Document:

Exhibit 10.4

 

Highly Confidential

 

December 30, 2012

 

LodgeNet Interactive Corporation

3900 West Innovation Street

Sioux Falls, South Dakota 57101

Attention: Chief Financial Officer

 

COMMITMENT LETTER

 

Ladies and Gentlemen:

 

LodgeNet Interactive Corporation, a Delaware corporation (the “Borrower”), has advised the undersigned banks and other financial institutions or entities (each an “Initial Lender” and, collectively the “Initial Lenders”) and Gleacher Products Corp. (in its capacity as administrative agent, the “Administrative Agent”), that the Borrower, together with all of its direct and indirect domestic subsidiaries (collectively, the “Guarantors”), are considering filing voluntary petitions for relief (the “Cases”) under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), and that the Borrower desires to establish a $30 million senior secured superpriority credit facility on terms and conditions substantially consistent with those set forth in the attached term sheet (the “Term Sheet”) for the Borrower as a debtor-in-possession pursuant to the Bankruptcy Code (the “DIP Facility”).  The obligations of the Borrower under the DIP Facility will be guaranteed by the Guarantors.

 

Section 1.  Commitments.  In connection with the foregoing, and subject to the terms and conditions set forth herein and the Term Sheet (collectively, and together with the Fee Letter referred to below, this “Commitment Letter”), you have requested that each Initial Lender commit, severally and not jointly, to provide, to the Borrower, the amount of the Delayed Draw Term Facility set forth on Schedule I hereto.

 

Based on the foregoing, each Initial Lender is pleased to confirm its several and not joint commitment to provide, or cause one or more of its affiliates (or any investment advisory client managed or advised by such Initial Lender) to provide, to the Borrower, the amount of the Delayed Draw Term Facility set forth on Schedule I hereto; provided that each such commitment shall be reduced on a pro rata basis (based on the commitments set forth on Schedule I) to the extent any lenders under that certain Credit Agreement, dated April 4, 2007, among the Borrower, the lenders from time to time party thereto (the “Prepetition Lenders”), and Gleacher Products Corp., as administrative agent (other than the Initial Lenders) elect to participate in the Delayed Draw Term Facility.

 

The rights and obligations of each of the Initial Lenders under this Commitment Letter shall be several and not joint, and no failure of any Initial Lender to comply with any of its obligations hereunder shall prejudice the rights of any other Initial Lender; provided that no Initial Lender shall be required to fund the commitment of another Initial Lender in the event such other Initial Lender fails to do so (the “Breaching Party”), but may at its option do so, in whole or in part, in which case such performing Initial Lender shall be entitled to all or a proportionate share, as the case may be, of the DIP Facility and related fees that would otherwise be issued to the Breaching Party.

 

Notwithstanding the foregoing, no such funding by an Initial Lender of the portion of the DIP Facility not funded by a Breaching Party shall constitute a waiver by the Borrower of such failure to fund by 

 

 

such Breaching Party of its obligations under this Commitment Letter, and the Borrower shall retain all rights and remedies available under law or in equity against such Breaching Party for its failure to perform its commitments and obligations hereunder.

 

Section 2.  Conditions Precedent.  The Initial Lenders’ commitment and other obligations hereunder are subject to: (i) the preparation, execution and delivery of mutually acceptable loan documentation, including without limitation, a credit agreement, security agreements, guaranties and other agreements, incorporating substantially the terms and conditions outlined in this Commitment Letter and otherwise reasonably satisfactory to the Initial Lenders and the Borrower (the “DIP Loan Documents”); (ii) the accuracy and completeness in all material respects of all representations that the Borrower makes to the Initial Lenders and all Information (as defined below) that the Borrower furnishes to the Initial Lenders; (iii) the Borrower’s compliance with the terms of this Commitment Letter, including without limitation, the payment in full when due of all fees, expenses and other amounts payable under this Commitment Letter and the Fee Letter; and (iv) the satisfaction of the other conditions precedent to the initial extension of credit under the DIP Facility contained in the Term Sheet.  You and we each agree to diligently negotiate in good faith to finalize the DIP Loan Documents following the execution and delivery of this Commitment Letter.

 

Section 3.  Commitment Termination.  The Initial Lenders’ commitment and other obligations set forth in this Commitment Letter will terminate on the earlier of (a) the date the DIP Loan Documents become effective, (b) the date the Plan Support Agreement (as defined in the Term Sheet) is terminated and (c) February 5, 2013.  Notwithstanding the foregoing, the termination of the Initial Lenders’ commitment and other obligations hereunder will not affect Sections 4 through 12, which provisions will survive any such termination.

 

Section 4.  Fees.  In addition to the fees described in the Term Sheet, the Borrower will pay the non-refundable fees set forth in the letter agreement dated the date hereof (the “Fee Letter”) between the Borrower, the Initial Lenders and the Administrative Agent.  The terms of the Fee Letter are an integral part of the Initial Lenders’ commitment and other obligations hereunder and constitute part of this Commitment Letter for all purposes hereof.

 

Section 5.  Indemnification.  The Borrower agrees to indemnify and hold harmless each of the Initial Lenders and the Administrative Agent and each of their affiliates and each of their respective officers, directors, employees, agents, advisors and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including without limitation, reasonable and properly documented legal fees and disbursements of outside counsel), that may be incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith), in each case, arising out of or in connection with or by reason of this Commitment Letter or the DIP Loan Documents or the transactions contemplated hereby or thereby or any actual or proposed use of the proceeds of the DIP Facility, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity will be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its directors, security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.

 

No Indemnified Party will have any liability (whether in contract, tort or otherwise) to the Borrower or any of its affiliates or any of their respective security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s 

 

 

gross negligence or willful misconduct.  In no event, however, will any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages (including without limitation, any loss of profits, business or anticipated savings).

 

Section 6.  Costs and Expenses.  The Borrower will pay, or reimburse the Initial Lenders and Administrative Agent on demand for, all reasonable out-of-pocket costs and expenses incurred by the Initial Lenders or Administrative Agent (whether incurred before or after the date hereof) in connection with the DIP Facility and the preparation, negotiation, execution and delivery of this Commitment Letter, including without limitation, the reasonable and properly documented fees and expenses of outside legal counsel, regardless of whether any of the transactions contemplated hereby are consummated (but limited, in the case of legal fees and disbursements, to one counsel to the Initial Lenders and the Administrative Agent, taken as a whole, and, solely in the case of a conflict of interest, one additional counsel to the Initial Lenders and the Administrative Agent, taken as a whole (and, if reasonably necessary, of one local counsel in any relevant material jurisdiction to all such persons, taken as a whole)).  The Borrower will also pay all out-of-pocket costs and expenses of the Initial Lenders and Administrative Agent (including without limitation, the fees and disbursements of outside counsel) incurred in connection with the enforcement of any of its rights and remedies under this Commitment Letter.

 

Section 7.  Confidentiality. By accepting delivery of this Commitment Letter, the Borrower agrees that this Commitment Letter is for the Borrower’s confidential use only and that neither its existence nor its terms will be disclosed by the Borrower to any person; provided that this Commitment Letter and its terms, other than the Fee Letter and its contents (except as otherwise set forth in the Fee Letter), may be disclosed by the Borrower to (i) (A) the Borrower’s affiliates and its and their respective officers, directors, employees, advisors, agents and representatives (the “Borrower Representatives”) and (B) Colony Capital, LLC and its affiliates and its and their respective officers, directors, employees, advisors, agents and representatives on a confidential basis in connection with the transactions contemplated hereby and (ii) the Prepetition Lenders and their respective officers, directors, employees, advisors, agents and representatives, which in each case have agreed to maintain this Commitment Letter and its terms on a confidential basis, only on a confidential and “need to know” basis in connection with the transactions contemplated hereby; provided, further, that the Borrower may make such public disclosures of the terms and conditions hereof (other than the Fee Letter and its contents (except as otherwise set forth in the Fee Letter)) (i) as the Borrower is required by law or compulsory legal process, under advice of the Borrower’s counsel, to make and (ii) in connection with its press releases to the public announcing the proposed transactions with Colony Capital, LLC and its affiliates.  Notwithstanding the foregoing, the parties hereto agree that the Borrower shall be permitted to disclose the Fee Letter and its contents to the Bankruptcy Court in connection with the Cases to the extent advised by the Borrower’s counsel that such disclosure is necessary or appropriate.

 

Section 8.  Representations and Warranties of the Borrower.  The Borrower represents and warrants that (i) all information, other than Projections (as defined below) and information of a general economic or industry nature, that has been or will hereafter be made available to the Initial Lenders or Administrative Agent by the Borrower or any Borrower Representatives in connection with the transactions contemplated hereby (the “Information”), when taken as a whole, is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein (after giving effect to all supplements and updates from time to time) not materially misleading, in light of the circumstances under which such statements were or are made and (ii) all financial projections, if any, that have been or will be prepared by the Borrower or any Borrower Representatives and made available to the Initial Lenders, any Lender, any potential Lender or the Administrative Agent (the “Projections”) have been or will be prepared in good faith based upon assumptions that are or were believed in good faith by the Borrower to be reasonable as of the date of the preparation of such Projections (it being understood that the Projections are not to be viewed as facts and are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, that no assurance can be given that the Projections will be realized, that 

 

 

actual results may differ from projected results and such differences may be material).  The Borrower agrees to supplement the Information and/or Projections from time to time until the Closing Date so that the representations and warranties in the preceding sentence are correct in all material respects on the Closing Date as if the Information and/or Projections were being furnished, and such representations and warranties were being made, on such date.

 

In providing this Commitment Letter and in arranging the DIP Facility, the Initial Lenders are relying on the accuracy of the Information furnished to it by or on behalf of the Borrower or any Borrower Representatives without independent verification thereof.

 

Section 9.  No Third Party Reliance, Not a Fiduciary, Etc.  The agreements of the Initial Lenders hereunder are made solely for the benefit of the Borrower and may not be relied upon or enforced by any other person.  Please note that those matters that are not covered or made clear herein are subject to mutual agreement of the parties.  No party to this Commitment Letter may assign or delegate any of its rights or obligations hereunder (other than any assignment or delegation to any other Prepetition Lender or its affiliates) without the prior written consent of the other parties hereto.  This Commitment Letter may not be amended or modified, or any provision hereof waived, except by a written agreement signed by all parties hereto.

 

The Borrower hereby acknowledges that the Initial Lenders are acting pursuant to a contractual relationship on an arm’s length basis, and the parties hereto do not intend that the Initial Lenders act or be responsible as a fiduciary to the Borrower, its management, stockholders, creditors or any other person.  Each of the Borrower and the Initial Lenders hereby expressly disclaims any fiduciary relationship and agrees they are each responsible for making their own independent judgments with respect to any transactions entered into between them. The Borrower also hereby acknowledges that the Initial Lenders have not advised and are not advising the Borrower as to any legal, accounting, regulatory or tax matters, and that the Borrower is consulting its own advisors concerning such matters to the extent it deems appropriate.

 

The Borrower understands that the Initial Lenders and their affiliates (collectively, the “Group”) are engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research).  Members of the Group and businesses within the Group generally act independently of each other, both for their own account and for the account of clients.  Accordingly, there may be situations where parts of the Group and/or their clients either now have or may in the future have interests, or take actions, that may conflict with the Borrower’s interests.  For example, the Group may, in the ordinary course of business, engage in trading in financial products or undertake other investment businesses for their own account or on behalf of other clients, including without limitation, trading in or holding long, short or derivative positions in securities, loans or other financial products of the Borrower or its affiliates or other entities connected with the DIP Facility or the transactions contemplated hereby.

 

In recognition of the foregoing, the Borrower agrees that the Group is not required to restrict its activities as a result of this Commitment Letter and that the Group may undertake any business activity without further consultation with or notification to the Borrower.  Neither this Commitment Letter nor the receipt by the Initial Lenders of confidential information nor any other matter will give rise to any fiduciary, equitable or contractual duties (including without limitation, any duty of trust or confidence) that would prevent or restrict the Group from acting on behalf of other customers or for its own account.  Furthermore, the Borrower agrees that neither the Group nor any member or business of the Group is under a duty to disclose to the Borrower or use on behalf of the Borrower any information whatsoever about or derived from those activities or to account for any revenue or profits obtained in connection with such activities.  However, consistent with the Group’s long-standing policy to hold in confidence the affairs of its customers, the Group will not use confidential information obtained from the Borrower 

 

 

except in connection with its services to, and its relationship with, the Borrower, provided, however, that the Group will be free to disclose information in any manner as required by law, regulation, regulatory authority or other applicable judicial or government order.

 

Section 10.  Governing Law, Etc.  This Commitment Letter will be governed by, and construed in accordance with, the law of the State of New York.  This Commitment Letter sets forth the entire agreement between the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto.  This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, will be deemed to be an original and all of which, taken together, will constitute one and the same Commitment Letter.  Delivery of an executed counterpart of a signature page to this Commitment Letter by telecopier or electronic transmission will be as effective as delivery of an original executed counterpart of this Commitment Letter.

 

Section 11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

Section 12.  Consent to Jurisdiction, Etc.  The Borrower irrevocably and unconditionally (i) (A) prior to the filing of the Bankruptcy Cases, submits to the non-exclusive jurisdiction of any New York State or Federal court located in the City of New York and (B) after the filing of the Bankruptcy Cases, submits to the exclusive jurisdiction of any Bankruptcy Court presiding over the Bankruptcy Cases submits to the non-exclusive jurisdiction of any New York State or Federal court located in the City of New York over any suit, action or proceeding arising out of or relating to this Commitment Letter, (ii) accepts for itself and in respect of its property the jurisdiction of such courts, (iii) waives any objection to the laying of venue of any such suit, action or proceeding brought in any such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum and (iv) consents to the service of any process, summons, notice or document in any such suit, action or proceeding by registered mail addressed to the Borrower at its address specified on the first page of this Commitment Letter.  A final judgment in any such suit, action or proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing herein will affect the right of the Initial Lenders to serve legal process in any other manner permitted by law or affect the Initial Lenders’ right to bring any suit, action or proceeding against the Borrower or its property in the courts of other jurisdictions.  To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower irrevocably waives such immunity in respect of its obligations under this Commitment Letter.

 

Section 13.  Patriot Act Compliance.  The Initial Lenders hereby notify the Borrower that pursuant to the requirements of the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Initial Lenders to identify the Borrower in accordance with the Patriot Act.  In that connection, the Initial Lenders may also request corporate formation documents, or other forms of identification, to verify information provided.

 

Please indicate the Borrower’s acceptance of the provisions hereof by signing the enclosed copy of this Commitment Letter and the Fee Letter and returning them, at or before 5 p.m. (New York City time) on December 31, 2012, the time at which the Initial Lender’s commitment and other obligations hereunder (if 

 

 

not so accepted prior thereto) will terminate.  If the Borrower elects to deliver this Commitment Letter by telecopier or electronic transmission, please arrange for the executed original to follow by next-day courier.

 

[Signature Pages to Follow]

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
,
    
	
 
    	
as   Initial Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
				

 

[Signature Page to Commitment Letter]

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GLEACHER   PRODUCTS CORP.,
    
	
 
    	
as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Joanna Anderson
    
	
 
    	
Name:  Joanna Anderson
    
	
 
    	
Title:  Authorized Signatory
    

 

[Signature Page to Commitment Letter]

 

 

	
ACCEPTED   AND AGREED
    	
 
    
	
on                       ,           :
    	
 
    
	
 
    	
 
    
	
LODGENET   INTERACTIVE CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   James G. Naro
    	
 
    
	
 
    	
Name:  James G. Naro
    	
 
    
	
 
    	
Title:  Senior Vice President and General Counsel
    	
 
    

 

[Signature Page to Commitment Letter]

 

 

SCHEDULE I

 

COMMITMENTS

 

REDACTED

 

 

LODGENET INTERACTIVE CORPORATION

 

SENIOR SECURED DEBTOR IN POSSESSION CREDIT FACILITY(1)

 

SUMMARY OF TERMS AND CONDITIONS

 

	
Borrower:
    	
 
    	
LodgeNet   Interactive Corporation, a Delaware corporation (the “Borrower”),   as a debtor and debtor in possession in a case (the “Borrower’s   Case”) under chapter 11 of title 11 of the United States Code (the   “Bankruptcy Code”) to be filed in the   United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
All   of the Borrower’s direct and indirect domestic subsidiaries (and not, for the   avoidance of doubt, any foreign subsidiaries) (collectively, the “Guarantors”), each of which will be a debtor and a debtor   in possession in cases (collectively, the “Guarantors’   Cases” and, together with the Borrower’s Case, the “Cases”) under chapter 11 of the Bankruptcy Code filed   contemporaneously and jointly administered with the Borrower’s Case. The   Borrower and the Guarantors are referred to herein as “Loan   Parties” and each, a “Loan Party”.   All obligations of the Borrower under the DIP Facility will be   unconditionally guaranteed by the Guarantors.
    
	
 
    	
 
    	
 
    
	
Lenders:
    	
 
    	
Certain   lenders party to that certain Credit Agreement, dated as of April 4,   2007 (as amended, restated, amended and restated, supplemented or otherwise   modified, the “Prepetition Credit Agreement”)   or their affiliates that subscribe to a commitment under the DIP Facility   (the “Lenders”).(2)
    
	
 
    	
 
    	
 
    
	
Administrative   Agent:
    	
 
    	
Gleacher   Products Corp. (the “Administrative Agent”).
    
	
 
    	
 
    	
 
    
	
DIP Facility:
    	
 
    	
A   senior secured credit facility of non-amortizing term loans in an aggregate   principal amount of up to $30,000,000 (the “DIP   Facility”), comprised of (A) a $15,000,000 delayed draw term   loan facility (the “Delayed Draw Term   Facility”) of which (i) a principal amount of up to   $7,500,000 will be available to be drawn at Closing and (ii) an   additional principal amount of up to $7,500,000 will be available to be drawn   under the Delayed Draw Term Facility on the date of entry of the Final Order   and (B) a dollar for dollar roll up of loans of each Lender and/or its   affiliates and/or its designees under the Prepetition Credit 
    

 

(1)  This term sheet reflects a DIP Credit Facility in a prepak Chapter 11.

(2)  Back-stop mechanics to be discussed, including consent rights of back-stop parties (the “Back-Stop Parties”).

 

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Agreement   up to the commitment amount of each Lender (the “Roll-Up   Loans”). The loans under the Delayed Draw Facility (the “Delayed Draw Term Loans” and together with the Roll-Up   Loans, the “DIP Loans”)) may be drawn in   minimum amounts of $2,500,000 and in increments of $500,000 in excess thereof   and such loans shall be denominated in US Dollars.
    
	
 
    	
 
    	
 
    
	
DIP   Facility Termination Date:
    	
 
    	
All   DIP Loans shall become due and payable on the DIP Facility Termination Date; provided,   however, that so long as the Plan Support Agreement has not been   terminated, instead of repayment in cash on the DIP Facility Termination   Date, the Roll-Up Loans (and all interest accrued thereon during the   bankruptcy case) will be deemed to be outstanding under the terms of the exit   credit facility on the DIP Facility Termination Date and paid in accordance   therewith. The “DIP Facility Termination Date”   shall be the earliest of (a) the Scheduled Termination Date, (b) 30   days after the entry of the Interim Order (as defined below) if the Final   Order (as defined below) has not been entered prior to the expiration of such   30-day period, (c) the consummation of any Section 363 sale,   (d) the substantial consummation (as defined in section 1101 of the   Bankruptcy Code and which for purposes hereof shall be no later than the   “effective date”) of a plan of reorganization filed in the Cases that is   confirmed pursuant to an order entered by the Bankruptcy Court and   (e) the acceleration of the loans and the termination of the commitment   with respect to the DIP Facility in accordance with the DIP Loan Documents.

 

“Scheduled Termination Date” means the date that is 180   days after the commencement of the Cases.
    
	
 
    	
 
    	
 
    
	
Purpose:
    	
 
    	
In   accordance with a budget reasonably acceptable to the Lenders (the “Budget”), proceeds of the Delayed Draw Term Loans will be   used for general corporate purposes of the Loan Parties during the Cases   (including payment of fees and expenses in connection with the transactions   contemplated hereby, adequate protection payments as set forth on Annex I   attached hereto (such adequate protection payments, the “Adequate   Protection Payments”) and working capital), certain transaction   fees, costs and expenses and certain other costs and expenses with respect to   the administration of the Cases.
    
	
 
    	
 
    	
 
    
	
DIP   Loan Documents:
    	
 
    	
The   DIP Facility will be documented by a Senior Secured Credit Agreement (the “DIP Credit Agreement”) and other guarantee, security and   other relevant documentation
    

 

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(together   with the DIP Credit Agreement, collectively, the “DIP Loan   Documents”) reflecting the terms and provisions set forth in this   term sheet and otherwise in form and substance reasonably satisfactory to the   Lenders.
    
	
 
    	
 
    	
 
    
	
Interest   Rates:
    	
 
    	
Delayed   Draw Term Loans will bear interest at LIBOR plus 7.00% with a LIBOR floor of   1.50%. The Roll-Up Loans will continue to bear interest at the rates provided   under the Prepetition Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Default   Interest:
    	
 
    	
During   the continuance of an event of default (as defined in the DIP Loan   Documents), Delayed Draw Term Loans will bear interest at an additional 2% per annum.
    
	
 
    	
 
    	
 
    
	
Optional   Prepayments:
    	
 
    	
The   Borrower may, upon at least 3 business days’ notice and (i) at the end   of the interest period with respect thereto or (ii) at any other times   with the payment of applicable breakage costs, prepay in full or in part,   without premium or penalty (other than such breakage costs), the Delayed Draw   Term Loans; provided that each such partial   prepayment shall be in an aggregate amount of $1,000,000 or multiples of   $500,000 in excess thereof (or, if less, the then outstanding principal   amount of the Delayed Draw Term Loans).
    
	
 
    	
 
    	
 
    
	
Mandatory   Prepayments:
    	
 
    	
Mandatory   prepayments of the Delayed Draw Term Loans shall be required with net cash   proceeds from sales or casualty events of any Collateral (excluding sales of   inventory in the ordinary course of business and other exceptions to be   agreed) above a threshold to be agreed.
    
	
 
    	
 
    	
 
    
	
Security   and Priority:
    	
 
    	
All   amounts owing by the Borrower under the DIP Facility and the obligations of   the Guarantors in respect thereof will be secured, subject to a carve-out to   be mutually agreed upon (the “Carve-Out”)   for professional fees and expenses for the Loan Parties and an official   creditors’ committee (and the expenses of members of the official creditors’   committee) not to exceed $1,000,000 incurred after the occurrence and continuation   of a default or event of default under the DIP Facility plus an additional   $50,000 to pay the fees and expenses of the United States Trustee by   (i) a first priority perfected pledge of (x) all promissory notes   owned by the Borrower and the Guarantors and (y) all capital stock owned   by the Borrower and the Guarantors (including 100% of the non-voting capital   stock of their respective first-tier foreign subsidiaries but no more than   65% of the voting capital stock of (A) their respective first-tier foreign   subsidiaries that are classified as controlled foreign corporations under   Section 957 of the Internal Revenue Code (“CFC”)   and (B) entities that are treated as 
    

 

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partnerships   or disregarded entities for United States federal income tax purposes and   substantially all of whose assets consist of capital stock of CFCs, which CFC   stock shall not be pledged) and (ii) a first priority perfected security   interest in all other assets owned by the Borrower and the Guarantors,   including, without limitation, accounts, inventory, equipment, investment   property, instruments, chattel paper, deposit accounts, owned and leased real   estate, contracts, patents, copyrights, trademarks, other general intangibles   and proceeds of avoidance actions, in each case, subject to customary   exclusions to be agreed and the Carve-Out (all aforementioned collateral, the   “Collateral”). 

 

The   liens granted under the DIP Facility will prime and be senior to the liens   and security interests in the Collateral securing the Prepetition Credit   Agreement, and shall be junior only to the Carve Out, valid, perfected,   enforceable and unavoidable liens in existence as of Closing, and to valid,   enforceable and unavoidable liens in existence as of Closing that are   perfected subsequent to Closing as permitted by section 546(b) of the   Bankruptcy Code and to other liens and encumbrances permitted by the DIP Loan   Documents (which will include, but not be limited to, customary permitted   liens, liens securing purchase money financing and capital leases). 

 

In   the Cases, the Lenders will be granted in each of the Interim Order and the   Final Order a superpriority administrative claim under section   364(c)(1) of the Bankruptcy Code for the payment of the obligations   under the DIP Facility with priority above all other administrative claims,   subject to the Carve-Out.
    
	
 
    	
 
    	
 
    
	
Conditions   Precedent to the Initial Extension of Credit:
    	
 
    	
The   initial extension of credit (the “Closing”)   under the DIP Facility shall be subject to the following conditions (and the   conditions set forth under “Conditions Precedent to Each Loan”):
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
A.
    	
All   documentation relating to the DIP Facility shall be in form and substance   consistent with this term sheet and reasonably satisfactory to the   Administrative Agent and its counsel.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B.
    	
The   Cases shall have been commenced by the Borrower and the Guarantors and the   same shall each be a debtor and a debtor in possession. All “first day   orders” entered at the time of commencement of the Bankruptcy Cases shall be   reasonably satisfactory in
    

 

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form   and substance to the Lenders.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
C.
    	
The   Plan Support and Lockup Agreement dated December 30, 2012 (the “Plan Support Agreement”) shall be in full force and effect   as of the Closing and shall not have been amended or modified in any manner   that is materially adverse to the Administrative Agent or the Lenders or   inconsistent with the DIP Loan Documents without the Administrative Agent’s   prior written consent. 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
D.
    	
The   Administrative Agent shall have received a signed copy of an order of the   Bankruptcy Court in substantially the form set forth as an exhibit to the DIP   Loan Documents (the “Interim Order”),   authorizing and approving the making of the DIP Loans and the granting of the   superpriority claims and liens and other liens referred to above under the   heading “Security and Priority”, which Interim   Order shall not have been vacated, reversed, modified, amended or stayed. The   Interim Order and the Final Order shall contain provisions authorizing   Adequate Protection Payments and granting customary adequate protection   claims and liens with respect to the Prepetition Credit Agreement, junior to   the claims and liens granted in connection with the DIP Facility as more   fully described on Annex I attached hereto and shall otherwise be   satisfactory in all respects to the Administrative Agent and its counsel, in   their sole discretion.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
E.
    	
All   reasonable out-of-pocket fees and expenses (including the fees and expenses   of outside counsel) required to be paid to the Administrative Agent and the   Lenders on or before the Closing (limited, in the case of attorneys’ fees to   the reasonable out-of-pocket fees and expenses of one outside counsel to the   Agent and the Lenders, taken as a whole) shall have been paid.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
F.
    	
The   Lenders shall be satisfied in their reasonable judgment that, except as   authorized by the Interim Order, there shall not occur as a result of, and   after giving effect to, the initial extension of credit under the DIP   Facility, a default (or any event which with the giving of notice or lapse of   time or both would be a default) under any of the Borrower’s or the   Guarantors’ debt instruments and other material agreements which would permit   the counterparty thereto to exercise remedies thereunder on a post-petition   basis.
    

 

5

 

	
 
    	
 
    	
G.
    	
The   Administrative Agent shall have received reasonably satisfactory opinions of   counsel to the Borrower and the Guarantors, addressing such matters as the   Lenders shall reasonably request, including, without limitation, the   enforceability of all DIP Loan Documents and other customary matters.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
H.
    	
The   absence of a material adverse change, or any event or occurrence, other than   the commencement of the Cases, which could reasonably be expected to result   in a material adverse change, in (i) the business, condition (financial   or otherwise), operations, performance, properties, contingent liabilities, material   agreements or prospects of the Borrower and the Guarantors, taken as a whole,   since September 30, 2012, (ii) the ability of the Borrower or the   Guarantors to perform their respective material obligations under the DIP   Loan Documents or (iii) the ability of the Administrative Agent and the   Lenders to enforce the DIP Loan Documents (any of the foregoing being a “Material Adverse Change”).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
I.
    	
There   shall exist no action, suit, investigation, litigation or proceeding pending   or (to the knowledge of the Loan Parties) threatened in any court or before   any arbitrator or governmental instrumentality (other than the Cases and any   action, suit, investigation or proceeding arising from the commencement and   continuation of the Cases or the consequences that would normally result from   the commencement and continuation of the Cases) that is not stayed and could   reasonably be expected to result in a Material Adverse Change (any such   action, suit, investigation, litigation or proceeding, a “Material Litigation”).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
J.
    	
All   necessary governmental and third party consents and approvals necessary in   connection with the DIP Facility and the transactions contemplated thereby   shall have been obtained (without the imposition of any materially adverse   conditions that are not reasonably acceptable to the Lenders) and shall   remain in effect; and no law or regulation shall be applicable in the good   faith judgment of the Lenders that restrains, prevents or imposes materially   adverse conditions upon the DIP Facility or the transactions contemplated   thereby.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
K.
    	
Each   Lender who has requested the same shall have received “know your customer”   and similar information; provided that such information is 
    

 

6

 

	
 
    	
 
    	
 
    	
requested   at least 3 business days prior to Closing.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
L.
    	
The   Lenders shall have a valid and perfected first priority lien on and security   interest in the Collateral; the Loan Parties shall have delivered uniform   commercial code financing statements and shall have executed and delivered   intellectual property security agreements, in each case, in suitable form for   filing; and provisions reasonably satisfactory to the Lenders for the payment   of all fees and taxes for such filings shall have been duly made.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
M.
    	
The   Administrative Agent shall have received endorsements (to the extent such   endorsements can be delivered prior to Closing after the exercise of   commercially reasonable efforts) naming the Administrative Agent, on behalf   of the Lenders, as an additional insured and loss payee, as applicable, under   all insurance policies to be maintained with respect to the Collateral.
    
	
 
    	
 
    	
 
    
	
Conditions   Precedent to Each Loan:
    	
 
    	
On   the funding date of each Delayed Draw Term Loan (i) there shall exist no   default under the DIP Loan Documents, (ii) the representations and   warranties of the Borrower and each Guarantor therein shall be true and   correct in all material respects (or in the case of representations and   warranties with a “materiality” qualifier, true and correct in all respects)   immediately prior to, and after giving effect to, such funding,   (iii) the making of such Delayed Draw Term Loan shall not violate any   requirement of law and shall not be enjoined, temporarily, preliminarily or   permanently, (iv) no later than 30 days after the entry of the Interim   Order, the Bankruptcy Court shall have entered an order in substantially the   form of the Interim Order, with only such modifications as are satisfactory   in form and substance to the Lenders (the “Final   Order”) and (v) the Interim Order or Final Order, as the case   may be, shall be in full force and effect and shall not have been vacated,   reversed, modified, amended or stayed in any respect without the consent of   the Requisite Lenders.
    
	
 
    	
 
    	
 
    
	
Representations   and Warranties:
    	
 
    	
The   DIP Loan Documents will contain representations and warranties customarily   found in loan agreements for similar debtor in possession financings and   other representations and warranties deemed by the Lenders appropriate to the   specific transaction (which will be applicable to the Borrower, the   Guarantors and their respective subsidiaries and subject to certain   exceptions and qualifications to be agreed), including, without limitation   with respect to: valid 
    

 

7

 

	
 
    	
 
    	
existence,   compliance with law, requisite power, due authorization, approvals, no   conflict with material agreements (to the extent enforceable post-petition)   or applicable law, enforceability of the DIP Loan Documents, ownership of   subsidiaries, material accuracy of financial statements and all other   information provided, absence of Material Adverse Change, absence of Material   Litigation, taxes, margin regulations, no burdensome restrictions, no default   under the DIP Loan Documents, inapplicability of Investment Company Act, use   of proceeds, insurance, labor matters, ERISA, environmental matters, security   interests, existing debt, liens and investments, necessary rights to   intellectual property and ownership of properties. The Interim Order and Final   Order shall also contain provisions, among other things,   (i) acknowledging the validity and enforceability of the Prepetition   Credit Agreement, the debt outstanding thereunder and the liens granted in   connection therewith, and (ii) waiving Bankruptcy Code sections   506(c) and 552 as such may pertain to the claims and liens of the agent   and lenders under the Prepetition Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Affirmative   Covenants:
    	
 
    	
The   DIP Documents will contain affirmative covenants customarily found in loan   agreements for similar debtor in possession financings and other affirmative   covenants deemed by the Lenders to be appropriate to the specific   transaction, subject to, where appropriate, materiality thresholds,   carve-outs and exceptions to be agreed (which will be applicable to the   Borrower, the Guarantors and their respective subsidiaries) including,   without limitation, the following:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
A.
    	
Preservation   of corporate existence.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B.
    	
Compliance   with applicable laws (including ERISA and environmental laws).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
C.
    	
Conduct   of business.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
D.
    	
Payment   of taxes.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
E.
    	
Maintenance   of insurance.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
F.
    	
Access   to books and records and visitation rights.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
G.
    	
Maintenance   of books and records.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
H.
    	
Maintenance   of properties.
    

 

8

 

	
 
    	
 
    	
I.
    	
Use of proceeds.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
J.
    	
Provision of additional   collateral, guarantees and mortgages.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
K.
    	
Further assurances.
    
	
 
    	
 
    	
 
    
	
Negative   Covenants:
    	
 
    	
The   DIP Loan Documents will contain negative covenants customarily found in loan   agreements for similar debtor in possession financings and other negative   covenants deemed by the Lenders to be appropriate to the specific transaction   and where appropriate, subject to materiality thresholds, carve-outs and   exceptions to be agreed (which will be applicable to the Borrower, the   Guarantors and their respective subsidiaries), including, without limitation,   the following:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
A.
    	
Limitations on debt and guarantees.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B.
    	
Limitations on liens.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
C.
    	
Limitations on loans and investments.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
D.
    	
Limitations on asset dispositions, including, without limitation, the   issuance and sale of capital stock of subsidiaries, with an exception for   among other things transactions for total consideration of no more than an   amount to be mutually agreed upon in the aggregate.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
E.
    	
Limitations on dividends, redemptions and repurchases with respect to   capital stock.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
F.
    	
Limitations on cancellation of debt and on prepayments, redemptions   and repurchases of pre-petition debt, except as expressly provided for in the   definitive loan documents or pursuant to “first day” or other orders entered   by the Bankruptcy Court.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
G.
    	
Limitations on mergers, consolidations, acquisitions, joint ventures   or creation of subsidiaries.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
H.
    	
Limitations on material changes in business.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
I.
    	
Limitations on transactions with affiliates.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
J.
    	
Limitations on restrictions on distributions from subsidiaries and   granting of negative pledges.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
K.
    	
Limitations on amendment of constituent documents and material agreements,   except for modifications that 
    

 

9

 

	
 
    	
 
    	
 
    	
could not reasonably be expected to materially and adversely affect   the interests of the Lenders.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
L.
    	
Limitations on changes in accounting treatment and reporting   practices or the fiscal year without the Administrative Agent’s consent.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
M.
    	
Limitations on sale/leasebacks and operating leases.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
N.
    	
Limitations on speculative transactions except for the sole purpose   of hedging in the normal course of business and consistent with industry   practices.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
O.
    	
Anti-cash hoarding covenant.  
    
	
 
    	
 
    	
 
    
	
Selected   Financial Covenants:
    	
 
    	
The   DIP Loan Documents will contain the following financial covenant (which will   be applicable to the Borrower, the Guarantors and their respective subsidiaries):(3)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Budget   variance with respect to net cash flow and receipts not exceeding 15%,   determined and tested on a rolling four week basis.  
    
	
 
    	
 
    	
 
    
	
Reporting   Requirements:
    	
 
    	
The   DIP Loan Documents will contain reporting requirements customarily found in   loan documents for similar debtor in possession financings and other   reporting requirements deemed by the Lenders appropriate to the specific   transaction, including, without limitation, (i) weekly budget variance   report; and (ii) weekly forecasts on a rolling 13-week basis.
    
	
 
    	
 
    	
 
    
	
Events   of Default:
    	
 
    	
The   DIP Loan Documents will contain events of default customarily found in loan   agreements for similar debtor in possession financings and other events of   default deemed by the Lenders to be appropriate to the specific transaction   (which will be applicable to the Borrower, the Guarantors and their   respective subsidiaries), including, without limitation, the following, with,   where appropriate, customary grace periods and exceptions to be determined:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
A.
    	
Failure to pay principal, interest or any other amount when due.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B.
    	
Representations and warranties incorrect in any material respect when   given.
    

 

(3)  The financial covenants shall not be tested so long as the Plan Support Agreement has not been terminated.

 

10

 

	
 
    	
 
    	
C.
    	
Failure to comply with covenants (with grace period as appropriate).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
D.
    	
Cross-default to payment defaults, or default or event of default if   the effect is to accelerate or permit acceleration in excess of an amount to   be mutually agreed upon, and cross-default to any Plan Support Agreement   termination.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
E.
    	
Failure to satisfy or stay execution of judgments in excess of an   amount to be mutually agreed upon.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
F.
    	
The occurrence of certain ERISA events that result in liabilities in   excess of an amount to be mutually agreed upon.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
G.
    	
Actual or asserted (by any Loan Party or any affiliate thereof)   invalidity or impairment of any DIP Loan Document (including the failure of   any lien to remain perfected).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
H.
    	
Change of ownership or control (to be defined).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
I.   (a) The entry of an   order dismissing any of the Cases or converting any of the Cases to a case   under chapter 7 of the Bankruptcy Code,

 

(b) the   entry of an order appointing a chapter 11 trustee in any of the Cases;

 

(c) the   entry of an order staying, reversing, vacating or otherwise modifying, in   each case in a manner materially adverse to the Administrative Agent or the   Lenders or inconsistent with the DIP Loan Documents, without the prior   consent of the Requisite Lenders, the DIP Facility, the Interim Order or the   Final Order;

 

(d) the   entry of an order in any of the Cases appointing an examiner having expanded   powers (beyond those set forth under sections 1106(a)(3) and (4) of   the Bankruptcy Code);

 

(e) the   entry of an order in any of the Cases denying or terminating use of cash   collateral by the Loan Parties;

 

(f) the   filing of any pleading by any Loan Party seeking, or otherwise consenting to,   any of the matters set forth in clauses (a) through (e) above;

 

(g) the   Bankruptcy Court shall terminate or reduce the period pursuant to Section 1121   of the Bankruptcy Code 
    

 

11

 

	
 
    	
 
    	
during   which the Loan Parties have the exclusive right to file a plan of   reorganization and solicit acceptances thereof;

 

(h) the   entry of the Final Order shall not have occurred within 30 days after entry   of the Interim Order;

 

(i) the   entry of a final non-appealable order in the Cases charging any of the   Collateral under section 506(c) of the Bankruptcy Code against the   Lenders or the commencement of other actions that is materially adverse to   the Administrative Agent, the Lenders or their respective rights and remedies   under the DIP Facility in any of the Cases or inconsistent with the DIP Loan   Documents;

 

(j) the   entry of an order granting relief from any stay of proceeding (including,   without limitation, the automatic stay) so as to allow a third party to   proceed against any material assets of the Loan Parties in excess of an   amount to be mutually agreed upon in the aggregate;

 

(k) existence   of any claims or charges, other than in respect of the DIP Facility or as   otherwise permitted under the DIP Loan Documents, entitled to superpriority   under Section 364(c)(1) of the Bankruptcy Code pari passu   or senior to the DIP Facility;

 

(l) the   Loan Parties or any of their subsidiaries, or any person claiming by or   through the Loan Parties any of their subsidiaries, shall obtain court   authorization to commence, or shall commence, join in, assist or otherwise   participate as an adverse party in any suit or other proceeding against the   Administrative Agent or any of the Lenders relating to the DIP Facility,   unless (i) such suit or other proceeding is in connection with the   enforcement of the DIP Loan Documents against the Administrative Agent or   Lenders or (ii) such suit or other proceeding is stayed pursuant to   section 362 of the Bankruptcy Code or an order of the Bankruptcy Court and is   released upon the “effective date” of the plan of reorganization, as defined   therein, and the order confirming such plan of reorganization provides that   any such suit or proceeding shall be dismissed with prejudice;

 

(m) after the order confirming the a plan of reorganization (the   “Confirmation Order”) shall have been   entered by the Bankruptcy Court, any Loan Party shall fail to satisfy in full   all obligations under the DIP Facility on the effective date of the such plan   of reorganization or fail to comply in any material respect with the   Confirmation Order, or the 
    

 

12

 

	
 
    	
 
    	
Confirmation   Order shall have been revoked, remanded, vacated, reversed, rescinded or   modified or amended in any manner that is adverse to the Administrative   Agent’s or the Lenders’ interests or inconsistent with the DIP Loan   Documents; or

 

(n) the   commencement of any adversary proceeding, contested matter or other action by   any Loan Party or any other party either asserting any claims and defenses or   otherwise against any of the agent or the lenders under the Prepetition   Credit Agreement with respect to the obligations of any Loan Party thereunder   or the liens granted to such agent to secure the obligations under the Prepetition   Credit Agreement, except as may be permitted under the Interim Order or Final   Order.
    
	
 
    	
 
    	
 
    
	
Expenses   and Indemnification:
    	
 
    	
The Borrower will indemnify the Administrative Agent, the Lenders,   their respective affiliates, successors and assigns and the officers,   directors, employees, agents, advisors, controlling persons and members of   each of the foregoing (each, an “Indemnified Person”)   and hold them harmless from and against all costs, expenses (including   reasonable and documented fees, disbursements and other charges of outside   counsel) and liabilities of such Indemnified Person arising out of or   relating to any claim or any litigation or other proceeding (regardless of   whether such Indemnified Person is a party thereto and regardless of whether such   matter is initiated by a third party or by the Borrower or any of its   affiliates) that relates to the DIP Facility or the transactions contemplated   thereby; provided that no Indemnified Person   will be indemnified for any cost, expense or liability to the extent   determined in the final, non-appealable judgment of a court of competent   jurisdiction to have resulted primarily from its gross negligence or willful   misconduct.  In addition, (a) all   out-of-pocket expenses (including, without limitation, reasonable and   documented fees, disbursements and other charges of outside counsel) of the   Administrative Agent in connection with the DIP Facility and the transactions   contemplated thereby shall be paid by the Borrower from time to time, whether   or not the Closing occurs, and (b) all out-of-pocket expenses   (including, without limitation, documented fees, disbursements and other   charges of outside counsel) of the Administrative Agent and the Lenders, for   enforcement costs and documentary taxes associated with the DIP Facility and   the transactions contemplated thereby will be paid by the Borrower.
    

 

13

 

	
Assignments   and Participations:
    	
 
    	
Assignments   are subject to the consent of the Administrative Agent and, unless a Default   or Event of Default has occurred and is continuing under the DIP Credit   Agreement, the Borrower (which shall not be unreasonably withheld or   delayed).  No participation shall   include voting rights, other than for matters requiring consent of 100% of the   Lenders.
    
	
 
    	
 
    	
 
    
	
Requisite   Lenders:
    	
 
    	
Lenders   holding at least 50.1% of the outstanding commitments and/or exposure under   the DIP Facility (the “Requisite Lenders”).   
    
	
 
    	
 
    	
 
    
	
Amendments:
    	
 
    	
Requisite   Lenders, except for provisions customarily requiring approval by affected   Lenders.
    
	
 
    	
 
    	
 
    
	
Miscellaneous:
    	
 
    	
The   DIP Loan Documents will include (i) standard yield protection provisions   (including, without limitation, provisions relating to compliance with   risk-based capital guidelines, increased costs and payments free and clear of   withholding taxes (subject to customary qualifications)), (ii) waivers   of consequential damages and jury trial, and (iii) customary agency,   set-off and sharing language.
    
	
 
    	
 
    	
 
    
	
Governing   Law and Submission to Non-Exclusive Jurisdiction:
    	
 
    	
State   of New York.
    
	
 
    	
 
    	
 
    
	
Counsel   to Administrative Agent:
    	
 
    	
Akin   Gump Strauss Hauer & Feld LLP.
    

 

14

 

ANNEX I

 

	
Prepetition   Lenders:
    	
 
    	
The   lenders (the “Prepetition Lenders”) under   that Prepetition Credit Agreement, by and among the Borrower, the Prepetition   Lenders and Gleacher Products Corp., as administrative agent ( in such   capacity, the “Prepetition Agent”)  
    
	
 
    	
 
    	
 
    
	
Usage   of Cash Collateral:
    	
 
    	
The   Prepetition Agent and the Consenting Lenders (as that term is defined in the   Plan Support Agreement), will agree to the Loan Parties’ usage of cash, cash   equivalents, negotiable instruments, investment property and securities in   deposit accounts, wherever located, which collectively constitute the cash   collateral (the “Cash Collateral”)   of the Prepetition Agent and the Prepetition Lenders (the “Adequate Protection Parties”) subject to (i) the   Budget and (ii) the terms and conditions set forth herein and in the   Interim Order and the Final Order 
    
	
 
    	
 
    	
 
    
	
Debtors’   Stipulations:
    	
 
    	
The   Loan Parties will make customary stipulations as to the validity of the   obligations owed and liens and security interests granted under the Loan   Documents (as defined in the Prepetition Credit Agreement) (the “Prepetition Obligations”)
    
	
 
    	
 
    	
 
    
	
Prepetition   Lender Adequate Protection:
    	
 
    	
The   Adequate Protection Parties will receive: (i) subject only to the   Carve-Out and the liens securing the obligations under the DIP Facility,   valid, enforceable, nonavoidable and fully perfected postpetition security   interests in and liens on any and all prepetition and postpetition property,   assets and interests in property and assets of the Debtors and all property   of the Debtors’ estate (the “Adequate Protection   Liens”); (ii) solely to the extent of any diminution in value   of their collateral, administrative expense claims under section 507(b) of   the Bankruptcy Code (the “Superpriority Claims”);   (iii) the current cash payment of fees and expenses of professionals   retained by the Prepetition Agent, including such amounts arising before and   after the Petition Date and without the necessity of filing motions or fee   applications, which professionals shall include (a) Akin Gump Strauss   Hauer & Feld LLP as counsel to the Prepetition Agent and (b) CDG   Group Inc. as financial advisor to the Prepetition Agent (collectively the “Prepetition Agent Professionals”); (iv) accrual of   post-petition interest at the default rate and (v) financial and other   reporting requirements customarily found in loan documents for debtor in   possession financings
    
	
 
    	
 
    	
 
    
	
Sections   506(c) and 552:
    	
 
    	
The   Adequate Protection Parties will receive (i) a waiver of any “equities   of the case” claims under Section 552(b) of the Bankruptcy Code and   (ii) a waiver of the provisions of Section 506(c) of the   Bankruptcy Code 
    
	
 
    	
 
    	
 
    
	
Investigation   Limitation:
    	
 
    	
Customary   provisions limiting the amount of Cash Collateral that may be utilized by any   official creditors’ committee to investigate the liens and claims in respect   of the Prepetition Obligations up to $25,000 in the aggregate.  Investigation period to be limited to 60   days from the date of the order approving counsel to an official creditors’   committee or 60 days after entry of the Final Order
    

 

Annex I-1Exhibit 10.1

 

SPX Corporation

 

2002 STOCK COMPENSATION PLAN

 

PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

20XX AWARD

 

THIS AGREEMENT (the “Agreement”) is made between SPX CORPORATION, a Delaware corporation (the “Company”), and the Recipient pursuant to the SPX Corporation 2002 Stock Compensation Plan, as amended, and related plan documents (the “Plan”) in combination with an SPX Restricted Stock Summary (the “Award Summary”) to be displayed at the Fidelity website.  The Award Summary, which identifies the person to whom the Restricted Stock is granted (the “Recipient”) and specifies the date (the “Award Date”) and other details of this grant of Restricted Stock, and the electronic acceptance of this Agreement (which also is to be displayed at the Fidelity website), are incorporated herein by reference.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Plan.  The parties hereto agree as follows:

 

1.                                      Grant of Restricted Stock.  The Company hereby grants to the Recipient the target number of shares of Restricted Stock specified in the Award Summary (the “Award”), subject to the terms and conditions of the Plan and this Agreement.  The Restricted Stock shall vest based on the Recipient’s performance during the Period of Restriction, as specified in Section 4 and pursuant to the terms of the Award Summary.  The Recipient must accept the Restricted Stock Award within ninety (90) days after notification that the Award is available for acceptance and in accordance with the instructions provided by the Company.  The Award automatically will be rescinded upon the action of the Company, in its discretion, if the Award is not accepted within ninety (90) days after notification is sent to the Recipient indicating availability for acceptance.

 

2.                                      Restrictions.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether voluntarily or involuntarily or by operation of law, until the termination of the Period of Restriction specified in Section 4 below or as otherwise provided in the Plan or this Agreement.  Except for such restrictions, and the provisions relating to dividends paid during the Period of Restriction as described in Section 9, the Recipient will be treated as the owner of the shares of Restricted Stock and shall have all of the rights of a shareholder, including, but not limited to, the right to vote such shares.

 

3.                                      Restricted Stock Certificates.  The Restricted Stock Award may be evidenced in such manner as the Committee shall determine.  The stock certificate(s) representing the Restricted Stock may be issued or held in book entry form promptly following the acceptance of this Agreement.  If a stock certificate is issued, it shall be delivered to the Secretary of the Company or such other custodian as may be designated by the Company, to be held until the end of the Period of Restriction or until the Restricted Stock is forfeited.  The certificates representing shares of Restricted Stock granted pursuant to this Agreement, if issued, shall bear a legend in substantially the form set forth below:

 

 

The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in the SPX Corporation 2002 Stock Compensation Plan, as amended and restated effective May 3, 2012, rules and administration adopted pursuant to such Plan, and a Restricted Stock award agreement with an Award Date as specified in the Recipient’s Award Summary.  A copy of the Plan, such rules and such Restricted Stock award agreement may be obtained from the Secretary of SPX Corporation.

 

4.                                      Period of Restriction.  Subject to the provisions of the Plan and this Agreement, unless vested or forfeited earlier as described in Section 5, 6, or 7 of this Agreement, as applicable, the number of shares of Restricted Stock that shall become vested and freely transferable shall be calculated in accordance with the chart below, based on the relationship between Total Shareholder Return (as defined below) and S&P Return (as defined below) for the Measurement Period (as defined below), calculated as of the Measurement Date (as defined below).  If Total Shareholder Return  falls between Threshold and Target or between Target and Maximum levels of performance, the number of shares of Restricted Stock that vest shall be calculated using straight-line interpolation.  Such vesting shall occur upon certification by the Board (or appropriate Board committee) that the applicable performance criteria have been met.

 

	
Total Shareholder Return Performance
   During the Measurement Period
    	
 
    	
Number of Shares of Restricted Stock
   Vesting
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Below Threshold:
   More than 9% below S&P Return
    	
 
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Threshold:
   9% below S&P Return
    	
 
    	
0.25x
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Target:
   Equal to S&P Return
    	
 
    	
x
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Maximum:
   6% above S&P Return
    	
 
    	
1.25x
    	
 
    

 

x = Target amount of shares of Restricted Stock, as specified in the Award Summary

 

“Total Shareholder Return” shall mean the average annual percentage change in the Fair Market Value of a share of Common Stock (using total shareholder return of the Common Stock as reported by Interactive Data Corporation) during the Measurement Period.  Thirty (30) day average values of the Common Stock (i.e., average values over the first 30 calendar days and the final 30 calendar days of each calendar year) shall be used to value the Common Stock at the beginning and end of the Measurement Period.

 

“S&P Return” shall mean the average annual percentage return of the S&P Composite 1500 Industrials Index (using total shareholder return of the S&P Composite 1500 Industrials Index as reported by Interactive Data Corporation) during the Measurement Period.  Thirty (30)

 

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day average values of the Common Stock shall be used to value the S&P Composite 1500 Industrials Index at the beginning and end of the Measurement Period.

 

“Measurement Period” shall mean the three (3) year period commencing on January 1, 20XX and ending on December 31, 20XX.

 

“Measurement Date” shall mean December 31, 20XX.

 

Upon vesting, all vested shares shall cease to be considered Restricted Stock, subject to the terms and conditions of the Plan and this Agreement, and the Recipient shall be entitled to have the legend removed from the Recipient’s Common Stock certificate(s), if applicable.

 

5.                                      Vesting upon Termination due to Retirement, Disability or Death.

 

(a)                                 If, while the Restricted Stock is subject to the Period of Restriction, the Recipient experiences a termination of Service by reason of Disability (as defined below) or death, then the Restricted Stock subject to the Period of Restriction shall become fully vested at the Target level of performance (as specified in the Award Summary) as of the date of such termination of Service without regard to the Period of Restriction set forth in Section 4 of this Agreement.  “Disability” means, in the written opinion of a qualified physician selected by the Company, the Recipient is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under the Company’s disability plan.

 

(b)                                 If, while the Restricted Stock is subject to the Period of Restriction, the Recipient experiences a termination of Service by reason of Retirement (as defined below), such Restricted Stock shall vest only if (and at the time that) the specified performance goals are achieved and vesting occurs for Recipients who remain actively employed.  A Recipient will be eligible for “Retirement” treatment for purposes of this Agreement if, at the time of the Recipient’s termination of Service, the Recipient is age 55 or older, has completed five years of Service with the Company or a Subsidiary (provided that the Subsidiary has been directly or indirectly owned by the Company for at least three years), and voluntarily elects to retire.

 

6.                                      Forfeiture upon Termination due to Reason other than Retirement, Disability or Death.  If, prior to the end of the Measurement Period,  the Recipient experiences a termination of Service for any reason other than the Recipient’s Retirement, Disability or death, then the Recipient shall forfeit any such unvested tranche on the date of such termination of Service.

 

7.                                      Vesting upon Change of Control.  In the event of a “Change of Control” of the Company as defined in this Section, the Restricted Stock subject to the Period of Restriction shall become fully vested at the Target level of performance (as specified in the Award Summary) as of the date of the consummation of such Change of Control, without regard to the Period of Restriction set forth in Section 4 of this Agreement.  A “Change of Control” shall be deemed to have occurred if:

 

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(a)                                 Any “Person” (as defined below), excluding for this purpose (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company, and (iii) any entity organized, appointed or established for or pursuant to the terms of any such plan that acquires beneficial ownership of Common Stock, is or becomes the “Beneficial Owner” (as defined below) of twenty percent (20%) or more of the Common Stock then outstanding; provided, however, that no Change of Control shall be deemed to have occurred as the result of an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate beneficial ownership interest of any Person to twenty percent (20%) or more of the Common Stock then outstanding, but any subsequent increase in the beneficial ownership interest of such a Person in Common Stock shall be deemed a Change of Control; and provided further that if the Board determines in good faith that a Person who has become the Beneficial Owner of Common Stock representing twenty percent (20%) or more of the Common Stock then outstanding has inadvertently reached that level of ownership interest, and if such Person divests as promptly as practicable a sufficient number of shares of the Company so that the Person no longer has a beneficial ownership interest in twenty percent (20%) or more of the Common Stock then outstanding, then no Change of Control shall be deemed to have occurred.  For purposes of this paragraph (a), the following terms shall have the meanings set forth below:

 

(i)                                    “Person” shall mean any individual, firm, limited liability company, corporation or other entity, and shall include any successor (by merger or otherwise) of any such entity.

 

(ii)                                “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(iii)                            A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” any securities:

 

(A)                               which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (determined as provided in Rule 13d-3 under the Exchange Act);

 

(B)                               which such Person or any of such Person’s Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for

 

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purchase or exchange; or (2) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (a) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (b) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(C)                               which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to subparagraph (a)(iii)(B)(2), above) or disposing of any securities of the Company.

 

Notwithstanding anything in this “Beneficial Ownership” definition to the contrary, the phrase “then outstanding,” when used with reference to a Person’s beneficial ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially hereunder.

 

(b)                                 During any period of two (2) consecutive years (not including any period prior to the acceptance of this Agreement), individuals who at the beginning of such two-year period constitute the Board and any new director or directors (except for any director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), above, or paragraph (c), below) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; or

 

(c)                                  Approval by the shareholders and consummation of (or if such approval is not required, the consummation of) (i) a plan of complete liquidation of the Company, (ii) an agreement for the sale or disposition of the Company or all or substantially all of the Company’s assets, (iii) a plan of merger or consolidation of the Company with any other corporation, or (iv) a similar transaction or series of transactions involving the Company (any transaction described in parts (i) through (iv) of this paragraph (c) being referred to as a “Business Combination”), in each case unless after such a Business Combination the shareholders of the Company immediately prior to the Business Combination continue to own at least eighty percent (80%) of the voting securities of the new (or continued) entity immediately after such Business Combination, in substantially the same proportion as their ownership of the Company immediately prior to such Business Combination.

 

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Notwithstanding any provision of this Agreement to the contrary, a “Change of Control” shall not include any transaction described in paragraph (a) or (c), above, where, in connection with such transaction, the Recipient and/or any party acting in concert with the Recipient substantially increases his or its, as the case may be, ownership interest in the Company or a successor to the Company (other than through conversion of prior ownership interests in the Company and/or through equity awards received entirely as compensation for past or future personal Services).  Further notwithstanding the foregoing, the transaction with Gardner Denver, Inc. under consideration by the Company as of the Award Date shall not constitute a Change of Control under this Agreement.

 

8.                                      Settlement Following Change of Control.  Notwithstanding any provision of this Agreement to the contrary, in connection with or after the occurrence of a Change of Control as defined in Section 7 of this Agreement, the Company may, in its sole discretion, fulfill its obligation with respect to all or any portion of the Restricted Stock that ceases to be subject to the Period of Restriction in conjunction with the Change of Control by:

 

(a)                                 delivery of (i) the number of shares of Common Stock that have ceased to be subject to the Period of Restriction or (ii) such other ownership interest as such shares of Common Stock may be converted into by virtue of the Change of Control transaction;

 

(b)                                 payment of cash in an amount equal to the Fair Market Value of the Common Stock at that time; or

 

(c)                                  delivery of any combination of shares of Common Stock (or other converted ownership interest) and cash having an aggregate Fair Market Value equal to the Fair Market Value of the Common Stock at that time.

 

9.                                      Dividends Paid During Period of Restriction.  If cash dividends are paid with respect to any shares of Restricted Stock, such dividends shall be deposited in the Recipient’s name in an escrow or similar account maintained by the Company for this purpose.  Such dividends shall be subject to the same Period of Restriction as the shares of Restricted Stock to which they relate.  The dividends shall be paid to the Recipient in cash (subject to all applicable tax withholding), without adjustment for interest, as soon as administratively practicable after the date the related shares of Restricted Stock vest.  If the related shares of Restricted Stock are forfeited, then any dividends related to such shares shall also be forfeited on the same date.  If any dividends on Restricted Stock are paid in shares of Common Stock, the dividend shares shall be subject to the same restrictions as the shares of Restricted Stock with respect to which they were paid, and shall vest or be forfeited in the same manner as the underlying Restricted Stock.

 

10.                               Adjustment in Capitalization.  In the event of any change in the Common Stock through stock dividends or stock splits, a corporate split-off or split-up, or recapitalization, merger, consolidation, exchange of shares, or a similar event, the number of shares of Restricted Stock subject to this Agreement shall be equitably adjusted by the Committee.

 

11.                               Delivery of Stock Certificates.  Subject to the requirements of Sections 12 and 13 below, as promptly as practicable after shares of Restricted Stock cease to be subject to the Period of Restriction in accordance with this Agreement, the Company may, if applicable, cause to be issued and delivered to the Recipient, the Recipient’s legal representative, or a brokerage

 

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account for the benefit of the Recipient, as the case may be, certificates for the vested shares of Common Stock.

 

12.                               Tax Withholding.  When the Period of Restriction applicable to the Recipient’s rights to some or all of the Restricted Stock lapses as provided in this Agreement, the Company or its agent shall notify the Recipient of the related amount of tax that must be withheld under applicable tax laws. Regardless of any action the Company, any Subsidiary of the Company, or the Recipient’s employer takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related withholding (“Tax”) that the Recipient is required to bear pursuant to all applicable laws, the Recipient hereby acknowledges and agrees that the ultimate liability for all Tax is and remains the responsibility of the Recipient.

 

Prior to receipt of any shares of Common Stock that correspond to Restricted Stock that vests in accordance with this Agreement, the Recipient shall pay or make adequate arrangements satisfactory to the Company and/or any Subsidiary of the Company to satisfy all withholding and payment on account obligations of the Company and/or any Subsidiary of the Company.  In this regard, the Recipient authorizes the Company and/or any Subsidiary of the Company to withhold all applicable Tax legally payable by the Recipient from the Recipient’s wages or other cash compensation paid to the Recipient by the Company and/or any Subsidiary of the Company or from the proceeds of the sale of shares of Common Stock.  Alternatively, or in addition, the Company may sell or arrange for the sale of Common Stock that the Recipient is due to acquire to satisfy the minimum withholding obligation for Tax and/or withhold any Common Stock.  Finally, the Recipient agrees to pay the Company or any Subsidiary of the Company any amount of any Tax that the Company or any Subsidiary of the Company may be required to withhold as a result of the Recipient’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to deliver Common Stock if the Recipient fails to comply with its obligations in connection with the tax as described in this section.

 

The Company advises the Recipient to consult a  lawyer or accountant with respect to the tax consequences for the Recipient under the Plan.

 

The Company and/or any Subsidiary of the Company: (a) make no representations or undertakings regarding the tax treatment in connection with the Plan; and (b) do not commit to structure the Plan to reduce or eliminate the Recipient’s liability for Tax.

 

13.                               Securities Laws.  This Award is a private offer that may be accepted only by a Recipient who is an employee or director of the Company or a Subsidiary of the Company and who satisfies the eligibility requirements outlined in the Plan and the Committee’s administrative procedures.  If a registration statement under the Securities Act of 1933, as amended, is not in effect with respect to the shares of Common Stock to be issued pursuant to this Agreement, the Recipient hereby represents that the Recipient is acquiring the shares of Common Stock for investment and with no present intention of selling or transferring them and that the Recipient will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Common Stock may then be listed.

 

14.                               Compliance with Code Section 409A.  Notwithstanding any provision of the Plan or this Agreement to the contrary, the Award is intended to be exempt from or, in the alternative,

 

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comply with Code Section 409A and the interpretive guidance thereunder, including the exceptions for stock rights and short-term deferrals.  The Plan and the Agreement will be construed and interpreted in accordance with such intent.  References in the Plan and this Agreement to “termination of Service” and similar terms shall mean a “separation from service” within the meaning of that term under Code Section 409A.  Any payment or distribution that is to be made to a Recipient who is a “specified employee” of the Company within the meaning of that term under Code Section 409A and as determined by the Committee, on account of a “separation from service” under Code Section 409A, may not be made before the date which is six months after the date of such “separation from service,” unless the payment or distribution is exempt from the application of Code Section 409A by reason of the short-term deferral exemption or otherwise.

 

15.                               No Employment or Compensation Rights.  Participation in the Plan is permitted only on the basis that the Recipient accepts all of the terms and conditions of the Plan and this Agreement, as well as the administrative rules established by the Committee.  This Agreement shall not confer upon the Recipient any right to continue to provide Services, nor shall this Agreement interfere in any way with the Company’s or its Subsidiaries’ right to terminate Recipient’s Service at any time.  Neither the Plan nor this Agreement forms any part of any contract of employment between the Company or any Subsidiary and the Recipient, and neither the Plan nor this Agreement confers on the Recipient any legal or equitable rights (other than those related to the Restricted Stock Award) against the Company or any Subsidiary or directly or indirectly gives rise to any cause of action in law or in equity against the Company or any Subsidiary.

 

The Restricted Stock granted pursuant to this Agreement does not constitute part of the Recipient’s wages or remuneration or count as pay or remuneration for pension or other purposes.  If the Recipient experiences a termination of Service, in no circumstances will the Recipient be entitled to any compensation for any loss of any right or benefit or any prospective right or benefit under the Plan or this Agreement that the Recipient might otherwise have enjoyed had such Service continued, whether such compensation is claimed by way of damages for wrongful dismissal, breach of contract or otherwise.

 

16.                               No Fractional Shares.  No fractional shares of Common Stock shall be issued or delivered under this Agreement.  The Committee shall determine whether cash or other property shall be issued or paid in lieu of such fractional shares of Common Stock or whether such fractional shares of Common Stock or any rights thereto shall be forfeited or otherwise eliminated.

 

17.                               Plan Terms and Committee Authority.  This Agreement and the rights of the Recipient hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, all of which shall be binding upon Recipient.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.  The Recipient hereby acknowledges receipt of a copy of the Plan and this Agreement.

 

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18.                               Amendment.  The Board may at any time amend, modify or terminate the Plan and this Agreement; provided, however, that no such action of the Board shall adversely affect the Recipient’s rights under this Agreement without the consent of the Recipient.  The Board or the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement so that the Award qualifies for exemption from or complies with Code Section 409A; provided, however, that the Board, the Committee and the Company make no representations that the Award shall be exempt from or comply with Code Section 409A and make no undertaking to preclude Code Section 409A from applying to the Award.

 

19.                               Severability.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or the Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Board’s determination, materially altering the intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or person, and the remainder of the Agreement shall remain in full force and effect.

 

20.                               Governing Law and Jurisdiction.  The Plan and this Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.  The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan will be exclusively in the courts in the State of North Carolina, County of Mecklenburg, including the Federal Courts located therein (should Federal jurisdiction exist).  As consideration for and by accepting the Award, the Recipient agrees that the Governing Law and Jurisdiction provisions of this Section 20 shall supersede any Governing Law or similar provisions contained or referenced in any prior equity awards made by the Company to the Recipient, and, accordingly, such prior equity awards shall become subject to the terms and conditions of the Governing Law and Jurisdiction provisions of this Section 20.

 

21.                               Successors.  All obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the business or assets of the Company or both, or a merger, consolidation or otherwise.

 

22.                               Erroneously Awarded Compensation.  This Award shall be subject to any compensation recovery policy adopted by the Company to comply with applicable law,  including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate governances practices, as such policy may be amended from time to time.  As consideration for and by accepting the Award, the Recipient agrees that all prior equity awards made by the Company to the Recipient shall become subject to the terms and conditions of the Erroneously Awarded Compensation provisions of this Section 22.

 

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