Document:

Form of Indenture

 Exhibit 4.1 
 BIODELIVERY SCIENCES INTERNATIONAL, INC. 
 and 

                    , as Trustee

 FORM OF INDENTURE 
 Dated as of                         , 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	PAGE	 
		
	ARTICLE 1     DEFINITIONS AND INCORPORATION BY REFERENCE	  	 	1	  
			
	    1.1.	  	DEFINITIONS	  	 	1	  
			
	    1.2.	  	OTHER DEFINITIONS	  	 	4	  
			
	    1.3.	  	INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT	  	 	5	  
			
	    1.4.	  	RULES OF CONSTRUCTION	  	 	5	  
		
	ARTICLE 2     THE SECURITIES	  	 	5	  
			
	    2.1.	  	ISSUABLE IN SERIES	  	 	5	  
			
	    2.2.	  	ESTABLISHMENT OF TERMS OF SERIES OF SECURITIES	  	 	5	  
			
	    2.3.	  	EXECUTION AND AUTHENTICATION	  	 	7	  
			
	    2.4.	  	REGISTRAR AND PAYING AGENT	  	 	8	  
			
	    2.5.	  	PAYING AGENT TO HOLD ASSETS IN TRUST	  	 	8	  
			
	    2.6.	  	SECURITYHOLDER LISTS	  	 	9	  
			
	    2.7.	  	TRANSFER AND EXCHANGE	  	 	9	  
			
	    2.8.	  	REPLACEMENT SECURITIES	  	 	9	  
			
	    2.9.	  	OUTSTANDING SECURITIES	  	 	9	  
			
	    2.10.	  	WHEN TREASURY SECURITIES DISREGARDED; DETERMINATION OF HOLDERS’ ACTION	  	 	10	  
			
	    2.11.	  	TEMPORARY SECURITIES	  	 	10	  
			
	    2.12.	  	CANCELLATION	  	 	10	  
			
	    2.13.	  	PAYMENT OF INTEREST; DEFAULTED INTEREST; COMPUTATION OF INTEREST	  	 	10	  
			
	    2.14.	  	CUSIP NUMBER	  	 	11	  
			
	    2.15.	  	PROVISIONS FOR GLOBAL SECURITIES	  	 	11	  
			
	    2.16.	  	PERSONS DEEMED OWNERS	  	 	12	  
		
	ARTICLE 3     REDEMPTION	  	 	12	  
			
	    3.1.	  	NOTICES TO TRUSTEE	  	 	12	  
			
	    3.2.	  	SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED	  	 	12	  
			
	    3.3.	  	NOTICE OF REDEMPTION	  	 	12	  

					
			
	    3.4.	  	EFFECT OF NOTICE OF REDEMPTION	  	13
			
	    3.5.	  	DEPOSIT OF REDEMPTION PRICE	  	13
			
	    3.6.	  	SECURITIES REDEEMED IN PART	  	14
		
	ARTICLE 4     COVENANTS	  	14
			
	    4.1.	  	PAYMENT OF SECURITIES	  	14
			
	    4.2.	  	SEC REPORTS	  	14
			
	    4.3.	  	COMPLIANCE CERTIFICATE	  	14
			
	    4.4.	  	CORPORATE EXISTENCE	  	15
		
	ARTICLE 5    SUCCESSOR CORPORATION	  	15
			
	    5.1.	  	LIMITATION ON CONSOLIDATION, MERGER AND SALE OF ASSETS	  	15
			
	    5.2.	  	SUCCESSOR PERSON SUBSTITUTED	  	15
		
	ARTICLE 6     DEFAULTS AND REMEDIES	  	16
			
	    6.1.	  	EVENTS OF DEFAULT	  	16
			
	    6.2.	  	ACCELERATION	  	16
			
	    6.3.	  	REMEDIES	  	17
			
	    6.4.	  	WAIVER OF PAST DEFAULTS AND EVENTS OF DEFAULT	  	17
			
	    6.5.	  	CONTROL BY MAJORITY	  	17
			
	    6.6.	  	LIMITATION ON SUITS	  	17
			
	    6.7.	  	RIGHTS OF HOLDERS TO RECEIVE PAYMENT	  	18
			
	    6.8.	  	COLLECTION SUIT BY TRUSTEE	  	18
			
	    6.9.	  	TRUSTEE MAY FILE PROOFS OF CLAIM	  	18
			
	    6.10.	  	PRIORITIES	  	18
			
	    6.11.	  	UNDERTAKING FOR COSTS	  	19
		
	ARTICLE 7     TRUSTEE	  	19
			
	    7.1.	  	DUTIES OF TRUSTEE	  	19
			
	    7.2.	  	RIGHTS OF TRUSTEE	  	20
			
	    7.3.	  	INDIVIDUAL RIGHTS OF TRUSTEE	  	20
			
	    7.4.	  	TRUSTEE’S DISCLAIMER	  	21

					
			
	    7.5.	  	NOTICE OF DEFAULT	  	21
			
	    7.6.	  	REPORTS BY TRUSTEE TO HOLDERS	  	21
			
	    7.7.	  	COMPENSATION AND INDEMNITY	  	21
			
	    7.8.	  	REPLACEMENT OF TRUSTEE	  	22
			
	    7.9.	  	SUCCESSOR TRUSTEE BY CONSOLIDATION, MERGER OR CONVERSION	  	22
			
	    7.10.	  	ELIGIBILITY; DISQUALIFICATION	  	22
			
	    7.11.	  	PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY	  	23
			
	    7.12.	  	PAYING AGENTS	  	23
		
	ARTICLE 8     AMENDMENTS, SUPPLEMENTS AND WAIVERS	  	23
			
	    8.1.	  	WITHOUT CONSENT OF HOLDERS	  	23
			
	    8.2.	  	WITH CONSENT OF HOLDERS	  	23
			
	    8.3.	  	COMPLIANCE WITH TRUST INDENTURE ACT	  	24
			
	    8.4.	  	REVOCATION AND EFFECT OF CONSENTS	  	24
			
	    8.5.	  	NOTATION ON OR EXCHANGE OF SECURITIES	  	25
			
	    8.6.	  	TRUSTEE TO SIGN AMENDMENTS, ETC.	  	25
		
	ARTICLE 9     DISCHARGE OF INDENTURE; DEFEASANCE	  	25
			
	    9.1.	  	DISCHARGE OF INDENTURE	  	25
			
	    9.2.	  	LEGAL DEFEASANCE	  	26
			
	    9.3.	  	COVENANT DEFEASANCE	  	26
			
	    9.4.	  	CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE	  	26
			
	    9.5.	  	DEPOSITED MONEY AND U.S. AND FOREIGN GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS	  	27
			
	    9.6.	  	REINSTATEMENT	  	28
			
	    9.7.	  	MONEYS HELD BY PAYING AGENT	  	28
			
	    9.8.	  	MONEYS HELD BY TRUSTEE	  	28
		
	ARTICLE 10     MISCELLANEOUS	  	28
			
	    10.1.	  	TRUST INDENTURE ACT CONTROLS	  	28
			
	    10.2.	  	NOTICES	  	29

					
			
	    10.3.	  	COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS	  	29
			
	    10.4.	  	CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT	  	29
			
	    10.5.	  	STATEMENT REQUIRED IN CERTIFICATE AND OPINION	  	30
			
	    10.6.	  	RULES BY TRUSTEE AND AGENTS	  	30
			
	    10.7.	  	BUSINESS DAYS; LEGAL HOLIDAYS; PLACE OF PAYMENT	  	30
			
	    10.8.	  	GOVERNING LAW	  	30
			
	    10.9.	  	NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS	  	30
			
	    10.10.	  	NO RECOURSE AGAINST OTHERS	  	30
			
	    10.11.	  	SUCCESSORS	  	31
			
	    10.12.	  	MULTIPLE COUNTERPARTS	  	31
			
	    10.13.	  	TABLE OF CONTENTS, HEADINGS, ETC.	  	31
			
	    10.14.	  	SEVERABILITY	  	31
			
	    10.15.	  	SECURITIES IN A FOREIGN CURRENCY OR IN EUROS	  	31
			
	    10.16.	  	JUDGMENT CURRENCY	  	31

 CROSS-REFERENCE TABLE 

 

			
	 TIA SECTION
	  	 INDENTURE SECTION

	 310(a)(1)(2)(5)
	  	7.10
	 310(a)(3)(4)
	  	Inapplicable
	 310(b)
	  	7.8; 7.10
	
310©

	  	Inapplicable
		
	 311(a)(b)
	  	7.11
	
311©

	  	Inapplicable
		
	 312(a)
	  	2.6
	 312(b)(c)
	  	10.3
		
	 313(a)(b)
	  	7.6
	
313©

	  	7.6; 10.2
	 313(d)
	  	7.6
		
	 314(a)
	  	4.2; 4.4; 10.2
	 314(b)
	  	N/A
	
314©(1)(2)

	  	10.4; 10.5
	
314©(3)

	  	Inapplicable
	 314(d)
	  	Inapplicable
	 314(e)
	  	10.5
	 314(f)
	  	Inapplicable
		
	 315(a)
	  	7.1, 7.2
	 315(b)
	  	7.5; 10.2
	
315©

	  	7.1
	 315(d)
	  	7.1; 7.2
	 315(e)
	  	6.11
		
	 316(a)(last sentence)
	  	2.10
	 316(a)(1)(A)
	  	6.5
	 316(a)(1)(B)
	  	6.4
	 316(a)(2)
	  	8.2
	 316(b)
	  	6.7
	
316©

	  	8.4
		
	 317(a)(1)
	  	6.8
	 317(a)(2)
	  	6.9
	 317(b)
	  	2.5; 7.12
		
	 318(a)
	  	10.1

 Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. 

 FORM OF INDENTURE 

INDENTURE, dated as of
                    ,     , by and between BioDelivery Sciences International, Inc., a Delaware corporation, as Issuer (the
“Company”) and                      , a
                     organized under the laws of
                    , as Trustee (the “Trustee”). 
 RECITALS OF THE COMPANY 
 The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of its secured or unsecured debentures, notes, bonds or other evidences of indebtedness to be issued in one or more series (the “Securities”), as herein provided, on
such terms and up to such principal amount as may from time to time be authorized in or pursuant to one or more resolutions of the Board of Directors or by supplemental indenture. 

All things necessary to make this Indenture a valid agreement of the Company in accordance with its terms have been done, and the
execution and delivery thereof have been in all respects duly authorized by the parties hereto. 
 NOW, THEREFORE, THIS
INDENTURE WITNESSETH: 
 For and in consideration of the premises and the purchase of the Securities by the Holders thereof,
it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities of a Series thereof, as follows: 

ARTICLE 1 

DEFINITIONS AND INCORPORATION BY REFERENCE 
  

	1.1.	DEFINITIONS. 

“Affiliate” of any specified Person means any other Person which, directly or indirectly through one or more intermediaries,
controls, or is controlled by or is under common control with, such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and
“under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise. 
 “Agent” means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands. 
 “Board of Directors” means the Board of Directors of the Company or any committee
duly authorized to act therefor. 
 “Board Resolution” means a copy of a resolution certified pursuant to an
Officers’ Certificate to have been duly adopted by the Board of Directors of the Company and to be in full force and effect on the date of such certification which has been delivered to the Trustee. 

“Capital Stock” means, with respect to any Person, any and all shares or other equivalents (however designated) of capital
stock, partnership interests or any other participation, right or other interest in the nature of an equity interest in such Person or any option, warrant or other security convertible into any of the foregoing. 

“Company” means the party named as such in the first paragraph of this Indenture until a successor replaces such party pursuant
to Article 5 of this Indenture, and thereafter means the successor and any other primary obligor on the Securities. 

“Company Order” means a written order signed in the name of the Company by two Officers, one of whom must be its Chief
Executive Officer or its Chief Financial Officer. 

  
 1 

 “Company Request” means any written request signed in the name of the Company by
its Chief Executive Officer, its President, any Vice President, its Chief Financial Officer or its Treasurer and attested to by its Secretary or any Assistant Secretary. 
 “Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered. 

“Default” means any event that is, or that with the passing of time or giving of notice or both would be, an Event of Default.

 “Depository” means, with respect to the Securities of any Series issuable or issued in whole or in part in the form
of one or more Global Securities, the Person designated as Depository for such Series by the Company, which Depository shall be a clearing agency registered under the Exchange Act, until a successor Depository shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Depository” shall mean each Person who is then a Depository hereunder, and if at any time there is more than one such Person, such Persons. 

“Dollars” means the currency of the United States of America. 

“Euro” means the single currency of participating member states of the economic and monetary union as contemplated in the
Treaty on European Union. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

“Foreign Currency” means any currency or currency unit issued by a government other than the government of the United States of
America. 
 “Foreign Government Obligations” means, with respect to Securities that are denominated in a Foreign
Currency, (i) direct obligations of the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by, or
acting as an agency or instrumentality of, such government, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by such government, which, in either case under clauses (i) and (ii), are not callable
or redeemable at the option of the issuer thereof. 
 “GAAP” means generally accepted accounting principles
consistently applied as in effect in the United States of America from time to time. 
 “Global Security” or
“Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2, evidencing all or part of a Series of Securities issued to the Depository for such Series or its nominee, and
registered in the name of such Depository or nominee, and bearing the legend set forth in Section 2.15(c) (or such other legend(s) as may be applied to such Securities in accordance with Section 2.2(24)). 

“Holder” or “Securityholder” means the Person in whose name a Security is registered on the Registrar’s books.

 “Indebtedness” means (without duplication), with respect to any Person, any indebtedness at any time outstanding,
secured or unsecured, contingent or otherwise, which is for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments, or representing the balance deferred and unpaid of the purchase price of any property (excluding any balances that constitute accounts payable or trade payables, and other accrued liabilities arising in the ordinary course of business),
if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. 
 “Indenture” means this Indenture as amended, restated or supplemented from time to time. 
 “Interest Payment Date,” when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. 

“Lien” means, with respect to any property or assets of any Person, any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, lien, charge, easement, encumbrance, preference, 

  
 2 

 
priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such property or assets (including, without limitation, any capitalized
lease obligation, conditional sales or other title retention agreement having substantially the same economic effect as any of the foregoing). 
 “Maturity,” when used with respect to any Security, means the date on which the principal of such Security, or an installment of principal, becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for redemption, notice of option to elect payment or otherwise. 
 “Officer” means the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer or the Secretary of the Company, or any other officer designated by the
Board of Directors, as the case may be. 
 “Officers’ Certificate” means, with respect to any Person, a
certificate signed by the Chairman, Chief Executive Officer, President or any Senior or Executive Vice President and the Chief Financial Officer or any Treasurer of such Person, that shall comply with applicable provisions of this Indenture.

 “Opinion of Counsel” means a written opinion from legal counsel, which counsel is reasonably acceptable to the
Trustee. The counsel may be an employee of or counsel to the Company. 
 “Person” means any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government (including any agency or political subdivision thereof). 

“Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture. 
 “Responsible Officer,” when used with respect to the Trustee, means any officer within the
corporate trust department or division of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, and also means,
with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. 
 “SEC” means the United States Securities and Exchange Commission as constituted from time to time, or any successor performing substantially the same functions. 

“Securities” means the securities that are issued under this Indenture, as amended or supplemented from time to time pursuant
to this Indenture. 
 “Securities Act” means the Securities Act of 1933, as amended. 

“Series” or “Series of Securities” means each series of debentures, notes, bonds or other debt instruments of the
Company created pursuant to Sections 2.1 and 2.2. 
 “Significant Subsidiary” means (i) any direct or indirect
Subsidiary of the Company that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof, or (ii) any group
of direct or indirect Subsidiaries of the Company that, taken together as a group, would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is
in effect on the date hereof. 
 “Stated Maturity,” when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security, or such installment of principal or interest, is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such Indebtedness as the fixed date on which the principal of such Indebtedness, or any installment of interest thereon, is due and payable. 

“Subsidiary” of any specified Person means any corporation, limited liability company, partnership, joint venture, association
or other business entity, whether now existing or hereafter organized or acquired, (i) in the case of a corporation, of which more than 50% of the total voting power of the Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is held, directly or indirectly, by such 

  
 3 

 
Person or any of its Subsidiaries; or (ii) in the case of a partnership, joint venture, association or other business entity, with respect to which such Person or any of its Subsidiaries has
the power to direct or cause the direction of the management and policies of such entity by contract or otherwise, or if in accordance with GAAP such entity is consolidated with such Person for financial statement purposes. 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code Section 77aaa-77bbbb) as in effect on the date of this Indenture
(except as provided in Section 8.3). 
 “Trustee” means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the successor, and if at any time there is more than one such Person, “Trustee” as used with respect to the Securities of any Series shall mean the Trustee with respect
to Securities of that Series. 
 “U.S. Government Obligations” means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. 

 

	1.2.	OTHER DEFINITIONS. 

 The
definitions of the following terms may be found in the sections indicated as follows: 
  

			
	 TERM
	  	 DEFINED IN SECTION

	 “Bankruptcy Law”
	  	6.1
	 “Business Day”
	  	10.7
	 “Covenant Defeasance”
	  	9.3
	 “Custodian”
	  	6.1
	 “Event of Default”
	  	6.1
	 “Journal”
	  	10.15
	 “Judgment Currency”
	  	10.16
	 “Legal Defeasance”
	  	9.2
	 “Legal Holiday”
	  	10.7
	 “Market Exchange Rate”
	  	10.15
	 “Paying Agent”
	  	2.4
	 “Place of Payment”
	  	10.7
	 “Registrar”
	  	2.4
	 “Required Currency”
	  	10.16
	 “Service Agent”
	  	2.4

  
 4 

	1.3.	INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. 

 Whenever this Indenture refers to a provision of the TIA, the portion of such provision required to be incorporated herein in order for this Indenture to be qualified under the TIA is incorporated by
reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: 

“Commission” means the SEC. 
 “indenture securities” means the Securities. 
 “indenture
securityholder” means a Holder or Securityholder. 
 “indenture to be qualified” means this Indenture.

 “indenture trustee” or “institutional trustee” means the Trustee. 

“obligor on the indenture securities” means the Company. 

All other terms used in this Indenture that are defined by the TIA, defined in the TIA by reference to another statute or defined by SEC
rule have the meanings therein assigned to them. 
  

	1.4.	RULES OF CONSTRUCTION. 

 Unless
the context otherwise requires: 
 (1) a term has the meaning assigned to it herein, whether defined expressly or by reference;

 (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; 

(3) “or” is not exclusive; 
 (4) words in the singular include the plural, and in the plural include the singular; 
 (5) words used herein implying any gender shall apply to each gender; and 
 (6)
the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 

ARTICLE 2 

THE SECURITIES 
  

	2.1.	ISSUABLE IN SERIES. 

 The
aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is $[            ]. The Securities may be issued in one or more Series. All Securities
of a Series shall be identical except as may be set forth in a Board Resolution, a supplemental indenture or an Officers’ Certificate detailing the adoption of the terms thereof pursuant to the authority granted under a Board Resolution. In the
case of Securities of a Series to be issued from time to time, the Board Resolution, Officers’ Certificate or supplemental indenture may provide for the method by which specified terms (such as interest rate, Stated Maturity, record date or
date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of any matters, PROVIDED, that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture. 

 

	2.2.	ESTABLISHMENT OF TERMS OF SERIES OF SECURITIES. 

 At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2(1) and either as to such Securities within the
Series or as to the Series generally in the case of Subsections 2.2(2) through 2.2(24)) by a Board Resolution, a supplemental indenture or an Officers’ Certificate, in each case, pursuant to authority granted under a Board Resolution:

 (1) the title of the Series (which shall distinguish the Securities of that particular Series from the Securities of any
other Series); 
 (2) any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated
and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 8.5);

  
 5 

 (3) the price or prices (expressed as a percentage of the principal amount thereof) at which
the Securities of the Series will be issued; 
 (4) the date or dates on which the principal of the Securities of the Series is
payable; 
 (5) the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine
such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall
accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any Interest Payment Date; 
 (6) the place or places where the principal of, and interest and premium, if any, on, the Securities of the Series shall be payable, or the method of such payment, if by wire transfer, mail or other
means; 
 (7) if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon
which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company; 
 (8) the obligation, if
any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the period or periods within which, the price or prices at which and the terms and
conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; 
 (9) the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof, and other detailed terms and
provisions of such repurchase obligations; 
 (10) if other than denominations of
$[            ] and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable; 

(11) the forms of the Securities of the Series in bearer (if to be issued outside of the United States of America) or fully registered
form (and, if in fully registered form, whether the Securities will be issuable as Global Securities); 
 (12) if other than the
principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 6.2; 

(13) the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, including, but not
limited to, the Euro, and, if such currency of denomination is a composite currency other than the Euro, the agency or organization, if any, responsible for overseeing such composite currency; 

(14) the designation of the currency, currencies or currency units in which payment of the principal of, and interest and premium, if
any, on, the Securities of the Series will be made; 
 (15) if payments of principal of, or interest or premium, if any, on, the
Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined;

 (16) the manner in which the amounts of payment of principal of, or interest and premium, if any, on, the Securities of the
Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index; 

(17) the provisions, if any, relating to any collateral provided for the Securities of the Series; 

  
 6 

 (18) any addition to or change in the covenants set forth in Articles 4 or 5 that applies to
Securities of the Series; 
 (19) any addition to or change in the Events of Default which applies to any Securities of the
Series, and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2; 

(20) the terms and conditions, if any, for conversion of the Securities into or exchange of the Securities for shares of common stock or
preferred stock of the Company that apply to Securities of the Series; 
 (21) any depositories, interest rate calculation
agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein; 
 (22) the terms and conditions, if any, upon which the Securities shall be subordinated in right of payment to other Indebtedness of the Company; 

(23) if applicable, that the Securities of the Series, in whole or any specified part, shall be defeasible pursuant to Article 9; and

 (24) any other terms of the Securities of the Series (which terms shall not be inconsistent with the provisions of this
Indenture, except as permitted by Section 8.1, but which may modify or delete any provision of this Indenture insofar as it applies to such Series). 
 All Securities of any one Series need not be issued at the same time, and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board
Resolution, supplemental indenture or Officers’ Certificate referred to above, however, the authorized principal amount of any Series may not be increased to provide for issuances of additional Securities of such Series, unless otherwise
provided in such Board Resolution, supplemental indenture or Officers’ Certificate. 
  

	2.3.	EXECUTION AND AUTHENTICATION. 

The Securities shall be executed on behalf of the Company by two Officers of the Company or an Officer and an Assistant Secretary of the
Company. Each such signature may be either manual or facsimile. The Company’s seal may be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. 

If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid. 
 A Security shall not be valid until authenticated by the manual signature of the Trustee or an
authenticating agent. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount
provided in the Board Resolution, supplemental indenture hereto or Officers’ Certificate, upon receipt by the Trustee of a Company Order. Such Company Order may authorize authentication and delivery pursuant to oral or electronic instructions
from the Company or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing. Each Security shall be dated the date of its authentication. 

The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal
amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8. 

Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.1) shall be fully
protected in relying on: (a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that
Series or of Securities within that Series, (b) an Officers’ Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4. 

The Trustee shall have the right to decline to authenticate and deliver any Securities of any Series: (a) if the Trustee, being
advised in writing by outside counsel, determines that such action may not lawfully be taken; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or
vice-presidents shall reasonably determine that such action would expose the Trustee to personal liability, or cause it to have a conflict of interest with respect to Holders of any then outstanding Series of Securities. 

  
 7 

 The Trustee may appoint an authenticating agent acceptable to the Company to authenticate
Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Any appointment shall be evidenced by an instrument signed by an authorized officer of the Trustee, a copy of which shall be furnished to the Company.
Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. 

 

	2.4.	REGISTRAR AND PAYING AGENT. 

 The
Company shall maintain in each Place of Payment for any Series of Securities (i) an office or agency where such Securities may be presented for registration of transfer or for exchange (“Registrar”), (ii) an office or agency
where such Securities may be presented for payment (“Paying Agent”), and PROVIDED, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear
in the register for the Securities maintained by the Registrar), and (iii) an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served (“Service Agent”). The
Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office, or to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee as set forth in Section 10.2. If the Company acts as Paying Agent, it shall segregate the money held by it for the payment of principal of, and interest and premium, if any, on, the Securities
and hold it as a separate trust fund. The Company may change any Paying Agent, Registrar, co-registrar or any other Agent without notice to any Securityholder. 
 The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes, and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any Series for such purposes. The
Company hereby initially designates the Corporate Trust Office of the Trustee as such office of the Company. The Company shall give prompt written notice to the Trustee of such designation or rescission, and of any change in the location of any such
other office or agency. 
 The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a
party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying
Agent, or agent for service of notices and demands, or fails to give the foregoing notice, the Trustee shall act as such. The Company hereby appoints the Trustee as the initial Registrar, Paying Agent and Service Agent for each Series unless another
Registrar, Paying Agent or Service Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued. . 
  

	2.5.	PAYING AGENT TO HOLD ASSETS IN TRUST. 

 The Trustee as Paying Agent shall, and the Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall, hold in trust for the benefit of the Holders of
any Series of Securities or the Trustee all assets held by the Paying Agent for the payment of principal of, or interest or premium, if any, on, such Series of Securities (whether such assets have been distributed to it by the Company or any other
obligor on such Series of Securities), and the Company and the Paying Agent shall notify the Trustee in writing of any Default by the Company (or any other obligor on such Series of Securities) in making any such payment. The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed, and the Trustee may, at any time during the continuance of any payment default with respect to any Series of Securities, upon written
request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets. 

  
 8 

	2.6.	SECURITYHOLDER LISTS. 

 The
Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders of each Series of Securities. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee as of each regular record date for the payment of interest on the Securities of a Series and before each related Interest Payment Date, and at such other times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of Securityholders of each Series of Securities. 
  

	2.7.	TRANSFER AND EXCHANGE. 

 When
Securities of a Series are presented to the Registrar with a request to register the transfer thereof, the Registrar shall register the transfer as requested if the requirements of applicable law are met, and when such Securities of a Series are
presented to the Registrar with a request to exchange them for an equal principal amount of other authorized denominations of Securities of the same Series, the Registrar shall make the exchange as requested. To permit transfers and exchanges, upon
surrender of any Security for registration of transfer at the office or agency maintained pursuant to Section 2.4, the Company shall execute and the Trustee shall authenticate Securities at the Registrar’s request. 

If Securities are issued as Global Securities, the provisions of Section 2.15 shall apply. 

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. 
 Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Registrar or a co-registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the Registrar or a co-registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. 

Any exchange or transfer shall be without charge, except that the Company may require payment by the Holder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation to a transfer or exchange, but this provision shall not apply to any exchange pursuant to Section 2.11, 3.6 or 8.5. The Trustee shall not be required to register transfers of
Securities of any Series, or to exchange Securities of any Series, for a period of [            ] days before the record date for selection for redemption of such Securities. The Trustee
shall not be required to exchange or register transfers of Securities of any Series called or being called for redemption in whole or in part, except the unredeemed portion of such Security being redeemed in part. 

 

	2.8.	REPLACEMENT SECURITIES. 

 If a
mutilated Security is surrendered to the Trustee, or if the Holder of a Security presents evidence to the satisfaction of the Company and the Trustee that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. An indemnity bond may be required by the Company or the Trustee that is sufficient in
the reasonable judgment of the Company or the Trustee, as the case may be, to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. The Company may charge such Holder for the
Company’s out-of-pocket expenses in replacing a Security, including the fees and expenses of the Trustee. Every replacement Security shall constitute an original additional obligation of the Company, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder. 

 

	2.9.	OUTSTANDING SECURITIES. 

Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those delivered to it
for cancellation and those described in this Section 2.9 as not outstanding. 
 If a Security is replaced pursuant to
Section 2.8 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding until the Company and the Trustee receive proof satisfactory to each of them that the replaced Security is held by a bona fide purchaser. A
mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.8. 

  
 9 

 If a Paying Agent holds on a Redemption Date or the Stated Maturity money sufficient to pay
the principal of, premium, if any, and accrued interest on, Securities payable on that date, and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture (PROVIDED, that if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made), then on and after that date such Securities cease to be outstanding and interest on them ceases to
accrue. 
 A Security does not cease to be outstanding solely because the Company or an Affiliate holds the Security.

  

	2.10.	WHEN TREASURY SECURITIES DISREGARDED; DETERMINATION OF HOLDERS’ ACTION. 

 In determining whether the Holders of the required aggregate principal amount of the Securities of any Series have concurred in any direction, waiver or consent, the Securities of any Series owned by the
Company or any other obligor on such Securities, or by any Affiliate of any of them, shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only
Securities of such Series which the Trustee actually knows are so owned shall be so disregarded. Securities of such Series so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right so to act with respect to the Securities of such Series and that the pledgee is not the Company or any other obligor on the Securities of such Series, or an Affiliate of any of them. 

 

	2.11.	TEMPORARY SECURITIES. 

 Until
definitive Securities are ready for delivery, the Company may prepare and execute, and the Trustee shall authenticate, temporary Securities. Temporary Securities shall be substantially in the form, and shall carry all rights, of definitive
Securities, but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and execute, and the Trustee shall authenticate, definitive Securities in exchange for
temporary Securities without charge to the Holder. 
  

	2.12.	CANCELLATION. 

 All Securities
surrendered for payment, redemption or registration of transfer or exchange, or for credit against any sinking fund payment, shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee for cancellation. The Company may at
any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the
Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or
payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel, and at the written request of the Company shall dispose of, all Securities surrendered for transfer, exchange, payment or
cancellation. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.12. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 2.12, except as expressly permitted by this Indenture. 

 

	2.13.	PAYMENT OF INTEREST; DEFAULTED INTEREST; COMPUTATION OF INTEREST. 

 Except as otherwise provided as contemplated by Section 2.2 with respect to any Series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the regular record date for such interest, as provided in the Board Resolution, supplemental indenture hereto or Officers’
Certificate establishing the terms of such Series. 
 If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted amounts, plus any interest payable on defaulted amounts pursuant to Section 4.1, to the Persons who are Securityholders on a subsequent special record date, which date shall be the
[            ] day next preceding the date fixed by the Company for the payment of defaulted interest, or the next succeeding Business Day if such date is not a Business Day. At least
[            ] 

  
 10 

 
days before the special record date, the Company shall mail or cause to be mailed to each Securityholder, with a copy to the Trustee, a notice that states the special record date, the payment
date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. 
 Except as
otherwise specified as contemplated by Section 2.2 for Securities of any Series, interest on the Securities of each Series shall be computed on the basis of a 360-day year of twelve 30-day months. 

 

	2.14.	CUSIP NUMBER. 

 The Company in
issuing the Securities may use one or more “CUSIP” numbers, and, if the Company does so, the Trustee shall use the CUSIP number(s) in notices of redemption or exchange as a convenience to Holders, PROVIDED, that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP number(s) printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers printed on the Securities, and that any such
redemption or exchange shall not be affected by any defect in or omission of any such numbers. 
  

	2.15.	PROVISIONS FOR GLOBAL SECURITIES. 

(a) A Board Resolution, a supplemental indenture hereto or an Officers’ Certificate shall establish whether the Securities of a
Series shall be issued in whole or in part in the form of one or more Global Securities, and the Depository for such Global Securities or Securities. 
 (b) Notwithstanding any provisions to the contrary contained in Section 2.7 and in addition thereto, if, and only if the Depository (i) at any time is unwilling or unable to continue as
Depository for such Global Security or ceases to be a clearing agency registered under the Exchange Act and (ii) a successor Depository is not appointed by the Company within
[            ] days after the date the Company is so informed in writing or becomes aware of the same, the Company promptly will execute and deliver to the Trustee definitive Securities,
and the Trustee, upon receipt of a Company Request for the authentication and delivery of such definitive Securities (which the Company will promptly execute and deliver to the Trustee) and an Officers’ Certificate to the effect that such
Global Security shall be so exchangeable, will authenticate and deliver definitive Securities, without charge, registered in such names and in such authorized denominations as the Depository shall direct in writing (pursuant to instructions from its
direct and indirect participants or otherwise) in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms. Upon the exchange of a Global Security for definitive Securities, such Global Security
shall be canceled by the Trustee. Unless and until it is exchanged in whole or in part for definitive Securities, as provided in this Section 2.15(b), a Global Security may not be transferred except as a whole by the Depository with respect to
such Global Security to a nominee of such Depository, by a nominee of such Depository to such Depository or another nominee of such Depository or by the Depository or any such nominee to a successor Depository or a nominee of such a successor
Depository. 
 (c) Any Global Security issued hereunder shall bear a legend in substantially the following form: 

“This Security is a Global Security within the meaning of the Indenture hereinafter referred to, and is registered in the name of the
Depository or a nominee of the Depository. This Security is exchangeable for Securities registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and may not be
transferred except as a whole by the Depository to a nominee of the Depository, by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of
such a successor Depository.” 
 (d) The Depository, as a Holder, may appoint agents and otherwise authorize participants
to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture. 
 (e) Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of, and interest and premium, if any, on, any Global
Security shall be made to the Depository or its nominee in its capacity as the Holder thereof. 
 (f) Except as provided in
Section 2.15(e) above, the Company, the Trustee and any Agent shall treat a Person as the Holder of such principal amount of outstanding Securities of any Series represented by a Global 

  
 11 

 
Security as shall be specified in a written statement of the Depository (which may be in the form of a participants’ list for such Series) with respect to such Global Security, for purposes
of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture, PROVIDED, that until the Trustee is so provided with a written statement, it may treat the Depository or any other Person
in whose name a Global Security is registered as the owner of such Global Security for the purpose of receiving payment of the principal of, and any premium and (subject to Section 2.13) any interest on, such Global Security and for all other
purposes whatsoever, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. 
  

	2.16.	PERSONS DEEMED OWNERS. 

 Prior to
due presentment of a Security for registration of transfer, the Company, the Trustee, the Registrar and any agent of the Company, the Registrar or the Trustee may treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of the principal of, and any premium and (subject to Section 2.13) any interest on, such Security and for all other purposes whatsoever, and none of the Company, the Trustee, the Registrar or any
agent of the Company, the Trustee or the Registrar shall be affected by notice to the contrary. 
 ARTICLE 3 

REDEMPTION 
  

	3.1.	NOTICES TO TRUSTEE. 

 The Company
may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities, or may covenant to redeem and pay the Series of Securities or any part thereof, prior to the Stated Maturity thereof at such time and on
such terms as provided for in such Securities or the related Board Resolution, supplemental indenture or Officers’ Certificate. If a Series of Securities is redeemable and the Company elects to redeem all or part of such Series of Securities,
it shall notify the Trustee of the Redemption Date and the principal amount of Securities to be redeemed at least 45 days (unless a shorter notice shall be satisfactory to the Trustee) before the Redemption Date. Any such notice may be canceled at
any time prior to notice of such redemption being mailed to any Holder, and shall thereby be void and of no effect. 
  

	3.2.	SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. 

 Unless otherwise indicated for a particular Series of Securities by a Board Resolution, a supplemental indenture or an Officers’ Certificate, if fewer than all of the Securities of a Series are to be
redeemed, the Trustee shall select the Securities of a Series to be redeemed pro rata, by lot or by any other method that the Trustee considers fair and appropriate (unless the Company specifically directs the Trustee otherwise) and, if such
Securities are listed on any securities exchange, by a method that complies with the requirements of such exchange. 
 The
Trustee shall make the selection from Securities of a Series outstanding and not previously called for redemption, and shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed at least [            ] but not more than [            ] days
before the Redemption Date. Securities of a Series in denominations of $[            ] may be redeemed only in whole. The Trustee may select for redemption portions of the principal of
Securities of a Series that have denominations larger than $[            ]. Securities of a Series and portions of them it selects shall be in amounts of
$[            ] or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2(10), the minimum principal denomination for each Series and
integral multiples thereof. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. 
  

	3.3.	NOTICE OF REDEMPTION. 

 Unless
otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, at least [            ] days, and no more than
[            ] days, before a Redemption Date, the Company shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Securities to be redeemed at his
or her last address as the same appears on the registry books maintained by the Registrar. The notice shall identify the Securities to be redeemed and shall state: 
 (1) the Redemption Date; 

  
 12 

 (2) the redemption price, and that such redemption price shall become due and payable on the
Redemption Date; 
 (3) if any Security of a Series is being redeemed in part, the portion of the principal amount of such
Security of a Series to be redeemed and that, after the Redemption Date and upon surrender of such Security of a Series, a new Security or Securities in principal amount equal to the unredeemed portion will be issued; 

(4) the name and address of the Paying Agent; 
 (5) that Securities of a Series called for redemption must be surrendered to the Paying Agent to collect the redemption price, and the place or places where each such Security is to be surrendered for
such payment; 
 (6) that, unless the Company defaults in making the redemption payment, interest on the Securities of a Series
called for redemption ceases to accrue on the Redemption Date, and the only remaining right of the Holders of such Securities is to receive payment of the redemption price upon surrender to the Paying Agent of the Securities redeemed; 

(7) if fewer than all of the Securities of a Series are to be redeemed, the identification of the particular Securities of a Series (or
portion thereof) to be redeemed, as well as the aggregate principal amount of Securities of a Series to be redeemed and the aggregate principal amount of Securities of a Series to be outstanding after such partial redemption. 

(8) the CUSIP number, if any, printed on the Securities being redeemed; and 

(9) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the
Securities. 
 At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at
the Company’s sole expense. 
  

	3.4.	EFFECT OF NOTICE OF REDEMPTION. 

Once the notice of redemption described in Section 3.3 is mailed, Securities of a Series called for redemption become due and payable
on the Redemption Date and at the redemption price, plus interest, if any, accrued to the Redemption Date. Upon surrender to the Trustee or Paying Agent, such Securities of a Series shall be paid at the redemption price, plus accrued interest, if
any, to the Redemption Date; PROVIDED, that if the Redemption Date is after a regular interest payment record date and on or prior to the next Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant record date, as specified by the Company in the notice to the Trustee pursuant to Section 3.1. 
  

	3.5.	DEPOSIT OF REDEMPTION PRICE. 

 On
or prior to the Redemption Date (but no later than 11:00 A.M. Eastern Time on such date), the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed
on that date other than Securities or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation. 
 On and after any Redemption Date, if money sufficient to pay the redemption price of, and accrued interest on, Securities called for redemption shall have been made available in accordance with the
preceding paragraph and the Company and the Paying Agent are not prohibited from paying such moneys to Holders, the Securities called for redemption will cease to accrue interest and the only right of the Holders of such Securities will be to
receive payment of the redemption price of and, subject to the proviso in Section 3.4, accrued and unpaid interest on such Securities to the Redemption Date. If any Security called for redemption shall not be so paid, interest will be paid,

  
 13 

 
from the Redemption Date until such redemption payment is made, on the unpaid principal of the Security and any interest or premium, if any, not paid on such unpaid principal, in each case, at
the rate and in the manner provided in the Securities. 
  

	3.6.	SECURITIES REDEEMED IN PART. 

Upon surrender of a Security of a Series that is redeemed in part, the Company shall execute, and the Trustee shall authenticate, for a
Holder a new Security of the same Series equal in principal amount to the unredeemed portion of the Security surrendered. 

ARTICLE 4 

COVENANTS 
  

	4.1.	PAYMENT OF SECURITIES. 

 The
Company shall pay the principal of, and interest and premium, if any, on, each Series of Securities on the dates and in the manner provided in such Securities and this Indenture. 

An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date
money designated for and sufficient to pay such installment and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture or otherwise. 
 The Company shall pay interest on overdue principal, and overdue interest, to the extent lawful, at the rate specified in the Series of Securities. 

 

	4.2.	SEC REPORTS. 

 The Company will
deliver to the Trustee within [            ] days after the filing of the same with the SEC, copies of the quarterly and annual reports and of the information, documents and other reports,
if any, which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act; PROVIDED, HOWEVER, that each such report or document will be deemed to be so delivered to the Trustee if the Company files such
report or document with the SEC through the SEC’s EDGAR database no later than the time such report or document is required to be filed with the SEC pursuant to the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the SEC, to the extent permitted, and provide the Trustee with, such quarterly and annual reports and such information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act. The Company will also comply with the other provisions of TIA Section 314(a). 
  

	4.3.	COMPLIANCE CERTIFICATE. 

 (a) The
Company shall deliver to the Trustee, within [            ] days after the end of each fiscal year of the Company, an Officers’ Certificate which complies with TIA
Section 314(a)(4) stating that a review of the activities of the Company and its Subsidiaries during such fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and that there is no default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, or interest or premium, if any, on, the Securities is prohibited, or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.

 (b) (i) If any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise
any remedy hereunder with respect to a claimed Default under this Indenture or the Securities, within five Business Days after the Company becoming aware of such occurrence the Company shall deliver to the Trustee an Officers’ Certificate
specifying such event, notice or other action and what action the Company is taking or proposes to take with respect thereto. 

  
 14 

	4.4.	CORPORATE EXISTENCE. 

 Subject to
Article 5, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, in accordance with the organizational documents (as the same may be amended from time to time) of the
Company and the rights (charter and statutory), licenses and franchises of the Company; PROVIDED, HOWEVER, that the Company shall not be required to preserve any such right, license or franchise, or its corporate existence, if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not adverse in any material respect to the Holders. 

ARTICLE 5 

SUCCESSOR CORPORATION 
  

	5.1.	LIMITATION ON CONSOLIDATION, MERGER AND SALE OF ASSETS. 

 (a) The Company will not, in any transaction or series of transactions, merge or consolidate with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets (as an entirety or substantially as an entirety in one transaction or a series of related transactions), to any Person or Persons, unless at the time of and after giving effect thereto (i) either (A) if the
transaction or series of transactions is a merger or consolidation, the Company shall be the surviving Person of such merger or consolidation, or (B) the Person formed by such consolidation or into which the Company is merged or to which the
properties and assets of the Company are transferred (any such surviving Person or transferee Person being the “Surviving Entity”) shall be a corporation organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia, or a corporation or comparable legal entity organized under the laws of a foreign jurisdiction and shall expressly assume by a supplemental indenture executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all of the obligations of the Company (including, without limitation, the obligation to pay the principal of, and premium and interest, if any, on, the Securities and the performance of the other covenants) under the
Securities of each Series and this Indenture, and in each case, this Indenture shall remain in full force and effect; and (ii) immediately before and immediately after giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing.

 (b) In connection with any consolidation, merger or transfer of assets contemplated by this Section 5.1, the Company
shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer, and the
supplemental indenture in respect thereto, comply with this Section 5.1, and that all conditions precedent herein provided for relating to such transaction or transactions have been complied with. 

 

	5.2.	SUCCESSOR PERSON SUBSTITUTED. 

Upon any consolidation, merger or transfer of all or substantially all of the assets of the Company in accordance with Section 5.1
above, the successor corporation formed by such consolidation, or into which the Company is merged or to which such transfer is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter (except with respect to any such transfer which is a lease) the predecessor corporation shall be relieved of all obligations and
covenants under this Indenture and the Securities. 

  
 15 

 ARTICLE 6 
 DEFAULTS AND REMEDIES 
  

	6.1.	EVENTS OF DEFAULT. 

 “Events
of Default,” wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental indenture or Officers’ Certificate, it is provided that such
Series shall not have the benefit of said Event of Default: 
 (1) there is a default in the payment of any principal of, or
premium, if any, on, the Securities when the same becomes due and payable at Maturity, upon acceleration, redemption or otherwise; 
 (2) there is a default in the payment of any interest on any Security of a Series when the same becomes due and payable, and the Default continues for a period of
[            ] days; 
 (3) the Company defaults in the observance
or performance of any other covenant in the Securities of a Series or in this Indenture for [            ] days after written notice from the Trustee or the Holders of not less than
[            ]% in the aggregate principal amount of the Securities of such Series then outstanding, which notice must specify the Default, demand that it be remedied and state that the
notice is a “Notice of Default”; 
 (4) the Company or any Significant Subsidiary pursuant to or within the meaning of
any Bankruptcy Law: 
 (A) commences a voluntary case, 

(B) consents to the entry of an order for relief against it in an involuntary case, 

(C) consents to the appointment of a Custodian of it or for all or substantially all of its property, 

(D) makes a general assignment for the benefit of its creditors, or 

(E) generally is not paying its debts as they become due; 

(5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 

(A) is for relief against the Company or any Significant Subsidiary in an involuntary case; 

(B) appoints a Custodian of the Company or any Significant Subsidiary, or for all or substantially all of the property of
the Company or any Significant Subsidiary; or 
 (C) orders the liquidation of the Company or any Significant
Subsidiary, and the order or decree remains unstayed and in effect for [            ] consecutive days; or 
 (6) any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, in accordance
with Section 2.2(19). 
 The term “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law
for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. 
 The Trustee may withhold notice of any Default (except in the payment of the principal of, or interest or premium, if any, on, the Securities) to the Holders of the Securities of any Series in accordance
with Section 7.5. When a Default is cured, it ceases to exist. 
  

	6.2.	ACCELERATION. 

 If an Event of
Default with respect to Securities of any Series at the time outstanding (other than an Event of Default arising under Section 6.1(4) or (5)) occurs and is continuing, the Trustee by written notice to the Company, or the Holders of not
less than [            ]% in aggregate principal amount of the Securities of that Series then outstanding by written notice to the Company and the Trustee, may declare that the entire
principal amount of all the Securities of that Series then outstanding plus accrued and unpaid interest to the date of acceleration are immediately due and payable, in which case such amounts shall become immediately due and payable; PROVIDED,
HOWEVER, that after such acceleration but before a judgment or decree based on such acceleration is obtained by the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Securities of that Series may

  
 16 

 
rescind and annul such acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of accelerated principal, interest or premium, if any, that has
become due solely because of the acceleration, have been cured or waived, (ii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid and (iii) the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent Default or impair any right consequent thereto. In case an Event of Default
specified in Section 6.1(4) or (5) with respect to the Company occurs, such principal, premium, if any, and interest amount with respect to all of the Securities of that Series shall be due and payable immediately without any declaration
or other act on the part of the Trustee or the Holders of the Securities of that Series. 
  

	6.3.	REMEDIES. 

 If an Event of
Default with respect to Securities of any Series at the time outstanding occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of, or interest and premium, if
any, on, the Securities of that Series, or to enforce the performance of any provision of the Securities of that Series or this Indenture. 
 The Trustee may maintain a proceeding even if it does not possess any of the Securities of that Series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law. 
  

	6.4.	WAIVER OF PAST DEFAULTS AND EVENTS OF DEFAULT. 

 Subject to Sections 6.2, 6.7 and 8.2, the Holders of a majority in principal amount of the Securities of any Series then outstanding have the right to waive any existing Default or Event of Default with
respect to such Series or compliance with any provision of this Indenture (with respect to such Series) or the Securities of such Series. Upon any such waiver, such Default with respect to such Series shall cease to exist, and any Event of Default
with respect to such Series arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. This
Section 6.4 shall be in lieu of TIA Section 316(a)(1)(B), and TIA Section 316(a)(1)(B) is hereby expressly excluded from this Indenture and Section as permitted by the TIA. 

 

	6.5.	CONTROL BY MAJORITY. 

 Subject to
Sections 6.2, 6.7 and 8.2, the Holders of a majority in principal amount of the Securities of any Series then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any
trust or power conferred on the Trustee by this Indenture with respect to such Series. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture, or that the Trustee determines may be unduly prejudicial to
the rights of another Securityholder, or that may involve the Trustee in personal liability; PROVIDED, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. This Section 6.5 shall
be in lieu of TIA Section 316(a)(1)(A), and TIA Section 316(a)(1)(A) is hereby expressly excluded from this Indenture and Section as permitted by the TIA. 
  

	6.6.	LIMITATION ON SUITS. 

 Subject to
Section 6.7, a Securityholder may not institute any proceeding or pursue any remedy with respect to this Indenture or the Securities of a Series unless: 
 (1) the Holder gives to the Trustee written notice of a continuing Event of Default with respect to the Securities of that Series; 
 (2) the Holders of at least [            ]% in aggregate principal amount of the Securities of such Series then outstanding make a written
request to the Trustee to pursue the remedy; 
 (3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request; 

  
 17 

 (4) the Trustee does not comply with the request within
[            ] days after receipt of the request and the offer of indemnity; and 
 (5) no direction inconsistent with such written request has been given to the Trustee during such [            ]-day period by the Holders of a
majority in aggregate principal amount of the Securities of such Series then outstanding. 
 A Securityholder may not use this
Indenture to prejudice the rights of another Securityholder, or to obtain a preference or priority over another Securityholder. 
  

	6.7.	RIGHTS OF HOLDERS TO RECEIVE PAYMENT. 

 Notwithstanding any other provision of this Indenture, the right of any Holder of a Security of a Series to receive payment of the principal of, and interest and premium, if any, on, the Security of such
Series on or after the respective due dates expressed in the Security of such Series, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional, and shall not be impaired or affected
without the consent of the Holder. 
  

	6.8.	COLLECTION SUIT BY TRUSTEE. 

 If
an Event of Default in payment of principal, interest or premium, if any, specified in Section 6.1(1) or (2) with respect to Securities of any Series at the time outstanding occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company (or any other obligor on the Securities of that Series) for the whole amount of unpaid principal and premium, if any, and accrued interest remaining unpaid, together with interest on
overdue principal and premium, if any, and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate then borne by the Securities of that Series, and such further amounts as shall
be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, as set forth in Section 7.7. 

 

	6.9.	TRUSTEE MAY FILE PROOFS OF CLAIM. 

The Trustee may file such proofs of claim and other papers or documents, and take other actions (including sitting on a committee of
creditors), as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Securityholders
allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), any of their respective creditors or any of their respective property, and the Trustee shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims, and to distribute the same after deduction of its charges and expenses to the extent that any such charges and expenses are not paid out of the estate in any such proceedings, and
any custodian in any such judicial proceeding is hereby authorized by each Securityholder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. 

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or accept or adopt on behalf of any
Securityholder, any plan of reorganization, arrangement, adjustment or composition affecting the Securities of a Series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any
such proceedings. 
  

	6.10.	PRIORITIES. 

 If the Trustee
collects any money pursuant to this Article 6, it shall pay out the money in the following order: 
 FIRST: to the Trustee for
amounts due under Section 7.7; 
 SECOND: to Securityholders for amounts then due and unpaid for the principal of, and
interest and premium, if any, on, the Securities in respect of which, or for the benefit of which, such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities; for
principal and any premium and interest, respectively; and 
 THIRD: to the Company. 

  
 18 

 The Trustee may fix a record date and payment date for any payment to Securityholders
pursuant to this Section 6.10. At least [            ] days before such record date, the Trustee shall mail to each Securityholder a notice that states the record date, the payment
date and amount to be paid. 
  

	6.11.	UNDERTAKING FOR COSTS. 

 In any
suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than
[            ]% in principal amount of the Securities of a Series then outstanding. 
 ARTICLE 7 
 TRUSTEE 

 

	7.1.	DUTIES OF TRUSTEE. 

 (a) If an
Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the
same circumstances in the conduct of his own affairs. 
 (b) Except during the continuance of an Event of Default: 

(1) The Trustee need perform only those duties that are specifically set forth in this Indenture, and no covenants or obligations shall
be implied in this Indenture against the Trustee. 
 (2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. 

(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful
misconduct, except that: 
 (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.1.

 (2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts. 
 (3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Sections 6.2 and 6.5. 
 (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds, or otherwise incur any financial liability, in the performance of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it. 

  
 19 

 (e) Whether or not therein expressly so provided, paragraphs (a), (b), (c) and
(d) of this Section 7.1 shall govern every provision of this Indenture that in any way relates to the Trustee. 
 (f)
The Trustee and Paying Agent shall not be liable for interest on any money received by either of them, except as the Trustee and Paying Agent may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by the law. 
 (g) The Paying Agent, the Registrar and any authenticating agent shall be
entitled to the protections, immunities and standard of care set forth in paragraphs (a), (b), (c), (d) and (f) of this Section 7.1 and in Section 7.2 with respect to the Trustee. 

 

	7.2.	RIGHTS OF TRUSTEE. 

 (a) Subject
to Section 7.1: 
 (1) The Trustee may rely on, and shall be protected in acting or refraining from acting upon, any
document reasonably believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. 

(2) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 10.5. The Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. 

(3) The Trustee may act through agents and attorneys, and shall not be responsible for the misconduct or negligence of any agent
appointed by it with due care. 
 (4) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it reasonably believes to be authorized or within its rights or powers. 
 (5) The Trustee may consult with counsel
reasonably acceptable to the Trustee, which may be counsel to the Company, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted
or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. 
 (6) The Trustee shall
be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. 

(7) The Trustee shall not be deemed to have knowledge of any fact or matter (including, without limitation, a Default or Event of
Default) unless such fact or matter is known to a Responsible Officer of the Trustee. 
 (8) Unless otherwise expressly provided
herein or in the Securities of a Series or the related Board Resolution, supplemental indenture or Officers’ Certificate, the Trustee shall not have any responsibility with respect to reports, notices, certificates or other documents filed with
it hereunder, except to make them available for inspection, at reasonable times, by Securityholders, it being understood that delivery of such reports, information and documents to the Trustee is for informational purposes only and the
Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (except as
set forth in Section 4.4). 
  

	7.3.	INDIVIDUAL RIGHTS OF TRUSTEE. 

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities, and may make loans to, accept deposits
from, perform services for or otherwise deal with the Company, or any Affiliate thereof, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, shall be subject to Sections 7.10
and 7.11. 

  
 20 

	7.4.	TRUSTEE’S DISCLAIMER. 

 The
Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities (except that the Trustee represents that it is duly authorized to execute and deliver this Indenture and authenticate the Securities and perform its
obligations hereunder), and the Trustee shall not be accountable for the Company’s use of the proceeds from the sale of Securities or any money paid to the Company pursuant to the terms of this Indenture, and the Trustee shall not be
responsible for any statement in the Securities other than its certificates of authentication. 
  

	7.5.	NOTICE OF DEFAULT. 

 If a Default
or an Event of Default occurs and is continuing with respect to the Securities of any Series, and if it is known to the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series notice of the Default or the Event of
Default, as the case may be, within [            ] days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default (except if
such Default or Event of Default has been validly cured or waived before the giving of such notice). Except in the case of a Default or an Event of Default in payment of the principal of, or interest or premium, if any, on, any Security of any
Series, the Trustee may withhold the notice if and so long as the Board of Directors of the Trustee, the executive committee or any trust committee of such board and/or its Responsible Officers in good faith determine(s) that withholding the notice
is in the interests of the Securityholders of that Series. 
  

	7.6.	REPORTS BY TRUSTEE TO HOLDERS. 

If and to the extent required by the TIA, within 60 days after April 1 of each year, commencing the April 1 following the date
of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such April 1 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c). 

A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and any stock exchange on which the
Securities of that Series are listed. The Company shall promptly notify the Trustee when the Securities of any Series are listed on any stock exchange or any delisting thereof, and the Trustee shall comply with TIA Section 313(d). 

 

	7.7.	COMPENSATION AND INDEMNITY. 

 The
Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any provision of law on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee within [            ] days after receipt of request for all reasonable out-of-pocket disbursements and expenses incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel. 
 The
Company shall indemnify the Trustee for, and hold it harmless against, any and all loss or liability incurred by it in connection with the acceptance or performance of its duties under this Indenture including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek
indemnity. 
 The failure by the Trustee to so notify the Company shall not however relieve the Company of its obligations.
Notwithstanding the foregoing, the Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by the Trustee through its negligence or bad faith. To secure the payment obligations of the Company in
this Section 7.7, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee except such money or property held in trust to pay the principal of, interest and premium, if any,
on particular Securities of that Series. 
 When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.1(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. 

For purposes of this Section 7.7, the term “Trustee” shall include any trustee appointed pursuant to this Article 7.

  
 21 

	7.8.	REPLACEMENT OF TRUSTEE. 

 The
Trustee may resign with respect to the Securities of one or more Series by so notifying the Company in writing at least [            ] days in advance of such resignation. 

The Holders of a majority in principal amount of the outstanding Securities of any Series may remove the Trustee with respect to that
Series by notifying the removed Trustee in writing and may appoint a successor Trustee with respect to that Series with the consent of the Company, which consent shall not be unreasonably withheld. The Company may remove the Trustee with respect to
that Series at its election if: 
 (1) the Trustee fails to comply with, or ceases to be eligible under, Section 7.10;

 (2) the Trustee is adjudged a bankrupt or an insolvent, or an order for relief is entered with respect to the Trustee, under
any Bankruptcy Law; 
 (3) a Custodian or other public officer takes charge of the Trustee or its property; or 

(4) the Trustee otherwise becomes incapable of acting. 
 (5) If the Trustee resigns or is removed, or if a vacancy exists in the office of Trustee, with respect to any Series of Securities for any reason, the Company shall promptly appoint, by Board Resolution,
a successor Trustee. 
 If a successor Trustee with respect to the Securities of one or more Series does not take office within
[            ] days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least
[            ]% in principal amount of the outstanding Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 If the Trustee with respect to the Securities of one or more Series fails to comply with Section 7.10, any
Securityholder of the applicable Series may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 
 A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately following such delivery, (i) the retiring Trustee with respect to one
or more Series shall, subject to its rights under Section 7.7, transfer all property held by it as Trustee with respect to such Series to the successor Trustee, (ii) the resignation or removal of the retiring Trustee shall become effective
and (iii) the successor Trustee with respect to such Series shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee with respect to the Securities of one or more Series shall mail notice of its
succession to each Securityholder of such Series. 
  

	7.9.	SUCCESSOR TRUSTEE BY CONSOLIDATION, MERGER OR CONVERSION. 

 If the Trustee, or any Agent, consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, subject to Section 7.10, the
successor corporation without any further act shall be the successor Trustee or Agent, as the case may be. 
  

	7.10.	ELIGIBILITY; DISQUALIFICATION. 

This Indenture shall always have a Trustee who satisfies the requirements of TIA Sections 310(a)(1), (2) and (5) in every
respect. The Trustee (or in the case of a Trustee that is a Person included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section 310(b), including the provision in Section 310(b)(1). In addition, if the Trustee is a Person included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements of TIA Section 310(a)(2). If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.10, it shall resign
immediately in the manner and with the effect specified in this Article 7. 

  
 22 

	7.11.	PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. 

 The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein. 
  

	7.12.	PAYING AGENTS. 

 The Company
shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.12: 

(1) that it will hold all sums held by it as agent for the payment of the principal of, or interest or premium, if any, on, the
Securities (whether such sums have been paid to it by the Company or by any obligor on the Securities) in trust for the benefit of Holders of the Securities or the Trustee; 
 (2) that it will at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting
thereof; and 
 (3) that it will give the Trustee written notice within three Business Days after any failure of the Company (or
by any obligor on the Securities) in the payment of any installment of the principal of, or interest or premium, if any, on, the Securities when the same shall be due and payable. 

ARTICLE 8 

AMENDMENTS, SUPPLEMENTS AND WAIVERS 
  

	8.1.	WITHOUT CONSENT OF HOLDERS. 

 The
Company, when authorized by a Board Resolution, and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without notice to or consent of any Securityholder: 

(1) to comply with Section 5.1; 
 (2) to provide for certificated Securities in addition to uncertificated Securities; 
 (3) to comply with any requirements of the SEC under the TIA; 
 (4) to cure any
ambiguity, defect or inconsistency, or to make any other change herein or in the Securities that does not materially and adversely affect the rights of any Securityholder; 
 (5) to provide for the issuance of, and establish the form and terms and conditions of, Securities of any Series as permitted by this Indenture; or 

(6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or
more Series, and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee. 

The Trustee is hereby authorized to join with the Company in the execution of any supplemental indenture authorized or permitted by the
terms of this Indenture, and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects its own rights,
duties or immunities under this Indenture. 
  

	8.2.	WITH CONSENT OF HOLDERS. 

 (a)
The Company, when authorized by a Board Resolution, and the Trustee may amend or supplement this Indenture or the Securities of one or more Series with the written consent of the Holders of not less than a majority in aggregate principal amount of
the outstanding Securities of such Series affected by such amendment or supplement without notice to any Securityholder. The Holders of not less than a majority in aggregate principal amount of the outstanding Securities of each such Series affected
by such amendment or supplement may waive compliance by the Company in a particular instance with any provision of this Indenture or the Securities of such Series without notice to any Securityholder. Subject to Section 8.4, without the consent
of each Securityholder affected, however, an amendment, supplement or waiver may not: 
 (1) reduce the amount of Securities
whose Holders must consent to an amendment, supplement or waiver to this Indenture or the Securities; 

  
 23 

 (2) reduce the rate of, or change the time for payment of, interest on any Security;

 (3) reduce the principal, or change the Stated Maturity, of any Security, or reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous obligation; 
 (4) make any Security payable in money other than that stated
in the Security; 
 (5) change the amount or time of any payment required by the Securities, or reduce the premium payable upon
any redemption of the Securities, or change the time before which no such redemption may be made; 
 (6) waive a Default or
Event of Default in the payment of the principal of, or interest or premium, if any, on, any Security (except a rescission of acceleration of the Securities of any Series by the Holders of at least a majority in principal amount of the outstanding
Securities of such Series and a waiver of the payment default that resulted from such acceleration); 
 (7) waive a redemption
payment with respect to any Security, or change any of the provisions with respect to the redemption of any Securities; 
 (8)
make any changes in Section 6.6 or this Section 8.2, except to increase any percentage of Securities the Holders of which must consent to any matter; or 
 (9) take any other action otherwise prohibited by this Indenture to be taken without the consent of each Holder affected thereby. 
 (b) Upon the request of the Company, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the receipt by the Trustee of evidence reasonably satisfactory
to the Trustee of the consent of the Securityholders as aforesaid and of the documents described in Section 8.6, the Trustee shall join with the Company in the execution of such supplemental indenture, unless such supplemental indenture affects
the Trustee’s own rights, duties or immunities under this Indenture, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. 

(c) It shall not be necessary for the consent of the Holders under this section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. 
 After an amendment or
supplement under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing the amendment or supplement. Any failure of the Company to mail any such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any supplemental indenture. 
  

	8.3.	COMPLIANCE WITH TRUST INDENTURE ACT. 

 Every amendment to, or supplement of, this Indenture or the Securities shall comply with the TIA as then in effect. 
  

	8.4.	REVOCATION AND EFFECT OF CONSENTS. 

 Until an amendment, supplement, waiver or other action becomes effective, a consent to it by a Holder of a Security is a continuing consent conclusive and binding upon such Holder and every subsequent
Holder of the same Security or portion thereof, and of any Security issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if the Trustee receives the notice of revocation before the date the amendment, supplement, waiver or other action becomes effective. 

  
 24 

 The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be at least [    ] days prior to the first solicitation of such consent. If a record date is fixed, then, notwithstanding
the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement or waiver, or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. 
 After an amendment, supplement, waiver or other
action becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (1) through (9) of Section 8.2. In that case, the amendment, supplement, waiver or other action shall bind each Holder
of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security; PROVIDED, that any such waiver shall not impair or affect the right of
any Holder to receive payment of the principal of, and interest and premium, if any, on, a Security, on or after the respective due dates expressed in such Security, or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder. 
  

	8.5.	NOTATION ON OR EXCHANGE OF SECURITIES. 

 If an amendment, supplement or waiver changes the terms of a Security of any Series, the Trustee may request the Holder of such Security to deliver it to the Trustee. In such case, the Trustee shall place
an appropriate notation on such Security about the changed terms and return it to the Holder. Alternatively, the Company, in exchange for such Security, may issue, and the Trustee shall authenticate, a new security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplement or waiver. 
  

	8.6.	TRUSTEE TO SIGN AMENDMENTS, ETC. 

The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver the Trustee shall be entitled to receive
and, subject to Section 7.1, shall be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture. The Company may not
sign an amendment or supplement until the Board of Directors of the Company approves it. 
 ARTICLE 9 

DISCHARGE OF INDENTURE; DEFEASANCE 
  

	9.1.	DISCHARGE OF INDENTURE. 

 The
Company may terminate its obligations under the Securities of any Series and this Indenture with respect to such Series, except the obligations referred to in the last paragraph of this Section 9.1, if there shall have been canceled by the
Trustee, or delivered to the Trustee for cancellation, all Securities of such Series theretofore authenticated and delivered (other than any Securities of such Series that are asserted to have been destroyed, lost or stolen and that shall have been
replaced as provided in Section 2.8) and the Company has paid all sums payable by it hereunder or deposited all required sums with the Trustee. 
 After such delivery the Trustee upon request shall acknowledge in a writing prepared by or on behalf of the Company the discharge of the Company’s obligations under the Securities of such Series and
this Indenture, except for those surviving obligations specified below. 
 Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company in Sections 7.7, 9.5 and 9.6 shall survive. 

  
 25 

	9.2.	LEGAL DEFEASANCE. 

 The Company
may at its option, by Board Resolution, be discharged from its obligations with respect to the Securities of any Series on the date upon which the conditions set forth in Section 9.4 below are satisfied (hereinafter, “Legal
Defeasance”). For this purpose, such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Securities of such Series and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall, subject to Section 9.6, execute proper instruments acknowledging the same, as are delivered to it by the
Company), except for the following, which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of outstanding Securities of such Series to receive solely from the trust funds described in Section 9.4
and as more fully set forth in such section, payments in respect of the principal of, and interest and premium, if any, on, the Securities of such Series when such payments are due, (B) the Company’s obligations with respect to the
Securities of such Series under Sections 2.4, 2.5, 2.6, 2.7, 2.8 and 2.9, (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder (including claims of, or payments to, the Trustee under or pursuant to Section 7.7)
and (D) this Article 9. Subject to compliance with this Article 9, the Company may exercise its option under this Section 9.2 with respect to the Securities of any Series notwithstanding the prior exercise of its option under
Section 9.3 below with respect to the Securities of such Series. 
  

	9.3.	COVENANT DEFEASANCE. 

 At the
option of the Company, pursuant to a Board Resolution, the Company shall be released from its obligations with respect to the outstanding Securities of any Series under Sections 4.2 through 4.5, inclusive, and Section 5.1, with respect to the
outstanding Securities of such Series, on and after the date the conditions set forth in Section 9.4 are satisfied (hereinafter, “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified section or portion thereof, whether directly or indirectly by reason of any reference elsewhere herein to any such specified
Section or portion thereof or by reason of any reference in any such specified section or portion thereof to any other provision herein or in any other document, but the remainder of this Indenture and the Securities of any Series shall be
unaffected thereby. 
  

	9.4.	CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE. 

 The following shall be the conditions to application of Section 9.2 or Section 9.3 to the outstanding Securities of a Series: 

(1) the Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 who shall agree to comply with the provisions of this Article 9 applicable to it) as funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of the Securities, (A) money in an amount, or (B) U.S. Government Obligations or Foreign Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with
their terms will provide, not later than the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of, and accrued interest and premium, if any, on, the outstanding
Securities of such Series at the Stated Maturity of such principal, interest or premium, if any, or on dates for payment and redemption of such principal, interest and premium, if any, selected in accordance with the terms of this Indenture and of
the Securities of such Series; 
 (2) no Event of Default or Default with respect to the Securities of such Series shall have
occurred and be continuing on the date of such deposit, or shall have occurred and be continuing at any time during the period ending on the 91st day after the date of such deposit or, if longer, ending on the day following the expiration of the
longest preference period under any Bankruptcy Law applicable to the Company in respect of such deposit as specified in the Opinion of Counsel identified in paragraph (8) below (it being understood that this condition shall not be deemed
satisfied until the expiration of such period); 
 (3) such Legal Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest for purposes of the TIA with respect to any securities of the Company; 

  
 26 

 (4) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute default under, any other agreement or instrument to which the Company is a party or by which it is bound; 

(5) the Company shall have delivered to the Trustee an Opinion of Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register as an investment company under the Investment Company Act of 1940, as amended; 
 (6) in the case of an election under Section 9.2, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that or (ii) there has been a change in any applicable Federal income tax law with the effect that, and such opinion shall confirm that, the Holders of the outstanding Securities
of such Series or Persons in their positions will not recognize income, gain or loss for Federal income tax purposes solely as a result of such Legal Defeasance and will be subject to Federal income tax on the same amounts, in the same manner,
including as a result of prepayment, and at the same times as would have been the case if such Legal Defeasance had not occurred; 
 (7) in the case of an election under Section 9.3, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the outstanding Securities of such Series
will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance, and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; 
 (8) the Company shall have delivered to the Trustee an Officers’ Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided for in this Article 9 relating to either the Legal Defeasance under Section 9.2 or the Covenant Defeasance under Section 9.3 (as the case may be) have been
complied with; 
 (9) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit
under clause (1) was not made by the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or others; and 
 (10) the Company shall have paid, or duly provided for payment under terms mutually satisfactory to the Company and the Trustee, all amounts then due to the Trustee pursuant to Section 7.7.

  

	9.5.	DEPOSITED MONEY AND U.S. AND FOREIGN GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. 

All money, U.S. Government Obligations and Foreign Government Obligations (including the proceeds thereof) deposited with the Trustee
pursuant to Section 9.4 in respect of the outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying
Agent as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal, accrued interest and premium, if any, but such money need not be segregated from other funds except to the
extent required by law. 
 The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations and Foreign Government Obligations deposited pursuant to Section 9.4 or the principal, interest and premium, if any, received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Securities. 
 Anything in this Article 9 to the contrary
notwithstanding, but subject to payment of any of its outstanding fees and expenses, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money, U.S. Government Obligations or Foreign Government Obligations held
by the Trustee as provided in Section 9.4 which, in the opinion of a nationally-recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 

  
 27 

	9.6.	REINSTATEMENT. 

 If the Trustee
or Paying Agent is unable to apply any money, U.S. Government Obligations or Foreign Government Obligations in accordance with Section 9.1, 9.2, 9.3 or 9.4 by reason of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this
Article 9 until such time as the Trustee or Paying Agent is permitted to apply all such money, U.S. Government Obligations or Foreign Government Obligations, as the case may be, in accordance with Section 9.1, 9.2, 9.3 or 9.4; PROVIDED,
HOWEVER, that if the Company has made any payment of principal of, or accrued interest or premium, if any, on, any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money, U.S. Government Obligations or Foreign Government Obligations held by the Trustee or Paying Agent. 
  

	9.7.	MONEYS HELD BY PAYING AGENT. 

 In
connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee, or, if sufficient moneys have been deposited
pursuant to Section 9.1, to the Company, and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. 
  

	9.8.	MONEYS HELD BY TRUSTEE. 

 Any
moneys deposited with the Trustee or any Paying Agent or then held by the Company in trust for the payment of the principal of, or interest or premium, if any, on, any Security that are not applied but remain unclaimed by the Holder of such Security
for [            ] after the date upon which the principal of, or interest or premium, if any, on, such Security shall have respectively become due and payable shall be repaid to the
Company upon Company Request, or if such moneys are then held by the Company in trust, such moneys shall be released from such trust; and the Holder of such Security entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or any such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company, either mail to each Securityholder affected, at the address shown in the register of the Securities maintained by the Registrar, or cause to be published once a week for two
successive weeks, in a newspaper published in the English language, customarily published each Business Day and of general circulation in the City of New York, New York, a notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than [ ] days from the date of such mailing or publication, any unclaimed balance of such moneys then remaining will be repaid to the Company. After payment to the Company or the release of any money held in trust by
the Company, Securityholders entitled to the money must look only to the Company for payment as general creditors, unless applicable abandoned property law designates another Person. 

ARTICLE 10 

MISCELLANEOUS 
  

	10.1.	TRUST INDENTURE ACT CONTROLS. 

If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be. 

  
 28 

	10.2.	NOTICES. 

 Any notice or
communication shall be given in writing and delivered in Person, sent by facsimile (and receipt confirmed by telephone or electronic transmission report), delivered by commercial courier service or mailed by first-class mail, postage prepaid,
addressed as follows: 
 If to the Company: 
 BioDelivery Sciences International, Inc. 
 4131 ParkLake Avenue, Suite 225

 Raleigh, North Carolina 27612 
 Fax: (919) 582-9051 
 Attention: Chief Executive Officer 

Copy to: 

Ellenoff Grossman & Schole LLP 
 1345 Avenue of the Americas 
 New York, New York 10105 

Fax: (212) 370-7889 
 Attention: Barry I. Grossman, Esq. 
 If to the Trustee: 

[                     

                    ] 

The Company or the Trustee by written notice to the other may designate additional or different addresses for subsequent notices or
communications. Any notice or communication to the Company or the Trustee shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is confirmed by telephone or electronic transmission report, if
sent by facsimile; and three Business Days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

 Any notice or communication mailed to a Securityholder shall be mailed to such Securityholder by first-class mail, postage
prepaid, at such Securityholder’s address shown on the register kept by the Registrar. 
 Failure to mail, or any defect
in, a notice or communication to a Securityholder shall not affect its sufficiency with respect to other Securityholders. If a notice or communication to a Securityholder is mailed in the manner provided above, it shall be deemed duly given, three
Business Days after such mailing, whether or not the addressee receives it. 
 In case by reason of the suspension of regular
mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such
notice. 
 In the case of Global Securities, notices or communications to be given to Securityholders shall be given to the
Depository, in accordance with its applicable policies as in effect from time to time. 
 In addition to the manner provided for
in the foregoing provisions, notices or communications to Securityholders shall be given by the Company by release made to Reuters Economic Services and Bloomberg Business News. 

 

	10.3.	COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. 

 Securityholders of any Series may communicate pursuant to TIA Section 312(b) with other Securityholders of that Series or any other Series with respect to their rights under this Indenture or the
Securities of that Series or any other Series. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). 
  

	10.4.	CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. 

 Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: 

(1) an Officers’ Certificate (which shall include the statements set forth in Section 10.5 below) stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and 
 (2) an Opinion of Counsel (which shall include the statements set forth in Section 10.5 below) stating that, in the opinion of such counsel, all such conditions precedent have been complied
with.

  
 29 

	10.5.	STATEMENT REQUIRED IN CERTIFICATE AND OPINION. 

 Each certificate and opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 4.4) shall include: 

(1) a statement that the Person making such certificate or opinion has read such covenant or condition; 

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; 
 (3) a statement that, in the opinion of such Person, it or he has made such
examination or investigation as is necessary to enable it or him to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
 (4) a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with. 
  

	10.6.	RULES BY TRUSTEE AND AGENTS. 

The Trustee may make reasonable rules for action by or at meetings of Securityholders. The Registrar and Paying Agent may make reasonable
rules for their functions. 
  

	10.7.	BUSINESS DAYS; LEGAL HOLIDAYS; PLACE OF PAYMENT. 

 A “Business Day” is a day that is not a Legal Holiday. A “Legal Holiday” is a Saturday, a Sunday, a federally-recognized holiday or a day on which banking institutions are not
authorized or required by law, regulation or executive order to be open in the State of New York. 
 If a payment date is a
Legal Holiday at a Place of Payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. “Place of Payment” means the place or places where the
principal of, and interest and premium, if any, on, the Securities of a Series are payable as specified as contemplated by Section 2.2. If the regular record date is a Legal Holiday, the record date shall not be affected. 

 

	10.8.	GOVERNING LAW. 

 THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

  

	10.9.	NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. 

 This Indenture may not be used to interpret another indenture, loan, security or debt agreement of the Company or any Subsidiary thereof. No such indenture, loan, security or debt agreement may be used to
interpret this Indenture. 
  

	10.10.	NO RECOURSE AGAINST OTHERS. 

 A
director, officer, employee, stockholder or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture. Each Securityholder by accepting a Security waives and releases
all such liability. Such waiver and release are part of the consideration for the issuance of the Securities. 

  
 30 

	10.11.	SUCCESSORS. 

 All covenants and
agreements of the Company in this Indenture and the Securities shall bind the Company’s successors and assigns, whether so expressed or not. All agreements of the Trustee, any additional trustee and any Paying Agents in this Indenture shall
bind their respective successors and assigns. 
  

	10.12.	MULTIPLE COUNTERPARTS. 

 The
parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement. 

 

	10.13.	TABLE OF CONTENTS, HEADINGS, ETC. 

The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. 
  

	10.14.	SEVERABILITY. 

 Each provision of
this Indenture shall be considered separable, and if for any reason any provision which is not essential to the effectuation of the basic purpose of this Indenture or the Securities shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim therefor against any party hereto. 

 

	10.15.	SECURITIES IN A FOREIGN CURRENCY OR IN EUROS. 

 Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate delivered pursuant to Section 2.2 with respect to a particular Series of Securities,
whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such
time, there are outstanding Securities of any Series which are denominated in a coin or currency other than Dollars (including Euros), then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of
taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate at such time. For purposes of this Section 10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in
New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; PROVIDED, HOWEVER, in the case of Euros, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Union
(or any successor thereto) as published in the Official Journal of the European Union (such publication or any successor publication, the “Journal”). If such Market Exchange Rate is not available for any reason with respect to such
currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of Euros, the rate of exchange as published in the Journal, as of the most recent
available date, or quotations or, in the case of Euros, rates of exchange from one or more major banks in New York City or in the country of issue of the currency in question or, in the case of Euros, in Luxembourg or such other quotations or, in
the case of Euros, rates of exchange as the Trustee, upon consultation with the Company, shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series
denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture. 
 All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in the Trustee’s sole discretion,
and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Company and all Holders. 
  

	10.16.	JUDGMENT CURRENCY. 

 The Company
agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of,

  
 31 

 
or interest or premium, if any, or other amount on, the Securities of any Series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which, in accordance with normal banking procedures, the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a Business Day, in which instance, the rate of exchange used shall be the rate at which, in accordance with normal banking procedures, the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be
discharged or satisfied by any tender or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)) in any currency other than the Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering
in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due
under this Indenture. 
 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. 
  

	
	 BIODELIVERY SCIENCES INTERNATIONAL, INC.

	
	 By:

	 Name:

	 Title:

	
	 [Name of Trustee]

	
	 By:

	 Name:

	 Title:

	
	 By:

	 Name:

	 Title:

  
 32Exhibit 10.1.1

 

 

 

CONIFER HOLDINGS, INC. 
 AMENDED AND RESTATED CREDIT AGREEMENT 
 DATED AS OF SEPTEMBER 29, 2014 
 COMERICA BANK

 

 

 

 

CLOSING AGENDA
 CONIFER HOLDINGS, INC.

 

September 29, 2014

 

1.                                 Amended and Restated Credit Agreement (4310845)

 

2.                                 $17,500,000 Master Revolving Note (4310843)

 

3.                                 $7,500,000 Installment Note (4310842)

 

4.                                 Waiver Letter (4328818)

 

5.                                 Consistency Letter (43393%) (Bank and Bodman Only)

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT, made as of the 29th day of September, 2014, by and between CONIFER HOLDINGS, INC., a Michigan corporation (herein called “Company”) and COMERICA BANK (herein called “Bank”),

 

RECITALS:

 

A.                                    Company and Bank entered into a Credit Agreement dated as of April 30, 2010 (as amended, the “Existing Credit Agreement”).

 

B.                                    Company and Bank desire to amend and restate the Existing Credit Agreement in its entirety.

 

C.                                    Company desires to obtain certain credit facilities from Bank.

 

D.                                    Bank is willing to extend such credit to Company on the terms and conditions herein set forth.

 

NOW, THEREFORE, Bank and Company agree as follows:

 

WITNESSETH:

 

1.                                      DEFINITIONS

 

For the purposes of this Agreement the following terms will have the following meanings:

 

“Advance” shall mean a borrowing requested by Company and made by Bank under Section 2 of this Agreement.

 

“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and executive officers of such Person), controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation for the purposes of this definition if such Person possesses, directly or indirectly, the power (1) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or (ii) to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise,

 

“Applicable L/C Commission Rate” shall mean two and three quarters percent (2 3/4%) per annum.

 

“Best” shall mean A,M. Best Company and its successors.

 

 

“Business Day” shall mean any day on which commercial banks are open for domestic and international business (including dealings in foreign exchange) in Detroit, London and New York.

 

“Capital Expenditure” shall mean, without duplication, any payment made directly or indirectly for the purpose of acquiring or constructing fixed assets, real property or equipment which in accordance with GAAP would be added as a debit to the fixed asset account of Company, including, without limitation, amounts paid or payable under any conditional sale or other title retention agreement or under any lease or other periodic payment arrangement which is of such a nature that payment obligations of Company or a Subsidiary, as applicable, thereunder would be required by GAAP to be capitalized and shown as liabilities on the balance sheet of Company and its consolidated Subsidiaries.

 

“Capital Lease” shall mean any lease of any property (whether real, personal or mixed) by Company or any Subsidiary as lessee which, in conformity with GAAP, is, or is required to be accounted for as a capital lease on the balance sheet of Company and its consolidated Subsidiaries.

 

“Consolidated” or “Consolidating” shall mean, when used with reference to any financial term in this Agreement, the aggregate for two or more Persons of the amounts signified by such term for all such Persons determined on a consolidated or combined, as applicable, basis in accordance with GAAP. Unless otherwise specified herein, references to Consolidated financial statements or data of Company includes consolidation with its Subsidiaries in accordance with GAAP or SAP, as applicable.

 

“Consolidated Net Income” shall mean, the net income (or loss) (after taxes) of Company and its consolidated Subsidiaries for such period, all as determined in accordance with GAAP.

 

“Dividend Paying Capacity” shall mean for any Insurance Subsidiary for any fiscal year, the greater of (i) net income of such Insurance Subsidiary for such year or (ii) the sum of ten percent (10%) of statutory capital for such Insurance Subsidiary as of the last day of such fiscal year, all as determined in accordance with GAAP or SAP, as applicable.

 

“Environmental Laws” shall mean all federal, state and local laws including statutes, regulations, ordinances, codes, rules, and other governmental restrictions and requirements, relating to environmental pollution, contamination or other impairment of the environment or any hazardous or toxic substances of any nature. These Environmental Laws shall include but ‘not be limited to the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, and the Federal Superfund Amendments and Reauthorization Act of 1986.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor act or code.

 

“Event of Default” shall mean any of the Events of Default specified in Section 10 hereof.

 

2

 

“Fixed Charge Coverage Ratio” shall mean, as of any date of determination, a ratio, the numerator of which is Consolidated Net Income of Company less net income from Subsidiaries (to the extent included in Net Income when applying the consolidated basis of accounting, in accordance with GAAP) for the four preceding fiscal quarters ending on such date, plus to the extent deducted in determining Net Income, interest expense, depreciation and amortization expenses (only to the extent directly recorded in Company) for such period, plus the Dividend Paying Capacity of all Insurance Subsidiaries and the denominator of which is the sum of (A) the amount of all dividends paid by Company to its shareholders during such period, (B) all scheduled principal and interest payments with respect to Funded Debt of Company during such period, (C) all payments by Company with respect to Capital Leases during such period, and (D) 20% of the Revolving Credit Facility Amount.

 

“Funded Debt” shall mean as of any date of determination, the sum, without duplication, of (a) all indebtedness of Company and its consolidated Subsidiaries for borrowed money or for the deferred purchase price of property or services as of such date (other than trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices) or which is evidenced by a note, bond, debenture or similar instrument, (b) all obligations of Company and its consolidated Subsidiaries under Capital Leases as of such date, (c) all obligations of Company and its consolidated Subsidiaries in respect of letters of credit, acceptances or similar obligations issued or created for the account of Company or any of its consolidated Subsidiaries as of such date, (d) all liabilities secured by any lien on any property owned by Company and its consolidated Subsidiaries as of such date even though Company or its Subsidiaries, as applicable, have not assumed or otherwise become liable for the payment thereof, (e) all obligations of Company and its consolidated Subsidiaries arising in connection with Hedging Transactions; (f) all liabilities of Company or any Subsidiary under any securitization, any so-called “synthetic lease” or “tax ownership operating lease” or any other off balance sheet transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on a balance sheet of such Person, based on the outstanding amount of such liability if it had been structured as a financing on the balance sheet of such person, and (g) all obligations of others similar in character to those described in clauses (a) through (f) of this definition for which Company or any of its Subsidiaries is contingently liable, as obligor, guarantor, surety or in any other capacity, or in respect of which obligations Company or any of its Subsidiaries assures a creditor against loss or agrees to take any action to prevent any such loss (other than endorsements of negotiable instruments for collection in the ordinary course of business), including without limitation all reimbursement obligations of Company or any of its Subsidiaries in respect of letters of credit, surety bonds or similar obligations and all obligations of Company or any of its Subsidiaries to advance funds to, or to purchase assets, property or services from, any other Person in order to maintain the financial condition of such other Person, other than insurance contracts issued by the Company or any of its Subsidiaries in the ordinary course of business.

 

“GAAP” shall mean, as of any applicable date of determination, generally accepted accounting principles consistently applied, as in effect on the date of this Agreement.

 

“Governmental Obligations” means noncallable direct general obligations of the United States of America or obligations the payment of principal of and interest on which is unconditionally guaranteed by the United States of America.

 

3

 

“Gross Premiums Ratio” shall mean for any Person as of any date of determination a ratio the numerator of which is gross premiums written of such Person for the four preceding fiscal quarters ending on such date of determination and the denominator of which is Statutory Surplus of such Person as of such date.

 

“Guarantors” shall mean each Subsidiary of Company required to guaranty the Indebtedness under the provisions of this Agreement and “Guarantor” shall mean each of them.

 

“Guaranties” shall mean the Guaranties in the form of attached Exhibit “A” from the Guarantors in favor of Bank and “Guaranty” shall mean each of them.

 

“Indebtedness” shall mean all loans, advances, indebtedness, obligations and liabilities of Company to Bank under this Agreement, together with all other indebtedness, obligations and liabilities whatsoever of Company to Bank arising under or in connection with this Agreement or otherwise, whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, due or to become due, now existing or hereafter arising.

 

“Insurance Regulatory Authority” shall mean, with respect to any Insurance Subsidiary, the insurance department or similar governmental authority charged with regulating insurance companies or insurance holding companies, in its state of domicile and, to the extent that it has regulatory authority over such Insurance Subsidiary, in each other jurisdiction in which such Insurance Subsidiary conducts business or is licensed to conduct business.

 

“Insurance Subsidiar(ies)” shall mean any Subsidiary of the Company, the ability of which to pay dividends is regulated by an Insurance Regulatory Authority or that is otherwise required to be regulated thereby in accordance with the applicable Requirement of Law of its state of domicile.

 

“Letter of Credit” shall have the meaning set forth in Section 2.5.

 

“Letter of Credit Reserve” shall mean as of any date of determination, an amount equal to the aggregate principal amount of all undrawn Letters of Credit issued by Bank for the account of Company under and pursuant to this Agreement and the amount of all draws under Letters of Credit paid by Bank and not reimbursed by Company.

 

“Life Insurance Policy” shall mean a key man life insurance policy in an amount of at least $5,000,000 insuring the life of James G. Petcoff which is owned by Company.

 

“Loan Documents” shall mean collectively, this Agreement, the Security Agreement, the Pledge Agreements, the Guaranties, the Note, and any other instruments or agreements executed at any time pursuant to or in connection with any such documents.

 

“NAIL” shall mean the National Association of Insurance Commissioners.

 

“Net Premium Ratio” shall mean for any Person as of any date of determination a ratio the numerator of which is Net Written Premiums of such Person for the four preceding fiscal quarters ending on such date of determination and the denominator of which is Statutory Surplus of such Person as of such date.

 

4

 

“Net Worth” shall mean as of any date of determination the common shareholders’ equity of Company and its consolidated Subsidiaries as of such date as determined in accordance with GAAP as in effect on the date of this Agreement.

 

“Net Uncollateralized Reinsurance Recoverables” shall mean as of any date of determination the aggregate amount of the Insurance Subsidiaries’ reinsurance recoverables as of such date, minus the aggregate amount of reinsurance recoverables which are secured by a letter of credit or cash collateral as of such date.

 

“Net Written Premiums” shall mean with respect to any Subsidiary of the Company, such Subsidiary’s gross written premiums, plus reinsurance assumed premiums less reinsurance ceded premiums.

 

“Note” shall mean the Revolving Credit Note, the Term Note and the 2014 Term Note or any of them as the context may require.

 

“Permitted Acquisitions shall mean any acquisition (including by way of merger) by Company or any wholly-owned Subsidiary of Company of all or substantially all of the assets of another Person, or of a division or line of business of another Person, or shares of stock or other ownership interests of another Person, which is conducted in accordance with the following requirements:

 

(a)                                 Such acquisition is of a business or Person organized under the laws of the United States of America or any state or district thereof which is engaged in a reasonably related line of business and whose assets are located in the United States of America;

 

(b)                                 Company shall have delivered to Bank not less than ten (10) nor more than ninety (90) days prior to the date of such acquisition, notice of such acquisition together with Pro Forma Projected Financial Information, copies of all material documents relating to such acquisition;

 

(c)                                  Both before and after giving effect to such acquisition, Company shall be in compliance with all other financial covenants in this Agreement, in each case on a pro forma basis acceptable to Bank;

 

(d)                                 Both immediately before and after such acquisition no Default or Event of Default shall have occurred and be continuing;

 

(e)                                  The board of directors (or other Person(s) exercising similar functions) of the seller of the assets or issue of the shares of stock or other ownership interests being acquired shall not have disapproved such transaction or recommended that such transaction be disapproved, and (in the case of a merger) the Company shall be the surviving entity;

 

(f)                                   The rating of the acquisition target by Best, if then rated by Best, must be at least B+’

 

5

 

(g)                                  If such ‘acquisition includes seller debt, such seller debt shall be Subordinated Debt and shall otherwise be acceptable to the Bank;

 

(h)                                 All approvals from all Regulatory Agencies shall have been obtained; and

 

(i)                                     If the sum of the purchase price of such proposed new acquisition, computed on the basis of total acquisition consideration paid or incurred, or to be paid or incurred, by Company and its Subsidiaries with respect thereto, including the amount of Debt assumed or to which such assets, businesses or business or ownership interest or shares, or any Person so acquired, is subject plus the amount of any seller notes, but excluding the value of any common shares transferred as a part of such acquisition, is greater than Four Million Dollars ($4,000,000), the acquisition shall have been approved in writing by Bank prior to its consummation.

 

“Permitted Investments” shall mean with respect to any Person;

 

(a)                                 Governmental Obligations;

 

(b)                                 Obligations of a state of the United States, the District of Columbia or any possession of the United States, or any political subdivision thereof, which are described in Section 103(a) of the Internal Revenue Code and are graded in any of the highest three (3) major grades as determined by at least one Rating Agency; or secured, as to payments of principal and interest, by a letter of credit provided by a financial institution or insurance provided by a bond insurance company which in each case is itself or its debt is rated in one of the highest three (3) major grades as determined by at least one Rating Agency;

 

(c)                                  Banker’s acceptances, commercial accounts, demand deposit accounts, certificates of deposit, or depository receipts issued by or maintained with any Bank or a bank, trust company, savings and loan association, savings bank or other financial institution whose deposits are insured by the Federal Deposit Insurance Corporation and whose reported capital and surplus equal at least $100,000,000, provided that such minimum capital and surplus requirement shall not apply to demand deposit accounts maintained by the Company or any of its Subsidiaries in the ordinary course of business;

 

(d)                                 Commercial paper rated at the time of purchase within the two highest classifications established by not less than two Rating Agencies, and which matures within 270 days after the date of issue;

 

(e)                                  Secured repurchase agreements against obligations itemized in paragraph (a) above, and executed by a bank or trust company or by members of the association of primary dealers or other recognized dealers in United States government securities, the market value of which must be maintained at levels at least equal to the amounts advanced;

 

6

 

(f)                                   Any fund or other pooling arrangement which exclusively purchases and holds the investments itemized in (a) through (e) above;

 

(g)                                  Securities and other investments held in its investment portfolio which are permitted under Company’s and the Insurance Subsidiaries’ then current investment policies and which are permitted under applicable law.

 

“Permitted Liens” shall mean with respect to any Person:

 

(a)                                 liens for taxes not yet due and payable or which are being contested in good faith by appropriate proceedings diligently pursued, provided that provision for the payment of all such taxes has been made on the books of such Person as may be required by generally accepted accounting principles, consistently applied;

 

(b)                                 mechanics’, materialmen’s, banker’s, carriers’, warehousemen’s and similar liens and encumbrances arising in the ordinary course of business and securing obligations of such Person that are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings diligently pursued, provided that in the case of any such contest (i) any proceedings commenced for the enforcement of such liens and encumbrances shall have been duly suspended; and (ii) such provision for the payment of such liens and encumbrances has been made on the books of such Person as may be required by generally accepted accounting principles, consistently applied;

 

(c)                                  liens arising in connection with worker’s compensation, unemployment insurance, old age pensions and social security benefits and similar statutory obligations which are not overdue or are being contested in good faith by appropriate proceedings diligently pursued, provided that in the case of any such contest (i) any proceedings commenced for the enforcement of such liens shall have been duly suspended; and (ii) such provision for the payment of such liens has been made on the books of such Person as may be required by generally accepted accounting principles, consistently applied;

 

(d)                                 (i) liens incurred in the ordinary course of business to secure the performance of statutory obligations arising in connection with progress payments or advance payments due under contracts with the United States government or any agency thereof entered into in the ordinary course of business and (ii) liens incurred or deposits made in the ordinary course of business to secure the performance of statutory obligations, bids, leases, fee and expense arrangements with trustees and fiscal agents and other similar obligations (exclusive of obligations incurred in connection with the borrowing of money, any lease-purchase arrangements or the payment of the deferred purchase price of property), provided that full provision for the payment of all such obligations set forth in clauses (i) and (ii) has been made on the books of such Person as may be required by generally accepted accounting principles, consistently applied; and

 

7

 

(e)                                  minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which do not materially interfere with the business of such Person.

 

“Person” or “person” shall mean any individual, corporation, partnership, joint venture, limited liability company, association, trust, unincorporated association, joint stock company, government, municipality, political subdivision or agency, or other entity.

 

“Pledge Agreements” shall mean the Security Agreements under which the Company and/or its Subsidiaries, as applicable, grant to Bank first priority security interests in all of the equity interests in their Subsidiaries.

 

“Prime Rate” shall mean the per annum interest rate established by Bank as its prime rate for its borrowers as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Pro Forma Projected Financial Information” shall mean, as to any proposed acquisition, a statement executed by the treasurer or otherwise designated authorized employee of Company (supported by reasonable detail) setting forth the total consideration to be paid or incurred in connection with the proposed acquisition, and pro forma combined projected financial information for the Company and its Consolidated Subsidiaries and the acquisition target (if applicable), consisting of projected balance sheets as of the proposed effective date of the. acquisition or the closing date thereof and as of the end of at least the next succeeding two (2) fiscal years of the Company following .the acquisition and projected statements of income and cash flows for each of those years, including sufficient detail to permit calculation of the amounts and the ratios described in Sections 7.13 through 7.16, as projected as of the effective date of the acquisition and for those fiscal years and accompanied by (i) a statement setting forth a calculation of the ratios and amounts so described, (ii) a statement in reasonable detail specifying all material assumptions underlying the projections and (iii) such other information as Bank may reasonably request.

 

“Rating Agency” shall mean the NAIC Securities Valuation Office.

 

“Regulatory Agency” shall mean any state board, commission, department or other regulatory body which regulates insurance companies or insurance holding companies.

 

“Required Rating” shall mean “Bi-”. •

 

“Requirement of Law” shall mean as to any Person, the certificate of incorporation and bylaws, the partnership agreement or other organizational or governing documents of such Person and any law, treaty, rule or regulation or determination of an arbitration or a court or other governmental authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Revolving Credit Facility Amount” shall mean Seventeen Million Five Hundred Thousand Dollars ($17,500,000).

 

8

 

“Revolving Credit Maturity Date” shall mean August 1, 2016. .

 

“Revolving Credit Note” or “Note” shall mean the Note described in Section 2.1 hereof made by Company to Bank in the form annexed to this Agreement as Exhibit “B”..

 

“SAP” or “Statutory Accounting Principles” shall mean, with respect to any Insurance Subsidiary, the statutory accounting practices or practices prescribed or permitted by the relevant Insurance Regulatory Authority of its state of domicile, consistently applied and maintained and in conformity with those used in the preparation of the most recent historical financial statements after giving effect to any changes in such principles and practices from time to time.

 

“Security Agreement” shall mean the collective reference to the Security Agreements in the form and content of Exhibit “C” to this Agreement pursuant to which Company and its Subsidiaries (other than the Insurance Subsidiaries) grant to Bank a first priority security interest in all tangible and intangible personal property, wherever located and whether now owned or hereafter acquired, together with all replacements thereof, substitutions therefor, accessions thereto and all proceeds and products of all the foregoing.

 

“Statutory Surplus” of any Person shall mean the statutory surplus of such Person computed in the manner required for its annual statement of condition and affairs prepared in accordance with SAP.

 

“Subordinated Debt” shall mean all indebtedness of Company for borrowed money which is subordinated to Company’s indebtedness to Bank pursuant to a written subordination agreement in form and substance acceptable to Bank and which otherwise is on terms acceptable to Bank in the exercise of it sole discretion.

 

“Subordination Agreements” shall mean the subordination agreements executed from time to time by the holders of Subordinated Debt in favor of Bank, in each case in form and substance acceptable to Bank.

 

“Subsidiary” shall mean a corporation or other entity of which more than fifty percent (50%) of the outstanding voting stock or equivalent equity interests are owned by Company, either direct or indirectly, through one or more intermediaries.

 

“Tangible Effective Net Worth” shall mean as of any date of determination, Tangible Net Worth as of such date, plus the outstanding principal amount of the Subordinated Debt as of such date.

 

“Tangible Net Worth” shall mean as of any date Net Worth less the Intangible Assets of the Company and its consolidated Subsidiaries, all determined as of such date. For purposes of this Agreement, “Intangible Assets” means the amount (to the extent reflected in determining such Net Worth) of (1) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within twelve months after the acquisition of such business) in the book value of any asset owned by Company and its consolidated Subsidiaries, (ii) loans or advances to Affiliates and receivables from Affiliates, (iii) -all investments in unconsolidated Subsidiaries of the Company and all equity investments in Persons which are not Subsidiaries of Company (provided that this exclusion shall not include

 

9

 

Permitted Investments) and (iv) all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks,, trade names, copyrights, organization or developmental expenses, deferred acquisition costs and other intangible assets.

 

“Term Loan Maturity Date” shall mean July 1, 2018.

 

“Term Note” shall mean the Installment Note dated March 5, 2013 in the principal amount of Five Million Dollars ($5,000,000) in the form attached as Exhibit “B-1”.

 

“2014 Term Loan Maturity Date” shall mean September 29, 2019.

 

“2014 Term Note” shall mean the Installment Note dated September 29, 2014 in the principal amount of Seven Million Five -Hundred Thousand Dollars ($7,500,000) in the form attached as Exhibit “B-2”.

 

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code of ‘any applicable state and unless specified otherwise shall mean the Uniform Commercial Code as in effect in the State of Michigan.

 

2.                                      THE INDEBTEDNESS:  Revolving Credit

 

2.1                               Bank agrees to make Advances to Company at any time and from time to time from the effective date hereof until the Revolving Credit Maturity Date, not to exceed the Revolving Credit Facility Amount in aggregate principal amount at any one time outstanding. All of the Advances under this Section 2 shall be evidenced by the Revolving Credit Note under which Advances, repayments and readvances may be made, subject to the terms and conditions of this Agreement.

 

2.2                               The Revolving Credit Note shall mature on the Revolving Credit Maturity Date and each Advance from time to time outstanding thereunder shall bear interest as provided in the Revolving Credit Note. The amount and date of each Advance and the amount and date of any repayment shall be noted on Bank’s records, which records will be conclusive evidence thereof absent manifest error.

 

2.3                               Company may request an Advance under this Section 2 upon the delivery to Bank of a request for advance as provided in the Revolving Credit Note.

 

2.4                               Company may prepay all or part of the outstanding balance of the Prime-based Advance(s) under the Revolving Credit Note as provided in the Revolving Credit Note.

 

2.5                               In addition to Advances under the Revolving Credit Note to be provided to Company by Bank under and pursuant to Section 2.1 of this Agreement, Bank may from time to time issue, or commit to issue, standby letters of credit for the account of Company (herein individually called a “Letter of Credit” and collectively “Letters of Credit”) in aggregate undrawn amounts not to exceed Two Million Dollars ($2,000,000) at any one time outstanding; provided, however that the sum of the aggregate amount of Advances outstanding under the Revolving Credit Note plus the Letter of Credit Reserve shall not exceed the Revolving Credit Facility Amount at any one time; and provided further that no Letter of Credit shall, by its terms, have an

 

10

 

expiration date which extends beyond the fifth (5th) Business Day before the Revolving Credit Maturity Date or one (1) year after issuance, whichever first occurs. In addition to the terms and conditions of this Agreement, the issuance of any Letters of Credit shall also be subject to the terms and conditions of any letter of credit applications and agreements executed and delivered by Company to Bank with respect thereto. Company shall pay to Bank quarterly in advance a per annum fee equal to the Applicable L/C Commission Rate of the amount of each .standby Letter of Credit.

 

2.6                               Company shall pay to the Bank an unused fee for the period from the date of this Agreement to and including the Revolving Credit Maturity Date equal to two tenths of one percent (0.2%) per annum on the average daily excess of the Revolving Credit Facility Amount over the aggregate unpaid principal balance of the Advances. Such commitment fee shall be payable on the first Business Day of each calendar quarter, beginning January 1, 2015 and the Revolving Credit Maturity Date,- for the periods ending on such dates. The fee under this Section 2.6 shall be computed on the basis of the actual number of days elapsed using a year of 360 days.

 

2.7                               Proceeds of Advances under the Revolving Credit Note shall be used solely for working capital purposes and to finance Permitted Acquisitions and such proceeds may not be used to repurchase or redeem the shares of any preferred stock issued by Company.

 

3.                                      THE INDEBTEDNESS:  Term Loan

 

3.1                               Bank loaned to Company and Company borrowed, on March 5, 2013, the sum of Five Million Dollars ($5,000,000). At the time of borrowing, Company executed the Term Note. The loan under this Section 3 shall be subject to the terms and conditions of this Agreement.

 

3.2                               The indebtedness represented by the Term Note shall be repaid in quarterly principal installments as set forth in the Term Note, until the Term Loan Maturity Date, when the entire unpaid balance of principal and interest thereon shall be due and payable. Company agrees to pay interest on the unpaid principal balance of the Term Note from time to time outstanding as provided in the Term Note.

 

3.3                               Company may prepay the Term Note in whole or in part at any time upon five (5) days prior written notice to Bank without premium or penalty. All prepayments shall be applied to principal installments in the inverse order of their respective maturities.

 

3.4                               The proceeds of the Term Note were used to refinance existing indebtedness of the Company to Bank;

 

4.                                      THE INDEBTEDNESS:  2014 Term Loan

 

4.1                               Bank agrees to loan to Company and Company agrees to borrow, on September 29, 2014, the sum of Seven Million Five Hundred Thousand Dollars ($7,500,000), At the time of borrowing, Company shall execute the 2014 Term Note. The loan under this Section 4 shall be subject to the terms and conditions of this Agreement.

 

11

 

4.2                               The indebtedness represented by the 2014 Term Note shall be repaid in quarterly principal installments as set forth in the 2014 Term Note, until the 2014 Term Loan Maturity Date, when the entire unpaid balance of principal and interest thereon shall be due and payable. Company agrees to pay interest on the unpaid principal balance of the 2014 Term Note from time to time outstanding as provided in the 2014 Term Note.

 

4.3                               Company may prepay the 2014 Term Note in whole or in part at any time upon five (5) days prior written notice to Bank without premium or penalty. All prepayments shall be applied to principal installments in the inverse order of their respective maturities.

 

4.4                               The proceeds of the 2014 Term Note shall be used to make equity investments in certain of its Insurance Subsidiaries and/or refinance existing indebtedness to Bank.

 

5.                                      CONDITIONS

 

5.1                               Company agrees to furnish Bank on the date of execution of this Agreement, in form and substance to be satisfactory to Bank, with (1) certified copies of resolutions of the Directors of Company evidencing approval of the borrowings and transactions contemplated hereunder; (ii) a certificate of good standing from the state of Company’s incorporation and from the state(s) in which is required to be qualified to do business; (iii) an opinion of Company’s legal counsel; (iv) evidence of the receipt of net cash proceeds of new equity contributions to Company consisting of $10,000,000 from the issuance of common stock and $5,000,000 from the issuance of preferred stock which is on terms acceptable to Bank; and (v) such other documents and instruments as Bank may reasonably require.

 

5.2                               As security for all Indebtedness, Company agrees to furnish, execute and deliver to Bank, or cause to be furnished, executed and delivered to Bank, prior to or simultaneously with the initial borrowing hereunder, in form to be satisfactory to Bank and supported by appropriate resolution in certified form authorizing same, the following:

 

(a)                                 The Security Agreement;

 

(b)                                 The Guaranties (if any);

 

(c)                                  The Pledge Agreements;

 

(d)                                 Financing Statements required or requested by Bank to perfect all security interests to be conferred upon Bank under this Agreement and to accord Bank a perfected first priority security position under the Uniform Commercial Code (subject only to the encumbrances permitted hereunder);

 

(e)                                  Such other documents or agreements of security and appropriate assurances of validity and perfected first priority of lien or security interest as Bank may reasonably request at any time.

 

5.3                               As a condition to the effectiveness of this Agreement, Bank shall have received from Company a non-refundable commitment fee in the amount of $50,000.

 

12

 

6.                                      REPRESENTATIONS AND WARRANTIES

 

Company represents and warrants and such representations and warranties shall be deemed to be continuing representations and warranties during the entire life of this Agreement:

 

6.1                               Company is a corporation duly organized and existing in good standing under the laws of the State of Michigan; Company and each of its Subsidiaries is in good standing in each jurisdiction in which it is required to be qualified to do business, except where the failure to be so qualified would not have a material adverse effect on the financial condition of Company and its Subsidiaries or their ability to carry on their business; execution, delivery and performance of this Agreement and other documents and instruments required under this Agreement, and the issuance of the Note by Company are within its powers, have been duly authorized, are not in contravention of law or the terms of Company’s Articles of Incorporation or Bylaws, and do not require the consent or approval of any governmental body, agency or authority; and this Agreement and other documents and instruments required under this Agreement and Note, when issued and delivered, will be valid and binding on the Company in accordance with their terms.

 

6.2                               The execution, delivery and performance of this Agreement and any other documents and instruments required under this Agreement, and the issuance of the Note by Company are not in contravention of the unwaived terms of any indenture, agreement or undertaking to which Company is a party or by which it is bound,

 

6.3                               No litigation or other proceeding before any court or administrative agency is pending, or to the knowledge of the officers of Company is threatened against Company or any of its Subsidiaries, the outcome of which would reasonably be expected to materially impair Company’s or any Subsidiary’s financial condition or the ability of Company or any Subsidiary to carry on its business.

 

6.4                               There are no security interests in, liens, mortgages, or other encumbrances on any of Company’s or any Subsidiary’s assets, except to Bank or as otherwise permitted by this Agreement.

 

6.5                               Neither Company nor any Subsidiary maintains or contributes to any employee pension benefit plan subject to title IV of the “Employee Retirement Income Security Act of 1974” (herein called “ERISA”), except those set forth in attached Schedule 6.5.  There was no unfunded past service liability of any pension plan maintained by the Company as of December 31, 2013, and there is no accumulated funding deficiency within the meaning of ERISA, or any existing material liability with respect to any pension plan owed to the Pension Benefit Guaranty Corporation (“PBGC”) or any successor thereto, except any funding deficiency for which an application to the PBGC for waiver is pending or for which a waiver has been granted by the PBGC.

 

6.6                               The financial statements of the Company dated December 31, 2013, previously furnished to Bank, fairly present in all material respects the financial condition of the Company and its consolidated Subsidiaries as of such date; since said date there has been no material adverse change in the financial condition of the Company and its consolidated Subsidiaries; to the best of the knowledge of Company’s officers, Company does not have any material

 

13

 

contingent obligations (including any liability for taxes) not disclosed by or reserved against in said balance sheet, and at the present time there are no material unrealized or anticipated losses from any present commitment of Company or any of its Subsidiaries.

 

6.7                               All tax returns and tax reports of Company and its consolidated Subsidiaries required by law to have been filed have been duly filed or extensions obtained, and all taxes, assessments and other governmental charges or levies (other than those presently payable without penalty and those currently being contested in good faith for which adequate reserves have been established) upon Company and its consolidated Subsidiaries (or any of its or their properties) which are due and payable and for which the failure to pay would materially adversely affect its business or the value of its property or assets have been paid. The charges, accruals and reserves on the books of Company in respect of the Federal income tax for all periods are adequate in the opinion of Company.

 

6.8                               Except as set forth in Schedule 6.8, there are no subsidiaries of Company,

 

6.9                               Except as set forth in Schedule 6.9:

 

(a)                                 Company and each of its Subsidiaries, in the conduct of its business, is in compliance in all material respects with all federal, state or local laws, statutes, ordinances and regulations applicable to any of them, the enforcement of which, if such Person were-not in compliance, would reasonably be expected to materially adversely affect its business or the value of its property or assets. Company and its Subsidiaries have all approvals, authorizations, consents, licenses, orders and other permits of all governmental agencies and authorities, whether federal, state or local, required to permit the operation of their business as presently conducted, except such approvals, authorizations, consents, licenses, orders and other permits with respect to which the failure to have would not reasonably be expected to materially adversely affect their business or the value of their property or assets (taken as a whole).

 

(b)                                 Neither Company nor any Subsidiary is a party to any litigation or administrative proceeding, nor so far as is known by Company is any litigation or administrative proceeding threatened against Company or any Subsidiary, the outcome of which would reasonably be expected to have a material adverse effect on the Company or any Subsidiary which in either case (i) asserts or alleges that Company or any Subsidiary violated Environmental Laws, (ii) asserts or alleges that Company or any Subsidiary is required to clean up, remove, or take remedial or other response action due to the “disposal, depositing, discharge, leaking or other release of any hazardous substances or materials, (iii) asserts or alleges that Company or any Subsidiary is required to pay all or a portion of the cost of any past, present, or future cleanup, removal or remedial or other response action which arises out of or is related to the disposal, depositing, discharge, leaking or other release of any hazardous substances or materials by Company or any Subsidiary.

 

(c)                                  Neither Company nor any Subsidiary is subject to any judgment, decree, order or citation related to or arising out of applicable Environmental Laws which would

 

14

 

reasonably be expected to materially adversely affect its business or the value of its property or assets and to the best knowledge of the Company, neither Company nor any Subsidiary has been named or listed as a potentially responsible party by any governmental body or agency in a matter arising under any applicable Environmental Laws which would reasonably be expected to materially adversely affect its business or the value of its property or assets.

 

(d)                                 To the best of Company’s knowledge, Company and its Subsidiaries have all permits, licenses and approvals required under applicable Environmental Laws, the failure of which to have would have a material adverse effect on the operation of their business as presently conducted and as proposed to be conducted.

 

6.10                        Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended. Company is not engaged principally, or as one of its important activities, directly or indirectly, in the business of extending credit for the purpose of purchasing or carrying margin stock, and none of the proceeds of any of the loans hereunder will be used, directly or indirectly, for any purpose which would violate the provisions of Regulation U or X of the Board of Governors of the Federal Reserve System. Terms for which meanings are provided in Regulation U of the Board of Governors of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this paragraph with such meanings.

 

6.11                        Company and its Subsidiaries have good and valid title to the property pledged, mortgaged or otherwise encumbered or to be encumbered by them under the Security Agreements.

 

6.12                        Except as have been previously obtained, no authorization, consent, approval, license, qualification or formal exemption from, nor any filing, declaration or registration with, any court, governmental agency or regulatory authority or any securities exchange or any other person or party (whether or not governmental) is required in connection with the execution, delivery and performance: (i) by Company of this Agreement, any of the other Loan Documents to which it is a party, or any other documents or instruments to be executed and or delivered by Company in connection therewith or herewith, or (ii) by Company of the Liens granted, conveyed or otherwise established (or to be granted, conveyed or otherwise established) by or under this Agreement or the other Loan Documents, except for such filings to be made as are required by the Loan Documents to perfect Liens in favor of the Agent. All such authorizations, consents, approvals, licenses, qualifications, exemptions, filings, declarations and registrations which have previously been obtained or made, as the case may be, are in full force and effect and are not the subject of any attack, or to the knowledge of Company threatened attack (in any material respect) by appeal or direct proceeding or otherwise.

 

7.                                      AFFIRMATIVE COVENANTS

 

Company covenants and agrees that it will, so long as Bank may make any advance under this Agreement and thereafter so long as any indebtedness remains outstanding under this Agreement:

 

15

 

7.1                               Furnish Bank:

 

(a)                                 as soon as available, but in any event not later than one hundred fifty (150) days after and as of the end of each fiscal year of Company a copy of the audited Consolidated and Consolidating financial statements of Company as at the end of the preceding fiscal year and the related audited statements of income, accumulated earnings, and cash flows for such year, setting forth in each case in comparative form the figures for the previous year, certified as being fairly stated in all material respects in accordance with GAAP by one of the “Big Four” certified public accounting firms or by any other recognized certified public accountant reasonably satisfactory to Bank;

 

(b)                                 as soon as available, but in any event not later than seventy five (75) days after the end of each fiscal quarter (commencing with the fiscal quarter ending September 30, 2014), the unaudited Consolidated and Consolidating financial statements of Company as at the end of such fiscal quarter and the related unaudited statements of income, accumulated earnings and cash flows of Company for the portion of the fiscal year through the end of such fiscal quarter, setting forth in each case in comparative form the figures for the previous year, and certified by the treasurer of Company as being fairly stated in all material respects and as having been prepared in accordance with GAAP;

 

(c)                                  as soon as available and in any event within seventy five (75) days after the end of each fiscal quarter (excluding the fourth fiscal quarter of each fiscal year), a copy of each Insurance Subsidiary’s financial statements for such fiscal quarter, including a balance sheet as of the end of such fiscal quarter and the related statements of income and retained earnings for such fiscal quarter, each prepared in accordance with SAP and certified by an officer of the applicable Insurance Subsidiary;

 

(d)                                 as soon as available and in any event not later than one hundred fifty (150) days after and as of the end of each fiscal year of Company, for each Insurance Subsidiary, a copy- of such Insurance Subsidiary’s financial statements for the preceding fiscal year, including a balance sheet as of the end of such fiscal year and the related statements of income and retained earnings for such fiscal year, each prepared in accordance with SAP (commonly referred to as the “Yellow Book” statements) and certified by an officer of the applicable Insurance Subsidiary;

 

(e)                                  as soon as available and in any event not later than June 1 of each year, for each Insurance Subsidiary, a copy of such Insurance Subsidiary’s audited financial statements for the preceding fiscal year (commencing with the fiscal year ending December 31, 2010), including a balance sheet as of the end of such fiscal year and the’ related statements of income and retained earnings for such fiscal year, each prepared in accordance with SAP and certified as being fairly stated in all material respects by one of the “Big Four” certified public accounting firms or by any another recognized certified public accountant reasonably acceptable to Bank;

 

16

 

(f)                                   as soon-as available, copies of all financial statements related to Company and/or any of its Subsidiaries filed with any Regulatory Agency;

 

(g)                                  as soon as available and to the extent not previously furnished to Bank, copies of all reports with respect to Company and/or any of its Subsidiaries prepared by any Regulatory Agency or rating agency;

 

all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP or SAP, as applicable, throughout the periods reflected therein and with prior periods.

 

7.2                               Furnish to Bank:

 

(a)                                 Within seventy five (75) days after and as the end of each fiscal quarter, a covenant compliance certificate substantially in form attached hereto as Exhibit D; and

 

(b)                                 within five (5) days after the occurrence thereof, written notice from Company of any change in the Best rating of an Insurance Subsidiary or in any other change in any rating of any Insurance Subsidiary by any other rating agency.

 

7.3                               Pay and discharge, and cause its Subsidiaries to pay and discharge, all taxes and other governmental charges, and all contractual obligations calling for the payment of money, before the same shall become overdue, unless and to the extent only that such payment is being contested in good faith.

 

7.4                               Maintain, and cause its Subsidiaries to maintain, insurance coverage on their physical assets and against other business risks in such amounts and of such types as are customarily carried by companies similar in size and nature, and in the event of acquisition of additional property, real or personal, or of incurrence of additional risks of any nature, increase such insurance coverage in such manner and to such extent as prudent business judgment and present practice would dictate; and in the case of all policies covering property mortgaged or pledged to Bank or property in which Bank shall have a security interest of any kind whatsoever, other than those policies protecting against casualty liabilities to strangers, all such insurance policies shall provide that the loss payable thereunder shall be payable to Company and Bank (as mortgagee) as their respective interests may appear, all said policies or copies thereof, including all endorsements thereon and those required hereunder, to be deposited with Bank.

 

7.5                               Permit Bank, through its authorized attorneys, accountants and representatives, to examine Company’s and each Subsidiary’s books, accounts, records, ledgers and assets of every kind and description at all reasonable times upon oral or written request of Bank.

 

7.6                               Promptly notify Bank of any condition or event which constitutes or with the running of time and/or the giving of notice would constitute an event of default under this Agreement, and promptly inform Bank of the existence or occurrence of any condition or event (other than conditions having an effect on the economy in general) which could have a material adverse effect upon Company’s or any Subsidiary’s financial condition.

 

17

 

7.7                               Maintain, and cause its Subsidiaries to maintain, in good standing all licenses required by the State of Michigan or any agency thereof, or other governmental authority that may be necessary or required for Company and its Subsidiaries to carry on its general business objects and purposes.

 

7.8                               Comply, and cause its Subsidiaries to’ comply, with all material requirements imposed by ERISA as presently in effect or hereafter promulgated, including but not limited to, the minimum funding requirements of any Pension Plan.

 

7.9                               Promptly notify Bank after the occurrence thereof in writing of any of the following events:

 

(a)                                 the termination of a Pension Plan pursuant to Subtitle C of Title IV of ERISA or otherwise;

 

(b)                                 the appointment of a trustee by a United States District Court to administer a Pension Plan;

 

(c)                                  the commencement by the Pension Benefit Guaranty Corporation, or any successor thereto of any proceeding to terminate a Pension Plan;

 

(d)                                 the failure of a Pension Plan to satisfy the minimum funding requirements for any plan year as established in Section 412 of the Internal Revenue Code of 1954, as amended or any similar provision under the Internal Revenue Code of 1986, as amended;

 

(e)                                  the withdrawal of Company or any Subsidiary from a Pension Plan; or

 

(f)                                   a reportable event, within the meaning of Title IV of ERISA

 

7.10                        Furnish Bank, upon Bank’s request, in form satisfactory to Bank with pledges, assignments, mortgages, lien instruments or other security instruments covering any or all of Company’s and each Subsidiary’s real and personal property, of every nature and description, whether now owed or hereafter acquired, to the extent that Bank may in its sole reasonable discretion require.

 

7.11                        Maintain, and cause its Subsidiaries to maintain, with Bank all of its and their bank accounts, except for local petty cash, payroll and similar accounts.

 

7.12                        With respect to each Person which becomes a Subsidiary (other than an Insurance Subsidiary) subsequent to the date of this Agreement, within fifteen (15) days of the date such a new Subsidiary is created or acquired, as the case may be, (a) cause each such Subsidiary to execute and deliver to Bank, (1) a guaranty in form acceptable to Bank whereby each Subsidiary guarantees the Indebtedness and (ii) a Security Agreement, together with such supporting documentation, including without limitation corporate authority, certificates and opinions of counsel, as reasonably required by Bank and (b) unless prohibited by applicable law, pledge, pursuant to a pledge agreement acceptable to Bank, all of the capital stock or other equity interests of any Subsidiary.

 

18

 

7.13                        Maintain as of the end of each fiscal quarter. of Company a Tangible Effective Net Worth of not less than the following amounts during the periods specified below:

 

	
December 31,   2014 through December 30, 2015
    	
 
    	
$
    	
37,000,000
    	
 
    
	
December 31,   2015 and thereafter
    	
 
    	
$
    	
41,000,000
    	
 
    

 

7.14                        Not permit “total adjusted capital” (within the meaning of the Risk-Based Capital for Insurers Model Act as promulgated by the NAIC as of the date of this Agreement (the “Model Act”)) of any of its Insurance Subsidiaries as of the last day of each fiscal year to be less than 300% of the applicable “Authorized Control Level RBC” (within the meaning of the Model Act) for such Insurance Subsidiary.

 

7.15                        Maintain as of the end of each fiscal year of Company a Fixed Charge Coverage Ratio of not less than 1,20 to 1.0.

 

7.16                        Cause each Insurance Subsidiaries to maintain as of the end of each fiscal quarter .a Net Premium Ratio of not more than 2.0 to 1.0 and a Gross Premium Ratio of not more than 3,0 to 1.0, This Section does not apply to Red Cedar Insurance Company,

 

7.17                        Not permit the Dividend Paying Capacity of any Insurance Subsidiary for any fiscal year to be less than $500,000. This Section does not apply to Red Cedar Insurance Company.

 

7.18                        Not permit as of the end of any fiscal year of Company Net Uncollateralized Reinsurance Recoverables under reinsurance contracts with Persons having a Best rating of less than A- to exceed 10% of reinsurance recoverables as reported in the Company’s consolidated balance sheet.

 

7.19                        Deliver to Bank on or before November 30, 2014 evidence of the issuance of the Life Insurance Policy and such documents as Bank may require to obtain a first priority collateral assignment of such Life Insurance Policy and after issuance of the Life Insurance Policy maintain the Life Insurance Policy in full force and effect.

 

7.20                        Provide to Bank on or before October 31, 2014 evidence of the receipt by Company of net cash proceeds of at least $5,000,000 resulting from the issuance of common stock of Company (which shall be in addition to the stock issuances referenced in Section 5.1(iv) above).

 

8.                                      NEGATIVE COVENANTS

 

Company covenants and agrees that, so long as Bank may make any Advances under this Agreement and thereafter so long as any Indebtedness remains outstanding under this Agreement, it will not, and will cause its Subsidiaries not to, without the prior written consent of Bank:

 

8.1                               Purchase, acquire or redeem any of its stock or make any material change in its capital structure.

 

19

 

8.2                               Enter into any merger or consolidation or sell, lease, transfer, or dispose of all, substantially all, or any part of its assets, except sales of inventory in the ordinary course of its business.

 

8.3                               Guarantee, endorse, or otherwise become secondarily liable for or upon the obligations of others, except by endorsement for deposit in the ordinary course of business and guaranties in favor of Bank.

 

8.4                               Purchase or otherwise acquire, or become obligated for the purchase of all or substantially all of the assets or business interests of any person, firm or corporation or any shares of stock of any corporation, trusteeship or association or in any other manner effectuate or attempt to effectuate an expansion of present business by acquisition, except for Permitted Acquisitions.

 

8.5                               Affirmatively pledge or mortgage any of its assets, whether now owned or hereafter acquired, or create, suffer or permit to exist any lien, security interest in, or encumbrance thereon, except:

 

(a)                                 to Bank;

 

(b)                                 the Permitted Liens;

 

(c)                                  liens described in attached Schedule 8.5; and

 

(d)                                 liens and security interests upon fixed assets acquired by Company after the date of this Agreement (including by virtue of a Capital Lease) provided that (i) any such lien or security interest is created solely for the purpose of securing indebtedness representing, or incurred to finance, the cost of the item of property subject thereto; (ii) the principal amount of the indebtedness secured by such lien does not exceed 100% of the fair value of the property at the time it was acquired, and (iii) the lien or security interest does not cover any property other than such item of property.

 

8.6                               Sell, assign, transfer or confer a security interest in any account, contract, note, trade acceptance or other receivable, except to Bank.

 

8.7                               Materially alter the character of its business from that conducted as of the date of this Agreement.

 

8.8                               Declare or pay any dividends or make any other distribution upon its equity interests if at the time declared or paid or if after giving effect thereto an Event of Default (or event which with the giving of notice or the passage of time or both would constitute an Event of Default) shall have occurred.

 

8.9                               Enter into any transaction or series of transactions with any Affiliate other than on terms and conditions as favorable to Company as would be obtainable in a comparable arms-length transaction with a Person other than an Affiliate.

 

20

 

8.10                        Make or allow to remain outstanding any investment (whether such investment shall be of the character of investment in shares of stock, evidence of indebtedness or other securities or otherwise) in, or any loans or advances or extensions of credit to, any person, firm, corporation or other entity or association, except:

 

(a)                                 Permitted Investments;

 

(b)                                 sales on open account and in the ordinary course of business;

 

(c)                                  deposits made in the ordinary course of business in order to obtain goods or services;

 

(d)                                 Company’s investments in its Subsidiaries which are Guarantors;

 

(e)                                  other loans, advances and investments not exceeding $350,000 in the aggregate at any time outstanding.

 

8.11                        Enter into or become subject to any agreement (other than this Agreement) (i) prohibiting the creation or assumption of any lien or encumbrance upon the properties or assets of Company or (ii) requiring an obligation to become secured (or further secured) if another obligation is secured or further secured.

 

8.12                        Become or remain obligated for any indebtedness for borrowed money, or for any indebtedness incurred in connection with the acquisition of any property, real or personal, tangible or intangible, except;

 

(a)                                 indebtedness to Bank;

 

(b)                                 current unsecured trade payables and accrued liabilities arising in the ordinary course of Company’s business (including, without limitation, obligations under operating leases);

 

(c)                                  indebtedness described in attached Schedule 8.13;

 

(d)                                 Subordinated Debt;

 

(e)                                  purchase money indebtedness incurred in connection with the acquisition of fixed assets in an aggregate amount not exceeding $500,000 incurred during any single fiscal year of Company.

 

8.13                        Make any Capital Expenditure during any fiscal year if after giving effect thereto the aggregate amount of all Capital Expenditures made by Company and its Subsidiaries during such fiscal year would exceed $500,000.

 

8.14                        Permit or suffer any material adverse change in either the quality of its investments or its investment policies.

 

21

 

8.15                        Permit or suffer any Insurance Subsidiary of the Company to at any time be outside the recommended range for more than four (4) of the Insurance Regulatory Information System ratio tests.

 

9.                                      ENVIRONMENTAL PROVISIONS

 

9.1                               Company shall comply, and shall cause its Subsidiaries to comply, with all applicable Environmental Laws except for such non-compliance which would reasonably not be expected to materially adversely affect its business or the value of its property or assets.

 

9.2                               Company shall provide to Bank, promptly upon receipt, copies of any correspondence, notice, pleading, citation, indictment, complaint, order, decree, or other document from any source asserting or alleging a circumstance or condition which requires or may require a financial contribution by Company or any Subsidiary to a cleanup, removal, remedial action, or other response by or on the part of Company or any Subsidiary under applicable Environmental Laws or which seeks damages or civil, criminal or punitive penalties from Company for an alleged violation of Environmental Laws, where such contribution, response or damages would reasonably be expected to materially adversely affect its business or the value of its property or assets.

 

9.3                               Company shall promptly notify Bank in writing as soon as Company becomes aware of the occurrence or existence of any condition or circumstance which makes the environmental warranties contained in this Agreement incomplete or inaccurate in any material respect as of any date.

 

9.4                               In the event of any condition or circumstance that makes any environmental warranty, representation and/or agreement incomplete or inaccurate in any material respect as of any date, Company shall, at the reasonable request of Bank, at its sole expense, retain an environmental consultant, reasonably acceptable to Bank, to conduct a thorough and complete investigation regarding the changed condition and/or circumstance. A copy of the environmental consultant’s report will be promptly delivered to both Bank and Company upon completion.

 

9.5                               At any time Company, directly or indirectly through any environmental consultant or other representative, determines to undertake an environmental audit, assessment or investigation relating to any fact, event or condition which would reasonably be expected to materially adversely affect its business or the value of its property or assets, Company shall promptly provide Bank with written notice of the initiation of the environmental audit, fully describing the purpose and intended scope of the environmental audit, Upon receipt, Company will promptly provide to Bank copies of all final findings and conclusions of any such environmental investigation.

 

9.6                               Company hereby indemnifies, saves and holds Bank and any of its past, present and future officers, directors, shareholders, employees, representatives and consultants harmless from any and all loss, damages, suits, penalties, costs,. liabilities and expenses (including but not limited to reasonable investigation, environmental audit(s), and legal expenses) arising out of any claim, loss or damage to any property, injuries to or death of persons, contamination of or adverse affects on the environment, or any violation of any applicable Environmental Laws,

 

22

 

caused by or in any way related to any property owned or operated by Company, or due to any acts of Company or such person’s, officers, directors, shareholders, employees, consultants and/or representatives; provided, however, that the foregoing indemnification shall not be applicable when arising solely from events or conditions occurring while the Bank is hi sole possession (subject to the rights of any creditors of Company) of such property. In no event shall Company be liable hereunder for any loss, damages, suits, penalties, costs, liabilities or expenses arising from any act of gross negligence of Bank, or its agents or employees.

 

It is expressly understood and agreed that the indemnifications granted herein are -intended to protect Bank, its past, present and future officers, directors, shareholders, employees, consultants and representatives from any claims that may arise by reason of the security interest, liens and/or mortgages granted to Bank, or under any other document or agreement given to secure repayment of any indebtedness from Company, whether or not such claims arise before or after Bank has foreclosed upon and/or otherwise become the owner of any such property.

 

It is expressly agreed and understood that the provisions of this Section 9 shall and are intended to be continuing and shall survive the repayment of any indebtedness from Company to Bank,

 

9.7                               Company shall maintain, and shall cause its Subsidiary to maintain, all permits, licenses and approvals required under applicable Environmental Laws except such permits, licenses and approvals the failure of which to have would reasonably not be expected to materially adversely affect its business or the value of its property or assets.

 

10.                               EVENTS OF DEFAULT

 

10.1                        Upon occurrence of any of the following events of default:

 

(a)                                 non-payment of any installment of the principal of any Note when due or any reimbursement obligation with respect to any Letter of Credit when due;

 

(b)                                 non-payment of any interest on any Note when due in accordance with the terms thereof, or upon non-payment of any other outstanding Indebtedness when due in accordance with the terms thereof;

 

(c)                                  default in the observance or performance of any of the conditions, covenants or agreements of Company set forth in Section 7 or set forth in Section 8;

 

(d)                                 default in observance or performance of any of the other conditions, covenants or agreements of Company herein set forth, and continuance thereof for thirty (30) days after written notice to Company by Bank;

 

(e)                                  any material representation or warranty made by Company or any other Person herein or in any instrument submitted pursuant hereto proves untrue in any material respect when made or deemed made;

 

(f)                                   default in the observance or performance of any of the conditions, covenants or agreements of Company, any Guarantor or any other Person set forth in any

 

23

 

collateral document which may be given to secure the indebtedness hereunder or in any other collateral document related to or connected with this Agreement or the indebtedness hereunder and continuance for fifteen (15) days after notice thereof by Bank to Company;

 

(g)                                  default in the payment of any other obligation of Company or any Subsidiary for borrowed money in an aggregate amount in excess of Ten Thousand Dollars ($10,000), or in the observance or performance of any conditions, covenants or agreements related or given with respect to any obligations for borrowed money in an aggregate amount in excess of Ten Thousand Dollars ($10,000) sufficient to permit the holder thereof to accelerate the maturity of such obligation;

 

(h)                                 judgments for the payment of money in excess of the sum of Ten Thousand Dollars ($10,000) in the aggregate shall be rendered against Company or any Subsidiary and such judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of thirty (30) consecutive days from the date of its entry and such judgment is not covered by insurance from a solvent insurer who is defending such action without reservation of rights;

 

(i)                                     the occurrence of any “reportable event”, as defined in the Employee Retirement Income Security Act of 1974 and any amendments thereto, which is determined to constitute grounds for termination by the Pension Benefit Guaranty Corporation of any employee pension benefit plan maintained by or on behalf of Company or any Subsidiary for the benefit of any of its employees or for the appointment by the appropriate United States District Court of a trustee to administer such plan and is reasonably likely that the occurrence of such event would result in a material adverse effect on Company, and such reportable event is not corrected and such determination is not revoked within thirty (30) days after notice thereof has been given to the plan administrator or Company; or the institution of proceedings by the Pension Benefit Guaranty Corporation to terminate any such employee benefit pension plan or to appoint a trustee to administer such plan; or the appointment of a trustee by the appropriate United States District Court to administer any such employee benefit pension plan;

 

(j)                                    if there shall be any change for any reason in the ownership or control of Company which results in James G. Petcoff owning less than 51% of the outstanding shares of stock of Company having voting power or if Company ceases to own 100% of the outstanding stock of its Subsidiaries;

 

(k)                                 if Bank shall for any reason deem itself to be insecure;

 

(l)                                     if any Guaranty is revoked or any individual Guarantor shall die;

 

(m)                             if (i) the Best rating for any Insurance Subsidiary is below the Required Rating, (ii) Best shall withdraw its rating for any Insurance Subsidiary or (iii) the Best rating for any Insurance Subsidiary shall be downgraded more than one level during any period of twelve (12) consecutive months;

 

24

 

(n)                                 if any of the Insurance Subsidiaries shall be prohibited by any Regulatory Agency from issuing new insurance policies in any jurisdiction and such prohibition shall have a material adverse effect on such Insurance Subsidiary’s business;

 

(o)                                 if any of the Insurance Subsidiaries shall fail to maintain such catastrophe reinsurance as a prudent insurance company would deem necessary, as reasonably determined by Bank; or

 

(p)                                 if the operation of Company or any of its Subsidiaries shall become subject to the control of any Regulatory Agency, other than in the normal course of business;

 

then, or at any time -thereafter, unless such default is remedied, Bank may give notice to Company declaring all outstanding indebtedness hereunder and under the Notes to be due and payable, whereupon all Indebtedness then outstanding hereunder and under the Notes and any Letters of Credit shall immediately become due and payable without further notice and demand, and Bank shall not be obligated to make further Advances or issue any Letter of Credit hereunder.

 

10.2                        If a creditors’ committee shall have been appointed for the business of Company or any Subsidiary in connection with any bankruptcy or insolvency; or if Company or any Subsidiary shall have made a general assignment for the benefit of creditors or shall have been adjudicated bankrupt, or shall have filed a voluntary petition in bankruptcy or for reorganization or to effect a plan or arrangement with creditors; or shall file an answer to a creditor’s petition or other petition filed against it, admitting the material allegations thereof for an adjudication in bankruptcy or for reorganization; or shall have applied for or permitted the appointment of a receiver, or trustee or custodian for any of its property or assets; or such receiver, trustee or custodian shall have been appointed for any of its property or assets (otherwise than upon application or consent of Company or any Subsidiary, as applicable), and such receiver, trustee or custodian so appointed shall not have been discharged within sixty (60) days after the date of his appointment or if an order shall be entered and shall not be dismissed or stayed within sixty (60) days from its entry, approving any petition for reorganization of Company or any Subsidiary, then the Notes and all Indebtedness then outstanding hereunder and under any Letters of Credit shall automatically become immediately due and payable and Bank shall not be .obligated to make further Advances or issue any Letters of Credit under this Agreement.

 

10.3                        Upon the occurrence and during the continuance of an Event of Default which is not cured with the cure period, if any, provided hereunder, unless all of the Indebtedness is then immediately fully paid, Bank shall have and may exercise any one or more of the rights and remedies for which provision is made for a secured party under the Michigan Uniform Commercial Code (or other applicable law), under the Security Agreements or under any other document contemplated hereby or for which provision is provided by law or in equity, including, without limitation, the right to take possession and sell, lease or otherwise dispose of any or all of the collateral and to. set off against the Indebtedness any amount owing by Bank to Company and/or any property of Company in possession of Bank. Company agrees, upon request of Bank, ‘to assemble the collateral and make it available to Bank at any place designated by Bank which is reasonably convenient to Bank and Company.

 

25

 

10.4                        All of the Indebtedness shall constitute one loan secured by Bank’s security interest in the collateral and by all other security interests, mortgages, liens, claims, and encumbrances now and from time to time hereafter granted from Company to Bank. Upon the occurrence and during the continuance of an Event of Default which is not cured within the cure period, if any, provided hereunder, Bank may in its sole discretion apply the collateral to any portion of the Indebtedness. The proceeds of any sale or other disposition of the Collateral authorized by this Agreement shall be applied by Bank, first upon all expenses authorized by the Michigan Uniform Commercial Code (or other applicable law) or otherwise in connection with the sale and all reasonable attorneys’ fees and legal expenses incurred by Bank; the balance of the proceeds of such sale or other disposition shall be applied in the payment of the Indebtedness, first to interest, then to principal, then to other Indebtedness and the surplus, if any, shall be paid over to Company or to such other Person or Persons as may be entitled thereto under applicable law, Company shall remain liable for any deficiency, which Company shall pay to Bank immediately upon demand.

 

10.5                        Upon the occurrence and during the continuance of any Event of Default, Company shall immediately upon demand by Bank deposit with Bank cash collateral in the amount equal to 105% of the maximum amount available to be drawn at any time under any Letter of Credit then outstanding,

 

11.                               MISCELLANEOUS

 

11.1                        This Agreement shall be binding upon and shall inure to the benefit of Company and Bank and their respective successors and assigns, except that the credit provided for under this Agreement and no part thereof and no obligation of Bank hereunder shall be assignable or otherwise transferable by Company.

 

11.2                        Company shall pay all closing costs and expenses, including, by way of description and not limitation, reasonable attorney fees and lien search fees incurred by Bank in connection with the commitment, consummation and closing of this Agreement. All of said amounts required to be paid by Company may, at Bank’s option, be charged by Bank as an advance against the proceeds of the Notes. All costs, including reasonable attorney fees incurred by Bank in protecting or enforcing any of its or any of the Bank’s rights against Company or any collateral or in defending Bank from any claims or liabilities by any party or otherwise incurred by Bank in connection with an event of default or the enforcement of this Agreement or the related documents, including by way of description and not limitation, such charges in any court or bankruptcy proceedings or arising out of any claim or action by any person against Bank which would not have been asserted were it not for Bank’s relationship with Company hereunder, shall also be paid by Company.

 

11.3                        Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP.

 

11.4                        No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof

 

26

 

preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Agreement are cumulative and not exclusive of any right or remedies which Bank would otherwise have.

 

11.5                        Except as expressly provided otherwise in this Agreement, all notices and other communications provided to any party hereto under this Agreement shall be in writing and shall be given by personal delivery, by mail, by reputable overnight courier, by telex or by facsimile and addressed or delivered to it at its address set forth below or at such other address as may be designated by such party in a notice to the other parties that complies as to delivery with the terms of this Section 11.5. Any notice, if personally delivered or if mailed and properly addressed with postage prepaid and sent by registered or certified mail, shall be deemed given when received; any notice, if given to a reputable overnight courier and properly addressed, shall be deemed given two (2) Business Days after the date on which it was sent, unless it is actually received sooner by the named addressee; and any notice, if transmitted by telex or facsimile, shall be deemed given when received (answerback confirmed in the case of telexes and receipt confirmed in the case of telecopies). Bank may, but shall not be required to, take any action on the basis of any notice given to it by telephone, but Company shall promptly confirm such notice in writing or by telex or facsimile, and such notice will not be deemed to have been received until such confirmation is deemed received in accordance with the provisions of this Section set forth above. If such telephonic notice conflicts with any such confirmation, the terms of such telephonic notice shall control.

 

To Company:

550 W. Merrill Street, Suite 200 
 Birmingham, Michigan 48009 
 Attention: James G. Petcoff 
 Fax No. (248) 559-0870

 

To Bank:

411 W. Lafayette

Detroit, Michigan 48226 -

Attention: Paul G. Russo

Fax No. (313) 222-5636

 

11.6                        This Agreement and the Notes have been delivered at Detroit, Michigan, and shall be governed by and construed and enforced in accordance with the laws of the State of Michigan. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision. or the remaining provisions of this Agreement.

 

11.7                        No amendments or waiver of any provisions of this Agreement nor consent to any departure by Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Bank, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, waiver

 

27

 

or consent with respect to any provision of this Agreement shall affect any other provision of this Agreement.

 

11.8                        All sums payable by Company to Bank under this Agreement or the other documents contemplated hereby shall be paid directly to Bank at its principal office set forth in Section 11.5 hereof in immediately available United States funds, without set off, deduction or counterclaim. In its sole discretion, Bank may charge any and all deposit or other accounts (including without limit an account evidenced by a certificate of deposit) of Company with Bank for all or a part of any Indebtedness then due; provided, however, that this authorization shall not affect Company’s obligation to pay, when due, any Indebtedness whether or not account balances are sufficient to pay amounts due.

 

11.9                        Any payment of the Indebtedness made by mail will be deemed tendered and received only upon actual receipt by Bank at the address designated for such payment, whether or not Bank has authorized payment by mail or any other manner, and shall not be deemed to have been made in a timely manner unless received on the date due for such payment, time being of the essence. Company expressly assumes all risks of loss or liability resulting from non-delivery or delay of delivery of any item of payment transmitted by mail or in any other manner. Acceptance by Bank of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default, and at any time thereafter and until the entire amount then due has been paid, Bank shall be entitled to exercise any and all rights conferred upon it herein upon the occurrence of an Event of Default. Upon the occurrence and during the continuance of an Event of Default, Company waives the right to direct the application of any and all payments at any time or times hereafter received by Bank from or on behalf of Company. Upon the occurrence and during the continuance of an Event of Default, Company agrees that ,Bank Shall have the continuing exclusive right to apply and to reapply any and all payments received at any time or times hereafter against the Indebtedness in such manner as Bank may deem advisable, notwithstanding any entry by Bank upon any of its books and records. Company expressly agrees that to the extent that Bank receives any payment or benefit and such payment or benefit, or any part thereof, is subsequently invalidated, declared to be fraudulent or preferential, set aside or is required to be repaid to a trustee, receiver, or any other party under any bankruptcy act, state or federal law, common law or equitable cause, then to the extent of such payment or benefit, the Indebtedness or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or benefit had not been made and, further, any such repayment by Bank, to the extent that Bank did not directly receive a corresponding cash payment, shall be added to and be additional Indebtedness payable upon demand by Bank.

 

11.10                 In the event Company’s obligation to pay interest on the principal balance of the Note is or becomes in excess of the maximum interest rate which Company is permitted by law to contract or agree to pay, giving due consideration to the execution date of this Agreement, then, in that event, the rate of interest applicable shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of such maximum rate shall be deemed to have been payments in reduction of principal and not of interest.

 

28

 

11.11                 COMPANY AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

 

11.12                 This Agreement shall become effective upon the execution hereof by Bank and Company.

 

29

 

WITNESS the due execution hereof as of the day and year first above written.

 

	
COMERICA BANK
    	
CONIFER HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Paul G. Russo
    	
 
    	
 
    
	
Its:
    	
Vice President
    	
 
    	
Its:
    	
 
    

 

(Signature Page to Amended and Restated Credit Agreement)

 

 

	

    	
Master Revolving Note

LIBOR-based Rate/Prime Referenced Rate

Maturity Date-Optional Advances (Business and   Commercial Loans Only)
    

 

	
AMOUNT
    	
 
    	
NOTE DATE
    	
 
    	
MATURITY DATE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
$17,500,000
    	
 
    	
September 29, 2014
    	
 
    	
August 1, 2016
    

 

On or before the Maturity Date set forth above, FOR VALUE RECEIVED, CONIFER HOLDINGS, INC. (referred to herein as the “undersigned”) promises to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Michigan, the principal sum of SEVENTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($17,500,000), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon as hereinafter set forth.

 

This Note is a note under which Advances, repayments and re-Advances may be made from time to time, subject to the terms and conditions of this Note. AT NO TIME SHALL THE BANK BE UNDER ANY OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMIT, IF THE BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) AND THE BANK, AT ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE, AND IN ITS SOLE DISCRETION, MAY REFUSE TO MAKE ADVANCES TO THE UNDERSIGNED WITHOUT INCURRING ANY LIABILITY DUE TO THIS REFUSAL AND WITHOUT AFFECTING THE UNDERSIGNED’S LIABILITY UNDER THIS NOTE FOR ANY AND ALL AMOUNTS ADVANCED.

 

Subject to the terms and conditions of this Note, each of the Advances made hereunder shall bear interest at the LIBOR-based Rate plus the Applicable Margin or the Prime Referenced Rate plus the Applicable Margin, as elected by the undersigned or as otherwise determined under this Note.

 

Accrued and unpaid interest on the unpaid balance of each outstanding Advance bearing interest at the Prime Referenced Rate hereunder shall be payable quarterly, in arrears, on the first Business Day of each calendar quarter (commencing January 2, 2012), until maturity (whether as stated herein, by acceleration, or otherwise). Interest accruing on the basis of the Prime Referenced Rate shall be computed on the basis of a year of 360 days, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Prime Referenced Rate on the date of each such change. Accrued and unpaid interest on each LIBOR-based Advance shall be payable on the last day of the Interest Period applicable thereto (unless sooner accelerated in accordance with the terms of this Note); provided, however, if such Interest Period in respect of any such LIBOR-based Advance is more than three (3) months, interest thereon shall also be payable at intervals of three (3) months from the date of such Advance. Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

 

From and after the occurrence of any Default hereunder, and so long as any such Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate(s), which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the maximum rate permitted by law.

 

The amount and date of each Advance, its Applicable Interest Rate, its Interest Period, if applicable, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

The undersigned may request an Advance hereunder, including the refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance, upon the delivery to Bank of a Request for Advance executed by the undersigned, subject to the following: (a) no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (b) each such Request for Advance shall set forth the information required on the Request for Advance form annexed hereto as Exhibit “A”; (c) each such Request for Advance shall be delivered to Bank by 11:00 a.m. (Detroit, Michigan time) on the proposed date of the requested Advance; (d) the principal amount of each LIBOR-based Advance shall be at least Two Hundred Fifty Thousand Dollars ($250,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion); (e) the proposed date of any refunding of any outstanding LIBOR-based Advance as another LIBOR-based Advance or the conversion of any outstanding LIBOR-based Advance to another type of Advance shall only be on the last day of the Interest Period applicable to such outstanding LIBOR-based Advance; (f) after giving effect to such Advance, the aggregate unpaid principal amount of Advances outstanding under this Note shall not exceed the face amount of this Note; and (g) a Request for Advance, once delivered to Bank, shall not be revocable by the undersigned; provided, however, as aforesaid, Bank shall not be obligated to make any Advance under this Note.

 

Advances hereunder may be requested in the undersigned’s discretion by telephonic notice to Bank. Any Advance requested by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank, either by first class mail, facsimile or other means of delivery acceptable to Bank, of the written Request for Advance aforementioned. The undersigned acknowledge(s) that if Bank makes an Advance based on a telephonic request, it shall be for the undersigned’s convenience and all risks involved in the use of such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor. Bank shall have no duty to confirm the authority of anyone requesting an Advance by telephone.

 

 

lf, as to any outstanding LIBOR-based Advance, Bank shall not receive a timely Request for Advance, or telephonic notice, in accordance with the foregoing requesting the refunding or continuation of such Advance as another LIBOR-based Advance for a specified Interest Period or the conversion of such Advance to a Prime-based Advance, effective as of the last day of the Interest Period applicable to such outstanding LIBOR-based Advance, and as of the last day of each succeeding Interest Period, the principal amount of such Advance which is not then repaid shall be automatically refunded or continued as a LIBOR-based Advance having an Interest Period equal to the same period of time as the Interest Period then ending for such outstanding LIBOR-based Advance, unless the undersigned is/are not entitled to request LIBOR-based Advances hereunder or otherwise elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable interest Rate hereunder for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Prime Referenced Rate plus the Applicable Margin shall be the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default hereunder, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

lf the undersigned make(s) any payment of principal with respect to any LIBOR-based Advance on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment or otherwise), or if the undersigned fail(s) to borrow any LIBOR-based Advance after notice has been given by the undersigned (or any of them) to Bank in accordance with the terms of this Note requesting such Advance, or if the undersigned fail(s) to make any payment of principal or interest in respect of a LIBOR-based Advance when due, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties, whether or not Bank shall have funded or committed to fund such Advance. Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the period from the date of such prepayment or of such failure to borrow, refund or convert, through the last day of the relevant Interest Period, at the applicable rate of interest for said Advance(s) provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading

 

 

banks in the interbank eurodollar market. Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant LIBOR-based Advance through the purchase of an underlying deposit in an amount equal to the amount of such Advance and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund any LIBOR-based Advance in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph. Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay all or part of the outstanding balance of any Prime-based Advance under this Note or any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid.

 

For any LIBOR-based Advance, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying such Advance on the books of such LIBOR Lending Office.

 

if, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Advance or Interest Period, or (c) the LIBOR-based Rate plus the Applicable Margin will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate, then Bank shall forthwith give notice thereof to the undersigned. Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance shall be suspended, and the Prime Referenced Rate plus the Applicable Margin shall be the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to make or maintain any Advance with interest based upon the LIBOR-based Rate, Bank shall forthwith give notice thereof to the undersigned. Thereafter, (a) until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance shall be suspended, and thereafter, the undersigned may select only the Prime Referenced Rate plus the Applicable Margin as the Applicable Interest Rate for the Indebtedness hereunder, and (b) if Bank may not lawfully continue to maintain an outstanding LIBOR-based Advance to the end of the then current Interest Period applicable thereto, the Prime Referenced Rate plus the Applicable Margin shall be the Applicable Interest Rate for the remainder of such Interest Period with respect to such outstanding Advance.

 

If any Change in Law shall: (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s

 

 

principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction. A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capita! and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder. A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or several, contingent or absolute, now existing or later arising, and however evidenced and whether incurred voluntarily or involuntarily, known or unknown, or originally payable to the Bank or to a third party and subsequently acquired by Bank including, without limitation, any late charges; loan fees or charges; overdraft indebtedness; costs incurred by Bank in establishing, determining, continuing or defending the validity or priority of any security interest, pledge or other lien or in pursuing any of its rights or remedies under any loan document (or otherwise) or in connection with any proceeding involving the Bank as a result of any financial accommodation to the undersigned (or any of them); and reasonable costs and expenses of attorneys and paralegals, whether inside or outside counsel is used, and whether any suit or other action is instituted, and to court costs if suit or action is instituted, and whether any such fees, costs or expenses are incurred at the trial court level or on appeal, in bankruptcy, in administrative proceedings, in probate proceedings or otherwise (collectively “Indebtedness”) are secured by and the Bank is granted a security interest in and lien upon all items deposited in any account of any of the undersigned with the Bank and by all proceeds of these items (cash or otherwise), all account balances of any of the undersigned from time to time

 

 

with the Bank, by all property of any of the undersigned from time to time in the possession of the Bank and by any other collateral, rights and properties described in each and every deed of trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement which has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or for the benefit of the Bank (collectively “Collateral”). Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

Upon the occurrence of a Default, then the Bank may, at its option and without prior notice to the undersigned (or any of them), declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned (or any of them) or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank any amounts when due, and to the extent that are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Michigan Uniform Commercial Code and waive(s) ail other suretyship defenses or right to

 

 

discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness. The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to reimburse Bank, or any other holder or owner of this Note, for any and all costs and expenses (including, without limit, court costs, legal expenses and reasonable attorneys’ fees, whether inside or outside counsel is used, whether or not suit is instituted, and, if suit is instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or administrative proceeding or otherwise) incurred in collecting or attempting to collect this Note or the Indebtedness or incurred in any other matter or proceeding relating to this Note or the Indebtedness.

 

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

For the purposes of this Note, the following terms have the following meanings:

 

“Advance” means a borrowing requested by the undersigned and made by Bank under this Note, including any refunding of an outstanding Advance as the same type of Advance or the conversion of any such outstanding Advance to another type of Advance, and shall include a LIBOR-based Advance and a Prime-based Advance.

 

“Applicable Interest Rate” means the LIBOR-based Rate plus the Applicable Margin or the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

“Applicable Margin” means:

 

1.                                      in respect of the LIBOR—based Rate, two and three quarters percent (2 3/4 %) per annum; and

 

2.                                      in respect of the Prime Referenced Rate, one percent (1%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to LIBOR-based Advances, the LIBOR-based Rate and the Daily Adjusting LIBOR Rate, also a day on

 

 

which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including any risk-based capital guidelines. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel Ill, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

2.1                               for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 am. (Detroit, Michigan time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall he determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the applicable principal amount of Indebtedness hereunder and for a period equal to one (1) month;

 

divided by

 

2.2                               1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation

 

 

or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“Default” shall mean any Event of Default, as defined in the Credit Agreement dated April 30, 2010 between undersigned and Bank, as the same may be amended or modified from time to time (“Credit Agreement”).

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Interest Period” means, with respect to a LIBOR-based Advance, a period of one (1) month, two (2) months, three (3) months or six (6) months, as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the day a LIBOR-based Advance is made or the day an Advance is converted to a LIBOR-based Advance or the day an outstanding LIBOR-based Advance is refunded or continued as another LIBOR-based Advance for an applicable Interest Period, provided that any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month. In the event that any LIBOR-based Advance is at any time refunded or continued as another LIBOR-based Advance for an additional Interest Period, such Interest Period shall commence on the last day of the preceding Interest Period then ending.

 

“LIBOR-based Advance” means an Advance which bears interest at the LIBOR-based Rate plus the Applicable Margin.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                 the LIBOR Rate;

 

divided by

 

(b)                                 1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

 

“LIBOR Lending Office” means Bank’s office located in the Cayman Islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the principal amount of the respective LIBOR-based Advance which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime-based Advance” means an Advance which bears interest at the Prime Referenced Rate plus the Applicable Margin.

 

“Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the Prime Rate in effect on such day, but in no event and at no time shall the Prime Referenced Rate be less than the sum of the Daily Adjusting LIBOR Rate for such day plus two and one-half percent (2.50%) per annum. If, at any time, Bank determines that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for any day, the Prime Referenced Rate for each such day shall be the Prime Rate in effect at such time, but not less than two and one-half percent (2.50%) per annum.

 

“Request for Advance” means a Request for Advance issued by the undersigned under this Note in the form annexed to this Note as Exhibit “A”.

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM OR THE HIGHEST APPLICABLE USURY CEILING, WHICHEVER IS LESS.

 

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

 

This Note amends and restates and increases that certain Master Revolving Note dated as of March    , 2013, made in the principal amount of Ten Million Dollars ($10,000,000) by the undersigned payable to Bank (the “Prior Note”); provided, however, (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Note, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all collateral and guaranties securing or supporting the Prior Note shall continue to secure and support this Note.

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
SIGNATURE OF
    
	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
TITLE
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
SIGNATURE OF
    
	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
TITLE
    

 

	
26300 Northwestern Highway
    	
 
    	
Southfield
    	
 
    	
Michigan
    	
 
    	
48076
    
	
STREET ADDRESS
    	
 
    	
CITY
    	
 
    	
STATE
    	
 
    	
ZIP
    

 

	
For Bank Use Only
    
	
 
    
	
LOAN OFFICER INITIALS
    	
LOAN GROUP NAME
    	
OBLIGOR NAME
   Conifer Holdings, Inc.
    	
 
    	
 
    
	
LOAN OFFICER ID.   NO.
    	
LOAN GROUP NO.
    	
OBLIGOR NO.
    	
NOTE NO.
    	
AMOUNT
   $17,500,000
    

 

(Signature Page to Master Revolving Note — 4310843)

 

 

EXHIBIT “A”

 

REQUEST FOR ADVANCE

 

CONIFER HOLDINGS, INC. (referred to herein as the “undersigned”) hereby requests COMERICA BANK (“Bank”) to make a                            * Advance to the undersigned on           ,     , in the amount of                                                          Dollars ($        ) under the Master Revolving Note dated as of September 29, 2014, issued by the undersigned to said Bank in the face amount of Seventeen Million Five Hundred Thousand Dollars ($17,500,000) (the “Note”). The Interest Period for the requested Advance, if applicable, shall be                          (    )** month(s).  In the event that any part of the Advance requested hereby constitutes the refunding or conversion of an outstanding Advance, the amount to be refunded or converted is                                     Dollars ($                 ), and the last day of the Interest Period for the amounts being converted or refunded hereunder, if applicable, is            , 201  .

 

The undersigned represent(s), warrant(s) and certify(ies) that no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing under the Note, and none will exist upon the making of the Advance requested hereunder. The undersigned further certify(ies) that upon advancing the sum requested hereunder, the aggregate principal amount outstanding under the Note will not exceed the face amount thereof. If the amount advanced to the undersigned under the Note shall at any time exceed the face amount thereof, the undersigned will immediately pay such excess amount, without any necessity of notice or demand.

 

The undersigned hereby authorize(s) Bank to disburse the proceeds of the Advance being requested by this Request for Advance by crediting the account of the undersigned with Bank separately designated by the undersigned or as the undersigned may otherwise direct, unless this Request for Advance is being submitted for a conversion or refunding of all or any part of any outstanding Advance(s), in which case, such proceeds shall be deemed to be utilized, to the extent necessary, to refund or convert that portion stated above of the existing outstandings under such Advance(s).

 

Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Note.

 

Dated this         day of            , 201  .

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    

 

 

* Insert, as applicable, “LIBOR-based” or “Prime Referenced Rate”.

 

**For a LIBOR-based Advance, insert the applicable Interest Period (i.e., “one (1)”, “two (2)” or “three (3)” months).

 

 

REQUEST FOR ADVANCE

 

CONIFER HOLDINGS, INC. (referred to herein as the “undersigned”) hereby requests COMERICA BANK (“Bank”) to make a libor based* Advance to the undersigned on September 30, 2014, in the amount of Seven Million Five Hundred Thousand 00/100 Dollars ($7,500,000.00) under the Master Revolving Note dated as of September 29, 2014, issued by the undersigned to said Bank in the face amount of Seventeen Million Five Hundred Thousand Dollars ($17,500,000) (the “Note”). The Interest Period for the requested Advance, if applicable, shall be three (3)** month(s).  In the event that any part of the Advance requested hereby constitutes the refunding or conversion of an outstanding Advance, the amount to be refunded or converted is                                     Dollars ($                 ), and the last day of the Interest Period for the amounts being converted or refunded hereunder, if applicable, is            , 201  .

 

The undersigned represent(s), warrant(s) and certify(ies) that no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing under the Note, and none will exist upon the making of the Advance requested hereunder. The undersigned further certify(ies) that upon advancing the sum requested hereunder, the aggregate principal amount outstanding under the Note will not exceed the face amount thereof. If the amount advanced to the undersigned under the Note shall at any time exceed the face amount thereof, the undersigned will immediately pay such excess amount, without any necessity of notice or demand.

 

The undersigned hereby authorize(s) Bank to disburse the proceeds of the Advance being requested by this Request for Advance by crediting the account of the undersigned with Bank separately designated by the undersigned or as the undersigned may otherwise direct, unless this Request for Advance is being submitted for a conversion or refunding of all or any part of any outstanding Advance(s), in which case, such proceeds shall be deemed to be utilized, to the extent necessary, to refund or convert that portion stated above of the existing outstandings under such Advance(s).

 

Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Note.

 

Dated this 30th day of September, 2014.

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
President
    

 

* Insert, as applicable, “LIBOR-based” or “Prime Referenced Rate”.

 

**For a LIBOR-based Advance, insert the applicable Interest Period (i.e., “one (1)”, “two (2)” or “three (3)” months).

 

 

	

    	
Installment Note

LIBOR-based Rate/Prime Referenced Rate

 
    

 

	
AMOUNT
    	
 
    	
NOTE DATE
    	
 
    	
MATURITY DATE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
$7,500,000
    	
 
    	
September 29, 2014
    	
 
    	
September 29, 2019
    

 

FOR VALUE RECEIVED, CONIFER HOLDINGS, INC. (referred to herein as the “undersigned”) promises to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Michigan, the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000), payable in quarterly installments each in the amounts set forth on attached Schedule 1, PLUS interest as set forth below, commencing on January 1, 2015, and on each succeeding Installment Payment Date thereafter, until the Maturity Date set forth above, when the entire unpaid balance of principal, interest and all other sums hereunder shall be due and payable in full (unless sooner accelerated in accordance with the terms of this Note).

 

Subject to the terms and conditions of this Note, the unpaid principal balance outstanding under this Note from time to time shall bear interest at the LIBOR-based Rate plus the Applicable Margin or the Prime Referenced Rate plus the Applicable Margin, or any number or combination of such interest rates, as elected by the undersigned or as otherwise determined under this Note.

 

Interest accruing hereunder on the basis of the Prime Referenced Rate shall be computed on the basis of a 360-day year if this Note evidences a business or commercial loan or a 365/366-day year if a consumer loan, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Prime Referenced Rate on the date of each such change. Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

Accrued and unpaid interest hereunder shall be payable, in arrears, on the first (1st) day of each April, July, October, and January commencing January 1, 2015, and on the Maturity Date (unless sooner accelerated in accordance with the terms of this Note).

 

Payments under this Note shall be first applied to accrued and unpaid interest hereunder and the balance, if any, to principal.

 

In the event the periodic installments set forth above are inclusive of interest, the undersigned hereby acknowledge(s) and agree(s) that such installments are based upon the original principal amount of Indebtedness outstanding under this Note, an assumed fixed rate of interest, and an assumed amortization term, notwithstanding the fact that the Applicable Interest Rate(s) may change from time to time during the term of this Note. Therefore, in the event that the Applicable Interest Rate(s) change(s) at any time as a result of any change(s) in the LIBOR-based Rate and/or the Prime Referenced Rate, Bank may, in its sole discretion, recalculate the installments of principal and interest required to be made by the undersigned under and pursuant to the terms

 

 

of this Note, and the undersigned agree(s) to pay such installments as they may be recalculated by Bank, and the undersigned acknowledge(s) and agree(s) that any such recalculation shall not affect the Maturity Date of this Note or any other terms or provisions herein set forth.

 

From and after the occurrence of any Default hereunder, and so long as any such Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate(s), which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the maximum rate permitted by law.

 

The amount from time to time outstanding under this Note, the Applicable Interest Rate(s), the Interest Period(s), if applicable, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

The undersigned may elect the LIBOR-based Rate plus the Applicable Margin or the Prime Referenced Rate plus the Applicable Margin as the Applicable Interest Rate for all or any part of the unpaid principal balance outstanding under this Note, subject to the following: (a) the undersigned shall deliver to Bank, by 11:00 a.m. (Detroit, Michigan time) on the proposed effective date of such election, a Notice of Interest Rate executed by the undersigned setting forth the information required on the Notice of Interest Rate form attached hereto as Exhibit “A”; (b) any conversion from an Applicable Interest Rate based upon the LIBOR-based Rate to an Applicable Interest Rate based upon the Prime Referenced Rate shall only be effective as of the last day of the Interest Period applicable to such LIBOR-based Rate; and (c) in the case of a LIBOR-based Rate Election, (i) the principal Indebtedness outstanding under this Note which is to bear interest on the basis of the relevant LIBOR-based Rate for the applicable Interest Period must be at least Two Hundred Fifty Thousand Dollars ($250,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion) as of the first day of such Interest Period; (ii) no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (iii) if, at the time of any such election, the LIBOR-based Rate plus the Applicable Margin is the Applicable Interest Rate with respect to all or any part of the Indebtedness which is to be subject to such election, such election shall be effective only as of the last day of the Interest Period applicable to such existing LIBOR-based Rate; (iv) the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make the mandatory installment payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and (v) any LIBOR-based Rate Election

 

6

 

by the undersigned hereunder shall not be revocable by the undersigned. Any election by the undersigned of an Applicable Interest Rate based upon the Prime Referenced Rate for all or any part of the Indebtedness hereunder shall remain in effect, and the Prime Referenced Rate plus the Applicable Margin shall continue as the Applicable Interest Rate for such Indebtedness hereunder, unless and until Bank receives a Notice of Interest Rate from the undersigned in accordance with the foregoing making a LIBOR-based Rate Election hereunder in respect of such Indebtedness, subject in all respects to the terms and conditions of this Note.

 

In the event that the LIBOR-based Rate is at any time the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, effective as of the last day of the Interest Period applicable to such LIBOR-based Rate and as of the last day of each succeeding Interest Period, the LIBOR-based Rate for such Indebtedness shall be determined as of each such date in accordance with the terms of this Note, and the LIBOR-based Rate plus the Applicable Margin shall continue to be the Applicable Interest Rate for and in respect of such Indebtedness for successive Interest Periods equal to the same period of time as the Interest Period then ending for such LIBOR-based Rate (but not less than one (1) month), unless and until the Bank receives a Notice of Interest Rate from the undersigned in accordance with the terms of this Note requesting a LIBOR-based Rate with an Interest Period having a duration different from the Interest Period then in effect or requesting the conversion to the Prime Referenced Rate plus the Applicable Margin as the Applicable Interest Rate for such Indebtedness hereunder; or unless the undersigned is/are not entitled to elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Prime Referenced Rate plus the Applicable Margin shall be the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default hereunder, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

In the event that the LIBOR-based Rate plus the Applicable Margin is the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, and any payment or prepayment of any such Indebtedness shall occur on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment

 

7

 

or otherwise), or if the undersigned make(s) a LIBOR-based Rate Election with respect to all or any part of the principal indebtedness outstanding under this Note in accordance with the terms and conditions hereof, and, subsequent to such election, but prior to the commencement of the Interest Period applicable thereto, the undersigned (or any of them) revoke(s) such election for any reason whatsoever, or if the undersigned shall fail to make any payment of principal or interest hereunder at any time that the LIBOR-based Rate is the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties. Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, for the period from the date of such prepayment through the last day of the relevant Interest Period, at the applicable rate of interest provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant Indebtedness hereunder through the purchase of an underlying deposit in an amount equal to the amount of such Indebtedness and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund the Indebtedness hereunder in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph. Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay all or any part of the outstanding balance of any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid. Partial prepayments hereunder shall be applied to the installments hereunder in the inverse order of their maturities.

 

For any Indebtedness hereunder for which the Applicable Interest Rate is at any time based upon the LIBOR-based Rate, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying this Note and the relevant Indebtedness hereunder on the books of such LIBOR Lending Office.

 

If, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Interest Period, or (c) the LIBOR-based Rate plus the Applicable Margin will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate, then Bank shall forthwith give notice thereof to the undersigned. Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, any obligation of the Bank to maintain any of the Indebtedness outstanding under this Note at an Applicable Interest Rate based upon the LIBOR-based Rate shall be suspended, and the Prime Referenced Rate plus the

 

8

 

Applicable Margin shall be the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to make or maintain any of the Indebtedness under this Note with interest based upon the LIBOR-based Rate, Bank shall forthwith give notice thereof to the undersigned. Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, the Prime Referenced Rate plus the Applicable Margin shall be the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall: (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction. A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder. A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

9

 

This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or several, contingent or absolute, now existing or later arising, and however evidenced and whether incurred voluntarily or involuntarily, known or unknown, or originally payable to the Bank or to a third party and subsequently acquired by Bank including, without limitation, any late charges; loan fees or charges; overdraft indebtedness; costs incurred by Bank in establishing, determining, continuing or defending the validity or priority of any security interest, pledge or other lien or in pursuing any of its rights or remedies under any loan document (or otherwise) or in connection with any proceeding involving the Bank as a result of any financial accommodation to the undersigned (or any of them); and reasonable costs and expenses of attorneys and paralegals, whether inside or outside counsel is used, and whether any suit or other action is instituted, and to court costs if suit or action is instituted, and whether any such fees, costs or expenses are incurred at the trial court level or on appeal, in bankruptcy, in administrative proceedings, in probate proceedings or otherwise (collectively ‘Indebtedness”) are secured by and the Bank is granted a security interest in and lien upon all items deposited in any account of any of the undersigned with the Bank and by all proceeds of these items (cash or otherwise), all account balances of any of the undersigned from time to time with the Bank, by all property of any of the undersigned from time to time in the possession of the Bank and by any other collateral, rights and properties described in each and every deed of trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement which has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or for the benefit of the Bank (collectively “Collateral”). Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

Upon the occurrence of a Default, then the Bank may, at its option and without prior notice to the undersigned (or any of them), declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned (or any of them) or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with

 

10

 

the Bank are insufficient to pay to the Bank any amounts when due, and to the extent that are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Michigan Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness. The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to pay to or reimburse Bank, or any other holder or owner of this Note, on demand, any and all costs and expenses of Bank or such holder or owner (including, without limit, court costs, legal expenses and reasonable attorneys’ fees, whether inside or outside counsel is used, whether or not suit is instituted, and, if suit is instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or administrative proceeding or otherwise) incurred in connection with the preparation, execution, delivery, amendment, administration, and performance of this Note and the related documents, or incurred in collecting or attempting to collect this Note or the Indebtedness, or incurred in any other matter or proceeding relating to this Note or the Indebtedness.

 

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing ,a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

For the purposes of this Note, the following terms have the following meanings:

 

11

 

“Applicable Interest Rate” means, in respect of all or any part of the Indebtedness hereunder, either the LIBOR-based Rate plus the Applicable Margin or the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

“Applicable Margin” means:

 

(a)                                 in respect of the LIBOR—based Rate, three and one quarter percent (31/4%) per annum; and

 

(b)                                 in respect of the Prime Referenced Rate, one and one half percent (11⁄2%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to the LIBOR-based Rate and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including any risk-based capital guidelines. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel Ill, shall each be deemed to be a “Change in Law’, regardless of the date enacted, adopted, issued or implemented.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

(a)                                 for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of

 

12

 

the Bloomberg Financial Markets Information Service as of 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the principal amount of the Indebtedness hereunder and for a period equal to one (1) month;

 

divided by

 

(b)                                 1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“Default” shall mean any Event of Default, as defined in the Credit Agreement dated April 30, 2010 between the undersigned and Bank, as the same may be amended or modified from time to time (“Credit Agreement”).

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Installment Payment Date” means January 1, 2015, and the first (1st) day of April, July, October and January thereafter, until (and including) the Maturity Date.

 

“Interest Period” means, a period of one (1) month, two (2) months, or three (3) months (or such shorter period as may be acceptable to Bank in its sole discretion), as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the effective date of a LIBOR-based Rate Election by the undersigned with respect to all or any part of the Indebtedness hereunder, or in the case of successive continuations of the LIBOR-based Rate plus the Applicable Margin as the Applicable Interest Rate hereunder, as herein provided, on the last day of the preceding Interest Period then ending, provided that:

 

13

 

(a)                                 any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month;

 

(b)                                 the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make the mandatory installment payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and

 

(c)                                  no Interest Period shall extend beyond the Maturity Date.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                 the LIBOR Rate;

 

divided by

 

(b)                                 1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities’ as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“LIBOR-based Rate Election” means an election by the undersigned of the LIBOR-based Rate plus the Applicable Margin as the Applicable Interest Rate for all or any part of the indebtedness hereunder, subject to and in accordance with the terms and conditions of this Note.

 

“LIBOR Lending Office” means Bank’s office located in the Cayman islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate’ shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service,

 

14

 

the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the amount of the outstanding Indebtedness hereunder which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period.

 

“Notice of Interest Rate” means a Notice of Interest Rate in form similar to that attached to this Note as Exhibit “A” issued and delivered by the undersigned to Bank in accordance with the terms of this Note.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the Prime Rate in effect on such day, but in no event and at no time shall the Prime Referenced Rate be less than the sum of the Daily Adjusting LIBOR Rate for such day plus two and one-half percent (2.50%) per annum. If, at any time, Bank determines that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for any day, the Prime Referenced Rate for each such day shall be the Prime Rate in effect at such time, but not less than two and one-half percent (2.50%) per annum.

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM OR THE HIGHEST APPLICABLE USURY CEILING, WHICHEVER IS LESS.

 

15

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT. THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
SIGNATURE OF
    
	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
TITLE
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
SIGNATURE OF
    
	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
TITLE
    

 

	
26300 Northwestern Highway
    	
 
    	
Southfield
    	
 
    	
Michigan
    	
 
    	
48076
    
	
STREET ADDRESS
    	
 
    	
CITY
    	
 
    	
STATE
    	
 
    	
ZIP
    

 

	
For Bank Use Only
    	
CCAR#
    
	
 
    
	
LOAN OFFICER INITIALS
    	
LOAN GROUP NAME
    	
BASE RATE INDEX

20129
    	
OBLIGOR NAME 
   Conifer Holdings, Inc.
    
	
LOAN OFFICER ID.   NO.
    	
LOAN GROUP NO.
    	
OBLIGOR NO.
    	
NOTE NO.
    	
AMOUNT
   $7,500,000
    
						

 

(Signature Page to Installment Note - 4310842)

 

 

EXHIBIT “A”

 

NOTICE OF INTEREST RATE

 

With reference to the Installment Note dated as of September 29, 2014 (the “Note”), made in the principal amount of $7,500,000 by Conifer Holdings, Inc. (referred to herein as the “undersigned”) payable to Comerica Bank (“Bank”), and subject to the terms and conditions of the Note, the undersigned hereby elect(s) the              * plus the Applicable Margin as the Applicable Interest Rate for $            of principal Indebtedness outstanding under the Note.  Such election shall be effective as of                           ,     , and the Interest Period, if applicable, shall be for                            (    )** month(s), and shall end on                  , 201  .

 

In the event that the Indebtedness outstanding under the Note to which this Notice relates is currently bearing interest at the LIBOR-based Rate, the Interest Period with respect thereto ends on              , 201  .

 

The undersigned hereby certify(ies) that, as of the date hereof, no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing or exists under said Installment Note.

 

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in said Installment Note.

 

Dated this       day of             , 201  .

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    

 

* Insert, as applicable, “LIBOR-based Rate” or “Prime Referenced Rate”.

 

**For an election of the LIBOR-based Rate, insert the applicable Interest Period (i.e., “one (1)”, “two (2)” or “three (3)” months).

 

 

SCHEDULE 1

 

	
Installment Payments
    	
 
    	
Amount
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1-8
    	
 
    	
$
    	
250,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
9-12
    	
 
    	
$
    	
375,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
13 and thereafter
    	
 
    	
$
    	
500,000
    	
 
    

 

 

NOTICE OF INTEREST RATE

 

With reference to the Installment Note dated as of September 29, 2014 (the “Note”), made in the principal amount of $7,500,000 by Conifer Holdings, Inc. (referred to herein as the “undersigned”) payable to Comerica Bank (“Bank”), and subject to the terms and conditions of the Note, the undersigned hereby elect(s) the Libor-based rate* plus the Applicable Margin as the Applicable Interest Rate for $7,500,000.00 of principal Indebtedness outstanding under the Note.  Such election shall be effective as of September 30, 2014, and the Interest Period, if applicable, shall be for three (3)** month(s), and shall end on January 1, 2015.

 

In the event that the Indebtedness outstanding under the Note to which this Notice relates is currently bearing interest at the LIBOR-based Rate, the Interest Period with respect thereto ends on              , 201  .

 

The undersigned hereby certify(ies) that, as of the date hereof, no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing or exists under said Installment Note.

 

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in said Installment Note.

 

Dated this 30th day of September, 2014.

 

 

	
 
    	
CONIFER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    

 

* Insert, as applicable, “LIBOR-based Rate” or “Prime Referenced Rate”.

 

**For an election of the LIBOR-based Rate, insert the applicable Interest Period (i.e., “one (1)”, “two (2)” or “three (3)” months).

 

 

Waiver Letter 
 September 30, 2014

 

Conifer Holdings, Inc. 
 550 W. Merrill Street 
 Suite 200Birmingham, MC 48009

 

Re:                        Credit Agreement dated August 30, 2010 between Conifer Holdings, Inc. (“Company”) and Comerica Bank, as amended (“Credit Agreement”)

 

Gentlemen:

 

The Company has advised the Bank that it violated the provisions of Section 8.10(e) of the Credit Agreement for periods ending prior to the date of this Waiver Letter (the “Covenant Violation”) and that an Event of Default under Section 10.1(j) because James Petcoff previously owned less than 51% of the stock of Company. The Company has requested that the Bank waive any Event of Default under the Credit Agreement resulting from the Covenant Violation. The Bank hereby waives such Events of Default (“Waiver”).

 

The Waiver shall not be deemed to amend or alter in any respect the terms and conditions of the Credit Agreement, or to constitute a waiver or release by the Bank of any right, remedy or Event of Default under the Credit Agreement, except to the extent expressly set forth above. Furthermore, the Waiver shall not affect in any manner whatsoever any rights or remedies of the Bank with respect to any other non-compliance by Company with the Credit Agreement whether in the nature of an Event of Default or otherwise, and whether now in existence or subsequently arising.

 

Except as specifically defined to the contrary herein, capitalized terms used in this Waiver shall have the meanings given them in the Credit Agreement.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
COMERICA BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Paul G. Russo
    
	
 
    	
Its:
    	
Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}]]