Document:

ex10-1.htm

EXHIBIT 10.1

 

 

ASSET PURCHASE AGREEMENT

by and between

Campus Labs, LLC

(the “Target”)

and

the Members of Campus Labs, LLC

(the “Members” and, together with the Target, the “Sellers”)

and

Higher One, Inc.

(the “Buyer”)

Dated as of August 7, 2012

 

 

  

  

  

EXECUTION COPY

TABLE OF CONTENTS

 

	
ARTICLE I

	
TRANSFER OF ASSETS AND LIABILITIES

	
1

	
Section 1.1

	
Assets and Liabilities

	
1

	
Section 1.2

	
Purchase Price; Assumption of Liabilities

	
3

	
Section 1.3

	
Closing

	
4

	
Section 1.4

	
Deliveries by the Target

	
5

	
Section 1.5

	
Deliveries by Buyer

	
5

	
Section 1.6

	
Working Capital Adjustment

	
6

	
Section 1.7

	
Dispute Resolution; Estimated Purchase Price Adjustment

	
7

	
Section 1.8

	
Earn Out Payment

	
8

	
Section 1.9

	
Certain Taxes and Fees

	
12

	  	  	  
	
ARTICLE II

	
RELATED MATTERS

	
12

	
Section 2.1

	
Books and Records of the Target

	
13

	
Section 2.2

	
Employees and Employee Benefits

	
12

	  	  	  
	
ARTICLE III

	
REPRESENTATIONS AND WARRANTIES OF SELLER

	
14

	
Section 3.1

	
Organization and Good Standing

	
14

	
Section 3.2

	
Authorization; No Conflict

	
15

	
Section 3.3

	
Title to Assets; No Sale of Asset

	
15

	
Section 3.4

	
Consents and Approvals; No Violations

	
16

	
Section 3.5

	
Financial Statements

	
16

	
Section 3.6

	
Absence of Certain Changes

	
16

	
Section 3.7

	
Absence of Material Adverse Effect

	
18

	
Section 3.8

	
Properties and Related Matters

	
18

	
Section 3.9

	
Business Products; Warranties; Defects; Liabilities

	
19

	
Section 3.10

	
Intellectual Property

	
20

	
Section 3.11

	
Litigation

	
21

	
Section 3.12

	
Compliance with Applicable Law; Permits

	
22

	
Section 3.13

	
Certain Contracts and Arrangements

	
22

	
Section 3.14

	
Employee Benefit Plans; ERISA

	
22

	
Section 3.15

	
Taxes

	
25

	
Section 3.16

	
Labor Matters

	
25

	
Section 3.17

	
Certain Fees

	
26

	
Section 3.18

	
Full Force and Effect

	
25

	
Section 3.19

	
Customers and Vendors

	
26

	
Section 3.20

	
Sufficiency and Condition of Assets

	
26

	
Section 3.21

	
Environmental Matters

	
27

	
Section 3.22

	
Accounts Receivable

	
28

	
Section 3.23

	
Insurance

	
29

	
Section 3.24

	
Related Party Transactions

	
29

	
Section 3.25

	
Gifts and Benefits

	
29

	
Section 3.26

	
Guaranties

	
30

	
Section 3.27

	
Disclosure

	
30

	  	  	  
	
ARTICLE IV

	
REPRESENTATIONS AND WARRANTIES OF BUYER

	
30

	
Section 4.1

	
Organization and Good Standing

	
30

	
Section 4.2

	
Authorization

	
30

	
Section 4.3

	
Consents and Approvals; No Violations

	
30

	
Section 4.4

	
Litigation

	
31

	
Section 4.5

	
Certain Fees

	
31

	
Section 4.6

	
Financial Ability

	
31

	  	  	  
	
ARTICLE V

	
COVENANTS

	
32

	
Section 5.1

	
Consents

	
32

	
Section 5.2

	
Accounts Receivable

	
32

	
Section 5.3

	
Inspection of Records

	
32

	
Section 5.4

	
Link to Buyer’s Website

	
33

	
Section 5.5

	
Trademarks

	
33

	
Section 5.6

	
Covenant Not to Compete

	
33

	
Section 5.7

	
Disclosure of Confidential Information

	
33

	
Section 5.8

	
Injunctive Relief

	
34

	
Section 5.9

	
Payroll Taxes and Payroll Records

	
34

	
Section 5.10

	
Health Insurance

	
34

	
Section 5.11

	
COBRA Liabilities

	
34

	
Section 5.12

	
401(k) Termination

	
35

	
Section 5.13

	
Tax Clearance Certificates and Allocations

	
35

	
Section 5.14

	
Option Grants and Bonus Plan

	
35

	
Section 5.15

	
Investigation by Sellers

	
35

	
Section 5.16

	
Investigation by Buyer

	
35

	
Section 5.17

	
Further Assurances

	
36

	  	  	  
	
ARTICLE VI

	
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS

	
36

	
Section 6.1

	
Survival of Representations

	
36

	
Section 6.2

	
Sellers’ Agreement to Indemnify

	
36

	
Section 6.3

	
Buyer’s Agreement to Indemnify

	
37

	
Section 6.4

	
Third Party Indemnification

	
38

	
Section 6.5

	
Certain Tax Matters

	
39

	  	  	  
	
ARTICLE VII

	
MISCELLANEOUS

	
40

	
Section 7.1

	
Fees and Expenses

	
40

	
Section 7.2

	
Further Assurances

	
40

	
Section 7.3

	
Counterparts

	
40

	
Section 7.4

	
Notices

	
40

	
Section 7.5

	
Amendments and Waivers

	
42

	
Section 7.6

	
Severability

	
42

	
Section 7.7

	
Binding Effect; Assignment

	
42

	
Section 7.8

	
No Third Party Beneficiaries

	
42

	
Section 7.9

	
Interpretation

	
43

	
Section 7.10

	
Jurisdiction; Consent to Service; Waiver of Jury Trial

	
43

	
Section 7.11

	
Entire Agreement

	
43

	
Section 7.12

	
Law Governing

	
43

  

  

  

EXECUTION COPY

EXHIBITS

 

	
Exhibit A

	
Tangible Personal Property

	
Exhibit B

	
Assigned Agreements

	
Exhibit C

	
Bill of Sale

	
Exhibit D

	
Intellectual Property Assignment

	
Exhibit E

	
Certain Excluded Assets

	
Exhibit F

	
Assignment and Assumption Agreement

	
Exhibit G

	
Cash Escrow Agreement

	
Exhibit H

	
Hypothetical Working Capital Calculation

	
Exhibit I

	
Non-Competition and Non-Solicitation Agreements

DISCLOSURE SCHEDULE

	
Section 1.1(c)

	
Assumed Liabilities

	
Section 1.1(d)

	
Excluded Liabilities

	
Section 1.4(d)

	
Deliveries by the Target

	
Section 1.8(a)

	
Sample Earn Out Payment

	
Section 1.8(b)

	
Earn Out Payment

	
Section 1.8(f)

	
Earn Out Payment

	
Section 1.8(f)(ii)(E)

	
List of Key Sales Employees

	
Section 2.2(a)

	
Employees

	
Section 3.2

	
Authorization; No Conflict

	
Section 3.3

	
Title to Assets; No Sale of Assets

	
Section 3.4

	
Consents and Approvals

	
Section 3.5

	
Financial Statements

	
Section 3.6

	
Absence of Certain Changes

	
Section 3.7

	
Absence of Material Adverse Effect

	
Section 3.8(a)

	
Properties and Related Matters

	
Section 3.8(b)

	
Properties and Related Matters

	
Section 3.9(a)

	
Business Products

	
Section 3.9(b)

	
Business Products

	
Section 3.11

	
Litigation

	
Section 3.12

	
Compliance with Applicable Law; Permits

	
Section 3.13

	
Certain Contracts and Arrangements

	
Section 3.14(a)

	
Employee Benefit Plans; ERISA

	
Section 3.14(c)

	
Employee Benefit Plans; ERISA

	
Section 3.14(d)

	
Employee Benefit Plans; ERISA

	
Section 3.14(f)

	
Employee Benefit Plans; ERISA

	
Section 3.14(h)

	
Employee Benefit Plans; ERISA

	
Section 3.14(l)

	
Employee Benefit Plans; ERISA

	
Section 3.14(n)

	
Employee Benefit Plans; ERISA

	
Section 3.15

	
Taxes

	
Section 3.17

	
Certain Fees

	
Section 3.18

	
Full Force and Effect

	
Section 3.19(a)

	
Customers and Vendors

	
Section 3.19(b)

	
Customers and Vendors

	
Section 3.21(b)

	
Environmental Matters

	
Section 3.23

	
Insurance

	
Section 3.24

	
Related Party Transactions

	
Section 3.27

	
Disclosure

	
Section 5.1

	
Consents

 

BUYER’S DISCLOSURE SCHEDULE

 

	
Section 4.4

	
Litigation

  

  

  

EXECUTION COPY

 

LOCATION OF DEFINITIONS

 

	
Agreement

	
Recitals

	
Ancillary Agreements

	
Sec. 3.2

	
Assets

	
Sec. 1.1(a)

	
Assigned Agreements

	
Sec. 1.1(a)(vii)

	
Assignment and Assumption

	
Sec. 1.1(c)

	
Assumed Liabilities

	
Sec. 1.1(c)

	
Basket Amount

	
Sec. 6.2(b)(i)

	
Benefit Plans

	
Sec. 3.14(m)

	
Bill of Sale

	
Sec. 1.1(a)(xiv)

	
Business

	
Recitals

	
Business Intellectual Property

	
Sec. 1.1(a)(ii)

	
Business Product

	
Sec. 3.9(a)

	
Business Records

	
Sec. 1.1(a)(v)

	
Buyer

	
Recitals

	
Buyer Damages

	
Sec. 6.2(a)

	
Buyer Indemnified Party

	
Sec. 6.2(a)

	
Buyer’s Disclosure Schedule

	
Article IV Preamble

	
Cap

	
Sec. 6.2(b)(ii)

	
Cases

	
Sec. 3.11

	
Claim

	
Sec. 6.4

	
Closing

	
Sec. 1.3

	
Closing Date

	
Sec. 1.3

	
Closing Date Statement

	
Sec. 1.6

	
Closing Date Working Capital

	
Sec. 1.6

	
Code

	
Sec. 14(b)

	
Confidential

	
Sec. 5.7

	
Confidential Information

	
Sec. 5.7

	
Copyrights

	
Sec. 3.10(h)

	
Disclosure Schedule

	
Article III preamble

	
Dispute

	
Sec. 1.8(g)

	
Earn Out Objection Notice

	
Sec. 1.8(c)

	
Earn Out Payment

	
Sec. 1.2(a)(ii)

	
Earn Out Payment Determination Date

	
Sec. 1.8(c)

	
Earn Out Statement

	
Sec. 1.8(b)

	
Earn Out Target

	
Sec. 1.8(a)

	
Environmental and Safety Laws

	
Sec. 3.21(i)

	
ERISA

	
Sec. 2.2(f)

	
ERISA Affiliate

	
Sec. 3.14(m)

	
Escrow Agent

	
Sec. 1.2(b)(iii)

	
Escrow Agreement

	
Sec. 1.2(b)(iii)

	
Escrow Deposit

	
Sec. 1.2(b)(iii)

	
Estimated Initial Purchase Price

	
 Sec. 1.6

	
Estimated Closing Date Settlement

	
 Sec. 1.6

	
Estimated Closing Date Working Capital

	
Sec. 1.6

	
Excluded Assets

	
Sec. 1.1(b)

	
Excluded Liabilities

	
Sec. 1.1(d)

	
Excluded Representations

	
Sec. 6.1

	
Facilities

	
Sec. 3.21(iv)

	
Final Closing Purchase Price

	
Sec. 1.2(a)

	
Final Statement

	
Sec. 1.7(a)(ii)

	
Financial Statements

	
Sec. 3.5

	
GAAP

	
Sec. 3.5

	
Hazardous Materials

	
Sec. 3.21(ii)

	
Historical Financial Statements

	
Sec. 3.5

	
Independent Accounting Firm

	
Sec. 1.7(a)(ii)

	
Initial Purchase Price

	
Sec. 1.2(a)(i)

	
Intellectual Property

	
Sec. 1.1(a)(ii)

	
Intellectual Property Assignment

	
Sec. 1.1(a)(xiv)

	
Interim Financial Statements

	
Sec. 3.5

	
Interim Financial Statements Date

	
Sec. 3.5

	
Knowledge

	
Sec. 3.9(b)

	
Liabilities

	
Sec. 1.1(d)

	
Liens

	
Sec. 3.3

	
Marks

	
Sec. 3.10(h)

	
Material Adverse Effect

	
Sec. 3.1

	
Members

	
Recitals

	
Member Options

	
Sec. 5.14

	
Member Party

	
Sec. 1.8(a)

	
Net Working Capital

	
Sec. 1.6

	
Notice of Employment

	
Sec. 2.2(b)

	
Patents

	
Sec. 3.10(h)

	
Payoff Amount

	
Sec. 1.2(b)(i)

	
Payoff Letter

	
Sec. 1.2(b)(i)

	
Permitted Liens

	
Sec. 3.3

	
Plans

	
Sec. 3.14(a)

	
Pre-Closing Tax Period

	
Sec. 6.5(a)(i)

	
Property

	
Sec. 3.21(iii)

	
Purchase Price

	
Sec. 1.2(a)

	
Revenue

	
Sec. 1.8(e)

	
Seller

	
Recitals

	
Seller Damages

	
Sec. 6.3(a)

	
Seller Indemnified Party

	
Sec. 6.3

	
Tangible Personal Property

	
Sec. 1.1(a)(i)

	
Target Working Capital

	
Sec. 1.6

	
Target’s Key Employees

	
Sec. 3.9(b)

	
Tax Return

	
Sec. 3.15(c)

	
Taxes

	
Sec. 3.15(b)

	
Transfer Taxes

	
Sec. 1.9

	
Transferred Employees

	
Sec. 2.2(b)

	
Warrants

	
Sec. 1.2(a)(iii)

	
Working Capital

	
Sec. 1.6

  

  

  

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT, dated as of August 7, 2012 (this “Agreement”), is by and among Campus Labs, LLC, a New York limited liability company (the “Target”), Eric Reich and Michael Weisman (the “Members” and, together with the Target, the “Sellers” , and Higher One, Inc., a Delaware corporation (the “Buyer”).  Capitalized terms used herein shall have the meanings assigned to such terms in the text of this Agreement and the locations of such definitions are referenced following the table of contents.

 

WHEREAS, the Target operates a business which offers specialized, comprehensive assessment programs that combine data collection, reporting, organization and campus-wide integration to higher education institutions (the “Business”); and

 

WHEREAS, the Target desires to sell and assign to the Buyer, and the Buyer desires to purchase from the Target, substantially all of the assets of the Business, and at the same time the Buyer will assume certain liabilities of the Business, all on the terms set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

 

TRANSFER OF ASSETS AND LIABILITIES

 

Section 1.1 Assets and Liabilities

 

(a) Subject to the terms of this Agreement, at the Closing provided for in Section 1.3, the Target shall sell, convey, assign, transfer and deliver, or shall cause to be sold, conveyed, assigned, transferred and delivered to the Buyer, all of the Target’s right, title and interest in and to the assets (other than the Excluded Assets set forth in Section 1.1(b) hereof) owned, leased or licensed directly or indirectly by the Target on the Closing Date (collectively, the “Assets”), free and clear of any Liens (other than any Permitted Liens), including but not limited to the following:

 

(i) all equipment listed in Exhibit A hereto, components, spare parts, furniture and other tangible personal property owned or leased or held under license by the Target (collectively, the “Tangible Personal Property”);

 

(ii) all Intellectual Property owned or held under any transferable license by the Target (the “Business Intellectual Property”);

 

(iii) any and all copies in a tangible medium of the Business Intellectual Property, including all designs and any registrations and applications therefore, all computer software, including all source code, object code and firmware, and all other tangible assets and material used in connection with the Business Intellectual Property;

 

(iv) all transferable licenses, permits, authorizations, consents, approvals, orders, filings or registrations with any court or administrative or governmental authority held by the Target;

 

  

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(v) copies (which need not be original) of all of Target’s general and financial records, financial information, marketing and sales information, customer and vendor lists, and (to the extent permitted by applicable law) records and information relating to the Target’s employees and consultants (collectively, the “Business Records”), it being understood that the Seller may retain a copy (which may be the original copy) of each such Business Record;

 

(vi) all rights with respect to deposits, advance payments and prepaid expenses made or incurred by Target, deferred charges and all credits and claims for refund held by the Target;

 

(vii)  those written agreements listed on Exhibit B (collectively,  the “Assigned Agreements”;

 

(viii) all goodwill associated with the Business;

 

(ix) all of the Target’s rights, claims, credits, causes of action or rights of set off against third parties, including all rights to seek and obtain injunctive relief and to recover damages for past, present and future infringement relating to the Business Intellectual Property;

 

(x) the Target’s rights in the names “Student Voice”, “Campus Labs” “Collegiatelink” and “Compliance Assist”, the registered trademarks associated with such names and any other Marks or Copyrights relating to or used by the Target in connection with the Business;

 

(xi) all domain names owned or used by the Target, including but not limited to www.campuslabs.com and www.studentvoice.com;

 

(xii) any cash, cash equivalents and marketable securities; and

 

(xiii) the accounts receivable held by the Target existing as of Closing Date.

 

Such sale, conveyance, assignment, transfer and delivery shall be effected by delivery by the Target to the Buyer of (i) a duly executed bill of sale (the “Bill of Sale”) in the form of Exhibit C attached hereto, (ii) duly executed instruments of assignment assigning Target’s interest in and to the Intellectual Property in the form of Exhibit D attached hereto (the “Intellectual Property Assignment”) and (iii) such other good and sufficient instruments of conveyance, transfer and assignment as shall be necessary to vest in the Buyer good and valid title to the other Assets, free and clear of all Liens (other than any Permitted Liens).

 

(b) Anything contained in Section 1.1(a) to the contrary notwithstanding, the term “Assets” shall not include the following assets of the Target (each and all such items being herein referred to as the “Excluded Assets”):

 

(i) the articles of organization, operating agreement, minute books and company seal;

 

(ii) all rights and benefits of Target arising in connection with or related to the Target’s status as a New York State Qualified Empire Zone Entity;

 

  

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(iii) all rights of Target arising under any insurance policies of the Target;

 

(iv) all rights of Target under this Agreement;

 

(v) any other property or assets expressly listed on Exhibit E.

 

(c) Subject to the terms of this Agreement, the Buyer shall assume on the Closing Date, and pay, perform and discharge when due, those obligations and liabilities of the Business:  (i) under all the Assigned Agreements to the extent that such obligations and liabilities: (A) arise after the Closing Date and (B) do not arise from or relate to any breach by the Target of any provision of such Assigned Agreements on or prior to the Closing Date; (ii) accounts payable and accrued expenses of the Business as of the Closing Date (but only to the extent accrued on the Closing Date Statement and incurred in the ordinary course of the Target’s business consistent with past practice); (iii) to the Target’s customers incurred by the Target in the ordinary course of business consistent with past practice for orders outstanding as of the Closing Date and reflected in the Closing Date Statement; (iv) to the Target’s customers under written warranty agreements given by the Target to its customers prior to the Closing Date; and (v) all Liabilities of the Target set forth in the Closing Date Statement (collectively, the “Assumed Liabilities”). Section 1.1(c) of the Disclosure Schedule contains a list of the Assumed Liabilities including accounts payable determined based on the Estimated Closing Date Statement.  At the Closing, the Target and the Buyer shall execute an instrument of assignment and assumption agreement in respect to the Assumed Liabilities, in the form of Exhibit F attached hereto (the “Assignment and Assumption”), whereby the Buyer agrees to perform, pay, become liable for and discharge when due, any and all Assumed Liabilities.

 

(d) The Target shall retain, and shall be solely responsible for paying, performing and discharging when due, and the Buyer shall not assume or otherwise have any responsibility or Liability for, (i) any and all Liabilities (as defined below) of Target (whether now existing or hereafter arising) including those listed on Section 1.1(d) of the Disclosure Schedule  hereto other than the Assumed Liabilities, (ii) all liabilities and obligations of the Target or any of its affiliates or any of their respective predecessors-in-interest for any Taxes due or becoming due by reason of the conduct of the Business prior to the Closing, the ownership, possession, use, operation or sale or other disposition of any assets (including the Assets), properties, rights or interests associated with the Business or the sale of any products, including but not limited to (A) Taxes attributable to employee withholding tax obligations, (B) income-based Taxes imposed on or accruing as a result of the purchase and sale of the Assets pursuant to this Agreement and (C) Taxes attributable to or resulting from recapture of depreciation or other tax benefit items or otherwise arising from or relating to any of the transactions contemplated by this Agreement, and (iii) all liabilities related to or arising from the Benefit Plans of the Target prior to or after the Closing, including without limitation documentation and administration obligations, and any post-Closing obligations relating thereto or arising therefrom, including without limitation COBRA administration (the “Excluded Liabilities”).  As used in this Agreement, “Liability” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, known or unknown, including, without limitation, those arising under any law, action or governmental order and those arising under any contract, agreement, arrangement, commitment or undertaking.

 

Section 1.2 Purchase Price; Assumption of Liabilities

 

  

3

  

(a) Subject to the adjustments as provided by this Agreement, the total purchase price of the Assets and the Business (the “Purchase Price” ) shall be an amount equal to the sum of the Initial Purchase Price, which amount shall be adjusted pursuant to Section 1.7 (as so adjusted, the “Final Closing Purchase Price”), and the Earn Out Payment and the Warrants.

 

(i) The “Initial Purchase Price” equals $38.4 million in cash.

 

(ii) The “Earn Out Payment”  equals the amount payable to the Target under Section 1.8.

 

(iii) The “Warrants” shall mean 150,000 warrants to purchase the same number of shares of common stock of Higher One Holdings, Inc.

 

(b) On the Closing Date, the Buyer shall:

 

(i) pay to any lenders of the Target who have security interests in any of the Assets (including capitalized leases), by wire transfer of immediately available funds, the amounts (in the aggregate, the “Payoff Amount”) required at Closing to pay in full any indebtedness (including any prepayment penalties) of Target secured by such security interests, as evidenced by payoff letters (“Payoff Letters”) executed by such lenders and delivered to the Buyer on or prior to the Closing Date;

 

(ii) cause the Estimated Initial Purchase Price (defined below), less (A) the Escrow Deposit and (B) the Payoff Amount to be delivered to the Target via wire transfer of immediately available funds to a bank account identified by the Target;

 

(iii) cause the Escrow Deposit to be delivered to U.S. Bank (the “Escrow Agent”) to be held in accordance with the terms and conditions of an escrow agreement (the “Escrow Agreement”), in the form of Exhibit G attached hereto, in order to secure certain indemnity claims that the Buyer may be entitled to assert pursuant to this Agreement, but not to be used for any downward adjustment to the Initial Purchase Price in the event of a Working Capital adjustment as provided for in Section 1.7.  As used in this Agreement, the “Escrow Deposit”  means an amount equal to the Cap plus $1,500,000; and

 

(iv) deliver to Target a certificate issuing the Warrants.

 

Section 1.3 Closing

 

The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at such time and place as are mutually agreed to by the parties (or remotely by electronic mail and/or facsimile) on the date hereof, to be effective as of 12:01AM, New Haven, Connecticut time, on such date.  The effective time of the Closing is sometimes referred to herein as the “Closing Date.”  The exchange of copies of this Agreement and the Ancillary Agreements and of all signature pages by electronic mail or facsimile transmission shall constitute effective execution and delivery hereof and thereof as to the parties and may be used in lieu of the originals for all purposes.  Signatures of the parties transmitted by electronic mail or facsimile shall be deemed to be their original signatures for all purposes.

 

  

4

  

Section 1.4 Deliveries by the Target

 

At the Closing, the Target shall deliver or cause to be delivered to the Buyer (unless delivered previously) the following:

 

(a) A duly executed Bill of Sale and Intellectual Property Assignment;

 

(b) Duly executed counterparts of the Assignment and Assumption and the Escrow Agreement;

 

(c) The Estimated Closing Date Statement, accompanied by such supporting documentation, information and calculations as are reasonably necessary for the Buyer to verify and determine the Estimated Closing Date Working Capital;

 

(d) Copies of all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and other third parties that are necessary to consummate the transactions contemplated by this Agreement, as identified on Section 1.4 of the Disclosure Schedule;

 

(e) Duly executed non-competition and non-solicitation agreements for Eric Reich and Michael Weisman;

 

(f) Copies of the Payoff Letters;

 

(g) Discharges, releases and UCC termination statements adequate to discharge all Liens, if any, on the Assets other than Permitted Liens and Liens which will be discharged, as provided by the Payoff Letters, upon receipt by the Target’s lenders of the Payoff Amount;

 

(h) A certificate of good standing with respect to Target certified as of a date not more than fifteen (15) days prior to the Closing Date from the Secretary of State of the State of New York;

 

(i) A certificate by a manager of the Target certifying as to (A) the Target’s resolutions approving this Agreement and each of the transactions contemplated hereby as in effect on the Closing Date, (B) the incumbency of the Target’s officers or managers, and (C) the Target’s resolutions terminating the Benefit Plan known as the Student Voice, LLC 401(k) Profit Sharing Plan;

 

(j) A written legal opinion letter from Target’s counsel addressed to the Buyer and dated as of the Closing Date, in substantially the form attached hereto as Exhibit J;  and

 

(k) All other documents, instruments and writings required or reasonably requested by the Buyer to be delivered at or prior to the Closing pursuant to this Agreement or otherwise required in connection herewith.

 

Section 1.5 Deliveries by Buyer

 

At the Closing, the Buyer shall deliver or cause to be delivered to the Target (unless otherwise specified and unless previously delivered) the following:

 

  

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(a) By wire transfer of immediately available funds, an amount equal to the Estimated Initial Purchase Price, less (i) the Escrow Deposit and (ii) the Payoff Amount;

 

(b) By wire transfer of immediately available funds to the Escrow Agent, an amount equal to the Escrow Deposit;

 

(c) By wire transfer of immediately available funds to each of the Target’s lenders that have issued a Payoff Letter to the Target, an amount equal to the amount required to be paid to each such lender by the terms of the Payoff Letter issued by such lender;

 

(d) A duly executed counterpart of the Escrow Agreement;

 

(e) A duly executed counterpart of the Assignment and Assumption;

 

(f) A letter, addressed to each Member, setting forth the terms and conditions of the employment by the Buyer of such Member, including, but not limited to, the amount of the annual base salary, the structure of the annual bonus compensation program and the employee benefits (each such letter being hereinafter an (“Employment Letter”);

 

(g) A duly executed counterpart of each of the non-competition and non-solicitation agreements for Eric Reich and Michael Weisman;

 

(h) A certificate of good standing with respect to the Buyer certified as of a date not more than fifteen (15) days prior to the Closing Date from the Secretary of State of the State of Delaware

 

(i) A copy of the 2012 Employment and Retention Bonus Plan, in substantially the form attached hereto as Exhibit K (the “Bonus Plan”);

 

(j) A certificate issuing the Warrants; and

 

(k) All other documents, instruments and writings required or reasonably requested by the Target to be delivered at or prior to the Closing pursuant to this Agreement or otherwise required in connection herewith.

 

Section 1.6 Working Capital Adjustment

 

Prior to the Closing, the Target shall deliver to the Buyer an unaudited statement (the “Estimated Closing Date Statement”) of Working Capital, setting forth the Target’s reasonable and good faith estimate of Working Capital as of August 5, 2012 (“Estimated Closing Date Working Capital”).  Based on the amount of the Estimated Closing Date Working Capital as contained in the Estimated Closing Date Statement, at Closing the amount of the Initial Purchase Price shall be adjusted (the Initial Purchase Price as adjusted being hereinafter the “Estimated Initial Purchase Price” ) as follows:

 

The Initial Purchase Price shall be increased or decreased, as the case may be, by the amount, if any, by which the Estimated Closing Date Working Capital is greater than or less than, as the case may be, - $2,873,238 (the “Target Working Capital”).  For purposes herein, the term “Working Capital” shall mean , (x) the sum of (i) cash and cash equivalents, plus (ii) accounts receivable, plus (iii) prepaid expenses and other current assets for which Buyer will receive the benefit, minus (y) the sum of (i) the current accounts payable and accrued expenses, plus (ii) plus prepaid contracts, plus (iii) deferred revenue, all determined in accordance with GAAP. For the avoidance of doubt, Target Working Capital is a negative number.   For purposes of illustration only, a hypothetical calculation of Working Capital is attached as Exhibit H.

 

  

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No later than ninety (90) days after the Closing Date, the Members shall deliver to the Buyer an unaudited statement (the “Closing Date Statement”) of Working Capital, setting forth the Members’ good faith calculation of Working Capital as of the Closing Date

 

Section 1.7 Dispute Resolution; Estimated Purchase Price Adjustment

 

(a) Dispute Resolution.

 

(i) Following the Closing, each of the Buyer and the Members shall give the other party and any independent auditors and authorized representatives of such other party reasonable access during normal business hours to the properties, books, records and personnel of the Business for purposes of preparing, reviewing and resolving any disputes concerning the Closing Date Statement.  The Buyer shall have thirty (30) days following the delivery to the Buyer of the Closing Date Statement during which to notify the Members in writing of any dispute of any item contained in the Closing Date Statement, which notice shall set forth in reasonable detail the basis for such dispute.

 

(ii) If the Buyer fails to notify the Members of any dispute of any item contained in the Closing Date Statement within thirty (30) days following the delivery to the Buyer of the Closing Date Statement, the Closing Date Statement shall be deemed to be accepted by the Buyer and the Closing Date Statement and the Working Capital of the Target as of the Closing Date as set forth therein shall be final, binding and conclusive for all purposes of this Agreement and not subject to any further recourse by the Buyer under any provision hereof.  In the event that the Buyer shall so notify the Members of any dispute and the Buyer and the Members are unable to resolve such dispute within thirty (30) days of such notice, then all amounts remaining in dispute shall be submitted to KPMG LLP (or, if such accounting firm shall decline to act, to another independent accounting firm mutually acceptable to the Buyer and the Members, which shall not have had a material relationship with the Buyer or any of its affiliates within the past two (2) years) (either KPMG LLP or such other accounting firm being the “Independent Accounting Firm”).  Each party hereto agrees to execute, if requested by the Independent Accounting Firm, a reasonable engagement letter.  The Independent Accounting Firm shall act as an arbitrator to determine, based solely on presentations by the Members and the Buyer (including any working papers of the Target and the Buyer) and not by any independent review, only those issues still in dispute.  The Independent Accounting Firm’s determination shall be requested to be made within thirty (30) days of its selection and shall be set forth in a written statement delivered to the Members and the Buyer, and the Working Capital of the Target as of the Closing Date as set forth in such written statement shall be final, binding and conclusive for all purposes of this Agreement and not subject to any further recourse by any party pursuant to any provision hereof.  The “Final Statement” shall be (i) the Closing Date Statement in the event that the Buyer does not deliver a notice of dispute in the 30-day period specified in Section 1.7(a)(i) or accepts the Closing Date Statement or (ii) the Closing Date Statement, as modified by resolution of any disputes by the Buyer and the Members or by the Independent Accounting Firm.  The Final Statement shall be deemed to be effective on the earliest to occur of: (x) issuance by the Buyer of its written agreement to the Net Working Capital of the Target as of the Closing Date as contained in the Closing Date Statement; (y) in the event that the Buyer does not deliver a notice of dispute to the Target within the thirty (30) day period specified in Section 1.7(c)(i), the first business day following the end of such period; and (z) in the event that the Buyer delivers a notice of dispute to the Target within the thirty (30) day period specified in Section 1.7(a)(i), the first business day following the date the dispute is resolved by written agreement of the Buyer and the Target or by the Independent Accounting Firm.  In addition, the “Closing Date Working Capital”  shall be the Working Capital of the Target as of the Closing Date as set forth in the Final Statement.  The procedures set forth in this Section 1.7(a)(ii) are the sole remedy for any disputes with respect to matters set forth on or arising in connection with the Closing Date Statement.

  

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In the event the parties submit any unresolved objections to the Independent Accounting Firm for resolution as provided in Section 1.7(a)(ii) above, the Buyer, as one party, and the Members, collectively, as the other party, shall each be responsible for fifty percent (50%) of the fees and expenses of the Independent Accounting Firm.

(b) Determination of Final Closing Purchase Price.

 

The Final Closing Purchase Price shall be an amount equal to the Initial Purchase Price, increased or decreased, as the case may be, by the amount, if any, by which the Closing Date Working Capital as determined by the Final Statement, is greater than or less than, as the case may be, the Target Working Capital.

 

(c) Payment of Working Capital Adjustment.

 

No later than ten (10) business days following the date the Final Statement becomes effective: (i) if the Final Closing Purchase Price exceeds the Estimated Initial Purchase Price, the Buyer shall pay the amount of such excess to the Target by wire transfer of immediately available funds; (ii) if the Final Closing Purchase Price is less than the Estimate Initial Purchase Price, the Target and each of the Members shall pay to the Buyer (and shall be jointly and severally liable for the amount of such payment, with the Buyer having a right of set off with respect to any amounts owed to it by the Members) by wire transfer of immediately available funds, the amount by which the Estimated Initial Purchase Price exceeds the Final Closing Purchase Price; and (iii) if the Final Closing Purchase Price equals the Estimated Initial Purchase Price, no payment shall be due from Buyer or from the Target and each Member.

 

Section 1.8 Earn Out Payment

 

(a) The Buyer shall pay the Members (or an entity designated by Members, the “Members’ Designee” and together with the Members, the “Member Party”) an aggregate amount equal to the Earn Out Payment, if any, determined in accordance with the following formula: in the event that Revenue for the 2013 calendar year is (A) less than or equal to $12.5 million (the “Earn Out Target”), the Earn Out Payment shall be equal to $0, or (B) greater than $12.5 million, the Earn Out Payment shall be equal to three and one half (3.5) times the amount of Revenue in excess of $12.5 million; provided, however, that the Earn Out Payment shall not exceed $46.4 million and the Earn Out Payment shall be paid quarterly during the 2013 fiscal year based on 12 months trailing Revenue of the Business in excess of $12.5 million.  Section 1.8(a) of the Disclosure Schedule hereto contains a sample calculation of an annual Earn Out Payment.

 

  

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(b) Within forty-five (45) days after the end of each quarter during fiscal year 2013, the Buyer shall prepare and deliver to the Member Party a statement setting forth a calculation of 2013 year-to-date Revenue of the Business as of the end of each then applicable quarter, and the portion of the Earn Out Payment payable hereby, together with a certificate of a duly authorized officer of the Buyer certifying the foregoing (the “Earn Out Statement”.  Such statement shall be prepared in a manner consistent with Section 1.8(b) of the Disclosure Schedule hereto, which sets forth, for illustrative purposes only, an example of the calculation of the Revenue for the calendar year ending December 31, 2011, as provided to the Buyer by the Target.

 

(c) The Member Party shall have the right to review, for a period of thirty (30) days commencing on the date of delivery by the Buyer of each Earn Out Statement (the “Earn Out Objection Period” (and the Buyer shall during such period provide reasonable access during normal business hours to) all books, records (including copies of all purchase orders and contracts with customers for the applicable quarter and for the period of the Earn Out then completed)  and supporting work of the Buyer related to the calculation of Revenue and the Earn Out Payment for the applicable quarter and the preparation of such Earn Out Statement.  The Member Party shall have the right during the Earn Out Objection Period to provide written notice to the Buyer of any objections to any item of calculation in the Earn Out Statement (the “Earn Out Objection Notice”.  If the Member Party fails to timely object to the calculations set forth in the Earn Out Statement during the Earn Out Objection Period, then the Earn Out Statement shall become final and binding on the parties and the Earn Out Payment for the applicable quarter, if any, shall be as set forth in the Earn Out Statement.  If the Member Party shall timely give the Earn Out Objection Notice, then the Member Party and the Buyer shall attempt in good faith to resolve any dispute concerning the item(s) subject to such Earn Out Objection Notice.  If the Member Party and the Buyer do not resolve any dispute arising in connection with the Earn Out Statement within 30 days after the date of delivery of the Earn Out Objection Notice, which 30-day period may be extended by written agreement of the Buyer and the Member Party, such dispute shall be resolved fully, finally and exclusively in accordance with the procedures set forth in Section 1.7(a)(ii).  Any Earn Out Payment to be made by the Buyer to the Member Party hereby shall be paid within five (5) business days by wire transfer of immediately available funds after the applicable Earn Out Payment Determination Date.  The “Earn Out Payment Determination Date” shall mean the first business day following the earliest of the:  (i) Member Party’s failure to timely object to the calculation of the Earn Out Payment pursuant to this Section, (ii) determination of the Earn Out Payment by the agreement of the parties; or (iii) the determination of the Earn Out Payment by the Independent Accounting Firm.

 

(d) The Earn Out Payment shall represent only a contingent right to receive a cash payment, and shall not possess any attributes of common stock or entitle the Target or Members to any rights of any kind other than as specifically set forth herein.

 

  

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(e) As used herein, the term “Revenue” shall mean, for any period, the gross revenues of the Business determined in accordance with GAAP without adjustment for any write down of opening deferred revenue as set forth on the Closing Date Statement.

 

(f) The Buyer acknowledges that changes in the manner in which the Business is operated after the Closing Date could reduce the amount of the Revenue during the 2013 calendar year and further acknowledges that Buyer does not intend to implement changes in the manner in which the Business is operated after the Closing Date if such changes could reasonably be expected to reduce the amount of Revenue for the 2013 calendar year.  In connection with the foregoing, the Buyer hereby agrees that it shall not, at any time prior to January 1, 2014: (i) terminate either of the Members without “Cause” (as “Cause” is hereinafter defined); or (ii) to the extent that either Eric Reich or Michael Weisman remain employed by the Buyer, without the consent of Eric Reich (or Michael Weisman if Eric Reich is no longer employed by Buyer or is disabled or incapacitated): (A) terminate the employment of any of the Target’s Key Employees (other than the Members) without “Cause”; (B) reduce the salary, bonus opportunity (whether by changes in the structure of the annual bonus program or otherwise) or benefits payable to each of the Members as determined by the terms of Employment Letters; (C) materially reduce the salary and benefits of any of the Target’s Key Employees (other than the Members); (D) assign duties to any of the Target’s Key Employees which are materially inconsistent with the duties of any of such Target’s Key Employees as set forth on Section 1.8(f) of the Disclosure Schedule or change the location of any of Target’s Key Employees; (E) terminate the employment of (I) any Key Sales Employee set forth on Section 1.8(f)(ii)(E) of the Disclosure Schedule other than for “Cause” or (II) a material portion of the Transferred Employees of Target devoted to sales; provided, however, that with respect to Transferred Employees that are not Key Employees or Key Sales Employees, the Buyer may replace any such employees without eliminating such position without such consent; (F) redirect the efforts of programmers to the development of products different from products under development or planned as of the Closing Date; or (G) assign duties and responsibilities to any of the Target Key Employees which could reasonably be expected to hinder or prohibit or to otherwise hinder or prohibit the implementation of any enhancement or expansion of any of the Business’ existing products or products under development or in planning as of the Closing Date; provided, however, that the Buyer may require the Target Key Employees to complete employee training programs and other such responsibilities that are typically required of all employees of the Buyer without such consent.  For purposes of the foregoing, the Buyer shall be deemed to have “Cause” to terminate the employment of a Target Key Employee only as a result of: (u) a willful and continued failure of the Target Key Employee to substantially perform the duties which have been assigned to the Target Key Employee (subject to the limitations on the nature of the duties which may be assigned to a Target Key Employee provided in Section 1.8(f)(ii)(D) above); provided that, for the avoidance of doubt, the failure of any Target Key Employee to achieve targeted performance goals shall not, without more, be deemed to constitute “Cause” within the meaning of this Section 1.8(f); and, provided, further, that the failure of a Target Key Employee to substantially perform the duties as a result of the Target Key Employee’s incapacity due to his suffering of a physical or mental illness or disability shall not be deemed to constitute “Cause” within the meaning of this Section 1.8(f); (v) criminal charges against the Target Key Employee of a felony; (w) any action or omission by such Target Key Employee relating to his or her service to the Buyer involving willful misconduct or gross negligence that results in more than de minimis harm to the Buyer; (x) the commission by such Target Key Employee of an act of fraud or embezzlement that results in harm to the Buyer or disregard of a rule or policy of the Buyer that results in harm to the Buyer; or (y) a material breach or violation by such Target Key Employee of any of any written agreement between such Target Key Employee and the Buyer or the Buyer’s written employment policies as applied to the employees of Buyer consistent with the past practices of Buyer.  For the purpose of this Section 1.8(f), consent of an individual to an event shall be deemed to be given if such individual knows of or learns of such event and does not object to the event within fourteen (14) days.

 

  

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(g) In the event of any breach of the provisions of 1.8(f) by Buyer or dispute between the parties hereto arising out of or related to Section 1.8(f), (a “Dispute”), such Dispute shall be resolved in the manner provided in this Section.  Any Dispute shall be resolved in the order of progression of subsections (i) through (iii) below.

 

(i) The Member Party shall notify the Buyer in writing of any Dispute.  The parties shall negotiate in good faith to attempt to resolve such Dispute for a period of thirty (30) days, unless otherwise agreed by the parties.  No settlement reached under this Section 1.8(g)(i) shall be binding on the parties until reduced to a writing signed on behalf of the parties.  The existence and substance of any negotiations pursuant to this Section 1.8(g)(i) shall be considered confidential under this Agreement and shall not be used by any party in any court, agency or tribunal in any jurisdiction for any reason.

 

(ii)  If the procedure outlined in subsection (i) above fails to bring about a resolution of each outstanding Dispute within the thirty (30) day period described above or any other time period agreed upon by the parties, either party may, by written notice to the other, demand resolution of the Dispute(s) by non-binding mediation to be held in Buffalo, New York.  Such mediation shall be conducted by a mediator based in the United States mutually agreed to by the parties.  No settlement reached under this Section shall be binding on the parties until reduced to a writing signed on behalf of the parties.  The existence and substance of the mediation pursuant to this Section 1.8(g)(ii) shall be considered confidential under this Agreement and shall not be used by any party in any court, agency or tribunal in any jurisdiction for any reason.

 

(iii) If a Dispute is not resolved within forty-five (45) days of the receipt by either party of a demand for mediation (or such later date as the parties may mutually agree in writing), the Member Party may commence a lawsuit. The venue for any such legal proceeding shall be before a federal located in Erie County, New York.

 

(iv) In the event that any Dispute results in any judgment or order in favor of the Member Party, the Buyer shall pay and reimburse the Member Party for all actual and reasonable costs and expenses, including without limitation, attorneys’ fees, disbursements, and any other litigation costs through all appeals in addition to other costs and disbursements allowed by law, including those incurred on appeal. If as a result of a judgment or order of a court in an action described in this Section 1.8(g)(vi), the Member Party is not entitled to any damages as a result of the Dispute, the Member Party shall pay to the Buyer all actual and reasonable costs and expenses, including without limitation, attorneys’ fees, disbursements, and any other litigation costs incurred.

 

  

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(v) In the event any Dispute results in the execution of a written settlement agreement among the parties requiring the Buyer to pay the Member Party, the Buyer shall pay and reimburse the Member Party for all actual and reasonable costs and expenses, including without limitation, attorneys’ fees, disbursements, and any other litigation costs incurred through execution of the written settlement agreement.

 

(vi) Fees and costs payable to the prevailing party under this Section shall only apply to Disputes under this Section 1.8.

 

Section 1.9                      Certain Taxes and Fees

 

The Sellers shall be responsible for the payment of any stamp, transfer, documentary, sales, use, registration and other such taxes, recording fees, personal property title application fees, patent and trademark assignment registration fees and other such fees, including any penalties and interest payable in connection with the transfer of the Assets contemplated by this Agreement, for the filing and recording of any documents required to discharge any Liens on the Assets (other than Permitted Liens) and arising otherwise in connection with the transactions contemplated by this Agreement.

 

ARTICLE II

 

 

RELATED MATTERS

 

Section 2.1 Books and Records of the Target

 

Subject to applicable law, the Sellers agree to deliver, or cause to be delivered, to the Buyer as soon as reasonably practicable after the Closing but in no event later than ten (10) business days after the Closing Date, originals or copies of the Business Records.  For a period of three (3) years after the Closing, the Buyer shall preserve and make available (for review and copying) to the Target and each of the Members, and their respective authorized representatives, upon reasonable notice during normal business hours the books and records transferred by the Target for reasonable business purposes with respect to all transactions occurring prior to and those relating to the Closing, the historical financial condition, assets, liabilities, results of operations and cash flows of the Target, with the Buyer’s agreement to make available such books and records to the Target not to be unreasonably withheld or delayed.

 

  

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Section 2.2 Employees and Employee Benefits

 

(a) Employees.  As of the Closing Date, the Target shall terminate all of its employees and the Buyer shall then be permitted, at the Buyer’s sole discretion, to offer each such employee employment in connection with the Business.  Section 2.2(a) of the Disclosure Schedule contains a complete and accurate list of the Target’s employees.  As to all such employees, the Target has provided the Buyer with a writing setting forth the locations at which such employees are working as of the date of this Agreement, as well as each employee’s position and department in which he/she works, together with a complete and accurate list of all written employment contracts (if any) related to any of such employees.

 

(b) Transferred Employees.  Not later than one (1) day prior to the Closing Date, the Buyer shall identify the employees listed in Section 2.2(a) of the Disclosure Schedule to whom the Buyer will offer employment as of the Closing (“Transferred Employees”), and shall provide the Target with a list of those Transferred Employees (“Notice of Employment”).  The Target shall be fully liable for the employment (or termination or severance thereof) of any employees not identified as Transferred Employees in the Notice of Employment.  In addition, the Target shall be liable for, and shall pay, all wages, salaries, payroll taxes and employee benefits due, owing or accrued for all employees of the Business through the Closing Date.

 

(c) Pre-Closing Claims.  The Target shall remain responsible for all claims under the applicable Plans for health, accident, sickness and disability benefits that are deemed incurred prior to the Closing Date by any of the Transferred Employees.  For all purposes under such Plans, such employees shall be considered to have terminated employment with the Target as of the Closing Date.  For purposes of this Agreement: (i) a claim for health benefits (including, without limitation, claims for medical, prescription drug and dental expenses) shall be deemed to have been incurred on the date on which the related medical service or material was rendered to or received by the Transferred Employee claiming any such benefits and (ii) in the case of any claim for benefits other than health benefits and sickness and disability benefits (e.g., life insurance benefits), a claim shall be deemed to have been incurred upon the occurrence of the event giving rise thereto.  As of the Closing, any Transferred Employee who is receiving benefits under the Target’s short-term disability program shall be deemed to be an employee of Target until such time as such employee is no longer eligible for the Target’s short-term disability program and, if at such time such Transferred Employee will be returning to work, such employee shall at that time be employed by the Buyer.  If at such time such employee shall be eligible for long-term disability benefits or disability retirement, such employee shall receive such benefits under the Target’s long-term disability program or pension plan.

 

(d) Disabled Employees.  Target shall remain responsible for (i) all benefits payable to Transferred Employees who, as of the close of business on the day immediately preceding the Closing Date, were determined to be totally and permanently disabled in accordance with the applicable provisions of Target’s health, accident, sickness, salary continuation or short-term or long-term disability benefits plans or programs and (ii) all workers compensation claims based on injuries occurring prior to the Closing Date.

 

(e) WARN.  The Target agrees to comply, if applicable, with the provisions of the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any other federal, state or local statute or regulation regarding termination of employment, and to perform all obligations that might otherwise be required by the Target with respect to the Target’s conduct of the Business.

 

  

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(f) Cooperation of Parties.  The Target and the Buyer agree to cooperate fully with respect to the actions which are necessary or reasonably desirable to accomplish the transactions contemplated hereunder, including, without limitation, the provision of records and information as each may reasonably request and the making of all appropriate filings under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

 

(g) No Right of Employment.  Nothing contained herein, express or implied, is intended to confer upon any of the Target’s employees any right to continued employment for any period by reason of this Agreement.  Nothing contained herein is intended to confer upon any of the Target’s employees any particular term or condition of employment other than with respect to the particular employee benefit plans or severance plans, policies or arrangements expressly referred to in this Agreement.

 

 

ARTICLE III

 

 

REPRESENTATIONS AND WARRANTIES OF TARGET AND MEMBERS

 

Except as disclosed in a separate disclosure letter, a copy of which is being delivered to the Buyer herewith and is incorporated herein by reference (the “Disclosure Schedule”), the Sellers, jointly and severally, hereby represent and warrant to the Buyer as set forth below.  Information disclosed in any section of the Disclosure Schedule shall be deemed to be disclosed with respect to such other sections of this Agreement or the Disclosure Schedule to which such disclosure would reasonably pertain in light of the form and substance of the disclosure made.

 

Section 3.1 Organization and Good Standing

 

The Target is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.  The Target has all requisite company power and authority to own, lease and operate its properties and to carry on the Business as now being conducted, except where any such failure to be so organized and existing or to have such power and authority would not individually or in the aggregate have a Material Adverse Effect.  All membership interests of the Target are held by the Members.  The Target is duly qualified or licensed to do business in each jurisdiction in which the property owned, leased or operated by the Target in the conduct of the Business or the nature of the Business makes such qualification necessary, except in any such jurisdictions where the failure to be duly qualified or licensed would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.

 

As used in this Agreement, “Material Adverse Effect” means any effect or change which, individually or in the case of multiple occurrences, events or circumstances having the same fundamental underlying cause or basis, in the aggregate, would be (or could reasonably be expected to be) materially adverse to the Business, the Assets, condition (financial or otherwise), the operating results or the operations of the Target, or to the ability of the Target to consummate timely the transactions contemplated hereby (regardless of whether or not such adverse effect or change can be or has been cured at any time or whether the Buyer has knowledge of such effect or change on the date hereof); provided, that, an effect or change that applies to the economy in general or to the Target’s industry, as a whole, which effect or change does not substantially disproportionately affect the Target shall not be considered to be a Material Adverse Effect.

 

  

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Section 3.2 Authorization and Non-Contravention

 

The Target has the requisite company power and authority to execute and deliver this Agreement and the other agreements required to be delivered by the Target (the “Ancillary Agreements”  and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Target and no other proceeding on the part of the Target is necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.  Except as set forth on Section 3.2 of the Disclosure Schedule, neither the execution and delivery of this Agreement and the Ancillary Agreements nor the consummation or performance of the contemplated transactions thereunder will, directly or indirectly (with or without notice or lapse of time) (i) breach any provision of any resolution adopted by the Target; (ii) breach or give any governmental body or other person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under any legal requirement or any order to which any Member  may be subject; (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any governmental body the right to revoke, withdraw, suspend, cancel, terminate or modify any government authorization or permit that is held by the Target or that otherwise related to the Assets or to the Business; (iv) except for taxes on income earned by the Buyer following the Closing, cause the Buyer to become subject to, or to become liable for, the payment of any tax imposed, assessed or collected by or under the authority of any governmental body or payable under any tax-sharing agreement; or (v) result in any Member having a right to exercise dissenter’s appraisal rights.  This Agreement has been, and the Ancillary Agreements will be, duly executed and delivered by the Sellers and, assuming the valid execution and delivery by all counterparties thereto, will constitute the valid and binding agreements of the Sellers, enforceable against the Sellers in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, moratorium, reorganization and other laws affecting the enforcement of creditors’ rights generally and by general principals of equity.

 

Section 3.3 Title to Assets; No Sale of Assets

 

The Target is the beneficial owner of the Assets other than the Assets leased from third parties, and has good and marketable title to such Assets, free and clear of all Liens (other than any Permitted Liens).  As used herein, the term “Liens” means any pledge, mortgage, charge, claim, title, imperfection, defect or objection, security interest, conditional and installment sales agreement, encumbrance, easement, encroachment, third party right or restriction of any kind and the term “Permitted Liens” means (i) rights, if any, (other than for a breach or default occurring prior to the Closing Date) of parties under any of the Assigned Agreements; (ii) any Liens for Taxes that are not yet due and payable; (iii) Liens to be discharged at Closing as set forth on Section 3.3. of the Disclosure Schedule; (iv) licenses of Business Intellectual Property; (v) other Liens that have been granted under or attach to the Assets with respect to any of the Assumed Liabilities, in each case to the extent set forth on Section 3.3 of the Disclosure Schedule; and (vii) imperfections in title or encumbrances, if any, that individually or in the aggregate would not cause a Material Adverse Effect on the continued use, operation and value of the assets to which they relate in the conduct of the Business as presently conducted.  Except as set forth on Section 3.3 of the Disclosure Schedule, since the Interim Financial Statements Date, the Target has not sold or otherwise encumbered any of its assets other than with respect to sales and dispositions of Tangible Personal Property in the ordinary course of the Target’s business consistent with past practice.

 

  

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Section 3.4 Consents and Approvals; No Violations

 

Except as set forth on Section 3.4 of the Disclosure Schedule, neither the execution, delivery or performance of this Agreement or the Ancillary Agreements nor the consummation by the Sellers of the transactions contemplated hereby or thereby will (a) conflict with or result in any breach or violation of any provision of the limited liability company operating agreement or other governing documents of the Target; (b) require any filing or registration with, or notice or declaration to, or the obtaining of any permit, license, authorization, consent or approval of, any governmental or regulatory authority whether within or outside the United States, except where the failure to file, register or obtain any permit license, authorization, consent or approval could not reasonably be expected to have a Material Adverse Effect; (c) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or result in any termination, cancellation or acceleration, or give rise to any such right of consent, approval, notice, termination, cancellation or acceleration under, any of the terms, conditions or provisions of any agreement related to the Business or the Assets to which the Target is a party (d) violate any order, injunction, decree, statute, rule or regulation applicable to the Target, or any of the Assets or the Business; or (e) result in the creation or imposition of any Lien (other than any Permitted Liens) upon any of the Assets.

 

Section 3.5 Financial Statements

 

Section 3.5 of the Disclosure Schedule contains the Business’ (i) unaudited balance sheet and income statement (the “Interim Financial Statements”) as of June 30, 2012 (the “Interim Financial Statements Date”), and (ii) unaudited balance sheet, income statement, statement of members’ equity and statement of cash flows for the year ended December 31, 2011 (the “Historical Financial Statements”, and together with the Interim Financial Statements, the “Financial Statements”), which have been extracted from the books and records of the Target.  Neither the Target nor either of the Members possess or have access to any balance sheet or income statement for the Business with respect to any period ending subsequent to June 30, 2012.  Except as disclosed in the Financial Statements or on Section 3.5 of the Disclosure Schedule, the Financial Statements fairly present in all material respects the financial position and the results of operations of the Business as of the respective dates thereof for the respective periods indicated in accordance with U.S. generally accepted accounting principles consistently applied (“GAAP”), subject, in the case of the Interim Financial Statements, to normal year-end accruals and adjustments and the absence of notes, and have been derived from the books and records of the Target.  The Target’s books, accounts and records are, and have been, maintained in all material respects in the Target’s usual, regular and ordinary manner, in accordance with GAAP, and all material transactions to which the Target has been a party are properly reflected therein.

 

Section 3.6 Absence of Certain Changes

 

Since the Interim Financial Statements Date, and except as noted in Section 3.6 of the Disclosure Schedule, the Target has conducted the Business only in the ordinary course consistent with past practice, and with respect to the Business: (a) the Target has not acquired, sold, leased or in any way transferred or otherwise disposed of any of the assets of the Business, or made or entered into any contract or letter of intent with respect to any acquisition, sale, lease or transfer of any asset of the Business (other than the sale or disposition of Business Products or other Tangible Personal Property to Business customers in the ordinary course of its business consistent with its past practice), (b) no Assigned Agreement has been amended or terminated  and there has not occurred any material default by the Target or, to the Knowledge of the Target or either of the Members, a third party under any Assigned Agreement, (c) the Target has not made any deferral of the payment of any accounts payable other than in the ordinary course of business, consistent with past practice, or given any discount, accommodation or other concession other than in the ordinary course of business, consistent with past practice, in order to accelerate or induce the collection of any receivable, (d) the Target has not made any material change in the manner in which it extends discounts, credits or warranties to customers or otherwise deals with its customers, (e) there has been no material casualty, damage, destruction or loss affecting, or any material interruption in the use of, whether or not covered by insurance, the Assets or the Business, (f) the Target has not sold, disposed of, transferred or licensed to any person any rights to any Business Intellectual Property, other than in the ordinary course of business consistent with past practice, nor has the Target acquired or licensed from any person any Intellectual Property, or disposed of, transferred or provided a copy of any source code relating to the Business Intellectual Property to any person or entity, (g) the Target has not made or suffered any material change in the conduct or nature of any aspect of the Business, (h) the Target has neither waived any right or benefit under the Assigned Agreements nor canceled or compromised any debt or claim, 

 

  

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other than in the ordinary course of business, (i) the Target has not made (or committed to make) capital expenditures in an amount which exceeds $25,000  in the aggregate, (j) the Target has used the same degree of persistence in the collection of any accounts or other receivables as it used to collect any such accounts or accounts receivable prior to the Interim Financial Statement Date or the payment of any accounts or other payables, except for any restatement of any customer payment schedule in connection with the renewal or restatement of any Assignment Agreement, (k) the Target has not experienced a material increase in the length of time required for the Target to implement its customers, (l) except as set forth on Section 3.6 of the Disclosure Schedule, the Target has not had a backlog (which means for purposes hereof, a customer order that is still unfilled or unimplemented after the date promised or requested or the normal completion dated thereof) of greater than thirty (30) days for any customer implementation,  (m) the Target has not incurred any Liabilities, except Liabilities incurred in the ordinary course of business and Liabilities incurred in connection with or as a result of this Agreement and the transactions contemplated hereby, (n) the Target has not canceled, compromised, waived or released any material right or claim (or series of related rights and claims); (o) there has been no change made or authorized in the operating agreement or other governing document of the Target; (p) the Target has not made any loan to, or entered into any other transaction with either of the Members or any of its officers or employees outside the ordinary course of business; (q) the Target has not granted any increase in the base compensation of either of the Members or any of its officers or employees; (r) except as contemplated by Section 5.12 or as otherwise contemplated by this Agreement, the Target has not adopted, amended, modified or terminated any bonus, profit sharing, incentive, severance or other plan, contract or commitment for the benefit of any of either of the Members or any of its officers or employees; (s) the Target has not made any other changes in employment terms for either of the Members, officers or employees; (t) the Target has not made or pledged to make any charitable or other capital contribution outside the ordinary course of business; (u) the Target has not discharged a material liability or lien outside the ordinary course of business; (v) the Target has not made any loans or advances of money including, without limitation, any such loans or advances between or among Target, the Members and any affiliate or employee of Target; (w) the Target has not disclosed any Confidential Information; (x) the Target has not changed any accounting method for tax purposes or made, changed or revoked any tax elections; (y) there has not occurred any announcement of, any negotiation by or any entry into any contract by the Target to do any of the things described in the preceding clauses (other than negotiations and agreements with the Buyer and its representatives regarding the transactions contemplated by this Agreement), (z) without limitation by the enumeration of any of the foregoing, except for the execution of this Agreement, the Target has not entered into any transaction other than in the usual and ordinary course of business.

 

  

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Section 3.7 Absence of Material Adverse Effect

 

Except as set forth on Section 3.7 of the Disclosure Schedule or as otherwise contemplated by this Agreement, since the Interim Financial Statements Date, there has not been any Material Adverse Effect.

 

Section 3.8 Properties and Related Matters

 

(a) Target does not own any real property, land, buildings or structures.  Section 3.8(a) of the Disclosure Schedules sets forth the address of each parcel of leased real property, and a true and complete list of all leases for such leased real property (including the date and name of the parties to such lease document).  Target has delivered to the Buyer a true and complete copy of such lease document, and in the case of any oral lease, a written summary of the terms of such lease.  Except as set forth on Schedule 3.8(a), with respect to each such lease: (i) such lease is valid, binding, enforceable and in full force and effect; (ii) the transactions contemplated by this Agreement do not require the consent of any other party to such lease, will not result in a breach of or default under such lease, and will not otherwise cause such lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; (iii) the Target’s possession and quiet enjoyment of the leased real property under such lease has not been disturbed and, to the Target’s Knowledge, there are no disputes with respect to such lease; (iv) neither the Target, nor to the Target’s Knowledge, any other party to the lease is in breach of or default under such lease, and, to Target’s Knowledge, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such lease; (v) no security deposit or portion thereof deposited with respect to such lease has been applied in respect of a breach of or default under such lease that has not been redeposited in full; (vi) the Target does not owe, nor will it owe in the future, any brokerage commissions or finder’s fees with respect to such lease; (vii) the other party to such lease is not an affiliate of, and otherwise does not have any economic interest in, the Target; the Target has not subleased, licensed or otherwise granted any person the right to use or occupy the leased real property or any portion thereof; (viii) the Target has not collaterally assigned or granted any other lien in such lease or any interest therein; and (ix) there are no liens on the estate or interest created by such lease.  The leased real property identified in Section 3.8 of the Disclosure Schedule comprises all of the real property used to operate the Business; and Target is not a party to any agreement or option to purchase any real property or interest therein.  To the Knowledge of the Sellers, all buildings, structures, fixtures, and equipment, and all components thereof (including the roof, foundation, load-bearing walls and other structural elements thereof), heating, ventilation, air conditioning, mechanical, electrical, plumbing and other building systems included in the leased real property are in good condition and repair and sufficient for the operation of the Business.  There is no injunction, decree order, writ or judgment outstanding or any claim, litigation, administrative action or similar proceeding, pending or, to the Target’s Knowledge, threatened, relating to the ownership, lease, use or occupancy of the leased real property or any portion thereof or the operation of the Business as currently conducted thereon.  To the Target’s Knowledge, the leased real property is in compliance, in all material respects, with all applicable building, zoning, subdivision, health and safety and other land use laws, including the Americans with Disabilities Act of 1990, as amended, and all insurance requirements affecting the leased real property (collectively, the “Real Property Laws” , and the current use and occupancy of the leased real property and operation of Target’s business thereon do not violate any Real Property Laws. The Target has not received any notice of violation of any Real Property Law and, to Target’s Knowledge, there is no basis for the issuance of any such notice or the taking of any action for such violation.

 

  

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(b) Section 3.8(b) of the Disclosure Schedule describes, as of the date hereof, all items of Tangible Personal Property having a value in excess of $1,000 owned, leased or subleased by the Target, specifying in the case of leases or subleases, the name of the lessor or sublessor, the lease term and basic annual rent.  All such leases of personal property are in good standing and are valid, binding and enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally and there does not exist under any such lease any material breach by the Target or any event known to the Target that, with notice or lapse of time or both, would constitute a material breach.

 

Section 3.9 Business Products; Warranties; Defects; Liabilities

 

(a) A general description of the products that are, as of the date hereof (or were at any time during the one-year period immediately preceding the date hereof), owned, created, designed, developed, manufactured, marketed, licensed or sold (whether in existence or in development) by or on behalf of the Target is set forth in Section 3.9(a) of the Disclosure Schedule (hereinafter referred to collectively as the “Business Products” and individually as a “Business Product”).

 

(b) To the Knowledge of the Target, each of the Business Products was in conformity in all respects with the specifications for such Business Product, all applicable contractual commitments and all applicable express warranties at the time of the manufacture, sale, license, lease or delivery of such Business Product, except for such nonconformities for which (and to the extent) there is a reserve set forth on the Interim Financial Statements or as otherwise disclosed on Section 3.9(b) of the Disclosure Schedule.

 

As used in this Agreement, “Knowledge” means as follows:

 

An individual will be deemed to have Knowledge of a particular fact or other matter if (i) that individual is actually aware of that fact or matter; or (ii) a prudent individual would reasonably be expected to discover or otherwise become aware of that fact or matter in the performance of his duties for the Target.  The Target will be deemed to have Knowledge of a particular fact or matter if any Member or any of the Target’s Key Employees has knowledge of that fact or other matter (as set forth in (i) and (ii) above), and any such individual will be deemed to have conducted a reasonably comprehensive investigation regarding the accuracy of the representations and warranties made herein by that person or individual.  The “Target’s Key Employees” shall mean Eric Reich, Michael Weisman, Sean Casey, John White, Kim Vanderlinden and Robert Willer.

 

 

  

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Section 3.10 Intellectual Property

 

(a) Except as set forth on Section 3.10(a) of the Disclosure Schedule, the Target (i) owns legal title to, or pursuant to written agreement has, to the Knowledge of Target, valid and enforceable rights to use, all Business Intellectual Property, in each case free and clear of any Liens (other than Permitted Liens), and (ii) is the owner of record of any application, registration or grant for each item of Business Intellectual Property, and to the Knowledge of the Target, has properly executed and recorded all documents necessary to perfect its title to the registered Business Intellectual Property which is owned by Target.  The Target has filed all documents and paid all Taxes, fees and other financial obligations required to renew and maintain in force and effect all of the registered Business Intellectual Property which is owned by the Target until Closing.  Each item of Business Intellectual Property is currently in compliance with formal legal requirements (including payment of filing, examination and maintenance fees, proofs of working use, timely post-registration filing of affidavits of use and incontestability, renewal applications), and, to the Knowledge of the Target, is valid and enforceable, and, to the Knowledge of Target, is not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Closing Date.  The Target has taken all reasonable precautions to protect the secrecy, confidentiality and value of all trade secrets (including the enforcement by the Target of a policy requiring each employee or contractor to execute proprietary information and confidentiality agreement agreements, and all current and former employees and contractors of the Target have executed such an agreement).

 

(b) Section 3.10(b) of the Disclosure Schedule contains a complete and correct list of all Business Intellectual Property.

 

(c) The Target has not received any written notice that there is any violation by any other person of any right of the Target with respect to any or all Business Intellectual Property.  Except as provided in Section 3.10(c) of the Disclosure Schedule and except for licenses by the Target of off the shelf software, the Target has not entered into or consummated any license or user agreement with another person in respect to any or all Business Intellectual Property or otherwise licensed or sublicensed any third party to use the Business Intellectual Property.

 

(d) To the Knowledge of the Target, (i) the Business Intellectual Property has not been misappropriated nor has it been the subject of an unauthorized disclosure, (ii) no employee, independent contractor or agent of the Target has misappropriated any trade secrets of any other person in the course of such employee’s performance as an employee, independent contractor or agent and (iii) no employee, independent contractor or agent of the Target is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of the Business Intellectual Property.  The Target has taken reasonable steps to maintain the confidentiality of customer information, trade secrets and other confidential or proprietary intellectual property of the Business.

 

(e) No third party has asserted in writing to the Target any ownership rights in any of the Business Intellectual Property.  To the Knowledge of the Target, no other person claims the right to use in connection with similar or closely related goods and in the same geographic area any mark which is identical or confusingly similar to any of the Marks.  To the Knowledge of Target, neither the use of the Business Intellectual Property in the Business nor the owned Business Products infringe any right of any third party.  To the Knowledge of the Target, no third party is (i) infringing any of the owned Business Intellectual Property or (ii) has made a claim relating to infringement of the owned Business Intellectual Property and, to the Knowledge of the Target, no third party is infringing any of the Business Intellectual Property not owned by Target.  Without limitation of the foregoing, the Target has, and following the Closing, Buyer will have, the legal right to use the Business Intellectual Property (including all copies of all computer software) currently used by the Target, except as disclosed on Section 3.10(e) of the Disclosure Schedule.  The Business Intellectual Property constitutes all of the intangible property necessary in order for the Target to conduct the Business consistent with past practices and as presently conducted.  To the Knowledge of the Target, the Members do not have any ownership rights to the Business Intellectual Property.

 

  

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(f) No litigation has ever been commenced or has been threatened, (i) alleging that any Business Intellectual Property infringes on or misappropriates the intellectual property of another person; or (ii) challenging the ownership, right to use or validity of Business Intellectual Property.  To the Knowledge of Target, there is no valid basis for any Case described in this Section 3.10(f).

 

(g) The consummation of this Agreement will not result in the loss or impairment of any rights to own, use or sell any or all Business Intellectual Property.

 

(h) All of the Business Intellectual Property that has been created by any independent contractor or other third party for the Target is the subject of a proper written assignment and/or work made for hire agreement providing that the Target is the owner of such Business Intellectual Property.  The Target has written agreements with its past and/or present employees requiring such employees to assign all patents, inventions and other intellectual property rights to the Target, as necessary to protect the Target’s ownership interest in the Intellectual Property.

 

“Copyrights” means all copyrights, registered U.S. and foreign works of authorship and all applications to register and renewals of any of the foregoing.

 

“Business Intellectual Property” means all (A) Patents, (B) Marks, (C) Copyrights, (D) licenses of rights in computer software, Marks, Patents, Copyrights and other intellectual property, whether to or by the Target, (E) websites, domain names, URLs (including all computer software, all documentation, source and object codes with respect to such software and all licenses and leases of software) and (F) formulas, in each case owned by the Target or in which the Target claims any ownership rights anywhere in the world, used in connection with the Business.

 

“Marks” means all registered and unregistered U.S. and foreign trade names, trademarks, trade dress, service marks, logos, and slogans, together with any information regarding all registrations and applications related thereto.

 

“Patents” means all issued U.S. and foreign patents, design patents, utility models, industrial designs, registered designs and pending patent applications for any of the foregoing.

 

Section 3.11 Litigation

 

Except as set forth on Section 3.11 of the Disclosure Schedule, there are no actions suits, or any administrative, arbitration, governmental or other proceedings, in law or in equity or, to the Knowledge of the Target, investigations or inquiries, (collectively, “Cases”), pending, or to the Knowledge of the Target, threatened that (in each case) relate to the Business and that are (a) against Target or its  officers or the Members, (b) with respect to or affecting Target’s operation of the Business or the products or services provided or rendered by the Business or (c) related to the consummation of the transactions contemplated hereby.  Section 3.11 of the Disclosure Schedule contains a complete and accurate list of all Cases filed since the Target’s inception or to the Knowledge of the Target, threatened in the last three (3) years: (i) by or against the Target or its officers or the Members, in each case relating to the Business, (ii) with respect to or affecting the operation of the Business by the Target or the products or services provided or rendered by the Business or (iii) related to the consummation of the transactions contemplated hereby.

 

  

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Section 3.12 Compliance with Applicable Law; Permits

 

Except as noted in Section 3.12 of the Disclosure Schedule, the Target is in compliance in all material respects with all laws, ordinances, rules and regulations of any federal, state, local or foreign governmental authority applicable to the Business and no client, prospect, counsel to the company, advisor, employee or other party has claimed otherwise or made a written inquiry regarding the Target’s compliance.  The Target holds all material licenses, permits, authorizations, consents, approvals, orders, filings or registrations with any court or administrative or governmental authority necessary for the lawful conduct of the Business.   The Target is not a party to, or bound by, any decree, order or arbitration award (or agreement entered into in any administrative, judicial or arbitration proceeding with any governmental or other authority) with respect to the Target’s properties, assets, personnel or activities.

 

Section 3.13 Certain Contracts and Arrangements

 

Except as set forth on Section 3.13 of the Disclosure Schedule and except for any Assigned Agreements, as of the date hereof, the Target is not a party to any written or oral (a) collective bargaining agreement, (b) any partnership, joint venture or other similar agreement or arrangement, (c) license or other similar agreement, (d) agency, sales representation, distribution or other similar agreement, (e) agreement for the purchase of supplies or materials providing for annual payments of more than Twenty-Five Thousand Dollars  ($25,000), (f) agreement for the sale of goods or services, (g) contract for capital expenditures, (h) agreement or arrangement regarding confidentiality or non-competition, (i) lease or sublease of personal property or (j) agreement that has a notice for termination period of more than three (3) months and obligates any party thereto to make an annual payment of more than Twenty-Five Thousand Dollars ($25,000) or total payments of more than Fifty Thousand Dollars ($50,000) during the term of such agreement.  Except as set forth on Section 3.13 of the Disclosure Schedule, each Assigned Agreement is in full force and effect and is a valid, binding and enforceable obligation of the Target and, to the Knowledge of the Target, of each other party thereto, enforceable against each party thereto in accordance with its terms subject to applicable bankruptcy, moratorium, reorganization and other laws affecting enforcement of creditors rights generally.  Neither the Target nor, to the Knowledge of the Target any other party to any of the aforesaid agreements, is in default under any of the aforesaid agreements.

 

Section 3.14 Employee Benefit Plans; ERISA

 

(a) Section 3.14(a) of the Disclosure Schedule lists all Benefit Plans maintained or contributed to by the Target for the benefit of any of its employees or former employees (collectively, the “Plans”).  True and complete copies of all Plans, including, but not limited to, any trust instruments and insurance contracts forming a part of any Plans, and all amendments thereto, all summary plan descriptions and administrative service contracts relating to all Benefit Plans, the three most recent Forms 5500 and financial statements have been provided or made available to the Buyer.

 

  

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(b) Each of the Plans has, in all material respects, been administered in accordance with its terms and in compliance with applicable law (including, where applicable, ERISA and the Internal Revenue Code of 1986, as amended (the “Code”)), and to the extent applicable, the Patient Protection and Affordable Care Act of 2010.

 

(c) Except as described in Section 3.14(c) of the Disclosure Schedule, each of the Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and, to the Knowledge of the Target, no fact or set of circumstances that has adversely affected, or is reasonably likely to adversely affect, the qualification of such Plan prior to the Closing has occurred.  No determination letter for any such Plan has been revoked, and no such Plan has been amended since the date of its most recent determination letter in a manner that would adversely affect its qualified status.  Each Plan that is required to satisfy Section 401(k)(3) and Section 401(m)(2) of the Code has been tested for compliance with, and satisfies the requirements of Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to the Closing Date, or is a “safe harbor” 401(k) plan exempt from discrimination testing.

 

(d) Except as set forth in Section 3.14(d) of the Disclosure Schedule, no Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for the Target’s employees or former employees for periods extending beyond their termination of service (by retirement or otherwise), other than (i) coverage mandated by applicable law, (ii) death benefits under any “pension plan,” as that term is defined in Section 3(2) of ERISA or (iii) benefits the full cost of which is borne by the current or former employee (or his or her beneficiary).

 

(e) There are no pending or, to the Knowledge of the Target or either of the Members, threatened claims (other than routine claims for benefits) by, on behalf of or against any of the Benefit Plans or any trusts related thereto, except for those claims that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect.  Neither Target nor Sellers have received any notice by the U.S. Department of Labor or Internal Revenue Service of an audit of any Benefit Plan.

 

(f) Except as set forth in Section 3.14(f) of the Disclosure Schedule, the Target has not made any representations to any of its employees concerning the length of time that the employee’s work or employment with the Buyer may continue or concerning the compensation or benefits or other terms or conditions of employment with the Buyer to be offered to the Target’s employees by the Buyer.

 

(g) Neither the Target nor any ERISA Affiliate has ever maintained or contributed to any defined benefit plan subject to Title IV of ERISA or any multiemployer pension plan as defined in Section 3(37) of ERISA, or any Benefit Plan subject to Section 412 of the Code.

 

(h) Except as otherwise disclosed in Section 3.14(h) of the Disclosure Schedule, no payment that is owed or may become due to any director, officer, employee or agent of the Target or any ERISA Affiliate will be non-deductible or subject to tax under Section 280G or Section 4999 of the Code; nor will the Target or any ERISA Affiliate be required to “gross up” or otherwise compensate any such person because of the imposition of any excise tax on a payment to such person.

 

  

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(i) No transaction prohibited by Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any Plan that could subject the Buyer to any liability.

 

(j) Each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been timely documented, operated and administered in compliance with Section 409A of the Code and final regulations and other guidance issued thereunder except for de minimis noncompliance that would not result in adverse tax consequences to Buyer, Sellers, or to any employee or service provider of the Target.  No stock option or stock appreciation rights or other equity instrument has been granted that would have an exercise price less than the fair market value on the date of the grant.

 

(k) All filings and reports as to each Plan required to have been submitted to the Internal Revenue Service or the U.S. Department of Labor have been timely filed.  All contributions required to be made to Benefit Plans have been timely made with respect to any period ending on  (and including) the Closing, or reserves adequate for such contributions have been set aside and have been reflected in the financial statements in accordance with GAAP.  All employee contributions have been timely deposited in accordance with applicable Department of Labor guidance.

 

(l) Except as set forth in Section 3.14(l) of the Disclosure Schedule, each Plan is amendable and terminable unilaterally at any time without liability or expense to the Target or to the Plan as a result thereof (other than for benefits accrued through the date of termination or amendment and reasonable administrative expenses related thereto).

 

(m) The Target has complied and currently complies in all material respects with the applicable continuation requirements for its welfare benefit plans, including Section 4980B of the Code and Sections 601 through 608, inclusive, of ERISA, and any applicable state statutes maintaining health insurance continuation coverage for employees and beneficiaries.

 

(n) Except as set forth in Section 3.14(n) of the Disclosure Schedule, none of the Benefit Plans provides that the consummation of this transaction will, either alone or in combination with another event (entitle any Employee or current or former officer, director or Member) to severance pay or other compensation except as expressly provided in this Agreement, or accelerate the time of payment or vesting or increase the amount of such compensation.

 

“Benefit Plans” for all purposes of this Agreement means all “employee benefit plans,” as defined in Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of the Code, all other employment, severance pay, salary, continuation, bonus, incentive, stock option, stock appreciation right, stock bonus, stock purchase, employee stock ownership, savings, change-in-control, supplemental unemployment, layoff, health, life insurance, disability, accident, group insurance, vacation, holiday, sick leave, fringe benefit, cafeteria, welfare, retirement, pension, profit sharing or deferred compensation plans, contracts, programs, funds or arrangements (whether qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective) and any trust, escrow or similar agreement related thereto, whether or not funded.

 

  

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“ERISA Affiliate” means each person (as defined in Section 3(9) of ERISA), whether or not incorporated, which is considered a single employer with the Target within the meaning of Section 414(b), (c) or (m) of the Code and the regulations promulgated thereunder.

 

Section 3.15 Taxes

 

(a) Except as set forth on Section 3.15 of the Disclosure Schedule, (i) for all periods through and including the Closing Date, the Target has timely filed or caused to be filed with the appropriate taxing authorities all Tax Returns due on or prior to the Closing Date and required to be filed by it, and such Tax Returns are true, correct and complete in all material respects, (ii) for all periods prior to the Closing Date, the Target has paid or will pay all Taxes related to the Business due and owing, (iii) for all periods prior to the Closing Date, the Target has withheld and paid or will timely pay all Taxes related to the Business and required to be withheld and paid with respect to amounts owing to any employee, creditor, independent contractor or other third party, (iv) none of the Assets is subject to any Liens relating to or attributable to Taxes (other than any Permitted Liens), (v) none of the Assets is “tax-exempt use property” within the meaning of Section 168(h) of the Code, (vi) there is no dispute, claim or proposed adjustment concerning any Tax liability of the Target either (A) which has been claimed or raised by any authority in writing or (B) based upon personal contact with any agent of such authority, (vii) the Target does not have any Knowledge of any basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any Lien (other than any Permitted Lien) upon the Assets, (viii) the Target is not a party to any tax allocation or sharing agreement nor does the Target owe any amount under any such agreement and (ix) the Target has not waived any statute of limitation in respect of Taxes or agreed to the extension of time with respect to a tax assessment or deficiency.

 

(b) As used in this Agreement, “Taxes” shall mean (i) any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts whether disputed or not; (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including, without limitation, any liability under Treas. Reg. Section 1.1502-6 or any comparable provision of foreign, state or local law); and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor or transferor entity.

 

(c) As used in this Agreement, “Tax Return” shall mean any report, return, claim for refund, estimate, information return or statement required to be supplied to a taxing authority in connection with Taxes including, without limitation, any schedule or attachment thereto, and including any amendments thereof.

 

Section 3.16 Labor Matters

 

The Target is not a party to or bound by any union contract and no organizational effort is being or has been made or threatened by or on behalf of any labor union with respect to the Target’s employees.  There is no labor strike, dispute, slowdown, stoppage or lockout ongoing, or to the Knowledge of the Target, threatened, against or affecting the Business.  There is no unfair labor practice, employment discrimination or employee grievance charges or complaints against the Target pending (for which notice has been provided) or, to the Knowledge of Target, threatened, before the National Labor Relations Board or any similar foreign agency.  The Target has not received written notice of the intent of any federal, state or foreign governmental authority responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to the Business and no such investigation is in progress.

 

  

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Section 3.17 Certain Fees

 

Except as set forth on Section 3.17 of the Disclosure Schedule, neither the Target nor any of its affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory fees, finders’ fees or similar fees in connection with this Agreement or the transactions contemplated hereby.

 

Section 3.18 Full Force and Effect

 

Except as set forth on Section 3.18 of the Disclosure Schedule, each Assigned Agreement and each of the Ancillary Agreements is in full force, and to the Knowledge of the Target, no event, occurrence or condition exists which, with the lapse of time, the giving of notice, or both, would become a material default or breach by any party to any Assigned Agreement thereunder.  Complete and accurate copies of all Assigned Agreement and all of the agreements listed in Section 3.13 of the Disclosure Schedule (including any amendments or supplements thereto) have previously been made available to the Buyer.

 

Section 3.19 Customers and Vendors

 

(a) Except as set forth on Section 3.19(a) of the Disclosure Schedule, to the Knowledge of the Target, the Target does not have any outstanding disputes concerning products and/or services with any customer.  The Target has not received written notice from any customer, and the Target does not otherwise have Knowledge, that a customer intends to prematurely terminate or materially modify their existing business relationships or an existing contract or any portion thereof.  Within the past year, the Target has not had any of its Business Products returned by a purchaser thereof except for normal warranty returns consistent with past history and those returns that would not result in a reversal of any material revenue by the Target.

 

(b) Except as set forth on Section 3.19(b) of the Disclosure Schedule, the Target does not have any outstanding dispute concerning products and/or services provided by vendor.  The Target has not received written notice from any vendor, and the Seller does not otherwise have Knowledge, that a vendor intends to prematurely terminate or materially modify their existing business relationships or an existing contract or any portion thereof.  The Target has access, on commercially reasonable terms, to all products and services reasonably necessary to carry on the Business as it is presently conducted.

 

Section 3.20 Sufficiency and Condition of Assets

 

Except as disclosed on Section 3.20 of the Disclosure Schedule, the Assets constitute all assets, properties, rights and Intellectual Property that are used by the Target and are necessary to enable the Buyer, following the Closing, to effectively own, conduct, operate and continue the Business, as conducted by the Target prior to Closing.  All of the tangible Assets, whether real or personal, owned or leased, have been maintained in accordance with the Target’s normal maintenance practices and are in operating condition (with the exception of normal wear and tear).

 

  

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Section 3.21 Environmental Matters

 

(a) As used in this Agreement, the following terms shall have the meanings indicated below:

 

(i) “Environmental and Safety Laws” shall mean any federal, state or local laws, ordinances, codes, regulations, rules, policies and orders that are intended to assure the protection of the environment, or that classify, regulate, call for the remediation of, require reporting with respect to, or list or define air, water, groundwater, solid waste, hazardous or toxic substances, materials, wastes, pollutants or contaminants, or which are intended to assure the safety of employees, workers or other persons, including the public.

 

(ii) “Hazardous Materials” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive substance, material or waste defined in or regulated under any Environmental and Safety Laws, but excludes office and janitorial supplies in amounts consistent with normal consumer usage which are properly and safely maintained.

 

(iii) “Property” shall mean all real property leased or owned by the Target either currently or in the past.

 

(iv) “Facilities” shall mean the portion of all buildings and improvements on the Property which is leased by the Target.

 

(b) Except as set forth in Section 3.21 of the Disclosure Schedule:

 

(i) The Target is in compliance in all material respects with currently applicable Environmental and Safety Laws and has at all times complied in all material respects with all Environmental and Safety Laws.

 

(ii) The Target possesses all material licenses, permits, authorizations, consents, approvals, orders, filings or registrations with any court or administrative or governmental authority required under Environmental and Safety Laws for its operations as currently conducted, (ii) all such instruments are in full force and effect, and (iii) no actions are pending, or to the Knowledge of the Target or either of the Members, threatened, to amend, challenge, terminate, cancel, limit, restrict or appeal any of such instruments.

 

(iii) There has been no release of any Hazardous Materials by the Target, or, to the Target’s Knowledge, any other party, on the Property or in any of the Facilities that is in violation of or, if discovered, would reasonably be expected to lead to any liability or investigative, corrective or remedial obligation arising under any Environmental and Safety Law.

 

  

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(iv) Except in the ordinary course of business pursuant to applicable law, the Target has not transported or arranged for the treatment, storage, handling, disposal or transportation of any Hazardous Materials to any off-site location.

 

(v) The Target has not (A) treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any Hazardous Materials so as to give rise to any liability or any investigative, corrective or remedial obligation under any Environmental and Safety Law or (B) either expressly or by operation of law, assumed or undertaken any liability or obligation for corrective or remedial action of any other person under any Environmental and Safety Law.

 

(vi) The Target has not received any notice of violation or liability from any governmental body, nor is any Case pending or threatened, asserting an actual or potential liability or obligation under any Environmental and Safety Law in respect to the Target or any of its Facilities or operations.

 

(vii) The Target is not a potentially responsible party under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any analogous state, local or foreign laws arising out of events occurring prior to the Closing Date.

 

(viii) All material environmental studies and audits conducted in relation to the Property or the Facilities by or on behalf of the Target or any of its predecessors in the last five (5) years are listed in Section 3.21 of the Disclosure Schedule, copies of which have been provided to the Buyer.

 

(ix) All agreements between the Target and any governmental authority with respect to environmental matters related to the Property or the Facilities are listed on Section 3.21 of the Disclosure Schedule.

 

(x) Neither this Agreement nor the consummation of the transaction that is the subject of this Agreement will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any Environmental and Safety Laws.

 

(xi) No judgment, sanction, restriction, probation period or other penalty by any governmental or judicial authority has been or will be imposed upon the Target or the Business with respect to any matter set forth in Section 3.21 of the Disclosure Schedule.

 

Section 3.22 Accounts Receivable

 

(a) All amounts of the Target’s reserves, allowances and discounts for accounts receivable reflected in the Financial Statements have been established in a manner which is consistent with reserves, allowances and discounts previously maintained by the Target in the ordinary course of its business.  Except as disclosed on Section 3.22 of the Disclosure Schedule, no account receivable reflected in the Interim Financial Statements is or was subject to any counterclaim or set off (other than returns and warranty claims in the ordinary course of business) and the Target has not issued any material credits or credit memos in respect thereof.

 

  

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(b)  To the Knowledge of the Target, all accounts receivable reflected in the Interim Financial Statement are good and collectible (or have been collected) in the ordinary course of business, and at the aggregate recorded amounts thereof, using collection practices consistent with the Target’s past collection practices, net of the amount of applicable reserves reflected on the Closing Date Statement for doubtful accounts and for allowances and discounts.  To the Knowledge of the Target, all of the trade receivables and notes receivable that are reflected on the Interim Financial Statements, or that arose subsequent to the date of the Interim Financial Statements, arose out of bona fide, arms-length transactions.

 

Section 3.23 Insurance.

 

Section 3.23 of the Disclosure Schedule sets forth and briefly describes, for each insurance policy (including policies providing property, casualty, liability and workers’ compensation coverage and bond and surety arrangements) to which Target has been a party at any time within the past three (3) years, the scope and amount of coverage, deductibles and ceilings, the period of coverage and claims made within the past three (3) years.  With respect to each such insurance policy: (i) the policy is legal, valid, binding, enforceable and in full force and effect in all material respects; (ii) the policy will continue to be legal, valid, binding, enforceable and in full force and effect in all material respects following the consummation of the transaction contemplated hereby (including the assignments and assumptions referred to in Article I above); (iii) neither Target nor to the Knowledge of Target, any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a breach or default or permit termination, modification or acceleration, under the policy and (iv) no party to the policy has repudiated any provision thereof.  Target has been covered during the past three (3) years by insurance in scope and amount customary and reasonable for the business in which it has engaged during the aforementioned period.  Section 3.23 of the Disclosure Schedule describes any material self-insurance arrangements affecting Target.

 

Section 3.24 Related Party Transactions

 

Every direct or indirect business relationship (other than normal employment relationships) between the Target, on the one hand, and the Target’s present managers, officers, members or employees or members of the families of any of the foregoing (or any entity in which any of them controls or has a material financial interest, directly or indirectly), on the other hand (each, a “Related Party”), is set forth in Section 3.24 of the Disclosure Schedule.  No Related Party (or affiliate of a Related Party) owns, directly or indirectly, any of the Assets and no Related Party (or affiliate of a Related Party) is engaged in any business which competes with the Business.  Without limiting the foregoing, no transaction between or among the Target and any of its affiliates is included in the Financial Statements.

 

Section 3.25 Gifts and Benefits

 

No employee or agent of the Target acting on the Target’s behalf has directly or indirectly given or agreed to give to any customer, vendor, governmental employee or any actual or purported agent of any of the foregoing who is or may be in a position to help or hinder the Business (or assist Target in connection with any actual or proposed transaction relating to the Business) (a) any illegal gift or benefit or (b) any gift or similar benefit which if not continued or repeated in the future would have a material adverse effect on the relationship of the Target with such entity or person.

 

  

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Section 3.26 Guaranties

 

The Target is not a guarantor or otherwise liable for any liability (including indebtedness) to and other person.

 

Section 3.27 Disclosure

 

To the Knowledge of the Sellers, the representations and warranties contained in this Article III do not contain any untrue statement of a fact or omit to state any fact necessary in order to make the statements and information contained in this Article III not misleading.  The Sellers do not have Knowledge of any facts that are material to the Target’s business or its operations that have not been disclosed to the Buyer in this Agreement.

 

ARTICLE IV

 

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as disclosed in a separate disclosure letter, a copy of which is being delivered to the Sellers herewith and is incorporated herein by reference (the “Buyer’s Disclosure Schedule”), the Buyer hereby represents and warrant to the Sellers as set forth below.

 

Section 4.1 Organization and Good Standing

 

The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Buyer has heretofore delivered to the Target complete and correct copies of its organization documents, as currently in effect.  The Buyer has all requisite company power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

 

Section 4.2 Authorization

 

The Buyer has the requisite company power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Buyer and no other limited liability company proceeding on the part of the Buyer is necessary to authorize the execution, delivery and performance of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.  This Agreement has been, and the Ancillary Agreements will be, duly executed and delivered by the Buyer and, assuming the valid execution and delivery by all counterparties thereto, will constitute the valid and binding agreements of the Buyer, enforceable against the Buyer in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, moratorium, reorganization and other laws affecting the enforcement of creditors’ rights generally and by general principals of equity.

 

Section 4.3 Consents and Approvals; No Violations

 

Neither the execution, delivery or performance of this Agreement and the Ancillary Agreements nor the consummation by the Buyer of the transactions contemplated hereby or thereby will (a) conflict with or result in any breach or violation of any provision of the certificate of formation or limited liability company operating agreement of the Buyer; (b) require any filing or registration with, or notice or declaration to, or the obtaining of any permit, license, authorization, consent or approval of, any governmental or regulatory authority whether within or outside the United States; (c) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or result in any termination, cancellation or acceleration, or give rise to any such right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other instrument or obligation to which the Buyer is a party or by which the Buyer or any of its assets is subject or by which any of them may be 

 

  

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bound; (d) violate any order, injunction, decree, statute, rule or regulation applicable to the Buyer; or (e) result in the creation or imposition of any Lien upon any properties, assets or business of the Buyer, excluding from the foregoing clauses (b), (c), (d) and (e), such requirements, conflicts, defaults, rights, security interests, Liens or violations that would not adversely affect the ability of the Buyer to consummate the transactions contemplated by this Agreement or the Ancillary Agreements.  The number of shares of common stock of Higher One Holdings, Inc., a Delaware corporation, par value $0.001 per share (such shares being hereinafter “Higher One Holdings Shares”) which are available for issuance under the terms of the Higher One Holdings, Inc. 2010 Equity Incentive Plan exceeds the total number of Higher One Holding Shares which will be issuable to the Members under the terms of the Member Options which will be granted to the Members as of the date hereof.  The issuance of the Warrants to the Target and the issuance of the Member Options by Higher One Holdings, Inc. has been duly authorized by all necessary corporate and stockholder action of  Higher One Holdings, Inc., will not violate or conflict with the certificate of incorporation or by-laws of Higher One Holdings, Inc. and will not violate or conflict with or constitute an event which, with notice or lapse of time or both, would constitute a breach of the obligations of Higher One Holdings, Inc. under any contract or agreement to which Higher One Holdings, Inc. is a party or by which its property or assets is bound.

 

Section 4.4 Litigation

 

Except as set forth on Section 4.4 of Buyer’s Disclosure Schedule, there are no Cases, governmental investigations or inquiries pending or threatened against the Buyer that are reasonably likely to adversely affect the Buyer’s performance under this Agreement or the ability of the Buyer to consummate the transactions contemplated herein.

 

Section 4.5 Certain Fees

 

Neither the Buyer nor any of its affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory fees, finders’ fees or similar fees in connection with this Agreement or the transactions contemplated hereby.

 

Section 4.6 Financial Ability

 

The Buyer has the financial ability to pay the Estimated Initial Purchase Price and Final Closing Purchase Price and otherwise satisfy its obligations under this Agreement.

 

 

ARTICLE V

 

 

COVENANTS

 

  

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Section 5.1 Consents

 

With respect to any agreements identified in Section 5.1 of the Disclosure Schedule (i) for which any required consent or approval is not obtained prior to the Closing, the Target and the Buyer shall each use commercially reasonable efforts to obtain any such consent or approval after the Closing until either such consent or approval has been obtained or the Target and the Buyer mutually determine in good faith that such consent cannot reasonably be obtained and (ii) for which any required consent or approval is not obtained prior to the Closing and the third party from which consent is required (A) refuses to consent to such assignment, (B) declares a default under the applicable agreement requiring consent of the third party or (C) otherwise ceases to perform under such agreement, then the Target and the Members shall use their commercially reasonable efforts to provide the Buyer with substantially similar benefits arising under such agreements, including performance as agent of the Buyer, if legally and commercially feasible; provided, however, that the Buyer shall provide the Target (and the Members, if applicable) with such access to the premises, books and records and personnel as is reasonably necessary to enable the Target (or the Members, if applicable) to perform its obligations under such agreements and the Buyer shall pay or satisfy the corresponding liabilities for the enjoyment of such benefits to the extent the Buyer would have been responsible therefor if such consent or approval had been obtained.

 

In the event that any governmental authority challenges the proposed transaction for any reason, the parties agree to take commercially reasonable efforts to vigorously defend, lift, mitigate or rescind the effect of any actual or reasonably anticipated litigation or administrative proceeding adversely affecting this Agreement or the transactions contemplated hereby, including, without limitation, promptly appealing any adverse court or administrative order or injunction.

 

Section 5.2 Accounts Receivable

 

After the Closing, the Sellers shall (a) promptly deliver to the Buyer any payments received from third parties in connection with the accounts receivable of the Business existing as of Closing, and (b) in the event the Target or either of the Members receives any instrument of payment of any of the accounts receivable of the Business, the Seller or the respective Member or Members shall forthwith deliver such instrument to the Buyer, endorsed where necessary, without recourse, in favor of the Buyer.

 

Section 5.3 Inspection of Records

 

The Sellers, the Buyer and their respective affiliates shall each retain and make their respective books and records (including work papers in the possession of their respective accountants) available for inspection by the other party, or by its duly accredited representatives, for reasonable business purposes at all reasonable times during normal business hours, for a three (3) year period after the Closing Date, with respect to all transactions of the Target occurring prior to and those relating to the Closing, and the historical financial condition, assets, liabilities, operations and cash flows of the Target.  In the case of records owned by the Target or any of its affiliates, such records shall be made available at the Target’s executive office, and in the case of records owned by Buyer, such records shall be made available at Buyer’s executive office.  For the avoidance of doubt, the Members shall ensure that the Target’s books and records (including work papers in the possession of the respective accountants of the Target) are available to the Buyer during such three (3) year period.  As used in this subsection, the right of inspection includes the right to make extracts or copies.  The representatives of a party inspecting the records of the other Party shall be reasonably satisfactory to the other party.

 

  

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Section 5.4 Link to Buyer’s Website

 

In the event that as of the Closing Date the Target’s websites, including but not limited to www.campuslabs.com, www.studentvoice.com and all other Target maintained, operated or owned websites,  have not been effectively conveyed to the Buyer in accordance with Section 1.1(a)(xii), the Target agrees, during the period from the Closing Date until the date on which such conveyance has been effectively made, to maintain and operate such websites in accordance with the Buyer’s direction.

 

Section 5.5 Trademarks

 

The Target shall, and shall cause its affiliates to, not use and shall not license or permit any third party to use any name, slogan, logo or trademark which is similar or deceptively similar to any of the trademarks or other name used in connection with the Business including the names “Campus Labs” or “Student Voice”.  At or promptly following the Closing Date, the Target shall change its name to any name other than (or that is not confusingly similar to) “Campus Labs” or “Student Voice”.

 

Section 5.6 Covenant Not to Compete

 

Each of the Members agrees to enter into a non-competition and non-solicitation agreement with the Buyer in substantially the forms attached hereto as Exhibit I as sellers of the Target.

 

Section 5.7 Disclosure of Confidential Information

 

As an inducement for the Buyer to enter into this Agreement, the Sellers agree that for five (5) years following the Closing Date, such party shall, and shall cause its affiliates to, maintain all Confidential Information in confidence and shall not disclose any Confidential Information to anyone outside of the Buyer, and the Sellers shall, and shall cause their affiliates to, not use any Confidential Information for its own benefit or the benefit of any third party.  Nothing in this Agreement, however, shall prohibit such party from using or disclosing Confidential Information to the extent required by law.  If such party is required by applicable law to disclose any Confidential Information, such party shall (a) provide the Buyer with prompt notice before such disclosure in order that the Buyer may attempt to obtain a protective order or other assurance that confidential treatment will be accorded such information and (b) cooperate with the Buyer (at the Buyer’s expense) in attempting to obtain such order or assurance.  “Confidential Information” means information regarding the Business to the extent it is Confidential, including the following:  (i) information regarding operations, assets, liabilities or financial condition; (ii) information regarding pricing, sales, merchandising, marketing, capital expenditures, costs, joint ventures, business alliances, purchasing or manufacturing; (iii) current or prospective customers, including information regarding their identities, contact persons and purchasing patterns; (iv) information regarding current or prospective vendors, suppliers, distributors or other business partners; (v) forecasts, projections, budgets and business plans; (vi) trade secrets and proprietary information; (vii) technical information, patent disclosures and applications, copyright applications, sketches, drawings, blueprints, models, know-how, discoveries, inventions, improvements, techniques, processes, business methods, equipment, algorithms, software programs, software source documents and formulae, in each case  regarding current, future or proposed products or services (including information concerning research, experimental work, development, design details and specifications and engineering) in respect to the Business.  “Confidential” means not generally available to the public.  “Confidential Information” shall not, however, include information which the Sellers receive from a third party with the legal right to disclose it to the Sellers.  Information shall not be considered to be generally available to the public if it is made public by the Sellers in violation of this Agreement or by a third party who has no lawful right to disclose the information or who does so in violation of any contractual, legal or fiduciary obligation to the Buyer.

 

  

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Section 5.8 Injunctive Relief

 

The Sellers and the Buyer specifically recognize that any breach of Section 5.7 of this Agreement will cause irreparable injury to the Buyer and that actual damages may be difficult to ascertain, and in any event, may be inadequate.  Accordingly, the Sellers and the Buyer agree that in the event of any such breach, the Buyer shall be entitled to injunctive relief in addition to such other legal and equitable remedies that may be available.

 

Section 5.9 Payroll Taxes and Payroll Records

 

The Target and the Buyer agree that upon Closing, the Buyer will have purchased substantially all of the assets of the Business, and in connection therewith Buyer shall employ certain individuals who immediately before the Closing Date were employed by the Target and that the Target and the Buyer shall comply with the Standard Procedure set forth in Section 4 of Revenue Procedure 2004-53, unless the Buyer elects in writing within ten (10) days after the Closing Date to have the “Alternative Procedure” set forth in Section 5 of Revenue Procedure 2004-53 with respect to the processing, filing and transferring Forms 941, W-2, W-3, W-4 and W-5 apply.

 

Section 5.10 Health Insurance

 

The Buyer shall satisfy the Target as of the Closing with information and evidence reasonably satisfactory to the Target that the Buyer will extend to each Transferred Employee the opportunity to enroll, as of the Closing, in the Buyer’s group health plans in which each Transferred Employee is eligible to participate (it being acknowledged that there will be a group health plan sponsored by the Buyer in which each Transferred Employee will be eligible to participate as of Closing if such Transferred Employee would, as of Closing, be eligible to participate in a group health plan sponsored by the Target).

 

Section 5.11 COBRA Liabilities

 

The Target shall maintain a health plan and shall provide COBRA continuation coverage (as generally described in Section 4980B(f) of the Code to (i) those individuals currently receiving COBRA coverage, (ii) employees, former employees and Qualified Beneficiaries (as such term is defined under Section 4980B(g)(1) of the Code) who are in the COBRA election period but have not yet made a COBRA election but hereafter do make a timely COBRA election, and (iii) those employees who become M&A Qualified Beneficiaries (as such term is defined in Treasury Regulations Section 54.4980B-9 Q&A 4).

 

Section 5.12 401(k) Termination by Target

 

The Members of the Target shall have adopted resolutions to terminate the Benefit Plan known as the Student Voice LLC 401(k) Profit Sharing Plan and Trust, effective immediately prior to, and conditioned upon, the Closing, and shall have provided Buyer with true and correct copies of the same as of the day immediately preceding the Closing Date. The form and substance of such resolutions shall be subject to the reasonable advance review and approval of Buyer.

 

  

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Section 5.13 Tax Clearance Certificates and Allocations

 

The Buyer and the Sellers shall cooperate in preparing and filing with the appropriate governmental authorities such forms as may be required in order to obtain a tax clearance certificate or other document absolving the Buyer from any responsibility or liability for the Target’s income, sales and use taxes.  The parties shall agree on an allocation of the Purchase Price which will be prepared on a timely basis pursuant to the requirements of the Code and any reporting requirements of the Buyer.  The Sellers and the Buyer further agree that (A) these allocations shall be made as provided in Section 1060 of the Code; (B) each party to this Agreement shall file Form 8594 (Asset Allocation Statement Under Section 1060) on a timely basis for reporting the allocation; and (C) none of the parties will take any position on its respective income tax return that is inconsistent with this allocation.

 

Section 5.14 Option Grants and Bonus Plan

 

At Closing, Higher One Holdings, Inc. shall grant to the Members in consideration of their employment options (the “Member Options”) to purchase shares of common stock of Higher One Holdings, Inc. in accordance with the equity incentive plan of Higher One Holdings, Inc. and customs and practices for awarding employees options.  The total number of shares of common stock underlying such option grants shall be equal to 450,000 shares.  The Member Options shall be comprised of incentive stock options and non-qualified stock options in accordance with applicable law.  The Members receiving such option grants shall execute option agreements with the Buyer.

 

Buyer shall enroll each Transferred Employee in the Bonus Plan and administer the Bonus Plan in compliance with the terms thereof unless otherwise approved by the Members.

 

Section 5.15 Investigation by the Sellers

 

Notwithstanding anything to the contrary in this Agreement, (a) no investigation by the Sellers shall affect the representations and warranties of the Buyer under this Agreement or contained in any other writing to be furnished to the Stockholders in connection with the transactions contemplated hereby, and (b) such representations and warranties shall not be affected or deemed waived by reason of the fact that the Sellers knew or should have known that any of the same is or might be inaccurate in any respect.

 

Section 5.16 Investigation by the Buyer

 

Notwithstanding anything to the contrary in this Agreement, (a) no investigation by the Buyer shall affect the representations and warranties of the Sellers under this Agreement or contained in any other writing to be furnished to the Buyer in connection with the transactions contemplated hereby, and (b) such representations and warranties shall not be affected or deemed waived by reason of the fact that the Buyer knew or should have known that any of the same is or might be inaccurate in any respect.

 

  

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Section 5.17 Further Assurances

 

Following the Closing Date, the parties shall execute such further documents, and perform such further acts, as may be necessary to transfer and convey the Assets to the Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transaction contemplated hereby.

 

 

ARTICLE VI

 

 

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS

 

Section 6.1 Survival of Representations

 

All representations and warranties made in this Agreement shall survive the Closing hereunder for a period of two (2) years beginning on the first day following the Closing Date; provided, however, that the Indemnity Period for (a) the representations and warranties contained in Section 3.1 (Organization); Section 3.2 (Authorization); Section 3.3 (Title to Assets); Section 3.14 (Employee Benefit Plans; ERISA);  Section 3.15 (Taxes); Section 3.17 (Certain Fees); Section 3.21 (Environmental Matters); Section 4.1 (Organization); Section 4.2 (Authorization); and Section 4.5 (Certain Fees) (these representations and warranties, collectively, the “Excluded Representations”) and (b) fraud shall survive until 30 days following the end of the applicable statute of limitations period; provided, further, that to the extent that no applicable statute of limitation period exists with respect to an Excluded Representation, such Excluded Representation shall survive the Closing Date indefinitely.  Notwithstanding anything to the contrary contained in Section 6.2 or in Section 6.3, the Sellers shall have no obligation to indemnify the Buyer Indemnified Parties for any Buyer Damages arising as a result of a breach of any representation or warranty made by Sellers unless written notice of the breach of any such representation or warranty is delivered to the Sellers prior to the expiration of the period during which the applicable representation and warranty survives the Closing and the Buyer shall have no obligation to indemnify the Seller Indemnified Parties for any Seller Damages arising as a result of a breach of any representation or warranty made by Buyer unless written notice of the breach of any such representation or warranty is delivered to the Buyer prior to the expiration of the period during which the applicable representation and warranty survives the Closing.

 

Section 6.2 Sellers’ Agreement to Indemnify

 

(a) Subject to the terms and limitations set forth in this Agreement, from and after the Closing, the Sellers, jointly and severally, shall indemnify and hold harmless the Buyer and its directors, officers, shareholders, employees, affiliates, successors and assigns (each, a “Buyer Indemnified Party” and collectively, the “Buyer Indemnified Parties”) from and against all liability, demands, claims, actions or causes of action, suits, proceedings, hearings, investigations, charges, complaints, injunctions, judgments, orders, decrees, rulings, assessments, losses, damages, dues, penalties, fines, costs, amounts paid in settlement, obligations, taxes, liens and expenses (including, without limitation, reasonable attorneys’ fees) (collectively, the “Buyer Damages”) asserted against or incurred by any Buyer Indemnified Party as a result of or arising out of (i) the Excluded Liabilities, (ii) any misrepresentation in any of the representations or any breach of the warranties made by the Sellers in Article III of this Agreement, the Disclosure Schedule or any closing certificate delivered by the Sellers pursuant to this Agreement or (iii) any breach of, or failure to perform, any agreement or covenant of the Sellers in this Agreement.

 

  

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(b) The obligations of the Sellers to indemnify the Buyer Indemnified Parties pursuant to Section 6.2(a) hereof are subject to the following limitations:

 

(i) No indemnification shall be made by the Sellers with respect to any claim made pursuant to Section 6.2(a)(ii) unless the aggregate amount of Buyer Damages under all claims exceeds an amount equal to $200,000 (the “Basket Amount”) and, in such event, indemnification shall be made by the Sellers for all Buyer Damages (including all claims under the Basket Amount); provided, however, that the foregoing limitations shall not apply to any breach of any representation or warranty contained in any Excluded Representation;

 

(ii) In no event shall the aggregate obligation of the Sellers to indemnify the Buyer Indemnified Parties as a result of a breach of any representation or warranty (other than an Excluded Representation) exceed an amount equal to $6,000,000 (the “Cap”), it being further understood and agreed that the Escrow Deposit less $1,500,000 shall serve as a limitation on and as the sole and exclusive source of funds available to the Buyer Indemnified Parties for satisfaction of the Sellers’ indemnity obligations as a result of a breach of any representation or warranty (other than an Excluded Representation) by the Sellers; and

 

(iii) Notwithstanding anything to the contrary herein contained, the indemnification obligations under Section 6.2 shall not limit the right of the Buyer Indemnified Parties to recover Buyer Damages which result from or arise out of actual fraud by the Sellers.

 

Section 6.3 Buyer’s Agreement to Indemnify

 

(a) Subject to the terms and limitations set forth in this Agreement, from and after the Closing, the Buyer shall indemnify and hold harmless the Sellers and the Target’s  managers, officers, employees, affiliates, successors and assigns (each, a “Seller Indemnified Party” and collectively, the “Seller Indemnified Parties”) from and against all from and against all liability, demands, claims, actions or causes of action, suits, proceedings, hearings, investigations, charges, complaints, injunctions, judgments, orders, decrees, rulings, assessments, losses, damages, dues, penalties, fines, costs, amounts paid in settlement, obligations, taxes, liens and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, the “Seller Damages”) asserted against or incurred by any Seller Indemnified Party as a result of or arising out of (i) the Assumed Liabilities, (ii) a breach of any representation or warranty contained in Article IV of this Agreement or (iii) a breach of any agreement or covenant of the Buyer contained herein.  The Sellers agree that the indemnification provided in this Section 6.3 is the exclusive remedy for a breach by the Buyer of any representation, warranty, agreement or covenant contained in this Agreement.

 

(b) The Buyer’s obligations to indemnify the Seller Indemnified Parties pursuant to Section 6.3(a) hereof are subject to the following limitations:

 

(i) No indemnification shall be made by the Buyer with respect to any claim made pursuant to Section 6.3(a)(ii) unless the aggregate amount of Seller Damages under all claims exceeds the Basket Amount and, in such event, indemnification shall be made by the Buyer for all Seller Damages (including all claims under the Basket Amount); provided, however, that the foregoing limitations shall not apply to any breach of any representation or warranty contained in any Excluded Representation;

 

  

37

  

(ii) In no event shall the Buyer’s aggregate obligation to indemnify the Seller Indemnified Parties as a result of a breach of any representation or warranty exceed an amount equal to the Cap; and

 

(iii) Notwithstanding anything to the contrary contained herein, the indemnification obligations under Section 6.3 shall not limit the right of the Seller Indemnified Parties to recover Seller Damages which result from or arise out of actual fraud by the Buyer.

 

Section 6.4 Third Party Indemnification

 

The obligations of any indemnifying party to indemnify any indemnified party under this Article VI with respect to Buyer Damages or Seller Damages, as the case may be, resulting from the assertion of liability by third parties (a “Claim”), shall be subject to the following terms and conditions:

 

(a) Any party against whom any Claim is asserted shall give the party required to provide indemnity hereunder written notice, setting forth with reasonable specificity the facts and circumstances of which such party has received notice, of any such Claim promptly after learning of such Claim, and if the party giving such notice is an indemnified party, specifying the basis hereunder upon which the indemnified party’s claim for indemnification is asserted, and the indemnifying party may at its option undertake the defense thereof by representatives of its own choosing.  Failure to give prompt notice of a Claim hereunder shall not affect the indemnifying party’s obligations under this Article VI, except to the extent that the indemnifying party is actually prejudiced by such failure to give prompt notice.  If the indemnifying party, within thirty (30) days after notice of any such Claim, fails to assume the defense of such Claim, the indemnifying party shall lose its right to contest, defend, litigate and settle such a Claim and the indemnified party against whom such claim has been made shall, without prejudice to its right, if any, of indemnification hereunder, (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such claim on behalf of and for the account and risk, and at the reasonable expense, of the indemnifying party, subject to the right of the indemnifying party to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof.  If, pursuant to the preceding sentence, the indemnified party so contests, defends, litigates or settles a Claim for which it is entitled to indemnification hereunder, the indemnified party shall, subject to any defense that the indemnifying party may have that it is not obligated to provide indemnity, be reimbursed by the indemnifying party for the reasonable attorneys’ fees and other expenses of contesting, defending, litigating and settling the Claim which are incurred from time to time, promptly following the presentation to the indemnifying party of itemized bills for such attorneys’ fees and other expenses.

 

(b) Except as herein provided, the indemnified party shall not, and the indemnifying party shall, have the right to contest, defend, litigate or settle such Claim, if the defense of a Claim is so tendered and within 30 days thereafter the indemnifying party accepts such tender and acknowledges in writing (but without waving any defenses it may have that it is not obligated to provide indemnity) its indemnification obligation.  The indemnified party shall have the right to be represented by counsel at its own expense in any such contest, defense, litigation or settlement conducted by the indemnifying party.  The indemnifying party shall lose its right to contest, defend, litigate and settle the Claim if it shall fail to diligently contest the Claim.  So long as the indemnifying party has not lost its right to contest, defend, litigate and settle as herein provided, the indemnifying party shall have the right to contest, defend and litigate the Claim and shall have the right to enter into any settlement of any Claim; provided, however, the indemnifying party may not enter into any settlement of any Claim without the prior written consent of the indemnified party, not to be unreasonably withheld or delayed, if pursuant to or as a result of such settlement, (i) injunctive or other equitable relief would be imposed against the indemnified party or (ii) such settlement would or could reasonably be expected to lead to any liability or create any financial or other obligation on the part of the indemnified party.  The indemnifying party shall not be entitled to assume control of a Claim and shall pay the reasonable fees and expenses of counsel retained by the indemnified party if (A) the Claim relates to or arises in connection with any criminal proceeding, action, indictment or allegation, (B) the Claim seeks injunctive or other equitable relief or (C) the indemnified party in its notice to the indemnifying party of the Claim states that, based on advice of counsel, it believes that its interests in the Claim is or can reasonably be expected to be adverse to the interests of the indemnifying party.

 

  

38

  

Section 6.5 Certain Tax Matters

 

(a) Tax Indemnification.

 

(i) Notwithstanding anything in this Agreement to the contrary, the Sellers, jointly and severally, shall indemnify and hold harmless the Buyer from and against any liability for Taxes of the Seller, or Taxes relating to the Assets and the Business, attributable to (A) any taxable period ending on or before the Closing Date or (B) for any taxable period that includes but does not end on the Closing Date, the portion thereof properly allocable to the period ending on the Closing Date (collectively, a “Pre-Closing Tax Period”).

 

(ii) The Buyer shall indemnify and hold harmless the Sellers from and against any liability for Taxes relating to the Assets and the Business attributable to any taxable period that is not a Pre-Closing Tax Period.

 

(iii) To the extent that an indemnification obligation pursuant to this Section 6.5 may overlap with any other indemnification obligation pursuant to this Article VI, the provisions of this Section 6.5 shall govern.

 

(iv) The parties hereto agree that any payments made pursuant to the indemnification provisions of Article VI hereof are intended to be deemed to be adjustments to the Final Purchase Price; provided, however, that to the extent that any taxing authority successfully characterizes, in a final determination, that any indemnification payments shall be deemed to be income to the party receiving such payments, then the party making such payments shall pay an additional amount to the party receiving such payments to cover all Taxes payable thereon (including Taxes payable on the gross-up payment).

 

  

39

  

(b) Survival of Tax Provisions.  Any claim to be made pursuant to this Section 6.5 must be made within thirty (30) days following the expiration (with valid extensions) of the applicable statutes of limitations related to the Taxes at issue.

 

 

ARTICLE VII

 

 

MISCELLANEOUS

 

Section 7.1 Fees and Expenses

 

Whether or not the transactions contemplated herein are consummated pursuant hereto, except as otherwise provided herein, each of the Sellers, on the one hand, and the Buyer, on the other hand, shall pay all fees and expenses incurred by, or on behalf of, such party in connection with, or in anticipation of, this Agreement and the consummation of the transactions contemplated hereby.

 

Section 7.2 Further Assurances

 

From time to time after the Closing Date, at the request of another party hereto and at the expense of the party so requesting, each of the parties hereto shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby.  If, after Closing, it is determined by mutual agreement of Buyer and Target that any of the Excluded Assets should more appropriately be included in the Assets but were inadvertently omitted therefrom, the Sellers shall promptly undertake all actions and deliver all such assets and execute all documents and instruments necessary or desirable to transfer title in such assets to the Buyer as if they were originally included in the Assets.

 

Section 7.3 Counterparts

 

This Agreement may be executed and delivered (including by electronic mail or facsimile transmission) simultaneously in counterparts, each of which when executed shall be deemed an original but all of which together shall constitute one and the same instrument.

 

Section 7.4 Notices

 

All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) registered or certified U.S. mail, postage prepaid, return receipt requested; (c) nationally – recognized overnight delivery service or (d) by electronic mail transmission to the appropriate electronic mail address set forth below (or at such other electronic mail address for the party as shall have been previously specified in writing to the other parties) with follow-up copy by nationally – recognized overnight courier service the next business day.  Notices shall be sent to the appropriate party at its address given below (or at such other address for such party as shall be specified by notice given hereunder):

 

  

40

  

(a) If to Target and The Members, to

 

Campus Labs, LLC

210 Ellicott Street

Buffalo, New York 14203

Telephone: (716) 652-9400

Facsimile:  (716) 652-2689

Attention:  Eric Reich

E-Mail:  ereich@campuslabs.com

and

Eric Reich

89 Arcadian Drive

Amherst, New York 14228

and

 

Michael Weisman

59 Pennington Court

Amherst, New York 14228

with a copy (which shall not constitute notice) to:

 

Lippes Mathias Wexler Friedman, LLP

665 Main Street

Suite 300

Buffalo, New York 14203

Telephone:  (716) 853-5100

Facsimile:   (716) 853-5199

Attention:  Brian J. Bocketti

E-Mail:      bbocketti@lippes.com

(c)           If to the Buyer to:

 

Higher One, Inc.

115 Munson Street

New Haven, Connecticut 06511

Telephone: (203) 776-7776

Facsimile: (203) 776-7796

Attention:  Thomas D. Kavanaugh, Esq.

E-Mail: tkavanaugh@higherone.com

  

41

  

with a copy (which shall not constitute notice) to:

 

Wiggin and Dana LLP

One Century Tower

265 Church Street

New Haven, CT  06508-1832

Telephone:  203-498-4321

Facsimile:  203-782-2889

Attention:  Paul Hughes, Esq.

E-Mail:  phughes@wiggin.com

All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. (New Haven, Connecticut time) and such day is a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

 

Section 7.5 Amendments and Waivers

 

 

No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Sellers.  No waiver by any party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.

 

Section 7.6 Severability

 

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, this Agreement shall be modified so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

Section 7.7 Binding Effect; Assignment

 

This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, including, without limitation, by operation of law, by any party without the prior written consent of the other parties hereto.

 

Section 7.8 No Third Party Beneficiaries

 

Except as provided in Section 7.7, this Agreement is solely for the benefit of the Sellers, and their respective successors and permitted assigns, with respect to the obligations of the Buyer under this Agreement, and for the benefit of the Buyer and its successors and permitted assigns, with respect to the obligations of the Sellers under this Agreement, and this Agreement shall not be deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement, cause of action or other right.

 

  

42

  

Section 7.9 Interpretation

 

(a) The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.

 

(b) As used in this Agreement, the term “person” shall mean and include an individual, a partnership, a limited liability company, an association, a group, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof or any other entity.

 

(c) As used in this Agreement, an “affiliate” of, or a person “affiliated” with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

 

(d) As used in this Agreement, the term “business day” shall mean any day on which banks are not required or authorized to close in New Haven, Connecticut.

 

Section 7.10 Jurisdiction; Consent to Service; Waiver of Jury Trial

 

(a) Except as otherwise provided in Section 1.8(g), each of the parties hereto (a) agree that any suit, action or proceeding arising out of or relating to this Agreement shall be brought solely in federal court located in New Haven, Connecticut; (b) consents to the exclusive jurisdiction of such court in any suit, action or proceeding relating to or arising out of this Agreement; (c) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, any objection or claim that it may have to the laying of venue in any such suit, action or proceeding in court; and (d) agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process.

 

(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.11 Entire Agreement

 

This Agreement, the Disclosure Schedule, the Buyer’s Disclosure Schedule and the Exhibits and other writings referred to herein to be delivered at the Closing (including the Ancillary Agreements) constitute the entire agreement among the parties with respect to their subject matter and supersede all other prior agreements and understandings, both written and oral, between the parties or any of them with respect to their subject matter (including any proposal letter, letter of intent or memorandum of understanding).

 

Section 7.12 Law Governing

 

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Connecticut  (without giving effect to the choice of law principles thereof that would cause the application of the laws of any other jurisdiction) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies.

 

{Remainder of page intentionally left blank.}

 

  

 43 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

	  	
HIGHER ONE, INC.

 

 

By:   /s/ Mark Volchek

	  	
Name:  Mark Volchek

Title:    Chief Executive Officer

	  	  
	  	  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Signature page to Asset Purchase Agreement}

 

  

  

  

	  	
CAMPUS LABS, LLC

	  	
 

 

By:          /s/ Eric Reich

	  	Name:    Eric Reich 

Title:       President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Signature page to Asset Purchase Agreement}

 

  

  

  

	  	
 

 

THE MEMBERS

 

 

/s/ Eric Reich

	 	Eric Reich

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Signature page to Asset Purchase Agreement}

 

  

  

  

	  	
 

 

 

/s/ Michael Weisman

	 	Michael Weisman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Signature page to Asset Purchase Agreement}Citibank, N.A.

        390 Greenwich Street

        New York, New York 10013
	

 

 

Execution Copy

 

	Date:	July 13, 2012 (amended and restated as of October 16, 2012)
	 	 
	To:	405 TRS I, LLC
	 	106 York Rd.
	 	Jenkintown, PA  19046
	 	Attention: General Counsel
	 	Facsimile: 646-861-7804
	 	 
	From:	Citibank, N.A.
	 	388 Greenwich Street
	 	11th Floor
	 	New York, New York 10013
	 	Attention:  Director Derivative Operations
	 	Facsimile:  212-615-8594

 

Transaction Reference Number: [__________]

 

CONFIRMATION

 

Ladies and Gentlemen:

 

The purpose of this letter agreement is
to set forth the terms and conditions of the Transactions entered into between Citibank, N.A. ("Citibank")
and 405 TRS I, LLC, a limited liability company organized under the laws of the State of Delaware ("Counterparty"),
on the Trade Date specified below (each, a "Transaction" and, collectively, the "Transactions").
This letter constitutes a "Confirmation" as referred to in the Master Agreement specified below.

 

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

 

With effect from the Amendment Effective Date specified below, this Confirmation amends and restates the
prior Confirmation dated July 13, 2012 relating to the Transactions described herein (the "Original Confirmation"),
which Original Confirmation (with respect to the period from and after the Amendment Effective Date) is hereby superseded and
shall be of no further force or effect.

 

 

1.Agreement

 

This Confirmation supplements, forms a
part of and is subject to, the ISDA 2002 Master Agreement, dated as of July 13, 2012 (as amended, supplemented and otherwise
modified and in effect from time to time, the "Master Agreement"), between Citibank and Counterparty. All
provisions contained in the Master Agreement govern this Confirmation except as expressly modified below.

    	Page 1

    	 

    
 

 

2.Terms of Transactions

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

	General Terms:	 
	Trade Date:	July 13, 2012
	Effective Date:	July 13, 2012
	Amendment Effective Date:	October 16, 2012
	Scheduled Termination Date:	The latest date for the final scheduled payment (or, if there is only one scheduled payment, for such scheduled payment) of principal of any Reference Obligation at any time included in the Reference Portfolio.
	Termination Date:	The final Scheduled Settlement Date (as defined in the Master Agreement) with respect to all Transactions (other than any Counterparty Second Floating Rate Payer Payment Date).  The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date.
	Obligation Termination Date:	
        (a) In relation to any Repaid Obligation,
        the related Repayment Date; and

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

	Reference Portfolio:	As of any date of determination, all Reference Obligations with respect to all Transactions outstanding on such date.
	Reference Obligation:	Each obligation listed in Annex I as revised from time to time pursuant to this Confirmation having a Reference Amount equal to the "Reference Amount" indicated in Annex I for such obligation (and, in the case of a Committed Obligation, having an Outstanding Principal Amount equal to the "Outstanding Principal Amount" indicated in Annex I for such Committed Obligation), in each case, subject to adjustment by the Calculation Agent in accordance with the terms of this Confirmation.

    	Page 2

    	 

    
 

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

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

        (a)Citibank, in its sole discretion,
        consents on or prior to the Obligation Trade Date to the relevant Reference Obligation becoming the subject of a Transaction hereunder
        with the effect set forth in the second and third paragraphs following subparagraph (c) below;

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

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

        Without limiting
        the generality of the foregoing clause (a), Citibank may reasonably withhold its consent to any such designation based on any
        legal, accounting, tax or other similar issues that are adverse to Citibank in any material respect and that would or could reasonably
        be expected to arise as a result of the entry into such Transaction or any purchase by the Citibank Holder of such Reference Obligation
        as a hedge for such Transaction.

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

 

    	Page 3

    	 

    
 

 

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

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

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

	Reference Entity:	The borrower of the Reference Obligation identified as such in Annex I.  In addition, "Reference Entity", unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Reference Obligation.
	Ramp-Up Period:	The period from and including the Effective Date and ending on and including the date 90 days after the Amendment Effective Date.
	Ramp-Down Period:	The period from and including the date 60 days prior to the Scheduled Termination Date and ending on and including the Scheduled Termination Date.

 

    	Page 4

    	 

    
 

	Portfolio Notional Amount:	As of any date of determination, the sum of the Notional Amounts for all Reference Obligations as of such date.
	Notional Amount:	
        (a) In relation to any Transaction (other
        than with respect to any Terminated Obligation or Repaid Obligation), as of any date of determination, the Reference Amount of
        the related Reference Obligation as of such date multiplied by the Initial Price in relation to such Reference Obligation;
        and

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

	Outstanding Principal Amount:	In relation to any Reference Obligation as of any date of determination, the outstanding principal amount of such obligation as shown in the then current Annex I, as increased pursuant to this Clause 2 (or, in the case of any Committed Obligation, pursuant to any borrowing in respect of such Committed Obligation after the Obligation Settlement Date) and reduced pursuant to Clauses 3 and 5.  Except as otherwise expressly provided below with respect to Counterparty First Floating Amounts, the Outstanding Principal Amount of any Committed Obligation on any date shall include the aggregate stated face amount of all letters of credit, bankers' acceptances and other similar instruments issued in respect of such Committed Obligation to the extent that the holder of such Committed Obligation is obligated to extend credit in respect of any drawing or other similar payment thereunder.
	Commitment Amount:	In relation to any Reference Obligation that is a Committed Obligation (and the related Transaction) as of any date of determination, the maximum outstanding principal amount of such Reference Obligation that a registered holder thereof would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).

 

    	Page 5

    	 

    

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

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

	Portfolio Notional Funded Amount:	As of any date of determination, the aggregate of all Notional Funded Amounts with respect to all Reference Obligations in the Reference Portfolio on such date of determination.
	Reference Amount:	In relation to (a) any Term Obligation (and the related Transaction), the Outstanding Principal Amount of such Term Obligation and (b) any Committed Obligation (and the related Transaction), the Commitment Amount of such Committed Obligation.
	Utilization Amount:	In relation to any Calculation Period, the daily average of the Portfolio Notional Amount during such Calculation Period.
	Maximum Portfolio Notional Amount:	USD100,000,000, or such greater amount as the parties may agree to in writing.
	Business Day:	New York
	Business Day Convention:	
        Following (which shall apply to any
        date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not
        a Business Day).

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

 

    	Page 6

    	 

    

	Monthly Period:	Each period from and including the 15th day of any calendar month to but excluding the same day of the immediately succeeding calendar month.
	Calculation Agent:	Citibank; provided that, if an Event of Default under Section 5(a)(i) or 5(a)(vii) with respect to Citibank shall have occurred and be continuing, then an Approved Buyer selected by Counterparty in good faith and acceptable to Citibank and that is not an Affiliate of either party shall be the Calculation Agent so long as no Event of Default with respect to Counterparty shall have occurred and be continuing. Unless otherwise specified, the Calculation Agent shall make all determinations, calculations and adjustments required pursuant to this Confirmation in good faith and on a commercially reasonable basis.
	Calculation Agent City:	New York
	Initial Price:	In relation to any Reference Obligation (and the related Transaction), the Initial Price specified in Annex I.  The Initial Price (a) will initially be as specified by Counterparty in its notice to Citibank on the Obligation Trade Date, (b) will be determined exclusive of accrued interest and (c) will be expressed as a percentage of the Reference Amount.  The Initial Price will be determined exclusive of Costs of Assignment that would be incurred by a buyer in connection with any purchase of the Reference Obligation and exclusive of any Delay Compensation.
	 	 
	Payments by Counterparty	 
	Counterparty First Floating
    Amounts:	 
	First Floating Amount Payer:	Counterparty
	First Floating Amount:	
        In relation to any First Floating Rate
        Payer Payment Date, the sum, for each Transaction, of the products of (a) the First Floating Rate Payer Calculation Amount
        for such Transaction for the related First Floating Rate Payer Calculation Period multiplied by (b) the Floating Rate
        Option for such Transaction during the related First Floating Rate Payer Calculation Period plus the Spread multiplied
        by (c) the Floating Rate Day Count Fraction; provided that, for purposes of the foregoing calculation, the percentage
        specified in the foregoing clause (b) shall be the Spread (and not the Floating Rate Option plus the Spread) with respect
        to any portion of a First Floating Rate Payer Calculation Amount constituting the undrawn stated face amount of all letters of
        credit, bankers' acceptances and other similar instruments issued in respect of a related Committed Obligation.

        

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

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

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

 

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        First Floating Rate

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

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

	Floating Rate Option:	In relation to any Transaction, the floating rate index specified in the term loan agreement, revolving loan agreement or other similar credit agreement governing the related Reference Obligation (the "Reference Obligation Credit Agreement") that is used to determine the rate of interest payable on such Reference Obligation; provided that (a) if more than one interest rate setting is at any time used to determine the rate of interest payable on a Reference Obligation (i.e., an interest rate election for a specific interest period relating to such Reference Obligation), then a separate First Floating Amount shall be calculated for each portion of such Reference Obligation as to which a separate interest rate setting has been effected, (b) any interest that has accrued to a specified date but is permitted under the Reference Obligation Credit Agreement to be capitalized or deferred as of such date (without default) shall be deemed to be scheduled to be paid on such date, (c) any Reference Obligation Credit Agreement that provides for the payment of interest less frequently than quarterly will be deemed to provide for a scheduled quarterly payment of interest on each date specified by Citibank, which date so specified shall be the calendar day of the month corresponding to other payment dates applicable to the related Reference Obligation and (d) notwithstanding the foregoing, (i) if the floating rate index for such Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate (or is otherwise not a rate determined on the basis of rates at which deposits in USD are offered to prime banks in the London interbank market), then the Floating Rate Option for such Reference Obligation (or such portion) shall equal USD-LIBOR-BBA and (ii) if the floating rate index for such Reference Obligation (or any portion thereof) is subject to the payment of a specified minimum rate regardless of the level of the relevant floating rate index, then the Floating Rate Option will be determined without regard to such specified minimum rate.
		

 

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	Designated Maturity:	In relation to any Transaction and the related Reference Obligation, the Floating Rate Option will have a Designated Maturity and Reset Dates that correspond to the maturity and reset dates specified in the related Reference Obligation Credit Agreement, except that, if the floating rate index specified in the related Reference Obligation Credit Agreement that is used to determine the rate of interest payable on the Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate (or is otherwise not a rate determined on the basis of rates at which deposits in USD are offered to prime banks in the London interbank market), then for purposes of determining USD-LIBOR-BBA the "Designated Maturity" shall be one month and the first day of each First Floating Rate Payer Calculation Period will be a Reset Date.
	Spread:	1.25%
	
        Floating Rate Day

        Count Fraction:
	In relation to any Transaction, the Floating Rate Day Count Fraction will be the day count basis for the computation of interest specified in the related Reference Obligation Credit Agreement, except that, if the floating rate index specified in the related Reference Obligation Credit Agreement that is used to determine the rate of interest payable on the Reference Obligation (or any portion thereof) is the prime or base rate or is a fixed rate (or is otherwise not a rate determined on the basis of rates at which deposits in USD are offered to prime banks in the London interbank market), then the Floating Rate Day Count Fraction will be Actual/360.
	Reset Dates:	As set forth in "Designated Maturity" above
	Compounding:	Inapplicable
	 	 
	Counterparty Second Floating Amounts:	 
	Second Floating Amount Payer:	Counterparty

 

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	Second Floating Amount:	In relation to any Second Floating Rate Payer Payment Date, the product of (a) the Second Floating Rate Payer Calculation Amount for the related Second Floating Rate Payer Calculation Period multiplied by (b) the Spread multiplied by (c) the Floating Rate Day Count Fraction; provided that no Second Floating Amount shall be payable following the designation of an Early Termination Date by Counterparty as a result of the occurrence of an Event of Default under Section 5(a)(i) or 5(a)(vii) with respect to Citibank as Defaulting Party.
	
        Second Floating Rate Payer

        Calculation Amount:
	In relation to any Second Floating Rate Payer Calculation Period, the excess, if any, of (a) 75% of the Maximum Portfolio Notional Amount over (b) the Utilization Amount for such Second Floating Rate Payer Calculation Period.
	
        Second Floating Rate Payer

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

        Payer Payment Dates:
	The fifth Business Day following the last day of each Monthly Period; provided that (a) the initial Second Floating Rate Payer Payment Date will be the first such Business Day after the last day of the Ramp-Up Period and (b) the final Second Floating Rate Payer Payment Date will be the Scheduled Termination Date (whether or not the Termination Date occurs prior to the final Second Floating Rate Payer Payment Date).
	Spread:	1.25%
	Floating Rate Day Count Fraction:	Actual/360.
	Compounding:	Inapplicable
	 	 
	Counterparty Third Floating
    Amount:	 
	Third Floating Amount Payer:	Counterparty
	Third Floating Amount:	Each Expense or Other Payment.

 

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        Third Floating Rate

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

        Payer Payment Dates:
	Each Total Return Payment Date.
	 	 
	Payments by Citibank:	 
	Citibank Fixed Amounts:	 
	Fixed Amount Payer:	Citibank
	Fixed Amount:	In relation to any Transaction, the Interest and Fee Amount with respect to such Transaction for the related Fixed Amount Payer Payment Date.
	Fixed Amount Payer Calculation Periods:	In relation to each Reference Obligation in the Reference Portfolio, each period from and including any date upon which a payment of interest is made on such Reference Obligation to but excluding the next such date; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Obligation Settlement Date for such Reference Obligation and (b) the final Fixed Amount Payer Calculation Period shall end on, but exclude, the related Obligation Termination Date.

 

    	Page 12

    	 

    

		
	Fixed Amount Payer Payment Dates:	
        (a) In relation to any Transaction (other
        than with respect to any Terminated Obligation or Repaid Obligation), the fifth Business Day after the last day of any Monthly
        Period, commencing with the first such date after the Obligation Settlement Date for such Transaction and ending with the last
        such date occurring prior to the related Obligation Termination Date; and

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

	 	 
	Citibank Floating Amounts:	 
	Floating Amount Payer:	Citibank
	Floating Amount:	In relation to any Terminated Obligation or Repaid Obligation, Capital Appreciation, if any.
	Floating Rate Payer Payment Dates:	Each Total Return Payment Date.
		

3.Reference Obligation Removal; Accelerated
Termination.

Reference Obligation Removal

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

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

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

    	Page 13

    	 

    
Elective Termination by Citibank
due to Certain Events

(b)If:

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

		(ii)	the Portfolio Criteria are not satisfied at any time,

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

		(iv)	Counterparty fails to perform when due any obligation
to Transfer Eligible Collateral under Clause 9(e) and such failure continues for one Business Day after notice of such failure
is given to Counterparty,

 

then Citibank may notify Counterparty
in writing of such event. In the case of the foregoing clause (i), if such event continues for 30 days following the delivery of
such notice, then Citibank will have the right but not the obligation to terminate the related Transaction. In the case of the
foregoing clause (ii), if such event continues for 30 days following the delivery of such notice, then Citibank will have the right
but not the obligation to terminate all (but not less than all) Transactions that are the subject of this Confirmation. In the
case of the foregoing clause (ii), pending any action taken to correct or remedy non-compliance with one
or both of clauses (iv) and (v) of the Portfolio Criteria (but without limiting Counterparty's obligation to remedy
such non-compliance or Citibank's right under this Clause 3(b) to terminate the related Transaction), Citibank may in its
sole discretion elect to treat all or any portion of the Transactions as Transactions relating to "Excess Concentration Obligations",
in each case, to the extent such treatment would remedy such non-compliance. In the case of the foregoing clause (iii) or
(iv), Citibank will have the immediate right but not the obligation to terminate all (but not less than all) Transactions that
are the subject of this Confirmation. Citibank may exercise this termination right with respect to each Terminated Obligation by
delivering an Accelerated Termination Notice to Counterparty that is given, as to any Terminated Obligation, (1) on the proposed
Termination Trade Date and (2) no less than 10 days prior to the proposed Termination Settlement Date for the related Terminated
Obligation. The Accelerated Termination Notice shall specify each Reference Obligation that is the subject of such Accelerated
Termination and, with respect to each such Reference Obligation, the amount of the Terminated Obligation, the proposed Termination
Trade Date and the proposed Termination Settlement Date.

Early Termination Date under Master
Agreement

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

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Effect of Termination

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

Citibank Call Date

(e)Citibank will have the right,
but not the obligation, to terminate any Transaction that is the subject of this Confirmation or any portion thereof; provided
that (i) no such termination shall have a Termination Trade Date that occurs prior to the date occurring 30 days prior to
July 13, 2015 (the "Citibank Call Date") or on a day other than a Business Day and (ii) any such
termination shall be effected by Citibank giving notice to Counterparty on a Business Day occurring no less than 30 days prior
to the proposed Termination Trade Date, which notice, in each case, shall specify the proposed Termination Trade Date. If Citibank
does not exercise its right pursuant to this Clause 3(e) to terminate a Transaction with a Termination Trade Date occurring
on the date 30 days prior to the Citibank Call Date, then Citibank will thereafter have the right, but not the obligation, to propose,
by notice to Counterparty no fewer than 10 Business Days prior to the date on which such proposal is to be effective, to amend
and restate one or more material terms of such Transaction, including, without limitation, the Spread, the Independent Amount Percentage
and the application of the Obligation Criteria and Portfolio Criteria, with effect no earlier than the Citibank Call Date. If Citibank
provides a notice to Counterparty proposing to amend and restate one or more material terms of a Transaction as provided above
and Counterparty does not agree in writing to such amended and restated terms within 10 Business Days after Citibank provides such
notice to Counterparty, each Transaction shall terminate, and the Termination Trade Date shall be such tenth Business Day. Even
if a Termination Trade Date has been designated with respect to a Transaction or portion thereof pursuant to this Clause 3(e),
such designation will not prevent Citibank or Counterparty from subsequently designating an earlier Termination Trade Date to the
extent Citibank or Counterparty, as the case may be, is entitled to designate such earlier Termination Trade Date pursuant to this
Confirmation. Notwithstanding anything in this Confirmation to the contrary:

    	Page 15

    	 

    
 

		(i)	if Citibank elects to exercise its termination right under this Clause 3(e) with respect to
all Transactions that are then the subject of this Confirmation, then each reference to the term "Scheduled Termination Date"
in Clauses 4 (other than Clause 4(c)) and 5 and in the definitions of "Ramp-Down Period" and "Termination
Trade Date" will instead be a reference to the date occurring 30 days after the Termination Trade Date specified in such notice
from Citibank; and

		(ii)	whether or not Citibank elects to exercise its termination right under this Clause 3(e), each
reference to the term "Scheduled Termination Date" in the definition of "Second Floating Rate Payer Payment Date"
(and in the provisions of Clause 4(c) dealing with the payment of the discounted present value of Second Floating Amounts)
will be a reference to the Citibank Call Date.

4.Final Price Determination

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

Determination by Counterparty

(a)In order to determine the Final
Price in relation to any Terminated Obligation then held by or on behalf of Citibank as a hedge for the related Transaction, Counterparty
may arrange for the sale of such Terminated Obligation by giving notice of such sale to Citibank; provided that Counterparty
shall have no right to arrange a sale of a Terminated Obligation pursuant to this Clause 4(a) in connection with the termination
of a Transaction: (i) in the case of a termination pursuant to Clause 3(b); (ii) in the case of a termination pursuant
to Clause 3(c) if the related Early Termination Date by reason of an Event of Default or Credit Event Upon Merger as to which
Counterparty is the Defaulting Party or Affected Party; or (iii) if, as a result of such termination and the termination of
all other Transactions as to which the Total Return Payment Date has not yet occurred, (x) the aggregate Value (as defined
in the Credit Support Annex) of all Posted Credit Support (as so defined) held by Citibank as Secured Party (as so defined) plus
the aggregate of all Citibank Floating Amounts payable in connection with such terminations would be less than (y) the aggregate
of all Counterparty Fourth Floating Amounts payable in connection with such terminations. Such notice must be given at least three
Business Days prior to the related Termination Settlement Date in the case of any Terminated Obligation and at least 30 days prior
to the Scheduled Termination Date if all Transactions are to be terminated in connection with the Scheduled Termination Date. Any
sale (i) must be to (x) an Approved Buyer or (y) another buyer approved in advance of the Termination Trade Date
by Citibank, such approval not to be unreasonably withheld or delayed, and (ii) must be scheduled to occur no later than the
date customary for settlement, substantially in accordance with the then-current market practice in the principal market for such
Terminated Obligation (as determined by the Calculation Agent), following the Termination Trade Date and on or prior to the Scheduled
Termination Date if all Transactions are to be terminated in connection with the Scheduled Termination Date. If Counterparty so
arranges any sale, the net cash proceeds received from the sale of any Terminated Obligation, net of the related Costs of Assignment
and adjusted by any Delay Compensation as provided in Clause 6(b), shall be the "Final Price" in relation
to that Terminated Obligation.

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Determination by Calculation Agent

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

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

If the Calculation Agent is able to
obtain at least one Firm Bid or combination of Firm Bids for all of the Reference Amount of any Terminated Obligation, the Final
Price for such Terminated Obligation shall be determined by reference to such Firm Bid or Firm Bids. If no Firm Bids are obtained
on or before such second Business Day for all or a portion of the applicable Terminated Obligation, the Final Price shall be deemed
to be zero with respect to such Terminated Obligation (or portion thereof) for which no Firm Bid was obtained. The Calculation
Agent will conduct the bid process in accordance with the procedures set forth in this Clause 4(b) and otherwise in a commercially
reasonable manner.

Notwithstanding anything to the contrary
herein,

		(i)	the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in
the Calculation Agent's commercially reasonable judgment, (x) such Dealer may be ineligible to accept assignment or transfer
of the related Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market
practice in the principal market for the Terminated Obligation, as determined by the Calculation Agent, or (y) such Dealer
would not, through the exercise of its commercially reasonable efforts, be able to obtain any consent required under any agreement
or instrument governing or otherwise relating to the related Terminated Obligation to the assignment or transfer of the related
Terminated Obligation or portion thereof, as applicable, to it; and

    	Page 17

    	 

    

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

that Firm Bid shall be disregarded and
the Calculation Agent shall designate a new Termination Trade Date; provided that the Calculation Agent shall designate
a new Termination Trade Date pursuant to this paragraph only once. If the only Firm Bid for any portion of the related Terminated
Obligation determined in connection with the second Termination Trade Date is disregarded pursuant to this paragraph, the Calculation
Agent shall have no obligation to obtain further bids, and the applicable "Final Price" for the portion
which was so disregarded shall be deemed to be zero. If one or more Firm Bids remains after disregarding any Firm Bid for any portion
of the related Terminated Obligation determined in connection with the second Termination Trade Date pursuant to this paragraph,
the Calculation Agent shall determine the Final Price for the Terminated Obligation by reference to such remaining Firm Bid or
Firm Bids.

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

If Citibank determines, in its sole
discretion, not to sell or cause the sale of any portion of any Terminated Obligation to the entity or entities providing the highest
Firm Bid or combination of Firm Bids, the "Final Price" for such unsold portion shall be equal to the greater
of (a) zero and (b) the sum of (i) the Outstanding Principal Amount of such Terminated Obligation as of the Termination
Trade Date multiplied by the highest Firm Bid or combination of Firm Bids for all of the Reference Amount of such Terminated
Obligation minus (ii) the product of (x) the excess, if any, of the Commitment Amount of such Terminated Obligation
as of the Termination Trade Date over the Outstanding Principal Amount of such Terminated Obligation as of the Termination Trade
Date multiplied by (y) 100% minus the highest Firm Bid or combination of Firm Bids for all of the Reference
Amount of such Terminated Obligation. The Calculation Agent may perform any of its duties under this Clause 4(b) through any
Affiliate designated by it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b).

Other than in the case of a termination
pursuant to Clause 3(c), Citibank and Counterparty will make commercially reasonable efforts to accomplish the assignment
to Counterparty (free of payment by Counterparty) of any Terminated Obligation or portion thereof held by or on behalf of Citibank
as a hedge for the related Transaction for which the Final Price is deemed to be zero as provided in this Clause 4(b); provided
that Citibank shall not be liable for any losses related to any delay in or failure of such assignment beyond its control.

    	Page 18

    	 

    
The Calculation Agent will, with respect
to each Terminated Obligation, provide to each party a statement showing, in reasonable detail, the calculation of the Final Price
for such Terminated Obligation determined pursuant to this Clause 4(b) (including the identity of all Firm Bids obtained in
connection with such calculation).

(c)For the avoidance of doubt, if
the Termination Date occurs prior to the Scheduled Termination Date (other than by reason of the designation of an Early Termination
Date by Counterparty as a result of the occurrence of an Event of Default under Section 5(a)(i) or 5(a)(vii) with respect
to Citibank as Defaulting Party), each Counterparty Second Floating Amount shall continue to be payable by Counterparty on each
subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Scheduled Termination Date; provided that,
if either party shall so specify in writing to the other party prior to any final Termination Trade Date, then on such final Termination
Trade Date (i) the obligation of Counterparty to continue to pay each Counterparty Second Floating Amount on each subsequent
Second Floating Rate Payer Payment Date occurring on or prior to the Scheduled Termination Date shall terminate and be replaced
by the obligation in the following clause and (ii) Counterparty shall pay to Citibank an amount equal to the present value
(as calculated by the Calculation Agent with discounting on a continuous basis) of each Counterparty Second Floating Amount payable
(without regard to the termination of such obligation under the foregoing clause) on each subsequent Second Floating Rate Payer
Payment Date occurring on or prior to the Scheduled Termination Date, discounted to such final Termination Trade Date at a discount
rate per annum equal to the Discount Rate. For this purpose, the "Discount Rate" means the zero coupon
swap rate (as determined by the Calculation Agent) implied by the fixed rate offered to be paid by Citibank under a fixed for floating
interest rate swap transaction with a remaining Term equal to the period from such final Termination Trade Date to the Scheduled
Termination Date in exchange for the receipt of payments indexed to USD-LIBOR-BBA.

5.Repayment.

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

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

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

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

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6.Adjustments.

(a)If any Reference Obligation or
any portion thereof is irreversibly converted or exchanged into or for any securities, obligations, cash or other assets or property
("Exchange Consideration"), thereafter such Exchange Consideration will constitute such Reference Obligation
or portion thereof, and the Calculation Agent shall in good faith adjust the terms of any Transaction relating to such Reference
Obligation as the Calculation Agent determines appropriate to preserve the theoretical value of such Transaction to the parties
immediately prior to such exchange or, if such exchange results in a change in value, the proportionate post-exchange value, and
determine the effective date of such adjustments. Any such adjustment of the terms of any Transaction relating to such Reference
Obligation made by the Calculation Agent shall be consistent with any comparable adjustments made in relation to the related conversion
or exchange into or for such Exchange Consideration by any authority or association that is generally recognized by nationally
recognized dealers in bank loans as having power or authority to make binding determinations with respect to such adjustments.

(b)Delay Compensation (as defined
below) shall result in an adjustment (i) as contemplated by the definition of "Interest and Fee Amount" in connection
with the establishment by the Citibank Holder of a related hedge in respect of a Transaction, if the actual settlement of the purchase
of the related hedge occurs after the date scheduled for the settlement of such purchase and (ii) of a Final Price with respect
to a Terminated Obligation in connection with the termination by the Citibank Holder of a related hedge, if the actual settlement
of the sale of the related hedge occurs after the date scheduled for the settlement of such sale; provided that Delay Compensation
shall be payable in connection with any such termination only to the extent the related Final Price does not already reflect such
adjustment for Delay Compensation. "Delay Compensation" shall accrue (x) in the case of clause (i) above,
from and including the date scheduled for the settlement of the purchase effected to establish the related hedge to but excluding
the actual settlement of such purchase (and, during such period, (A) the Counterparty First Floating Amount shall be calculated
by reference to the Spread and not the Floating Rate Option and (B) Interest and Fee Amounts will be determined without regard
to payments in respect of the interest rate index used in the Reference Obligation Credit Agreement to calculate interest payments
in respect of the related Reference Obligation and in effect during such period) and (y) in the case of clause (ii) above,
from and including the date scheduled for the sale effected to terminate the related hedge to but excluding the actual settlement
of such sale (and, during such period, (A) the Counterparty First Floating Amount shall be calculated by reference to the
Floating Rate Option and not the Spread and (B) Interest and Fee Amounts shall be reduced by interest accrued during such
period in excess of the interest rate index used in the Reference Obligation Credit Agreement to calculate interest payments in
respect of the related Reference Obligation and in effect during such period). In connection with any adjustment by reason of Delay
Compensation, (i) any initial Payment Date in this Confirmation determined by reference to the "Obligation Settlement
Date" shall be determined as if the Obligation Settlement Date were the actual settlement of the purchase of the related hedge
and (ii) any final Payment Date in this Confirmation determined by reference to the "Termination Settlement Date"
shall be determined as if the Termination Settlement Date were the actual settlement of the termination of the related hedge. If
Citibank elects to establish a hedge as a result of the addition or increase in the Reference Amount of any Reference Obligation
that is the subject of a Transaction, or to sell or cause the sale of any portion of any Terminated Obligation in order to determine
the Final Price thereof as contemplated by Clause 4(b), then Citibank will use commercially reasonable efforts to cause the
related purchase or sale to occur on the related Obligation Settlement Date or Termination Settlement Date, as the case may be.

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

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7.Representations, Warranties and Agreements.

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

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

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

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

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

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

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

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

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

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

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

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

    	Page 22

    	 

    

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

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

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

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

(d)Counterparty hereby represents
to Citibank that:

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

		(ii)	it understands no obligations of Citibank to it hereunder will be entitled to the benefit of deposit
insurance (except for any deposit insurance that may apply to Posted Collateral) and that such obligations will not be guaranteed
by any Affiliate of Citibank or any governmental agency;

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

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

    	Page 23

    	 

    

		(v)	it is a limited liability company formed under the laws of the State of Delaware, and it is a disregarded
entity of a corporation organized under the laws of the State of Delaware for U.S. Federal income tax purposes (which representation
shall also be made for purposes of Section 3(f) of the Master Agreement);

		(vi)	it has delivered to Citibank on or prior to the Trade Date (and it will, prior to any expiration
of any such form previously so delivered, deliver to Citibank) a United States Internal Revenue Service Form W-9 (or applicable
successor form), properly completed and signed;

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

		(viii)	it is not a tax-exempt organization for U.S. Federal income tax purposes.

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

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

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

8.Adjustments Relating to Certain Unpaid
or Rescinded Payments.

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

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

    	Page 24

    	 

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

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

9.Credit Support.

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

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

	Condition	Independent Amount Percentage
	(i) Except as provided in clauses (ii), (iii) and (iv)  below, with respect to any Transaction	25%
	(ii) Except as provided in clause (iv) below, with respect to any Transaction relating to a Non-Standard Reference Obligation	Such percentage as Citibank shall specify on or prior to the Obligation Trade Date for such Transaction
	(iii) Except as provided in clause (iv) below, with respect to any Transaction relating to a Excess Concentration Obligation	Such percentage as Citibank shall specify pursuant to Clause 3(b)
	(iv) With respect to any Reference Obligation whose Independent Amount Percentage is agreed in writing as provided in Clause 3(a)(ii)	Such Independent Amount Percentage as is agreed in writing as provided in Clause 3(a)(ii)

    	Page 25

    	 

    

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

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

		(c)	In no event shall Counterparty as a Secured Party have any positive "Exposure" to Citibank
with respect to any Transaction to which this Confirmation relates.

		(d)	Without limiting Clause 3(b)(iv) or Clause 9(e), in no event shall Citibank as a Secured
Party shall have any positive "Exposure" to Counterparty with respect to any Transaction to which this Confirmation relates.

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

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

		(g)	Each Business Day shall be a Valuation Date.

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10.Notice and Account Details.

	Notices to Citibank:
	 	
        Citibank, N.A., New York Branch

        390 Greenwich Street, 4th Floor

        New York, New York 10013

        Tel: (212) 723-6181

        Fax: (646) 291-5779

        Attn: Mitali Sohoni

         

        with a copy to:

         

        Office of the General Counsel

        Fixed Income and Derivatives Sales and Trading

        Citibank, N.A., New York Branch

        388 Greenwich Street, 17th Floor

        New York, New York 10013

        Tel: (212) 816-2121

        Fax: (646) 862-8431

        Attn: Craig Seledee

 

	Notices to Counterparty:
	 	As set forth in Part 4 of the Schedule to the Master Agreement
	Payments to Citibank:
	 	
        Citibank, N.A., New York

        ABA No.: 021-000-089

        Account No.: 00167679

        Ref: Financial Futures

 

	Payments to Counterparty:
	 	Any payment to be made by Citibank to Counterparty shall be subject to the condition that Citibank shall have received notice of the account to which such payment is to be made not less than three Local Business Days prior to the date of such payment.

 

11.Offices.

		(a)	The Office of Citibank for each Transaction:

New York

		(b)	The Office of Counterparty for each Transaction:

New York

 

    	Page 27

    	 

    

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

Very truly yours,

CITIBANK, N.A.

	By:	/s/ David Santos 	 	 	 	 
	 	Name: David Santos	 	 	 	 
	 	Title: Authorized Signatory	 	 	 	 

 

CONFIRMED AND AGREED

AS OF THE DATE FIRST ABOVE WRITTEN:

405 TRS I, LLC

	By:	/s/ Brian S. Block 	 	 	 	 
	 	Name: Brian S. Block	 	 	 	 
	 	Title: Chief Financial Officer and Treasurer	 	 	 	 

 

 

 

TRS Confirmation

 

    	 

    	 

    

ANNEX
A

ADDITIONAL
DEFINITIONS

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

"Approved Buyer"
means (a) any entity listed in Annex III (as such Annex may be amended by mutual written consent of the parties
hereto from time to time) so long as its long-term unsecured and unsubordinated debt obligations on the "trade date"
for the related purchase or submission of a Firm Bid contemplated hereby are rated at least "Baa1" by Moody's and at
least "BBB+ " by S&P and (b) if an entity listed in Annex III is not the principal banking or securities
Affiliate within a financial holding company group, the principal banking or securities Affiliate of such listed entity within
such financial holding company group so long as such obligations of such Affiliate have the rating indicated in clause (a) above.

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

Final Price – Applicable Notional
Amount

where

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

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

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

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

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

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

    	Page 29

    	 

    
"Cure Threshold"
means, on any date of determination occurring from and including the Effective Date, a percentage equal to (a) the aggregate
of all Independent Amounts under this Confirmation over (b) the Portfolio Notional Amount.

"Current Price"
means, with respect to any Reference Obligation on any date of determination, the Calculation Agent's determination of the net
cash proceeds that would be received from the sale on such date of determination of such Reference Obligation, net of the related
Costs of Assignment. If Counterparty disputes the Calculation Agent's determination of the Current Price of any Reference Obligation,
then Counterparty may, no later than three hours after Counterparty is given notice of such determination, designate two Dealers
of credit standing acceptable to Citibank in the exercise of its reasonable discretion to provide a Firm Bid to Citibank within
such three-hour period. The highest of such two Firm Bids will be the Current Price. The "Current Price" shall be expressed
as a percentage of par and will be determined exclusive of accrued interest.

"Dealer" means
(i) a nationally recognized independent dealer in the related Reference Obligation chosen by the Calculation Agent or its
designated Affiliate (other than the Calculation Agent or any of its Affiliates), (ii) any Approved Buyer designated by Counterparty
or (iii) any other entity (other than the Calculation Agent or any of its Affiliates) designated by the Calculation Agent
or its designated Affiliate in its sole discretion as a "Dealer" for the purposes of this Confirmation.

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

"Excess
Concentration Obligation" means (a) any Reference Obligation whose inclusion in the
Reference Portfolio (other than as an "Excess Concentration Obligation") would not on the related Obligation Trade Date
satisfy one or more of clauses (iv) and (v) of the Portfolio Criteria (but only to the extent that such inclusion would
not satisfy any such clause) and (b) any Reference Obligation deemed to be an Excess Concentration Obligation pursuant to
Clause 3(b). Notwithstanding that the foregoing definition provides that only part of a Reference Obligation may be an "Excess
Concentration Obligation" for all other purposes of this Confirmation, the entire Reference Obligation shall be deemed to
be an "Excess Concentration Obligation" for purposes of determining pursuant to Clause 9(a) the Independent Amount
Percentage for the Transaction relating to such Reference Obligation. Counterparty shall give notice to Citibank on or prior to
the related Obligation Trade Date if any Reference Obligation would be an Excess Concentration Obligation pursuant to the foregoing
clause (a). 

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

    	Page 30

    	 

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

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

		(b)	in the case of "Non-Recurring Fees" (as so defined), shall not include any amounts that
(i) are paid on or after the Termination Trade Date for the related Reference Obligation or portion thereof or (ii) are
paid with respect to the related Reference Obligation that is not held by or on behalf of Citibank as a hedge for the related Transaction,

		(c)	shall be determined after deducting all customary and reasonable expenses that would be incurred
by a buyer in connection with any purchase of the Reference Obligation as a hedge for such Transaction and shall be adjusted by
any Delay Compensation as provided in Clause 6(b); and

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

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

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

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

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

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

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

	Loan	Relevant Rating
	The Loan is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by Moody's that is one rating subcategory above such corporate family rating
	The Loan is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by Moody's that is one rating subcategory below such corporate family rating
	The Loan is Subordinate	The rating by Moody's that is two rating subcategories below such corporate family rating

    	Page 31

    	 

    

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

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating assigned by Moody's to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by Moody's that is one rating subcategory below the rating assigned by Moody's to the other obligation
	The Reference Obligation is Subordinate	The rating by Moody's that is two rating subcategories below the rating assigned by Moody's to the other obligation

 

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

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by Moody's that is one rating subcategory above the rating assigned by Moody's to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating assigned by Moody's to the other obligation
	The Reference Obligation is Subordinate	The rating by Moody's that is one rating subcategory below the rating assigned by Moody's to the other obligation

 

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

 

    	Page 32

    	 

    

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by Moody's that is two rating subcategories above the rating assigned by Moody's to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by Moody's that is one rating subcategory above the rating assigned by Moody's to the other obligation
	The Reference Obligation is Subordinate	The rating assigned by Moody's to the other obligation

 

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

 

		(A)	for up to 10% of the Portfolio Target Amount, Counterparty
may apply to Moody's for a shadow rating or public rating of such Reference Obligation, which shall then be the Moody's Rating
(and Counterparty may deem the Moody's Rating of such Reference Obligation to be "B3" pending receipt of such shadow
rating or public rating, as the case may be); provided that (x) a Reference Obligation will not be included in the
10% limit of the Portfolio Target Amount if Counterparty has assigned a rating to such Reference Obligation in accordance with
clause (B) below and (y) upon receipt of a shadow rating or public rating, as the case may be, such Reference Obligation
will not be included in the 10% limit of the Portfolio Target Amount;

		(B)	for up to 10% of the Portfolio Target Amount, if there
is a private rating of an obligor that has been provided by Moody's to Citibank and Counterparty, Counterparty may impute a Moody's
Rating that corresponds to such private rating; provided that a Reference Obligation will not be included in the 10% limit
of the Portfolio Target Amount if Counterparty has applied to Moody's for a shadow rating; or

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

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

    	Page 33

    	 

    
 

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

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

"Non-Standard Reference Obligation"
means any Reference Obligation whose inclusion in the Reference Portfolio (other than as a "Non-Standard
Reference Obligation") would not on the related Obligation Trade Date satisfy one or more of clauses (viii) through (xii)
of the Obligation Criteria.

"Portfolio Target Amount"
means (a) during the Ramp-Up Period and the Ramp-Down Period, the Maximum Portfolio Notional Amount, (b) at any other
time, the Portfolio Notional Amount; provided that, for purposes of clauses (iv) and (v) of the Portfolio Criteria,
the Portfolio Target Amount on any date of determination shall be reduced by the sum of the Notional Amounts for all Excess Concentration
Obligations as of such date.

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

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

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

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

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

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

	Loan	Relevant Rating
	The Loan is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by S&P that is one rating subcategory above such corporate issuer rating
	The Loan is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by S&P that is one rating subcategory below such corporate issuer rating
	The Loan is Subordinate	The rating by S&P that is two rating subcategories below such corporate issuer rating

 

    	Page 34

    	 

    

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

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating assigned by S&P to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation
	The Reference Obligation is Subordinate	The rating by S&P that is two rating subcategories below the rating assigned by S&P to the other obligation

 

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

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating assigned by S&P to the other obligation
	The Reference Obligation is Subordinate	The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation

 

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

    	Page 35

    	 

    

	Reference Obligation	Relevant Rating
	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	The rating by S&P that is two rating subcategories above the rating assigned by S&P to the other obligation
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation
	The Reference Obligation is Subordinate	The rating assigned by S&P to the other obligation

 

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

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

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

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

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

    	Page 36

    	 

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

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

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

"Termination Threshold"
means, on any date of determination from and including the Effective Date, the Cure Threshold minus 5%.

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

		(a)	except as provided in the following paragraph (b), if the related Final Price is not determined
in accordance with Clause 4(a), the "Termination Trade Date" will be the bid submission deadline for the Firm Bid
or combination of Firm Bids for all of the Reference Amount of such Terminated Obligation that are to be the basis for determining
the Final Price of such Terminated Obligation as designated by the Calculation Agent in order to cause the related Total Return
Payment Date to occur as promptly as practicable (in the discretion of the Calculation Agent) after the date originally designated
as the "Termination Trade Date" pursuant to Clause 3; and

		(b)	in respect of the Scheduled Termination Date, if the related Final Price is not determined in accordance
with Clause 4(a), the "Termination Trade Date" will be the date so designated by the Calculation Agent in its discretion,
occurring during the 30 calendar days preceding the Scheduled Termination Date (or earlier in the case of any Terminated Obligation
determined by the Calculation Agent in its sole discretion to be a distressed loan or other obligation) in a manner reasonably
likely to cause the final Total Return Payment Date to occur on the Scheduled Termination Date.

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

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

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

    	Page 37

    	 

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

    	Page 38

    	 

    
ANNEX
I

Reference
Portfolio

 

	Reference Obligation	Reference Entity	Reference Amount	Outstanding Principal Amount	Initial Price (%)	Obligation Trade Date	Obligation Settlement Date	Independent Amount Percentage (%)
	 	 	 	 	 	 	 	 

 

 

 

    	Page 39

    	 

    

ANNEX
II

Obligation
Criteria

The "Obligation Criteria"
are as follows:

		(i)	The obligation is a Loan.

		(ii)	The obligation is denominated in USD.

		(iii)	The obligation constitutes a legal, valid, binding and enforceable obligation of the applicable
Reference Entity, enforceable against such person in accordance with its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles
of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

		(iv)	Except for any Delayed Drawdown Reference Obligation or Revolving Reference Obligation, the obligation
does not require any future advances to be made to the related issuer or obligor on or after the Obligation Trade Date.

		(v)	On the Obligation Trade Date, the obligation is in the form of, and is treated as, indebtedness
for U.S. Federal income tax purposes.

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

		(vii)	The obligation is not Subordinate.

		(viii)	Except for any Non-Standard Reference Obligation, the obligation is not a Second Lien Obligation.

		(ix)	Except for any Non-Standard Reference Obligation, the obligation has as of the Obligation Trade
Date a Moody's Rating of at least "B2" and an S&P Rating of at least "B".

		(x)	Except for any Non-Standard Reference Obligation, on the Obligation Trade Date the obligation is
part of a fungible class of debt obligations (as to issuance date and all economic terms) of at least USD150,000,000.

		(xi)	Except for any Non-Standard Reference Obligation, the obligation has an Initial Price as of the
Obligation Trade Date of at least 80%.

		(xii)	Except for any Non-Standard Reference Obligation, the obligation on the Obligation Trade Date either
(x) is the subject of at least two bid quotations from nationally recognized independent dealers in the related obligation
as reported on a nationally recognized pricing service or (y) satisfies each of the following two conditions: (A) the
obligation was originated not more than 30 days prior to the Obligation Trade Date and (B) the obligation is the subject of
at least one bid quotation from a nationally recognized independent dealer in the related obligation as reported on a nationally
recognized pricing service.

 

    	Page 40

    	 

    

Portfolio
Criteria

The "Portfolio Criteria"
are as follows:

		(i)	The Portfolio Notional Amount does not exceed the Maximum Portfolio Notional Amount.

		(ii)	The sum of the Notional Amounts for all Reference Obligations that are Committed Obligations does
not exceed 10% of the Portfolio Target Amount.

		(iii)	The sum of the Notional Amounts for all Reference Obligations that are Non-Standard Reference Obligations
does not exceed 20% of the Portfolio Target Amount.

		(iv)	The sum of the Notional Amounts for Reference Obligations (other than any Excess Concentration
Obligation so long as the sum of the Notional Amounts for Reference Obligations of any single Reference Entity or any of its Affiliates
does not exceed 10% of the Portfolio Target Amount) of any single Reference Entity or any of its Affiliates does not exceed 5%
of the Portfolio Target Amount.

		(v)	The sum of the Notional Amounts for Reference Obligations (other than any Excess Concentration
Obligation) of Reference Entities in any single Moody's Industry Classification Group does not exceed 15% of the Portfolio Target
Amount.

		(vi)	After the Ramp-Up Period and prior to the Ramp-Down Period, the Reference Portfolio has a Weighted
Average Rating of at most 2,850.

For purposes hereof:

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

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

 

    	Page 41

    	 

    

Table
1

Moody's
Industry Classification Groups

Aerospace & Defense

Automotive

Banking, Finance, Insurance and Real
Estate

Beverage, Food, & Tobacco

Capital Equipment

Chemicals, Plastics, & Rubber

Construction & Building

Consumer goods: durable

Consumer goods: non-durable

Containers, Packaging, & Glass

Energy: Electricity

Energy: Oil & Gas

Environmental Industries

Forest Products & Paper

Healthcare & Pharmaceuticals

High Tech Industries

Hotel, Gaming, & Leisure

Media: Advertising, Printing &
Publishing

Media: Broadcasting & Subscription

Media: Diversified & Production

Metals & Mining

Retail

Services: Business

Services: Consumer

Sovereign & Public Finance

Telecommunications

Transportation: Cargo

Transportation: Consumer

Utilities: Electric

Utilities: Oil & Gas

Utilities: Water

Wholesale

    	Page 42

    	 

    
Table
2

Rating
Factors

 

	Moody's Rating	Rating Factor
	Aaa	1
	Aa1	10
	Aa2	20
	Aa3	40
	A1	70
	A2	120
	A3	180
	Baa1	260
	Baa2	360
	Baa3	610
	Ba1	940
	Ba2	1,350
	Ba3	1,766
	B1	2,220
	B2	2,720
	B3	3,490
	Caa1	4,770
	Caa2	6,500
	Caa3	8,070
	Below Caa3	10,000

 

 

    	Page 43

    	 

    

Annex III

Approved
Buyers

Bank of America, NA

The Bank of Montreal

The Bank of New York Mellon, N.A.

Barclays Bank plc

BNP Paribas

Citibank, N.A.

Credit Agricole S.A.

Canadian Imperial Bank of Commerce

Credit Suisse

Deutsche Bank AG

Goldman Sachs & Co.

HSBC Bank

JPMorgan Chase Bank, N.A.

Morgan Stanley & Co.

Natixis

Northern Trust Company

Royal Bank of Canada

The Royal Bank of Scotland plc

Scotia Capital

Societe Generale

The Toronto-Dominion Bank

UBS AG

U.S. Bank, National Association

Wells Fargo Bank, National Association

 

    	Page 44

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