPLOYMENT RELATIONSHIP

 

Your employment relationship with the Company is at-will. Accordingly, both you and the Company may terminate the employment relationship at any time, with or without cause, and with or without advance notice.  Your employment being at-will also means that your position, job duties, work location, title and responsibility and reporting level and relationship, work schedule, compensation and benefits, as well as the Company’s personnel policies and procedures, may be changed with prospective effect, with or without notice, at any time in the sole discretion of the Company.  This “at-will” nature of your employment shall remain unchanged during your tenure as an employee and may not be changed, except in an express writing signed by you and a duly authorized member of the Board of Directors.  Notwithstanding the foregoing, you shall be entitled to severance upon certain terminations of employment as set forth below.

 

BENEFITS UPON TERMINATION OF EMPLOYMENT

 

Termination In Connection with or Following a Change of Control.  In the event that your employment is terminated as a result of an involuntary termination other than for Cause (as defined below) or if you resign for Good Reason at any time within ninety (90) days prior to and twelve (12) months following the effective date of a Change of Control (as defined below), and provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), then you will be entitled to receive severance benefits as follows, subject to your satisfaction of the release of claims agreement condition set forth below: (i) a lump sum severance payment in an amount equivalent to twenty-four (24) months of your base salary in effect as of the date of your employment termination or, if greater, the date of the Change of Control, subject to standard payroll deductions and withholdings, with such payment made on the 60th day following your Separation from Service; (ii) a lump sum payment in an amount equal to the greater of (a) two-times the Performance Bonus paid to you for the year prior to

 

 

the year in which your employment terminates, or (b) two-times the target Performance Bonus you are eligible to receive for the year in which your employment terminates, subject to standard payroll deductions and withholdings, with such payment made on the 60th day following your Separation from Service; (iii) a prorated Performance Bonus based on your target bonus for the year in which your employment terminates, based upon meeting Company goals as determined by the Board and prorated based on the period of time during the year that you were employed by the Company, subject to standard payroll deductions and withholdings, with such payment made on the 60th day following your Separation from Service; (iv) continuation of the health insurance benefits provided to you for you and your eligible dependents immediately prior to the Change of Control at Company expense pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or other applicable law, through the earlier of the date that is twenty-four (24) months after your employment termination date or the date upon which you are no longer eligible for such COBRA or other benefits under applicable law; (v) with respect to equity awards, (A) if the Change of Control occurs prior to your second anniversary of employment as CEO, each equity award, including each option to purchase shares of the Company’s Common Stock, RSU award and restricted stock award granted to you over the course of your employment with the Company and held by you on the date of termination of your employment shall become immediately vested and, if applicable, exercisable as to 100% of the then unvested portion of such awards, or (B) if the Change of Control occurs on or after your second anniversary of employment as CEO, each equity award other than the Performance Option and Performance RSU Award, but including each option to purchase shares of the Company’s Common Stock, RSU award and restricted stock award otherwise granted to you over the course of your employment with the Company and held by you on the date of termination of your employment shall become immediately vested and, if applicable, exercisable as to 100% of the then unvested portion of such awards; (vi) each stock option and stock appreciation right (if any) held by you shall remain exercisable until the earlier of the first anniversary of your termination of employment or the original expiration date thereof, provided that your option or stock appreciation right may be subject to earlier termination pursuant to the terms and conditions of the equity plan under which it is granted in connection with the Change of Control;  and (vii) the Company will pay for outplacement counseling and services for three (3) months, to be provided by a mutually agreed third party provider, commencing upon the date of your employment termination.  On the 60th day following your Separation from Service, the Company will make the first payment under clause (iv) above equal to the aggregate amount of payments that the Company would have paid through such date had such payments commenced on the Separation from Service through such 60th day, with the balance of the payments paid thereafter on the schedule described above.  In addition, you will receive payment(s) for all earned and unpaid salary and bonuses and all accrued but unused PTO as of the date of your employment termination.  Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the COBRA benefits set forth in clause (iv) above without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to you a taxable monthly payment in an amount equal to the monthly COBRA premium that you would be required to pay to continue your group health coverage in effect on the date of your employment termination (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made regardless of whether you elect COBRA continuation coverage and shall end on the earlier of (x) the date upon which you obtain other employment or (y) the date that is twenty-four (24) months after your employment termination date.

 

Termination Not In Connection with or Following a Change of Control.  In the event that your employment is terminated as a result of an involuntary termination other than for Cause (as defined below) or if you resign for Good Reason at any time more than ninety (90) days prior to or more than twelve (12) months following the effective date of a Change of Control, and provided such termination constitutes a Separation from Service, then you will be entitled to receive severance benefits as follows, subject to your satisfaction of the release of claims agreement condition set forth below:  (i) a lump sum severance payment in an amount equivalent to eighteen (18) months of your base salary in effect as of the

 

 

date of your employment termination, subject to standard payroll deductions and withholdings, with such payment made on the 60th day following your Separation from Service; (ii) a prorated Performance Bonus for the year in which your employment terminates, based upon meeting Company goals as determined by the Board and prorated based on the period of time during the year that you were employed by the Company, subject to standard payroll deductions and withholdings, with such payment made on the 60th day following your Separation from Service; (iii) continuation of the health insurance benefits provided to you for you and your eligible dependents immediately prior to your employment termination at Company expense pursuant to the terms of COBRA or other applicable law, through the earlier of the date that is eighteen (18) months after your employment termination date or the date upon which you are no longer eligible for such COBRA or other benefits under applicable law; (iv) each stock option and stock appreciation right (if any) held by you shall remain exercisable until the earlier of the first anniversary of your termination of employment or the original expiration date thereof, provided that your option or stock appreciation right may be subject to earlier termination pursuant to the terms and conditions of the plan under which it is granted in the event a Change of Control occurs within this extended exercise period; and (v) the Company will pay for outplacement counseling and services for three (3) months, to be provided by a mutually agreed third party provider, commencing upon the date of your employment termination.  Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the COBRA benefits set forth in clause (iii) above without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to you a taxable monthly payment in an amount equal to the monthly COBRA premium that you would be required to pay to continue your group health coverage in effect on the date of your employment termination (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made regardless of whether you elect COBRA continuation coverage and shall end on the earlier of (x) the date upon which you obtain other employment or (y) the date that is eighteen (18) months after your employment termination date.  On the 60th day following your Separation from Service, the Company will make the first payment under this clause (iii) equal to the aggregate amount of payments that the Company would have paid through such date had such payments commenced on the Separation from Service through such 60th day, with the balance of the payments paid thereafter on the schedule described above.  In addition, you will receive payment(s) for all earned and unpaid salary and bonuses and all accrued but unused PTO as of the date of your employment termination.

 

Termination for Cause or Resignation other than for Good Reason.  If your employment is terminated for Cause at any time or if you voluntarily resign from the Company at any time for any reason other than Good Reason in the context of a Change of Control as set forth above, then you shall not be entitled to receive payment of any severance benefits under this Agreement.  You will receive payment(s) for all earned and unpaid salary and bonuses and all accrued but unused PTO as of the date of your employment termination, and your benefits will be continued under the Company’s then existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination and in accordance with applicable law.

 

Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:

 

(a)                                 Change of Control.  “Change of Control” shall mean (i) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the assets of the Company (other than the transfer of the Company’s assets to a majority-owned subsidiary corporation); (ii) a merger or consolidation in which the Company is not the surviving corporation (unless the holders of the Company’s outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing at least fifty percent (50%) of the voting power of the corporation or other entity surviving such transaction); (iii) a reverse merger in which the Company is the surviving

 

 

corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise (unless the holders of the Company’s outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing at least fifty percent (50%) of the voting power of the Company); or (iv) the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation if the holders of the Company’s outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing at least fifty percent (50%) of the voting power of the corporation or other entity surviving such transaction; provided further that, for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 50% or more of the Outstanding Common Stock or 50% or more of the Outstanding Voting Securities by reason of an acquisition by the Company and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control.

 

(b)                                 Cause.  “Cause” shall mean the occurrence of one or more of the following as determined by the Board acting reasonably and in good faith based on the information then known to it:  (i) gross negligence or willful misconduct in the performance of duties to the Company where such gross negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its subsidiaries; (ii) your conviction of a felony involving moral turpitude or dishonesty; (iii) your knowing and active participation in a fraud or significant act of dishonesty against the Company; (iv) your intentional and material damage to the Company’s property or (v) your material breach of this letter, the Company’s written policies, or the Confidential Information Agreement (as defined below) that is not remedied by you within thirty (30) days of written notice of such breach from the Board.  Notwithstanding anything herein to the contrary, your physical or mental Disability or death shall not constitute Cause.

 

(c)                                  Good Reason.  “Good Reason” for your resignation of your employment will exist following the occurrence of any of the following without your consent:  (A) a material reduction or change in job duties, responsibilities or authority inconsistent with your position with the Company and your prior duties, responsibilities or authority; (B) a reduction of your base compensation by more than 10 percent (10%); (C) a relocation of the principal place for performance of your duties to the Company to a location more than twenty-five (25) miles from the then current headquarters location of the Company or a requirement to commute to headquarters from a location more than twenty-five (25) miles from Middleton, WI; or (D) a material breach by the Company of this letter (it being understood that the failure of any successor to the Company to assume and agree to perform the obligations of the Company set forth herein shall constitute a material breach of this letter); provided, in each case, that you give written notice to the Company of the event forming the basis of the Good Reason resignation within sixty (60) days of the date on which you receive written notice from the Company of such event, the Company fails to cure

 

 

such basis for the Good Reason resignation within thirty (30) days after receipt of your written notice and you terminate employment within one hundred twenty (120) days following the date on which you received written notice from the Company of the event forming the basis for the Good Reason resignation.

 

(d)                                 Permanent Disability.  “Permanent Disability” shall mean your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six (6) months.

 

Parachute Payments.  In the event that the acceleration and severance benefits provided for in this letter (A) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (B) but for this paragraph, would be subject to the excise tax imposed by Section 4999 of the Code, then your benefits hereunder shall be payable either:  (X) in full, or (Y) as to such lesser amount which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by you on an after-tax basis, of the greatest amount of benefits hereunder, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  Unless the Company and you otherwise agree in writing, any determination required under this paragraph shall be made in writing by the public accountants regularly engaged for audit services by the Company (the “Accountants”), whose determination shall be conclusive and binding upon you and the Company for all purposes.  For purposes of making the calculations required by this paragraph, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code.  The Company and you shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this paragraph.  The Company shall bear all costs the Accountants may incur in connection with any calculations contemplated by this paragraph.  In the event that a reduction in payments and/or benefits is required under this paragraph, such reduction shall occur in the following order: (1) reduction of cash payments; (2) reduction of acceleration of vesting of options, RSUs and shares; and (3) reduction of other benefits paid to you.  If the acceleration of vesting of options, RSUs and shares is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the highest price option grant or highest purchase price per share down to the lowest priced option grant or lowest purchase price per share.

 

Limitations and Conditions on Benefits

 

(a)                                 Income and Employment Taxes.  You agree that you shall be responsible for any applicable taxes of any nature (including any penalties or interest that may apply to such taxes) that apply to any payment made hereunder, that your receipt of any benefit hereunder is conditioned on your satisfaction of any applicable withholding or similar obligations that apply to such benefit, and that any cash payment owed hereunder will be reduced to satisfy any such withholding or similar obligations that may apply.

 

(b)                                 Section 409A of the Code.  It is intended that all of the benefits and payments under this letter satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this letter will be construed to the greatest extent possible as consistent with those provisions.  If not so exempt, this letter (and any definitions hereunder) will be construed in a manner that complies with Section 409A, and incorporates by reference all required definitions and payment terms.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section

 

 

1.409A-2(b)(2)(iii)), your right to receive any installment payments under this letter (whether severance payments, reimbursements or otherwise) will be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder will at all times be considered a separate and distinct payment.  Notwithstanding any provision to the contrary in this letter, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”, then if delayed commencement of any portion of such payments is required to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, the timing of the payments upon a Separation from Service will be delayed as follows: on the earlier to occur of (i) the date that is six months and one day after the effective date of your Separation from Service, and (ii) the date of the your death (such earlier date, the “Delayed Initial Payment Date”), the Company will (A) pay to you a lump sum amount equal to the sum of the payments upon Separation from Service that you would otherwise have received through the Delayed Initial Payment Date if the commencement of the payments had not been delayed pursuant to this paragraph, and (B) commence paying the balance of the payments in accordance with the applicable payment schedules set forth above. No interest will be due on any amounts so deferred.

 

(c)                                  Release Prior to Receipt of Benefits.  As a condition of receiving any severance or other benefits under this letter, you shall execute, and allow to become effective, a release of claims agreement (the “Release”) not later than fifty-five (55) days following your Separation from Service in substantially the form as attached hereto as Attachment A.  Unless the Release is timely executed by you, delivered to the Company, and becomes effective within the required period (the date on which the Release becomes effective, the “Release Date”), you will not receive any of the severance benefits provided for under this letter.  In no event will severance benefits be provided to you until after the Release becomes effective.

 

CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT

 

As a condition of employment, you are required to sign and abide by the Company’s Confidential Information and Invention Assignment Agreement (the “Confidential Information Agreement”), attached hereto as Attachment B.

 

INDEMNIFICATION AGREEMENT

 

You will continue to be covered by, or, if not currently covered by, entitled to enter into, the Amended and Restated Indemnification Agreement (the “Indemnification Agreement”), attached hereto as Attachment C.

 

PROTECTION OF THIRD PARTY INFORMATION

 

In your work for the Company, you will be expected not to use or disclose any confidential information or materials, including trade secrets, of any former employer or other third party to whom you have an obligation of confidentiality; and not to violate any lawful agreement that you may have with any third party. By signing this letter, you represent that you are able to perform your job duties within these guidelines, and you are not in unauthorized possession of any confidential documents or other property of any former employer or other third party. In addition, you represent that you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may limit your ability to perform your duties to the Company, or which otherwise could create a conflict of interest with the Company.

 

 

OUTSIDE ACTIVITIES

 

Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of your duties hereunder or present a conflict of interest with the Company. Subject to the restrictions set forth herein and with the prior written consent of the Board, you may serve as a director of other corporations and may devote a reasonable amount of your time to other types of business or public activities not expressly mentioned in this paragraph. The Board expressly consents to your continued service on the boards of directors you currently serve, as set forth on Attachment D.  The Board may rescind its consent to your service as a director of all other corporations or participation in other business or public activities, if the Board reasonably determines that such activities compromise or threaten to compromise the Company’s business interests or conflict with your duties to the Company.

 

During your employment by the Company, except on behalf of the Company, you will not directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint venturer, associate, representative or consultant of any other person, corporation, firm, partnership or other entity whatsoever known by you to compete with the Company (or is planning or preparing to compete with the Company), anywhere in the world, in any line of business engaged in (or planned to be engaged in) by the Company; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (but without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange.

 

MISCELLANEOUS

 

This letter, including its exhibits, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or representations concerning its subject matter. Changes in your employment terms, other than those expressly reserved herein to the Company’s or the Board’s discretion, can only be made in a writing signed by a duly-authorized officer of the Company and you. This letter agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this letter is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this letter and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law. This letter shall be construed and enforced in accordance with the laws of the State of California without regard to conflicts of law principles. Any ambiguity in this letter shall not be construed against either party as the drafter. Any waiver of a breach of this letter, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This letter may be executed in counterparts which shall be deemed to be part of one original, and facsimile and electronic image copies of signatures shall be equivalent to original signatures.

 

To ensure the rapid and economical resolution of disputes that may arise under or relate to this letter, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to the enforcement, execution, or interpretation of this letter, your employment or the termination of your employment (collectively, “Claims”), shall be resolved to the fullest extent permitted by law, by final, binding, and (to the extent permitted by law) confidential arbitration conducted by JAMS, Inc. (“JAMS”) before a single arbitrator in San Jose, California in accordance with the applicable JAMS rules then in effect (which can be found at http://www.jamsadr.com/rules-clauses/). Claims subject to this arbitration provision shall (a) include, but not be limited to, Claims pursuant to any federal, state or local law or statute, including (without limitation) the Age Discrimination in Employment Act, as

 

 

amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans With Disabilities Act of 1990; the federal Fair Labor Standards Act; the California Fair Employment and Housing Act; the Wisconsin Fair Employment Law, Wisconsin Statutes Sections 111.31-111.395; and Claims pursuant to common law, tort law or contract law, including (without limitation) Claims for breach of contract or other promise, discrimination, harassment, retaliation, wrongful discharge, fraud, misrepresentation, defamation and/or emotional distress; and (b) exclude Claims that by law are not subject to arbitration. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of all Claims and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. The Company shall pay all JAMS fees in excess of the amount of filing and other court-related fees you would have been required to pay if the Claims were asserted in a court of law. You and the Company acknowledge that, by agreeing to this arbitration procedure, both you and the Company waive the right to resolve any Claims through a trial by jury or judge or by administrative proceeding.  Nothing in this letter shall prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.

 

As required by law, this offer is subject to satisfactory proof of your identity and right to work in the United States.

 

Please sign this letter and the attached Confidential Information Agreement and return them to me within three (3) days to accept employment with the Company on the terms set forth herein. Our employment offer will expire if we do not receive the fully signed letter and Confidential Information Agreement from you within this timeframe. We are very excited about having you join us and look forward to working with you.

 

 

	
Sincerely,
    	
 
    
	
 
    	
 
    
	
Anacor Pharmaceuticals, Inc.
    	
 
    
	
 
    	
 
    
	
/s/ Anders Hove
    	
 
    
	
 
    	
 
    
	
Anders Hove,
    	
 
    
	
Authorized Representative of the Board
    	
 
    
	
 
    	
 
    
	
Accepted and Agreed:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Paul Berns
    	
 
    
	
Paul Berns
    	
 
    
	
 
    	
 
    
	
Dated:
    	
March   18, 2014

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}]]