Document:

Crailar Technologies Inc.: Exhibit 10.25 - Filed by newsfilecorp.com

	SENIOR EXECUTIVE EMPLOYMENT
      AGREEMENT 

 

 

 

Between: 

NATURALLY ADVANCED TECHNOLOGIES INC.

 

 

 

And: 

TOM ROBINSON

 

 

 

 

Naturally Advanced Technologies Inc.

305 - 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

  __________

SENIOR EXECUTIVE EMPLOYMENT AGREEMENT 

                   
         THIS SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
  is made and dated as fully executed on this 18th day of June,
  2012, with an Effective Date of October 1st, 2011 as set forth below. 

BETWEEN:

  
    
      NATURALLY ADVANCED TECHNOLOGIES INC., a
        company incorporated pursuant to the laws of the Province of British Columbia,
        Canada, and having an address for delivery and notice located at 305 -
        4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J21 (the
        “Company”); 

    

  

OF THE FIRST PART

AND: 

  
    
      TOM ROBINSON, businessperson, having an
        address for notice and delivery located at 6188 Old Ironworks Road, Greensboro,
        NC 27455 (the “Executive”); 

    

  

OF THE SECOND PART

  
    
      (the Company and the Executive being hereinafter singularly
        also referred to as a “Party” and collectively referred
        to as the “Parties” as the context so requires). 

    

  

                   
         WHEREAS:

A.                   
  The Company is a reporting company incorporated under the laws of the Province
  of British Columbia, Canada, and has its common shares listed for trading on
  each of the TSX Venture Exchange and the FINRA over-the-counter bulletin board
  market; 

B.                   
  The Executive has experience in and specializes in providing reporting and non-reporting
  companies with valuable management and development services; 

C.                   
  The Company is a “green tech” company focused on providing environmentally-friendly
  textile, composite, biomass and pulping solutions through the cost effective
  process of converting industrial hemp, flax and other bast fibre crops through
  its patented CRAiLAR® and CRAiLEXTM technologies and, as a consequence
  thereof, the Company is hereby desirous of formally retaining the Executive
  as a consultant to the Company, and the Executive is hereby desirous of accepting
  such position, in order to provide such related Services (as herein defined)
  to the Company; 

D.                   
  As a consequence of the Executive’s increasing and valuable role within
  the Company, the Parties hereby acknowledge and agree that there have been various
  discussions, negotiations, understandings and agreements between them relating
  to the terms and conditions of the Services and, correspondingly, that it is their
intention by the terms and conditions of this “Senior Executive Services
Agreement” (the “Agreement”) to hereby replace, in their entirety, all
such prior discussions, negotiations, understandings and agreements with respect
to the Services; and E. The Parties have agreed to enter into this Agreement
which replaces, in its entirety, all such prior discussions, negotiations,
understandings and agreements, and, furthermore, which necessarily clarifies
their respective duties and obligations with respect to the within Services to
be provided hereunder, all in accordance with the terms and conditions of this
Agreement; 

- 2 - 

                      
      NOW THEREFORE THIS AGREEMENT WITNESSETH that,
  in consideration of the mutual covenants and provisos herein contained, THE
  PARTIES AGREE AS FOLLOWS:

PART 1 
INITIAL TERM AND RENEWAL TERM

Initial Term 

1.1                   
  The initial term of this Agreement (the “Initial Term”) is
  for a period of five years commencing on October 1st, 2011 (the “Effective
  Date”), unless such employment will be terminated earlier as hereinafter
  provided. 

Renewal Term 

1.2                   
  Subject at all times to the provisions of Part 7 herein, this Agreement shall
  renew automatically if not specifically terminated in accordance with the following
  provisions. The Company agrees to notify the Executive in writing at least 90
  calendar days prior to the end of the Initial Term of its intent not to renew
  this Agreement (the “Company’s Notice”). Should the Company
  fail to provide a Company’s Notice this Agreement shall automatically renew
  for an additional five-year term renewal basis after the Initial Term (each
  a “Renewal Term”) until otherwise specifically renewed in writing
  by each of the Parties for the next Renewal Term or, otherwise, terminated upon
  delivery by the Company of a corresponding and follow-up 90 calendar day Company’s
  Notice in connection with and within 90 calendar days prior to the end of any
  such Renewal Term. Any such Renewal Term shall be on the same terms and conditions
  contained herein unless modified and agreed to in writing by the Parties in
  advance. 

PART 2 

  TITLE, SERVICES, REPORTING AND DUTIES

Title and Services 

2.1                   
  Subject as otherwise herein provided, the Company hereby appoints the Executive
  to the office of Chief Operating Officer of the Company, and on and after
  the Effective Date the Executive will undertake and perform the duties and responsibilities
  normally and reasonably associated with such office and including, without limitation,
  those initial services being set out in Schedule “A” to this Agreement
  which forms a material part hereof. The Executive agrees that the Executive’s
  duties and responsibilities may be reasonably modified at the Company’s
  discretion from time to time. All services to be provided by the Executive hereunder
  are referred to as the “Services”. 

- 3 - 

2.2                    
In this regard it is hereby acknowledged and agreed that the Executive shall be
entitled to communicate with and shall rely upon the immediate advice, direction
and instructions of the Chief Executive Officer of the Company, or upon the
advice or instructions of such other director or officer of the Company as the
Chief Executive Officer shall, from time to time, designate in times of the
Chief Executive Officer’s absence, in order to initiate, coordinate and
implement the Services as contemplated herein subject, at all times, to the
final direction and supervision of the Board of Directors of the Company (the
“Board of Directors”). 

Conditions 

2.3                    
The Executive’s employment under this Agreement is conditional upon the
Executive: 

	 	(a) 	
      receiving and maintaining all required regulatory and
      governmental licences and approvals of various jurisdictions as may be
      required to act as Chief Operating Officer of the Company;
    and

	 	 	 
	 	(b) 	
      maintaining, in good standing, all required and
      recommended professional accreditation as may be deemed necessary by the
      Company, acting reasonably in consultation with the Executive, in order
      for the Executive to fulfill all Services under this
  Agreement

Services to Subsidiaries 

2.4                     The
Executive will perform the Services on behalf of the Company and its
subsidiaries, accordingly: 

	 	(a) 	
      in this Agreement the term “the Company” means the
      Company and all of its subsidiaries,

	 	 	 
	 	(b) 	
      the Executive may be appointed to the office of Chief
      Operating Officer within the Company, and

	 	 	 
	 	(c) 	
      in the course of performing the Services, the Executive
      will be required to travel.

Reporting 

2.5                     The
Executive will report to the person holding the office of Chief Executive
Officer of the Company. The Executive will report fully on the management,
operations and business affairs of the Company and advise, to the best of the
Executive’s ability and in accordance with reasonable business standards, on
business matters that may arise from time to time. 

Duties and Obligations 

2.6                     The
Executive acknowledges that, as a senior or executive officer of the Company,
the Executive will owe a fiduciary duty to the Company. 

2.7               
     The Executive will also: 

	 	(a) 	
      devote reasonably full-time effort and attention to the
      business and affairs of the Company;

- 4 - 

	 	(b) 	
      perform the Services in a competent and efficient manner
      and in a manner consistent with the Executive’s fiduciary obligations to
      the Company as a senior or executive officer thereof and in compliance
      with all the Company policies, and will carry out all lawful instructions
      and directions from time to time given to the Executive;

	 	 	 
	 	(c) 	
      use the Executive’s best efforts to promote the interests
      and goodwill of the Company; and

	 	 	 
	 	(d) 	
      not undertake any other business or occupation or become
      a director or officer, employee or agent of any other company, firm,
      society or person without prior written approval of the Board of
      Directors.

2.8                     The
Executive acknowledges and agrees that all written and oral opinions, reports,
advice and materials provided by the Executive to the Company in connection with
the Executive’s employment and the Services hereunder are intended solely for
the Company’s benefit and for the Company’s uses only, and that any such written
and oral opinions, reports, advice and information are the exclusive property of
the Company. In this regard the Executive covenants and agrees that the Company
may utilize any such opinion, report, advice and materials for any other purpose
whatsoever and, furthermore, may reproduce, disseminate, quote from and refer
to, in whole or in part, at any time and in any manner, any such opinion,
report, advice and materials in the Company’s sole and absolute discretion. The
Executive further covenants and agrees that no public references to the
Executive or disclosure of the Executive’s role in respect of the Company may be
made by the Executive without the prior written consent of the Board of
Directors in each specific instance. 

2.9                    The
Executive warrants that the Executive shall conduct the business and other
activities in a manner which is lawful and reputable and which brings good
repute to the Company, the Company’s business interests and the Executive. In
particular, and in this regard, the Executive specifically warrants to provide
the Services in a sound and professional manner such that the same meets
superior standards of performance quality within the standards of the industry
or as set by the specifications of the Company. In the event that the Board of
Directors has a reasonable concern that the business as conducted by the
Executive is being conducted in a way contrary to law or is reasonably likely to
bring disrepute to the business interests or to the Company’s or the Executive’s
reputation, the Company may require that the Executive make such alterations in
the Executive’s business conduct or structure, whether of management or Board
representation or employee or sub-licensee representation, as the Board of
Directors may reasonably require in its sole and absolute discretion. 

2.10                  
The Executive will comply with all Canadian and foreign laws, whether federal,
provincial or state, applicable to the Executive’s respective duties and
obligations hereunder and, in addition, hereby represents and warrants that any
information which the Executive may provide to any person or company hereunder
will, to the best of the Executive’s knowledge, information and belief, be
accurate and complete in all material respects and not misleading, and will not
omit to state any fact or information which would be material to such person or
company. 

- 5 - 

PART 3 

  PLACE OF EMPLOYMENT

3.1                    
The Executive will provide services based in Greensboro, North Carolina. 

PART 4 

  COMPENSATION AND BENEFITS

Base Salary 

4.1                    
It is hereby acknowledged and agreed that the Executive shall render the
Services as defined hereinabove during the Initial Term and during the
continuance of this Agreement and shall thus be compensated from the Effective
Date of this Agreement to the termination of the same by way of the payment by
the Company to the Executive, or to the further order or direction of the
Executive as the Executive may determine, in the Executive’s sole and absolute
discretion, and advise the Company of prior to such payment, of the gross annual
fee of U.S. $150,000 (the “Base Salary”). All such Base Salary will be
due and payable by the Company to the Executive, or to the further order or
direction of the Executive as the Executive may determine, in the Executive’s
sole and absolute discretion, and advise the Company of prior to any such Fee
payment, in a manner consistent with the general payroll practice of the
Company, or at such other time and in such other manner as the Executive and the
Company may agree, from time to time. 

Increase in Base Salary 

4.2                    
The Company will review the Base Salary payable to the Executive from time to
time during the Initial Term and during the continuance of this Agreement and
may, in its sole and absolute discretion, increase the Base Salary depending on
the Executive’s performance of the Services and having regard to the financial
circumstances of the Company. 

Bonus 

4.3                    
It is hereby also acknowledged that the Compensation Committee shall, in good
faith, consider the payment of reasonable industry standard annual bonuses (each
being a “Bonus”) based upon the performance of the Company and upon the
achievement by the Executive and/or the Company of reasonable management
objectives to be reasonably established by the Compensation Committee (after
reviewing proposals with respect thereto defined by the Executive and delivered
to the Compensation Committee by the Executive at least 30 calendar days before
the beginning of the relevant year of the Company (or within 90 calendar days
following the commencement of the Company’s first calendar year commencing on
the Effective Date). These management objectives shall consist of both financial
and subjective goals and shall be specified in writing by the Compensation
Committee, and a copy shall be given to the Executive prior to the commencement
of the applicable year. The payment of any such Bonus shall be payable, in the
sole and absolute discretion of the Company, in cash or common shares of the
Company, no later than within 120 calendar days of the ensuing year after any
calendar year commencing on the Effective Date. 

- 6 - 

Stock Options 

4.4                     Additional
stock options may be granted to the Executive from time to time at the sole
discretion of the Company. 

Group Insurance and Health Benefits 

4.5                    
It is hereby acknowledged and agreed that, during the continuance of this
Agreement, the Executive shall be entitled to participate fully in each of the
Company’s respective medical services plans and management and employee benefits
program(s) which the Company provides, from time to time, to all senior
management personnel and including, without limitation, the following benefits
(collectively, the “Group Benefits”): 

	 	(a) 	group health insurance; 
	 	 	 
	 	(b) 	accidental death and
      dismemberment insurance and including, without limitation, travel accident
      insurance; 
	 	 	 
	 	(c) 	group life insurance; 
	 	 	 
	 	(d) 	Short and long term disability
      insurance; 
	 	 	 
	 	(e) 	drug coverage; and 
	 	 	 
	 	f) 	dental coverage.

Payment of compensation and status as a taxable employee

4.6                    
It is hereby also acknowledged and agreed that the Executive will be classified
as a taxable employee of the Company for all purposes, such that all
compensation which is provided by the Company to the Executive under this
Agreement, or otherwise, will be calculated and payable on a net basis for which
all required statutory taxes will first be deducted by the Company and remitted
on behalf of the Executive to all applicable taxation authorities in each
instance. 

PART 5 

  ANNUAL VACATION

Period 

5.1                     The
Executive will be entitled to four weeks’ paid annual vacation plus all US
statutory holidays per calendar year (the “Vacation”) during the Initial
Term and during the continuance of this Agreement, to be taken at a time or
times which are approved by the Chief Executive Officer of the Company (such
approval not to be unreasonably withheld); provided, however, taking into
account the operational requirements of the Company and the need for the timely
performance of the Executive’s Services; and provided, further, that such weeks
shall not be taken consecutively. In this regard it is further understood hereby
that the Executive’s entitlement to any such paid Vacation during any year
(including the initial year) during the continuance of this Agreement will be
subject, at all times, to the Executive’s entitlement to only a pro rata portion of any such paid Vacation time during any
year (including the initial year) and to the effective date upon which this
Agreement is terminated prior to the end of any such year for any reason
whatsoever. 

- 7 - 

Unused 

5.2                    
Unused vacation may not be carried over after the completion of each calendar
year and any unused vacation will be paid out in cash. 

PART 6 

  EXPENSES

Reimbursement of Expenses 

6.1                    
The Company will reimburse the Executive for all pre-approved and reasonable
travel and other out-of-pocket expenses incurred by the Executive directly
related to the performance of the Services (collectively, the
“Expenses”). The Executive will account for such Expenses in accordance
with the policies and directions provided by the Company from time to time. 

6.2                     The
Company will provide a car allowance of $800.00 after taxes for the purpose of a
vehicle lease/payment, insurance, registration/taxes, maintenance and IRS
mileage. The Executive will maintain a mileage log. Should travel demands result
in actual expenses in excess of the above allowance the executive will be
reimbursed annually upon submitting a reconciliation expense report.

PART 7 
TERMINATION 

Definitions 

7.1                    
In this Agreement: 

	 	(a) 	
      “Just Cause” means any act, omission, behaviour,
      conduct or circumstance of the Executive that constitutes just cause for
      dismissal of the Executive at common law; and

	 	 	 
	 	(b) 	
      “Change In Control” means either: (i) a merger or
      acquisition in which the Company is not the surviving entity; except for a
      transaction the principal purpose of which is to change the incorporating
      jurisdiction of the Company; (ii) the sale, transfer or other disposition
      of all or substantially all of the assets of the Company; or (iii) any
      other corporate reorganization or business combination in which 50% or
      more of the outstanding voting stock of the Company is transferred, or
      exchanged through merger, to different holders in a single transaction of
      the Company or in a series of related
transactions.

Termination by the Company for Just Cause 

7.2                    
The Company may terminate the employment of the Executive under this Agreement
summarily, without any notice or any payment in lieu of notice, for Just Cause.

- 8 - 

Voluntary Termination By the Executive 

7.3                    
The Executive may terminate the Executive’s employment under this Agreement for
any reason by providing not less than 90 calendar days’ notice in writing to the
Company; provided, however, that the Company may waive or abridge any notice
period specified in such notice in its sole and absolute discretion. 

Termination By the Executive for any Change In Control

7.4                     The
Executive may terminate the Executive’s employment under this Agreement in
connection with any Change In Control of the Company by providing not less than
90 calendar days’ notice in writing of said termination to the Company after the
Change In Control has been effected; provided, however, that the Company may
waive or abridge any notice period specified in such notice in its sole and
absolute discretion; and provided, further, that the Company will be entitled to
carefully review and object to any said Change In Control designation by the
Executive within 30 calendar days of said notice; the final determination of
which, upon dispute, if any, to be determined by arbitration in accordance with
Part 12 herein. 

Death of the Executive 

7.5                    
The employment of the Executive will terminate upon the death of the Executive.

No Payments in Certain Events 

7.6                    
Upon the date of the termination of the employment of the Executive: 

	 	(a) 	
      for Just Cause in accordance with section 7.2 herein;
      or

	 	 	 
	 	(b) 	
      by the voluntary termination of employment by the
      Executive in accordance with section 7.3 herein;

(in each instance the “Effective Date of Termination”
herein), the Executive will be entitled to compensation earned by the Executive
before the Effective Date of Termination calculated pro rata up to and including
the Effective Date of Termination and will not be entitled to any severance or
other payments under this Agreement or otherwise. 

Payments in the Event of Termination by Death 

7.7                     The
Company will, upon the death of the Executive during the continuance of this
Agreement in accordance with section 7.5 herein (the “Effective Date of
Termination” herein), provide the Executive’s estate and, if applicable, the
Executive’s immediate family members, with the following: 

	 	(a) 	
      pay to the Executive’s estate the total of:

	 	 	 	 
	 		(i) 	
      six months of the then Base Salary, less any required
      statutory deductions, if any;

- 9 - 

	 	(ii) 	
      that portion of any then declared and/or earned or
      accrued Bonus, prorated to the end of the six-month period from the
      Effective Date of Termination, that the Chief Executive Officer of the
      Company determines would likely have been paid to the Executive for the
      six months from the Effective Date of Termination; such determination to
      be made fairly and reasonably and taking into account all relevant
      circumstances;

	 	 	 
	 	(iii) 	
      the present value, as determined by the Company, acting
      reasonably, of each of the then Individual Benefits described under
      section 4.7 herein that would have been enjoyed by the Executive during
      the next six months from the Effective Date of Termination assuming the
      Executive’s employment was not terminated and assuming the then current
      level of Individual Benefits were continued for that six months;

	 	 	 
	 	(iv) 	
      any outstanding Vacation pay as at the Effective Date of
      Termination; and

	 	 	 
	 	(v) 	
      any outstanding Expenses as at the Effective Date of
      Termination; and

	 	(b) 	
      subject to the Company’s then stock option plan and the
      rules and policies of any regulatory authority and stock exchange having
      jurisdiction over the Company, allow for the Executive’s estate to then
      exercise any unexercised and fully vested portion of the Stock Option on
      the Effective Date of Termination at any time during 12 months from the
      Effective Date of Termination.

Payments in the Event of Non-Renewal or in the Event of
Termination Without Just Cause 

7.8                    
The Company will, if it either (i) does not renew this Agreement after the
Initial Term or any Renewal Term by providing a Company’s Notice in accordance
with section 1.2 herein or (ii) terminates the employment of the Executive other
than for Just Cause or by death in accordance with sections 7.2 and 7.5 herein
(in such instance on the “Effective Date of Termination” herein), provide
the Executive with the following: 

	 	(a) 	
      pay to the Executive the total of:

	 	 	 	 
	 		(i) 	
      6 months of the then Base Salary, less any required
      statutory deductions, if any if termination takes place within 24 months
      of the Effective Date or 12 months of the then Base Salary, less any
      required statutory deductions thereafter;

	 	 	 	 
	 		(ii) 	
      that portion of any then declared and/or earned or
      accrued Bonus, prorated to the end of the six-month period from the
      Effective Date of Termination, that the Chief Executive Officer of the
      Company determines would likely have been paid to the Executive for the
      six months from the Effective Date of Termination; such determination to
      be made fairly and reasonably and taking into account all relevant
      circumstances;

	 	 	 	 
	 		(iii) 	
      the present value, as determined by the Company, acting
      reasonably, of each of the then Individual Benefits described under
      section 4.7 herein that would have been enjoyed by the Executive during
      the next 12 months from the Effective Date of Termination assuming the
      Executive’s employment was not terminated and assuming the then current
      level of Individual Benefits were continued for that 12 months;

	 	 	 	 
	 		(iv) 	
      any outstanding Vacation pay as at the Effective Date of
      Termination; and

	 	 	 	 
	 		(v) 	
      any outstanding Expenses as at the Effective Date of
      Termination;

- 10 - 

	 	(b) 	
      maintain the Executive’s then Group Benefits for 6 months
      from the Effective Date of Termination if termination takes place within
      24 months of the Effective Date or, maintain the Executive’s then Group
      Benefits for 12 months from the Effective Date of Termination if
      termination takes place more than 24 months after the Effective Date;
      and

	 	 	 
	 	(c) 	
      subject to the Company’s then stock option plan and the
      rules and policies of any regulatory authority and stock exchange having
      jurisdiction over the Company, allow for the Executive to then exercise
      any unexercised and fully vested portion of the Stock Option on the
      Effective Date of Termination at any time during 12 months from the
      Effective Date of Termination.

Payments in the Event of Termination upon a Change In
Control 

7.9                    
The Company will, if the Executive terminates the Executive’s employment as a
consequence of a Change In Control of the Company (in such instance on the
“Effective Date of Termination” herein): 

	 	(a) 	
      pay the total of:

	 	 	 	 
	 		(i) 	
      12 months of the then Base Salary, less any required
      statutory deductions, if any;

	 	 	 	 
	 		(ii) 	
      that portion of any then declared and/or earned or
      accrued Bonus, prorated to the end of the six-month period from the
      Effective Date of Termination, that the Chief Executive Officer of the
      Company determines would likely have been paid to the Executive for the
      six months from the Effective Date of Termination; such determination to
      be made fairly and reasonably and taking into account all relevant
      circumstances;

	 	 	 	 
	 		(iii) 	
      the present value, as determined by the Company, acting
      reasonably, of each of the then Individual Benefits described under
      section 4.7 herein that would have been enjoyed by the Executive during
      the next six months from the Effective Date of Termination assuming the
      Executive’s employment was not terminated and assuming the then current
      level of Individual Benefits were continued for that six months;

	 	 	 	 
	 		(iv) 	
      any outstanding Vacation pay as at the Effective Date of
      Termination; and

	 	 	 	 
	 		(v) 	
      any outstanding Expenses as at the Effective Date of
      Termination;

	 	 	 	 
	 	(b) 	
      maintain the Executive’s then Group Benefits for a period
      of one year from the Effective Date of Termination; and

	 	 	 	 
	 	(c) 	
      subject to the Company’s then stock option plan and the
      rules and policies of any regulatory authority and stock exchange having
      jurisdiction over the Company, allow for the Executive to then exercise
      any unexercised and fully vested portion of the Stock Option on the
      Effective Date of Termination at any time during 12 months from the
      Effective Date of Termination.

Executive to Provide Release 

7.10                  
Subject to the Company’s making the payment and maintaining the Group Benefits
and Individual Benefits as provided in sections 7.7 and 7.8 herein, the
Executive will execute and deliver to the Company a full and final release of
the Company, in the form provided by the Company, in respect of the Executive’s
employment under this Agreement and otherwise. 

- 11 - 

Manner of Payment 

7.11                  
The Company may, in its sole and absolute discretion, pay the amounts referred
to in sections 7.7 and 7.8 herein either in a manner consistent with the general
payroll practice of the Company over the course of the relevant time period or
in a lump sum payment within seven business days after receipt by the Company of
the executed full and final release referred to in section 7.9 herein. 

Return of Materials 

7.12                  
All documents and materials in any form or medium and including, but not limited
to, files, forms, brochures, books, correspondence, memoranda, manuals and lists
(including lists of customers, suppliers, products and prices), all equipment
and accessories and again including, but not being limited to, leased
automobiles, computers, computer disks, software products, cellular phones and
personal digital assistants, all keys, building access cards, parking passes,
credit cards, and other similar items pertaining to the business of the Company
that may come into the possession or control of the Executive, will at all times
remain the property of the Company and, on termination of the Executive’s
employment for any reason, the Executive will promptly deliver to the Company
all property of the Company in the possession of the Executive or directly or
indirectly under the control of the Executive, and will not reproduce or copy
any such property or other property of the Company. 

PART 8

  CONFIDENTIALITY

Confidential Information 

8.1                    
The Executive acknowledges that: 

	 	(a) 	
      the Executive may, during the course of employment with
      the Company, acquire information which is confidential in nature or of
      great value to the Company and its subsidiaries including, without
      limitation, matters or subjects concerning corporate assets, cost and
      pricing data, customer listing, financial reports, formulae, inventions,
      know-how, marketing strategies, products or devices, profit plans,
      research and development projects and findings, computer programs,
      suppliers, and trade secrets, whether in the form of records, files,
      correspondence, notes, data, information, or any other form, including
      copies or excerpts thereof (collectively, the “Confidential
      Information”); the disclosure of any of which to competitors,
      customers, clients or suppliers of the Company, unauthorized personnel of
      the Company or to third parties would be highly detrimental to the best
      interests of the Company; and

	 	 	 
	 	(b) 	
      the right to maintain the confidentiality of Confidential
      Information, and the right to preserve the Company’s goodwill, constitute
      proprietary rights which the Company is entitled to
  protect.

8.2                    
The Executive will, while employed with the Company and at all times
thereafter:

	 	(a) 	
      hold all Confidential Information that the Executive
      receives in trust for the sole benefit of the Company and in strictest
      confidence;

- 12 - 

	 	(b) 	
      protect all Confidential Information from disclosure and
      will not take any action that could reasonably be expected to result in
      any Confidential Information losing its character as Confidential
      Information, and will take all lawful action necessary to prevent any
      Confidential Information from losing its status as Confidential
      Information; and

	 	 	 
	 	(c) 	
      neither, except as required in the course of performing
      duties and responsibilities under this Agreement, directly or indirectly
      use, publish, disseminate or otherwise disclose any Confidential
      Information to any unauthorized personnel of the Company or to any third
      party, nor use Confidential Information for any purpose other than the
      purposes of the Company, without the prior written consent of the Company,
      which consent may be withheld in the Company’s sole and absolute
      discretion.

8.3                    
The restrictions on the Executive’s use or disclosure of all Company
Information, as set forth in this Part 8, shall continue following the
expiration or termination of the Executive’s employment with the Company
regardless of the reasons for or manner of such termination. 

8.4                     Notwithstanding
section 8.2 herein, the Executive may, if and solely to the extent required by
lawful subpoena or other lawful process, disclose Confidential Information but,
to the extent possible, shall first notify the Company of each such requirement
so that the Company may seek an appropriate protective order or waive compliance
with the provisions of this Agreement. The Executive will co-operate fully with
the Company at the expense of the Company in seeking any such protective order.

PART 9 

  NON-COMPETITION AND NON-SOLICITATION

Non-Competition and Payments for Enforcement by the Company
during Standstill Period 

9.1                    
The Executive acknowledges that the Executive’s Services under this Agreement
are of special, unique and extraordinary character which give the Executive
value to the Company; the loss of which cannot adequately be compensated in
damages or by an action at law. In addition to, and not in limitation of any
other restrictive covenant which may be binding on the Executive, the Executive
shall not anywhere in North America and Europe, for a period of one year after
the termination of this Agreement (the “Standstill Period” herein) for
any reason in any manner whatsoever: 

	 	(a) 	
      carry on, engage in, or be concerned with or interested
      in; or

	 	 	 
	 	(b) 	
      permit the Executive’s name or any part thereof to in any
      manner whatsoever to be used or connected with any business that is, or
      any interest in any business that is;

similar to or competitive with the business of the Company or
any of its subsidiaries. 9.2 The Executive agrees that: 

	 	(a) 	
      all restrictions contained in section 9.1 herein are
      reasonable and valid in the circumstances and all defences to the strict
      enforcement thereof by the Company are hereby waived by the
    Executive;

- 13 - 

	 	(b) 	
      the remedy available to the Company at law for any breach
      by him of section 9.1 herein will be inadequate and that the Company, on
      any application to a Court, shall be entitled to temporary and permanent
      injunctive relief against the Executive without the necessity of proving
      actual damage to the Company; and

	 	 	 
	 	(c) 	
      if the foregoing covenant is found to be unreasonable to
      any extent by a court of competent jurisdiction adjudicating upon the
      validity of the covenant, whether as to the scope of the restriction, the
      area of the restriction or the duration of the restriction, then such
      restriction shall be reduced to that which is in fact declared reasonable
      by such court, or a subsequent court of competent jurisdiction, requested
      to make such a declaration.

9.3                    
Should this Agreement be terminated for any reason (in such instance on the
“Effective Date of Termination” herein) and should the Executive, during
the one year Standstill Period from the Effective Date of Termination, secure a
bona fide employment or consulting position outside of the Company (which the
Executive evidences in writing to the Company; the “Other Position”)
which may in any manner infringe the restrictions contained in section 9.1
herein, and should the Company, acting reasonably, not release the Executive
from the restrictions contained in sections 9.1 and 9.2 herein in taking such
Other Position, then, during the Standstill Period, and in order to compensate
the Executive for not being in a position to accept the Other Position, the
Company will, during the Standstill Period: 

	 	(a) 	
      continue to pay the Executive the Executive’s then Base
      Salary; and

	 	 	 
	 	(b) 	
      continue to maintain the Executive’s then Group
      Benefits.

Non-Solicitation 

9.4                    
The Executive hereby agrees that the Executive will not, during the period
commencing on the Effective Date hereof and ending one year following the
termination or expiration of this Agreement for any reason, be a party to or
abet any solicitation of customers, clients, referral services, consultants or
suppliers of the Company or any of its subsidiaries, to transfer business from
the Company or any of its subsidiaries to any other person, or seek in any way
to persuade or entice any employee of the Company or any of its subsidiaries to
leave that employment or to be a party to or abet any such action. 

PART 10 

  OWNERSHIP OF INTELLECTUAL PROPERTY

Definitions 

10.1                  
In this Agreement, “Inventions” means, collectively, all: 

	 	(a) 	
      discoveries, inventions, ideas, suggestions, reports,
      documents, designs, technology, methodologies, compilations, concepts,
      procedures, processes, products, protocols, treatments, methods, tests,
      improvements, work product and computer programs (including all source
      code, object code, compilers, libraries and developer tools, and any
      manuals, descriptions, data files, resource files and other such materials
      relating thereto), and

- 14 - 

	 	(b) 	
      each and every part of the
foregoing;

that are conceived, developed, reduced to practice or otherwise
made by the Executive either alone or with others or, in any way, relate to the
present or proposed programs, services, products or business of the Company, or
to tasks assigned to the Executive in connection with the Executive’s duties or
in connection with any research or development carried on or planned by the
Company, whether or not such Inventions are conceived, developed, reduced to
practice or otherwise made during the Executive’s employment or during regular
working hours and whether or not the Executive is specifically instructed to
conceive, develop, reduce to practice or otherwise make same. 

Exclusive Property 

10.2                  
The Executive agrees that all Inventions, and any and all services and products
which embody, emulate or employ any such Invention, shall be the sole property
of the Company and all copyrights, patents, patent rights, trademarks, service
marks, reproduction rights and all other proprietary title, rights and interest
in and to each such Invention, whether or not registrable (collectively, the
“Intellectual Property Rights”), shall belong exclusively to the Company.

Work for Hire 

10.3                  
For purposes of all applicable copyright laws to the extent, if any, that such
laws are applicable to any such Invention or any such service or product, it
shall be considered a work made for hire and the Company shall be considered the
author thereof. 

Disclosure 

10.4                  
The Executive will promptly disclose to the Company, or any persons designated
by it, all Inventions and all such services or products. 

Assignment 

10.5                  
The Executive hereby assigns and further agrees to, from time to time as such
Inventions arise, assign to the Company or its nominee (or their respective
successors or assigns) all of the Executive’s right, title and interest in and
to the Inventions and the Intellectual Property Rights without further payment
by the Company. 

Moral Rights 

10.6                  
The Executive hereby waives and further agrees to, from time to time as such
Inventions arise, waive for the benefit of the Company and its successors or
assigns all the Executive‘s moral rights in respect of the Inventions. 

Further Assistance 

10.7                  
The Executive agrees to assist the Company in every proper way (but at the
Company’s expense) to obtain and, from time to time, enforce the Intellectual
Property Rights and to the Inventions in any and all countries, and to that end
will execute all documents for use in applying for, obtaining and enforcing the
Intellectual Property Rights in and to such Inventions as the Company may desire, together with any
assignments of such Inventions to the Company or persons designated by it. The
Executive’s obligation to assist the Company in obtaining and enforcing such
Intellectual Property Rights in any and all countries shall continue beyond the
termination of this Agreement. 

- 15 - 

Representations and Warranties 

10.8                 
The Executive hereby represents and warrants that the Executive is subject to no
contractual or other restriction or obligation that will in any manner limit the
Executive’s obligations under this Agreement or activities on behalf of the
Company. The Executive hereby represents and warrants to the Company that the
Executive has no continuing obligations to any person (a) with respect to any
previous invention, discovery or other item of intellectual property or (b) that
require the Executive not to disclose the same. 

PART 11 

  INDEMNIFICATION AND LEGAL PROCEEDINGS

Indemnification 

11.1                  
The Parties hereby each agree to indemnify and save harmless the other Party and
including, where applicable, the other Party’s respective subsidiaries and
affiliates and each of their respective directors, officers, associates,
affiliates and agents (each such party being an “Indemnified Party”),
harmless from and against any and all losses, claims, actions, suits,
proceedings, damages, liabilities or expenses of whatever nature or kind and
including, without limitation, any investigation expenses incurred by any
Indemnified Party, to which an Indemnified Party may become subject by reason of
the terms and conditions of this Agreement. 

No indemnification 

11.2                  
This indemnity will not apply in respect of an Indemnified Party in the event
and to the extent that a Court of competent jurisdiction in a final judgment
shall determine that the Indemnified Party was grossly negligent or guilty of
wilful misconduct. 

Claim of indemnification 

11.3                  
The Parties agree to waive any right they might have of first requiring the
Indemnified Party to proceed against or enforce any other right, power, remedy,
security or claim payment from any other person before claiming this indemnity.

Notice of claim 

11.4                  
In case any action is brought against an Indemnified Party in respect of which
indemnity may be sought against either of the Parties (said Party then being the
“Indemnitee”), the Indemnified Party will give both Parties prompt
written notice of any such action of which the Indemnified Party has knowledge
and the Indemnitee will undertake the investigation and defense thereof on
behalf of the Indemnified Party, including the prompt employment of counsel
acceptable to the Indemnified Party affected and the Indemnitee and the payment
of all expenses. Failure by the Indemnified Party to so notify shall not relieve
the Indemnitee of the Indemnitee‘s obligation of indemnification hereunder
unless (and only to the extent that) such failure results in a forfeiture by the
Indemnitee of substantive rights or defenses. 

- 16 - 

Settlement 

11.5                  
No admission of liability and no settlement of any action shall be made without
the consent of each of the Parties and the consent of the Indemnified Party
affected, such consent not to be unreasonable withheld. 

Legal Proceedings 

11.6                  
Notwithstanding that the Indemnitee will undertake the investigation and defense
of any action, an Indemnified Party will have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel will be at the expense of the Indemnified Party
unless: 

	 	(a) 	
      such counsel has been authorized by the
  Indemnitee;

	 	 	 
	 	(b) 	
      the Indemnitee has not assumed the defense of the action
      within a reasonable period of time after receiving notice of the
      action;

	 	 	 
	 	(c) 	
      the named parties to any such action include that any
      Party and the Indemnified Party shall have been advised by counsel that
      there may be a conflict of interest between any Party and the Indemnified
      Party; or

	 	 	 
	 	(d) 	
      there are one or more legal defenses available to the
      Indemnified Party which are different from or in addition to those
      available to any Party.

Contribution 

11.7                  
If for any reason other than the gross negligence or bad faith of the
Indemnified Party being the primary cause of the loss claim, damage, liability,
cost or expense, the foregoing indemnification is unavailable to the Indemnified
Party or insufficient to hold them harmless, the Indemnitee shall contribute to
the amount paid or payable by the Indemnified Party as a result of any and all
such losses, claim, damages or liabilities in such proportion as is appropriate
to reflect not only the relative benefits received by the Indemnitee on the one
hand and the Indemnified Party on the other, but also the relative fault of the
Indemnitee and the Indemnified Party and other equitable considerations which
may be relevant. Notwithstanding the foregoing, the Indemnitee shall in any
event contribute to the amount paid or payable by the Indemnified Party, as a
result of the loss, claim, damage, liability, cost or expense (other than a
loss, claim, damage, liability, cost or expenses, the primary cause of which is
the gross negligence or bad faith of the Indemnified Party), any excess of such
amount over the amount of the fees actually received by the Indemnified Party
hereunder. 

PART 12 

  ARBITRATION

Matters for arbitration 

12.1                  
Except for matters of indemnity or in the case of urgency to prevent material
harm to a substantive right or asset, the Parties agree that all questions or
matters in dispute with respect to this Agreement shall be submitted to
arbitration pursuant to the terms hereof. This provision shall not prejudice a
Party from seeking a Court order or assistance to garnish or secure sums or to seek summary remedy for such matters as counsel may
consider amenable to summary proceedings. 

- 17 - 

Notice 

12.2                  
It shall be a condition precedent to the right of any Party to submit any matter
to arbitration pursuant to the provisions hereof that any Party intending to
refer any matter to arbitration shall have given not less than five business
days’ prior written notice of its intention to do so to the other Party together
with particulars of the matter in dispute. On the expiration of such five
business days the Party who gave such notice may proceed to refer the dispute to
arbitration as provided for herein. Except for matters of indemnity or in the
case of urgency to prevent material harm to a substantive right or asset, the
Parties agree that all questions or matters in dispute with respect to this
Agreement shall be submitted to arbitration pursuant to the terms hereof. This
provision shall not prejudice a Party from seeking a Court order or assistance
to garnish or secure sums or to seek summary remedy for such matters as counsel
may consider amenable to summary proceedings. 

Appointments 

12.3                  
The Party desiring arbitration shall appoint one arbitrator, and shall notify
the other Party of such appointment, and the other Party shall, within five
business days after receiving such notice, appoint an arbitrator, and the two
arbitrators so named, before proceeding to act, shall, within five business days
of the appointment of the last appointed arbitrator, unanimously agree on the
appointment of a third arbitrator, to act with them and be chairperson of the
arbitration herein provided for. If the other Party shall fail to appoint an
arbitrator within five business days after receiving notice of the appointment
of the first arbitrator, and if the two arbitrators appointed by the Parties
shall be unable to agree on the appointment of the chairperson, the chairperson
shall be appointed in accordance with the provisions of the British Columbia
International Commercial Arbitration Act (the “Arbitration Act”).
Except as specifically otherwise provided in this section, the arbitration
herein provided for shall be conducted in accordance with such Arbitration Act.
The chairperson, or in the case where only one arbitrator is appointed, the
single arbitrator, shall fix a time and place for the purpose of hearing the
evidence and representations of the Parties, and the chairperson shall preside
over the arbitration and determine all questions of procedure not provided for
by the Arbitration Act or this section. After hearing any evidence and
representations that the Parties may submit, the single arbitrator, or the
arbitrators, as the case may be, shall make an award and reduce the same to
writing, and deliver one copy thereof to each of the Parties. The expense of the
arbitration shall be paid as specified in the award. 

Award 

12.4                  
The Parties agree that the award of a majority of the arbitrators, or in the
case of a single arbitrator, of such arbitrator, shall be final and binding upon
each of them. 

PART 13 

  OTHER PROVISIONS

Waivers and Amendments 

13.1                  
This Agreement may be amended, modified, superseded, cancelled, renewed or
extended, only by a written agreement between the Parties. Failure or delay by
either Party to enforce compliance with any term or condition of this Agreement
shall not constitute a waiver of such term or condition. 

- 18 - 

No Representation or Claims 

13.2 The Executive agrees that the Executive has not been
induced to enter into this Agreement by reason of any statement, representation,
understanding or promise not expressly set out in this Agreement. The Executive
has no claim against the Company arising from any Services provided by the
Executive to the Company in any capacity prior to the effective date of this
Agreement. 

Governing Law 

13.3                  
The situs of this Agreement is Vancouver, British Columbia, Canada, and for all
purposes this Agreement will be governed exclusively by and construed and
enforced in accordance with the laws prevailing in the Province of British
Columbia, Canada, and the federal laws of Canada applicable thereto. 

Notices 

13.4                  
Any notice or other communication or writing required or permitted to be given
under this Agreement or for the purposes of this Agreement will be in writing
and will be sufficiently given if delivered personally, or if transmitted by
facsimile transmission (with original to follow by mail) or other form of
recorded communication, tested prior to transmission, to: 

	 	(a) 	if to the Company: 
	 	  	 
	 	  	Naturally Advanced Technologies Inc. 
	 	  	305 - 4420 Chatterton Way, Victoria, British
      Columbia, Canada, V8X 5J2 
	 	  	Attention: Ken Barker, CEO 
	 	  	Phone:                  
      (250) 658-8582 
	 	  	Fax:                        (250)
      658-8586 
	 	  	E-mail:                   
      ken@naturallyadvanced.com; and 
	 	  	 
	 	  	with a copy to counsel for the Company: 
	 	  	 
	 	  	McMillan LLP 
			1500 – 1055 West Georgia Street, Vancouver,
      British Columbia, Canada, V6E 4N7 
	 	  	Attention: Thomas J. Deutsch 
	 	  	Phone:                  
      (604) 691-7445 
	 	  	Fax:                       
      (604) 893-2679 
	 	  	E-mail:                  
      thomas.deutsch@mcmillan.ca; and 
	 	  	 
	 	(b) 	if to the Executive: 
	 	  	 
	 	  	Tom Robinson, 6188 Old Ironworks Road,
      Greensboro, NC 27455 
	 	  	Phone:                  
      (336) 549-7873 
	 	  	E-mail:                  
      tom.robinson@naturallyadvanced.com; 

or to such other address as the Party to whom such notice is to
be given will have last notified the Party giving the same in the manner
provided in this section. Any notice so delivered will be deemed to have been
given and received on the day it is so delivered at such address; provided that
such day is not a Business Day (as herein defined) then the notice will be
deemed to have been given and received on the Business Day next following the
day it is so delivered. Any notice so transmitted by facsimile transmission or
other form of recorded communication will be deemed to have been given and received on the day of its
confirmed transmission (as confirmed by the transmitting medium), provided that
if such day is not a Business Day then the notice will be deemed to have been
given and received on the Business Day next following such day. “Business
Day” means any day that is not a Saturday, Sunday or civic or statutory
holiday in the Province of British Columbia, Canada. 

- 19 - 

Assignment 

13.5                  
The Executive may not assign this Agreement or any right or obligation under it.

Severability 

13.6                  
If any provision of this Agreement is determined to be invalid or unenforceable
in whole or in part, such invalidity or unenforceability shall attach only to
such provision or part thereof and the remaining part of such provision and all
other provisions hereof shall continue in full force and effect. The Parties
agree to negotiate in good faith to agree to a substitute provision which shall
be as close as possible to the intention of any invalid or unenforceable
provision as may be valid or enforceable.

Independent Legal Advice 

13.7                  
The Executive acknowledges that the Company has recommended that the Executive
obtain independent legal advice with respect to this Agreement, and that the
Executive has had a reasonable opportunity to do so prior to executing this
Agreement. 

Force Majeure 

13.8                  
If either Party is at any time either during this Agreement or thereafter
prevented or delayed in complying with any provisions of this Agreement by
reason of strikes, walk-outs, labour shortages, power shortages, fires, wars,
acts of God, earthquakes, storms, floods, explosions, accidents, protests or
demonstrations by environmental lobbyists or native rights groups, delays in
transportation, breakdown of machinery, inability to obtain necessary materials
in the open market, unavailability of equipment, governmental regulations
restricting normal operations, shipping delays or any other reason or reasons
beyond the control of that Party, then the time limited for the performance by
that Party of its respective obligations hereunder shall be extended by a period
of time equal in length to the period of each such prevention or delay. A Party
shall within three calendar days give notice to the other Party of each event of
force majeure under this section, and upon cessation of such event shall furnish
the other Party with notice of that event together with particulars of the
number of days by which the obligations of that Party hereunder have been
extended by virtue of such event of force majeure and all preceding events of
force majeure. 

Time of the essence 

13.9                  
Time will be of the essence of this Agreement. 

Enurement 

13.10                 This
Agreement will enure to the benefit of and will be binding upon the Parties and
their respective heirs, executors, administrators and assigns. 

- 20 - 

Further assurances 

13.11                
  The Parties will from time to time after the execution of this Agreement make,
  do, execute or cause or permit to be made, done or executed, all such further
  and other acts, deeds, things, devices and assurances in law whatsoever as may
  be required to carry out the true intention and to give full force and effect to
  this Agreement. 

No partnership or agency 

13.12                
The Parties have not created a partnership and nothing contained in this
Agreement shall in any manner whatsoever constitute any Party the partner, agent
or legal representative of the other Parties, nor create any fiduciary
relationship between them for any purpose whatsoever. 

Personal Information 

13.13                
The Executive acknowledges that the Company is obligated to comply with the
British Columbia Personal Information Protection Act and with any other
applicable legislation governing the collection, use, storage and disclosure of
personal information. The Executive agrees to comply with all Company personal
information protection policies and with other policies, controls and practices
as they may exist, from time to time, in ensuring that the Executive and the
Company engage only in lawful collection, storage, use and disclosure of
personal information. 

Captions 

13.14                 The
headings, captions, Part, section and subsection numbers appearing in this
Agreement are inserted for convenience of reference only and shall in no way
define, limit, construe or describe the scope or intent of this Agreement nor in
any way affect this Agreement. 

Counterparts 

13.15                
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, and all of which together shall constitute one and the
same instrument. 

                   
     IN WITNESS WHEREOF the Parties have
hereunto set their respective hands and seals as at the Effective Date as
hereinabove determined. 

	The COMMON SEAL of 	) 	  
	NATURALLY ADVANCED 	) 	  
	TECHNOLOGIES INC., 	) 	  
	the Company herein, was hereunto affixed 	) 	  
	in the presence of: 	) 	(C/S) 

- 21 - 

	  	) 	  
	  	) 	  
	/s/ Kenneth Barker
    	) 	  
	Authorized Signatory- Ken Barker 	) 	  
	  	  	  
	SIGNED, SEALED and DELIVERED by 	) 	  
	TOM ROBINSON, the Executive 	) 	  
	herein, in the presence of: 	) 	  
	  	) 	  
	  	) 	  
	/s/ Daksha J. Gami
    	) 	  
	Witness Signature 	) 	/s/ Tom Robinson 
	  	) 	TOM ROBINSON 
	211 Pisgah Church
      Rd., Greensboro, NC 	) 	  
	Witness Address 	) 	  
	  	) 	  
	Daksha J. Gami,
      Financial Service Officer 	) 	  
	Witness Name and Occupation 	) 	  

Schedule A 

This is Schedule “A” to that certain Senior Executive Services
Agreement, dated for reference effective on October 1st, 2011, as
entered into between Naturally Advanced Technologies Inc. (as the Company) and
Tom Robinson (as the Executive). 

Initial Services

Without in any manner limiting the generality of the initial
Services to be provided by the Executive as set forth in Part 2 of the Agreement
hereinabove, it is hereby also acknowledged and agreed that the Executive will
provide the following specific Services to the Company, or to any of the
Company’s respective subsidiaries, as the case may be, and as may be determined
by the Board of Directors, from time to time, in its sole and absolute
discretion, and in conjunction with the development and maintenance of the
Company’s various business interests subject, at all times, to the direction of
the Board of Directors: 

Job Title: Chief Operating Officer, 

Key Responsibilities: 

Responsible for overseeing the company’s entire operations
platform, including procurement of raw materials; production process,
facilities, and manufacturing functions; expense, cost, and margin control; and
monthly, quarterly, and annual financial goal attainment. As a key member of the
leadership team, the COO will play an integral role in the company’s strategic
direction, development, and growth. 

Essential Duties and Responsibilities: 

	
  Lead strategic planning process for company making shift from research and
  development mode to production and commercialization. 

  
	
  Develop and drive strategies to successfully operationalize and integrate
  production while ensuring capacity for scaling operations to incorporate
  multiple products and meet rapid growth initiatives. 

  
	
  Work closely with the CFO to develop a model for financial planning and
  budgeting. 

  
	
  Create budgeting process and manage budget execution with a focus on costs,
  yield, and margin. 

  
	
  Bring new production facilities online, overseeing build-out, staffing, and
  important regional business and government partnerships. 

  
	
  Establish and manage team to facilitate high volume production capacity in
  multiple manufacturing facilities around the globe. 

- 2 - 

	
  Establish clear reporting, forecasting, and planning tools. Develop team
  performance goals, allocate resources, and develop management policies and
  practices. 

  
	
  Develop financial and operational controls and monitor production metrics
  such as yield, quality, on time delivery, and gross margin. 

  
	
  Participate in capital market development, including participation in road
  shows, bank meetings, analyst meetings, and economic development talks with
  local governments. 

  
	
  Develop, establish, and direct execution of operating policies to support
  overall company policies and objectives. 

  
	
  Direct all production control, production process development, quality
  systems, purchasing, and logistics activities. 

  
	
  Work with sales to supply small run prototype samples for custom
  fabrications / development trials. 

  
	
  Understand and maximize the global supply chain. 

In this regard it is hereby acknowledged and agreed that the
Executive shall be entitled to communicate with and shall rely upon the
immediate advice, direction and instructions of the Chief Executive Officer of
the Company, or upon the advice or instructions of such other director or
officer of the Company as the Chief Executive Officer shall, from time to time,
designate in times of the Chief Executive Officer’s absence, in order to
initiate, coordinate and implement the Services as contemplated herein subject,
at all times, to the final direction and supervision of the Board of Directors.

__________]ex10_50.htm

EXHIBIT 10.50

 

CONSENT, WAIVER AND THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

This CONSENT, WAIVER AND THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 14, 2013 (this “Amendment”), is by and among USEC INC., a Delaware corporation (“Holdings”), UNITED STATES ENRICHMENT CORPORATION, a Delaware corporation (“Enrichment” and, together with Holdings, the “Borrowers”), those Lenders under the Credit Agreement referred to below which are signatories to this Amendment, and JPMORGAN CHASE BANK, N.A., as Administrative and Collateral Agent (the “Administrative Agent”), and amends that certain Fourth Amended and Restated Credit Agreement dated as of March 13, 2012 (as previously amended, the “Existing Credit Agreement” and, as further amended by this Amendment, the “Credit Agreement”), among the Borrowers, the Lenders party thereto, the Administrative Agent and the other financial institutions named therein as “agents”, “bookrunners” and “arrangers”.

 

WHEREAS, the Borrowers have informed the Administrative Agent and the Lenders that the Borrowers wish to prepay the entire outstanding principal balance of the Term Loans and all accrued interest thereon;

 

WHEREAS, pursuant to Section 2.09(e) of the Existing Credit Agreement, the Borrowers are not permitted to make any optional prepayment of the Term Loans without the prior written consent of the Required Revolving Lenders and then only if, at the time of such prepayment and after giving effect thereto, Availability is greater than $35,000,000;

 

WHEREAS, the Borrowers have informed the Administrative Agent and the Lenders that the Borrowers wish to voluntarily reduce the Revolving Commitments under the Existing Credit Agreement from $137,200,000 to $110,000,000;

 

WHEREAS, the Borrowers have informed the Administrative Agent and the Lenders that Holdings has entered into that certain Stock Purchase Agreement dated as of January 23, 2013 (as amended, restated, supplemented or otherwise modified from time to time in a manner reasonably acceptable to the Administrative Agent, the “NAC Sale Agreement”) by and between Holdings, as seller, and Hitz Holdings U.S.A. Inc., as purchaser (the “NAC Purchaser”) pursuant to which Holdings has agreed to sell and the NAC Purchaser has agreed to purchase all of the issued and outstanding equity interests of NAC International Inc. (“NAC”) for a cash purchase price of $45,000,000, less purchase price adjustments described in the NAC Sale Agreement (the “NAC Sale Transaction”);

 

WHEREAS, the NAC Sale Transaction is prohibited by Section 6.03 of the Existing Credit Agreement and Section 8.6 of the Security Agreement, and pursuant to Sections 9.02(b)(B)(7), (8) and (9) of the Existing Credit Agreement, the prior written consent of the Revolving Lenders is required to release (a) NAC as a Guarantor and from its obligations under the Existing Credit Agreement, the Security Agreement and any other Financing Document to which it is a party, (b) any security interest held by the Administrative Agent in any assets of NAC and (c) any security interest held by the Administrative Agent in any equity interests in NAC;

 

WHEREAS, the Borrowers have informed the Administrative Agent and the Lenders that the audit by the Borrowers’ independent public accountants accompanying the annual consolidated financial statements of Holdings and its Subsidiaries for the fiscal year ended December 31, 2012 (the “2012 Fiscal Year Audit”) required to be delivered by the Borrowers to the Administrative Agent and the Lenders under Section 5.01(a) of the Existing Credit Agreement will contain a going concern qualification, which condition would constitute an Event of Default under Section 7.01(d) of the Existing Credit Agreement;

 

WHEREAS, the Borrowers have requested that the Revolving Lenders (a) consent to the prepayment in full of the Term Loans as described above and (b) further that, effective immediately following such prepayment, the Administrative Agent and the Revolving Lenders (i) agree to waive compliance by the Borrowers with Section 5.01(a) of the Existing Credit Agreement solely to the extent necessary to permit the Borrowers to deliver the 2012 Fiscal Year Audit with a going concern qualification, (ii) agree to waive compliance by the Borrowers with Section 6.03 of the Existing Credit Agreement and Section 8.6 of the Security Agreement, in each case, solely to the extent necessary to permit the Borrowers to consummate the NAC Sale Transaction, (iii) agree to consent to the release of (A) NAC as a Guarantor and from its obligations under the Existing Credit Agreement, the Security Agreement and any other Financing Document to which it is a party, (B) any security interest held by the Administrative Agent in any assets of NAC and (C) any security interest held by the Administrative Agent in any equity interests in NAC, in each case, concurrently with the consummation of the NAC Sale Transaction, and (iv) agree to waive and amend certain other provisions of the Existing Credit Agreement as more fully described herein; and

 

WHEREAS, the Administrative Agent and the Revolving Lenders party to this Amendment are willing to consent to the prepayment in full of the Term Loans and, effective immediately following such prepayment, to agree to the waivers and amendments described above as more particularly set forth  herein, all subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing and the agreements contained herein, the parties hereto hereby agree as follows:

 

1. Capitalized Terms.  Capitalized terms used herein which are defined in the Existing Credit Agreement have the same meanings herein as therein, except to the extent that such meanings are amended hereby.

 

2. Consent to Term Loan Prepayment.  Subject to the satisfaction of the terms and conditions set forth in Section 8 hereof and in reliance on the representations set forth in Section 7 hereof, the Revolving Lenders hereby consent to the prepayment by the Borrowers of the entire outstanding principal balance of the Term Loans, together with all accrued interest thereon and any amounts payable under Section 2.14 of the Existing Credit Agreement with respect thereto (the “Term Loan Prepayment”).

 

3. Reduction of Revolving Commitments.  Pursuant to Section 2.07(d) of the Existing Credit Agreement, effective immediately following the Term Loan Prepayment, the Borrowers hereby irrevocably reduce the Revolving Commitments from $137,200,000 to $110,000,000 (the “Third Amendment Date Commitment Reduction”).  Immediately after giving effect to the Third Amendment Date Commitment Reduction, the Revolving Commitment of each Revolving Lender shall be as set forth on updated Schedule 2.01 attached hereto. For avoidance of doubt, the Borrowers, the Administrative Agent and the Revolving Lenders hereby confirm that the Third Amendment Date Commitment Reduction is permanent.

 

4. Waivers.  Subject to the satisfaction of the terms and conditions set forth in Section 8 hereof and in reliance on the representations set forth in Section 7 hereof, effective immediately following the Term Loan Prepayment:

 

(a)           the Administrative Agent and the Revolving Lenders waive any requirement (i) under Section 2.07(e) of the Existing Credit Agreement that the Borrowers provide prior notice of the reduction of the Revolving Commitments, and (ii) under Section 2.07(d) of the Existing Credit Agreement that the reduction of the Revolving Commitments be in an amount that is an integral multiple of $1,000,000, in each case, solely with respect to the Third Amendment Date Commitment Reduction;

 

(b)           the Administrative Agent and the Revolving Lenders waive compliance by the Borrowers with Section 5.01(a) of the Existing Credit Agreement and any Event of Default under Section 7.01(d) of the Existing Credit Agreement that would result from such noncompliance, in each case, solely to the extent necessary to permit the Borrowers to deliver the 2012 Fiscal Year Audit with a qualification as to the Borrowers’ ability to continue as a “going concern”; and

 

(c)           the Administrative Agent and the Revolving Lenders (i) waive compliance by the Borrowers with Section 6.03 of the Existing Credit Agreement and waive the Event of Default under Sections 7.01(d) of the Existing Credit Agreement that would result from such noncompliance, in each case, solely to the extent necessary to permit the Borrowers to consummate the NAC Sale Transaction in accordance with the terms of the NAC Sale Agreement, (ii) waive compliance by the Borrowers with Section 8.6 of the Security Agreement solely to the extent necessary to permit the Borrowers to consummate the NAC Sale Transaction in accordance with the terms of the NAC Sale Agreement, (iii) agree that, effective contemporaneously with the consummation of the NAC Sale Transaction in accordance with the terms of the NAC Sale Agreement, NAC shall be released as a Guarantor and shall be released from its obligations under the Existing Credit Agreement, the Security Agreement and any other Financing Document to which it is a party and shall cease to be a Credit Party for all purposes under the Financing Documents, and any security interest held by the Administrative Agent in any assets of NAC or any equity interests in NAC shall be released and terminated (and the Revolving Lenders hereby consent to such release and termination pursuant to Sections 9.02(b)(B)(7), (8), and (9) of the Existing Credit Agreement) and (iv) agree that, at the Borrowers’ expense, the Administrative Agent shall (and the Revolving Lenders hereby authorize and direct the Administrative Agent to) deliver or cause to be delivered to the New York office of the Administrative Agent’s counsel the following documents and other items to be held in escrow and released to the Borrowers or to such other person or entity as the Borrowers may direct concurrently with the consummation of the NAC Sale Transaction:  (A) the stock certificate of NAC held by the Administrative Agent as collateral pursuant to the Security Agreement, (B) an amendment to that certain Blocked Account Control Agreement dated as of March 16, 2010 by and among the Borrowers, NAC, the Administrative Agent and JPMorgan Chase Bank, N.A. releasing Account No. 512-096473 of NAC from such agreement, (C) UCC-3 termination statements with respect to the UCC financing statements naming NAC as a debtor and the Administrative Agent as secured party and (D) such other documents as may be reasonably necessary to evidence or give public notice of the release and termination contemplated by the foregoing clause (iii)), provided that the Net Proceeds received by the Borrowers from the NAC Sale Transaction shall be applied in accordance with Section 2.09(b)(iii) and Section 2.09(c) of the Credit Agreement (but, for avoidance of doubt, without any reduction in the Revolving Commitments in connection therewith).

 

The Administrative Agent, the Revolving Lenders and the Borrowers hereby acknowledge, agree and confirm that the foregoing waivers are limited to the 2012 Fiscal Year Audit, the Third Amendment Date Commitment Reduction and the consummation of the NAC Sale Transaction in accordance with the terms of the NAC Sale Agreement and shall not constitute (i) a waiver of any provision of the Credit Agreement (including without limitation, Sections 2.07(d), 2.07(e), 5.01(a), or 6.03 thereof) or any other Financing Document (including without limitation, Section 8.6 of the Security Agreement) on any other occasion or for any other purpose or (ii) an amendment of any provision of the Credit Agreement (including without limitation, Sections 2.07(d), 2.07(e), 5.01(a) or 6.03 thereof) or any other Financing Document (including without limitation, Section 8.6 of the Security Agreement).

 

5. Amendments to Existing Credit Agreement.  Subject to the satisfaction of the terms and conditions set forth in Section 8 hereof and in reliance on the representations set forth in Section 7 hereof, the Existing Credit Agreement is hereby amended, effective immediately following the Term Loan Prepayment, as follows:

 

(a) Section 1.01 of the Existing Credit Agreement is hereby amended by deleting the definitions of “ACP Grant Proceeds”, “Applicable Margin”, “Availability”, “Availability Block”, “Availability Reserves”, “Borrowing Base”, “Inventory Cap Amount”, “LC Sublimit”, “Maturity Date”, “Pledged Cash Component” and “Pledged Money Market Account” in their entirety and substituting the following therefor:

 

“‘ACP Grant Proceeds’” means (a) the cash proceeds (including the release of cash pledged to secure (i) surety bonds, (ii) letters of credit or (iii) other like instruments) actually received by the Borrowers from an ACP Grant and (b) the 298,000 SWU received by the Borrowers from the DOE pursuant to the 2013 DOE SWU Transfer Agreement, which shall be deemed to have a value equal to the 2013 DOE SWU Agreed Value.”

 

“‘Applicable Margin’ means with respect to interest accruing on any day in respect of any Revolving Loan, (a) 2.75% per annum for ABR Revolving Loans and (b) 4.50% per annum for any Eurodollar Revolving Loans; provided, however, that, if the operation of the Paducah Facility shall result in a loss, as measured by gross profit during any period of three consecutive months ending on or after August 31, 2012 (each such three-month period, a “Paducah Profitability Test Period”) as shown on the monthly consolidated financial statements of Holdings and its Subsidiaries delivered pursuant to Section 5.01(c), the Applicable Margin for ABR Revolving Loans and Eurodollar Revolving Loans shall automatically increase by 1.50% effective retroactively to the first day of the applicable Paducah Profitability Test Period (except that, in the case of the first Paducah Profitability Test Period ending on August 31, 2012, the increase in the Applicable Margin shall be effective retroactively to July 1, 2012) and continuing in effect until the cessation of uranium enrichment at the Paducah Facility.”

 

“‘Availability’ means, at any time, an amount equal to the lesser of:

 

(a) (i) the aggregate Revolving Commitments of the Revolving Lenders at such time, minus (ii) the Availability Block at such time, minus (iii) the unpaid principal balance of the Revolving Loans and Swingline Loans at such time, minus (iv) the LC Exposure at such time; and

 

(b) (i) the Borrowing Base at such time, minus (ii) the unpaid principal balance of the Revolving Loans and Swingline Loans at such time, minus (iii) the LC Exposure at such time, plus (iv) the portion of the LC Exposure at such time that has been cash collateralized in accordance with the terms of this Agreement.”

 

“‘Availability Block’ means, at any time, the sum of (a) $30,000,000 plus (b) the Excess ACP Expenditure Amount.”

 

“‘Availability Reserves’ means, as of any date of determination, without duplication of any other reserves that are otherwise addressed or excluded through eligibility criteria or otherwise in this Agreement, such reserves in amounts as the Administrative Agent may from time to time establish and revise (upward or downward) in its Permitted Discretion upon reasonable prior notice to the Credit Parties:  (a) to reflect events, conditions, contingencies or risks which, as reasonably determined by the Administrative Agent, do, or reasonably would be expected to, materially adversely affect either (i) the Collateral or its value or (ii) the security interests and other rights of the Administrative Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof), (b) to reflect the Administrative Agent’s reasonable belief that any collateral report or financial information furnished by or on behalf of the Borrowers is or may have been incomplete, inaccurate or misleading in any material respect, (c) in respect of any state of facts which the Administrative Agent reasonably determines in good faith constitutes a Default or (d) to reflect any Swap Obligations or Banking Services Obligations.”

 

“‘Borrowing Base’ means an amount equal to:

 

(a)           eighty-five percent (85%) of the positive difference between (i) the Net Amount of Eligible Receivables and (ii) the Borrowing Base Reserves (Receivables);

 

plus

 

(b)           the lesser of:

 

(i)           eighty-five percent (85%) of the positive difference between (A) the net orderly liquidation value of Eligible Inventory and (B) the Borrowing Base Reserves (Inventory); and

 

(ii)           sixty-five percent (65%) of the positive difference between (A) the Net Amount of Eligible Inventory and (B) the Borrowing Base Reserves (Inventory); and

 

(iii)           the Inventory Cap Amount;

 

plus

 

(c)           at any time after the Shutdown/Demobilization/Transfer Commitment Reduction Threshold shall have been reached, 100% of the Specified Cash Collateral Amount;

 

minus

 

(d)           the Availability Reserves;

 

minus

 

(e)           the Availability Block.

 

The Borrowing Base will be computed monthly or more often as may be requested by the Administrative Agent in its Permitted Discretion upon reasonable prior notice to the Credit Parties.

 

The “net orderly liquidation value” of Eligible Inventory as of the Third Amendment Date was established pursuant to the August 10, 2012 appraisal prepared by Accuval and submitted to the Administrative Agent (the “2012 Appraisal”), which 2012 Appraisal, among other things, sets forth a net liquidation percentage used in determining the net orderly liquidation value of Eligible Inventory.  Until such time as another appraisal of inventory (which may, in the Administrative Agent’s Permitted Discretion, be another appraisal consisting of a desktop appraisal or a full appraisal) shall be conducted at the request of the Administrative Agent in accordance with Section 5.04, the net orderly liquidation value of Eligible Inventory shall be determined based on the net liquidation percentage set forth in the 2012 Appraisal.  Thereafter, the net orderly liquidation value of Eligible Inventory shall be determined based on the net liquidation percentage set forth in the most recent inventory appraisal (which may, in the Administrative Agent’s Permitted Discretion, be the most recent appraisal consisting of a desktop appraisal or a full appraisal) conducted in accordance with Section 5.04.”

 

“‘Inventory Cap Amount’ means, at any time of determination thereof, an amount equal to $90,000,000.”

 

“‘LC Sublimit’ means (i) at all times prior to the date which is sixty (60) days following the cessation of uranium enrichment at the Paducah Facility, $50,000,000, and (ii) at all times from and after the date which is sixty (60) days following the cessation of uranium enrichment at the Paducah Facility, $25,000,000.”

 

“‘Maturity Date’ means September 30, 2013.”

 

“‘Pledged Cash Component’ means, for any Monthly Collateral Coverage Period, the lesser of (a) the amount of cash specified by the Borrowers in the Monthly Compliance Certificate delivered by the Borrowers on first day of such Monthly Collateral Coverage Period (the “Specified Pledged Cash Amount”) that Enrichment covenants to maintain in the Pledged Money Market Account (which Specified Pledged Cash Amount, if not $0, shall be an integral multiple of $5,000,000) until delivery by the Borrowers of the next Monthly Compliance Certificate, or (b) the actual amount of cash on deposit in the Pledged Money Market Account during such Monthly Collateral Coverage Period; provided that  the Pledged Cash Component shall equal $0 any time the Pledged Money Market Account is not subject to a control agreement in favor of the Administrative Agent pursuant to which the Administrative Agent has a perfected, first priority Lien thereon for the benefit of the Lenders.”

 

“‘Pledged Money Market Account’ means (a) that certain money market Securities Account (as such term is defined in the Security Agreement) of Enrichment maintained with Chase or its Affiliates designated with an account number ending with the digits “721”, or (b) such other money market Securities Account established in favor of Enrichment by, and maintained with, Chase or its Affiliates that replaces the money market Securities Account described in clause (a) of this definition.”

 

(b) Section 1.01 of the Existing Credit Agreement is hereby further amended by deleting clause (i) of the definition of “Eligible Receivables” in its entirety and substituting the following therefor:

 

“(i)           the Customer is not (i) the United States government or the government of any state or political subdivision thereof or therein, or any agency or department of any thereof, including, without limitation, the DOE and the Tennessee Valley Authority, unless the Administrative Agent shall have received from the Credit Parties such documentation as the Administrative Agent shall deem appropriate in its Permitted Discretion to enable the Administrative Agent to make all filings necessary to comply with any applicable assignment of claims statute (provided that such documentation shall be held in escrow by the Administrative Agent and shall not be filed unless and until (1) an Event of Default has occurred and is continuing or (2) the Administrative Agent deems the filing of such documentation to be appropriate under the circumstances or the Administrative Agent shall have been instructed by the Required Revolving Lenders to so file such documentation); or (ii) (A) an Affiliate of the Credit Parties or any Subsidiary or any employee, officer, director or agent thereof, or (B) a supplier or creditor of the Credit Parties or any Subsidiary thereof (provided that such Receivable under this clause (ii)(B) shall only be ineligible to the extent of amounts payable by the Credit Parties or Subsidiary to such supplier or outstanding to such creditor);”

 

(c) Section 1.01 of the Existing Credit Agreement is hereby further amended by deleting the definitions of “2011 Appraisal” and “DOE SWU Purchase Expenditures” in their entirety.

 

(d) Section 1.01 of the Existing Credit Agreement is hereby further amended by inserting the following new definitions therein in appropriate alphabetical order:

 

“‘2012 Appraisal’ has the meaning assigned to such term in the definition of “Borrowing Base” set forth in this Section 1.01.”

 

“‘2013 DOE SWU Agreed Value’ means $44,378,055, the “value” as agreed to by the Borrowers and the DOE of the 298,000 SWU transferred by the DOE to the Borrowers pursuant to the 2013 DOE SWU Transfer Agreement.”

 

“‘2013 DOE SWU Transfer Agreement’ means the modification of the documentation evidencing an ACP Grant to provide for the transfer by the DOE to the Credit Parties of 298,000 SWU in lieu of the DOE’s obligation to remit $44,378,055 of cash to the Borrowers pursuant to such ACP Grant documentation in respect of ACP Expenditures incurred, or to be incurred, by the Borrowers, which modification shall be in form and substance reasonably satisfactory to the Administrative Agent.”

 

“‘DOE Barter Deposit Account’ means that certain Deposit Account of Enrichment maintained at JPMorgan Chase Bank, N.A. and designated with an account number ending with the digits “350”, which Deposit Account is used solely for the purpose of holding certain funds that are subject to a barter agreement between the Borrowers and the DOE.”

 

“‘Excess ACP Expenditure Amount’ has the meaning ascribed to such term in Section 6.11.”

 

“‘Government Share’ means that portion of the ACP Grant to be funded by DOE pursuant to the ACP Grant documentation, which amount is equal to 80% of the allowable costs of the ACP Grant.”

 

“‘NAC Purchaser’ means Hitz Holdings U.S.A., Inc.”

 

“‘NAC Sale Agreement’ means that certain Stock Purchase Agreement dated as of January 23, 2013 by and between Holdings, as seller, and the NAC Purchaser, as purchaser, pursuant to which Holdings has agreed to sell, and the NAC Purchaser has agreed to purchase, all of the issued and outstanding equity interests of NAC International, Inc. for a cash purchase price of $45,000,000, less purchase price adjustments described therein, as the same may be amended, restated, supplemented or otherwise modified from time to time in a manner reasonably acceptable to the Administrative Agent.”

 

“‘Third Amendment Date’ means March 14, 2013.”

 

(e) Section 1.05(b) of the Existing Credit Agreement is hereby amended by deleting such Section 1.05(b) in its entirety and substituting the following therefor:

 

“(b)           [Intentionally omitted].”

 

(f) Section 2.04(c) of the Existing Credit Agreement is hereby amended by deleting such Section 2.04(c) in its entirety and substituting the following therefor:

 

“(c)           Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension); provided that a Letter of Credit may provide that its expiration date shall be automatically extended to a date not more than one year after the then outstanding expiration date unless, at least a specified number of days prior to such then existing expiration date, the Issuing Bank shall have given the beneficiary thereof notice, in a form that may be specified in such Letter of Credit, that such expiration date shall not be so extended, and (ii) the date that is five (5) Business Days prior to the Maturity Date; provided that any Letter of Credit may be issued with an expiry date, or extended for a period, of up to one year after the Maturity Date so long as the Borrowers provide cash collateral for the LC Exposure related thereto in accordance with Section 2.04(j).”

 

(g) Section 2.04(j) of the Existing Credit Agreement is hereby amended by deleting such Section 2.04(j) in its entirety and substituting the following therefor:

 

“(j)           Cash Collateralization.   On or prior to the Third Amendment Date, the Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 105% of the LC Exposure as of such date plus accrued and unpaid interest thereon.  In addition, concurrently with any request for the issuance of any Letter of Credit under this Section 2.04 on or after the Third Amendment Date, the Borrowers shall deposit in the LC Collateral Account an amount in cash equal to 105% of the face amount of such Letter of Credit.  Further, if at any time (whether upon the occurrence of an Event of Default, any date on which the Borrowers are required to  Prepay the Obligations in Full pursuant to Section 2.09(h), or any date on which any Letter of Credit is issued, renewed, amended, or extended, or otherwise), the aggregate amount of cash on deposit in the LC Collateral Account is less than 105% of the LC Exposure (determined after giving effect to any such issuance, renewal, amendment, or extension, if applicable), then, the Borrowers shall immediately deposit in the LC Collateral Account an amount in cash sufficient to cause the aggregate amount of cash on deposit in the LC Collateral Account to be at least 105% of the LC Exposure (determined after giving effect to any such issuance, renewal, amendment or extension, if applicable).  Any such deposit of cash collateral pursuant to this Section 2.04(j) shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Borrowers hereby grant the Administrative Agent a security interest in the LC Collateral Account.  Other than any interest earned on such cash collateral while it is on deposit in the LC Collateral Account, such deposits shall not bear interest (it being understood that cash collateral on deposit in the LC Collateral Account may or may not bear interest, at the option and in the discretion of the Administrative Agent).  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposure at such time or, if the maturity of the Revolving Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Secured Obligations.  From time to time, to the extent that the aggregate amount of cash on deposit in the LC Collateral Account exceeds 105% of the LC Exposure as of such date (as determined in good faith by the Administrative Agent), the Borrowers may request in writing that the Administrative Agent remit cash to the Borrowers in an amount equal to the excess of the cash on deposit in the LC Collateral Account as of the date of such written request over an amount equal to 105% of the LC Exposure as of such date, as determined in good faith by the Administrative Agent (the amount of such excess, the “Excess Cash Collateral Amount”).  Within ten (10) Business Days after the Administrative Agent’s receipt of such a written request from the Borrowers, so long as no Event of Default shall have occurred and be continuing, the Administrative Agent shall remit to the Borrowers cash in an amount equal to the Excess Cash Collateral Amount, if any.”

 

(h) Section 2.07(c) of the Existing Credit Agreement is hereby amended by deleting such Section 2.07(c) in its entirety and substituting the following therefor:

 

“(c)           [Intentionally omitted].”

 

(i) Section 2.08 of the Existing Credit Agreement is hereby amended by adding the following new clause (g) at the end of Section 2.08:

 

“(g)           At any time when Revolving Loans are outstanding, if the aggregate amount of the Borrowers’ cash and cash equivalents (excluding the Pledged Cash Component, cash pledged to secure Obligations in respect of outstanding Letters of Credit, and cash subject to a barter agreement between the Borrowers and DOE and held in the DOE Barter Deposit Account) shall exceed $20,000,000 for more than two (2) Business Days, the Borrowers shall prepay the Revolving Loans by an amount equal to the lesser of (i) the amount necessary to prepay in full the Revolving Loans then outstanding and (ii) the amount by which the aggregate amount of the Borrowers’ cash and cash equivalents (excluding the Pledged Cash Component, cash pledged to secure Obligations in respect of outstanding Letters of Credit and cash subject to a barter agreement between the Borrowers and DOE and held in the DOE Barter Deposit Account) exceeds $20,000,000.”

 

(j) Section 2.09(b) of the Existing Credit Agreement is hereby amended by deleting such Section 2.09(b) in its entirety and substituting the following therefor:

 

“(b)           Mandatory Prepayments of Revolving Loans.  The Borrowers shall be obligated to prepay the Revolving Loans as follows

 

(i)           Overadvances.  Except as otherwise expressly provided in Section 2.05(d), if, at any time, Availability shall be less than $0, the Borrowers shall immediately prepay Revolving Loans or Swingline Loans in an aggregate amount necessary to cause Availability to be greater than or equal to $0, and such prepayment shall be applied in accordance with Section 2.09(c).

 

(ii)           Sale of Inventory and Collection of Receivables.  The Borrowers shall prepay Revolving Loans in an amount equal to 100% of the proceeds received by any Credit Party or any Restricted Subsidiary from the sale of inventory or the collection of Receivables, any such prepayment to be applied in accordance with Section 2.08(b).

 

(iii)           Other Asset Sales and Casualty Events.  Within three (3) Business Days of the receipt by any Credit Party or any Restricted Subsidiary of any Asset Sale Proceeds (other than Asset Sale Proceeds from dispositions permitted pursuant to Sections 6.03(c)(i),(ii), (ix) or (xii)) or Casualty Proceeds, the Borrowers shall make a mandatory prepayment of the Revolving Loans in an amount equal to 100% of the proceeds received, any prepayment to be applied in accordance with Section 2.09(c).

 

(iv)           Sale of Equity.  Within three (3) Business Days of the receipt by any Credit Party or any Restricted Subsidiary of any Equity Proceeds (other than Equity Proceeds from (A) the issuance of any Equity Interest in connection with any incentive plans available to officers, directors or employees of Holdings or any of its Subsidiaries or (B) the issuance of any Equity Interests by any Subsidiary to Holdings or any other Subsidiary), the Borrowers shall make a mandatory prepayment of the Revolving Loans in an amount equal to 100% of the proceeds received, any prepayment to be applied in accordance with Section 2.09(c).

 

(v)           Incurrence of Indebtedness.  Within three (3) Business Days of the receipt by any Credit Party or any Restricted Subsidiary of any Debt Proceeds (other than Debt Proceeds from Indebtedness permitted pursuant to clauses 6.01(a) through (h), (l), (m), (n), (o) or (p)), the Borrowers shall make a mandatory prepayment of the Revolving Loans in an amount equal to 100% of the proceeds received, any prepayment to be applied in accordance with Section 2.09(c).

 

(vi)           DOE Transfer Event.  Upon receipt of “fair value” from the DOE in respect of any DOE Transfer Event, the Borrowers shall promptly take such steps as necessary to convert such “fair value” into cash and, within three (3) Business Days of the receipt by the Borrowers of such cash, the Borrowers shall make a mandatory prepayment of the Revolving Loans in an amount equal to 100% of the cash received, any prepayment to be applied in accordance with Section 2.09(c).”

 

(k) Section 2.09(h) of the Existing Credit Agreement is hereby amended by deleting such Section 2.09(h) in its entirety and substituting the following therefor:

 

“(h)           Mandatory Revolving Commitment Reductions.

 

(i)           Incurrence of Certain Indebtedness.  If any Credit Party or Restricted Subsidiary receives any Debt Proceeds from the incurrence of Indebtedness of the types described in Sections 6.01(i), 6.01(j) and 6.01(k), the Borrowers shall immediately notify the Administrative Agent and, unless such indebtedness (A) is a permitted extension, renewal, replacement or refinancing of Indebtedness outstanding on the Effective Date or (B) does not provide for any cash payments prior to the Maturity Date (other than (i) mandatory prepayments resulting from a change of control or other event or circumstance, provided all such mandatory prepayments are expressly subject to the prior Payment in Full of the Obligations, and (ii) customary obligations to reimburse lenders for reasonable costs and expenses), then the Revolving Credit Commitments shall be automatically reduced by an amount equal to 100% of the Net Proceeds of such Indebtedness.

(ii)           Certain Asset Sales.  If any Credit Party or Restricted Subsidiary receives any Asset Sale Proceeds from any sale or transfer of assets (other than (A) Asset Sale Proceeds relating to the Paducah Orderly Shutdown, an ACP Demobilization or a DOE Transfer Event or (B) Asset Sale Proceeds relating to any disposition or transfer of assets of the type described in clauses (i) through  (xiv) of Section 6.03(c)), then, the Credit Parties shall immediately notify the Administrative Agent and the Revolving Credit Commitments shall be automatically reduced by an amount equal to 100% of the Net Proceeds of such sale or transfer of assets.

 

(iii)           [Reserved].

 

(iv)           ACP Demobilization or DOE Transfer Event.  If an ACP Demobilization or a DOE Transfer Event shall occur, on the 15th Business Day following the end of each month the Credit Parties shall provide the Administrative Agent with a report setting forth (A) the aggregate amount of Net Proceeds received by the Credit Parties from the sale or transfer of assets related to the American Centrifuge Project and/or the aggregate amount of Asset Sale Proceeds received by the Credit Parties from the transfer of assets to the DOE or its designee in connection with a DOE Transfer Event (the “Demobilization/Transfer Proceeds”), in each case as of the last day of the month most recently ended and (B) the sum of (x) the aggregate actual and accrued cumulative costs relating to the ACP Demobilization and/or DOE Transfer Event (which actual and accrued cumulative costs for purposes of this calculation shall not exceed 125% of the estimated amounts of such costs as set forth in the ACP Expenditure Plan and/or the DOE Transfer Event Cost Schedule, as applicable) as of the last day of the month most recently ended and (y) $40,000,000 (such sum, the “Demobilization/Transfer Costs”).  If, as of the 15th Business Day following the end of any month commencing six months after the ACP Demobilization or DOE Transfer Event, the Demobilization/Transfer Proceeds exceed the Demobilization/Transfer Costs by at least $2,000,000 (such excess, the “Demobilization/Transfer Excess Proceeds”), then, the Borrowers shall immediately notify the Administrative Agent and on the 20th Business Day following the end of each such month then, the Credit Parties shall immediately notify the Administrative Agent and the Revolving Credit Commitments shall be automatically reduced by an amount equal to 100% of the Demobilization/Transfer Excess Proceeds.

 

(v)           [Reserved].

 

(vi)           [Reserved].

 

(vii)           Shutdown/Demobilization/Transfer Commitment Reduction Threshold. Notwithstanding anything to the contrary set forth above, at such time as the aggregate reduction in the Revolving Commitments under clauses (i) through (iv) of this Section 2.09(h) equals $20,000,000 (the “Shutdown/Demobilization/Transfer Commitment Reduction Threshold”), the Revolving Commitments shall not be subject to any further reduction under clauses (i) through (iv) of this Section 2.09(h), and, instead, the Borrowers shall be required to deliver to the Administrative Agent cash to be held by the Administrative Agent in a pledged collateral account in an amount equal to the amount by which the aggregate required reductions in the Revolving Commitments which would have been required under this Section 2.09(h) but for this clause (vii) exceed $20,000,000.”

 

(l) Section 2.16(b) of the Existing Credit Agreement is hereby amended by deleting such Section 2.16(b) in its entirety and substituting the following therefor:

 

“(b)           Any proceeds of Collateral received by the Administrative Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum payable under the Financing Documents (which shall be applied as specified by the Borrowers), (B) a mandatory prepayment (which shall be applied in accordance with Section 2.09) or (C) amounts to be applied from the Collection Account (which shall be applied in accordance with Section 2.08(b)) or (ii) after an Event of Default has occurred and is continuing and (A) the Administrative Agent so elects, (B) the Required Revolving Lenders so direct, or (C) the Loans are accelerated pursuant to Section 7.02, shall be applied ratably (based upon the Administrative Agent’s and each Lender’s interest in the aggregate outstanding Secured Obligations described in each of categories first through eleventh described below) first, to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent and the Issuing Bank from the Borrowers (other than in connection with Banking Services Obligations or Swap Obligations), second, to pay any fees or expense reimbursements then due to the Revolving Lenders from the Borrowers (other than in connection with Banking Services Obligations or Swap Obligations), third, to pay interest due in respect of the Protective Advances, fourth, to pay the principal of the Protective Advances, fifth, to pay interest then due and payable on the Revolving Loans (other than the Protective Advances) ratably, sixth, to prepay principal on the Revolving Loans (other than the Protective Advances) and unreimbursed LC Disbursements ratably (and the Revolving Commitments shall be permanently reduced by the amount of any prepayment of the Revolving Loans pursuant to this clause sixth), seventh, to pay to the Administrative Agent cash collateral for the LC Exposure in an amount sufficient to cause the aggregate amount of cash collateral held by the Administrative Agent for such Obligations to be equal to 105% of the LC Exposure, eighth, to pay amounts owing with respect to Secured Obligations consisting of Noticed Banking Services Obligations (based on the amounts then certified by the Revolving Lender or Affiliate thereof providing the applicable Noticed Banking Services to the Administrative Agent to be due and payable to such Revolving Lender or Affiliate with respect thereto), ninth, to pay amounts owing with respect to Secured Obligations consisting of Noticed Swap Obligations (based on the amounts then certified by the Revolving Lender or Affiliate thereof party to the applicable Swap Agreement to the Administrative Agent to be due and payable to such Revolving Lender or Affiliate with respect thereto), tenth, to pay amounts owing with respect to Secured Obligations consisting of Banking Services Obligations (other than Noticed Banking Services Obligations) and Swap Obligations (other than Noticed Swap Obligations) (based on the amounts then certified by the Revolving Lender or Affiliate thereof providing the applicable Banking Services or party to the applicable Swap Agreement to the Administrative Agent to be due and payable to such Lender or Affiliate with respect thereto), eleventh, to pay any other Secured Obligation due to the Administrative Agent or any Lender by the Borrowers, and twelfth, any excess to be returned to the Borrowers.  Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrowers, or unless an Event of Default has occurred and is continuing, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan, except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the event, and only to the extent, that there are no outstanding ABR Loans and, in any such event, the Borrowers shall pay the break funding payment required in accordance with Section 2.14. The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.”

 

(m) Section 3.04(c) of the Existing Credit Agreement is hereby amended by deleting such Section 3.04(c) in its entirety and substituting the following therefor:

 

“(c)           Since December 31, 2011, after taking into account those items listed on a schedule delivered to the Administrative Agent prior to the Third Amendment Date, no event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect.”

 

(n) Section 4.02 of the Existing Credit Agreement is hereby amended by adding the following two new clauses (d) and (e) after existing clause (c) of Section 4.02 and before the last sentence of Section 4.02:

 

“(d)           The proceeds of such Borrowing shall be used only for one or more of the following purposes:  (i) to fund current payables arising in the ordinary course of business which are due or are about to become due; (ii) to fund current operating expenses arising in the ordinary course of business and consistent with past practices; (iii) to repay drawings under Letters of Credit; (iv) to pay the Obligations and amounts due in respect thereof; (v) to pay regularly scheduled payments of principal and interest in respect of Funded Indebtedness as and when the same shall become due; (vi) to fund Capital Expenditures and ACP Expenditures, in each case solely to the extent permitted under this Agreement; and (vii) any other general corporate purpose in the ordinary course of business acceptable to the Administrative Agent in its Permitted Discretion.”

 

“(e)           After giving effect to such requested Borrowing and the use of the proceeds of such requested Borrowing (which Borrowers must utilize within two (2) Business Days of the funding of such Borrowing), the aggregate amount of the Borrowers’ cash and cash equivalents (excluding the Pledged Cash Component, cash pledged to secure Obligations in respect of outstanding Letters of Credit and escrowed cash in the DOE Barter Deposit Account) shall not exceed $20,000,000.”

 

(o) Section 5.01(g) of the Existing Credit Agreement is hereby amended by deleting such Section 5.01(g) in its entirety and substituting the following therefor:

 

“(g)           within fifteen (15) Business Days after the end of each calendar month (or, if, at any time, Availability shall fall below $25,000,000, then, during the period from the date that Availability fell below such amount and continuing until the ninetieth (90th) consecutive day on which Availability exceeds $25,000,000, with such greater frequency as the Administrative Agent shall request, in its Permitted Discretion), (i) a certificate substantially in the form of Exhibit 5.01(g) hereto (a “Borrowing Base Certificate”) executed by a Financial Officer of the Borrowers demonstrating compliance as at the end of each month (or as of the end of such more frequent period, as applicable) with the Availability requirements, which shall include a Borrowing Base calculation, inventory designation, an inventory reconciliation delineating Credit Party owned inventory versus Customer owned inventory (to the extent included in the determination of the Borrowing Base or any reserves with respect thereto), (ii) an aging schedule of Receivables and a report showing debit and credit adjustments to Receivables, a reconciliation of Receivables aging to the general ledger, accounts payable listing and reconciliation of accounts payable listing to the general ledger, a detailed list of customer liabilities and deferred revenue accounts, a detailed inventory report, detailed credit insurance coverage by Customer and binding order backlog information, and (iii) a report showing the actual amount of cash of Enrichment as of the end of each month (or as of the end of such more frequent period, as applicable) on deposit in the Pledged Money Market Account and in each other deposit account or securities account maintained at Chase or its Affiliates that is subject to a control agreement in favor of the Administrative Agent pursuant to which the Administrative Agent has a perfected, first priority Lien thereon for the benefit of the Lenders, all such certificates, schedules, reports and reconciliations in form and detail satisfactory to the Administrative Agent in its Permitted Discretion; provided that in the event that such Borrowing Base Certificates and reports described in clauses (i) and (ii) above are required more frequently than monthly, inventory data will not be required to be reported more frequently than monthly;”

 

(p) Section 5.01(h) of the Existing Credit Agreement is hereby amended by deleting such Section 5.01(h) in its entirety and substituting the following therefor:

 

“(h)           within thirty (30) days after the end of each calendar month, a rolling monthly financial forecast for the period commencing on the first day of such calendar month and ending on December 31, 2013;”

 

(q) Section 5.04 of the Existing Credit Agreement is hereby amended by deleting such Section 5.04 in its entirety and substituting the following therefor:

 

SECTION 5.04                           Inspection of Property, Books and Records.  The Borrowers will keep, and will cause each Restricted Subsidiary to keep, proper books of record and account reflecting their business and activities; and will permit, and will cause each Restricted Subsidiary to permit, upon reasonable notice, representatives of any Lender at such Lender’s expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, senior employees and independent public accountants, all during normal business hours and as often as may reasonably be desired (but not so as to materially interfere with the business of the Borrowers or any of their Restricted Subsidiaries); provided that the Borrowers may, at their option, have one or more employees or representatives present at any such inspection, examination or discussion; provided, further, that each of the foregoing shall be subject to compliance with applicable laws and the Borrowers and their Restricted Subsidiaries shall not be obligated to provide any information that is “classified” for reasons of national security or foreign policy, or otherwise restricted from disclosure under applicable laws or agreements.  At the Borrowers’ expense, the Administrative Agent (a) shall have the right to audit, up to two times each fiscal year (provided that (x) if a Default or Event of Default shall have occurred and be continuing, the Administrative Agent shall have the right to conduct audits as often as the Administrative Agent may request in the exercise of its Permitted Discretion and (y) if Availability shall fall below $25,000,000, then, during the period from the date that Availability fell below such amount and continuing until the ninetieth (90th) consecutive day on which Availability exceeds $25,000,000, the Administrative Agent shall have the right to conduct audits as often as the Administrative Agent may request in the exercise of its Permitted Discretion), the existence and condition of the Collateral and to review compliance with the Financing Documents, (b) shall retain an inventory appraiser to appraise the inventory Collateral at least once (but not more than twice) each fiscal year (provided that (x) if a Default or Event of Default shall have occurred and be continuing, the Administrative Agent shall have the right to retain an inventory appraiser to appraise the inventory Collateral as often as the Administrative Agent may request in the exercise of its Permitted Discretion and (y) if Availability shall fall below $25,000,000, then, during the period from the date that Availability fell below such amount and continuing until the ninetieth (90th) consecutive day on which Availability exceeds $25,000,000, the Administrative Agent shall have the right to retain an inventory appraiser to appraise the inventory Collateral as often as the Administrative Agent may request in the exercise of its Permitted Discretion; and provided further, the Administrative Agent shall have the right to retain any such inventory appraisers to provide the Administrative Agent with an updated desktop appraisal of the inventory Collateral as frequently (but not more frequently than once each quarter) as the Administrative Agent may request in the exercise of its Permitted Discretion) and (c) shall have the right to obtain independent reports regarding the uranium markets, including, spot market value information.  The Borrowers will enter into agreements (in form and substance satisfactory to the Administrative Agent in its Permitted Discretion) with the Administrative Agent and PriceWaterhouseCoopers LLP (or such other nationally recognized independent public accounting firm as may be selected by the Borrowers and which is reasonably satisfactory to the Administrative Agent in its Permitted Discretion) providing annual verifications of Customer account balances and inventory counts in a manner reasonably satisfactory to the Administrative Agent. ”

 

(r) Section 5.12 of the Existing Credit Agreement is hereby amended by deleting such Section 5.12 in its entirety and substituting the following therefor:

 

“SECTION 5.12                                Cash Management Arrangements.  The Borrowers will, and will cause each of the other Credit Parties to, maintain such cash management systems and banking arrangements (including the establishment of lockboxes and deposit account control arrangements) as provided for in the Security Agreement and on terms satisfactory to the Administrative Agent in its Permitted Discretion.  On the date of delivery of each Monthly Compliance Certificate, Enrichment shall fix the Specified Pledged Cash Amount for the Monthly Collateral Coverage Period then commencing by specifying such amount on such Monthly Compliance Certificate (which Specified Pledged Cash Amount may be greater than or less than the Specified Pledged Cash Amount for the prior Monthly Collateral Coverage Period).  If Enrichment elects to reduce the Specified Pledged Cash Amount for any Monthly Collateral Coverage Period to an amount that is less than the Specified Pledged Cash Amount in effect during the prior Monthly Collateral Coverage Period (a “Pledged Cash Reduction”), Enrichment shall be permitted to request that the Administrative Agent (or Chase or its Affiliates, as applicable) withdraw cash from the Pledged Money Market Account and deliver it to Enrichment; provided that, after giving effect to such withdrawal of cash, the actual amount of cash on deposit in the Pledged Money Market Account is equal to or greater than the new Specified Pledged Cash Amount; and provided, further, that Enrichment shall not be permitted to effectuate a Pledged Cash Reduction unless (i) no Default or Event of Default shall have occurred and be continuing or shall result therefrom, and (ii) as of the last day of the month most recently ended prior to the delivery of such Monthly Compliance Certificate, and, as of the date of delivery of such Monthly Compliance Certificate, the Collateral Coverage Ratio (in each case, computed after giving effect to the proposed Pledged Cash Reduction) shall not be less than the minimum Collateral Coverage Ratio required by Section 6.10. At all times during each Monthly Collateral Coverage Period, Enrichment shall maintain a minimum cash balance in the Pledged Money Market Account of not less than the Specified Pledged Cash Amount set forth in the Monthly Compliance Certificate delivered at the commencement of such Monthly Collateral Coverage Period.  Enrichment shall cause the Pledged Money Market Account at all times to remain subject to the exclusive control and dominion of the Administrative Agent.”

 

(s) Section 6.01 of the Existing Credit Agreement is hereby amended by deleting the reference to “and” at the end of subsection (o) thereof, replacing the period at the end of subsection (p) thereof with “; and” and inserting a new subsection (q) thereof, which shall read as follows:

 

“(q)           Indebtedness of the Borrowers consisting of Guarantees, letters of credit or similar instruments issued in support of the obligations of NAC International, Inc. and set forth on Schedule 6.01(q) attached hereto, provided that the NAC Purchaser shall have assumed and agreed to perform, or indemnified the Borrowers for any and all payments made by the Borrowers in respect of, such Indebtedness pursuant to the NAC Sale Agreement.”

 

(t) Section 6.03(c)(ii) of the Existing Credit Agreement is hereby amended by deleting such Section 6.03(c)(ii) in its entirety and substituting the following therefor:

 

“(ii)           sell or otherwise dispose of worn out, obsolete, scrap or surplus assets (including without limitation, ACP Property) not to exceed $10,000,000 in the aggregate in any fiscal year;”

 

(u) Section 6.03(c)(x) of the Existing Credit Agreement is hereby amended by deleting such Section 6.03(c)(x) in its entirety and substituting the following therefor:

 

“(x)           transfer or dispose of assets (excluding (A) any inventory, accounts receivable or other Collateral (provided that the Administrative Agent may, in its Permitted Discretion, permit Collateral other than inventory, accounts receivable, or Equity Interests in Enrichment or any Guarantor constituting a Material Subsidiary to be transferred or disposed of pursuant to this Section 6.03(c)(x), subject to the limitations set forth below in this Section 6.03(c)(x)), (B) any Equity Interests in Enrichment or any Guarantor constituting a Material Subsidiary and (C) any ACP Property, ACP Grant Purchased Property, ACP Transferred Property or Equity Interests of an ACP Company) for which the Net Proceeds received by any Borrower or any Restricted Subsidiary, when added to the aggregate Net Proceeds of all such dispositions made during that fiscal year, does not exceed an amount equal to 2.5% of the book value of consolidated total assets of Holdings and its Restricted Subsidiaries as of the last day of the immediately preceding fiscal year and which does not result in a Material Adverse Effect;”

 

(v) Section 6.04(q) of the Existing Credit Agreement is hereby amended by deleting such Section 6.04(q) in its entirety and substituting the following therefor:

 

“(q)           Investments consisting of Guarantees, letters of credit or similar instruments issued in support of obligations of NAC International, Inc. and set forth on Schedule 6.01(q) attached hereto, provided that the NAC Purchaser shall have assumed and agreed to perform, or indemnified the Borrowers for any and all payments made by the Borrowers in respect of, such Investments pursuant to the NAC Sale Agreement.”

 

(w) Section 6.05(a) of the Existing Credit Agreement is hereby amended by deleting such Section 6.05(a) in its entirety and substituting the following therefor:

 

“(a)           The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, directly or indirectly prepay, redeem, purchase, retire, refinance, refund, replace or convert any Funded Indebtedness, except (i) prepayments or redemptions of the Loans and other Indebtedness under the Financing Documents, (ii) refinancings, refundings or replacements of Indebtedness permitted by Section 6.01(m), (iii) conversion of the Convertible Notes or other convertible notes permitted by Section 6.01(j) (or any refinancing, refunding or replacement of the foregoing permitted by Section 6.01(m)) into common stock of Holdings (including, so long as no Default or Event of Default shall have occurred and be continuing, the payment of up to $500,000 in cash in the aggregate from and after the Effective Date in respect of any fractional shares remaining after such conversion), and (iv) as otherwise expressly permitted under Section 6.06; and provided that nothing herein shall prohibit the Borrowers or any Restricted Subsidiary from making regularly scheduled payments of principal, interest and fees (or any mandatory prepayment in respect of any Casualty Event or asset sale permitted under this Agreement) in respect of any Indebtedness (other than Subordinated Indebtedness) permitted under Section 6.01.”

 

(x) Section 6.09 of the Existing Credit Agreement is hereby amended by deleting such Section 6.09 in its entirety and substituting the following therefor:

 

“SECTION 6.09                           Capital Expenditures.  The Borrowers shall not make or incur any Capital Expenditures (other than ACP Expenditures to the extent permitted under Section 6.11 below) in an amount greater than $1,000,000 during the period of twelve (12) consecutive months commencing on January 1, 2013 or any period of twelve (12) consecutive months thereafter.”

 

(y) Section 6.10 of the Existing Credit Agreement is hereby amended by deleting such Section 6.10 in its entirety and substituting the following therefor:

 

“SECTION 6.10                           Collateral Coverage Ratio.  The Borrowers shall not permit the Collateral Coverage Ratio at any time to be less than 2.00 to 1.00.”

 

(z) Section 6.11 of the Existing Credit Agreement is hereby amended by deleting such Section 6.11 in its entirety and substituting the following therefor:

 

“SECTION 6.11                           ACP Expenditures.  Notwithstanding anything to the contrary set forth in this Agreement other than Section 6.12, the Borrowers shall not make any ACP Expenditures, except:

 

(a)           from and after the ACP Grant Start Date, the Borrowers shall be permitted to make ACP Expenditures to the extent that, as of any date, the aggregate amount of such ACP Expenditures does not exceed 110% of the amount of ACP Expenditures anticipated to be made by the Borrowers through the end of the month in which such date occurs pursuant to the budget included in the definitive documentation between the Borrowers and the DOE relating to the ACP Grant; provided that:

 

(i)  if, at any time, the difference between (A) 80% of the aggregate amount of ACP Expenditures made by the Borrowers after the ACP Grant Start Date and (B) the aggregate amount of ACP Grant Proceeds actually received by the Borrowers after the ACP Grant Start Date, exceeds $50,000,000, the Borrowers shall not make any further ACP Expenditures unless and until such time as the Borrowers have received ACP Grant Proceeds in an amount sufficient to cause the difference between (1) 80% of the aggregate amount of ACP Expenditures made by the Borrowers after the ACP Grant Start Date and (2) the aggregate amount of ACP Grant Proceeds actually received by the Borrowers after the ACP Grant Start Date to be less than $50,000,000 (it being acknowledged and agreed that the transfer by the DOE of SWU pursuant to the 2013 DOE SWU Transfer Agreement shall be deemed to constitute the delivery of ACP Grant Proceeds with a value equal to the 2013 DOE SWU Agreed Value, notwithstanding that the actual fair market value of such transferred SWU may be less than the 2013 DOE SWU Agreed Value);

 

(ii)   in no event shall the aggregate amount of ACP Expenditures made by the Borrowers from and after the ACP Grant Start Date exceed $375,000,000;

 

(iii)  in no event shall the aggregate amount of ACP Expenditures made by the Borrowers from and after the ACP Grant Start Date for which the Borrowers are not entitled to receive reimbursement in the form of ACP Grant Proceeds exceed the lesser of (A) $75,000,000 and (B) an amount equal to 20% of the aggregate amount of ACP Expenditures made by the Borrowers from and after the ACP Grant Start Date; and

 

(iv) the Borrowers shall not make ACP Expenditures in an aggregate amount in excess of $20,000,000 for the Government Share for which the DOE has not yet obligated funds in cash (including the release of cash pledged to secure (x) surety bonds, (y) letters of credit or (z) other like instruments) or pursuant to the 2013 DOE SWU Transfer Agreement (at any time, the amount of ACP Expenditures for the Government Share made by the Borrowers for which the DOE has not yet obligated funds in cash (including the release of cash pledged to secure (x) surety bonds, (y) letters of credit or (z) other like instruments) or pursuant to the 2013 DOE SWU Transfer Agreement being referred to herein as the “Excess ACP Expenditure Amount”);

 

(b)           notwithstanding anything to the contrary set forth herein, (x) if the DOE Transfer Event shall have occurred, then the Borrowers shall not be permitted to use any proceeds of the Revolving Loans for additional ACP Expenditures, except that to the extent such ACP Expenditures are required by law and no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrowers may use up to $5,000,000 of the proceeds of Revolving Loans for such ACP Expenditures, and (y) if a Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrowers shall not be permitted to use any proceeds of the Revolving Loans for additional ACP Expenditures without the prior written consent of the Administrative Agent and the Required Revolving Lenders;

 

(c)           if the ACP Demobilization shall have occurred, the Borrowers shall be permitted to make ACP Demobilization Expenditures; provided that, as of any date, the aggregate amount of ACP Demobilization Expenditures shall not exceed 110% of the estimated amount of such expenditures through the end of the month in which such date occurs as set forth in the ACP Demobilization Expenditure Plan; and

 

(d)           in addition to the amounts permitted under clause (a) above, the Borrowers may make additional ACP Expenditures not covered under the ACP Grant documentation or to which the Borrowers are not entitled to reimbursement from the United States Federal Government; provided, that the aggregate amount of all ACP Expenditures made pursuant to this clause (d) (i) prior to the Third Amendment Date shall not exceed $950,000 and (ii) from and after the Third Amendment Date, shall not exceed $750,000.”

 

(aa) Section 9.03(a) of the Existing Credit Agreement is hereby amended by deleting subsection (ii) of such Section 9.03(a) in its entirety and substituting the following therefor:

 

“(ii)           field examinations and the preparation of Reports based on the fees charged by a third party retained by the Administrative Agent or the internally allocated fees for each Person employed by the Administrative Agent with respect to each field examination; provided that that up to two field examinations will be conducted each year unless (x) a Default or Event of Default shall have occurred and be continuing (in which case there shall be no limitation on the number or frequency of field examinations) or (y) Availability shall fall below an amount equal to $25,000,000 (in which case, during the period from the date that Availability fell below such amount and continuing until the ninetieth (90th) consecutive day on which Availability exceeds $25,000,000, there shall be no limitation on the number or frequency of field examinations);”

 

(bb) Effective immediately upon the Term Loan Prepayment, (i) each provision of the Credit Agreement which would require the vote of all or any portion of the Term Lenders (voting either as a separate class or together with all or any portion of the Revolving Lenders) to approve an amendment, waiver, modification or other action shall be deemed to be amended to not require any such Term Lender vote, and (ii) each provision of the Credit Agreement which affords the Term Lenders any special rights or remedies shall have no further force and effect (provided that the Term Lenders shall retain any such right or remedy solely to the extent that the Credit Agreement expressly provides for such right or remedy to survive the payment in full of the Term Loans).

 

(cc) Effective immediately upon the Term Loan Prepayment, the Schedules to the Existing Credit Agreement shall be amended as follows:  (i) Schedule 2.01 thereof shall be amended by deleting such Schedule in its entirety and replacing it with updated Schedule 2.01 attached hereto and (ii) the Schedules to the Existing Credit Agreement shall be further amended by inserting therein new Schedule 6.01(q) in the form of Schedule 6.01(q) attached hereto.

 

6. Amendment to Security Agreement.  Subject to the satisfaction of the terms and conditions set forth in Section 8 hereof and in reliance on the representations set forth in Section 7 hereof, the Security Agreement is hereby amended, effective concurrently with the consummation of the NAC Sale Transaction, by deleting such Annex H thereof in its entirety and replacing it with updated Annex H attached hereto.

 

7. No Default; Representations and Warranties, etc.  Each of the Borrowers represents and warrants to the Lenders and the Administrative Agent that, after giving effect to this Amendment, as of the date hereof (a) the representations and warranties of the Credit Parties contained in Article III of the Existing Credit Agreement are true and correct in all material respects as of the date hereof as if made on such date (except to extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such date); (b) the Borrowers are in compliance in all material respects with all of the terms and provisions set forth in the Credit Agreement and the other Financing Documents to be observed or performed by them thereunder; (c) no Default or Event of Default has occurred and is continuing; and (d) the execution, delivery and performance by the Borrowers of this Amendment (i) have been duly authorized by all necessary corporate and, if required, shareholder action on the part of the Borrowers, (ii) will not violate any applicable law or regulation applicable to the Borrowers or the organizational documents of any Borrower, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding on any Borrower or any of its assets and (iv) do not require any consent, waiver or approval of or by any Person (other than the Administrative Agent and the Revolving Lenders) which has not been obtained.

 

8. Conditions Precedent.  The effectiveness of this Amendment shall be conditioned upon the satisfaction of the following conditions precedent:

 

(a) Counterparts of Amendment:  The Administrative Agent shall have received counterparts of this Amendment signed on behalf of the Borrowers and the Revolving Lenders and a counterpart of the Ratification of Guarantee attached hereto signed on behalf of NAC International Inc., as Guarantor (which counterparts may be delivered by telecopy or electronic transmission of a pdf of a signed signature page to this Amendment or such Ratification of Guarantee, as applicable).

 

(b)           Cash Collateralization of Letters of Credit.  The Borrowers shall have delivered to the Administrative Agent cash collateral for the LC Exposure in an amount not less than 105% of the LC Exposure, which cash collateral shall be deposited in the LC Collateral Account and held as collateral for the LC Exposure and other Secured Obligations in accordance with Section 2.04(j) of the Credit Agreement.

 

(c)           Minimum Availability.  After giving effect to Term Loan Prepayment, Availability (calculated based on the Borrowing Base Certificate most recently delivered by the Borrowers to the Administrative Agent) shall be not less than $35,000,000.

 

(d)           Fees and Expenses.  The Borrowers shall have paid all fees and other amounts due and payable to the Administrative Agent and its counsel and the Lenders in connection with this Amendment, including, (i) the fees described in that certain Fee Letter dated as of February 20, 2013 between the Borrowers and the Administrative Agent, and (ii) to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers under the Credit Agreement.

 

(e)           Other Documents:  The Administrative Agent shall have received such other documents from the Credit Parties as the Administrative Agent shall reasonably request in connection herewith prior to the execution of this Amendment by the Borrowers, all of which shall be satisfactory in form and substance to the Administrative Agent.

 

9. RELEASE.  EACH CREDIT PARTY HEREBY ACKNOWLEDGES AND AGREES THAT:  (A) NEITHER IT NOR ANY OF ITS AFFILIATES HAS ANY CLAIM OR CAUSE OF ACTION AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER (OR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, CONSULTANTS OR AGENTS) AND (B) THE ADMINISTRATIVE AGENT AND EACH LENDER HAS HERETOFORE PROPERLY PERFORMED AND SATISFIED IN A TIMELY MANNER ALL OF ITS OBLIGATIONS TO SUCH CREDIT PARTY AND ITS AFFILIATES UNDER THE CREDIT AGREEMENT AND THE OTHER FINANCING DOCUMENTS.  NOTWITHSTANDING THE FOREGOING, THE ADMINISTRATIVE AGENT AND THE LENDERS WISH (AND EACH CREDIT PARTY AGREES) TO ELIMINATE ANY POSSIBILITY THAT ANY PAST CONDITIONS, ACTS, OMISSIONS, EVENTS OR CIRCUMSTANCES WOULD IMPAIR OR OTHERWISE ADVERSELY AFFECT ANY OF THE ADMINISTRATIVE AGENT'S AND THE LENDERS' RIGHTS, INTERESTS, SECURITY AND/OR REMEDIES UNDER THE CREDIT AGREEMENT AND THE OTHER FINANCING DOCUMENTS.  ACCORDINGLY, FOR AND IN CONSIDERATION OF THE AGREEMENTS CONTAINED IN THIS AMENDMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, EACH CREDIT PARTY (FOR ITSELF AND ITS AFFILIATES AND THE SUCCESSORS, ASSIGNS, HEIRS AND REPRESENTATIVES OF EACH OF THE FOREGOING) (COLLECTIVELY, THE "RELEASORS") DOES HEREBY FULLY, FINALLY, UNCONDITIONALLY AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, CONSULTANTS AND AGENTS (COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY AND ALL DEBTS, CLAIMS, OBLIGATIONS, DAMAGES, COSTS, ATTORNEYS' FEES, SUITS, DEMANDS, LIABILITIES, ACTIONS, PROCEEDINGS AND CAUSES OF ACTION, IN EACH CASE, WHETHER KNOWN OR UNKNOWN, CONTINGENT OR FIXED, DIRECT OR INDIRECT, AND OF WHATEVER NATURE OR DESCRIPTION, AND WHETHER IN LAW OR IN EQUITY, UNDER CONTRACT, TORT, STATUTE OR OTHERWISE, WHICH ANY RELEASOR HAS HERETOFORE HAD OR NOW OR HEREAFTER CAN, SHALL OR MAY HAVE AGAINST ANY RELEASED PARTY BY REASON OF ANY ACT, OMISSION OR THING WHATSOEVER DONE OR OMITTED TO BE DONE ON OR PRIOR TO THE DATE HEREOF ARISING OUT OF, CONNECTED WITH OR RELATED IN ANY WAY TO THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR ANY ACT, EVENT OR TRANSACTION RELATED OR ATTENDANT THERETO, OR THE AGREEMENTS OF THE ADMINISTRATIVE AGENT OR ANY LENDER CONTAINED THEREIN, OR THE POSSESSION, USE, OPERATION OR CONTROL OF ANY OF THE ASSETS OF EACH CREDIT PARTY, OR THE MAKING OF ANY LOANS OR OTHER ADVANCES, OR THE MANAGEMENT OF SUCH LOANS OR ADVANCES OR THE COLLATERAL ON OR PRIOR TO THE DATE HEREOF.

 

10. Miscellaneous.

 

(a) The Borrowers, the Lenders and the Administrative Agent hereby ratify and confirm the terms and provisions of the Credit Agreement and the other Financing Documents and agree that, except to the extent specifically amended hereby, the Credit Agreement, the other Financing Documents and all related documents shall remain in full force and effect.  Nothing contained herein shall constitute a waiver of any provision of the Financing Documents.

 

(b) The Borrowers agree to pay all reasonable and documented expenses, including legal fees and disbursements, incurred by the Administrative Agent in connection with this Amendment and the transactions contemplated thereby.

 

(c) This Amendment may be executed in any number of counterparts (including by way of facsimile transmission), each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument.

 

(d) This Amendment shall be governed by the laws of the State of New York and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.

 

BORROWERS:

 

USEC INC.

 

By /s/ John C. Barpoulis                                                                                

 

Name: John C. Barpoulis

 

Title:   Senior Vice President & Chief Financial Officer

 

UNITED STATES ENRICHMENT CORPORATION

 

By: /s/ John C. Barpoulis                                                                                

 

Name: John C. Barpoulis

 

Title:   Senior Vice President & Chief Financial Officer

 

  

  

  

ADMINISTRATIVE AGENT:

 

JPMORGAN CHASE BANK, N.A., as Administrative and Collateral Agent

 

By:/s/ Dan Bueno                                                                                

 

Name: Dan Bueno

 

Title:  Vice President

 

LENDERS:

 

JPMORGAN CHASE BANK, N.A., as Revolving Lender

 

By:/s/ Dan Bueno                                                                                           

 

Name: Dan Bueno

 

Title:  Vice President

 

WELLS FARGO CAPITAL FINANCE, LLC, as Revolving Lender

 

By:/s/ Mark Bradford                                                                                           

 

Name: Mark Bradford

 

Title:  Vice President

 

ALLY COMMERCIAL FINANCE LLC, as Revolving Lender

 

By:/s/ Michael Malcangi                                                                                

 

Name: Michael Malcangi

 

Title:  Director

 

FIRST NIAGARA COMMERCIAL FINANCE, INC. a wholly-owned subsidiary of First Niagara Bank, N.A., as Revolving Lender

 

By:/s/ Michael Schwartz                                                                                

 

Name:  Michael Schwartz

 

Title:  Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}]]