Document:

Exhibit 10.1

 

 

 

CREDIT AGREEMENT

Dated as of June 27, 2013

among

CAL DIVE INTERNATIONAL, INC.,

CAL DIVE OFFSHORE CONTRACTORS, INC.,

AFFILIATED MARINE CONTRACTORS, INC.,

FLEET PIPELINE SERVICES, INC., GULF OFFSHORE CONSTRUCTION, INC.,

AND CDI RENEWABLES, LLC,

as Borrowers,

and

ABC FUNDING, LLC,

as Administrative Agent

 

 

 

TABLE OF CONTENTS

	
 

	
 

	
Page

	
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

	
1

	
Section 1.01

	
Defined Terms

	
1

	
Section 1.02

	
Other Interpretive Provisions

	
18

	
Section 1.03

	
Accounting Terms

	
18

	
Section 1.04

	
Times of Day

	
18

	
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

	
19

	
Section 2.01

	
Loans

	
19

	
Section 2.02

	
Borrowings, Conversions and Continuations of Loans

	
19

	
Section 2.03

	
Optional Prepayments

	
19

	
Section 2.04

	
Mandatory Prepayments

	
19

	
Section 2.05

	
Repayment of Loans

	
21

	
Section 2.06

	
Interest

	
22

	
Section 2.07

	
Fees

	
22

	
Section 2.08

	
Computation of Interest and Fees

	
22

	
Section 2.09

	
Evidence of Debt

	
22

	
Section 2.10

	
Payments Generally; Administrative Agent's Clawback

	
23

	
Section 2.11

	
Sharing of Payments by Lenders

	
24

	
Section 2.12

	
Defaulting Lenders

	
25

	
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

	
26

	
Section 3.01

	
Taxes

	
26

	
Section 3.02

	
Increased Costs

	
28

	
Section 3.03

	
Mitigation Obligations; Replacement of Lenders

	
30

	
Section 3.04

	
Survival

	
30

	
ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

	
30

	
Section 4.01

	
Conditions of Initial Credit Extension

	
30

	
Section 4.02

	
Conditions to all Credit Extensions

	
33

 

i

	
ARTICLE V REPRESENTATIONS AND WARRANTIES

	
33

	
Section 5.01

	
Existence, Qualification and Power

	
33

	
Section 5.02

	
Authorization; No Contravention

	
34

	
Section 5.03

	
Governmental Authorization; Other Consents

	
34

	
Section 5.04

	
Binding Effect

	
34

	
Section 5.05

	
Financial Statements; No Material Adverse Effect; No Internal Control Event

	
34

	
Section 5.06

	
Litigation

	
35

	
Section 5.07

	
No Default

	
36

	
Section 5.08

	
Ownership of Property; Liens

	
36

	
Section 5.09

	
Environmental Compliance

	
36

	
Section 5.10

	
Insurance

	
36

	
Section 5.11

	
Taxes

	
36

	
Section 5.12

	
ERISA Compliance

	
37

	
Section 5.13

	
Subsidiaries; Equity Interests

	
38

	
Section 5.14

	
Margin Regulations; Investment Company Act

	
38

	
Section 5.15

	
Disclosure

	
38

	
Section 5.16

	
Compliance with Laws

	
39

	
Section 5.17

	
Taxpayer Identification Number

	
39

	
Section 5.18

	
Intellectual Property; Licenses, Etc.

	
39

	
Section 5.19

	
Intentionally Left Blank

	
39

	
Section 5.20

	
Solvency

	
39

	
Section 5.21

	
Off-Balance Sheet Liabilities

	
39

	
Section 5.22

	
Casualty, Etc.

	
39

	
ARTICLE VI AFFIRMATIVE COVENANTS

	
39

	
Section 6.01

	
Financial Statements

	
40

	
Section 6.02

	
Certificates; Other Information

	
41

	
Section 6.03

	
Notices

	
42

	
Section 6.04

	
Payment of Obligations

	
43

	
Section 6.05

	
Preservation of Existence, Etc.

	
43

	
Section 6.06

	
Maintenance of Properties

	
43

	
Section 6.07

	
Maintenance of Insurance

	
43

	
Section 6.08

	
Compliance with Laws

	
44

	
Section 6.09

	
Books and Records

	
44

 

ii

	
Section 6.10

	
Inspection Rights

	
44

	
Section 6.11

	
Use of Proceeds

	
44

	
Section 6.12

	
Material Contracts

	
44

	
Section 6.13

	
Collateral; etc.

	
45

	
Section 6.14

	
Governmental Authorizations

	
46

	
Section 6.15

	
Compliance with Environmental Laws

	
46

	
Section 6.16

	
Further Assurances

	
47

	
Section 6.17

	
Lien Trigger

	
47

	
Section 6.18

	
Post-Closing Actions

	
47

	
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

	
48

	
Section 7.01

	
Events of Default

	
48

	
Section 7.02

	
Remedies Upon Event of Default

	
50

	
Section 7.03

	
Application of Funds

	
51

	
ARTICLE VIII ADMINISTRATIVE AGENT

	
51

	
Section 8.01

	
Appointment and Authority

	
51

	
Section 8.02

	
Rights as a Lender

	
52

	
Section 8.03

	
Exculpatory Provisions

	
52

	
Section 8.04

	
Reliance by Administrative Agent

	
53

	
Section 8.05

	
Delegation of Duties

	
53

	
Section 8.06

	
Resignation of Administrative Agent

	
53

	
Section 8.07

	
Non-Reliance on Administrative Agent and Other Lenders

	
54

	
Section 8.08

	
Administrative Agent May File Proofs of Claim

	
54

	
Section 8.09

	
Collateral and Guaranty Matters

	
55

	
ARTICLE IX MISCELLANEOUS

	
55

	
Section 9.01

	
Amendments, Etc.

	
55

	
Section 9.02

	
Notices; Effectiveness; Electronic Communication

	
57

	
Section 9.03

	
No Waiver; Cumulative Remedies

	
58

	
Section 9.04

	
Expenses; Indemnity; Damage Waiver

	
59

	
Section 9.05

	
Payments Set Aside

	
61

 

iii

	
Section 9.06

	
Successors and Assigns

	
61

	
Section 9.07

	
Treatment of Certain Information; Confidentiality

	
66

	
Section 9.08

	
Right of Setoff

	
67

	
Section 9.09

	
Interest Rate Limitation

	
67

	
Section 9.10

	
Counterparts; Integration; Effectiveness

	
68

	
Section 9.11

	
Survival of Representations and Warranties

	
68

	
Section 9.12

	
Severability

	
68

	
Section 9.13

	
Replacement of Lenders

	
69

	
Section 9.14

	
Governing Law; Jurisdiction; Etc.

	
69

	
Section 9.15

	
Waiver of Jury Trial

	
70

	
Section 9.16

	
No Advisory or Fiduciary Responsibility

	
70

	
Section 9.17

	
Collateral and Guaranty Matters

	
71

	
Section 9.18

	
USA PATRIOT Act Notice

	
72

	
Section 9.19

	
CDII as Agent for Borrower

	
72

	
Section 9.20

	
ENTIRE AGREEMENT

	
72

iv

 

SCHEDULES

2.01               Commitments and Applicable Percentages

4.01               Liens

5.11               Taxes

5.13               Subsidiaries and Other Equity Investments

9.02               Administrative Agent's Office; Certain Addresses for Notices

EXHIBITS

Form of

A                   Loan Notice

B-1                2014 Note

B-2                2015 Note

C                   Assignment and Assumption

v

CREDIT AGREEMENT

This CREDIT AGREEMENT ("Agreement") is entered into as of June 27, 2013, among CAL DIVE INTERNATIONAL, INC., a Delaware corporation ("CDII"), CAL DIVE OFFSHORE CONTRACTORS, INC. ("CDOCI"), a Delaware corporation, AFFILIATED MARINE CONTRACTORS, INC. ("AMCI"), a Delaware corporation, FLEET PIPELINE SERVICES, INC. ("FPSI"), a Delaware corporation, GULF OFFSHORE CONSTRUCTION, INC. ("GOCI"), a Delaware corporation and CDI RENEWABLES, LLC, a Delaware limited liability company ("CRL" and together with CDII, CDOCI, AMCI, FPSI and GOCI, collectively the "Borrower"), each lender from time to time party hereto (collectively, the "Lenders" and individually, a "Lender"), and ABC FUNDING, LLC, a Delaware limited liability company, as Administrative Agent.

The Borrower has requested that the Lenders provide a term loan facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01  Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

"2014 Loan" means any Term Loan made by any Lender to the Borrower under Section 2.01(a).

"2014 Loan Commitment" means, as to each Lender, its obligation to make a Term Loan to the Borrower pursuant to Section 2.01(a) in a principal amount not to exceed the amount set forth opposite such Lender's name on Schedule 2.01 under the caption "2014 Loan Commitment" or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  As of the Closing Date, the aggregate amount of the 2014 Loan Commitment is $10,000,000.

"2014 Loan Maturity Date" means January 2, 2014.

"2014 Note" means a promissory note made by the Borrower in favor of a Lender evidencing 2014 Loans made or held by such Lender, substantially in the form of Exhibit B-1.

"2015 Loan" means any Term Loan made by any Lender to the Borrower under Section 2.01(b).

"2015 Loan Commitment" means, as to each Lender, its obligation to make a Term Loan to the Borrower pursuant to Section 2.01(b) in a principal amount not to exceed the amount set forth opposite such Lender's name on Schedule 2.01 under the caption "2015 Loan Commitment" or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  As of the Closing Date, the aggregate amount of the 2015 Loan Commitment is $10,000,000.

 

"2015 Loan Maturity Date" means June 26, 2015.

"2015 Note" means a promissory note made by the Borrower in favor of a Lender evidencing 2015 Loans made or held by such Lender, substantially in the form of Exhibit B-2.

"Administrative Agent" means ABC Funding, LLC, a Delaware limited liability company, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

"Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 9.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

"Administrative Borrower" has the meaning specified in Section 9.19.

"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent.

"Affiliate" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

"Aggregate Commitments" means the Commitments of all the Lenders.

"Agreement" means this Credit Agreement.

"All-In Yield" means, as to the Senior Obligations, the yield thereon, whether in the form of interest rate, margin, original issue discount ("OID"), up-front fees or an Eurodollar Rate or Base Rate floor greater than the existing floor on the Closing Date; provided that OID and up-front fees (which shall be deemed to constitute like amounts of OID) shall be equated to interest rate adjustments, assuming a 4 year life to maturity; and provided, further, that "All-In Yield" shall not include any one-time amendment fees paid to the Senior Lenders in connection with amendments to the Senior Loan Documents.

"Applicable Percentage" means in respect of the Term Facility, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Term Facility represented by (i) on or prior to the Closing Date, such Lender's Commitment at such time and (ii) thereafter, the principal amount of such Lender's Term Loans at such time.  The initial Applicable Percentage of each Lender in respect of the Term Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

2

"Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

"Asset Disposition" means "Asset Disposition", as defined in the Senior Credit Agreement.

"Assignee Group" means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

"Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

"Attributable Indebtedness" means, on any date, in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.

"Base Rate" means "Base Rate", as defined in the Senior Credit Agreement.

"Borrower" has the meaning specified in the introductory paragraph hereto.

"Borrower Materials" has the meaning specified in Section 6.02.

"Borrowing" means a borrowing consisting of simultaneous Term Loans to the Borrower pursuant to Section 2.01(a) or Section 2.01(b).

"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office is located.

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority, provided, that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.

3

"Change of Control" means an event or series of events by which:

(a)            any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time)(such right, an "option right")), directly or indirectly, of 30% or more of the equity securities of CDII entitled to vote for members of the board of directors or equivalent governing body of CDII on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

(b)            during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of CDII cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).

"Closing Date" means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 9.01.

"Code" means the Internal Revenue Code of 1986.

"Collateral" has the meaning specified in the Security Documents.

"Commitment" means, as to each Lender, the sum of the 2014 Loan Commitment and 2015 Loan Commitment of such Lender.  As of the Closing Date, the aggregate amount of the Commitments is $20,000,000.

"Compliance Certificate" means a certificate substantially in the form of Exhibit D to the Senior Credit Agreement.

"Consolidated Leverage Ratio" means the "Consolidated Leverage Ratio", as defined in the Senior Credit Agreement as in effect on the Closing Date (including all definitions used therein).

"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

4

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  "Controlling" and "Controlled" have meanings correlative thereto.

"Credit Extension" means a Borrowing.

"Debtor Relief Laws" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

"Default" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

"Default Rate" means 15.50% per annum.

"Defaulting Lender" means, subject to Section 2.12(b), any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder,  including in respect of its Loans, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, the Administrative Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

"Disposition" or "Dispose" means the sale, transfer, license, lease (as a lessor), farm-out or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

"Dollar" and "$" mean lawful money of the United States.

"Domestic Subsidiary" means any Subsidiary that is organized under the laws of any political subdivision of the United States.

"Eligible Assignee" means any Person that meets the requirements to be an assignee under Section 9.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 9.06(b)(iii)).

5

"Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

"Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

"Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law.

"Equity Interests" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests other than a net profits based bonus program in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination (provided, however, that debt securities that are or by their terms may be convertible or exchangeable into or for Equity Interests shall not be Equity Interests prior to conversion or exchange thereof).

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon  the Borrower or any ERISA Affiliate.

6

"Eurodollar Rate" means "Eurodollar Rate", as defined in the Senior Credit Agreement.

"Event of Default" has the meaning specified in Section 7.01.

"Excluded Asset Disposition" means "Excluded Asset Disposition", as defined in the Senior Credit Agreement.

"Excluded Foreign Subsidiary" means any Foreign Subsidiary that is a "controlled foreign corporation" under Section 957 of the Code.

"Excluded Property" has the meaning specified in the Security Agreement.

"Excluded Taxes" means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 9.13), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender's failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a).

"FASB ASC" means the Accounting Standards Codification of the Financial Accounting Standards Board.

"Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

7

"Fee Letter" means the letter agreement, dated as of the Closing Date, among the Administrative Borrower and the Administrative Agent.

"Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes.  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

"Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary.

"FRB" means the Board of Governors of the Federal Reserve System of the United States.

"Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

"GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

"Governmental Authority" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

"Granting Lender" has the meaning specified in Section 9.06(h).

"Guarantee" means, as to any Person (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term "Guarantee" as a verb has a corresponding meaning.

8

"Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

"Immaterial Foreign Subsidiary" means any Foreign Subsidiary that (a) had assets having an aggregate book value, as of the end of the fiscal year most recently ended, not exceeding 5% of the consolidated total assets of the Borrower and its Subsidiaries and (b) had Consolidated EBITDA not exceeding 5% of the Consolidated EBITDA of the Borrower for such fiscal year.  A Foreign Subsidiary shall automatically cease to be an Immaterial Foreign Subsidiary if at the end of any fiscal year such Subsidiary would not meet the requirements set forth in the foregoing clauses (a) and (b).

"Indebtedness" means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)            all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)            all direct or contingent obligations of such Person owing under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments;

(c)            net obligations of such Person under any Swap Contract;

(d)            all obligations of such Person to pay the deferred purchase price of property or services (other than current trade accounts payable in the ordinary course of business);

(e)            obligations (excluding prepaid interest thereon) of others of the type referred to in clauses (a) through (d) and (f) through (h) of this definition secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements), whether or not such obligations shall have been assumed by, or is limited in recourse to, the Person granting such Lien;

(f)            capital leases of such Person;

9

(g)            all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

(h)            all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.  The amount of any net obligation under any Swap Contract of any Person on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  The amount of any Indebtedness under clause (e) above shall be the lesser of (i) such outstanding principal amount and (ii) the then fair market value of such property.

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Indemnitees" has the meaning specified in Section 9.04(b).

"Information" has the meaning specified in Section 9.07.

"Initial Financial Statements" means the consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2012, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

"Interest Payment Date" means the first Business Day of each January, April, July and October and the 2014 Loan Maturity Date or the 2015 Loan Maturity Date, as applicable.

"Internal Control Event" means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Borrower's internal controls over financial reporting, in each case as described in the Securities Laws.

"IP Rights" has the meaning specified in Section 5.18.

"Laws" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority (other than any such agreements that are entered into in respect of a commercial transaction).

"Lender" has the meaning specified in the introductory paragraph hereto.

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"Lending Office" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, production payment, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

"Lien Trigger Date" means the earlier of (i) the failure of the Borrowers to maintain Liquidity of an amount equal to or greater than $15,000,000, measured as of the last day of each fiscal quarter of the Borrower beginning with the fiscal quarter ending June 30, 2014, (ii) the occurrence of a Default or (iii) the payment in full (other than contingent indemnification Obligations) of the Senior Obligations (other than in connection with the refinancing or replacement, in accordance with the terms hereof, of the Senior Credit Agreement).

"Liquidity" means, as of any date, the sum of (a) the "Revolving Credit Facility" (as defined in the Senior Credit Agreement) minus the "Total Revolving Credit Outstandings" (as defined in the Senior Credit Agreement), and (b) readily and immediately available unrestricted cash held in deposit accounts of any Loan Party (other than any account holding "Cash Collateral" (as defined in the Senior Credit Agreement)), which is free and clear of all Liens (other than (i) Liens in favor of the Administrative Agent securing the Obligations and (ii) Liens securing the Senior Obligations).

"Loan" means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan.

"Loan Documents" means this Agreement, each Note, the Fee Letter, and the Security Documents.

"Loan Notice" means a notice of a Borrowing, which, if in writing, shall be substantially in the form of Exhibit A.

"Loan Parties" means, collectively, the Borrowers.

"Maintenance Capital Expenditures" means "Maintenance Capital Expenditures", as defined in the Senior Credit Agreement.

"Make-Whole Amount" means with respect to the prepayment of any Note, an amount equal to the amount of interest that would have been paid on such Note pursuant to Section 2.06 through the later of January 2, 2015 or the date of such prepayment plus an amount equal to 101% of the outstanding principal amount of such Note prepaid.

"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document or the ability of any Loan Party to perform any payment obligations under and pursuant to the terms of, or to perform any of its other material obligations under and pursuant to the terms of, any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

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"Material Contract" means any contract or other arrangement to which the Borrower or any of its Subsidiaries is a party (other than the Loan Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.

"Multiemployer Plan" means a Plan covered by Title IV of ERISA which is a multiemployer plan as defined in Section 3(37) of ERISA or Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or with respect to which the Borrower or any ERISA Affiliates may have any liability, contingent or otherwise.

"Multiple Employer Plan" means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

"Net Cash Proceeds" means "Net Cash Proceeds", as defined in the Senior Credit Agreement.

"Note" means a 2014 Note or a 2015 Note, as the context may require.

"Notes" means, collectively, the 2014 Notes and the 2015 Notes.

"Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

"Off-Balance Sheet Liabilities" means, with respect to any Person as of any date of determination thereof, without duplication and to the extent not included as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with respect to any asset securitization transaction (including any accounts receivable purchase facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred and (ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar obligation of such Person or any of its Subsidiaries in respect of assets transferred or payments made in respect thereof, other than limited recourse provisions that are customary for transactions of such type and that neither (x) have the effect of limiting the loss or credit risk of such purchasers or transferees with respect to payment or performance by the obligors of the assets so transferred nor (y) impair the characterization of the transaction as a true sale under applicable Laws (including Debtor Relief Laws); (b) the monetary obligations under any financing lease or so-called "synthetic," tax retention or off-balance sheet lease transaction which, upon the application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as indebtedness; (c) the monetary obligations under any sale and leaseback transaction which does not create a liability on the consolidated balance sheet of such Person and its Subsidiaries; or (d) any other monetary obligation arising with respect to any other transaction which (i) is characterized as indebtedness for tax purposes but not for accounting purposes in accordance with GAAP or (ii) is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheet of such Person and its Subsidiaries (for purposes of this clause (d), any transaction structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

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"Organizational Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

"Other Taxes" means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

"Outstanding Amount" means with respect to Term Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Term Loans occurring on such date.

"Participant" has the meaning specified in Section 9.06(d).

"PBGC" means the Pension Benefit Guaranty Corporation.

"PCAOB" means the Public Company Accounting Oversight Board.

"Pemex Contract" means, collectively, (i) that certain contract, dated April 1, 2013, between CDOCI, HOC Offshore, S. DE R.L. DE C.V. and Pemex Exploración Y Producción, (ii) that certain contract, dated May 25, 2013, between CDOCI, HOC Offshore, S. DE R.L. DE C.V. and Pemex Exploración Y Producción, and (iii) that certain contract, dated May 29, 2013, between CDOCI, HOC Offshore, S. DE R.L. DE C.V. and Pemex Exploración Y Producción.

"Pension Act" means the Pension Protection Act of 2006.

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"Pension Funding Rules" means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

"Pension Plan" means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

"Permitted Liens" means Liens of the type described in Section 7.01 of the Senior Credit Agreement.

"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

"Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.

"Recovery Event" means any settlement of or payment in respect of any property or casualty insurance claim (excluding any claim in respect of business interruption) or any condemnation, appropriation, seizure or similar proceeding or act relating to any asset of the Borrower or any of its Subsidiaries.

"Register" has the meaning specified in Section 9.06(c).

"Registered Public Accounting Firm" has the meaning specified in the Securities Laws and shall be independent of the Borrower as prescribed by the Securities Laws.

"Related Parties" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.

"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

"Request for Credit Extension" means with respect to a Borrowing of Term Loans, a Loan Notice.

"Required Lenders" means, as of any date of determination, Lenders holding more than 50% of the Outstanding Amount; provided that the portion of the Outstanding Amount held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

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"Responsible Officer" means the chief executive officer, president, chief financial officer, Vice President – Finance or Vice President – Corporate Controller of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other equivalent action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

"Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower's stockholders, partners or members (or the equivalent Person thereof).

"Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002.

"SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

"Securities Laws" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

"Secured Parties" has the meaning specified in the Security Agreement.

"Security Agreement" means the Security Agreement to be entered into pursuant to Section 6.18, among the Borrowers and the Administrative Agent.

"Security Documents" means the Security Agreement and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

"Senior Cap" means, at any time, $302,500,000 less in each case (i) the amount of all prepayments and repayments applied to any term loans constituting Senior Obligations whether made before or after the Closing Date and (ii) the amount of all repayments and prepayments of any revolving loans or letters of credit constituting Senior Obligations whether made before or after the Closing Date, in each case as to this clause (ii) to the extent accompanied by a corresponding reduction in the applicable commitment amount, provided that the Senior Cap may be increased by $25,000,000 if the Consolidated Leverage Ratio calculated on a pro forma basis after giving effect to the incurrence of such additional Indebtedness is equal to or less than 3.75:1.00.

"Senior Credit Agreement" means the credit agreement, dated as of April 26, 2011, among CDII, as Borrower, each lender from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, as amended, supplemented or otherwise modified from time to time, in accordance with the terms hereof, or as refinanced or replaced, in accordance with the terms hereof, or to the extent terminated and no refinancing or replacement occurs in connection therewith, as in effect immediately prior to such termination.

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"Senior Lenders" means the "Lenders", as defined in the Senior Credit Agreement.

"Senior Loan Documents" means the "Loan Documents", as defined in the Senior Credit Agreement, provided that to the extent the Senior Loan Documents have been terminated, as in effect immediately prior to such termination.

"Senior Obligations" means the "Obligations", as defined in the Senior Credit Agreement.

"Senior Security Agreement" means the "Security Agreement", as defined in the Senior Credit Agreement.

"Senior Security Documents" means the "Security Documents", as defined in the Senior Credit Agreement.

"Solvent" and "Solvency" mean, with respect to any Person on any date of determination, that on such date (a) the value of the property of such Person, at a fair valuation, is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and are scheduled to mature, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they are scheduled to mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability subject to limitation provisions in the instrument creating or governing such contingent liabilities.

"SPC" has the meaning specified in Section 9.06(h).

"Subsidiary" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or, other than solely as a result of a contract under which such Person or one or more Persons that otherwise would constitute a Subsidiary of such Person provides management, operation or similar services but does not control the policies of such Person (including the appointment of such management), the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower.

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"Swap Contract" means (a) any and all interest rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement.

"Swap Termination Value" means, in respect of any one or more Swap Contracts of a Person, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

"Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"Term Facility" means, at any time (a) on or prior to the Closing Date, the aggregate amount of the Commitments at such time and (b) thereafter, the aggregate principal amount of the Term Loans of all Lenders outstanding at such time.

"Term Loan" means any loan made by any Lender pursuant to this Agreement.

"Threshold Amount" means $15,000,000.

"Transaction" means, collectively and without duplication, (a) the entering into by the Loan Parties of the Loan Documents to which they are intended to be a party, and (b) the payment of the fees and expenses incurred in connection with the consummation of the foregoing.

"United States" and "U.S." mean the United States of America.

"Wholly Owned Subsidiary" means as to any Person, any other Person all of the Equity Interests of which (other than, in the case of a Foreign Subsidiary, directors' qualifying shares or shares required by applicable law to be held by a Person other than the Borrower or a Subsidiary) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

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Section 1.02  Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

	
(a)

	
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation."  The word "will" shall be construed to have the same meaning and effect as the word "shall."  The word "or" is not exclusive.  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organizational Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, or if so specified herein, permitted assigns, (iii) the words "herein," "hereof" and "hereunder," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

	
(b)

	
In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including;" the words "to" and "until" each mean "to but excluding;" and the word "through" means "to and including."

	
(c)

	
Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

Section 1.03  Accounting Terms.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Initial Financial Statements, except as otherwise specifically prescribed herein.

 

Section 1.04  Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

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ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

Section 2.01  Loans.

 

	
(a)

	
The 2014 Loan Borrowing.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make a 2014 Loan to the Borrower on the Closing Date in an aggregate amount not to exceed such Lender's 2014 Loan Commitment.  The Borrowings shall consist of Term Loans made simultaneously by the Lenders in accordance with their respective 2014 Loan Commitments.  Amounts borrowed under this Section 2.01(a) and repaid may not be reborrowed.

	
(b)

	
The 2015 Loan Borrowing.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make a 2015 Loan to the Borrower on the Closing Date in an aggregate amount not to exceed such Lender's 2015 Loan Commitment.  The Borrowings shall consist of Term Loans made simultaneously by the Lenders in accordance with their respective 2015 Loan Commitments.  Amounts borrowed under this Section 2.01(b) and repaid may not be reborrowed.

Section 2.02  Borrowings, Conversions and Continuations of Loans.

 

	
(a)

	
Each Borrowing shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 11:00 a.m. on the Business Day prior to the requested date of any Borrowing or such later time as agreed by the Administrative Agent.  Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower.  Each Loan Notice (whether telephonic or written) shall specify (i) the requested date of the Borrowing (which shall be a Business Day), and (ii) the principal amount of Loans to be borrowed.

	
(b)

	
Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the Loans.  In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 2:00 p.m. on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.01 and Section 4.02, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

Section 2.03  Optional Prepayments.  The Borrower may not voluntarily prepay any Loans under the Term Facility in whole or in part.

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Section 2.04  Mandatory Prepayments.

 

	
(a)

	
(i)  After (A) the payment in full (other than contingent indemnification Obligations) of the Senior Obligations and (B) the termination of the Senior Credit Agreement (other than in connection with the refinancing or replacement of the Senior Credit Agreement, in accordance with the terms hereof), if the Borrower or any of its Subsidiaries receives Net Cash Proceeds in excess of $2,500,000 from any Asset Disposition or any Recovery Event (or series of related Asset Dispositions or Recovery Events), then (i) on the next Business Day following the date of receipt by the Borrower or the applicable Subsidiary of such Net Cash Proceeds and (ii) the Borrower shall prepay (or cause to be prepaid) the Loans by an amount equal to the amount of Net Cash Proceeds so received, as set forth in Section 2.04(d); provided, however that at the election of the Borrower, and so long as no Default shall have occurred and be continuing, the Borrower, the applicable Subsidiary or any Loan Party (or any combination of the foregoing) may reinvest all or any portion of such Net Cash Proceeds if such reinvestment complies with the following requirements:  (w) the Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer to the effect that the Borrower and/or any such permitted Subsidiary intends to reinvest all or any portion of such Net Cash Proceeds in accordance with this Section 2.04(a), (x) the Borrower, the applicable Subsidiary or any Loan Party (or any combination of the foregoing) shall reinvest such Net Cash Proceeds to acquire operating assets (including the construction of any such assets and the Acquisition of all of the Equity Interests in one or more Persons owning or constructing any such assets), to improve, enlarge, develop, re-construct or repair the affected asset, to perform drydocking and machinery overhaul Maintenance Capital Expenditures with respect to operating assets, or any combination of the foregoing in each case, within 365 days after the receipt of the applicable Net Cash Proceeds, (y) the Borrower, the applicable Subsidiary or any Loan Party (or any combination of the foregoing) shall, in the case of any Disposition of, or Recovery Event with respect to, any Collateral, reinvest such proceeds in assets of the type described in clause (x) above (including the construction of, or Maintenance Capital Expenditures with respect to, such assets and the Acquisition of all of the Equity Interests in one or more Persons owning or constructing such assets) which will constitute Collateral and take all actions required by Section 6.13 with respect thereto (provided that any Equity Interests purchased with Net Cash Proceeds of Collateral pursuant to this Section 2.04(a) must be issued by a Person organized under the laws of any political subdivision of the United States), and (z) the Borrower shall prepay (or cause to be prepaid) the Loans, as set forth in Section 2.04(d), with any portion of such Net Cash Proceeds not expended in accordance with this Section 2.04(a) within such period.  Pending the application of any such Net Cash Proceeds, the Borrower may invest such Net Cash Proceeds in Cash Equivalents in which the Administrative Agent, for the benefit of the Secured Parties, has a perfected first priority security interest, subject only to Permitted Liens.

	
(ii)

	
After (A) the payment in full (other than contingent indemnification Obligations) of the Senior Obligations and (B) the termination of the Senior Credit Agreement (other than in connection with the refinancing or replacement of the Senior Credit Agreement, in accordance with the terms hereof), with respect to any Disposition of assets (other than any Excluded Asset Disposition) or Recovery Event which will result in Net Cash Proceeds in excess of $10,000,000, the Borrower shall notify the Administrative Agent thereof on or prior to the date of the applicable Disposition or promptly following the date that the Borrower has actual knowledge that a Recovery Event has occurred.

 

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(b)

	
After (A) the payment in full (other than contingent indemnification Obligations) of the Senior Obligations and (B) the termination of the Senior Credit Agreement (other than in connection with the refinancing or replacement of the Senior Credit Agreement, in accordance with the terms hereof), if any Indebtedness shall be issued or incurred by the Borrower or any of its Subsidiaries (excluding any Indebtedness permitted to be incurred in accordance with Section 7.03(a) – (f), (h) – (n) and (p) of the Senior Credit Agreement and Indebtedness incurred pursuant to Section 7.03(g) of the Senior Credit Agreement to the extent provided below), then, on the next Business Day following receipt by the Borrower or the applicable Subsidiary of the Net Cash Proceeds from such issuance or incurrence, the Borrower shall prepay (or cause to be prepaid) the Loans by an amount equal to the amount of such Net Cash Proceeds, as set forth in Section 2.04(d).  If any Indebtedness shall be issued or incurred by the Borrower or any of its Subsidiaries in accordance with Section 7.03(g) of the Senior Credit Agreement, then, on the next Business Day following receipt by the Borrower or the applicable Subsidiary of the Net Cash Proceeds from such issuance or incurrence, the Borrower shall prepay (or cause to be prepaid) the Loans by an amount equal to 75% of the amount of such Net Cash Proceeds, as set forth in Section 2.04(d).

	
(c)

	
If an Event of Default occurs under Section 7.01(m), the Borrower shall prepay the Loans in full plus the Make-Whole Amount on such date or contemporaneously with the occurrence of such Event of Default.

	
(d)

	
Each prepayment of Loans pursuant to the foregoing provisions of Section 2.04 shall be applied, subject to Section 2.12, to the prepayment of the 2014 Loans and the 2015 Loans on a pro rata basis and to each of the Lenders holding such Loans on a pro rata basis.  Any prepayment of a Loan pursuant to this Section 2.04(d) shall be accompanied by all accrued interest thereon plus 1.0% of the principal amount of the Loans prepaid. Any payment in respect of a mandatory prepayment pursuant to Section 2.04 may be declined in whole or in part by any Lender without prejudice to such Lender's rights hereunder to accept or decline any future payments in respect of mandatory prepayment.  If a Lender chooses to accept payment in respect of a mandatory prepayment, in whole or in part, such Lender shall provide written notice thereof to the Agent and each other Lender and the Borrowers not less than five (5) Business Days after the date of offer of such redemption (the "Notice Period") and the other Lenders that accept such mandatory prepayment shall share such proceeds on a pro rata basis (and if declined by all Lenders, such declined proceeds shall be retained by the Borrower).  Borrower shall thereafter make any required mandatory prepayment to Lenders that has so accepted within two Business Days of the expiration of the Notice Period.

Section 2.05  Repayment of Loans.  The Borrower shall repay to the Lenders the aggregate outstanding principal amount of the Term Loans made to the Borrower as follows: (i) on the 2014 Loan Maturity Date, the Borrower shall repay the aggregate principal amount of the 2014 Loans plus all accrued interest, without any premium or penalty and (ii) on the 2015 Loan Maturity Date, the Borrower shall repay the aggregate principal amount of the 2015 Loans plus all accrued interest, without any premium or penalty.

21

 

Section 2.06  Interest.

 

	
(a)

	
Subject to the provisions of subsection (b) below, the Term Loans shall bear interest on the principal amount thereof from time to time outstanding at a rate per annum equal to 13.50%.

	
(b)

	
(i)            While any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a rate per annum equal to the Default Rate to the fullest extent permitted by applicable Laws.

	
(ii)

	
Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

	
(c)

	
Interest on each Loan shall be due and payable by the Borrower in immediately available funds in arrears on each Interest Payment Date applicable thereto (with the first such payment on October 1, 2013) and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

Section 2.07  Fees.

 

	
(a)

	
The Borrower shall pay to the Lenders for their own respective accounts fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

	
(b)

	
The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

Section 2.08  Computation of Interest and Fees.  All computations of fees and interest for Term Loans shall be made on the basis of a year of 360 days, and actual days elapsed.  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.10(a), bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

Section 2.09  Evidence of Debt.  The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

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Section 2.10  Payments Generally; Administrative Agent's Clawback.

 

	
(a)

	
General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 3:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office.  All payments received by the Administrative Agent after 3:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

	
(b)

	
(i)  Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender agrees to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender's Loan included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

23

 

	
(ii)

	
Payments by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

	
(c)

	
Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

	
(d)

	
Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 9.04(c) are several and not joint.  The failure of any Lender to make any Loan or to make any payment under Section 9.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 9.04(c).

	
(e)

	
Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

Section 2.11   Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations in respect of the Term Facility due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations in respect of the Term Facility due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations in respect of the Term Facility due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations in respect of the Term Facility owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations in respect of the Term Facility owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payment on account of the Obligations in respect of the Term Facility owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations in respect of the Term Facility then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that the provisions of this Section shall not be construed to apply to (y) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section shall apply).

24

 

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

Section 2.12  Defaulting Lenders.  (a) Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

	
(i)

	
Waivers and Amendments.  That Defaulting Lender's right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.01.

	
(ii)

	
Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; and sixth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans under the Term Facility in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders under the Term Facility on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

25

 

	
(b)

	
Defaulting Lender Cure.  If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01  Taxes.

 

	
(a)

	
Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

26

 

	
(b)

	
Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

	
(c)

	
Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

	
(d)

	
Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

	
(e)

	
Status of Lenders.  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

27

	
(i)

	
duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

	
(ii)

	
duly completed copies of Internal Revenue Service Form W-8ECI,

	
(iii)

	
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

	
(iv)

	
any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

	
(f)

	
Treatment of Certain Refunds.  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative Agent or such Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

Section 3.02  Increased Costs.

 

	
(a)

	
Increased Costs Generally.  If any Change in Law shall:

 

28

 

	
(i)

	
impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;

	
(ii)

	
subject any Lender to any tax of any kind whatsoever with respect to this Agreement, or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or

	
(iii)

	
impose on any Lender any other condition, cost or expense affecting this Agreement or Term Loans made by such Lender;

and the result of any of the foregoing shall be to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

	
(b)

	
Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered.

	
(c)

	
Certificates for Reimbursement.  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay (or cause to be paid) to such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.  Upon request by the Borrower, a Lender shall also provide a certificate that such Lender is generally requesting such compensation from other borrowers which such Lender deems similarly-situated to the Borrower.

	
(d)

	
Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender's right to demand such compensation, provided that no Borrower shall be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than 120 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 120 day period referred to above shall be extended to include the period of retroactive effect thereof).

 

 

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Section 3.03  Mitigation Obligations; Replacement of Lenders.

 

	
(a)

	
Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.02, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.02, as the case may be, in the future, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

	
(b)

	
Replacement of Lenders.  If any Lender requests compensation under Section 3.02 and does not subsequently designate a different Lending Office or assign its rights and obligations hereunder to another of its offices, branches or affiliates as provided above, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 9.13.

Section 3.04  Survival.  All of the Borrower's obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

 

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

Section 4.01  Conditions of Initial Credit Extension.  The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

 

	
(a)

	
The Administrative Agent's receipt of the following, each of which shall be originals or either copies transmitted by electronic transmission or telecopies (followed, in each case, promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

	
(i)

	
executed counterparts of this Agreement;

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(ii)

	
a Note executed by the Borrower in favor of each Lender requesting a Note;

	
(iii)

	
completed lien searches, listing all effective financing statements filed in the jurisdictions that the Administrative Agent may deem necessary or reasonably desirable in order to perfect the liens and security interests created under the Security Documents covering the Collateral described in the Security Documents that name any Loan Party or any Subsidiary of any Loan Party as debtor, together with copies of such other financing statements, which liens shall be listed on Schedule 4.01;

	
(iv)

	
an incumbency certificate executed by the Responsible Officer(s) of each Loan Party evidencing the identity, authority and capacity of each Responsible Officer authorized to act as a Responsible Officer in connection with each Loan Document to which such Loan Party is a party;

	
(v)

	
copies, certified by the Secretary or Assistant Secretary (or other appropriate Responsible Officer) of the applicable Loan Party, of all resolutions and other appropriate authorizing actions taken or to be taken by or on behalf of each Loan Party authorizing and approving the execution, delivery and performance of all Loan Documents to which such Loan Party is a party, which resolutions or authorizing actions have not been revoked, modified, amended or rescinded and are in full force and effect as of the Closing Date;

	
(vi)

	
such Organizational Documents, certified by the Secretary or Assistant Secretary (or other appropriate Responsible Officer) of the applicable Loan Party, and/or certificates of good standing or similar certificates or instruments as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that the Borrower is validly existing, in good standing and (if applicable) qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

	
(vii)

	
a favorable legal opinion of (A) Jones Walker LLP, counsel to the Loan Parties, and (B) General Counsel of CDII, each addressed to the Administrative Agent and each Lender, as to such matters concerning the Loan Parties (or any of them) and the Loan Documents as the Administrative Agent may reasonably request;

	
(viii)

	
a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all material consents, licenses and approvals required to be obtained by any Loan Party in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

 

31

	
(ix)

	
 a copy of the Pemex Contract, together with a certificate of a Responsible Officer of each Loan Party certifying such document as being a true, correct, and complete copy thereof;

	
(x)

	
a certificate signed by a Responsible Officer of the Borrower certifying that the conditions specified in Sections 4.02(a) and (b) have been satisfied.

	
(b)

	
There shall not have occurred since December 31, 2012 any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect;

	
(c)

	
The Administrative Agent shall have received certification as to the financial condition and Solvency of the Borrower and its Subsidiaries from the chief financial officer of the Borrower after giving effect to the consummation of the Transaction and the incurrence of indebtedness related thereto;

	
(d)

	
There shall be no action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower in any court or before any arbitrator or Governmental Authority that could reasonably be expected to have a Material Adverse Effect;

	
(e)

	
The Administrative Agent shall be satisfied that all Loans made by the Lenders to the Borrower shall be in full compliance with the Federal Reserve's margin regulations;

	
(f)

	
The Administrative Agent shall have received (a) the Borrower's unqualified audited consolidated financial statements for the year ending 2012, (b) forecasts of consolidated balance sheets, income statements and cash flow statements of the Borrower and its Subsidiaries for each of the Borrower's fiscal quarters ending June 30, 2013, September 30, 2013 and December 31, 2013, in each case, prepared by management of the Borrower and in form and substance substantially similar to those delivered to the Senior Lenders and (c) budgets and forecasts of consolidated balance sheets, income statements and cash flow statements of the Borrower and its Subsidiaries for each of the Borrower's fiscal years 2014 through and including 2015, in each case, prepared by management of the Borrower and in form and substance substantially similar to those delivered to the Senior Lenders;

	
(g)

	
The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, such other assurances, certificates, documents, consents or opinions as the Administrative Agent reasonably may require and timely request;

	
(h)

	
Any fees required to be paid on or before the Closing Date shall have been paid unless the receipt thereof on or before the Closing Date is or has been waived by the recipient thereof; and

 

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(i)

	
The Borrower shall have paid all reasonable fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced in a reasonably detailed statement and received by the Borrower prior to or at a reasonable time on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such reasonable fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

Without limiting the generality of the provisions of Section 8.04, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

Section 4.02  Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent:

 

	
(a)

	
The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer, after the Closing Date, to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

	
(b)

	
No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

	
(c)

	
The Administrative Agent shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Section 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

Section 5.01  Existence, Qualification and Power.  Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and, if applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite corporate or equivalent power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business as now conducted and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, if applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of its properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i), or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

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Section 5.02  Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or equivalent action, and do not and will not (a) violate the terms of any of such Person's Organizational Documents; (b) conflict with or result in any breach of or default (however denominated) under, or the creation of any Lien under, or require any payment to be made under any security issued by, or any loan agreement, indenture or other material agreement to which such Person is a party or which is binding on its properties; (c) violate any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (d) violate any Law applicable to it.

 

Section 5.03  Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required to be made by any Loan Party in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the Transaction, (b) the grant by any Loan Party after the Lien Trigger Date of the Liens granted by it pursuant to the Security Documents to which it is a party or (c) following delivery of the Security Documents pursuant to Section 6.13 after the Lien Trigger Date, the perfection or maintenance of the Liens created under the Security Documents to which it is a party except for (i) such authorizations, approvals, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect, and (ii) filings or other requisite actions necessary to perfect or establish the priority of Liens created under the Security Documents, to the extent not required by such Security Documents.

 

Section 5.04  Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of each Loan Party that is a party hereto or thereto, as the case may be, enforceable against such Loan Party in accordance with its terms, except as such enforcement may be limited by Debtor Relief Laws and similar Laws affecting creditors' rights generally or providing relief for debtors and subject to general principles of equity.

 

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Section 5.05  Financial Statements; No Material Adverse Effect; No Internal Control Event.

 

	
(a)

	
The Initial Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the consolidated financial condition of the Borrower and its Subsidiaries as of the date thereof and their consolidated results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including any such liabilities for taxes, material commitments and Indebtedness.

	
(b)

	
The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated March 31, 2013, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the consolidated financial condition of the Borrower and its Subsidiaries as of the date thereof and their consolidated results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

	
(c)

	
[Intentionally left blank.]

	
(d)

	
Since the date of the most recent financial statements furnished pursuant to Section 6.01(a) (or, until the date of the initial delivery of financial statements pursuant to such Section, since the date of the Initial Financial Statements), there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

	
(e)

	
To the best knowledge of the Borrower, no Internal Control Event exists or has occurred since the date of the Initial Financial Statements that has resulted in or could reasonably be expected to result in a misstatement in any material respect, in any material financial information delivered or to be delivered to the Administrative Agent or the Lenders, of (i) covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial condition or results of operations of the Borrower and its Subsidiaries on a consolidated basis.

	
(f)

	
The consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were reasonable in light of the conditions existing when made and, and represented, at the time of delivery, the Borrower's good faith best estimate of its future financial condition and performance.

Section 5.06  Litigation.  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of its properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely to such Loan Party, could reasonably be expected to have a Material Adverse Effect.

35

 

Section 5.07  No Default.  Neither any Loan Party nor any Subsidiary thereof is in default under, or in breach of, any Contractual Obligation to which it is a party or by which it is bound that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

 

Section 5.08  Ownership of Property; Liens.  The Borrower and its Subsidiaries have good and defensible title to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to materially detract from the value thereof to, or the use thereof in, the business of the Borrower and its Subsidiaries.  The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01 of the Senior Credit Agreement.

 

Section 5.09  Environmental Compliance.

 

	
(a)

	
The Borrower and its Subsidiaries are in compliance with all applicable Environmental Laws, and have no liability under any Environmental Laws, except for such non-compliance or liability which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

	
(b)

	
The Borrower and its Subsidiaries hold all Environmental Permits (each of which is in full force and effect) necessary for the operation of its business and for the use of any property owned, leased, or otherwise operated by them, except for such Environmental Permits the failure to hold which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

	
(c)

	
(i) There are no pending or, to the knowledge of the Borrower, threatened, claims against the Borrower or any of its Subsidiaries under any Environmental Laws, and, (ii) neither the Borrower nor any of its Subsidiaries has received any written notice of alleged non-compliance with applicable Environmental Laws or Environmental Permits which, in each case, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 5.10  Insurance.  The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates, except to the extent that reasonable self insurance meeting the same standards is maintained with respect to such risks.

 

Section 5.11  Taxes.  The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP and except as set forth on Schedule 5.11.  There is no proposed tax assessment against the Borrower or any of its Subsidiaries that would, if made, have a Material Adverse Effect.  Except as set forth on Schedule 5.11, neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement with any Person that is not a Loan Party or Subsidiary thereof.

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Section 5.12  ERISA Compliance.

 

	
(a)

	
Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws.  Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service.  To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

	
(b)

	
There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or  lawsuits, or action by any Governmental Authority, with respect to any Plan that  could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

	
(c)

	
(i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

 

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(d)

	
Neither the Borrower or any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other Pension Plans not otherwise prohibited by this Agreement.

Section 5.13  Subsidiaries; Equity Interests.  As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens (other than those created under (i) the Senior Security Documents, (ii) after the Lien Trigger Date, the Security Documents, and (iii) any applicable Permitted Liens).  As of the Closing Date, the Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13.  All of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.

 

Section 5.14  Margin Regulations; Investment Company Act.

 

	
(a)

	
The Borrower is neither engaged nor will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower individually or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Sections 7.01 or 7.05 of the Senior Credit Agreement or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 7.01(e) of the Senior Credit Agreement will be margin stock.

	
(b)

	
None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an "investment company" under the Investment Company Act of 1940.

Section 5.15  Disclosure.  The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which the Borrower or any of its Subsidiaries is a party or by which the Borrower is bound, and all other matters known to the Borrower, that, individually or in the aggregate, could, if breached or violated by, enforced against, or adversely determined in relation to, the Borrower or any of its Subsidiaries, reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

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Section 5.16  Compliance with Laws.  The Borrower and its Subsidiaries is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees binding on it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.17  Taxpayer Identification Number.  As of the Closing Date, the Borrower's true and correct U.S. taxpayer identification number is set forth on Schedule 9.02, and after the Closing Date, as disclosed by the Borrower in writing to the Administrative Agent.

 

Section 5.18  Intellectual Property; Licenses, Etc.  The Borrower and/or its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, "IP Rights") that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person unless such failure to own or possess the right to use such IP Rights would not reasonably be expected to have a Material Adverse Effect.  To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any of its Subsidiaries infringes upon any rights held by any other Person in a manner that would reasonably be expected to have a Material Adverse Effect.  No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, against the Borrower or any of its Subsidiaries, or any of their use thereof, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 5.19  Intentionally Left Blank.

 

Section 5.20  Solvency.  Each Loan Party is, individually and together with its Subsidiaries on a consolidated basis, Solvent.

 

Section 5.21  Off-Balance Sheet Liabilities.  Neither the Borrower nor any of its Subsidiaries has any liability in respect of any Off-Balance Sheet Liabilities.

 

Section 5.22  Casualty, Etc.  Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each of its Subsidiaries to:

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Section 6.01  Financial Statements.  Deliver to the Administrative Agent:

 

	
(a)

	
as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower (or, if earlier, 15 days after the date required to be filed with the SEC (giving effect to any extension permitted by the SEC)), a consolidated balance sheet of CDII and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP, audited and accompanied by (i) a report and opinion of a Registered Public Accounting Firm of nationally recognized standing selected by CDII and reasonably acceptable to the Administrative Agent (which shall be deemed reasonably acceptable if reasonably acceptable to the Senior Lenders), which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit or with respect to the absence of any material misstatement, and (ii) an opinion of such Registered Public Accounting Firm independently assessing CDII's internal controls over financial reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 5, and Section 404 of Sarbanes-Oxley, in each case, so long as the foregoing are in effect and so long as therein required and applicable to the CDII, and expressing a conclusion that contains no statement that there is a material weakness in such internal controls, except for such material weaknesses as to which the Administrative Agent do not object, provided that if the Senior Lenders do not object, the Administrative Agent will not object;

	
(b)

	
as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of CDII (or, if earlier, 5 days after the date required to be filed with the SEC (giving effect to any extension permitted by the SEC)) (commencing with the fiscal quarter ended June 30, 2013), a consolidated balance sheet of CDII and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations and cash flows for such fiscal quarter and for the portion of CDII's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by a Responsible Officer of CDII as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of CDII and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and

	
(c)

	
as soon as available, but in any event within 30 days following the end of each fiscal year of CDII (i) forecasts prepared by management of CDII, in form reasonably satisfactory to the Administrative Agent (which shall be deemed reasonably acceptable if reasonably acceptable to the Senior Lenders), of consolidated balance sheets and statements of income or operations and cash flows of CDII and its respective Subsidiaries for each of the immediately succeeding three years and (ii) the business plan of CDII and its respective Subsidiaries for the immediately following fiscal year; and

 

40

As to any information contained in materials furnished pursuant to Section 6.02(c), CDII shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of CDII to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

Section 6.02  Certificates; Other Information.  Deliver to the Administrative Agent (except as provided in Section 6.02(a)):

 

	
(a)

	
concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a copy of the duly completed Compliance Certificate delivered pursuant to Section 6.02 of the Senior Credit Agreement;

	
(b)

	
promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;

	
(c)

	
promptly after the same are publicly available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

	
(d)

	
promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

	
(e)

	
promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

	
(f)

	
promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request;

	
(g)

	
promptly, and in any event within five Business Days after receipt or issuance thereof by any Loan Party or any Subsidiary thereof, copies of each amendment, material notice, or notice of default or termination related to (i) the Pemex Contract or (ii) the Senior Loan Documents;

 

41

	
(h)

	
within ten (10) days after each Interest Payment Date, beginning with the Interest Payment Date occurring on July 1, 2014, a calculation of the Liquidity of the Borrowers as of the last day of the previous fiscal quarter, signed by a Responsible Officer of the Borrower and delivered to the Administrative Agent (which delivery may, unless the Administrative Agent requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes).

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(b), (c), (d), or (e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower's website on the Internet at the website address listed on Schedule 9.02; or (ii) on which such documents are posted on the Borrower's behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting by it of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

Section 6.03  Notices.  Promptly notify the Administrative Agent:

 

	
(a)

	
of the occurrence of any Default;

	
(b)

	
of the occurrence of any Default under the Senior Loan Documents;

	
(c)

	
of the occurrence of (i) any default under the Pemex Contract or (ii) any event under the Pemex Contract that could (A) reasonably be expected to result in the termination of the Pemex Contract or (B) allow Pemex Exploración Y Producción to terminate the Pemex Contract;

	
(d)

	
of any occurrence or event that has resulted or could reasonably be expected to result in a Material Adverse Effect, including, if any of the same resulted in or could be reasonably be expected to result in a Material Adverse Effect, (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

 

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(e)

	
of the occurrence of any ERISA Event, upon the Borrower obtaining knowledge thereof;

	
(f)

	
of any material change in accounting policies or financial reporting practices by the Borrower and the Subsidiaries taken as a whole;

	
(g)

	
of the determination by the Registered Public Accounting Firm providing the opinion required under Section 6.01(a)(ii) (in connection with its preparation of such opinion) or the Borrower's determination at any time of the occurrence or existence of any Internal Control Event; and

	
(h)

	
any public offering of Equity Interests of the Borrower, each such notice to be delivered to the Administrative Agent not less than five Business Days after the occurrence of such event.

Each notice pursuant to this Section 6.03 other than Section 6.03(h) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

Section 6.04  Payment of Obligations.  Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

 

Section 6.05  Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Sections 7.04 or 7.05 of the Senior Credit Agreement; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

 

Section 6.06  Maintenance of Properties.  (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof, in each case, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

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Section 6.07  Maintenance of Insurance.  Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and, after the Lien Trigger Date, providing for not less than 30 days' prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance, except to the extent reasonable self insurance meeting the same standards is maintained.  Each Loan Party shall, after the Lien Trigger Date, cause the Administrative Agent to be named at all times as loss payee for the benefit of the Lenders in respect of each property or casualty insurance policy that such Loan Party is required to maintain under this Section with respect to the Collateral, and at all times as an additional insured party in respect of each liability insurance policy that such Loan Party is required to maintain under this Section.

 

Section 6.08  Compliance with Laws.  Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

Section 6.09  Books and Records.  (a)  Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.

 

Section 6.10  Inspection Rights.  Permit representatives of the Administrative Agent and each Lender to visit and inspect its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower and subject to applicable safety standards, applicable privilege and confidentiality restrictions, and restrictions of owners of such records or properties who are neither the Borrower nor any Subsidiary; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

 

Section 6.11  Use of Proceeds.  (a) Use the proceeds of the Credit Extensions made on the Closing Date to (i) pay fees and expenses incurred in connection with the foregoing, the entering into and funding of the Term Facility, and all related transactions and (ii) to provide ongoing working capital and for other general corporate purposes of the Borrower and its Subsidiaries not in violation of any Law or of any Loan Document.

 

Section 6.12  Material Contracts.  Perform and observe all the terms and provision of each Material Contract to be performed and observed by it, maintain each such Material Contract in full force and effect and enforce each such Material Contract in accordance with its terms, except, in any case described in this Section 6.12, where the failure to do so, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

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Section 6.13  Collateral; etc.

 

	
(a)

	
After the Lien Trigger Date, with respect to any property (other than any Excluded Property) acquired after the Closing Date by any Loan Party, including without limitation pursuant to Section 7.02(h) of the Senior Credit Agreement, and any property that ceases to be Excluded Property promptly (i) execute and deliver to the Administrative Agent such amendments or addendums to the Security Documents or such other documents as the Administrative Agent reasonably deems necessary to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such property and (ii) take all actions necessary to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in such property (subject only to applicable Permitted Liens and Liens granted under the Senior Security Documents), including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be reasonably requested by the Administrative Agent, in each case within a reasonable time following the applicable requests of the Administrative Agent and receipt of applicable documents, if any.

	
(b)

	
After the Lien Trigger Date, with respect to any new Subsidiary (other than, (y) a Subsidiary that, promptly upon its formation incurs Indebtedness pursuant to Section 7.03(h) of the Senior Credit Agreement, to the extent such Subsidiary is prohibited under the documents governing such Indebtedness from taking any of the following actions and (z) in the case of clause (iii) below, a Foreign Subsidiary, and in the case of all clauses below, an Immaterial Foreign Subsidiary or an Excluded Foreign Subsidiary) created or acquired after the Closing Date, including without limitation pursuant to Section 7.02(h) of the Senior Credit Agreement, (which, for the purposes of this paragraph, shall include any existing Subsidiary that ceases to be an Immaterial Foreign Subsidiary or an Excluded Foreign Subsidiary), by any Loan Party, promptly (i) execute and deliver to the Administrative Agent such amendments or addendums to the Security Documents as the Administrative Agent deems necessary to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Equity Interests of such new Subsidiary that is owned by such Loan Party (subject only to applicable Permitted Liens), (ii) to the extent not delivered pursuant to the Senior Security Documents, deliver to the Administrative Agent the certificates (if any) representing such Equity Interests, together with undated stock powers or share transfer forms, in blank, executed and delivered by a duly authorized officer of the applicable Loan Party, (iii) cause such new Subsidiary (A) to become a party to this Agreement and the Security Documents and (B) to take such actions necessary to grant to the Administrative Agent for the benefit of the Secured Parties a perfected first priority security interest in the collateral described in the Security Documents with respect to such new Subsidiary (subject only to applicable Permitted Liens and Liens granted under the Senior Security Documents), including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be reasonably requested by the Administrative Agent, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, in each case within a reasonable time following the applicable requests of the Administrative Agent and receipt of applicable documents, if any.

 

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(c)

	
After the Lien Trigger Date, with respect to (i) any new Excluded Foreign Subsidiary (other than (y) a Subsidiary that, promptly upon its formation incurs Indebtedness pursuant to Section 7.03(h) of the Senior Credit Agreement, to the extent the documents governing such Indebtedness prohibit the following actions and (z) an Immaterial Foreign Subsidiary) created or acquired after the Closing Date by any Loan Party, including without limitation pursuant to Section 7.02(h) of the Senior Credit Agreement, and (ii) any Excluded Foreign Subsidiary of a Loan Party which Subsidiary is existing on the Closing Date but whose Equity Interests are not subject to a "Foreign Pledge Agreement" (as defined in the Senior Credit Agreement), if such Excluded Foreign Subsidiary ceases to be an Immaterial Foreign Subsidiary, promptly (A) execute and deliver to the Administrative Agent such amendments or addendums to the Security Documents or such other documents as the Administrative Agent deems necessary and requests in order to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest (subject only to applicable Permitted Liens and Liens granted under the Senior Security Documents) in the Equity Interests of such Subsidiary that is owned by the applicable Loan Party, (provided that in no event shall more than 66% of the total outstanding Equity Interests of any such Excluded Foreign Subsidiary be required to be so pledged), and (B) to the extent not delivered pursuant to the Senior Security Documents, deliver to the Administrative Agent the certificates (if any) representing such Equity Interests, together with undated stock powers or share transfer forms, in blank, executed and delivered by a duly authorized officer of the applicable Loan Party, and take such other action as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect the Lien of the Administrative Agent thereon, and (C) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, in each case within a reasonable time following the applicable requests of the Administrative Agent and the receipt of any applicable documents.

Section 6.14  Governmental Authorizations.  If any filing, notice to, registration with, or consent or other action of any Governmental Authority is required to be made or obtained by the Borrower or any of its Subsidiaries under Law applicable to any of them to permit any Foreign Subsidiary to make payments on any intercompany note made by it or any Restricted Payments to any other Subsidiary or the Borrower, as applicable, promptly take such actions as are reasonably necessary to obtain permission for such Foreign Subsidiary to make such note payments or Restricted Payments without further Governmental Authority approval.

 

Section 6.15  Compliance with Environmental Laws.  In each case, to the extent that the failure to do or cause to be done any of the following actions would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:  (i) comply, and cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; (ii) obtain and renew all Environmental Permits necessary for its operations and properties; and (iii) conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

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Section 6.16  Further Assurances.  Promptly upon request by, and receipt of any applicable information and documents from, the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) after the Lien Trigger Date, to the fullest extent permitted by applicable law and so long the granting of such liens would not cause a default or event of default to occur under the Senior Loan Documents, subject any Loan Party's or any of its Subsidiaries' properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Security Documents, (iii) after the Lien Trigger Date, perfect and maintain the validity, effectiveness and priority of any of the Security Documents and any of the Liens intended to be created thereunder and (iv) after the Lien Trigger Date, assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Lenders the rights granted or now or hereafter intended to be granted to the Lenders under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

 

Section 6.17  Lien Trigger.  Upon the occurrence of the Lien Trigger Date, the Borrower will use its best efforts to immediately (but in any event within 30 days) obtain the consent of the lenders under the Senior Credit Agreement to grant a security interest in the same collateral that secures the Senior Obligations, which security interest shall rank junior to the security interest that secures the Senior Obligations, provided that the Borrowers' grant of such security interest will be effective to secure the Obligations without the consent of the lenders under the Senior Credit Agreement if (i) the granting of such liens will not cause a default or event of default under the Senior Credit Agreement or (ii) Senior Obligations have been paid in full (other than contingent indemnification Obligations), unless such payment has been made in connection with the refinancing or replacement of the Senior Credit Agreement, in accordance with the terms hereof.

 

Section 6.18  Post-Closing Actions.  Promptly, but in any event within 90 days following the Closing Date (or such later date as extended by the Administrative Agent in its sole discretion), the Borrower shall enter into the Security Agreement with the Administrative Agent in substantially the same form as the Senior Security Agreement, provided that (i) the liens granted thereunder shall be junior to the liens under the Senior Security Agreement, (ii) such liens will not actually be granted until the Lien Trigger Date and (iii) the granting of such liens will not cause a default or event of default under the Senior Credit Agreement.

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ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.01  Events of Default.  Any of the following shall constitute an Event of Default:

 

	
(a)

	
Non-Payment.  The Borrower or any other Loan Party fails to pay (i) within three days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (ii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

	
(b)

	
Specific Covenants.  Any Loan Party fails to perform or observe any term, covenant or agreement contained in (i) any of Section 6.03, 6.05, 6.10, 6.12, 6.17 or Section 6.18 and with respect to CDII only, Section 6.01 or (ii) after (A) the payment in full (other than contingent indemnification Obligations) of the Senior Obligations and (B) the termination of the Senior Credit Agreement (other than in connection with the refinancing or replacement of the Senior Credit Agreement, in accordance with the terms hereof), Article VII of the Senior Credit Agreement as in effect immediately prior to such termination, which is incorporated herein by reference.

	
(c)

	
Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues unremedied for 30 days after the earlier of (i) the date on which the Borrower or such Loan Party obtains, or reasonably should have had, knowledge of such failure and (ii) the date on which the Borrower or such Loan Party receives notice thereof from the Administrative Agent; or

	
(d)

	
Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

	
(e)

	
Cross-Default.  (i) The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) the occurrence of any event or circumstance pursuant to the Senior Loan Documents that allows (or would have allowed to the extent the Senior Obligations have been paid in full (other than contingent indemnification Obligations)) the Senior Lenders to exercise remedies thereunder or declare the commitments thereunder to be terminated; or

 

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(f)

	
Insolvency Proceedings, Etc.  (i) Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or (ii) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or (iii) any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

	
(g)

	
Inability to Pay Debts; Attachment.  (i) The Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

	
(h)

	
Judgments.  There is entered against the Borrower or any Subsidiary one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), and (i) enforcement proceedings are commenced by any creditor upon such judgment or order, or (ii) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

	
(i)

	
ERISA.  (i) An ERISA Event occurs that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to subject the Borrower or any Subsidiary to liability individually or in the aggregate in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

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(j)

	
Invalidity of Loan Documents.  Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document;

	
(k)

	
Change of Control.  There occurs any Change of Control;

	
(l)

	
Secured Indebtedness.  The amount of any Indebtedness secured by a Lien (other than the Obligations) exceeds the Senior Cap; or

	
(m)

	
Amendment to Senior Loan Documents.  The Senior Loan Documents are amended, refinanced or replaced in any way without the consent of the Required Lenders that (i) increases the amount of Indebtedness under the Senior Loan Document to an amount in excess of the Senior Cap, (ii) increases the All-In Yield of the Senior Obligations by more than 200 basis point greater than the All-In Yield on the Closing Date (assuming the "Applicable Margin" (as defined in the Senior Credit Agreement) in the Senior Credit Agreement on the Closing Date is being calculated at the highest level possible in the Senior Credit Agreement), provided that the highest pricing level in the definition of "Applicable Margin" (as defined in the Senior Credit Agreement) shall not be measured against a Consolidated Leverage Ratio less than 5.00:1.00, (iii) amends Section 7.01(t) of the Senior Credit Agreement to decrease the amount of Indebtedness that can be secured by a Lien or (iv) amends Section 7.03(f) of the Senior Credit Agreement to permit less than $20,000,000 of an aggregate principal amount of unsecured Indebtedness.

Section 7.02  Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

	
(a)

	
declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated; and

	
(b)

	
declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

provided, however, that upon the occurrence of an Event of Default under Section 7.01(f), the obligation of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

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Section 7.03  Application of Funds.  After the exercise of remedies provided for in Section 7.02, any amounts received on account of the Obligations shall, subject to the provisions of Section 2.12, be applied by the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders ((including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

ARTICLE VIII

ADMINISTRATIVE AGENT

Section 8.01  Appointment and Authority.

 

	
(a)

	
Each of the Lenders hereby irrevocably appoints ABC Funding, LLC, a Delaware limited liability company, to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions, other than the consultation rights expressly afforded the Borrower in Section 8.06.

	
(b)

	
After the Lien Trigger Date, the Administrative Agent shall also act as the "collateral agent" under the Loan Documents, and each of the Lenders hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as "collateral agent" and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the "collateral agent" under the Loan Documents) as if set forth in full herein with respect thereto.

 

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Section 8.02  Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 8.03  Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

	
(a)

	
shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

	
(b)

	
shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

	
(c)

	
shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

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The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.01 and 7.02 or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 8.04  Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Section 8.05  Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent.  The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

Section 8.06  Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

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Section 8.07  Non-Reliance on Administrative Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

Section 8.08  Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

 

	
(a)

	
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.07 and 9.04) allowed in such judicial proceeding; and

	
(b)

	
to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.07 and 9.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

Section 8.09  Collateral and Guaranty Matters.  The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,

 

	
(a)

	
to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments, payment in full of all Obligations (other than contingent indemnification Obligations), (ii) that is Disposed of or to be Disposed of as part of or in connection with any Disposition permitted under the Senior Credit Agreement, hereunder or under any other Loan Document or (iii) subject to Section 9.01, if approved, authorized or ratified in writing by the Required Lenders;

	
(b)

	
to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i) of the Senior Credit Agreement;

	
(c)

	
to release any Borrower from its obligations under the Loan Documents if such Person ceases to be a Subsidiary of CDII as a result of a transaction permitted hereunder or under the Senior Credit Agreement; and

	
(d)

	
to release any Liens, or to release any Borrower from its obligations under the Loan Documents, in each case in accordance with Section 9.17.

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Borrower from its obligations under the applicable Loan Documents pursuant to this Section 8.09.

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ARTICLE IX

MISCELLANEOUS

Section 9.01  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

 

	
(a)

	
amend, modify or waive any condition set forth in Section 4.01 or Section 4.02, without the written consent of each Lender;

	
(b)

	
extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 7.02) without the written consent of such Lender;

	
(c)

	
postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to such payment;

	
(d)

	
reduce the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to such amount; provided, however, that only the consent of the Required Lenders shall be necessary to amend Section Section 2.06(b);

	
(e)

	
change (i) Section 2.11 or Section 7.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

	
(f)

	
change any provision of this Section or the definition of "Required Lenders," or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender;

	
(g)

	
release all or substantially all of the Collateral (other than as permitted by the Loan Documents) in any transaction or series of related transactions, without the written consent of each Lender;

	
(h)

	
release all or substantially all of the value of any Borrower (other than as permitted by the Loan Documents) without the written consent of each Lender;

	
(i)

	
impose any greater restriction on the ability of any Lender to assign any of its rights or obligations hereunder without the written consent of the Required Lenders;

and, provided further, that (i)  no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) Section 9.06(h) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification; and (v) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder or any other Loan Document (and any amendment, waiver, consent or any other Loan Document which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), nor shall a Defaulting Lender's vote or status as a Lender be required in determining majority, unanimity or other condition or effect of any vote, except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

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If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such non-consenting Lender in accordance with Section 9.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

Section 9.02  Notices; Effectiveness; Electronic Communication.

 

	
(a)

	
Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or other electronic transmission as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

	
(i)

	
if to the Borrower or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 9.02; and

	
(ii)

	
if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

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(b)

	
Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

	
(c)

	
Change of Address, Etc.  Each of the Borrower and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

	
(d)

	
Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent made pursuant to this Agreement may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

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Section 9.03  No Waiver; Cumulative Remedies.  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Section 9.04  Expenses; Indemnity; Damage Waiver.

 

	
(a)

	
Costs and Expenses.  The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii)  all out of pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

	
(b)

	
INDEMNIFICATION BY THE BORROWER.  THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF) AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE) INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING THE TRANSACTION, OR, IN THE CASE OF THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF) AND ITS RELATED PARTIES ONLY, THE ADMINISTRATION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, (II) ANY LOAN OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE'S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

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(c)

	
Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.10(d).

	
(d)

	
Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

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(e)

	
Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

	
(f)

	
Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments, the termination of the Loan Documents and the repayment, satisfaction or discharge of all the other Obligations.

Section 9.05  Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

Section 9.06  Successors and Assigns.

 

	
(a)

	
Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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(b)

	
Assignments by Lenders.  Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

	
(i)

	
Minimum Amounts.

	
(A)

	
in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment under the Term Facility and the Loans at the time owing to it under the Term Facility, no minimum amount need be assigned; and

	
(B)

	
in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the outstanding principal balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000, unless each of the Administrative Agent otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an Eligible Assignee and members of its Assignee Group) each will be treated as a single assignment for purposes of determining whether such minimum amount has been met;

	
(ii)

	
Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;

	
(iii)

	
Required Consents.  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition, the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund.

	
(iv)

	
Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  For the avoidance of doubt, no part of any such processing and recordation fee shall be payable by or otherwise for the account of any Loan Party, directly or indirectly.  The Eligible Assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

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(v)

	
No Assignment to Certain Persons.  No such assignment shall be made (A) to the Borrower or any of the Borrower's Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

	
(vi)

	
Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.02, and 9.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  The assignor shall, if its entire Commitment was assigned, return each cancelled original Note of such assignor to the Borrower following a request therefor.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

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(c)

	
Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register").  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

	
(d)

	
Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender, a competitor of the Borrower (as defined below), or the Borrower or the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans; provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement.  As used above, a "competitor" of the Borrower shall mean any Person principally engaged in the business of providing contracting services to others with respect to oil and/or gas exploration and production.  The Borrower shall, upon request of any Lender, advise such Lender as to whether the Borrower considers a proposed Participant to be a competitor.  Any such determination shall be made by the Borrower promptly and in good faith.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 and 3.02 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.11 as though it were a Lender.

	
(e)

	
Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.02 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent, which consent shall constitute the express waiver by the Borrower of the foregoing limitation.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.

 

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(f)

	
Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto, and all costs, fees and expenses related to any such pledge, including the release thereof, shall be for the sole account of such Lender (without, for the avoidance of doubt, direct or indirect reimbursement from any Loan Party).

	
(g)

	
Electronic Execution of Assignments.  The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

65

	
(h)

	
Special Purpose Funding Vehicles.  Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle of such Granting Lender identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an "SPC") the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.10(b)(ii).  Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 3.02), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof.  Notwithstanding anything to the contrary contained in this Section 9.06, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to its Granting Lender and (ii) disclose on a confidential basis as provided herein any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

Section 9.07  Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process (and in each such case, such Person shall, if permitted by law, notify the Borrower of such occurrence as soon as reasonably practicable following the service of any such process on such Person), (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any pledgee referred to in Section 9.06(f), or (iii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or (i) as part of such Lender's or the Administrative Agent's normal reporting, rating or review procedure (including normal credit rating and pricing process), or to existing or prospective investors in connection with such Person's or any of its Affiliates' normal fundraising through private placement memoranda or information or reporting activities at a customary level of detail, provided that Information disclosed pursuant to this Section 9.07(i) shall consist of materials prepared by the Administrative Agent or its Affiliates that reference or are derived from the Information (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential).

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For purposes of this Section, "Information" means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary, or any Affiliate of any of them, or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

Section 9.08  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.12 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have.  Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

Section 9.09  Interest Rate Limitation.  Notwithstanding anything to the contrary contained in any Loan Document, the interest (including amounts not so denominated but deemed to be "interest" under applicable law) charged, paid, collected, taken, reserved, or agreed to be paid under any Loan Document shall not exceed the maximum amount or maximum rate of non-usurious interest permitted to be contracted for, charged, collected, reserved, taken or received by applicable Law (the "Maximum Amount" and the "Maximum Rate", as the case may be).  If the Administrative Agent or any Lender shall contract for, charge, collect, reserve, take or receive such interest in an amount that exceeds the Maximum Amount or calculated at the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower, and in no event shall any Person ever be liable for the payment of unearned interest on, or in respect or as a part of, the Obligations.  In determining whether the interest contracted for, charged, collected, reserved, taken or received exceeds the Maximum Amount or an amount calculated at the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

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Section 9.10  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or electronic transmission shall be effective as delivery of an original manually executed counterpart of this Agreement.

 

Section 9.11  Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

 

Section 9.12  Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 9.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

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Section 9.13  Replacement of Lenders.  If (i) any Lender (A) requests compensation under Section 3.02 or (B) is a Defaulting Lender, or (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, then in each case the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

	
(a)

	
the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 9.06(b);

	
(b)

	
such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

69

	
(c)

	
in the case of any such assignment resulting from a claim for compensation under Section 3.02, or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

	
(d)

	
such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

Section 9.14  Governing Law; Jurisdiction; Etc.

 

	
(a)

	
GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

	
(b)

	
SUBMISSION TO JURISDICTION.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

	
(c)

	
WAIVER OF VENUE.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

	
(d)

	
SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 9.15  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

70

 

Section 9.16  No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i)(A) the arranging and other services regarding this Agreement provided by the Administrative Agent, are arm's-length commercial transactions between the Borrower and its respective Affiliates, on the one hand, and the Administrative Agent, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)(A) the Administrative Agent is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates or any other Person and (B) the Administrative Agent does not have any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and its respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and the Administrative Agent does not have any obligation to disclose any of such interests to the Borrower or any of its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

Section 9.17  Collateral and Guaranty Matters.

 

	
(a)

	
Liens granted to or held by the Administrative Agent under any Loan Document shall be released as follows:  (i) with respect to all such Liens, upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification Obligations); (ii) with respect to any Lien on property that is Disposed of or to be Disposed of as part of or in connection with any Disposition permitted hereunder or under any other Loan Document or under the Senior Credit Agreement, automatically upon such Disposition thereof; and (iii) with respect to any other Lien, and subject to Section 9.01, upon approval, authorization or ratification in writing by the Required Lenders of such release thereof.

	
(b)

	
Borrowers shall be released from their respective Obligations under the Loan Documents as follows:  (i) with respect to all Borrowers, upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification Obligations) (provided that the foregoing release shall not apply to any obligations that expressly survive the termination of the applicable Loan Document, repayment of the Obligations or termination of the Aggregate Commitments); (ii) with respect to any Person that ceases to be a Subsidiary of CDII as a result of a transaction permitted hereunder or under the Senior Credit Agreement, automatically upon such Person so ceasing to be a Subsidiary, and (iii) with respect to any other release of a Borrower, and subject to Section 9.01, upon approval, authorization or ratification in writing by the Required Lenders of such release thereof.

	
(c)

	
The Administrative Agent will, at the Borrower's expense, timely execute and deliver such documents and notices and take such other actions as the Borrower may reasonably request to evidence the release of any Lien or Borrower in accordance with this Section 9.17.

 

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Section 9.18  USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies 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 "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 such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.

 

Section 9.19  CDII as Agent for Borrower.  Each Borrower hereby irrevocably appoints CDII as the borrowing agent and attorney-in-fact for all Borrowers (the "Administrative Borrower") which appointment shall remain in full force and effect unless and until Administrative Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower.  Each Borrower hereby irrevocably appoints and authorizes Administrative Borrower (i) to provide Agent with all notices with respect to Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as Administrative Borrower deems appropriate on its behalf to obtain Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement.  It is understood that the handling of the Loans and collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lenders shall not incur liability to any Borrower as a result hereof.  Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loans and the collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.  To induce the Lenders to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each Lender and hold each Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lenders by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loans and collateral of Borrowers as herein provided or (b) the Lenders' relying on any instructions of Administrative Borrower.

 

Section 9.20  ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

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

	
CAL DIVE INTERNATIONAL, INC.

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

	
 

	
 

	
CAL DIVE OFFSHORE CONTRACTORS, INC.

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

	
 

	
 

	
AFFILIATED MARINE CONTRACTORS, INC.

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

	
 

	
 

	
FLEET PIPELINE SERVICES, INC.

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

	
 

	
 

	
GULF OFFSHORE CONSTRUCTION, INC.

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

	
 

	
 

	
CDI RENEWABLES, LLC

	
 

	
 

	
By:

	
/s/ Brent D. Smith

	
Name:

	
Brent D. Smith

	
Title:

	
Executive Vice President, Chief Financial Officer and Treasurer

		
		
		
	Signature Page to Credit Agreement
		

 

 

 

 

	
ADMINISTRATIVE AGENT:

	
 

	
ABC FUNDING, LLC,

 as Administrative Agent

	
 

	
 

	
By:

	
Summit Partners Credit Advisors, L.P.

	
Its:

	
Manager

	
 

	
 

	
By:

	
Summit Master Company, LLC

	
Its:

	
General Partner

	
 

	
 

	
By:

	
/s/ Todd Hearle

	
Name:

	
Todd Hearle

	
Its:

	
Authorized Signatory

	
 

	
 

	
 

	
 

	
LENDERS:

	
 

	
SUMMIT PARTNERS CREDIT FUND, L.P.

 as a Lender

	
 

	
 

	
By:

	
Summit Partners Credit GP, L.P.

	
Its:

	
General Partner

	
 

	
 

	
By:

	
/s/ Todd Hearle

	
Name:

	
Todd Hearle

	
Its:

	
Authorized Signatory

	
 

	
 

	
 

	
 

	
SUMMIT PARTNERS CREDIT FUND A-1, L.P.

 as a Lender

	
 

	
 

	
By:

	
Summit Partners Credit A-1 GP, L.P.

	
Its:

	
General Partner

	
 

	
 

	
By:

	
/s/ Todd Hearle

	
Name:

	
Todd Hearle

	
Its:

	
Authorized Signatory

	
 

	
 

	
 

	
 

	
SUMMIT INVESTORS I, LLC,

 as a Lender

	
 

	
 

	
By:

	
Summit Investors Management, LLC

	
Its:

	
Manager

	
 

	
 

	
By:

	
Summit Partners, L.P.

	
Its:

	
Manager

	
 

	
 

	
By:

	
Summit Master Company, LLC

	
Its:

	
General Partner

	
 

	
 

	
By:

	
/s/ Todd Hearle

	
Name:

	
Todd Hearle

	
Its:

	
Authorized Signatory

	
 

	
 

	
 

	
 

	
SUMMIT INVESTORS I (UK), L.P.,

 as a Lender

	
 

	
 

	
By:

	
Summit Investors Management, LLC

	
Its:

	
General Partner

	
 

	
 

	
By:

	
Summit Partners, L.P.

	
Its:

	
Manager

	
 

	
 

	
By:

	
Summit Master Company, LLC

	
Its:

	
General Partner

	
 

	
 

	
By:

	
/s/ Todd Hearle

	
Name:

	
Todd Hearle

	
Its:

	
Authorized Signatory

		                                                                
		                             
	
 

Signature Page to Credit Agreement

		

 

 

  

 

SCHEDULE 2.01

COMMITMENTS AND APPLICABLE PERCENTAGES

	
LENDER

 

	
2014 LOAN COMMITMENT

 

	
2014 LOAN APPLICABLE PERCENTAGE

 

	
2015 LOAN COMMITMENT

 

	
2015 LOAN APPLICABLE PERCENTAGE

	
Summit Partners Credit Fund, L.P.

 

	
$7,069,804.51

 

	
70.698045100%

 

	
$7,069,804.52

 

	
70.698045200%

 

	
Summit Partners Credit Fund A-1, L.P.

 

	
$2,880,170.49

 

	
28.801704900%

 

	
$2,880,170.48

 

	
28.801704800%

 

	
Summit Investors I, LLC

 

	
$42,550.00

 

	
0.425500000%

 

	
$42,550.00

 

	
0.425500000%

 

	
Summit Investors I (UK), L.P.

 

	
$7,475.00

 

	
0.074750000%

 

	
$7,475.00

 

	
0.074750000%

 

	
TOTAL

 

	
$10,000,000.00

 

	
 

 

	
$10,000,000.00

 

	
 

	        				
	
	                                                                                
	
Schedule 2.01

SCHEDULE 5.11

TAXES

Tax Sharing Agreements:

Tax Matters Agreement dated December 14, 2006 between Cal Dive International, Inc. and Helix Energy Solutions Group, Inc., a Minnesota corporation, a copy of which has been filed as an exhibit to the Cal Dive International, Inc. Form 10-K for the fiscal year ended December 31, 2006.

 

 

 

Schedule 5.11

 

 

SCHEDULE 9.02

AGENT'S OFFICE; CERTAIN ADDRESSES FOR NOTICES

 

 

	
If to Administrative Agent:

	
ABC Funding, LLC

	
222 Berkeley Street

	
Boston, Massachusetts 02116

	
Attention:

	
Todd D. Hearle

	
 

	
 

	
Telephone:

	
(617) 598-4801

	
 

	
 

	
Facsimile:

	
(617) 598-4906

	
 

	
 

	
E-mail:

	
THearle@summitpartners.com

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
with a copy (such copy not to constitute notice) to:

	
 

	
 

	
 

	
 

	
 

	
Kirkland & Ellis LLP

	
 

	
 

	
 

	
300 North LaSalle Street

	
 

	
 

	
 

	
Chicago, Illinois 60654

	
 

	
 

	
 

	
Attention:

	
Christopher Butler, P.C.

	
 

	
 

	
Telephone:

	
(312) 862-2298

	
 

	
 

	
Facsimile:

	
(312) 862-2200

	
 

	
 

	
E-mail:

	
Christopher.Butler@kirkland.com

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
If to Loan Parties:

	
Cal Dive International, Inc.

	
2500 City West Boulevard, Suite 2200

	
Houston, Texas 77042

	
Attention:

	
Mr. Brent D. Smith

	
 

	
 

	
Telephone:

	
(713) 361-2634

	
 

	
 

	
Facsimile:

	
(713) 243-2748

	
 

	
 

	
Email:

	
bsmith@caldive.com

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
with a copy to:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Jones Walker LLP

	
 

	
 

	
20 St. Charles Avenue, Floor 50

	
 

	
 

	
New Orleans, Louisiana 70170

	
 

	
 

	
Attention:

	
Amy G. Scafidel

	
 

	
 

	
Telephone:

	
(504) 582-8462

	
 

	
 

	
Facsimile:

	
(504) 582-8583

	
 

	
 

	
E-mail:

	
ascafidel@joneswalker.com

	
 

				
				
				
				
	
 

	
 

	
 

	
 

	
CAL DIVE INTERNATIONAL, INC. (FEIN 61-1500501)

CAL DIVE OFFSHORE CONTRACTORS, INC. (FEIN 76-0534878)

AFFILIATED MARINE CONTRACTORS, INC. (FEIN 73-1628678)

FLEET PIPELINE SERVICES, INC. (FEIN 71-0902104)

GULF OFFSHORE CONSTRUCTION, INC. (FEIN 71-0902106)

CDI RENEWABLES, LLC (FEIN 45-4894985)

	
 

	
 

	
Schedule 9.02

 

 

EXHIBIT A

FORM OF LOAN NOTICE

Date:  ___________, _____

To:            ABC Funding, LLC, as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of June 27, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined), among Cal Dive International, Inc., a Delaware corporation (the "Borrower"), the other Borrowers party thereto, the Lenders from time to time party thereto, and ABC Funding, LLC, as Administrative Agent.

The undersigned hereby requests (select one):

___ A Borrowing of [2014 Loans][2015 Loans]

(i)            On _________________________ (a Business Day).

(ii)            In the amount of $________________.

All conditions precedent to the making of the Borrowing set forth in Section 4.02(a) and (b) of the Credit Agreement have been satisfied.

 

	
CAL DIVE INTERNATIONAL, INC.

	
 

	
 

	
By:

	
 

	
Name:

	
	
Title:

	

 

 

Exhibit A to Credit Agreement

                                                                               

EXHIBIT B-1

FORM OF 2014 NOTE

Date:  ___________, _____

FOR VALUE RECEIVED, the undersigned (the " Borrowers") hereby promises to pay to _____________________ or registered assigns (the "Lender"), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of the 2014 Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of June 27, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined), among CAL DIVE INTERNATIONAL, INC., a Delaware corporation, CAL DIVE OFFSHORE CONTRACTORS, INC., a Delaware corporation, AFFILIATED MARINE CONTRACTORS, INC., a Delaware corporation, FLEET PIPELINE SERVICES, INC., a Delaware corporation, GULF OFFSHORE CONSTRUCTION, INC., a Delaware corporation and CDI RENEWABLES, LLC, a Delaware limited liability company, each lender from time to time party thereto, and ABC FUNDING, LLC, a Delaware limited liability company, as Administrative Agent.

 

The Borrower promises to pay interest on the unpaid principal amount of such 2014 Loan from the date of such 2014 Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement.  All payments of principal and interest shall be made to the Administrative Agent for the account of the Lenders in Dollars in immediately available funds at the Administrative Agent's Office.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

 

This Note is one of the 2014 Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this 2014 Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement.  2014 Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this 2014 Note and endorse thereon the date, amount and maturity of its 2014 Loans and payments with respect thereto.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this 2014 Note.

 

Exhibit B-1 to Credit Agreement

THIS 2014 NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

CAL DIVE INTERNATIONAL, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

CAL DIVE OFFSHORE CONTRACTORS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

AFFILIATED MARINE CONTRACTORS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

FLEET PIPELINE SERVICES, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

GULF OFFSHORE CONSTRUCTIONS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

CDI RENEWABLES, LLC

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

 

Signature Page to 2014 Note

EXHIBIT B-2

FORM OF 2015 NOTE

Date:  ___________, _____

FOR VALUE RECEIVED, the undersigned (the " Borrowers") hereby promises to pay to _____________________ or registered assigns (the "Lender"), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of the 2015 Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of June 27, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined), among CAL DIVE INTERNATIONAL, INC., a Delaware corporation, CAL DIVE OFFSHORE CONTRACTORS, INC., a Delaware corporation, AFFILIATED MARINE CONTRACTORS, INC., a Delaware corporation, FLEET PIPELINE SERVICES, INC., a Delaware corporation, GULF OFFSHORE CONSTRUCTION, INC., a Delaware corporation and CDI RENEWABLES, LLC, a Delaware limited liability company, each lender from time to time party thereto, and ABC FUNDING, LLC, a Delaware limited liability company, as Administrative Agent.

 

The Borrower promises to pay interest on the unpaid principal amount of such 2015 Loan from the date of such 2015 Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement.  All payments of principal and interest shall be made to the Administrative Agent for the account of the Lenders in Dollars in immediately available funds at the Administrative Agent's Office.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

 

This Note is one of the 2015 Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this 2015 Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement.  2015 Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this 2015 Note and endorse thereon the date, amount and maturity of its 2015 Loans and payments with respect thereto.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this 2015 Note.

Exhibit B-2 to Credit Agreement

THIS 2015 NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

CAL DIVE INTERNATIONAL, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

CAL DIVE OFFSHORE CONTRACTORS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

AFFILIATED MARINE CONTRACTORS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

FLEET PIPELINE SERVICES, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

 

GULF OFFSHORE CONSTRUCTIONS, INC.

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

CDI RENEWABLES, LLC

By:__________________________

Name:                Brent D. Smith

Title:                Executive Vice President, Chief

                Financial Officer and Treasurer

 

 

 

                                         Signature Page to 2015 Note                         

EXHIBIT C

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [the][each] Assignor identified in item 1 below   ([the][each, an]) "Assignor") and [the][each] Assignee identified in item 2 below ([the][each ,  an] "Assignee").  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] hereunder are several and not joint.]  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor's][the respective Assignors'] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the Term Facility and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any]   Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] " Assigned Interest ").  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

 

1. Assignor[s]:

 

2. Assignee[s]:   [for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

 

3. Borrowers:  Cal Dive International, Inc., Cal Dive Offshore Contractors, Inc., Affiliated Marine Contractors, Inc., Fleet Pipeline Services, Inc., Gulf Offshore Construction, Inc., and CDI Renewables, LLC

 

4. Administrative Agent: ABC Funding, LLC, as the administrative agent under the Credit Agreement

 

5. Credit Agreement:  Credit Agreement, dated as of June 27, 2013, among the Borrowers, the Lenders from time to time party thereto, and the Administrative Agent, as from time to time amended, supplemented or otherwise modified

 

6. Assigned Interest[s]:

 

	
Assignor[s]

 

	
Assignee[s]

 

	
Aggregate

Amount of

[2014][2015]Commitment/[2014][2015]Loans

for all Lenders*

 

	
Amount of

[2014][2015]Commitment / [2014][2015]Loans

Assigned*

 

	
Percentage

Assigned of

[2014][2015]Commitment / [2014][2015]Loans

	
 

	
 

	
$______________

	
$___________

	
 

	
 

	
 

	
$______________

	
$___________

	
 

	
 

	
 

	
$______________

	
$___________

	
 

 

7. [Trade Date:                      __________________]**

 

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

 

*   Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

**   To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

 

Exhibit C to Credit Agreement

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:                                                                      

Title:                                                                      

ASSIGNEE

[NAME OF ASSIGNEE]

By:                                                                      

Title:                                                                      

[Consented to and] *** Accepted:

ABC FUNDING, LLC, as

Administrative Agent

By:                                                                

Title:                                                                

 

*** To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

 

Exhibit C to Credit Agreement

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1. Representations and Warranties.

 

1.1. Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower and any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower and any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2. Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.06(b)(iii) and (v) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi)  it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2. Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

 

3. General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

Exhibit C to Credit Agreementex10-1.htm

SHARE EXCHANGE AGREEMENT

 

THIS AGREEMENT is made effective as of the 28th day of June, 2013

 

AMONG:

 

ROCKFORD MINERALS INC.

 

a Nevada corporation with an address at 369 Shuter Street, Toronto, Ontario M5A 1X2

 

(“Pubco”)

 

AND:

 

1896432 ONTARIO INC.

 

an Ontario corporation with an address at 369 Shuter Street, Toronto, Ontario M5A 1X2

 

(“Subco”)

 

AND:

 

TROPIC SPA INC.

 

an Ontario corporation with an address at 1057 Parkinson Road, Unit 9, Woodstock, Ontario N4S 7W3

 

(“Priveco”)

 

AND:

 

THE UNDERSIGNED SHAREHOLDERS OF PRIVECO LISTED ON SCHEDULE A ATTACHED HERETO

 

(the “Selling Shareholders”)

 

WHEREAS:

 

	
A.  

	
The Selling Shareholders are the registered and beneficial owners of 78,030,877 issued and outstanding common shares in the capital of Priveco;

 

	
B.  

	
Pubco has agreed to arrange for Subco, a wholly-owned subsidiary of Pubco, to issue 78,030,877 preferred shares in the capital of Subco as of the Closing Date (as defined below) to the Selling Shareholders as consideration for the purchase by Pubco of all of the issued and outstanding common shares of Priveco held by the Selling Shareholders; and

 

	
C.  

	
Upon the terms and subject to the conditions set forth in this Agreement, the Selling Shareholders have agreed to sell all of the issued and outstanding common shares of Priveco held by the Selling Shareholders to Pubco in exchange for preferred shares of Subco.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by the parties), the parties covenant and agree as follows:

 

 

1

 

 

 

1.  INTERPRETATION

 

	
1.1  

	
Definitions.  In this Agreement, the following terms shall have the following meanings, unless the context otherwise requires:

 

	
(a)  

	
“Agreement” means this Agreement and all the schedules, appendices and other documents attached hereto or referred to herein, and all amendments, supplements or other modifications, if any, hereto;

 

	
(b)  

	
“Callco” means 1896431 Ontario Inc., a wholly-owned subsidiary of Pubco existing under the laws of the Province of Ontario, or any other direct or indirect wholly-owned subsidiary of Pubco designated by Pubco from time to time in replacement thereof;

 

	
(c)  

	
“Closing” means the completion of the Transaction, in accordance with Section 8 hereof, at which the Closing Documents shall be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time;

 

	
(d)  

	
“Closing Date” means a date mutually agreed upon by the parties hereto in writing and in accordance with Section 8.1 following the satisfaction or waiver by Pubco, Subco and Priveco of the conditions precedent set out in Sections 6.1 and 6.2, respectively;

 

	
(e)  

	
“Closing Documents” means the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement;

 

	
(f)  

	
“Contract” has the meaning ascribed to that term in Section 3.20;

 

	
(g)  

	
“Copyrights” has the meaning ascribed to that term in Section 3.16(a)(iii);

 

	
(h)  

	
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

 

	
(i)  

	
“GAAP” means United States generally accepted accounting principles applied in a manner consistent with prior periods;

 

	
(j)  

	
“Intellectual Property Assets” has the meaning ascribed to that term in Section 3.16(a);

 

	
(k)  

	
“Leases” has the meaning ascribed to that term in Section 3.19;

 

	
(l)  

	
“Liabilities” includes any direct or indirect indebtedness, guarantee, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, liquidated or unliquidated, secured or unsecured;

 

	
(m)  

	
“Marks” has the meaning ascribed to that term in Section 3.16(a)(i);

 

	
(n)  

	
“Material Adverse Effect” means any event, condition or change which individually or in the aggregate constitutes, or could reasonably be expected to have, a material adverse effect on the business, operations, assets, properties, prospects or condition (financial or otherwise) of a party taken as a whole; provided, however, that the determination of whether a material adverse effect has occurred shall be made ignoring any event, change, fact or effect resulting from: (i) any change in laws or interpretation thereof; (ii) any generally applicable change or development in economic, regulatory, business or financial market conditions; (iii) any acts of terrorism or war; (iv) the execution or announcement of this Agreement; (v) in respect of Rockford, any breach of this Agreement by Priveco or the Selling Shareholders; and (vi) in respect of Priveco, any breach of this Agreement by Rockford or Subco;

 

 

2

 

 

	
(o)  

	
“Ontario Securities Act” means the Securities Act (Ontario), R.S.O. 1990, c. S.5, together with all regulations adopted thereunder, and all blanket rulings, policy statements, orders, rules and notices of the Ontario Securities Commission;

 

	
(p)  

	
“Patents” has the meaning ascribed to that term in Section 3.16(a)(ii);

 

	
(q)  

	
“Priveco Accounting Date” means November 30, 2012;

 

	
(r)  

	
“Priveco Common Stock” has the meaning ascribed to that term in Section 3.3;

 

	
(s)  

	
“Priveco Documents” has the meaning ascribed to that term in Section 3.2;

 

	
(t)  

	
“Priveco Financial Statements” has the meaning ascribed to that term in Section 3.10;

 

	
(u)  

	
“Priveco Preferred Stock” has the meaning ascribed to that term in Section 3.3;

 

	
(v)  

	
“Priveco Shares” means the 78,030,877 fully paid and non-assessable common shares of Priveco held by the Selling Shareholders, being all of the issued and outstanding common shares of Priveco beneficially held, either directly or indirectly, by the Selling Shareholders;

 

	
(w)  

	
“Pubco Accounting Date” means April 30, 2013;

 

	
(x)  

	
“Pubco Common Stock” has the meaning ascribed to that term in Section 2.3;

 

	
(y)  

	
“Pubco Documents” has the meaning ascribed to that term in Section 4.2;

 

	
(z)  

	
“Pubco Financial Statements” has the meaning ascribed thereto in Section 4.10;

 

	
(aa)  

	
“Pubco SEC Documents” has the meaning ascribed to that term in Section 4.9;

 

	
(bb)  

	
“SEC” means the United States Securities and Exchange Commission;

 

	
(cc)  

	
“Securities Act” means the United States Securities Act of 1933, as amended;

 

	
(dd)  

	
“Subco Common Stock” has the meaning ascribed to that term in Section 5.3;

 

	
(ee)  

	
“Subco Documents” has the meaning ascribed to that term in Section 5.2;

 

	
(ff)  

	
“Subco Preferred Stock” has the meaning ascribed to that term in Section 2.3;

 

	
(gg)  

	
“Subco Shares” means the 78,030,877 fully paid and non-assessable preferred shares of Subco to be issued to the Selling Shareholders by Subco on the Closing Date;

 

	
(hh)  

	
“Support Agreement” means the support agreement to be entered into among Pubco, Callco and Subco in substantially the form attached hereto as Appendix 2;

 

	
(ii)  

	
“Taxes” includes international, federal, state, provincial and local income taxes, capital gains tax, value-added taxes, franchise, personal property and real property taxes, levies, assessments, tariffs, duties (including any customs duty), business license or other fees, sales, use and any other taxes relating to the assets of the designated party or the business of the designated party for all periods up to and including the Closing Date, together with any related charge or amount, including interest, fines, penalties and additions to tax, if any, arising out of tax assessments;

 

 

3

 

 

	
(jj)  

	
“Trade Secrets” has the meaning ascribed to that term in Section 3.16(a)(iv);

 

	
(kk)  

	
“Transaction” means the purchase of the Priveco Shares by Pubco from the Selling Shareholders in consideration for the issuance of the Subco Shares by Subco; and

 

	
(ll)  

	
“Voting and Exchange Trust Agreement” means the voting and exchange trust agreement to be entered into among Priveco, Callco, Subco and John Marmora in substantially the form attached hereto as Appendix 3.

 

	
1.2  

	
Schedules.  The following schedules and appendices are attached to and form part of this Agreement:

 

	
 

	
Schedule A       –       Selling Shareholders

	
 

	
Schedule B       –       Certificate of U.S Shareholder

	
 

	
Schedule C       –       Priveco Leases and Other Property Interests

	
 

	
Schedule D       –       Priveco Intellectual Property

	
 

	
Schedule E       –       Priveco Material Contracts

 

	
 

	
Appendix 1       –       Provisions Attaching to the Subco Preferred Stock

	
 

	
Appendix 2       –       Form of Support Agreement between Priveco, Callco and Subco

	
 

	
Appendix 3       –       Form of Voting and Exchange Trust Agreement between Priveco, Callco, Subco and John Marmora

 

	
1.3  

	
Currency.  All references to currency in this Agreement are to United States dollars unless expressly stated otherwise.

 

	
1.4  

	
Gender.  All references to any party in this Agreement shall be read with such changes in number and gender as the context or reference requires.

 

	
1.5  

	
Headings.  The headings contained in this Agreement are for convenience only and shall not affect in any way the meaning or interpretation hereof.

 

2.  OFFER, PURCHASE AND SALE OF SHARES

 

	
2.1  

	
Offer, Purchase and Sale of Priveco Shares.  On the terms and subject to the conditions of this Agreement, the Selling Shareholders shall sell, assign and transfer to Pubco, and Pubco shall purchase from the Selling Shareholders, the Priveco Shares.

 

	
2.2  

	
Consideration.  As consideration for the sale of the Priveco Shares by the Selling Shareholders to Pubco, Pubco shall cause Subco to allot and issue the Subco Shares to the Selling Shareholders in the amount set out opposite each Selling Shareholder’s name in Schedule A on the basis of one Subco Share for each Priveco Share held by each Selling Shareholder.  The Selling Shareholders acknowledge and agree that the Subco Shares are being issued pursuant to an exemption from the registration requirements of the Securities Act and the prospectus requirements of the Ontario Securities Act.  As required by applicable securities laws, the Selling Shareholders agree to abide by all applicable resale restrictions and hold periods imposed by all such laws.  All certificates representing Subco Shares issued at the Closing shall be endorsed with the legends in substantially the following form pursuant to the Securities Act and the Ontario Securities Act in order to reflect the fact that the Subco Shares will be issued to the Selling Shareholders pursuant to one or more exemptions from the prospectus and registration requirements of such Acts:

 

 

4

 

 

For Selling Shareholders not resident in the United States:

 

	
 

	
“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

	
 

	
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”

 

	
 

	
“UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) THE DISTRIBUTION DATE, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

 

For Selling Shareholders resident in the United States:

 

	
 

	
“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”

 

	
 

	
“UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) THE DISTRIBUTION DATE, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

 

	
2.3  

	
Share Exchange Procedure.  On the Closing Date, (a) each certificate representing Priveco Shares shall automatically be cancelled without any further action on the part of the Selling Shareholders and Pubco shall be registered as the holder of such shares on the books of Priveco, and (b) Pubco shall authorize its transfer agent to issue one or more certificates representing preferred shares of Subco without par value (the “Subco Preferred Stock”) to each Selling Shareholder in the amounts set out in Schedule A.  In order to receive any certificates representing Subco Preferred Stock, each Selling Shareholder that is resident in the United States must deliver a Certificate of U.S. Shareholder in the form attached hereto as Schedule B to Pubco on or prior to the Closing Date.  The provisions attaching to the Subco Preferred Stock are described in Appendix 1 and the Subco Preferred Stock shall be exchangeable for common shares of Pubco, par value $0.001 per share (the “Pubco Common Stock”), in accordance with such provisions.

 

 

5

 

	
2.4  

	
Fractional Shares.  Notwithstanding any other provision of this Agreement, no certificate for fractional Subco Shares shall be issued in connection with the Transaction.  In lieu of any such fractional shares, if any of the Selling Shareholders would otherwise be entitled to receive a fraction of a Subco Share upon the surrender of one or more certificates representing Priveco Shares for exchange pursuant to this Agreement, the Selling Shareholders shall be entitled to have such fraction rounded up to the nearest whole number of Subco Shares and shall receive from Subco one or more share certificates representing same.

 

	
2.5  

	
Closing Date.  The Closing shall take place, on the terms and subject to the conditions of this Agreement, on the Closing Date.

 

	
2.6  

	
Restricted Shares.  The Selling Shareholders acknowledge that the Subco Shares shall have such hold periods as are required under applicable securities laws and as a result may not be sold, transferred or otherwise disposed of except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or the prospectus requirements of the Ontario Securities Act, and in each case, only in accordance with all applicable securities laws.

 

	
2.7  

	
Exemptions.  The Selling Shareholders resident in the United States acknowledge that each of Pubco and Subco has advised the Selling Shareholders that they are relying upon the representations and warranties of the Selling Shareholders set out in Schedule A to issue the Subco Shares under an exemption from the registration requirements of the Securities Act and, as a consequence, certain protections, rights and remedies provided by the Securities Act, including statutory rights of rescission or damages, will not be available to the Selling Shareholders.

 

	
2.8  

	
Canadian Resale Restrictions.  The Selling Shareholders acknowledge that Subco is not a reporting issuer in any province or territory of Canada and accordingly, any applicable hold periods under the Ontario Securities Act or the securities laws of any other Canadian jurisdiction may never expire, and the Subco Shares may be subject to resale restrictions in Canada for an indefinite period of time.  Additionally, the Selling Shareholders acknowledge that resale of any of the Subco Shares by Selling Shareholders resident in Canada is restricted except pursuant to an exemption from applicable securities laws.

 

3.  REPRESENTATIONS AND WARRANTIES OF PRIVECO

 

Priveco and the Selling Shareholders, jointly and severally, represent and warrant to Pubco and Subco, and acknowledge that each of Pubco and Subco is relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Pubco or Subco, as follows:

 

	
3.1  

	
Organization and Good Standing.  Priveco is a corporation duly organized, validly existing and in good standing under the laws of the Province of Ontario and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.  Priveco is duly qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which Priveco owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a Material Adverse Effect on Priveco.

 

 

6

 

	
3.2  

	
Authority.  Priveco has all requisite corporate power and authority to execute and deliver this Agreement and any other documents contemplated by this Agreement (collectively, the “Priveco Documents”) to be signed by Priveco and to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of each of the Priveco Documents by Priveco and the consummation by Priveco of the transactions contemplated hereby have been duly authorized by Priveco’s board of directors and no other corporate or shareholder proceeding on the part of Priveco is necessary to authorize such documents or to consummate the transactions contemplated hereby.  This Agreement has been, and the other Priveco Documents when executed and delivered by Priveco as contemplated hereby will be, duly executed and delivered by Priveco and this Agreement is, and the other Priveco Documents when executed and delivered by Priveco as contemplated hereby will be, valid and binding obligations of Priveco enforceable in accordance with their respective terms except as limited by:

 

	
(a)  

	
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the enforcement of creditors’ rights generally;

 

	
(b)  

	
laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and

 

	
(c)  

	
public policy.

 

	
3.3  

	
Capitalization of Priveco.  The entire authorized capital stock of Priveco consists of an unlimited number of common shares without par value (the “Priveco Common Stock”) and an unlimited number of class A shares without par value (the “Priveco Preferred Stock”).  As of the date of this Agreement, there are 100,000,000 issued and outstanding shares of Priveco Common Stock and no issued and outstanding shares of Priveco Preferred Stock.  All of the issued and outstanding shares of Priveco Common Stock have been duly authorized, are validly issued as fully paid and non-assessable, were not issued in violation of any pre-emptive rights and are not subject to pre-emptive rights and were issued in full compliance with all federal, provincial and local laws, rules and regulations.  There are no outstanding options, warrants, subscriptions, conversion rights or other rights, agreements or commitments obligating Priveco to issue any additional shares of Priveco Common Stock or Priveco Preferred Stock, or any other securities convertible into, exchangeable for or evidencing the right to subscribe for or acquire from Priveco any shares of Priveco Common Stock or Priveco Preferred Stock.  There are no agreements purporting to restrict the transfer of Priveco Common Stock or Priveco Preferred Stock and no voting agreements, shareholders’ agreements, voting trusts or other arrangements restricting or affecting the voting of Priveco Common Stock or Priveco Preferred Stock.

 

	
3.4  

	
Shareholders of Priveco Common Stock.  As of the Closing Date, Schedule A contains a true and complete list of the Selling Shareholders.

 

	
3.5  

	
Corporate Records of Priveco.  The corporate records of Priveco, as required to be maintained by it pursuant to all applicable laws, are accurate, complete and current in all material respects, and the minute book of Priveco is, in all material respects, correct and contains all records required by all applicable laws in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Priveco.

 

	
3.6  

	
Non-Contravention.  Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:

 

	
(a)  

	
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material assets of Priveco under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Priveco or any of its material property or assets;

 

	
(b)  

	
violate any provision of the constating documents of Priveco or any applicable laws; or

 

	
(c)  

	
violate any order, writ, injunction, decree, statute, rule or regulation of any court or governmental or regulatory authority applicable to Priveco or any of its material property or assets.

 

 

7

 

	
3.7  

	
Actions and Proceedings.  To the knowledge of Priveco, there is no basis for and there is no action, suit, judgment, claim, charge, arbitration, grievance, investigation, demand or proceeding outstanding or pending by or before any court, arbitrator, administrative agency or other government body, or threatened against Priveco which involves any of the business, property or assets of Priveco that, if adversely resolved or determined, would have a Material Adverse Effect on Priveco.  There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Material Adverse Effect.

 

	
3.8  

	
Compliance.

 

	
(a)  

	
To the knowledge of Priveco, Priveco is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule or decree applicable to the business or operations of Priveco;

 

	
(b)  

	
To the knowledge of Priveco, Priveco is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would have a Material Adverse Effect on Priveco;

 

	
(c)  

	
Priveco has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement.  All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Priveco, threatened, and none of them will be adversely affected by the consummation of the Transaction; and

 

	
(d)  

	
Priveco has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business.  Priveco has not received any notice of any violation thereof, nor is Priveco aware of any valid basis therefore.

 

	
3.9  

	
Filings, Consents and Approvals.  No filing or registration with, no notice to and no permit, authorization, consent or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Priveco of the Transaction or to enable Pubco to conduct Priveco’s business after the Closing Date in a manner which is consistent with that in which the business is presently conducted.

 

	
3.10  

	
Financial Representations.  The audited balance sheets for Priveco for its last two fiscal years plus any unaudited balance sheets for Priveco dated on or the Priveco Accounting Date, together with related statements of income, cash flows and changes in shareholder’s equity for such fiscal years and interim periods then ended (collectively, the “Priveco Financial Statements”) to be supplied on or before the Closing Date:

 

	
(a)  

	
are in accordance with the books and records of Priveco;

 

	
(b)  

	
present fairly the financial condition of Priveco as of the respective dates indicated and the results of operations for such periods; and

 

	
(c)  

	
have been prepared in accordance with GAAP.

 

 

8

 

Priveco has not received any advice or notification from its independent certified public accountants that Priveco has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the Priveco Financial Statements or the books and records of Priveco, any properties, assets, Liabilities, revenues or expenses.  The books, records and accounts of Priveco accurately and fairly reflect, in reasonable detail, the assets and Liabilities of Priveco.  Priveco has not engaged in any transaction, maintained any bank account or used any funds of Priveco except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of Priveco.

 

	
3.11  

	
Absence of Undisclosed Liabilities.  Priveco does not have any material Liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise that exceed $5,000, which:

 

	
(a)  

	
are not set forth in the Priveco Financial Statements or have not heretofore been paid or discharged;

 

	
(b)  

	
did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in writing to Pubco; or

 

	
(c)  

	
have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business since the Priveco Accounting Date.

 

	
3.12  

	
Tax Matters.

 

	
(a)  

	
As of the date of this Agreement:

 

	
(i)  

	
Priveco has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to Priveco, and

 

	
(ii)  

	
all such returns are true and correct in all material respects;

 

	
(b)  

	
Priveco has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheets for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a Material Adverse Effect on Priveco;

 

	
(c)  

	
Priveco is not presently under or has not received notice of, any contemplated investigation or audit by any regulatory or governmental agency or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof;

 

	
(d)  

	
Priveco has properly withheld all Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes and, if required on or prior to the date hereof, has deposited such Taxes with the appropriate governmental agency; and

 

	
(e)  

	
to the knowledge of Priveco, the Priveco Financial Statements contain full provisions for all Taxes including any deferred Taxes that may be assessed to Priveco for the accounting period ended on the Priveco Accounting Date or for any prior period in respect of any transaction, event or omission occurring, or any profit earned, on or prior to the Priveco Accounting Date or for any profit earned by Priveco on or prior to the Priveco Accounting Date or for which Priveco is accountable up to such date and all contingent Liabilities for Taxes have been provided for or disclosed in the Priveco Financial Statements.

 

 

9

 

	
3.13  

	
Absence of Changes.  Since the Priveco Accounting Date, Priveco has not:

 

	
(a)  

	
incurred any Liabilities, other than Liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or property;

 

	
(b)  

	
sold, encumbered, assigned or transferred any material fixed assets except for ordinary course business transactions consistent with past practice;

 

	
(c)  

	
created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or property of Priveco to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;

 

	
(d)  

	
made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business;

 

	
(e)  

	
declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its equity securities or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its equity securities;

 

	
(f)  

	
suffered any Material Adverse Effect;

 

	
(g)  

	
experienced any material change in its accounting methods, principles or practices;

 

	
(h)  

	
received notice or had knowledge of any actual or threatened labour trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;

 

	
(i)  

	
made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $5,000;

 

	
(j)  

	
other than in the ordinary course of business, increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to any of its directors, officers, employees or consultants or made any increase in, or any addition to, other benefits to which any of its directors, officers, employees or consultants may be entitled;

 

	
(k)  

	
entered into any transaction other than in the ordinary course of business consistent with past practice; or

 

	
(l)  

	
agreed, whether in writing or orally, to do any of the foregoing.

 

 

10

 

	
3.14  

	
Subsidiaries.  Priveco does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.

 

	
3.15  

	
Personal Property.  Priveco possesses, and has good and marketable title to all property necessary for the continued operation of the business of Priveco as presently conducted and as represented to Pubco and Subco.  All such property is used in the business of Priveco, is in reasonably good operating condition (normal wear and tear excepted) and is reasonably fit for the purposes for which such property is presently used.  All material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Priveco is owned by Priveco free and clear of all liens, security interests, charges, encumbrances, and other adverse claims.

 

	
3.16  

	
Intellectual Property

 

	
(a)  

	
Intellectual Property Assets.  Priveco owns or holds an interest in all intellectual property assets necessary for the operation of the business of Priveco as it is currently conducted (collectively, the “Intellectual Property Assets”), including:

 

	
(i)  

	
all functional business names, trading names, registered and unregistered trademarks, service marks and applications (collectively, the “Marks”);

 

	
(ii)  

	
all patents, patent applications and inventions, methods, processes and discoveries that may be patentable (collectively, the “Patents”);

 

	
(iii)  

	
all copyrights in both published works and unpublished works (collectively, the “Copyrights”); and

 

	
(iv)  

	
all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints owned, used, or licensed by Priveco as licensee or licensor (collectively, the “Trade Secrets”).

 

	
(b)  

	
Agreements. Schedule D contains a complete and accurate list and summary description, including any royalties paid or received by Priveco, of all contracts and agreements relating to the Intellectual Property Assets to which Priveco is a party or by which Priveco is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $500 under which Priveco is the licensee.  To the best knowledge of Priveco, there are no outstanding or threatened disputes or disagreements with respect to any such agreement.

 

	
(c)  

	
Intellectual Property and Know-How Necessary for the Business.  Except as set forth in Schedule D, Priveco is the owner of all right, title and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances and other adverse claims, and has the right to use of all the Intellectual Property Assets without payment to a third party.  Except as set forth in Schedule D, all former and current employees and contractors of Priveco have executed written contracts, agreements or other undertakings with Priveco that assign all rights to any inventions, improvements, discoveries or information relating to the business of Priveco.  No employee, director, officer or shareholder of Priveco owns, directly or indirectly, in whole or in part, any Intellectual Property Assets which Priveco is presently using or which is necessary for the conduct of its business.  To the knowledge of Priveco, no employee or contractor of Priveco has entered into any contract or agreement that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign or disclose information concerning his work to anyone other than Priveco.

 

 

11

 

	
(d)  

	
Patents.  Except as set out in Schedule D, Priveco does not hold any right, title or interest in and to any Patent and Priveco has not filed any patent application with any third party.  To the knowledge of Priveco, none of the products manufactured and sold, nor any process or know-how used, by Priveco infringes or is alleged to infringe any patent or other proprietary right of any other person or entity.

 

	
(e)  

	
Trademarks.  Except as set out in Schedule D, Priveco does not hold any right, title or interest in and to any Mark and Priveco has not registered or filed any application to register any Mark with any third party.  To the knowledge of Priveco, none of the Marks, if any, used by Priveco infringes or is alleged to infringe any trade name, trademark or service mark of any third party.

 

	
(f)  

	
Copyrights. Schedule D contains a complete and accurate list and summary description of all Copyrights.  Priveco is the owner of all right, title and interest in and to each of the Copyrights, free and clear of all liens, security interests, charges, encumbrances and other adverse claims.  If applicable, all registered Copyrights are currently in compliance with formal legal requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within 90 days after the Closing Date.  To the knowledge of Priveco, no Copyright is infringed or has been challenged or threatened in any way and none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party.  All works encompassed by the Copyrights have been marked with the proper copyright notice.

 

	
(g)  

	
Trade Secrets.  Priveco has taken all reasonable precautions to protect the secrecy, confidentiality and value of its Trade Secrets.  Priveco has good title and an absolute right to use the Trade Secrets.  The Trade Secrets are not part of the public knowledge or literature, and to the knowledge of Priveco, have not been used, divulged or appropriated either for the benefit of any person or entity or to the detriment of Priveco.  No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

 

	
3.17  

	
Insurance.  The products sold by and the assets owned by Priveco are insured under various policies of general product liability and other forms of insurance consistent with prudent business practices.  All such policies are in full force and effect in accordance with their terms, no notice of cancellation has been received, and there is no existing default by Priveco, or any event which, with the giving of notice, the lapse of time or both, would constitute a default thereunder.  All premiums to date have been paid in full.

 

	
3.18  

	
Employees and Consultants.  All consultants of Priveco have been paid all salaries, wages, income and any other sum due and owing to them by Priveco, as at the end of the most recent completed pay period.  Priveco does not have any employees.

 

	
3.19  

	
Real Property.  Priveco does not own any real property.  Each of the leases, subleases, claims or other real property interests (collectively, the “Leases”) to which Priveco is a party or is bound, as set out in Schedule C, is legal, valid, binding, enforceable and in full force and effect in all material respects.  All rental and other payments required to be paid by Priveco pursuant to any such Leases have been duly paid and no event has occurred which, upon the passing of time, the giving of notice, or both, would constitute a breach or default by any party under any of the Leases.  The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing Date.  Priveco has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the Leases or the leasehold property pursuant thereto.

 

	
3.20  

	
Material Contracts and Transactions.  Schedule E lists each material contract, agreement, license, permit, arrangement, commitment, instrument or contract to which Priveco is a party (each, a “Contract”).  Each Contract is in full force and effect, and there exists no material breach or violation of or default by Priveco under any Contract, or any event that with notice or the lapse of time, or both, will create a material breach or violation thereof or default under any Contract by Priveco.  The continuation, validity and effectiveness of each Contract shall in no way be affected by the consummation of the Transaction.  There exists no actual or threatened termination, cancellation or limitation of, or any amendment, modification or change to, any Contract.

 

 

12

 

	
3.21  

	
Certain Transactions.  Priveco is not a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation.

 

	
3.22  

	
No Brokers.  Priveco has not incurred any independent obligation or Liability to any party for any brokerage fees, agent’s commissions or finder’s fees in connection with the Transaction.

 

	
3.23  

	
Completeness of Disclosure.  No representation or warranty by Priveco in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Pubco pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

 

4.  REPRESENTATIONS AND WARRANTIES OF PUBCO

 

Pubco represents and warrants to Priveco and the Selling Shareholders and acknowledges that Priveco and the Selling Shareholders are relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Priveco or the Selling Shareholders, as follows:

 

	
4.1  

	
Organization and Good Standing.  Pubco is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.  Pubco is duly qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which Pubco owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a Material Adverse Effect on Pubco.

 

	
4.2  

	
Authority.  Pubco has all requisite corporate power and authority to execute and deliver this Agreement and any other documents contemplated by this Agreement (collectively, the “Pubco Documents”) to be signed by Pubco and to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of each of the Pubco Documents by Pubco and the consummation by Pubco of the transactions contemplated hereby have been duly authorized by Pubco’s board of directors and no other corporate or shareholder proceeding on the part of Pubco is necessary to authorize such documents or to consummate the transactions contemplated hereby.  This Agreement has been, and the other Pubco Documents when executed and delivered by Pubco as contemplated hereby will be, duly executed and delivered by Pubco and this Agreement is, and the other Pubco Documents when executed and delivered by Pubco as contemplated hereby will be, valid and binding obligations of Pubco enforceable in accordance with their respective terms, except as limited by:

 

	
(a)  

	
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the enforcement of creditors’ rights generally;

 

	
(b)  

	
by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and

 

	
(c)  

	
public policy.

 

 

13

 

	
4.3  

	
Capitalization of Pubco.  The entire authorized capital stock of Pubco consists of 300,000,000 shares of Pubco Common Stock.  As of the date of this Agreement, there are 12,264,146 issued and outstanding shares of Pubco Common Stock.  All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued as fully paid and non-assessable, were not issued in violation of any pre-emptive rights are not subject to pre-emptive rights and were issued in full compliance with all federal, state and local laws, rules and regulations.  There are no outstanding options, warrants, subscriptions, conversion rights or other rights, agreements or commitments obligating Pubco to issue any additional shares of Pubco Common Stock, or any other securities convertible into, exchangeable for or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock.  There are no agreements purporting to restrict the transfer of Pubco Common Stock and no voting agreements, shareholders’ agreement, voting trusts or other arrangements restricting or affecting the voting of Pubco Common Stock.

 

	
4.4  

	
Corporate Records of Pubco.  The corporate records of Pubco, as required to be maintained by it pursuant to all applicable laws, are accurate, complete and current in all material respects, and the minute book of Pubco is, in all material respects, correct and contains all material records required by all applicable laws in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Pubco.

 

	
4.5  

	
Non-Contravention.  Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:

 

	
(a)  

	
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Pubco under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Pubco or any of its material property or assets;

 

	
(b)  

	
violate any provision of the constating documents of Pubco or any applicable laws; or

 

	
(c)  

	
violate any order, writ, injunction, decree, statute, rule or regulation of any court or governmental or regulatory authority applicable to Pubco or any of its material property or assets.

 

	
4.6  

	
Actions and Proceedings.  To the knowledge of Pubco, there is no basis for and there is no action, suit, judgment, claim, charge, arbitration, grievance, investigation, demand or proceeding outstanding or pending by or before any court, arbitrator, administrative agency or other governmental authority, or threatened against Pubco which involves any of the business, property or assets of Pubco that, if adversely resolved or determined, would have a Material Adverse Effect on Pubco.  There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Material Adverse Effect.

 

	
4.7  

	
Compliance.

 

	
(a)  

	
To the knowledge of Pubco, Pubco is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule or decree applicable to the business or operations of Pubco;

 

 

14

 

	
(b)  

	
To the knowledge of Pubco, Pubco is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would have a Material Adverse Effect on Pubco;

 

	
(c)  

	
Pubco has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement.  All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Pubco, threatened, and none of them will be affected in a material adverse manner by the consummation of the Transaction; and

 

	
(d)  

	
Pubco has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business.  Pubco has not received any notice of any violation thereof, nor is Pubco aware of any valid basis therefore.

 

	
4.8  

	
Filings, Consents and Approvals.  Except as described in this Agreement, no filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Pubco of the Transaction.

 

	
4.9  

	
SEC Filings.  Pubco has furnished or made available to Priveco and the Selling Shareholders a true and complete copy of each report, schedule, registration statement and proxy statement filed by Pubco with the SEC (collectively, the “Pubco SEC Documents”).  As of their respective dates, the Pubco SEC Documents complied in all material respects with the requirements of the Securities Act, or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Pubco SEC Documents.  The Pubco SEC Documents constitute all of the documents and reports that Pubco was required to file with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder by the SEC.

 

	
4.10  

	
Financial Representations.  Included with the Pubco SEC Documents are true, correct, and complete copies of audited balance sheets for Pubco dated as of the Pubco Accounting Date, together with related statements of income, cash flows, and changes in shareholder’s equity for the fiscal year and interim period then ended (collectively, the “Pubco Financial Statements”).  The Pubco Financial Statements:

 

	
(a)  

	
are in accordance with the books and records of Pubco;

 

	
(b)  

	
present fairly the financial condition of Pubco as of the respective dates indicated and the results of operations for such periods; and

 

	
(c)  

	
have been prepared in accordance with GAAP.

 

Pubco has not received any advice or notification from its independent certified public accountants that Pubco has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the Pubco Financial Statements or the books and records of Pubco, any properties, assets, Liabilities, revenues or expenses.  The books, records and accounts of Pubco accurately and fairly reflect, in reasonable detail, the assets and Liabilities of Pubco.  Pubco has not engaged in any transaction, maintained any bank account or used any funds of Pubco except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of Pubco.

 

 

15

 

	
4.11  

	
Absence of Undisclosed Liabilities.  Pubco has no material Liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, which:

 

	
(a)  

	
are not set forth in the Pubco Financial Statements or have not heretofore been paid or discharged;

 

	
(b)  

	
did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in writing to Priveco; or

 

	
(c)  

	
have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business since the Pubco Accounting Date.

 

	
4.12  

	
Tax Matters.

 

	
(a)  

	
As of the date of this Agreement:

 

	
(i)  

	
Pubco has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to Pubco, and

 

	
(ii)  

	
all such returns are true and correct in all material respects;

 

	
(b)  

	
Pubco has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheets for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a Material Adverse Effect on Pubco;

 

	
(c)  

	
Pubco is not presently under and has not received notice of, any contemplated investigation or audit by any regulatory or governmental agency or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof;

 

	
(d)  

	
Pubco has properly withheld all Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes and, if required on or prior to the date hereof, has deposited such Taxes with the appropriate governmental agency; and

 

	
(e)  

	
To the knowledge of Pubco, the Pubco Financial Statements contain full provisions for all Taxes including any deferred Taxes that may be assessed to Pubco for the accounting period ended on the Pubco Accounting Date or for any prior period in respect of any transaction, event or omission occurring, or any profit earned, on or prior to the Pubco Accounting Date or for any profit earned by Pubco on or prior to the Pubco Accounting Date or for which Pubco is accountable up to such date and all contingent Liabilities for Taxes have been provided for or disclosed in the Pubco Financial Statements.

 

	
4.13  

	
Absence of Changes.  Since the Pubco Accounting Date, except as and to the extent disclosed in the Pubco SEC Documents, Pubco has not:

 

	
(a)  

	
incurred any Liabilities, other than Liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or property;

 

	
(b)  

	
sold, encumbered, assigned or transferred any material fixed assets or properties;

 

 

16

 

	
(c)  

	
created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or property of Pubco to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;

 

	
(d)  

	
made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business;

 

	
(e)  

	
declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its equity securities or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its equity securities;

 

	
(f)  

	
suffered any Material Adverse Effect;

 

	
(g)  

	
experienced any material change in its accounting methods, principles or practices;

 

	
(h)  

	
received notice or had knowledge of any actual or threatened labour trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;

 

	
(i)  

	
made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $1,000;

 

	
(j)  

	
other than in the ordinary course of business, increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to any of its directors, officers, employees or consultants or made any increase in, or any addition to, other benefits to which any of its directors, officers, employees or consultants may be entitled;

 

	
(k)  

	
entered into any transaction other than in the ordinary course of business consistent with past practice; or

 

	
(l)  

	
agreed, whether in writing or orally, to do any of the foregoing.

 

	
4.14  

	
Subsidiaries.  Except for Subco and as disclosed in the Pubco SEC Documents, Pubco does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.

 

	
4.15  

	
Personal Property.  Except as disclosed in the Pubco SEC Documents, Pubco does not own or lease any material equipment, furniture, fixtures and other tangible personal property or assets.

 

	
4.16  

	
Employees and Consultants.  Except as disclosed in the Pubco SEC Documents, Pubco does not have any employees or consultants.

 

	
4.17  

	
Material Contracts and Transactions.  Other than as expressly contemplated by this Agreement, there are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or implied, contingent, fixed or otherwise, to which Pubco is a party except as disclosed in writing to Priveco or as disclosed in the Pubco SEC Documents.

 

	
4.18  

	
No Brokers.  Pubco has not incurred any obligation or Liability to any party for any brokerage fees, agent’s commissions or finder’s fees in connection with the Transaction.

 

 

17

 

	
4.19  

	
Internal Accounting Controls.  Pubco maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Pubco’s certifying officers evaluated the effectiveness of Pubco’s controls and procedures as the Evaluation Date, and Pubco presented in its most recently filed Form 10-Q the conclusions of such certifying officers about the effectiveness of Pubco’s disclosure controls and procedures based on their evaluations as of the Pubco Accounting Date.  Since the Pubco Accounting Date, there have been no significant changes in Pubco’s disclosure controls and procedures or, to Pubco’s knowledge, in other factors that could significantly affect Pubco’s disclosure controls and procedures.

 

	
4.20  

	
Application of Takeover Protections.  Pubco and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under Pubco’s constating documents or the laws of the State of Nevada that is or could become applicable to Pubco as a result of the Transaction or the exercise of any rights pursuant to this Agreement.

 

	
4.21  

	
No SEC Inquiries.  Neither Pubco nor any of its past or present officers or directors is the subject of any formal or informal inquiry or investigation by the SEC.  Pubco does not currently have any outstanding comment letters or other correspondences from the SEC.

 

	
4.22  

	
Completeness of Disclosure.  No representation or warranty by Pubco in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Priveco pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

 

5.  REPRESENTATIONS AND WARRANTIES OF SUBCO

 

Subco represents and warrants to Priveco and the Selling Shareholders and acknowledges that Priveco and the Selling Shareholders are relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Priveco or the Selling Shareholders, as follows:

 

	
5.1  

	
Organization and Good Standing.  Subco is a corporation duly organized, validly existing and in good standing under the laws of the Province of Ontario and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.  Subco is duly qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which Subco owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a Material Adverse Effect on Subco.

 

	
5.2  

	
Authority.  Subco has all requisite corporate power and authority to execute and deliver this Agreement and any other documents contemplated by this Agreement (collectively, the “Subco Documents”) to be signed by Subco and to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of each of the Subco Documents by Subco and the consummation by Subco of the transactions contemplated hereby have been duly authorized by Subco’s board of directors and no other corporate or shareholder proceeding on the part of Subco is necessary to authorize such documents or to consummate the transactions contemplated hereby.  This Agreement has been, and the other Subco Documents when executed and delivered by Subco as contemplated hereby will be, duly executed and delivered by Subco and this Agreement is, and the other Subco Documents when executed and delivered by Subco as contemplated hereby will be, valid and binding obligations of Subco enforceable in accordance with their respective terms, except as limited by:

 

	
(a)  

	
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the enforcement of creditors’ rights generally;

 

	
(b)  

	
laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and

 

	
(c)  

	
public policy.

 

 

18

 

	
5.3  

	
Capitalization of Subco.  The entire authorized capital stock and other equity securities of Subco consists of an unlimited number of common shares without par value (the “Subco Common Stock”) and an unlimited number of shares of Subco Preferred Stock.  As of the date of this Agreement, there is one (1) issued and outstanding share of Subco Common Stock and no issued and outstanding shares of Subco Preferred Stock.  All of the issued and outstanding shares of Subco Common Stock have been duly authorized, are validly issued as fully paid and non-assessable, were not issued in violation of any pre-emptive rights are not subject to pre-emptive rights and were issued in full compliance with all federal, state and local laws, rules and regulations.  There are no outstanding options, warrants, subscriptions, conversion rights or other rights, agreements or commitments obligating Subco to issue any additional shares of Subco Common Stock or Subco Preferred Stock, or any other securities convertible into, exchangeable for or evidencing the right to subscribe for or acquire from Subco any shares of Subco Common Stock or Subco Preferred Stock.  There are no agreements purporting to restrict the transfer of Subco Common Stock or Subco Preferred Stock and no voting agreements, shareholders’ agreement, voting trusts or other arrangements restricting or affecting the voting of Subco Common Stock or Subco Preferred Stock.

 

	
5.4  

	
Corporate Records of Subco.  The corporate records of Subco, as required to be maintained by it pursuant to all applicable laws, are accurate, complete and current in all material respects, and the minute book of Subco is, in all material respects, correct and contains all material records required by all applicable laws in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Subco.

 

	
5.5  

	
Non-Contravention.  Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:

 

	
(a)  

	
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Subco under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Subco or any of its material property or assets;

 

	
(b)  

	
violate any provision of the constating documents of Subco or any applicable laws; or

 

	
(c)  

	
violate any order, writ, injunction, decree, statute, rule or regulation of any court or governmental or regulatory authority applicable to Subco or any of its material property or assets.

 

	
5.6  

	
Actions and Proceedings.  To the knowledge of Subco, there is no basis for and there is no action, suit, judgment, claim, charge, arbitration, grievance, investigation, demand or proceeding outstanding or pending by or before any court, arbitrator, administrative agency or other governmental authority, or threatened against Subco which involves any of the business, property or assets of Subco that, if adversely resolved or determined, would have a Material Adverse Effect on Subco.  There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Material Adverse Effect.

 

 

19

 

	
5.7  

	
Compliance.

 

	
(a)  

	
To the knowledge of Subco, Subco is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule or decree applicable to the business or operations of Subco;

 

	
(b)  

	
To the knowledge of Subco, Subco is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would have a Material Adverse Effect on Subco;

 

	
(c)  

	
Subco has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement.  All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Subco, threatened, and none of them will be affected in a material adverse manner by the consummation of the Transaction; and

 

	
(d)  

	
Subco has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business.  Subco has not received any notice of any violation thereof, nor is Subco aware of any valid basis therefore.

 

	
5.8  

	
Filings, Consents and Approvals.  No filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Subco of the Transaction.

 

	
5.9  

	
Validity of Subco Common Stock Issuable at the Closing.  The Subco Shares will, upon issuance, have been duly and validly authorized and, when so issued in accordance with the terms of this Agreement, will be duly and validly issued as fully paid and non-assessable.

 

	
5.10  

	
Absence of Undisclosed Liabilities.  Subco has no material Liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, which:

 

	
(a)  

	
have not heretofore been paid or discharged;

 

	
(b)  

	
did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in writing to Priveco; or

 

	
(c)  

	
have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business.

 

 

20

 

	
5.11  

	
Tax Matters.

 

	
(a)  

	
As of the date of this Agreement:

 

	
(i)  

	
Subco has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to Subco, and

 

	
(ii)  

	
all such returns are true and correct in all material respects;

 

	
(b)  

	
Subco has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheets for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a Material Adverse Effect on Subco;

 

	
(c)  

	
Subco is not presently under and has not received notice of, any contemplated investigation or audit by any regulatory or governmental agency or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof; and

 

	
(d)  

	
Subco has properly withheld all Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes and, if required on or prior to the date hereof, has deposited such Taxes with the appropriate governmental agency.

 

	
5.12  

	
Absence of Changes.  Subco has not:

 

	
(a)  

	
incurred any Liabilities, other than Liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or property;

 

	
(b)  

	
sold, encumbered, assigned or transferred any material fixed assets or properties;

 

	
(c)  

	
created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or property of Subco to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;

 

	
(d)  

	
made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business;

 

	
(e)  

	
declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its equity securities or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its equity securities;

 

	
(f)  

	
received notice or had knowledge of any actual or threatened labour trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;

 

	
(g)  

	
made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $1,000;

 

	
(h)  

	
other than in the ordinary course of business, increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to any of its directors or officers or made any increase in, or any addition to, other benefits to which any of its directors or officers may be entitled;

 

	
(i)  

	
entered into any transaction other than in the ordinary course of business consistent with past practice; or

 

	
(j)  

	
agreed, whether in writing or orally, to do any of the foregoing.

 

 

21

 

	
5.13  

	
Subsidiaries.  Subco does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.

 

	
5.14  

	
Personal Property.  Subco does not own or lease any material equipment, furniture, fixtures and other tangible personal property or assets.

 

	
5.15  

	
Employees and Consultants.  Subco does not have any employees or consultants.

 

	
5.16  

	
Material Contracts and Transactions.  There are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or implied, contingent, fixed or otherwise, to which Subco is a party.

 

	
5.17  

	
No Brokers.  Subco has not incurred any obligation or Liability to any party for any brokerage fees, agent’s commissions or finder’s fees in connection with the Transaction.

 

	
5.18  

	
Completeness of Disclosure.  No representation or warranty by Subco in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Priveco pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

 

6.  CLOSING CONDITIONS

 

	
6.1  

	
Conditions Precedent to Closing by Pubco and Subco.  The obligation of Pubco and Subco to consummate the Transaction is subject to the satisfaction or written waiver of the conditions set forth below by a date mutually agreed upon by the parties to this Agreement in writing and in accordance with Section 8.1.  The Closing of the Transaction shall be deemed to mean a waiver of all conditions to Closing.  These conditions precedent are for the benefit of Pubco and Subco may be waived by each of Pubco and Subco in its sole discretion.

 

	
(a)  

	
Representations and Warranties.  The representations and warranties of Priveco and the Selling Shareholders set forth in this Agreement shall be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Priveco shall have delivered to each of Pubco a certificate of an officer of Priveco dated as of the Closing Date, to the effect that the representations and warranties made by Priveco in this Agreement are true and correct.

 

	
(b)  

	
Performance.  All of the covenants and obligations that Priveco and the Selling Shareholders are required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been performed and complied with in all material respects.

 

	
(c)  

	
Transaction Documents.  This Agreement, the Priveco Documents, the Priveco Financial Statements and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Pubco, shall have been executed and delivered to Pubco.

 

 

22

 

	
(d)  

	
Officer’s Certificate.  Pubco shall have received a certificate from an officer of Priveco attaching:

 

	
(i)  

	
a copy of Priveco’s Articles of Incorporation, Bylaws and all other incorporation documents, as amended through the Closing Date; and

 

	
(ii)  

	
a copy of the resolutions duly adopted by the board of directors of Priveco approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.

 

	
(e)  

	
Third Party Consents.  Pubco shall have received from Priveco duly executed copies of all third party consents, permits, authorizations and approvals of any public, regulatory or governmental body or authority or person or entity contemplated by this Agreement, in form and substance reasonably satisfactory to Pubco.

 

	
(f)  

	
Execution by Selling Shareholders.  Selling Shareholders holding note less than 50% of the issued and outstanding Priveco Shares shall have executed this Agreement.

 

	
(g)  

	
No Material Adverse Effect.  No Material Adverse Effect on Priveco shall have occurred since the date of this Agreement.

 

	
(h)  

	
No Action.  No suit, action or proceeding shall be pending or threatened before any governmental or regulatory authority wherein an unfavourable judgment, order, decree, stipulation, injunction or charge would result in and/or:

 

	
(i)  

	
prevent the consummation of any of the transactions contemplated by this Agreement; or

 

	
(ii)  

	
cause the Transaction to be rescinded following consummation.

 

	
(i)  

	
Outstanding Shares. Priveco shall have no more than 100,000,000 issued and outstanding shares of Priveco Common Stock on the Closing Date.

 

	
(j)  

	
Delivery of Financial Statements. Priveco shall have delivered to Pubco the Priveco Financial Statements, which financial statements shall include audited financial statements for Priveco’s two most recent fiscal years and interim unaudited financial statements for any quarterly period thereafter that ended more than 45 days prior to the Closing Date, in each case prepared in accordance with GAAP and audited or reviewed, as applicable, by an independent auditor registered with the Public Company Accounting Oversight Board in the United States.

 

	
(k)  

	
Due Diligence Review of Financial Statements.  Pubco shall be reasonably satisfied with its due diligence investigation and review of the Priveco Financial Statements.

 

	
(l)  

	
Due Diligence Generally.  Pubco shall be reasonably satisfied with its due diligence investigation of Priveco that is reasonable and customary in a transaction of a similar nature to that contemplated by the Transaction, including:

 

	
(i)  

	
materials, documents and information in the possession and control of Priveco and the Selling Shareholders which are reasonably germane to the Transaction;

 

	
(ii)  

	
a physical inspection of the assets of Priveco by Pubco or its representatives; and

 

	
(iii)  

	
title to the material assets of Priveco.

 

 

23

 

	
(m)  

	
Compliance with Securities Laws.  Pubco shall have received evidence satisfactory to Pubco that the Subco Shares issuable at the Closing will be issuable without registration pursuant to the Securities Act in reliance upon one or more exemptions from the registration requirements of the Securities Act and in reliance upon an exemption from the prospectus requirements of the Ontario Securities Act.  In order to establish the availability of the exemption from the registration requirements of the Securities Act for the issuance of the Subco Shares to each Selling Shareholder resident in the United States, at the Closing Priveco shall deliver to Pubco a Certificate of U.S. Shareholder in the form attached hereto as Schedule B, executed by the applicable Selling Shareholder.

 

	
6.2  

	
Conditions Precedent to Closing by Priveco.  The obligation of Priveco and the Selling Shareholders to consummate the Transaction is subject to the satisfaction or written waiver of the conditions set forth below by a date mutually agreed upon by the parties to this Agreement in writing and in accordance with Section 8.1.  The Closing of the Transaction shall be deemed to mean a waiver of all conditions to Closing.  These conditions precedent are for the benefit of Priveco and the Selling Shareholders and may be waived by Priveco and the Selling Shareholders in their discretion.

 

	
(a)  

	
Representations and Warranties.  The representations and warranties of Pubco and Subco set forth in this Agreement shall be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and each of Pubco and Subco shall have delivered to Priveco a certificate of an officer of Pubco or Subco, as applicable, dated the Closing Date, to the effect that the representations and warranties made by Pubco and Subco in this Agreement are true and correct.

 

	
(b)  

	
Performance.  All of the covenants and obligations that Pubco and Subco are required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been performed and complied with in all material respects.

 

	
(c)  

	
Transaction Documents.  This Agreement, the Pubco Documents, the Subco Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Priveco, shall have been executed and delivered by Pubco or Subco, as applicable.

 

	
(d)  

	
Officer’s Certificate. Priveco shall have received a certificate from an officer of Pubco and an officer of Subco attaching:

 

	
(i)  

	
a copy of Pubco’s or Subco’s Articles of Incorporation, Bylaws and all other incorporation documents, as applicable,  as amended through the Closing Date; and

 

	
(ii)  

	
a copy of the resolutions duly adopted by the board of directors of Pubco or Subco, as applicable, approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.

 

	
(e)  

	
Third Party Consents.  Priveco shall have received from Pubco and Subco duly executed copies of all third-party consents, permits, authorizations and approvals of any public, regulatory or governmental body or authority or person or entity contemplated by this Agreement, in form and substance reasonably satisfactory to Priveco.

 

	
(f)  

	
No Material Adverse Effect.  No Material Adverse Effect on Pubco or Subco shall have occurred since the date of this Agreement.

 

 

24

 

	
(g)  

	
No Action.  No suit, action, or proceeding shall be pending or threatened before any governmental or regulatory authority wherein an unfavorable judgment, order, decree, stipulation, injunction or charge would result in and/or:

 

	
(i)  

	
prevent the consummation of any of the transactions contemplated by this Agreement; or

 

	
(ii)  

	
cause the Transaction to be rescinded following consummation.

 

	
(h)  

	
No Liabilities.  Neither Pubco nor Subco shall have any direct, indirect or contingent liabilities outstanding that exceed in the aggregate $31,000 on the Closing Date.

 

	
(i)  

	
Outstanding Shares.  On the Closing Date, Pubco shall have no more than 12,264,146 issued and outstanding shares of Pubco Common Stock and Subco shall have no more than one (1) issued and outstanding share of Subco Common Stock and no issued and outstanding shares of Subco Preferred Stock.

 

	
(j)  

	
Agreements.  The Support Agreement and the Voting and Exchange Trust Agreement shall have been executed and delivered by each of the parties thereto.

 

	
(k)  

	
Due Diligence Review of Pubco SEC Documents.  Priveco shall be reasonably satisfied with its due diligence investigation and review of the Pubco SEC Documents.

 

	
(l)  

	
Due Diligence Generally.  Priveco shall be reasonably satisfied with its due diligence investigation of Pubco and Subco that is reasonable and customary in a transaction of a similar nature to that contemplated by the Transaction.

 

7.  COVENANTS

 

	
7.1  

	
Access and Investigation.  Between the date of this Agreement and the Closing Date, Priveco, on the one hand, and Pubco and Subco, on the other hand, shall, and shall cause each of their respective representatives to:

 

	
(a)  

	
afford the other and its representatives full and free access to its personnel, properties, assets, contracts, books and records, and other documents and data;

 

	
(b)  

	
furnish the other and its representatives with copies of all such contracts, books and records, and other existing documents and data as required by this Agreement and as the other may otherwise reasonably request; and

 

	
(c)  

	
furnish the other and its representatives with such additional financial, operating and other data and information as the other may reasonably request.

 

All of such access, investigation and communication by a party and its representatives shall be conducted during normal business hours and in a manner designed not to interfere unduly with the normal business operations of the other party.  Each party shall instruct its auditors to co-operate with the other party and its representatives in connection with such investigations.

 

	
7.2  

	
Confidentiality.  All information regarding the business of Priveco that Priveco provides to Pubco or Subco during their mutual due diligence investigation of Priveco shall be kept in strict confidence by each of Pubco and Subco and shall not be used (except in connection with due diligence), dealt with, exploited or commercialized by Pubco or Subco or disclosed to any third party (other than their respective professional accounting and legal advisors) without the prior written consent of Priveco.  Likewise, all information regarding the business of Pubco and Subco shall be kept in strict confidence by Priveco and shall not be used (except in connection with due diligence), dealt with, exploited or commercialized by Priveco or disclosed to any third party (other than Priveco’s professional accounting and legal advisors) without the prior written consent of Pubco or Subco, as applicable.  If the Transaction does not proceed for any reason, then upon receipt of a written request from any party, the other parties shall immediately return to the requesting party (or as directed by such party) any information received regarding such party’s business.

 

 

25

 

	
7.3  

	
Notification.  Between the date of this Agreement and the Closing Date, each of the parties to this Agreement shall promptly notify the other parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties, or if it becomes aware of any fact or condition that would cause or constitute a material breach of any such representation or warranty.  Should any such fact or condition require any change in the schedules or appendices relating to such party, such party shall promptly deliver to the other parties a supplement to the applicable schedule or appendix specifying such change.  During the same period, each party shall promptly notify the other parties of the occurrence of any material breach of any of its covenants in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.

 

	
7.4  

	
Conduct of Business Prior to Closing.  From the date of this Agreement to the Closing Date, and except to the extent that Pubco otherwise consents in writing, Priveco shall operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it.  Likewise, from the date of this Agreement to the Closing Date, and except to the extent that Priveco otherwise consents in writing, Pubco and Subco shall operate their respective business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use their best efforts to preserve intact their good reputation and present business organization and to preserve their relationships with persons having business dealings with them.

 

	
7.5  

	
Certain Acts Prohibited – Priveco.  Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, between the date of this Agreement and the Closing Date, Priveco shall not, without the prior written consent of Pubco:

 

	
(a)  

	
amend its Articles of Incorporation, Bylaws or other incorporation documents;

 

	
(b)  

	
incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any property or assets of Priveco except in the ordinary course of business consistent with past practice;

 

	
(c)  

	
dispose of or contract to dispose of any Priveco property or assets, including the Intellectual Property Assets, except in the ordinary course of business consistent with past practice;

 

	
(d)  

	
issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of Priveco Common Stock or Priveco Preferred Stock, or any rights, warrants or options to acquire any such shares or other securities;

 

	
(e)  

	
declare, set aside or pay any dividends on, or make any other distributions in respect of, Priveco Common Stock or Priveco Preferred Stock;

 

	
(f)  

	
split, combine or reclassify any Priveco Common Stock or Priveco Preferred Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of, Priveco Common Stock or Priveco Preferred Stock; or

 

	
(g)  

	
materially increase the benefits or compensation expenses of Priveco, other than as contemplated by the terms of any employment agreement in existence on the date of this Agreement, increase the cash compensation of any director, officer, employee or consultant or pay any benefit or amount to any such person.

 

 

26

 

	
7.6  

	
Certain Acts Prohibited - Pubco.  Except as expressly contemplated by this Agreement, between the date of this Agreement and the Closing Date, Pubco shall not, without the prior written consent of Priveco:

 

	
(a)  

	
amend its Articles of Incorporation, Bylaws or other incorporation documents

 

	
(b)  

	
incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any property or assets of Pubco except in the ordinary course of business consistent with past practice;

 

	
(c)  

	
dispose of or contract to dispose of any Pubco property or assets except in the ordinary course of business consistent with past practice;

 

	
(d)  

	
issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of Pubco Common Stock, or any rights, warrants or options to acquire any such shares or other securities;

 

	
(e)  

	
declare, set aside or pay any dividends on, or make any other distributions in respect of Pubco Common Stock; or

 

	
(f)  

	
materially increase the benefits or compensation expenses of Pubco, increase the cash compensation of any director, officer, employee or consultant or pay any benefit or amount to any such person.

 

	
7.7  

	
Certain Acts Prohibited - Subco.  Except as expressly contemplated by this Agreement, between the date of this Agreement and the Closing Date, Subco shall not, without the prior written consent of Priveco:

 

	
(a)  

	
amend its Articles of Incorporation, Bylaws or other incorporation documents

 

	
(b)  

	
incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any property or assets of Subco except in the ordinary course of business consistent with past practice;

 

	
(c)  

	
dispose of or contract to dispose of any Subco property or assets except in the ordinary course of business consistent with past practice;

 

	
(d)  

	
issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of Subco Common Stock or Subco Preferred Stock, or any rights, warrants or options to acquire any such shares or other securities;

 

	
(e)  

	
declare, set aside or pay any dividends on, or make any other distributions in respect of Subco Common Stock or Subco Preferred Stock; or

 

	
(f)  

	
materially increase the benefits or compensation expenses of Pubco, increase the cash compensation of any director or officer or pay any benefit or amount to any such person.

 

	
7.8  

	
Public Announcements.  Pubco and Priveco each agree that they will not release or issue any reports or statements or make any public announcements relating to this Agreement or the Transaction without the prior written consent of the other party, except as may be required upon written advice of counsel to comply with applicable laws or regulatory requirements after consulting with the other party and seeking their reasonable consent to such announcement.

 

 

27

 

	
7.9  

	
Pubco Board of Directors.  The sole director of Pubco shall adopt resolutions appointing John Marmora to the board of directors of Pubco and shall accept the resignation of Gregory Neely as a director and officer of Pubco, which appointment and resignation shall be effective at the Closing.

 

8.  CLOSING

 

	
8.1  

	
Closing.  The Closing shall take place on the Closing Date at the offices of the solicitors for Priveco or at such other location as agreed to by the parties.  Notwithstanding the location of the Closing, each party agrees that the Closing may be completed by the exchange of undertakings between the respective legal counsel for Priveco and Pubco, provided such undertakings are satisfactory to each party’s respective legal counsel.

 

	
8.2  

	
Closing Deliveries of Priveco and the Selling Shareholders.  At the Closing, Priveco and the Selling Shareholders shall deliver or cause to be delivered the following, fully executed and in form and substance reasonably satisfactory to Pubco:

 

	
(a)  

	
all resolutions and/or consent actions adopted by or on behalf of the board of directors of Priveco evidencing approval of this Agreement and the Transaction;

 

	
(b)  

	
if any of the Selling Shareholders appoint any person, by power of attorney or equivalent, to execute this Agreement or any other agreement, document, instrument or certificate contemplated hereby, a valid and binding power of attorney or equivalent from such Selling Shareholder;

 

	
(c)  

	
all certificates and other documents required by Section 6.1;

 

	
(d)  

	
a certificate of an officer of Priveco, dated as of the Closing, certifying that:

 

	
(i)  

	
each covenant and obligation of Priveco has been complied with; and

 

	
(ii)  

	
each representation, warranty and covenant of Priveco is true and correct at the Closing as if made on and as of the Closing; and

 

	
(e)  

	
the Priveco Documents, the Priveco Financial Statements and any other necessary documents, each duly executed by Priveco, as required to give effect to the Transaction.

 

	
8.3  

	
Closing Deliveries of Pubco.  At the Closing, Pubco shall deliver or cause to be delivered the following, fully executed and in form and substance reasonably satisfactory to Priveco:

 

	
(a)  

	
all resolutions and/or consent actions adopted by or on behalf of the board of directors of Pubco evidencing approval of this Agreement and the Transaction;

 

	
(b)  

	
all certificates and other documents required by Section 6.2;

 

 

28

 

	
(c)  

	
a certificate of an officer of Pubco, dated as of the Closing, certifying that:

 

	
(i)  

	
each covenant and obligation of Pubco has been complied with; and

 

	
(ii)  

	
each representation, warranty and covenant of Pubco is true and correct at the Closing as if made on and as of the Closing;

 

	
(d)  

	
resolutions adopted by or on behalf of the board of directors of Pubco appointing John Marmora as the President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director of Pubco;

 

	
(e)  

	
the resignation of Gregory Neely as an officer and director of Pubco; and

 

	
(f)  

	
the Pubco Documents and any other necessary documents, each duly executed by Pubco, as required to give effect to the Transaction.

 

	
8.4  

	
Closing Deliveries of Subco.  At the Closing, Subco shall deliver or cause to be delivered the following, fully executed and in form and substance reasonably satisfactory to Priveco:

 

	
(a)  

	
all resolutions and/or consent actions adopted by or on behalf of the board of directors of Subco evidencing approval of this Agreement and the Transaction;

 

	
(b)  

	
all certificates and other documents required by Section 6.2;

 

	
(c)  

	
a certificate of an officer of Subco, dated as of the Closing, certifying that:

 

	
(i)  

	
each covenant and obligation of Subco has been complied with; and

 

	
(ii)  

	
each representation, warranty and covenant of Subco is true and correct at the Closing as if made on and as of the Closing; and

 

	
(d)  

	
the Subco Documents and any other necessary documents, each duly executed by Subco, as required to give effect to the Transaction.

 

	
8.5  

	
Additional Closing Delivery of Pubco.  Promptly following the Closing, Pubco shall deliver or cause to be delivered the share certificates representing the Subco Shares to the Selling Shareholders.

 

9.  TERMINATION

 

	
9.1  

	
Termination.  This Agreement may be terminated at any time prior to the Closing Date by:

 

	
(a)  

	
the mutual agreement of Pubco and Priveco;

 

	
(b)  

	
Pubco, if there has been a material breach by Priveco or any of the Selling Shareholders of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Priveco or the Selling Shareholders that is not cured, to the reasonable satisfaction of Pubco, within 10 business days after notice of such breach is given by Pubco (except that no cure period shall be provided for a breach by Priveco or the Selling Shareholders that by its nature cannot be cured);

 

	
(c)  

	
Priveco, if there has been a material breach by Pubco or Subco of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Pubco or Subco, as applicable, that is not cured, to the reasonable satisfaction of Priveco, within 10 business days after notice of such breach is given by Priveco (except that no cure period shall be provided for a breach by Pubco or Subco that by its nature cannot be cured); or

 

	
(d)  

	
Pubco or Priveco if any permanent injunction or other order of a governmental entity or competent authority preventing the consummation of the Transaction has become final and non-appealable.

 

 

29

 

	
9.2  

	
Effect of Termination.  In the event of the termination of this Agreement as provided in Section 9.1, this Agreement shall be of no further force or effect, provided, however, that no termination of this Agreement shall relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations.

 

10.  INDEMNIFICATION, REMEDIES, SURVIVAL

 

	
10.1  

	
Certain Definitions.  For the purposes of this Article 10, the terms “Loss” and “Losses” mean any and all demands, claims, actions or causes of action, assessments, losses, damages, Liabilities, costs and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Pubco, Subco or Priveco including damages for lost profits or lost business opportunities.

 

	
10.2  

	
Agreement of Priveco to Indemnify.  Priveco shall indemnify, defend and hold harmless, to the full extent of the law, Pubco, Subco and their respective shareholders from, against and in respect of any and all Losses asserted against, relating to, imposed upon or incurred by Pubco or Subco and their respective shareholders, as applicable, by reason of, resulting from, based upon or arising out of:

 

	
(a)  

	
the breach by Priveco of any representation or warranty of Priveco contained in or made pursuant to this Agreement, any Priveco Document or any certificate or other instrument delivered pursuant to this Agreement; or

 

	
(b)  

	
the breach or partial breach by Priveco of any covenant or agreement of Priveco made in or pursuant to this Agreement, any Priveco Document or any certificate or other instrument delivered pursuant to this Agreement.

 

	
10.3  

	
Agreement of the Selling Shareholders to Indemnify.  The Selling Shareholders shall indemnify, defend and hold harmless, to the full extent of the law, Pubco, Subco and their respective shareholders from, against and in respect of any and all Losses asserted against, relating to, imposed upon or incurred by Pubco or Subco and their respective shareholders, as applicable by reason of, resulting from, based upon or arising out of:

 

	
(a)  

	
any breach by the Selling Shareholders of Section 2.2; or

 

	
(b)  

	
any misstatement, misrepresentation or breach of the representations and warranties made by the Selling Shareholders contained in or made pursuant to the Certificate of U.S. Shareholder executed by each Selling Shareholder resident in the United States as part of the share exchange procedure described in Section 2.3.

 

	
10.4  

	
Agreement of Pubco to Indemnify.  Pubco shall indemnify, defend and hold harmless, to the full extent of the law, Priveco and the Selling Shareholders from, against and in respect of any and all Losses asserted against, relating to, imposed upon or incurred by Priveco and the Selling Shareholders by reason of, resulting from, based upon or arising out of:

 

	
(a)  

	
the breach by Pubco of any representation or warranty of Pubco contained in or made pursuant to this Agreement, any Pubco Document or any certificate or other instrument delivered pursuant to this Agreement; or

 

	
(b)  

	
the breach or partial breach by Pubco of any covenant or agreement of Pubco made in or pursuant to this Agreement, any Pubco Document or any certificate or other instrument delivered pursuant to this Agreement.

 

 

30

 

	
10.5  

	
Agreement of Subco to Indemnify.  Subco shall indemnify, defend and hold harmless, to the full extent of the law, Priveco and the Selling Shareholders from, against and in respect of any and all Losses asserted against, relating to, imposed upon or incurred by Priveco and the Selling Shareholders by reason of, resulting from, based upon or arising out of:

 

	
(a)  

	
the breach by Subco of any representation or warranty of Subco contained in or made pursuant to this Agreement, any Subco Document or any certificate or other instrument delivered pursuant to this Agreement; or

 

	
(b)  

	
the breach or partial breach by Subco of any covenant or agreement of Subco made in or pursuant to this Agreement, any Subco Document or any certificate or other instrument delivered pursuant to this Agreement.

 

11.  GENERAL PROVISIONS

 

	
11.1  

	
Time of the Essence.  Time shall be of the essence of this Agreement.

 

	
11.2  

	
Independent Legal Advice.  Each of the parties acknowledges and confirms that:

 

	
(a)  

	
it has been advised to seek, and has sought or have otherwise waived, independent tax and legal advice with respect to this Agreement and the documents delivered pursuant hereto; and

 

	
(b)  

	
to the extent that any Selling Shareholder declines to receive independent legal counsel in respect of this Agreement, such Selling Shareholder hereby waives that right, should a dispute later develop, to rely on its lack of independent legal advice to avoid its obligations, to seek indulgences from the other parties, or to otherwise attack, in whole or in part, the integrity of this Agreement or any document related thereto.

 

	
11.3  

	
Effectiveness of Representations; Survival.  Each party is entitled to rely on the representations, warranties and agreements of each of the other parties and all such representations, warranties and agreements shall be effective regardless of any investigation that any party has undertaken or failed to undertake.  Unless otherwise stated in this Agreement, and except for instances of fraud, the representations, warranties and agreements shall survive the Closing Date and continue in full force and effect until one (1) year after the Closing Date.

 

	
11.4  

	
Further Assurances.  Each of the parties shall co-operate with the others and execute and deliver to the other parties such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party as necessary to carry out, evidence and confirm the intended purposes of this Agreement.

 

	
11.5  

	
Amendment.  This Agreement may not be amended except by an instrument in writing signed by each of the parties.

 

	
11.6  

	
Severability.  In the event that any provision or part of this Agreement is determined by any court or other judicial or administrative body to be illegal, null, void, invalid or unenforceable, that provision shall be severed to the extent that it is so declared and the other provisions of this Agreement shall continue in full force and effect.

 

	
11.7  

	
Expenses.  Each party shall be responsible for its own legal and audit fees and other charges incurred in connection with the preparation, execution and performance of this Agreement, all negotiations between the parties and the consummation of the Transaction.

 

	
11.8  

	
Entire Agreement.  This Agreement, the schedules and appendices attached hereto and the other documents in connection with the Transaction contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings, both written and oral, expressed or implied, with respect thereto.  Any preceding correspondence or offers are expressly superseded and terminated by this Agreement.

 

 

31

 

	
11.9  

	
Notices.  All notices and other communications required or permitted under this Agreement must be in writing and shall be deemed given if sent by personal delivery, emailed with electronic confirmation of delivery, internationally-recognized express courier or registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as will be specified by like notice):

 

If to Priveco or any of the Selling Shareholders:

 

Tropic Spa Inc.

1057 Parkinson Road, Unit 9

Woodstock, Ontario N4S 7W3

 

Attention:        John Marmora

Email:             jmarmora@tropicspatan.com

 

If to Pubco or Subo:

 

Rockford Minerals Inc.

369 Shuter Street

Toronto, Ontario M5A 1X2

 

Attention:        Gregory Neely

Email:             greg@forgemedia.ca

 

All such notices and other communications shall be deemed to have been received:

 

	
(a)  

	
in the case of personal delivery, on the date of such delivery;

 

	
(b)  

	
in the case of a fax, when the party sending such fax has received electronic confirmation of its delivery;

 

	
(c)  

	
in the case of delivery by internationally-recognized express courier, on the business day following dispatch; and

 

	
(d)  

	
in the case of mailing, on the fifth business day following mailing.

 

	
11.10  

	
Benefits.  This Agreement is and shall only be construed as for the benefit of or enforceable by those persons party to this Agreement.

 

	
11.11  

	
Assignment.  This Agreement may not be assigned (except by operation of law) by any party without the written consent of the other parties.

 

	
11.12  

	
Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario applicable to contracts made and to be performed therein.

 

	
11.13  

	
Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

	
11.14  

	
Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

 

 

32

 

	
11.15  

	
Fax Execution.  This Agreement may be executed by delivery of executed signature pages by facsimile transmission and such execution shall be effective for all purposes.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first written above.

 

ROCKFORD MINERALS INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

1896432 ONTARIO INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

TROPIC SPA INC.

 

Per:      /s/ John Mamora

Name:  John Marmora

Title:    President

 

 

33

 

 

SCHEDULE A

 

THE SELLING SHAREHOLDERS

 

	
Name of Shareholder

	
Signature of Shareholder

	
Number of Priveco Shares Held

	
Number of Subco Shares to be Issued

	
101063467 Saskatchewan Ltd.

	
Per:           /s/ James Deis

Name:        James Deis

Title:           President

	
260,000

	
260,000

	
2176526 Ontario Ltd.

	
Per:           /s/ Jeffrey S. McQuade

Name:        Jeffrey S. McQuade

Title:           Secretary/Treasurer

	
750,000

	
750,000

	
Nandor Bajusz

	
/s/ Nandor Bajusz

	
2,561,500

	
2,561,500

	
Lloyd East

	
/s/ Lloyd East

	
8,600,000

	
8,600,000

	
Rudy Flaman

	
/s/ Rudy Flaman

	
4,908,400

	
4,908,400

	
Flaman Sales Ltd.

	
Per:           /s/ Rudy Flaman

Name:        Rudy Flaman

Title:           Vice President

	
1,391,600

	
1,391,600

	
Alan Gardiner

	
/s/ Alan Gardiner

	
185,000

	
185,000

	
Paige Gray

	
/s/ Paige Gray

	
20,000

	
20,000

	
William Brian Gray

	
/s/ William Brian Gray

	
1,050,000

	
1,050,000

	
Greg Halsall

	
/s/ Greg Halsall

	
1,750,000

	
1,750,000

	
J&J Winny Holdings Ltd.

	
Per:           /s/ Jim Winny

Name:        Jim Winny

Title:           President

	
50,000

	
50,000

	
Kamantha Acres Ltd.

	
Per:           /s/ David Marshall

Name:        David Marshall

Title:           President

	
105,000

	
105,000

	
Regan Lazar

	
/s/ Regan Lazar

	
3,000,000

	
3,000,000

	
Joanna Maund

	
/s/ Joanna Maund

	
350,000

	
350,000

	
Anthony Marmora

	
/s/ Anthony Marmora

	
130,000

	
130,000

	
John Marmora

	
/s/ John Marmora

	
32,093,377

	
32,093,377

	
Jeffrey S. McQuade

	
/s/ Jeffrey S. McQuade

	
2,400,000

	
2,400,000

	
Everett Moore

	
/s/ Everett Moore

	
1,600,000

	
1,600,000

	
Matthew Owens

	
/s/ Matthew Owens

	
106,000

	
106,000

	
Sandra Owens

	
/s/ Sandra Owens

	
60,000

	
60,000

	
Rick Padulo

	
/s/ Rick Padulo

	
1,000,000

	
1,000,000

	
Ken Rampersand

	
/s/ Ken Rampersand

	
1,250,000

	
1,250,000

	
Joan Rampersand

	
/s/ Joan Rampersand

	
90,000

	
90,000

	
Reo Holdings Company Ltd.

	
Per:           /s/ Rob Owens

Name:        Rob Owens

Title:           President

	
7,000,000

	
7,000,000

	
John Sutherland

	
/s/ John Sutherland

	
100,000

	
100,000

	
David Weinrauch

	
/s/ David Weinrauch

	
7,000,000

	
7,000,000

	
Beverly Wentzell

	
/s/ Beverly Wentzell

	
20,000

	
20,000

	
Doug Worden

	
/s/ Doug Worden

	
200,000

	
200,000

	
Total

	  	
78,030,877

	
78,030,877

 

34

 

 

SCHEDULE B

 

CERTIFICATE OF U.S. SHAREHOLDER

 

In connection with the issuance of common shares (the “Subco Shares”) of 1896432 Ontario Inc., an Ontario corporation (“Subco”), to the undersigned, pursuant to a Share Exchange Agreement dated June 28, 2013 (the “Agreement”) among Rockford Minerals Inc., a Nevada corporation, Subco, Tropic Spa Inc., an Ontario corporation (“Priveco”), and the shareholders of Priveco as set out in the Agreement (each, a “Selling Shareholder”), the undersigned represents and warrants to, and covenants with Subco that:

 

	
1.  

	
The undersigned satisfies one or more of the categories of “accredited investor”, as defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), as indicated below: (please initial in the space provided)

 

	
  

	
  Category 1

	
A bank as defined in section (3)(a)(2) of the U.S. Securities Act, or a savings and loan association or other institution as defined in section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; an insurance company as defined in section 2(13) of the U.S. Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivision, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

 

	
  

	
  Category 2

	
A private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

 

	
  

	
  Category 3

	
An organization described in section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Subco Shares, with total assets in excess of $5,000,000;

 

	
  

	
  Category 4

	
A director or executive officer of Subco;

 

	
  

	
  Category 5

	
A natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000, excluding the value of the primary residence of such natural person, calculated by subtracting from the estimated fair market value of the property the amount of debt secured by the property, up to the estimated fair market value of the property;

 

	
  

	
  Category 3

	
A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

 

  

35

  

	
  

	
  Category 7

	
A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Subco Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; or

 

	
  

	
  Category 8

	
An entity in which all of the equity owners are accredited investors.

 

	
2.  

	
If the undersigned does not satisfy one or more of the categories of “accredited investor”, as defined in Rule 501 of Regulation D promulgated under the U.S. Securities Act, the undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Subco Shares.

 

	
3.  

	
None of the Subco Shares have been or will be registered under the U.S. Securities Act, or under any applicable state securities or “blue sky” laws, and may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S promulgated under the U.S. Securities Act, except in accordance with the provisions of Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state and foreign securities laws.

 

	
4.  

	
The undersigned understands and agrees that offers and sales of any of the Subco Shares may only be made in compliance with the registration provisions of the U.S. Securities Act or an exemption therefrom and in each case only in accordance with applicable securities laws.

 

	
5.  

	
The undersigned understands and agrees not to engage in any hedging transactions involving any of the Subco Shares unless such transactions are in compliance with the provisions of the U.S. Securities Act and in each case only in accordance with applicable securities laws.

 

	
6.  

	
The undersigned is acquiring the Subco Shares for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Subco Shares in the United States or to U.S. Persons.

 

	
7.  

	
Subco has not undertaken, and will have no obligation, to register any of the Subco Shares under the U.S. Securities Act.

 

	
8.  

	
Subco is entitled to rely on the acknowledgements, agreements, representations and warranties and the statements and answers of the undersigned contained in the Agreement and this Certificate, and the undersigned shall hold harmless Subco from any loss or damage either one may suffer as a result of any such acknowledgements, agreements, representations and/or warranties made by the undersigned not being true and correct.

 

	
9.  

	
The undersigned has been advised to consult his own legal, tax and other advisors with respect to the merits and risks of an investment in the Subco Shares and, with respect to applicable resale restrictions, is solely responsible (and Subco is not in any way responsible) for compliance with applicable resale restrictions.

 

	
10.  

	
The undersigned and the undersigned’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from Subco in connection with the acquisition of the Subco Shares under the Agreement, and to obtain additional information, to the extent possessed or obtainable by Subco without unreasonable effort or expense.

 

  

36

  

	
11.  

	
The books and records of Subco were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the undersigned during reasonable business hours at its principal place of business and that all documents, records and books in connection with the acquisition of the Subco Shares under the Agreement have been made available for inspection by the undersigned and the undersigned’s advisor(s).

 

	
12.  

	
The undersigned (i) is able to fend for himself in connection with the acquisition of the Subco Shares; and (ii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment.

 

	
13.  

	
The undersigned is not aware of any advertisement of any of the Subco Shares and is not acquiring the Subco Shares as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

 

	
14.  

	
No person has made to the undersigned any written or oral representations:

 

	
  

	
(a)

	
that any person will resell or repurchase any of the Subco Shares;

 

	
  

	
(b)

	
that any person will refund the purchase price of any of the Subco Shares;

 

	
  

	
(c)

	
as to the future price or value of any of the Subco Shares; or

 

	
  

	
(d)

	
that any of the Subco Shares will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Subco Shares on any stock exchange or automated dealer quotation system.

 

	
15.  

	
The undersigned is acquiring the Subco Shares as principal for his own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Subco Shares.

 

	
16.  

	
Neither the Securities and Exchange Commission nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Subco Shares.

 

	
17.  

	
The undersigned acknowledges and agrees that Subco may refuse to register any transfer of Subco Shares not made in accordance with the U.S. Securities Act or pursuant to an available exemption from registration thereunder.

 

	
18.  

	
The undersigned understands and agrees that the Subco Shares shall bear legends in substantially the following form:

 

	
 

	
“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”

 

	
 

	
“UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) THE DISTRIBUTION DATE, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

 

	
19.  

	
The address of the undersigned included herein is the sole address of the undersigned as of the date of this Certificate.

 

IN WITNESS WHEREOF, I have executed this Certificate of U.S. Shareholder.

 

	  	  	  
	
Signature

 

	  	
Date: _____________ , 2013

 

	  	  	  
	
Name

 

	  	  
	  	  	  
	
Title (if applicable)

 

	  	  
	  	  	  
	
Address

 

	  	  

 

  

37

  

 

SCHEDULE C

 

PRIVECO LEASES AND OTHER PROPERTY INTERESTS

 

	
Name of Agreement

	
Parties

	
Execution Date

	
Terms and Conditions

	
Agreement to Lease –  Commercial

	
Stonewood Management Inc. and Tropic Spa Inc.

	
December 2, 2011

	
As per agreement provided to Pubco

 

  

38

  

 

SCHEDULE D

 

PRIVECO INTELLECTUAL PROPERTY

 

	
Type

	
Name

	
Region

	
Number

	
Date

	
Inventor

	
Patent

	
Apparatus for Spray 

Application of a 

Sunless Tanning 

Product

	
United States

	
7,594,593

	
January 17, 2006 (Filed) / 

September 29, 2009 (Issued)

	
Tropic Spa Inc.

	
Patent Application

	
Apparatus for Spray 

Application of a 

Sunless Tanning 

Product

	
Canada

	
2,685,941

	
April 5, 2007 (Filed) / 

December 22, 2009 (Entered)

	
Tropic Spa Inc.

	
Patent Application

	
Automated Mist 

Tanning Apparatus

	
Australia

	
2012227220

	
September 24, 2012 (Filed)

	
Tropic Spa Inc.

	
Patent Application

	
Apparatus for Spray

 Application of a

 Sunless Tanning 

Product

	
China

	
200780053225.1

	
December 4, 2009 (Filed)

	
Tropic Spa Inc.

	
Patent Application

	
 
Apparatus for Spray

 Application of a

 Sunless Tanning 

Product

	
Europe

	
07 804 956.6

	
November 3, 2009 (Filed)

	
Tropic Spa Inc.

 

  

39

  

 

SCHEDULE E

 

PRIVECO MATERIAL CONTRACTS

 

None.

 

 

  

40

  

 

APPENDIX 1

 

PROVISIONS ATTACHING TO THE SUBCO PREFERRED STOCK

 

Attached hereto.

 

  

41

  

 

APPENDIX 2

 

SUPPORT AGREEMENT BETWEEN ROCKFORD MINERALS INC., 1896431 ONTARIO INC. AND 1896432 ONTARIO INC.

 

Attached hereto.

 

  

42

  

 

APPENDIX 3

 

VOTING AND EXCHANGE TRUST AGREEMENT BETWEEN ROCKFORD MINERALS INC., 1896431 ONTARIO INC., 1896432 ONTARIO INC. AND JOHN MARMORA 

 

Attached hereto.

 

  

43

  

 

APPENDIX 1

 

PROVISIONS ATTACHING TO THE SUBCO PREFERRED STOCK

 

The Exchangeable Shares shall have the following rights, privileges, restrictions and conditions:

 

1.  INTERPRETATION

 

	
(a)  

	
Definitions. For the purposes of these Exchangeable Share Provisions:

 

“affiliate” has the meaning ascribed thereto in the Securities Act;

 

“Board of Directors” means the board of directors of Subco;

 

“Business Day” means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banking institutions in Toronto, Ontario are closed for business;

 

“Callco” means 1896431 Ontario Inc., a subsidiary of Rockford existing under the laws of the Province of Ontario, or any other direct or indirect wholly-owned subsidiary of Rockford designated by Rockford from time to time in replacement thereof;

 

“Callco Call Notice” has the meaning ascribed thereto in Section 8(b);

 

“Canadian Dollar Equivalent” means, at any date, in respect of any amount expressed in a currency other than Canadian dollars (the “Foreign Currency Amount”) as of such date, the product obtained by multiplying (i) the Foreign Currency Amount by (ii) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose;

 

“Closing Date” has the meaning ascribed thereto in the Share Exchange Agreement;

 

“Common Shares” means the common shares in the capital of Subco;

 

“Current Market Price” means, in respect of a Rockford Share on any date, the Canadian Dollar Equivalent of the average closing sale price on the OTC Bulletin Board during the period of 20 consecutive trading days ending on the third trading day immediately before such date or, if the Rockford Shares are not then quoted on the OTC Bulletin Board, on such stock exchange or automated quotation system on which the Rockford Shares are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if in the opinion of the Board of Directors the public distribution or trading activity of Rockford Shares during such period does not reflect the fair market value of a Rockford Share, then the Current Market Price of a Rockford Share shall be determined by the Board of Directors, based upon the advice of such qualified independent financial advisors as the Board of Directors may deem to be appropriate; and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding, absent manifest error;

 

“Exchangeable Shares” means the preferred shares in the capital of Subco, having the rights, privileges, restrictions and conditions set forth herein;

 

 

1

 

“Exchangeable Share Consideration” means, with respect to each Exchangeable Share, for any acquisition of, redemption of or distribution of assets of Subco in respect of such Exchangeable Share, or purchase of such Exchangeable Share pursuant to these Exchangeable Share Provisions, the Share Exchange Agreement, the Support Agreement or the Voting and Exchange Trust Agreement:

 

	
(i)  

	
the Current Market Price of one Rockford Share deliverable in connection with such action; plus

 

	
(ii)  

	
a cheque or cheques payable at par at any branch of the bankers of the payor in the amount of all declared, payable and unpaid, and all undeclared but payable, cash dividends deliverable in connection with such action; plus

 

	
(iii)  

	
such stock or other property constituting any declared, payable and unpaid non-cash dividends deliverable in connection with such action,

 

provided that: (A) the part of the consideration which represents (i) above shall be fully paid and satisfied by the delivery of one Rockford Share, such share to be duly issued as fully paid and non-assessable; (B) the part of the consideration which represents (iii) above shall be fully paid and satisfied by delivery of such non-cash items; (C) in each case, any such consideration shall be delivered free and clear of any lien, claim, encumbrance, security interest or adverse claim or interest; and (D) in each case, any such consideration shall be paid without interest and less any tax required to be deducted and withheld therefrom;

 

“Exchangeable Share Price” means, at any time, for each Exchangeable Share, an amount equal to the aggregate of:

 

	
(i)  

	
the Current Market Price of one Rockford Share at such time;

 

	
(ii)  

	
the full amount of all cash dividends declared, payable and unpaid, at such time, on such Exchangeable Share;

 

	
(iii)  

	
the full amount of all non-cash dividends declared, payable and unpaid, on such Exchangeable Share; and

 

	
(iv)  

	
the full amount of all dividends declared and payable or paid in respect of each Rockford Share which have not, at such time, been declared or paid on Exchangeable Shares in accordance herewith;

 

“Exchangeable Share Provisions” means the rights, privileges, restrictions and conditions set out herein;

 

“Exchangeable Share Voting Event” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of Subco, other than an Exempt Exchangeable Share Voting Event, and, for greater certainty, excluding any matter in respect of which holders of Exchangeable Shares are entitled to vote (or instruct the Trustee to vote) in their capacity as Beneficiaries under (and as that term is defined) in the Voting and Exchange Trust Agreement;

 

“Exempt Exchangeable Share Voting Event” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of Subco to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change is required to maintain the economic equivalence of the Exchangeable Shares and the Rockford Shares;

 

 

2

 

“Liquidation Amount” has the meaning ascribed thereto in Section 6(d);

 

“Liquidation Call Right” has the meaning ascribed thereto in Section 6(a);

 

“Liquidation Date” has the meaning ascribed thereto in Section 6(d);

 

“OBCA” means the Business Corporations Act (Ontario), as amended;

 

“person” includes any individual, sole proprietorship, corporation, body corporate, incorporated or unincorporated association, syndicate or organization, partnership, limited partnership, limited liability company, unlimited liability company, joint venture, joint stock company, trust, natural person in his or her capacity as trustee, executor, administrator or other legal representative, a government or governmental authority or other entity, whether or not having legal status;

 

“Redemption Call Purchase Price” has the meaning ascribed thereto in Section 7(a);

 

“Redemption Call Right” has the meaning ascribed thereto in Section 7(a);

 

“Redemption Date” means the date, if any, established by the Board of Directors for the redemption by Subco of all but not less than all of the outstanding Exchangeable Shares, which date shall be no earlier than the fifth anniversary of the Closing Date, unless:

 

	
(i)  

	
the aggregate number of Exchangeable Shares issued and outstanding (other than Exchangeable Shares held by Rockford and its subsidiaries) is less than 5% of the number of Exchangeable Shares issued on the Closing Date (as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision, combination or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date, as it may determine, upon at least 30 days’ prior written notice to the registered holders of the Exchangeable Shares;

 

	
(ii)  

	
a Rockford Control Transaction is proposed, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Rockford Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Rockford Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date as it may determine, upon such number of days prior written notice to the registered holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances;

 

	
(iii)  

	
an Exchangeable Share Voting Event is proposed and (A) the Board of Directors has determined, in good faith and in its sole discretion, that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event and (B) the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exchangeable Share Voting Event, in which case the Redemption Date shall be the Business Day following the later of the day on which the Board of Directors makes such a determination or the holders of the Exchangeable Shares fail to take such action; or

 

 

3

 

	
(iv)  

	
an Exempt Exchangeable Share Voting Event is proposed and the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event, in which case the Redemption Date shall be the Business Day following the day on which the holders of the Exchangeable Shares fail to take such action,

 

provided, however, that the accidental failure or omission to give any notice of redemption under clauses (i), (ii), (iii) or (iv) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption;

 

“Redemption Price” has the meaning ascribed thereto in Section 7(d);

 

“Restricted Actions” has the meaning ascribed thereto in Section 5(a);

 

“Retracted Shares” has the meaning ascribed thereto in Section 8(a)(i);

 

“Retraction Call Notice” has the meaning ascribed thereto in Section 8(b)(ii);

 

“Retraction Call Right” has the meaning ascribed thereto in Section 8(b)(i);

 

“Retraction Call Right Purchase Price” has the meaning ascribed thereto in Section 8(b)(i);

 

“Retraction Date” has the meaning ascribed thereto in Section 8(a)(i);

 

“Retraction Price” has the meaning ascribed thereto in Section 8(a)(i);

 

“Retraction Request” has the meaning ascribed thereto in Section 8(a)(i);

 

“Rockford” means Rockford Minerals Inc., a corporation existing under the laws of the State of Nevada;

 

“Rockford Control Transaction” shall be deemed to have occurred if:

 

	
(i)  

	
any person acquires, directly or indirectly, any voting security of Rockford and, immediately after such acquisition, the acquirer directly or indirectly owns, or exercises control and direction over, voting securities representing more than 50% of the total voting power of all of the then outstanding voting securities of Rockford;

 

	
(ii)  

	
the shareholders of Rockford approve a merger, consolidation, recapitalization or reorganization of Rockford, other than any such transaction which would result in the holders of outstanding voting securities of Rockford immediately prior to such transaction directly or indirectly owning, or exercising control and direction over, voting securities representing more than 50% of the total voting power of all of the voting securities of the surviving entity outstanding immediately after such transaction;

 

 

4

 

	
(iii)  

	
the shareholders of Rockford approve a liquidation of Rockford; or

 

	
(iv)  

	
Rockford sells or disposes of all or substantially all of its assets;

 

“Rockford Dividend Declaration Date” means the date on which the board of directors of Rockford declares any dividend or other distribution on the Rockford Shares;

 

“Rockford Shares” means shares of the common stock of Rockford;

 

“Securities Act” means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as amended;

 

“Share Exchange Agreement” means the share exchange agreement dated ●, 2013 between Rockford, Subco, Tropic Spa and the shareholders of Tropic Spa, as amended, supplemented and/or restated in accordance with its terms;

 

“Support Agreement” means the support agreement to be entered into prior to the issuance by Subco of any Exchangeable Shares among Rockford, Callco and Subco in substantially the form attached as Appendix 2 to the Share Exchange Agreement, as amended, supplemental or otherwise modified from time to time in accordance with its terms;

 

“Tax Act” means the Income Tax Act (Canada), as amended;

 

“Transfer Agent” means such person as may from time to time be appointed by Subco as the registrar and transfer agent for the Exchangeable Shares;

 

“Tropic Spa” means Tropic Spa Inc., a corporation existing under the laws of the Province of Ontario;

 

“Trustee” means the trustee chosen by Rockford to act as trustee under the Voting and Exchange Trust Agreement, and any successor trustee appointed under the Voting and Exchange Trust Agreement; and

 

“Voting and Exchange Trust Agreement” means the voting and exchange trust agreement to be entered into among Rockford, Callco, Subco and the Trustee in substantially the form attached as Appendix 3 to the Share Exchange Agreement, as amended, supplemental or otherwise modified from time to time in accordance with its terms.

 

	
(b)  

	
Interpretation Not Affected by Headings.  The division of these Exchangeable Share Provisions into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof.  Unless otherwise indicated, references to a “Section” refer to the specified section of these Exchangeable Share Provisions.

 

	
(c)  

	
Number and Gender.  In these Exchangeable Share Provisions, unless the context otherwise requires, words used importing the singular include the plural and vice versa and words imparting any gender shall include all genders.

 

 

5

 

	
(d)  

	
Date of Any Action.  If any date on which any action is required to be taken hereunder by any person is not a Business Day, then such action shall be required to be taken on the next succeeding day which is a Business Day.

 

	
(e)  

	
Currency.  In these Exchangeable Share Provisions, unless stated otherwise, all cash payments provided for shall be made in Canadian dollars.

 

2.  RANKING OF EXCHANGEABLE SHARES

 

The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares (a) with respect to the payment of dividends as and to the extent provided in Section 3 and (b) with respect to the distribution of assets in the event of the liquidation, dissolution or winding-up of Subco, whether voluntary or involuntary, or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs as and to the extent provided in Section 5.

 

3.  DIVIDENDS

 

	
(a)  

	
Dividends.  A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable laws, on each Rockford Dividend Declaration Date, declare a dividend on each Exchangeable Share:

 

	
(i)  

	
in the case of a cash dividend or distribution declared on the Rockford Shares, in an amount in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent of the cash dividend or distribution declared on each Rockford Share on the Rockford Dividend Declaration Date;

 

	
(ii)  

	
in the case of a stock dividend or distribution declared on the Rockford Shares to be paid in Rockford Shares, by the issue or transfer by Subco of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Rockford Shares to be paid on each Rockford Share; provided, however, that Subco may, in lieu of such stock dividend or distribution, ellect to effect a contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with Section 3(e)) subdivision of the outstanding Exchangeable Shares; or

 

	
(iii)  

	
in the case of a dividend or distribution declared on the Rockford Shares in property other than cash or Rockford Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (as determined by the Board of Directors in accordance with Section 3(e)) to the type and amount of property declared as a dividend or distribution on each Rockford Share.

 

Such dividends or distributions shall be paid out of money, assets or property of Subco properly applicable to the payment of dividends, or out of authorized but unissued shares of Subco, as applicable.  The holders of Exchangeable Shares shall not be entitled to any dividends other than or in excess of the dividends referred to in this Section 3(a).

 

	
(b)  

	
Payments of Dividends.  Cheques of Subco payable at par at any branch of the bankers of Subco shall be issued in respect of any cash dividends or distributions contemplated by Section 3(a)(i) and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend or distribution represented thereby unless the cheque is not paid on presentation.  Written evidence of the book entry issuance or transfer to the registered holder of Exchangeable Shares shall be delivered in respect of any stock dividends or distributions contemplated by Section 3(a)(ii) and the sending of such written evidence to each holder of an Exchangeable Share shall satisfy the stock dividend or distribution represented thereby.  Such other type and amount of property in respect of any dividends or distributions contemplated by Section 3(a)(iii) shall be issued, distributed or transferred by Subco in such manner as it shall determine and the issuance, distribution or transfer thereof by Subco to each holder of an Exchangeable Share shall satisfy the dividend or distribution represented thereby.  Subject to the requirements of applicable laws with respect to unclaimed property, no holder of an Exchangeable Share shall be entitled to recover by action or other legal process against Subco any dividend that is represented by a cheque that has not been duly presented to Subco’s bankers for payment or that otherwise remains unclaimed for a period of five (5) years from the date on which such dividend or distribution was payable.

 

 

6

 

	
(c)  

	
Record and Payment Dates.  The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend or distribution declared on the Exchangeable Shares under Section 3(a) shall be the same dates as the record date and payment date, respectively, for the corresponding dividend or distribution declared on the Rockford Shares.  The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision of the Exchangeable Shares under Section 3(a)(ii) and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend or distribution declared on the Rockford Shares.

 

	
(d)  

	
Partial Payment.  If on any payment date for any dividends or distributions declared on the Exchangeable Shares under Section 3(a) the dividends or distributions are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends or distributions that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which Subco shall have sufficient moneys, assets or property properly applicable to the payment of such dividends or distributions.

 

	
(e)  

	
Economic Equivalence.  The Board of Directors shall determine, in good faith and in its sole discretion (with the assistance of such financial or other advisors as the Board of Directors may determine), “economic equivalence” for the purposes of the Exchangeable Share Provisions and each such determination shall be conclusive and binding on Subco and its shareholders.  In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors:

 

	
(i)  

	
in the case of any stock dividend or distribution payable in Rockford Shares, the number of such shares issued in proportion to the number of Rockford Shares previously outstanding;

 

	
(ii)  

	
in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares), the relationship between the exercise price of each such right, option or warrant, the Current Market Price of a Rockford Share, the volatility of the Rockford Shares and the terms of any such instrument;

 

	
(iii)  

	
in the case of the issuance or distribution of any other form of property (including any shares or securities of Rockford of any class other than Rockford Shares, any rights, options or warrants other than those referred to in Section 3(e)(ii), any evidences of indebtedness of Rockford or any assets of Rockford), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Rockford Share and the Current Market Price of a Rockford Share;

 

 

7

 

	
(iv)  

	
in the case of any subdivision, redivision or change of the then outstanding Rockford Shares into a greater number of Rockford Shares or the reduction, combination, consolidation or change of the then outstanding Rockford Shares into a lesser number of Rockford Shares or any amalgamation, merger, arrangement, reorganization or other transaction affecting the Rockford Shares, the effect thereof upon the then outstanding Exchangeable Shares; and

 

	
(v)  

	
in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Rockford Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).

 

4.  CERTAIN RESTRICTIONS

 

So long as any of the Exchangeable Shares are outstanding, Subco shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Section 12(a):

 

	
(a)  

	
pay any dividends on the Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends, other than stock dividends payable in Common Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be;

 

	
(b)  

	
redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends or the distribution of the assets in the event of the liquidation, dissolution or winding up of Subco, whether voluntary or involuntary, or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs;

 

	
(c)  

	
redeem or purchase or make any capital distribution in respect of any other shares of Subco ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of Subco, whether voluntary or involuntary, or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs;

 

	
(d)  

	
issue any Exchangeable Shares or any other shares of Subco ranking equally with the Exchangeable Shares other, in each case, than by way of stock dividends to the holders of such Exchangeable Shares; or

 

	
(e)  

	
issue any shares of Subco ranking superior to the Exchangeable Shares,

 

provided, however, that the restrictions in Sections 4(a), (b), (c) and (d) shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the Rockford Shares shall have been declared and paid in full on the Exchangeable Shares and provided that the proposed redemption, purchase or other capital distribution does not impair Subco’s ability to redeem all of the outstanding Exchangeable Shares.

 

5.  ADDITIONAL RESTRICTIONS

 

	
(a)  

	
Restricted Actions.  Except as provided in this Section 5, the holders of the Exchangeable Shares may not, without the written consent of Subco, exchange, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any of their Exchangeable Shares, or (b) enter into any swap or other arrangement that transfers to another person, in whole or in part, any of the economic consequences of ownership of any of their Exchangeable Shares, whether any such transaction is to be settled by delivery of such Exchangeable Shares or otherwise (the “Restricted Actions”).  The Restricted Actions are in addition to and cumulative with any other restrictions on conversion or transfer otherwise agreed to by any holder of Exchangeable Shares or to which such holder is subject under applicable laws.

 

 

8

 

	
(b)  

	
Expiration of Restricted Actions.  Within 30 days of each six (6) month anniversary of the Closing Date, and provided Tropic Spa has generated at least $1,000,000 in gross revenue during the preceding six (6) month period, Subco shall permit the holders of Exchangeable Shares to require Subco to redeem an aggregate of 1% of the then-outstanding Exchangeable Shares on a pro rata basis in accordance with the manner specified in Section 8(a).  Notwithstanding the foregoing, the Restricted Actions shall automatically expire on June 30, 2015 unless an extension thereof is approved by the holders of the Exchangeable Shares in accordance with Section 12(b).

 

	
(c)  

	
Exceptions.  The Restricted Actions shall not apply to any transfer or other disposition of Exchangeable Shares by the holder thereof:

 

	
(i)  

	
to a person over which such holder exercises sole voting and investment control;

 

	
(ii)  

	
upon such holder’s death by will or intestacy; or

 

	
(iii)  

	
as a distribution solely to members, partners or stockholders of such holder, if the holder is a corporation, body corporate, syndicate or organization, partnership, limited partnership, limited liability company, unlimited liability company, joint venture or joint stock company.

 

For greater certainty, the exceptions specified in this Section 5(c) shall not extend to any actions in furtherance of a retraction of Exchangeable Shares at the option of the holder thereof pursuant to Section 8 that would violate the terms of Section 5(a).

 

6.  LIQUIDATION

 

	
(a)  

	
Liquidation Call Right.  Subject to Section 6(b), Rockford and Callco shall each have the overriding right (the “Liquidation Call Right”), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, to purchase from all but not less than all of the holders of Exchangeable Shares (other than Rockford or an affiliate of Rockford) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder upon the payment by Rockford or Callco, as the case may be, to each such holder of the Exchangeable Share Price (payable in the form of the Exchangeable Share Consideration) applicable on the last Business Day prior to the Liquidation Date (the “Liquidation Call Purchase Price”) in accordance with Section 6(c). In the event of the exercise of the Liquidation Call Right by Rockford or Callco, as the case may be, each such holder of Exchangeable Shares shall be obligated to sell all of the Exchangeable Shares held by the holder to Rockford or Callco, as the case may be, on the Liquidation Date upon the payment by Rockford or Callco, as the case may be, to such holder of the Liquidation Call Purchase Price (payable in the form of Exchangeable Share Consideration) for each such share, and the purchaser shall have no obligation to pay any Liquidation Amount to the holders of such shares so purchased.

 

 

9

 

	
(b)  

	
Limitation on Liquidation.  Callco shall only be entitled to exercise the Liquidation Call Right with respect to those Exchangeable Shares, if any, in respect of which Rockford has not exercised the Liquidation Call Right.  To exercise the Liquidation Call Right, Rockford or Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Subco of its intention to exercise such right (i) in the case of a voluntary liquidation, dissolution or winding-up of Subco or any other voluntary distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, at least 30 days before the Liquidation Date or (ii) in the case of an involuntary liquidation, dissolution or winding-up of Subco or any other involuntary distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, at least five (5) Business Days before the Liquidation Date.  The Transfer Agent shall notify the holders of Exchangeable Shares as to whether or not Rockford and/or Callco has exercised the Liquidation Call Right forthwith after the expiry of the period during which Rockford or Callco may exercise the Liquidation Call Right.  If Rockford and/or Callco exercises the Liquidation Call Right, Rockford and/or Callco, as the case may be, shall purchase and the holders of the Exchangeable Shares (other than Rockford or an affiliate of Rockford) shall sell, on the Liquidation Date, all of the Exchangeable Shares held by such holders on such date for a price per share equal to the Liquidation Call Purchase Price (payable in the form of Exchangeable Share Consideration).

 

	
(c)  

	
Liquidation Call Procedure.  For the purposes of completing the purchase and sale of the Exchangeable Shares pursuant to the exercise of the Liquidation Call Right, Rockford and/or Callco, as the case may be, shall deposit or cause to be deposited with the Transfer Agent, on or before the Liquidation Date, the Exchangeable Share Consideration representing the total Liquidation Call Purchase Price less any amounts deducted and withheld as Tropic Spa, Subco or the Transfer Agent is required to deduct and withhold with respect to such payment under the Tax Act, the U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, or any provision of any provincial, state, local or foreign tax laws as counsel may advise is required to be so deducted and withheld by Tropic Spa, Subco or the Transfer Agent, as the case may be.  Provided that such Exchangeable Share Consideration has been so deposited with the Transfer Agent, the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares on and after the Liquidation Date and, from and after such date, shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Liquidation Call Purchase Price, without interest, upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Liquidation Date be considered and deemed for all purposes to be the holder of the Rockford Shares which such holder is entitled to receive.  Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the articles and by-laws of Subco, and such additional documents, instruments and payments as the Transfer Agent and Subco may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive, in exchange therefor, and the Transfer Agent on behalf of Rockford and/or Callco, as the case may be, shall deliver to such holder the Exchangeable Share Consideration such holder is entitled to receive.

 

	
(d)  

	
Liquidation Amount.  Subject to applicable laws and the due exercise by Rockford or Callco of the Liquidation Call Right, in the event of the liquidation, dissolution or winding-up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, a holder of Exchangeable Shares shall be entitled, subject to applicable laws, to receive from the assets of Subco in respect of each Exchangeable Share held by such holder on the effective date of such liquidation, dissolution, winding-up or other distribution (the “Liquidation Date”), before any distribution of any part of the assets of Subco among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share (the “Liquidation Amount”) equal to the Exchangeable Share Price applicable on the last Business Day prior to the Liquidation Date, which price shall be satisfied in full by Subco delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Liquidation Amount.

 

 

10

 

	
(e)  

	
Payment of Liquidation Amount.  In the case of a distribution pursuant to Section 6(d), and provided that the Liquidation Call Right has not been exercised by Rockford or Callco, on or promptly after the Liquidation Date, Subco shall deliver or cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the articles and by-laws of Subco and such additional documents, instruments and payments as the Transfer Agent and Subco may reasonably require, at the registered office of Subco or at any office of the Transfer Agent as may be specified by Subco by notice to the holders of the Exchangeable Shares.  Payment of the Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of Subco for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of Subco or at any office of the Transfer Agent as may be specified by Subco by notice to the holders of the Exchangeable Shares, the Exchangeable Share Consideration such holder is entitled to receive pursuant to Section 6(d).  On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon the presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided.  Subco shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited in a custodial account with, any chartered bank or trust company the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not been surrendered by the holders thereof at the Liquidation Date, such Liquidation Amount to be held by such bank or trust company as trustee for and on behalf of, and for the use and benefit of, such holders.  Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the total Liquidation Amount for such Exchangeable Shares so deposited, without interest, and all dividends and other distributions with respect to the Rockford Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such Rockford Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions.

 

	
(f)  

	
No Right to Participate in Further Distributions.  After Subco has satisfied its obligations to pay the holders of the Exchangeable Shares the total Liquidation Amount per Exchangeable Share pursuant to this Section 6, such holders shall not be entitled to share in any further distribution of the assets of Subco.

 

7.  REDEMPTION OF EXCHANGEABLE SHARES

 

	
(a)  

	
Redemption Call Right.  Subject to Section 7(b), Rockford and Callco shall each have the overriding right (the “Redemption Call Right”) to purchase from all but not less than all of the holders of Exchangeable Shares (other than Rockford or an affiliate of Rockford) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Rockford or Callco, as the case may be, to each such holder of the Exchangeable Share Price (payable in the form of the Exchangeable Share Consideration) applicable on the last Business Day prior to the Redemption Date (the “Redemption Call Purchase Price”) in accordance with Section 7(c).  In the event of the exercise of the Redemption Call Right by Rockford or Callco, as the case may be, each such holder of Exchangeable Shares shall be obligated to sell all of the Exchangeable Shares held by the holder to Rockford or Callco, as the case may be, on the Redemption Date upon the payment by Rockford or Callco, as the case may be, to such holder of the Redemption Call Purchase Price (payable in the form of Exchangeable Share Consideration) for each such share, and the purchaser shall have no obligation to redeem or to pay the Redemption Price in respect of such shares so purchased.

 

 

11

 

	
(b)  

	
Limitation on Redemption.  Callco shall only be entitled to exercise the Redemption Call Right with respect to those Exchangeable Shares, if any, in respect of which Rockford has not exercised the Redemption Call Right.  To exercise the Redemption Call Right, Rockford or Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Subco of its intention to exercise such right (i) in the case of a redemption occurring as a result of a Rockford Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, on or before the Redemption Date and (ii) in any other case, at least 30 days before the Redemption Date.  The Transfer Agent shall notify the holders of the Exchangeable Shares as to whether or not Rockford and/or Callco has exercised the Redemption Call Right forthwith after the expiry of the period during which Rockford or Callco may exercise the Redemption Call Right.  If Rockford and/or Callco exercises the Redemption Call Right, Rockford and/or Callco, as the case may be, shall purchase and the holders of the Exchangeable Shares (other than Rockford or an affiliate of Rockford) shall sell, on the Redemption Date, all of the Exchangeable Shares held by such holders on such date for a price per share equal to the Redemption Call Purchase Price (payable in the form of Exchangeable Share Consideration).

 

	
(c)  

	
Redemption Call Procedure.  For the purposes of completing the purchase and sale of the Exchangeable Shares pursuant to the exercise of the Redemption Call Right, Rockford and/or Callco, as the case may be, shall deposit or cause to be deposited with the Transfer Agent, on or before the Redemption Date, the Exchangeable Share Consideration representing the total Redemption Call Purchase Price less any amounts deducted and withheld as Tropic Spa, Subco or the Transfer Agent is required to deduct and withhold with respect to such payment under the Tax Act, the U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, or any provision of any provincial, state, local or foreign tax laws as counsel may advise is required to be so deducted and withheld by Tropic Spa, Subco or the Transfer Agent, as the case may be.  Provided that such Exchangeable Share Consideration has been so deposited with the Transfer Agent, the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares on and after the Redemption Date and, from and after such date, shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Redemption Call Purchase Price, without interest, upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Redemption Date be considered and deemed for all purposes to be the holder of the Rockford Shares which such holder is entitled to receive.  Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the articles and by-laws of Subco, and such additional documents, instruments and payments as the Transfer Agent and Subco may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive, in exchange therefor, and the Transfer Agent on behalf of Rockford and/or Callco, as the case may be, shall deliver to such holder the Exchangeable Share Consideration such holder is entitled to receive.

 

	
(d)  

	
Redemption Amount.  Subject to applicable laws and the due exercise by Rockford or Callco of the Redemption Call Right, Subco shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share (the “Redemption Price”) equal to the Exchangeable Share Price on the last Business Day prior to the Redemption Date, which price shall be satisfied in full by Subco delivering or causing to be delivered to each holder of Exchangeable Shares the Exchangeable Share Consideration for each Exchangeable Share held by such holder.

 

 

12

 

	
(e)  

	
Notice of Redemption.  In the case of a redemption of Exchangeable Shares pursuant to Section 7(d), Subco shall, at least 30 days before the Redemption Date (other than a Redemption Date established in connection with a Rockford Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by Subco or the purchase by Rockford or Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder.  In the case of a Redemption Date established in connection with a Rockford Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, the written notice of the redemption by Subco or the purchase by Rockford or Callco, as the case may be, under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances.  In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right.  In the case of any notice given in connection with a possible Redemption Date, such notice will be given contingently and will be withdrawn if the contingency does not occur.

 

	
(f)  

	
Payment of Redemption Price.  On or after the Redemption Date, and provided that the Redemption Call Right has not been exercised by Callco, Subco shall deliver or cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, upon the presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the articles and by-laws of Subco and such additional documents, instruments and payments as the Transfer Agent and Subco may reasonably require, at the registered office of Subco or at any office of the Transfer Agent as may be specified by notice to the holders of the Exchangeable Shares.  The payment of the Redemption Price for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of Subco for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of the Transfer Agent as may be specified by Subco by notice to the holders of Exchangeable Shares, the Exchangeable Share Consideration representing the Redemption Price.  On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Redemption Price, unless payment of the total Redemption Price for such Exchangeable Shares shall not be made upon the presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Redemption Price has been paid in the manner hereinbefore provided.  Subco shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the total Redemption Price (in the form of Exchangeable Share Consideration) of the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account with any chartered bank or trust company named in such notice and any interest earned on such deposit shall belong to Subco.  Provided that such total Redemption Price has been so deposited prior to the Redemption Date, on and after the Redemption Date, the Exchangeable Shares shall be redeemed and the rights of the holders thereof after the Redemption Date shall be limited to receiving their proportionate part of the total Redemption Price for such Exchangeable Shares so deposited, against the presentation and surrender of the certificates for the Exchangeable Shares held by them, respectively, in accordance with the foregoing provisions.

 

 

13

 

8.  RETRACTION OF EXCHANGEABLE SHARES

 

	
(a)  

	
Retraction at Option of Holder.

 

	
(i)  

	
Subject to Section 5, applicable laws and the due exercise by Rockford or Callco of the Retraction Call Right, a holder of Exchangeable Shares shall be entitled at any time to require Subco to redeem, on the fifth Business Day after the date on which the Retraction Request is received by Subco (the “Retraction Date”), any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Exchangeable Share Price applicable on the last Business Day prior to the Retraction Date (the “Retraction Price”), which price shall be satisfied in full by Subco delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Retraction Price.  The holder must give notice of a request to redeem by presenting and surrendering to Subco, at the registered office of Subco or at any office of the Transfer Agent as may be specified by Subco by notice to the holders of the Exchangeable Shares, the certificate or certificates representing the Exchangeable Shares that the holder desires to have Subco redeem, together with (A) such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the OBCA and the articles and by-laws of Subco and such additional documents, instruments and payments as the Transfer Agent and Subco may reasonably require and (B) a duly executed request (the ‘‘Retraction Request’’) in substantially the form attached as Schedule A hereto or in such other form as may be acceptable to Subco specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the “Retracted Shares”) redeemed by Subco.

 

	
(ii)  

	
In the case of a redemption of Exchangeable Shares pursuant to this Section 8(a), upon receipt by Subco or the Transfer Agent in the manner specified in Section 8(a)(i) of a certificate representing the number of Exchangeable Shares which the holder desires to have Subco redeem, together with a duly executed Retraction Request and such additional documents and instruments specified in Section 8(a)(i), and provided that (A) the Retraction Request has not been revoked by the holder of such Exchangeable Shares in the manner specified in Section 8(a)(iv) and (B) neither Rockford nor Callco has exercised the Retraction Call Right, Subco shall redeem the Retracted Shares effective at the close of business on the Retraction Date.  On the Retraction Date, Subco shall deliver or cause to be delivered to such holder, at the address of the holder recorded in the securities register of Subco for the Exchangeable Shares or at the address specified in the Retraction Request or by holding for pick-up by the holder at the registered office of Subco or at any office of the Transfer Agent as may be specified by Subco by notice to the holders of the Exchangeable Shares, the Exchangeable Share Consideration representing the Retraction Price and such delivery of such Exchangeable Share Consideration by or on behalf of Subco by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price to the extent that the same is represented by such Exchangeable Share Consideration, unless any cheque comprising part of such Exchangeable Share Consideration is not paid on due presentation.  If only a part of the Exchangeable Shares represented by any certificate is redeemed, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Subco.  On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Retraction Price in respect thereof, unless upon the presentation and surrender of certificates in accordance with the foregoing provisions, the payment of the aggregate Retraction Price payable to such holder shall not be made, in which case the rights of such holder shall remain unaffected until such aggregate Retraction Price has been paid in the manner hereinbefore provided.  On and after the close of business on the Retraction Date, provided that the presentation and surrender of certificates and the payment of such aggregate Retraction Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by Subco shall thereafter be considered and deemed for all purposes to be a holder of the Rockford Shares delivered to such holder.

 

 

14

 

	
(iii)  

	
Notwithstanding any other provision of this Section 8, Subco shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request if and to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable laws.  If Subco believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and neither Rockford nor Callco has exercised the Retraction Call Right with respect to such Retracted Shares, Subco shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two (2) Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by Subco.  In any case in which the redemption by Subco of Retracted Shares would be contrary to solvency requirements or other provisions of applicable laws, Subco shall redeem Retracted Shares in accordance with Section 8(a)(ii) on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of Subco, representing the Retracted Shares not redeemed by Subco pursuant to Section 8(a)(ii).  If Subco would otherwise be obligated to redeem Retracted Shares pursuant to Section 8(a)(ii) but is not obligated to do so as a result of solvency requirements or other provisions of applicable laws, the holder of any such Retracted Shares not redeemed by Subco pursuant to Section 8(a)(ii) as a result of solvency requirements or other provisions of applicable laws shall be deemed, by delivery of the Retraction Request to have instructed the Transfer Agent to require Rockford or Callco to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by Rockford or Callco to such holder of the total Retraction Price in respect of such Retracted Shares, all as more specifically provided for in the Voting and Exchange Trust Agreement.

 

	
(iv)  

	
A holder of Retracted Shares may, by notice in writing given by the holder to Subco before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Callco shall be deemed to have been revoked.

 

	
(v)  

	
Notwithstanding any other provision of this Section 8(a), if:

 

	
A.  

	
the exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require Subco to redeem any Exchangeable Shares pursuant to this Section 8(a) on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of any stock exchange or automated quotation system on which the Rockford Shares are listed or quoted to the listing and trading (subject to official notice of issuance) of the Rockford Shares that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and

 

	
B.  

	
as a result of (A) above, it would not be practicable (notwithstanding the reasonable endeavours of Rockford) to obtain such approvals in time to enable all or any of such Rockford Shares to be admitted to listing and trading by any stock exchange or automated quotation system on which the Rockford Shares are listed or quoted (subject to official notice of issuance) when so delivered,

 

the Retraction Date shall, notwithstanding any other date specified or otherwise deemed to be specified in any relevant Retraction Request, be deemed for all purposes to be the earlier of (x) the second Business Day immediately following the date the approvals referred to in Section 8(a)(v)A are obtained and (ii) the date which is 30 Business Days after the date on which the relevant Retraction Request is received by Subco, and references in these Exchangeable Share Provisions to such Retraction Date shall be construed accordingly.

 

	
(b)  

	
Retraction Call Rights

 

	
(i)  

	
In the event that a holder of Exchangeable Shares delivers a Retraction Request pursuant to Section 8(a), and subject to the limitations set forth in Section 8(b)(ii) (including that Callco shall only be entitled to exercise its Retraction Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which Rockford has not exercised its Retraction Call Right), Rockford and Callco shall each have the overriding right (the “Retraction Call Right”), notwithstanding the proposed redemption of the Exchangeable Shares by Subco pursuant to Section 7(a), to purchase from such holder on the Retraction Date all but not less than all of the Retracted Shares held by such holder on payment by Rockford or Callco, as the case may be, of an amount per share equal to the Exchangeable Share Price applicable on the last Business Day prior to the Retraction Date (the “Retraction Call Right Purchase Price”), which price shall be satisfied in full by Rockford or Callco, as the case may, delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Retraction Call Right Purchase Price.  Upon the exercise of the Retraction Call Right in respect of Retracted Shares, the holder of such shares shall be obligated to sell all of such Retracted Shares to Rockford or Callco, as the case may be, on the Retraction Date upon the payment by Rockford or Callco, as the case may be, of the total Retraction Price in respect of such Retracted Shares as set forth in this Section 8(b)(i).

 

 

15

 

	
(ii)  

	
Upon receipt by Subco of a Retraction Request, Subco shall immediately notify Rockford and Callco thereof and shall provide Rockford and Callco with a copy of the Retraction Request.  Callco shall only be entitled to exercise its Retraction Call Right with respect to those holders of Retracted Shares, if any, in respect of which Rockford has not exercised its Retraction Call Right.  In order to exercise its Retraction Call Right, Rockford or Callco, as the case may be, must notify Subco in writing of its determination to do so (a “Retraction Call Notice”) within five (5) Business Days after Subco notifies Rockford and Callco of the Retraction Request.  If neither Rockford nor Callco so notifies Subco within such five (5) Business Day period, Subco shall notify the holder as soon as possible thereafter that neither Rockford nor Callco will exercise the Retraction Call Right.  If one or both of Rockford and Callco delivers a Retraction Call Notice within such five (5) Business Day period and duly exercises its Retraction Call Right in accordance with this Section 8(b)(ii), the obligation of Subco to redeem the Retracted Shares shall terminate and, provided that the Retraction Request is not revoked by the holder of such Retracted Shares in the manner specified in Section 8(a)(iv), Rockford or Callco, as the case may be, shall purchase from such holder and such holder shall sell to Rockford or Callco, as the case may be, on the Retraction Date the Retracted Shares for an amount per share equal to the Retraction Call Right Purchase Price.  Provided that the aggregate Retraction Call Right Purchase Price has been so deposited with the Transfer Agent as provided in Section 8(b)(iii), the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by Subco of such Retracted Shares shall take place on the Retraction Date.

 

	
(iii)  

	
For the purpose of completing a purchase of Retracted Shares pursuant to the exercise of the Retraction Call Right, Rockford or Callco, as the case may be, shall deliver or cause to be delivered to the holder of such Retracted Shares, at the address of the holder recorded in the securities register of Subco for the Exchangeable Shares or at the address specified in the holder’s Retraction Request or by holding for pick-up by the holder at the registered office of Subco or at any office of the Transfer Agent as may be specified by Subco by notice to the holders of Exchangeable Shares, the Exchangeable Share Consideration representing the Retraction Call Right Purchase Price to which such holder is entitled and such delivery of Exchangeable Share Consideration on behalf of Rockford or Callco, as the case may be, shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Call Right Purchase Price to the extent that the same is represented by such Exchangeable Share Consideration, unless such cheque comprising part of such Exchangeable Share Consideration is not paid on due presentation.

 

	
(iv)  

	
On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Retraction Call Right Purchase Price in respect thereof, unless upon the presentation and surrender of certificates in accordance with the foregoing provisions, the payment of the aggregate Retraction Call Right Purchase Price payable to such holder shall not be made, in which case the rights of such holder shall remain unaffected until such aggregate Retraction Call Right Purchase Price has been paid in the manner hereinbefore provided.  On and after the close of business on the Retraction Date, provided that the presentation and surrender of certificates and the payment of such aggregate Retraction Call Right Purchase Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so purchased by Rockford or Callco, as the case may be, shall thereafter be considered and deemed for all purposes to be a holder of the Rockford Shares delivered to such holder.

 

 

16

 

9.  PURCHASE FOR CANCELLATION

 

	
(a)  

	
Private Agreement.  Subject to applicable laws and the articles and by-laws of Subco, and notwithstanding Section 9(b), Subco may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares by private agreement with the holder thereof.

 

	
(b)  

	
Tender Offer.  Subject to applicable laws and the articles and by-laws of Subco, Subco may at any time and from time to time purchase for cancellation all or any part of the outstanding Exchangeable Shares at any price per share by tender to all the holders of record of Exchangeable Shares then outstanding or through the facilities of any stock exchange on which the Exchangeable Shares are listed or quoted together with an amount equal to all declared and unpaid dividends thereon for which the record date has occurred prior to the date of purchase.  If in response to an invitation for tenders under the provisions of this Section 9(b), more Exchangeable Shares are tendered at a price or prices acceptable to Subco than Subco is prepared to purchase, the Exchangeable Shares to be purchased by Subco shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to Subco, provided that when shares are tendered at different prices, the pro rating shall be effected (disregarding fractions) only with respect to the shares tendered at the price at which more shares were tendered than Subco is prepared to purchase after Subco has purchased all the shares tendered at lower prices.  If only part of the Exchangeable Shares represented by any certificate are purchased pursuant to this Section 9(b), a new certificate for the balance of such shares shall be issued at the expense of Subco.

 

10.  VOTING RIGHTS

 

Except as required by applicable laws and by Section 12, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of Subco or to vote at any such meeting.  Without limiting the generality of the foregoing, the holders of the Exchangeable Shares shall not have class votes except as required by applicable laws.

 

11.  SPECIFIED AMOUNT

 

The amount specified in respect of each Exchangeable Share for the purposes of subsection 191(4) of the Income Tax Act (Canada) shall be an amount equal to $●.

 

12.  AMENDMENT AND APPROVAL

 

	
(a)  

	
Amendment.  The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified.

 

	
(b)  

	
Approval.  Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares in accordance with applicable laws shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable laws, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of the holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided, however, that if at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five (5) days thereafter and to such time and place as may be designated by the Chairman of such meeting.  At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares.

 

 

17

 

13.  RECIPROCAL CHANGES, ETC. IN RESPECT OF ROCKFORD SHARES

 

	
(a)  

	
Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that Rockford will not, except as provided in the Support Agreement, without the prior approval of Subco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(b):

 

	
(i)  

	
issue or distribute Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) to the holders of all or substantially all of the then outstanding Rockford Shares by way of stock dividend or other distribution, other than an issue of Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) to holders of Rockford Shares (i) who exercise an option to receive dividends in Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) in lieu of receiving cash dividends or (ii) pursuant to any dividend reinvestment plan or similar arrangement;

 

	
(ii)  

	
issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Rockford Shares entitling them to subscribe for or to purchase Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares); or

 

	
(iii)  

	
issue or distribute to the holders of all or substantially all of the then outstanding Rockford Shares:

 

	
A.  

	
shares or securities of Rockford of any class other than Rockford Shares (or securities convertible into or exchangeable for or carrying rights to acquire Rockford Shares);

 

	
B.  

	
rights, options or warrants other than those referred to in Section 13(a)(ii);

 

	
C.  

	
evidence of indebtedness of Rockford; or

 

	
D.  

	
assets of Rockford;

 

unless (A) Subco is permitted under applicable laws to issue or distribute the economic equivalent on a per share basis of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets to the holders of the Exchangeable Shares and (B) Subco shall issue or distribute the economic equivalent of such rights, options, warrants, securities, shares evidences of indebtedness or other assets simultaneously to holders of the Exchangeable Shares; provided, however, that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Rockford in order to give effect to and to consummate the transactions contemplated by, and in accordance with, the Share Exchange Agreement.

 

 

18

 

	
(b)  

	
Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that for so long as any Exchangeable Shares not owned by Rockford or its affiliates are outstanding, Rockford will not without the prior approval of Subco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(b):

 

	
(i)  

	
subdivide, redivide or change the then outstanding Rockford Shares into a greater number of Rockford Shares;

 

	
(ii)  

	
reduce, combine, consolidate or change the then outstanding Rockford Shares into a lesser number of Rockford Shares; or

 

	
(iii)  

	
reclassify or otherwise change the Rockford Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Rockford Shares,

 

unless (A) Subco is permitted under applicable laws to make the same or an economically equivalent change to, or in the rights of holders of, the Exchangeable Shares and (B) the same or an economically equivalent change is made simultaneously to, or in the rights of the holders of, the Exchangeable Shares; provided, however, that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Rockford in order to give effect to and to consummate the transactions contemplated by, and in accordance with the Share Exchange Agreement.  The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Section 12(a).

 

	
(c)  

	
Notwithstanding the foregoing provisions of this Section 13, in the event of a Rockford Control Transaction:

 

	
(i)  

	
in which Rockford merges or amalgamates with, or in which all or substantially all of the then outstanding Rockford Shares are acquired by one or more other corporations to which Rockford is, immediately before such merger, amalgamation or acquisition, related within the meaning of the Income Tax Act (Canada) (otherwise than virtue of a right referred to in paragraph 251(5)(b) thereof);

 

	
(ii)  

	
which does not result in an acceleration of the Redemption Date in accordance with paragraph (ii) of the definition of such term in Section 1(a); and

 

	
(iii)  

	
in which all or substantially all of the then outstanding Rockford Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) of another corporation (the “Other Corporation”) that, immediately after such Rockford Control Transaction, owns or controls, directly or indirectly, Rockford;

 

then all references herein to “Rockford” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Rockford Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments, if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of shares pursuant to these Exchangeable Share Provisions or the exchange of shares pursuant to the Voting and Exchange Trust Agreement immediately subsequent to the Rockford Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, option or retraction of such shares pursuant to these Exchangeable Share Provisions or the exchange of such shares pursuant to the Voting and Exchange Trust Agreement had occurred immediately prior to the Rockford Control Transaction and the Rockford Control Transaction was completed) but subject to subsequent adjustments to reflect any subsequent changes in the share capital of the issuer of the Other Shares, including without limitation, any subdivision, consolidation or reduction of share capital, without any need to amend the terms and conditions of the Exchangeable Shares and without any further action required.

 

 

19

 

14.  ACTIONS BY SUBCO UNDER SUPPORT AGREEMENT

 

	
(a)  

	
Actions by Subco.  Subco will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by Rockford, Callco and Subco with all provisions of the Support Agreement applicable to Rockford, Callco and Subco, respectively, in accordance with the terms thereof including taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of Subco all rights and benefits in favour of Subco under or pursuant to such agreement.

 

	
(b)  

	
Changes to the Support Agreement.  Subco shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section 12(b) other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of:

 

	
(i)  

	
adding to the covenants of any or all of the other parties to the Support Agreement if the board of directors of each of Rockford, Callco and Subco shall be of the good faith opinion that such additions will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole;

 

	
(ii)  

	
evidencing the succession of successors to Rockford either by operation of law or agreement to the liabilities and covenants of Rockford under the Support Agreement (“Rockford Successors”) and the covenants of and obligations assumed by each such Rockford Successor in accordance with the provisions of Section 3 of the Support Agreement;

 

	
(iii)  

	
making such amendments or modifications not inconsistent with the Support Agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the board of directors of each of Rockford, Callco and Subco, having in mind the interests of the holders of the Exchangeable Shares as a whole, it may be expedient to make, provided that each such board of directors shall be of the good faith opinion, after consultation with counsel, that such amendments and modifications will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole; or

 

	
(iv)  

	
making such changes in or corrections to the Support Agreement which, on the advice of counsel to Rockford, Callco and Subco, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the board of directors of each of Rockford, Callco and Subco shall be of the good faith opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole.

 

 

20

 

15.  LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS

 

	
(a)  

	
Legend.  The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) the Liquidation Call Right, the Redemption Call Right and the Retraction Call Right.

 

	
(b)  

	
Call Rights.  Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Redemption Call Right and the Retraction Call Right, in each case, in favour of Rockford and Callco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Rockford and Callco as provided herein.

 

	
(c)  

	
Withholding Rights.  Rockford, Callco, Subco and the Transfer Agent shall be entitled to deduct and withhold from any dividend, distribution or other consideration otherwise payable to any holder of Exchangeable Shares such amounts as Rockford, Callco, Subco or the Transfer Agent, as the case may be, is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United States tax laws or any provision of provincial, territorial, state, local or foreign tax laws, in each case, as amended.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing agency.  To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Rockford, Callco, Subco and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Rockford, Callco, Subco or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and Rockford, Callco, Subco or the Transfer Agent, as the case may be, shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale.

 

16.  NOTICES

 

	
(a)  

	
Notices.  Subject to applicable laws, any notice, request or other communication to be given to Subco by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by fax or by delivery to the registered office of Subco and addressed to the attention of the Secretary of Subco.  Any such notice, request or other communication, if given by mail, fax or delivery, shall only be deemed to have been given and received upon actual receipt thereof by Subco.

 

	
(b)  

	
Certificates.  Any presentation and surrender by a holder of Exchangeable Shares to Subco or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of Subco or the retraction or redemption of Exchangeable Shares shall be made by first class mail (postage prepaid) or by delivery to the registered office of Subco or to such office of the Transfer Agent as may be specified by Subco, in each case, addressed to the attention of the Secretary of Subco.  Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by Subco or the Transfer Agent, as the case may be.  Any such presentation and surrender of certificates made by first class mail (postage prepaid) shall be at the sole risk of the holder mailing the same.

 

 

21

 

	
(c)  

	
Notice to Shareholders.

 

	
(i)  

	
Subject to applicable laws, any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of Subco shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of Subco or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder.  Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery.  The accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by Subco pursuant thereto.

 

	
(ii)  

	
In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, Subco shall make reasonable efforts to disseminate any notice by other means, such as publication.

 

	
(iii)  

	
Notwithstanding any other provisions of these Exchangeable Share Provisions, notices, other communications and deliveries need not be mailed if Subco determines that delivery thereof by mail may be delayed.  Persons entitled to any deliveries (including certificates and cheques) which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deliveries were made, upon application to the Transfer Agent, until such time as Subco has determined that delivery by mail will not longer be delayed.  Subco will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this Section 16(c).  Such deliveries in such circumstances will constitute delivery to the persons entitled thereto.

 

17.  DISCLOSURE OF INTERESTS IN EXCHANGEABLE SHARES

 

Subco shall be entitled to require any holder of an Exchangeable Share or any person whom Subco knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to (a) confirm that fact or (b) give such details as to who has an interest in such Exchangeable Share, in each case as would be required (if the Exchangeable Shares were a class of “equity shares” of Subco) under Section 102.1 of the Securities Act or as would be required under the articles or by-laws of Rockford or any laws or regulations, or pursuant to the rules or regulations of any regulatory agency, if and only to the extent that the Exchangeable Shares were Rockford Shares.

 

 

22

 

 

SCHEDULE A

TO APPENDIX I

 

RETRACTION REQUEST

[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]

 

	
To:

	
Rockford Minerals Inc. (“Rockford”)

	
  

	
1896431 Ontario Inc. (“Callco”)

	
  

	
1896432 Ontario Inc. (“Subco”)

 

This notice is given pursuant to Section 8 of the share provisions (the “Exchangeable Share Provisions”) attaching to the Exchangeable Shares of Subco represented by this certificate and all capitalized words and expressions used in this notice that are defined in the Exchangeable Share Provisions have the meanings ascribed to such words and expressions in such Exchangeable Share Provisions.

 

The undersigned hereby notifies Subco that, subject to the Retraction Call Right referred to below, the undersigned desires to have Subco redeem in accordance with Section 6 of the Exchangeable Share Provisions:

 

	
  

	
o

	
all share(s) represented by this certificate; or

 

	
  

	
o

	
_______________ share(s) only represented by this certificate.

 

The undersigned acknowledges the overriding Retraction Call Right of Rockford and Callco to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Rockford or Callco in accordance with the Retraction Call Right on the Retraction Date for the Retraction Call Purchase Price and on the other terms and conditions set out in Section 8(b) of the Exchangeable Share Provisions.  If neither Rockford nor Callco exercised the Retraction Call Right, Subco will notify the undersigned of such fact as soon as possible.  This Retraction Request, and this offer to sell the Retracted Shares to Rockford or Callco, may be revoked and withdrawn by the undersigned only by notice in writing given to Subco at any time before the close of business on the Business Day immediately preceding the Retraction Date.

 

The undersigned acknowledges that if, as a result of solvency provisions of applicable laws, Subco is unable to redeem all Retracted Shares, and provided that neither Rockford nor Callco has exercised the Retraction Call Right with respect to the Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require Rockford to purchase the unredeemed Retracted Shares.

 

The undersigned hereby represents and warrants to Rockford, Callco and Subco that the undersigned (select one):

 

	
  

	
o

	
is

 

	
  

	
o

	
is not

 

a resident of Canada for the purposes of the Income Tax Act (Canada).  The undersigned acknowledges that in the absence of an indication that the undersigned is not a resident of Canada, withholding on account of Canadian tax may be made from amounts payable to the undersigned on the redemption or purchase of the Retracted Shares.

 

The undersigned hereby represents and warrants to Rockford, Callco and Subco that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by Rockford, Callco or Subco, as the case may be, free and clear of all liens, claims and encumbrances.

 

 

1

 

 

	  	  	  	  	  
	
(Date)

	  	
(Signature of Shareholder)

	  	
(Guarantee of Signature)

	
  

	
o

	
Please check box if the securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder from the Transfer Agent at the principal office of the Transfer Agent, failing which such certificates and cheque(s) will be mailed to the last address of the shareholder as it appears on the register.

 

	
  

	
NOTE: This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent and Subco may require, must be deposited with the Transfer Agent.  The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of Subco and the certificates for the securities and any cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed.

 

	
Date:

 

	___________________________________  
	
Name of Person in Whose Name

Securities or Cheque(s) are to be

Registered, Issued or Delivered:

 

	
 

 

___________________________________

	
Signature of Shareholder:

 

	___________________________________  
	
Address:

 

	___________________________________  
	 	
___________________________________

 

	
Signature Guaranteed by:

	___________________________________  

 

 

 

	
NOTE:

	
If this Retraction Request is for less than all of the shares represented by this certificate, a certificate representing the remaining share(s) of Subco represented by this certificate will be issued and registered in the name of the shareholder as it appears on the register of Subco, unless the Share Transfer Power on the share certificate is duly completed in respect of such share(s).

 

 

2

 

 

SUPPORT AGREEMENT

 

THIS SUPPORT AGREEMENT is made as of June 28, 2013 among Rockford Minerals Inc., a corporation existing under the laws of the State of Nevada (“Rockford”), 1896431 Ontario Inc., a corporation existing under the laws of the Province of Ontario (“Callco”) and 1896432 Ontario Inc., a corporation existing under the laws of the Province of Ontario (“Subco”).

 

RECITALS:

 

	
A.  

	
In connection with a share exchange agreement (the “Share Exchange Agreement”) dated June 28, 2013 between, on the one hand, Rockford and Subco and, on the other hand, Tropic Spa Inc. (“Tropic Spa”), Subco is to issue exchangeable shares (the “Exchangeable Shares”) to certain holders of common shares of Tropic Spa pursuant to a share exchange under s. 92A.110 of the Nevada Revised Statutes (the “Share Exchange”) on the terms and conditions set out in the Share Exchange Agreement;

 

	
B.  

	
The holders of Exchangeable Shares are entitled to require Subco to redeem such Exchangeable Shares and, upon such redemption, each Exchangeable Share so redeemed shall be exchanged by Subco for one share of common stock of Rockford (each, a “Rockford Share”);

 

	
C.  

	
The parties desire to make appropriate provision and to establish a procedure whereby Rockford will take certain actions and make certain payments and deliveries necessary to ensure that Callco and Subco will be able to make certain payments and to deliver or cause to be delivered Rockford Shares in satisfaction of the obligations of Callco and/or Subco under the Exchangeable Share Provisions (as hereinafter defined) and this Agreement; and

 

	
D.  

	
Pursuant to the Share Exchange Agreement, Rockford, Callco and Subco are required to enter into a support agreement substantially in the form of this Agreement.

 

In consideration of the foregoing and the mutual agreements contained herein (the receipt and sufficiency of which are acknowledged), the parties agree as follows:

 

1.  DEFINITIONS AND INTERPRETATION

 

	
1.1  

	
Defined Terms

 

In this Agreement, each capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “Exchangeable Share Provisions”) attaching to the Exchangeable Shares as set out in the articles of Subco.

 

	
1.2  

	
Interpretation Not Affected By Headings

 

The division of this Agreement into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless otherwise specified, references to a “Section” refer to the specified section of this Agreement.

 

	
1.3  

	
Number and Gender

 

Unless the context otherwise requires, words used herein importing the singular include the plural and vice versa and words imparting any gender shall include all genders.

 

	
1.4  

	
Date of Any Action

 

If any date on which any action is required to be taken hereunder by any person is not a Business Day, then such action shall be required to be taken on the next succeeding day which is a Business Day.

 

 

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2.  COVENANTS OF ROCKFORD AND SUBCO

 

	
2.1  

	
Covenants Regarding Exchangeable Shares

 

So long as any Exchangeable Shares not owned by Rockford or its affiliates are outstanding, Rockford shall:

 

	
(a)  

	
not declare or pay any dividend or make any other distribution on the Rockford Shares unless:

 

	
(i)  

	
Subco shall (A) simultaneously declare or pay, as the case may be, an equivalent dividend or other distribution economically equivalent thereto (as determined in accordance with the Exchangeable Share Provisions) on the Exchangeable Shares (an “Equivalent Dividend”) and (B) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable laws and the Exchangeable Share Provisions, of any such Equivalent Dividend; or

 

	
(ii)  

	
if the dividend is a stock dividend or distribution of stock, in lieu of such a dividend, on the Rockford Shares, Subco shall (A) effect a corresponding, contemporaneous and economically equivalent subdivision of the Exchangeable Shares (as determined in accordance with the Exchangeable Share Provisions) (an “Equivalent Stock Subdivision”) and (B) have sufficient authorized but unissued securities available to enable the Equivalent Stock Subdivision;

 

	
(b)  

	
advise Subco sufficiently in advance of the declaration by Rockford of any dividend or other distribution on the Rockford Shares and take all such other actions as are reasonably necessary or desirable, in co-operation with Subco, to ensure that:

 

	
(i)  

	
the respective declaration date, record date and payment date for an Equivalent Dividend shall be the same as the declaration date, record date and payment date for the corresponding dividend or other distribution on the Rockford Shares; or

 

	
(ii)  

	
the record date and effective date for an Equivalent Stock Subdivision shall be the same as the record date and payment date for the corresponding stock dividend or distribution of stock, in lieu of such a dividend, on the Rockford Shares and that such Equivalent Stock Subdivision shall comply with the requirements of any stock exchange on which the Exchangeable Shares are then listed;

 

	
(c)  

	
ensure that the record date for determining shareholders entitled to receive any dividend or other distribution declared on the Rockford Shares is not less than 10 Business Days after the declaration date of such dividend or other distribution or such shorter period as may be permitted under applicable law and the requirements of any stock exchange on which the Exchangeable Shares are then listed;

 

	
(d)  

	
take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Subco, in accordance with applicable laws, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price upon the liquidation, dissolution or winding-up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by Subco, as the case may be, including all such actions and all such things as are necessary or desirable to enable and permit Subco to deliver or cause to be delivered Rockford Shares or other property to the holders of Exchangeable Shares in accordance with the provisions of Sections 5, 6 or 7, as the case may be, of the Exchangeable Share Provisions;

 

 

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(e)  

	
take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Rockford or Callco, as the case may be, in accordance with applicable laws, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Rockford or Callco, as the case may be, to deliver or cause to be delivered Rockford Shares or other property to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and

 

	
(f)  

	
not exercise its vote as a shareholder of Subco to initiate the voluntary liquidation, dissolution or winding up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs.

 

	
2.2  

	
Segregation of Funds

 

Rockford shall cause Subco to deposit a sufficient amount of funds in a separate account of Subco and segregate a sufficient amount of such other assets and property as is necessary to enable Subco to pay dividends when due and to pay or otherwise satisfy its respective obligations with respect to the applicable dividend, Liquidation Amount, Retraction Price or Redemption Price, in each case once such amounts become payable under the terms of this Agreement or the Exchangeable Share Provisions.  Subco will use such funds, assets and property so segregated exclusively for the payment of dividends and the payment or other satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price.

 

	
2.3  

	
Reservation of Rockford Shares

 

Rockford hereby represents, warrants and covenants in favour of Subco and Callco that Rockford has reserved for issuance and shall, at all times while any Exchangeable Shares are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of Rockford Shares (or other shares or securities into which Rockford Shares may be reclassified or changed as contemplated by Section 2.7):

 

	
(a)  

	
as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time; and

 

	
(b)  

	
as are now and may hereafter be required to enable and permit each of Rockford, Callco and Subco to meet its obligations under the Voting and Exchange Trust Agreement, the Exchangeable Share Provisions and any other security or commitment relating to the Share Exchange pursuant to which Rockford, Callco or Subco may now or hereafter be required to issue Rockford Shares.

 

 

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2.4  

	
Notification of Certain Events

 

In order to assist Rockford to comply with its obligations hereunder and to permit Rockford or Callco to exercise, as the case may be, the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as applicable, Subco shall notify Rockford and Callco of each of the following events at the time set forth below:

 

	
(a)  

	
in the event of any determination by the board of directors of Subco to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Subco or to effect any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs, at least 30 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution;

 

	
(b)  

	
promptly upon the earlier of (i) receipt by Subco of notice of and (ii) Subco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Subco or to effect any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs;

 

	
(c)  

	
immediately, upon receipt by Subco of a Retraction Request;

 

	
(d)  

	
on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Exchangeable Share Provisions; and

 

	
(e)  

	
as soon as practicable upon the issuance by Subco of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares pursuant to the Share Exchange).

 

	
2.5  

	
Delivery of Rockford Shares

 

Upon notice from Callco or Subco of any event that requires Callco or Subco to deliver or cause to be delivered Rockford Shares to any holder of Exchangeable Shares, Rockford shall forthwith issue and deliver or cause to be delivered the requisite number of shares of Rockford Shares to Callco or Subco, as appropriate, and Callco or Subco, as the case may be, shall forthwith deliver or cause to be delivered the requisite number of Rockford Shares to or for the benefit of the former holder of the surrendered Exchangeable Shares.  All such Rockford Shares shall be duly authorized and validly issued as fully paid, non-assessable, free of pre-emptive rights and shall be free and clear of any lien, claim or encumbrance.  In consideration for the issuance and delivery of each such Rockford Share, Callco or Subco, as the case may be, shall subscribe a cash amount or pay a purchase price equal to the fair market value of the Rockford Shares, and Rockford shall contribute or cause to be contributed to the capital of Callco or Subco, as the case may be, the cash necessary for Callco or Subco, as the case may be, to effect such subscription or payment.

 

	
2.6  

	
Qualification of Rockford Shares

 

	
(a)  

	
Rockford covenants that it will use its reasonable best efforts to make such filings and seek such regulatory consents and approvals as are necessary so that the Rockford Shares to be issued to holders of Exchangeable Shares pursuant to the terms of the Exchangeable Share Provisions, the Voting and Exchange Trust Agreement and this Agreement will be issued in compliance with the applicable securities laws in Canada and the United States and may be freely traded thereafter (other than by reason of a holder being a control person of Rockford for purposes of Canadian federal, provincial or territorial securities laws or by holders who are Affiliates of Rockford within the meaning of U.S. securities laws).  Rockford will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all Rockford Shares to be delivered hereunder to be listed, quoted and posted for trading on all stock exchanges and quotation systems on which outstanding Rockford Shares have been listed by Rockford and remain listed and are quoted or posted for trading at such time.

 

 

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(b)  

	
Notwithstanding any other provision of the Exchangeable Share Provisions, or any term of this Agreement, the Voting and Exchange Trust Agreement or the Share Exchange Arrangement, no Rockford Shares shall be issued (and Rockford will not be required to issue any Rockford Shares) in connection with any liquidation, dissolution or winding-up of Subco, or any retraction, redemption or any other exchange, direct or indirect, of Exchangeable Shares, if such issuance of Rockford Shares would not be permitted by applicable laws.

 

	
2.7  

	
Economic Equivalence

 

So long as any Exchangeable Shares not owned by Rockford or its affiliates are outstanding:

 

	
(a)  

	
Rockford shall not without prior approval of Subco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11(b) of the Exchangeable Share Provisions:

 

	
(i)  

	
issue or distribute Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) to the holders of all or substantially all of the then outstanding Rockford Shares by way of stock dividend or other distribution, other than an issue of Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) to holders of Rockford Shares (A) who exercise an option to receive dividends in Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares) in lieu of receiving cash dividends or (B) pursuant to any dividend reinvestment plan or similar arrangement;

 

	
(ii)  

	
issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Rockford Shares entitling them to subscribe for or to purchase Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares); or

 

	
(iii)  

	
issue or distribute to the holders of all or substantially all of the then outstanding Rockford Shares (A) shares or securities of Rockford of any class other than Rockford Shares (or securities convertible into or exchangeable for or carrying rights to acquire Rockford Shares), (B) rights, options, warrants or other assets other than those referred to in Section 2.7(a)(ii), (C) evidence of indebtedness of Rockford or (D) assets of Rockford,

 

unless, in each case, (x) Subco is permitted under applicable laws to issue or distribute the economic equivalent on a per share basis of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets to holders of the Exchangeable Shares and (y) Subco shall issue or distribute the economic equivalent of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets simultaneously to holders of the Exchangeable Shares, provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Rockford in order to give effect to and to consummate the transactions contemplated by, and in accordance with, the Share Exchange Agreement.

 

	
(b)  

	
Rockford shall not without the prior approval of Subco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11(b) of the Exchangeable Share Provisions:

 

	
(i)  

	
subdivide, redivide or change the then outstanding Rockford Shares into a greater number of Rockford Shares; or

 

 

5

 

	
(ii)  

	
reduce, combine, consolidate or change the then outstanding Rockford Shares into a lesser number of Rockford Shares; or

 

	
(iii)  

	
reclassify or otherwise change the Rockford Shares or effect an amalgamation, merger, arrangement, reorganization or other transaction affecting the Rockford Shares;

 

unless, in each case, (x) Subco is permitted under applicable laws to make the same or an economically equivalent change to, or in the rights of holders of, the Exchangeable Shares, and (y) the same or an economically equivalent change is made simultaneously to, or in the rights of the holders of, the Exchangeable Shares, provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Rockford in order to give effect to and to consummate the transactions contemplated by, and in accordance with, the Share Exchange Agreement.

 

	
(c)  

	
Rockford shall ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b) or, if no record date is applicable for such event, the effective date for any such event, is not less than 10 Business Days after the date on which such event is declared or announced by Rockford (with contemporaneous notification thereof by Rockford to Subco).

 

	
(d)  

	
The board of directors of Subco shall determine, in good faith and in its sole discretion (with the assistance of such financial or other advisors as the board of may determine), “economic equivalence” for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on Rockford. In making each such determination, the following factors shall, without excluding other factors determined by the board of directors of Subco to be relevant, be considered by the board of directors of Subco:

 

	
(i)  

	
in the case of any stock dividend or other distribution payable in Rockford Shares, the number of such shares issued in proportion to the number of Rockford Shares previously outstanding;

 

	
(ii)  

	
in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Rockford Shares (or securities exchangeable for or convertible into or carrying rights to acquire Rockford Shares), the relationship between the exercise price of each such right, option or warrant, the Current Market Price of a Rockford Share, the volatility of the Rockford Shares and the terms of any such instrument;

 

	
(iii)  

	
in the case of the issuance or distribution of any other form of property (including any shares or securities of Rockford of any class other than Rockford Shares, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of Rockford or any assets of Rockford), the relationship between the fair market value (as determined by the board of directors of Subco in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Rockford Share and the Current Market Price of a Rockford Share;

 

	
(iv)  

	
in the case of any subdivision, redivision or change of the then outstanding Rockford Shares into a greater number of Rockford Shares or the reduction, combination, consolidation or change of the then outstanding Rockford Shares into a lesser number of Rockford Shares or any amalgamation, merger, arrangement, reorganization or other transaction affecting Rockford Shares, the effect thereof upon the then outstanding Rockford Shares; and

 

 

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(v)  

	
in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Rockford Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).

 

	
(e)  

	
Subco agrees that, to the extent required, upon due notice from Rockford, Subco shall use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Subco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the Rockford Shares and Exchangeable Shares as provided for in this Section 2.7.

 

	
2.8  

	
Tender Offers

 

In the event that a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to Rockford Shares (an “Offer”) is proposed by Rockford or is proposed to Rockford or its shareholders and is recommended by the board of directors of Rockford, or is otherwise effected or to be effected with the consent or approval of the board of directors of Rockford, and the Exchangeable Shares are not redeemed by Subco or purchased by Rockford or Callco pursuant to the Redemption Call Right, Rockford and Subco will use reasonable best efforts to take all such actions and do all such things as are necessary or desirable to enable and permit holders of Exchangeable Shares (other than Rockford and its affiliates) to participate in such Offer to the same extent and on an economically equivalent basis as the holders of Rockford Shares, without discrimination.  Without limiting the generality of the foregoing, Rockford and Subco will use reasonable best efforts expeditiously and in good faith to ensure that holders of Exchangeable Shares may participate in each such Offer without being required to retract Exchangeable Shares as against Subco (or, if so required, to ensure that any such retraction shall be effective only upon, and shall be conditional upon, the closing of such Offer and only to the extent necessary to tender or deposit to the Offer).  Nothing herein shall affect the rights of Subco to redeem, or Rockford or Callco to purchase pursuant to the Redemption Call Right, Exchangeable Shares in the event of a Rockford Control Transaction.

 

	
2.9  

	
Rockford and Affiliates Not to Vote Exchangeable Shares

 

Each of Rockford and Callco covenants and agrees that it shall appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its affiliates for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting.  Each of Rockford and Callco further covenants and agrees that it shall not, and shall cause its affiliates not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Exchangeable Share Provisions or pursuant to the provisions of the Business Corporations Act (Ontario) (or any successor or other corporate statute by which Subco may in the future be governed) with respect to any Exchangeable Shares held by it or by its affiliates in respect of any matter considered at any meeting of holders of Exchangeable Shares, provided however, for further clarity, that this Section 2.9 shall not in any way restrict Callco’s right to vote its common shares of Subco in accordance with the Exchangeable Share Provisions.

 

	
2.10  

	
Ordinary Market Purchases

 

For certainty, nothing contained in this Agreement, including the obligations of Rockford contained in Section 2.8, shall limit the ability of Rockford (or any of its affiliates) to make ordinary market purchases of Rockford Shares in accordance with applicable laws and regulatory or stock exchange requirements.

 

 

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2.11  

	
Ownership of Outstanding Shares

 

Without the prior approval of Subco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11(b) of the Exchangeable Share Provisions, Rockford covenants and agrees in favour of Subco that, as long as any outstanding Exchangeable Shares not owned by Rockford or its affiliates are outstanding, Rockford will be and remain the direct or indirect beneficial owner of all issued and outstanding common shares in the capital of Subco and Callco.  Notwithstanding the foregoing, Rockford shall not be in violation of this Section 2.11 if any person or group of persons acting jointly or in concert acquires all or substantially all of the assets of Rockford or the Rockford Shares pursuant to any merger of Rockford pursuant to which Rockford was not the surviving corporation.

 

3.  ROCKFORD SUCCESSORS

 

	
3.1  

	
Certain Requirements in Respect of Combination, etc.

 

So long as any Exchangeable Shares not owned by Rockford or its affiliates are outstanding, Rockford shall not enter into any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, amalgamation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the surviving corporation resulting therefrom, provided that it may do so if:

 

	
(a)  

	
such other person or surviving corporation (the “Rockford Successor”) by operation of law, becomes, without more, bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the Rockford Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Rockford Successor to pay and deliver or cause to be paid and delivered the same and its agreement to observe and perform all the covenants and obligations of Rockford under this Agreement; and

 

	
(b)  

	
such transaction shall be upon such terms and conditions as to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares.

 

	
3.2  

	
Vesting of Powers in Successor

 

Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Section 3.1(a) and thereupon the Rockford Successor and such other person that may then be the issuer of the Rockford Shares shall possess and from time to time may exercise each and every right and power of Rockford under this Agreement in the name of Rockford or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of Rockford or any officers of Rockford may be done and performed with like force and effect by the directors or officers of such Rockford Successor.

 

	
3.3  

	
Wholly-Owned Subsidiaries

 

Nothing herein shall be construed as preventing (a) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Rockford with or into Rockford, (b) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Rockford, provided that all of the assets of such subsidiary are transferred to Rockford or another wholly-owned direct or indirect subsidiary of Rockford, (c) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Rockford among the shareholders of such subsidiary for the purpose of winding up its affairs and (d) any such transactions are expressly permitted by this Section 3.

 

 

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3.4  

	
Successorship Transaction

 

Notwithstanding the foregoing provisions of this Section 3, in the event of a Rockford Control Transaction:

 

	
(a)  

	
in which Rockford merges or amalgamates with, or in which all or substantially all of the then outstanding Rockford Shares are acquired by, one or more other corporations to which Rockford is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the Tax Act (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof);

 

	
(b)  

	
which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of that definition; and

 

	
(c)  

	
in which all or substantially all of the then outstanding Rockford Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) or another corporation (the “Other Corporation”) that, immediately after such Rockford Control Transaction, owns or controls, directly or indirectly, Rockford;

 

then all references herein to “Rockford” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Rockford Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions or the exchange of such shares pursuant to the Voting and Exchange Trust Agreement immediately subsequent to the Rockford Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions or the exchange of such shares pursuant to the Voting and Exchange Trust Agreement had occurred immediately prior to the Rockford Control Transaction and the Rockford Control Transaction was completed) without any need to amend the terms and conditions of the Exchangeable Shares and without any further action required.

 

4.  GENERAL

 

	
4.1  

	
Term

 

This Agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any person other than Rockford and any of its affiliates.

 

	
4.2  

	
Changes in Capital of Rockford and Subco

 

Notwithstanding the provisions of Section 4.4, at all times after the occurrence of any event contemplated pursuant to Section 2.7 and Section 2.8 or otherwise, as a result of which either Rockford Shares or the Exchangeable Shares or both are in any way changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which Rockford Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications.

 

	
4.3  

	
Severability

 

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

 

 

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4.4  

	
Amendments, Modifications

 

Subject to Section 4.2, 4.3 and 4.5, this Agreement may not be amended or modified except by an agreement in writing executed by Rockford, Callco and Subco and approved by the holders of the Exchangeable Shares in accordance with Section 11(b) of the Exchangeable Share Provisions.  No amendment or modification or waiver of any of the provisions of this Agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto.

 

	
4.5  

	
Ministerial Amendments

 

Notwithstanding the provisions of Section 4.4, the parties to this Agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this Agreement for the purposes of:

 

	
(a)  

	
adding to the covenants of any or all parties hereto if the board of directors of each of Rockford, Callco and Subco shall be of the good faith opinion that such additions will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole;

 

	
(b)  

	
evidencing the succession of Rockford Successors and the covenants of and obligations assumed by each such Rockford Successor in accordance with the provisions of Section 3;

 

	
(c)  

	
making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions arising hereunder which, in the good faith opinion of the board of directors of each of Rockford, Callco and Subco, having in mind the interests of the holders of the Exchangeable Shares as a whole, it may be expedient to make, provided that each such board of directors shall be of the good faith opinion, after consultation with counsel, that such amendments or modifications will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole; or

 

	
(d)  

	
making such changes or corrections hereto which, on the advice of counsel to Rockford, Callco and Subco, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained herein, provided that the boards of directors of each of Rockford, Callco and Subco shall be of the good faith opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole.

 

	
4.6  

	
Meeting to Consider Amendments

 

Subco, at the request of Rockford, shall call a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4.  Any such meeting or meetings shall be called and held in accordance with the articles and bylaws of Subco, the Exchangeable Share Provisions and all applicable laws.

 

 

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4.7  

	
Enurement

 

This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.

 

	
4.8  

	
Notices to Parties

 

Any notice and other communications required or permitted to be given pursuant to this Agreement shall be sufficiently given if delivered in person or if emailed with electronic confirmation of delivery to the parties at the following addresses:

 

369 Shuter Street

Toronto, Ontario M5A 1X2

 

Attention:        Gregory Neely

Email:             greg@forgemedia.ca

 

or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.

 

	
4.9  

	
Counterparts

 

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

 

	
4.10  

	
Jurisdiction

 

This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.  Each party hereto irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto.

 

 

11

 

 

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

 

ROCKFORD MINERALS INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

 

1896431 ONTARIO INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

1896432 ONTARIO INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

 

12

 

VOTING AND EXCHANGE TRUST AGREEMENT

 

THIS VOTING AND EXCHANGE TRUST AGREEMENT is made as of June 28, 2013 among Rockford Minerals Inc., a corporation existing under the laws of the State of Nevada (“Rockford”), 1896431 Ontario Inc., a corporation existing under the laws of the Province of Ontario (“Callco”), 1896432 Ontario Inc., a corporation existing under the laws of the Province of Ontario (“Subco”) and John Marmora (the “Trustee”).

 

WHEREAS:

 

	
A.  

	
In connection with the share exchange agreement (the “Share Exchange Agreement”) made as of June 28, 2013 between Rockford, Subco and Tropic Spa Inc. (“Tropic Spa”), the Exchangeable Shares are to be issued to certain holders of securities of Tropic Spa pursuant to the Share Exchange Agreement;

 

	
B.  

	
The holders of Exchangeable Shares will be entitled to require Subco to redeem such Exchangeable Shares and, upon such redemption, each Exchangeable Share so redeemed shall be exchanged by Subco for one share of the common stock of Rockford (each, a “Rockford Share”);

 

	
C.  

	
The parties desire to make appropriate provision and to establish a procedure whereby voting rights in Rockford shall be exercisable by the Beneficiaries (as defined herein) from time to time by and through the Trustee, who will hold legal title to the Special Voting Share (as defined herein) to which voting rights attach for the benefit of the Beneficiaries;

 

	
D.  

	
Pursuant to the Share Exchange Agreement, Rockford, Callco and Subco are required to enter into a voting and exchange trust agreement substantially in the form of this Agreement; and

 

	
E.  

	
These recitals and any statements of fact in this Agreement are made by Rockford, Callco and Subco and not by the Trustee.

 

NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein (the receipt and sufficiency of which are acknowledged), the parties agree as follows:

 

1.  DEFINITIONS AND INTERPRETATION

 

	
1.1  

	
Definitions

 

In this Agreement, each capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “Exchangeable Share Provisions”) attaching to the Exchangeable Shares as set out in the articles of Subco and the following terms shall have the following meanings:

 

	
(a)  

	
“Automatic Exchange Right” has the meaning ascribed thereto in Section 5.10(b);

 

	
(b)  

	
“Beneficiaries” means the registered holders from time to time of Exchangeable Shares, other than Rockford and its affiliates;

 

	
(c)  

	
“Beneficiary Votes” has the meaning ascribed thereto in Section 4.2;

 

	
(d)  

	
“Callco” has the meaning ascribed thereto in the introductory paragraph;

 

	
(e)  

	
“Equivalent Vote Amount” means, with respect to any matter, proposition, proposal or question on which holders of Rockford Shares are entitled to vote, consent or otherwise act, the number of votes to which a holder of one Rockford Share is entitled with respect to such matter, proposition or question;

 

 

1

 

	
(f)  

	
“Exchange Right” has the meaning ascribed thereto in Section 5.1;

 

	
(g)  

	
“Indemnified Parties” has the meaning ascribed thereto in Section 8.1;

 

	
(h)  

	
“Insolvency Event” means (i) the institution by Subco of any proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the consent of Subco to the institution of bankruptcy, insolvency, dissolution or winding-up proceedings against it, (ii) the filing by Subco of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including the Companies Creditors’ Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), or the failure by Subco to contest in good faith any such proceedings commenced in respect of Subco within 30 days of becoming aware thereof, or the consent by Subco to the filing of any such petition or to the appointment of a receiver, (iii) the making by Subco of a general assignment for the benefit of creditors, or the admission in writing by Subco of its inability to pay its debts generally as they become due, or (iv) Subco not being permitted, pursuant to solvency requirements of applicable laws, to redeem any Retracted Shares pursuant to Section 6(a)(iii) of the Exchangeable Share Provisions specified in a retraction request delivered to Subco in accordance with Section 6 of the Exchangeable Share Provisions;

 

	
(i)  

	
“Liquidation Event” has the meaning ascribed thereto in Section 5.10(a);

 

	
(j)  

	
“Liquidation Event Effective Date” has the meaning ascribed thereto in Section 5.10(c);

 

	
(k)  

	
“List” has the meaning ascribed thereto in Section 4.6;

 

	
(l)  

	
“Officer’s Certificate” means, with respect to Rockford, Callco or Subco, as the case may be, a certificate signed by any one of the chairman of the board, the president, the chief executive officer, the chief financial officer or any other executive officer of Rockford, Callco or Subco, as the case may be;

 

	
(m)  

	
“Other Corporation” has the meaning ascribed thereto in Section 10.4(c);

 

	
(n)  

	
“Other Shares” has the meaning ascribed thereto in Section 10.4(c);

 

	
(o)  

	
“Privacy Laws” has the meaning ascribed thereto in Section 6.17;

 

	
(p)  

	
“Retracted Shares” has the meaning ascribed thereto in Section 5.7;

 

	
(q)  

	
“Rockford” has the meaning ascribed thereto in the introductory paragraph;

 

	
(r)  

	
“Rockford Consent” has the meaning ascribed thereto in Section 4.1;

 

	
(s)  

	
“Rockford Meeting” has the meaning ascribed thereto in Section 4.1;

 

	
(t)  

	
“Rockford Share” as the meaning ascribed thereto in Recital B;

 

	
(u)  

	
“Rockford Successor” has the meaning ascribed thereto in Section 10.1(a);

 

	
(v)  

	
“Share Exchange Agreement” has the meaning ascribed thereto in Recital A;

 

 

2

 

	
(w)  

	
“Special Voting Share” means the special voting share in the capital of Rockford, issued by Rockford to and deposited with the Trustee, which, at any time, entitles the holder of record to that number of votes at meetings of holders of Rockford Shares equal to the number of Exchangeable Shares outstanding at such time (excluding Exchangeable Shares held by Rockford and its affiliates);

 

	
(x)  

	
“Subco” has the meaning ascribed thereto in the introductory paragraph;

 

	
(y)  

	
“Support Agreement” means the support agreement dated the date hereof between Rockford, Callco and Subco, in substantially the form attached as Appendix 2 to the Share Exchange Agreement;

 

	
(z)  

	
“Tropic Spa” has the meaning ascribed thereto in Recital A;

 

	
(aa)  

	
“Trust Estate” means the Special Voting Share, any other securities, the Exchange Right, the Automatic Exchange Right and any money or other property which may be held by the Trustee from time to time pursuant to this Agreement;

 

	
(bb)  

	
“Trust” means the trust created by this Agreement;

 

	
(cc)  

	
“Trustee” has the meaning ascribed thereto in the introductory paragraph; and

 

	
(dd)  

	
“Voting Rights” means the voting rights attached to the Special Voting Share.

 

	
1.2  

	
Interpretation Not Affected by Headings

 

The division of this Agreement into sections and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement. Unless otherwise specified, references to a “Section” refer to the specified section of this Agreement.

 

	
1.3  

	
Number, Gender, etc.

 

Unless the context otherwise requires, words used herein importing the singular include the plural and vice versa and words imparting any gender shall include all genders.

 

	
1.4  

	
Date for any Action

 

If any date on which any action is required to be taken hereunder by any person is not a Business Day, then such action shall be required to be taken on the next succeeding day which is a Business Day.

 

2.  PURPOSE OF AGREEMENT

 

	
2.1  

	
Establishment of Trust

 

The purpose of this Agreement is to create the Trust for the benefit of the Beneficiaries as herein provided.  Rockford, as the settlor of the Trust, hereby appoints the Trustee as trustee of the Trust.  The Trustee shall hold the Special Voting Share in order to enable the Trustee to exercise the Voting Rights and shall hold the Exchange Right and the Automatic Exchange Right in order to enable the Trustee to exercise or enforce such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this Agreement.

 

 

3

 

3.  SPECIAL VOTING SHARE

 

	
3.1  

	
Issue and Ownership of the Special Voting Share

 

Immediately following the execution and delivery of this Agreement, Rockford shall issue to and deposit with the Trustee the Special Voting Share to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this Agreement.  Rockford hereby acknowledges receipt from the Trustee, as trustee for and on behalf of the Beneficiaries, of $1 and other good and valuable consideration (and the adequacy thereof) for the issuance of the Special Voting Share by Rockford to the Trustee.  During the term of the Trust, and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Special Voting Share; provided, however, that:

 

	
(a)  

	
the Trustee shall hold the Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and

 

	
(b)  

	
except as specifically authorized by this Agreement, the Trustee shall have no power or authority to sell, transfer, vote or otherwise deal in or with the Special Voting Share and the Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this Agreement.

 

	
3.2  

	
Legended Share Certificates

 

Subco shall cause each certificate representing Exchangeable Shares to bear a legend notifying the Beneficiary of such shares of his, her or its right to instruct the Trustee with respect to the exercise of that portion of the Voting Rights which corresponds to the number of Exchangeable Shares held by each such Beneficiary.

 

	
3.3  

	
Safe Keeping of Certificate

 

The certificate representing the Special Voting Share shall at all times be held in safe keeping by the Trustee or its duly authorized agent.

 

4.  EXERCISE OF VOTING RIGHTS

 

	
4.1  

	
Voting Rights

 

The Trustee, as the holder of record of the Special Voting Share, shall be entitled to exercise all of the Voting Rights, including the right to consent to or vote in person or by proxy the Special Voting Share, on any matter, question, proposal or proposition whatsoever that may properly come before the shareholders of Rockford at any meeting thereof at which holders of Rockford Shares are entitled to vote (each, a “Rockford Meeting”).  The Voting Rights shall be and remain vested in and exercised by the Trustee subject to the terms of this Agreement.  Subject to Section 6.14:

 

	
(a)  

	
the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Section 4 from Beneficiaries on the record date established by Rockford or by applicable laws for such Rockford Meeting or any written consent sought from the holders of Rockford Shares (each, a “Rockford Consent”) who are entitled to instruct the Trustee as to the voting thereof; and

 

	
(b)  

	
to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights in respect of which such Beneficiary is entitled to instruct the Trustee, the Trustee shall not exercise or permit the exercise of such Voting Rights.

 

	
4.2  

	
Number of Votes

 

With respect to all Rockford Meetings and Rockford Consents, each Beneficiary shall be entitled to instruct the Trustee to cast and exercise, in the manner instructed, that number of votes equal to the Equivalent Vote Amount for each Exchangeable Share owned of record by such Beneficiary at the close of business on the record date established by Rockford or by applicable laws for such Rockford Meeting or Rockford Consent, as the case may be (collectively, the “Beneficiary Votes”), in respect of each matter, question, proposal or proposition to be voted on at such Rockford Meeting or consented to in connection with such Rockford Consent.

 

 

4

 

	
4.3  

	
Mailings to Shareholders

 

	
(a)  

	
With respect to each Rockford Meeting or Rockford Consent, the Trustee will mail or cause to be mailed (or otherwise communicate in the same manner as Rockford utilizes in communications to holders of Rockford Shares, subject to applicable regulatory requirements and to the Trustee being advised in writing of such manner and provided that such manner of communications is reasonably available to the Trustee) to each Beneficiary named in the applicable List on the same day as the mailing (or other communication) with respect thereto is commenced by Rockford to its shareholders:

 

	
(i)  

	
a copy of such mailing, together with any related materials, including any proxy or information statement or listing particulars, to be provided to shareholders of Rockford;

 

	
(ii)  

	
a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such Rockford Meeting or Rockford Consent or, pursuant to Section 4.7, to attend such Rockford Meeting and to exercise personally the Beneficiary Votes thereat;

 

	
(iii)  

	
a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give (A) a proxy to such Beneficiary or his, her or its designee to exercise personally such holder’s Beneficiary Votes or (B) a proxy to a designated agent or other representative of Rockford to exercise such holder’s Beneficiary Votes;

 

	
(iv)  

	
a statement that if no such instructions are received from such Beneficiary, the Beneficiary Votes to which the Beneficiary is entitled will not be exercised;

 

	
(v)  

	
a form of direction such Beneficiary may use to direct and instruct the Trustee as contemplated herein; and

 

	
(vi)  

	
a statement of (A) the time and date by which such instructions must be received by the Trustee in order for such instructions to be binding upon the Trustee, which in the case of a Rockford Meeting shall not be earlier than the close of business on the Business Day immediately prior to the date by which Rockford has required proxies to be deposited for such meeting, and (B) of the method for revoking or amending such instructions.

 

	
(b)  

	
The materials referred to in this Section 4.3 shall be provided to the Trustee by Rockford, and the materials referred to in Sections 4.3(a)(ii), 4.3(a)(iii), 4.3(a)(iv), 4.3(a)(v) and 4.3(a)(vi) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner.  Subject to the foregoing, Rockford shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of Rockford Shares.  Rockford agrees not to communicate with holders of Rockford Shares with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries.  Notwithstanding the foregoing, Rockford may, at its option, exercise the duties of the Trustee to deliver copies of all materials to all Beneficiaries as required by this Section 4.3 so long as, in each case, Rockford delivers a certificate to the Trustee stating that Rockford has undertaken to perform the obligations of the Trustee set forth in this Section 4.3.

 

	
(c)  

	
For the purpose of determining the number of Beneficiary Votes to which a Beneficiary is entitled in respect of any Rockford Meeting or Rockford Consent, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by Rockford or by applicable laws for purposes of determining shareholders entitled to vote at such Rockford Meeting or in respect of such Rockford Consent.  Rockford shall notify the Trustee of any decision of the board of directors of Rockford with respect to the calling of any Rockford Meeting or any Rockford Consent and shall provide all necessary information and materials to the Trustee in each case promptly and, in any event, in sufficient time to enable the Trustee to perform the obligations of the Trustee set forth in this Section 4.3.

 

 

5

 

	
4.4  

	
Copies of Shareholder Information

 

Rockford shall deliver to the Trustee copies of all proxy materials (including notices of Rockford Meetings but excluding proxies to vote Rockford Shares), information statements, reports (including all interim and annual financial statements) and other written communications that, in each case, are to be distributed by Rockford from time to time to the holders of Rockford Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send or cause to send those materials to each Beneficiary at the same time as such materials are first sent to the holders of Rockford Shares.  The Trustee shall mail or otherwise send to each Beneficiary, at the expense of Rockford, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Rockford) received by the Trustee from Rockford contemporaneously with the sending of such materials to holders of Rockford Shares.  The Trustee shall also make available for inspection by any Beneficiary at the Trustee’s principal address all proxy materials, information statements, reports and other written communications that are:

 

	
(a)  

	
received by the Trustee as the registered holder of the Special Voting Share and made available by Rockford generally to the holders of Rockford Shares; or

 

	
(b)  

	
specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Rockford.

 

Notwithstanding the foregoing, Rockford may, at its option, exercise the duties of the Trustee to deliver copies of all such materials to all Beneficiaries as required by this Section 4.4 so long as, in each case, Rockford delivers a certificate to the Trustee stating that Rockford has undertaken to perform the obligations of the Trustee set forth in this Section 4.4.

 

	
4.5  

	
Other Materials

 

As soon as reasonably practicable after receipt by Rockford or the shareholders of Rockford (if such receipt is known by Rockford) of any material sent or given by or on behalf of a third party to the holders of Rockford Shares generally, including dissident proxy and information statements (and related information and material), provided such material has not been sent to the Beneficiaries by or on behalf of such third party, Rockford shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to the Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter.  As soon as reasonably practicable after receipt thereof, the Trustee shall mail or otherwise send to each Beneficiary, at the expense of Rockford, copies of all such materials received by the Trustee from Rockford.  The Trustee shall also make available for inspection by any Beneficiary at the Trustee’s principal address copies of all such materials.  Notwithstanding the foregoing, Rockford may, at its option, exercise the duties of the Trustee to deliver copies of all such materials to all Beneficiaries as required by this Section 4.5 so long as, in each case, Rockford delivers a certificate to the Trustee stating that Rockford has undertaken to perform the obligations of the Trustee set forth in this Section 4.5.

 

 

6

 

	
4.6  

	
List of Persons Entitled to Vote

 

Subco shall, (a) prior to each annual, general and special Rockford Meeting or the seeking of any Rockford Consent and (b) forthwith upon each request made at any time by the Trustee in writing, prepare or cause to be prepared a list (a “List”) of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with a Rockford Meeting or Rockford Consent, at the close of business on the record date established by Rockford or pursuant to applicable laws for determining the holders of Rockford Shares entitled to receive notice of and/or to vote at such Rockford Meeting or to give consent in connection with a Rockford Consent.  Each such List shall be delivered to the Trustee promptly after the receipt by Subco of such request or the record date for such meeting or consent, as the case may be, and, in any event, within sufficient time as to permit the Trustee to perform its obligations under this Agreement.  Rockford agrees to give Subco notice (with a copy to the Trustee) of the calling of any Rockford Meeting or the seeking of any Rockford Consent, together with the record date therefor, sufficiently prior to the date of the calling of such meeting or seeking of such consent, so as to enable Subco to perform its obligations under this Section 4.6.

 

	
4.7  

	
Entitlement to Direct Votes

 

Subject to Section 4.8 and Section 4.11, any Beneficiary named in a List prepared in connection with any Rockford Meeting or Rockford Consent shall be entitled to (a) instruct the Trustee in the manner described in Section 4.2 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled, (b) attend such meeting and personally exercise thereat (or to exercise with respect to any written consent), as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled or (c) appoint a third party as the proxy of the Trustee to attend such meeting and exercise thereat the Beneficiary Votes to which such Beneficiary is entitled except, in each case, to the extent that such Beneficiary has transferred the ownership of any Exchangeable Shares in respect of which such Beneficiary is entitled to Beneficiary Votes after the close of business on the record date for such meeting or seeking of consent.

 

	
4.8  

	
Voting by Trustee and Attendance of Trustee Representative at Meeting

 

	
(a)  

	
In connection with each Rockford Meeting and Rockford Consent, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.2, the Beneficiary Votes as to which such Beneficiary is entitled (or any lesser number thereof as may be set forth in the instructions) other than any Beneficiary Votes that are the subject of Section 4.8(b); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to Section 4.3.

 

	
(b)  

	
To the extent so instructed in accordance with the terms of this Agreement, the Trustee shall sign and deliver, or cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling a Beneficiary to attend a Rockford Meeting.  Upon the submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee or the Trustee’s representative, as the case may be, and at the Beneficiary’s request, the Trustee or such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to the Trustee or such representative, as the case may be, written revocation of any such previous instructions.  At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in accordance with such proxy shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition.

  

 

7

 

	
4.9  

	
Distribution of Written Materials

 

Any written materials distributed by the Trustee to the Beneficiaries pursuant to this Agreement shall be sent by mail (or otherwise communicated in the same manner as Rockford utilizes in communications to the holders of Rockford Shares subject to applicable regulatory requirements and to the Trustee being advised in writing of such manner and provided such manner of communications is reasonably available to the Trustee) to each Beneficiary at its address as shown on the register of holders of Exchangeable Shares maintained by the Transfer Agent.  In connection with each such distribution, Subco shall provide or cause to be provided to the Trustee for purposes of communication, on a timely basis and without charge or other expense (a) a current List and (b) upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this Agreement.  Subco’s obligations under this Section 4.9 shall be deemed satisfied to the extent Rockford exercises its option to perform the duties of the Trustee to deliver copies of materials to each Beneficiary and Subco provides the required information and materials to Rockford.

 

	
4.10  

	
Termination of Voting Rights

 

Except as otherwise provided in the Exchangeable Share Provisions, all of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall lapse and be deemed to be surrendered by the Beneficiary to Rockford or Callco, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon:

 

	
(a)  

	
the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the exercise by the Beneficiary of the Exchange Right;

 

	
(b)  

	
the occurrence of the automatic exchange of Exchangeable Shares for Rockford Shares, as specified in Section 5;

 

	
(c)  

	
the redemption or retraction of Exchangeable Shares pursuant to Sections 7 or 8, respectively, of the Exchangeable Share Provisions;

 

	
(d)  

	
the effective date of the liquidation, dissolution or winding-up of Subco or any other distribution of the assets of Subco among its shareholders for the purpose of winding up its affairs pursuant to Section 6 of the Exchangeable Share Provisions; or

 

	
(e)  

	
upon the purchase of Exchangeable Shares from the holder thereof by Rockford or Callco, as the case may be, pursuant to the exercise by Rockford or Callco of the Liquidation Call Right, the Redemption Call Right or the Retraction Call Right (unless, in any case, Rockford or Callco, as the case may be, shall not have delivered the requisite consideration deliverable in exchange therefor).

 

	
4.11  

	
Disclosure of Interest in Exchangeable Shares

 

The Trustee or Subco shall be entitled to require any Beneficiary or any person whom the Trustee or Subco, as the case may be, knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to (a) confirm that fact or (b) give such details as to whom has an interest in such Exchangeable Share, in each case as would be required (if the Exchangeable Shares were a class of “equity shares” of Subco) under Section 102.1 of the Securities Act (Ontario), as amended from time to time, or as would be required under the articles or by-laws of Rockford or any laws or regulations, or pursuant to the rules or regulations of any regulatory agency, if and only to the extent that the Exchangeable Shares were Rockford Shares.  If a Beneficiary does not provide the information required to be provided by such Beneficiary pursuant to this Section 4.11, the board of directors of Rockford may take any action permitted under the articles or by-laws of Rockford or any laws or regulations, or pursuant to the rules or regulations of any regulatory agency, with respect to the Voting Rights relating to the Exchangeable Shares held by such Beneficiary.

 

 

8

 

5.  EXCHANGE AND AUTOMATIC EXCHANGE

 

	
5.1  

	
Grant and Ownership of the Exchange Right and Automatic Exchange Right

 

	
(a)  

	
Rockford and, in the case the Exchange Right, Callco hereby grant to the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries (i) the right (the “Exchange Right”), upon the occurrence and during the continuance of an Insolvency Event, to require Rockford or Callco to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by such Beneficiary, all in accordance with the provisions of this Agreement, and (ii) the Automatic Exchange Right.  Each of Rockford and Callco hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right and the Automatic Exchange Right by Rockford or Callco, as the case may be, to the Trustee.

 

	
(b)  

	
During the term of the Trust, and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the Exchange Right and the Automatic Exchange Right and shall be entitled to exercise all of the rights and powers of an owner with respect to the Exchange Right and the Automatic Exchange Right, provided that the Trustee shall:

 

	
(i)  

	
hold the Exchange Right and the Automatic Exchange Right and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and

 

	
(ii)  

	
except as specifically authorized by this Agreement, have no power or authority to exercise or otherwise deal in or with the Exchange Right or the Automatic Exchange Right, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this Agreement.

 

	
5.2  

	
Legended Share Certificates

 

Subco shall cause each certificate representing Exchangeable Shares to bear a legend notifying the Beneficiary in respect of the Exchangeable Shares represented by such certificate of (a) his, her or its right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by such Beneficiary and (b) the Automatic Exchange Right.

 

	
5.3  

	
General Exercise of Exchange Right

 

The Exchange Right shall be and remain vested in and exercisable by Trustee.  Subject to Section 6.14, the Trustee shall exercise the Exchange Right only on the basis of instructions received pursuant to this Section 5 from Beneficiaries entitled to instruct the Trustee as to the exercise thereof.  To the extent that no instructions are received from any Beneficiary with respect to the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Right.

 

 

9

 

	
5.4  

	
Purchase Price

 

The purchase price payable by Rockford or Callco, as the case may be, for each Exchangeable Share to be purchased by Rockford or Callco, as the case may be, pursuant to the exercise of the Exchange Right shall be an amount per share equal to the Exchangeable Share Price on the last Business Day prior to the day of the closing of the purchase and sale of such Exchangeable Share pursuant to such exercise of the Exchange Right, which price may be satisfied only by Rockford or Callco, as the case may be, delivering or causing to be delivered to the Trustee, on behalf of the relevant Beneficiary, the Exchangeable Share Consideration representing such Exchangeable Share Price.

 

	
5.5  

	
Exercise Instructions

 

Subject to the terms and conditions set forth herein, a Beneficiary shall be entitled upon the occurrence and during the continuance of an Insolvency Event, to instruct the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of such Beneficiary.  In order to cause the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of a Beneficiary, such Beneficiary shall deliver to the Trustee, in person or by certified or registered mail, at its principal address or at such other place as the Trustee may from time to time designate by written notice to the Beneficiaries, the certificates representing the Exchangeable Shares which such Beneficiary desires Rockford or Callco to purchase, duly endorsed in blank for transfer, and accompanied by such other documents and instruments as may be required to effect a transfer of the Exchangeable Shares under the Business Corporations Act (Ontario), the articles or by-laws of Subco and such additional documents and instruments as Rockford, Subco or the Trustee may reasonably require together with:

 

	
(a)  

	
a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating (i) that the Beneficiary thereby instructs the Trustee to exercise the Exchange Right so as to require Rockford or Callco to purchase from the Beneficiary the number of Exchangeable Shares specified therein, (ii) that such Beneficiary has good title to and owns all such Exchangeable Shares to be acquired by Rockford or Callco free and clear of all liens, claims, security interests and encumbrances, (iii) the names in which the certificates representing Rockford Shares issuable in connection with the exercise of the Exchange Right are to be issued, and (iv) the names and addresses of the persons to whom such new certificates should be delivered; and

 

	
(b)  

	
payment (or evidence satisfactory to Rockford, Subco and the Trustee of payment) of the taxes (if any) payable as contemplated by Section 5.8 of this Agreement.

 

If only a part of the Exchangeable Shares represented by any certificate or certificates delivered to the Trustee are to be purchased by Rockford or Callco pursuant to the exercise of the Exchange Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Subco.

 

 

10

 

	
5.6  

	
Delivery of Rockford Shares; Effect of Exercise

 

Promptly after the receipt by the Trustee of the certificates representing the Exchangeable Shares which a Beneficiary desires Rockford or Callco to purchase pursuant to the exercise of the Exchange Right, together with a notice of exercise and such other documents and instruments specified by Section 5.5, the Trustee shall notify Rockford, Callco and Subco of its receipt of the same, which notice to Rockford, Callco and Subco shall constitute the exercise of the Exchange Right by the Trustee on behalf of such Beneficiary in respect of such Exchangeable Shares, and Rockford or Callco, as the case may be, shall promptly thereafter deliver or cause to be delivered to the Trustee, for delivery to such Beneficiary (or to such other persons, if any, properly designated by such Beneficiary) the Exchangeable Share Consideration deliverable in connection with such exercise of the Exchange Right; provided, however, that no such delivery shall be made unless and until the Beneficiary requesting the same shall have paid (or provided evidence satisfactory to Rockford, Callco, Subco and the Trustee of the payment of) the taxes (if any) payable as contemplated by Section 5.8.  Immediately upon the giving of notice by the Trustee to Rockford, Callco and Subco of any exercise of the Exchange Right, as provided in this Section 5.6, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred, and the Beneficiary in respect of such Exchangeable Shares shall be deemed to have transferred to Rockford or Callco, as the case may be, all of such Beneficiary’s right, title and interest in and to such Exchangeable Shares and in the related interest in the Trust Estate and shall cease to be a holder of such Exchangeable Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Exchangeable Share Consideration in respect of such Exchangeable Shares, unless such Exchangeable Share Consideration is not delivered by Rockford or Callco, as the case may be, to the Trustee for delivery to such Beneficiary (or to such other person, if any, properly designated by such Beneficiary) within five Business Days of the date of the giving of such notice by the Trustee, in which case the rights of the Beneficiary shall remain unaffected until such Exchangeable Share Consideration is so delivered.  Upon the delivery of such Exchangeable Share Consideration to the Trustee, the Trustee shall promptly deliver such Exchangeable Share Consideration to such Beneficiary (or to such other person, if any, properly designated by such Beneficiary).  Concurrently with the closing of the transaction of purchase and sale contemplated by such exercise of the Exchange Right, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Rockford Shares delivered to it pursuant to such exercise of the Exchange Right.

 

	
5.7  

	
Exercise of Exchange Right Subsequent to Retraction

 

In the event that a Beneficiary has exercised its retraction right under Section 8 of the Exchangeable Share Provisions to require Subco to redeem any or all of the Exchangeable Shares held by the Beneficiary (the “Retracted Shares”) and is notified by Subco pursuant to Section 8(a)(iii) of the Exchangeable Share Provisions that Subco will not be permitted as a result of solvency requirements of applicable laws to redeem all such Retracted Shares, subject to receipt by the Trustee of written notice to that effect from Subco, and provided that neither Rockford nor Callco shall have exercised its Retraction Call Right with respect to the Retracted Shares and that the Beneficiary shall not have revoked the retraction request delivered by the Beneficiary to Subco pursuant to Section 8(a)(iv) of the Exchangeable Share Provisions, the retraction request will constitute and will be deemed to constitute notice from the Beneficiary to the Trustee instructing the Trustee to exercise the Exchange Right with respect to those Retracted Shares that Subco is unable to redeem.  In any such event, Subco hereby agrees with the Trustee, and in favour of the Beneficiary, to promptly notify the Trustee of such prohibition against Subco and to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to Subco or to the Transfer Agent in connection with such proposed redemption of the Retracted Shares and the Trustee will thereupon exercise the Exchange Right with respect to the Retracted Shares that Subco is not permitted to redeem and will require Rockford or, at the option of Rockford, Callco to purchase such shares in accordance with the provisions of this Section 5.

 

	
5.8  

	
Stamp or Other Transfer Taxes

 

Upon any sale of Exchangeable Shares to Rockford pursuant to the exercise of the Exchange Right or the Automatic Exchange Right, the share certificate or certificates representing the Rockford Shares to be delivered in connection with the payment of the purchase price therefor shall be issued in the name of the Beneficiary in respect of the Exchangeable Shares so sold or in such names as such Beneficiary may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none of Rockford, Callco, Subco or the Trustee shall be required to pay) any documentary, stamp, transfer of other taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Beneficiary or (b) shall have evidenced to the satisfaction of Rockford, Callco, Subco and the Trustee that such taxes (if any) have been paid.

 

 

11

 

	
5.9  

	
Notice of Insolvency Event

 

As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Rockford and Subco shall give written notice thereof to the Trustee.  As soon as practicable after receiving notice from Rockford or Subco of the occurrence of an Insolvency Event, or upon the Trustee otherwise becoming aware of an Insolvency Event, the Trustee shall mail to each Beneficiary, at the expense of Rockford (such funds to be received in advance), a notice of such Insolvency Event in the form provided by Rockford, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Exchange Right.

 

	
5.10  

	
Automatic Exchange on Liquidation of Rockford

 

	
(a)  

	
Rockford shall give the Trustee written notice of each of the following events (each, a “Liquidation Event”) at the time set forth below:

 

	
(i)  

	
in the event of any determination by the board of directors of Rockford to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Rockford or to effect any other distribution of assets of Rockford among its shareholders for the purpose of winding up its affairs, at least 30 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and

 

	
(ii)  

	
as soon as practicable following the earlier of (A) receipt by Rockford of notice of and (B) Rockford otherwise becoming aware of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Rockford or to effect any other distribution of assets of Rockford among its shareholders for the purpose of winding up its affairs, in each case where Rockford has failed to contest in good faith any such proceeding commenced in respect of Rockford within 10 days of becoming aware thereof.

 

	
(b)  

	
As soon as practicable following receipt by the Trustee from Rockford of notice of a Liquidation Event, the Trustee shall give notice thereof to the Beneficiaries.  Such notice shall be provided by Rockford to the Trustee and shall include a brief description of the automatic exchange of Exchangeable Shares for Rockford Shares provided for in Section 5.10(c) (the “Automatic Exchange Right”).

 

	
(c)  

	
In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of Rockford Shares in the distribution of assets of Rockford in connection with a Liquidation Event, immediately prior to the effective date (the “Liquidation Event Effective Date”) of a Liquidation Event, each of the then outstanding Exchangeable Shares (other than Exchangeable Shares held by Rockford and its affiliates) shall be automatically exchanged for one Rockford Share.  To effect such automatic exchange, Rockford shall purchase each such Exchangeable Share outstanding immediately prior to the Liquidation Event Effective Date, and each Beneficiary shall sell each Exchangeable Shares held by it at such time, free and clear of any lien, claim or encumbrance, for a purchase price per share equal to Exchangeable Share Price on the last Business Day immediately prior to the Liquidation Event Effective Date, which price shall be satisfied in full by Rockford delivering to such holder the Exchangeable Share Consideration representing such Exchangeable Share Price.

 

	
(d)  

	
The closing of the transaction of purchase and sale contemplated by any exercise of the Automatic Exchange Right shall be deemed to have occurred at the close of business on the Business Day immediately prior to the Liquidation Event Effective Date, and each Beneficiary shall be deemed to have transferred to Rockford all of such Beneficiary’s right, title and interest in and to the Exchangeable Shares held by such Beneficiary free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and Rockford shall deliver or cause to be delivered to the Trustee, for delivery to such Beneficiary, the Exchangeable Share Consideration deliverable to such Beneficiary upon such exercise of the Automatic Exchange Right.  Concurrently with each such Beneficiary ceasing to be a holder of Exchangeable Shares, such Beneficiary shall be considered and deemed for all purposes to be the holder of the Rockford Shares included in the Exchangeable Share Consideration to be delivered to such Beneficiary and the certificates held by such Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Rockford pursuant to the exercise of the Automatic Exchange Right shall thereafter be deemed to represent the Rockford Shares issued to such Beneficiary by Rockford pursuant to the exercise of the Automatic Exchange Right.  Upon the request of any Beneficiary and the surrender by such Beneficiary of Exchangeable Share certificates deemed to represent Rockford Shares, duly endorsed in blank and accompanied by such instruments of transfer as Rockford may reasonably require, Rockford shall deliver or cause to be delivered to such Beneficiary certificates representing the Rockford Shares of which the Beneficiary is the holder.

 

 

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5.11  

	
Withholding Rights

 

Rockford, Callco, Subco and the Trustee shall be entitled to deduct and withhold from any dividend, distribution, price or other consideration otherwise payable under this Agreement to any holder of Exchangeable Shares or Rockford Shares such amounts as Rockford, Callco, Subco or the Trustee is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United States tax laws or any provision of provincial, state, local or foreign tax laws, in each case as amended or succeeded.  The Trustee may act and rely on the advice of counsel with respect to such matters.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing agency.  To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Rockford, Callco, Subco and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Rockford, Callco, Subco or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and Rockford, Callco, Subco or the Trustee, as the case may be, shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale.

 

6.  CONCERNING THE TRUSTEE

 

	
6.1  

	
Powers and Duties of the Trustee

 

	
(a)  

	
The rights, powers, duties and authorities of the Trustee under this Agreement, in its capacity as Trustee of the Trust, shall include:

 

	
(i)  

	
receipt and deposit of the Special Voting Share from Rockford as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement;

 

	
(ii)  

	
granting proxies and distributing materials to Beneficiaries as provided in this Agreement;

 

	
(iii)  

	
voting the Beneficiary Votes in accordance with the provisions of this Agreement;

 

	
(iv)  

	
receiving the grant of the Exchange Right from Rockford and Callco, and the Automatic Exchange Right from Rockford, as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement;

 

	
(v)  

	
exercising the Exchange Right and enforcing the benefit of the Automatic Exchange Right, in each case in accordance with the provisions of this Agreement, and in connection therewith receiving from Beneficiaries any requisite documents and distributing to such Beneficiaries the Exchangeable Share Consideration to which such Beneficiaries are entitled pursuant to the exercise of the Exchange Right or the Automatic Exchange Right, as the case may be;

 

 

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(vi)  

	
holding title to the Trust Estate;

 

	
(vii)  

	
investing any moneys forming, from time to time, a part of the Trust Estate as provided in this Agreement;

 

	
(viii)  

	
taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of Rockford, Callco and Subco under this Agreement; and

 

	
(ix)  

	
taking such other actions and doing such other things as are specifically provided in this Agreement to be carried out by the Trustee.

 

	
(b)  

	
In the exercise of such rights, powers, duties and authorities, the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this Agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust.  Any exercise of such discretionary rights, powers, duties and authorities by the Trustee shall be final, conclusive and binding upon all persons.

 

	
(c)  

	
The Trustee, in exercising its rights, powers, duties and authorities hereunder, shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

 

	
(d)  

	
The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default or breach, which notices shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this Agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein.

 

	
6.2  

	
No Conflict of Interest

 

The Trustee represents to Rockford, Callco and Subco that, at the date of execution and delivery of this Agreement, there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity.  The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 9.  If, notwithstanding the foregoing provisions of this Section 6.2, the Trustee has such a material conflict of interest, the validity and enforceability of this Agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest.  If the Trustee contravenes the foregoing provisions of this Section 6.2, any interested party may apply to the Ontario Superior Court of Justice for an order that the Trustee be replaced as Trustee hereunder.

 

 

14

 

	
6.3  

	
Dealings with Transfer Agents, Registrars, etc.

 

	
(a)  

	
Each of Rockford, Callco and Subco irrevocably authorizes the Trustee, from time to time, to:

 

	
(i)  

	
consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and Rockford Shares; and

 

	
(ii)  

	
requisition, from time to time, from any such registrar or transfer agent, any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this Agreement.

 

	
(b)  

	
Each of Rockford and Callco covenants that it shall supply the Trustee or its transfer agent, as the case may be, in a timely manner with duly executed share certificates for the purpose of completing the exercise from time to time of all rights to acquire Rockford Shares hereunder, under the Exchangeable Share Provisions and under any other security or commitment given to the Beneficiaries pursuant thereto, in each case pursuant to the provisions hereof or of the Exchangeable Share Provisions or otherwise.

 

	
6.4  

	
Books and Records

 

The Trustee shall keep available for inspection by Rockford, Callco and Subco at the Trustee’s principal address correct and complete books and records of account relating to the Trustee’s actions under this Agreement, including all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Exchange Right and the Automatic Exchange Right.  On or before December 31, 2013, and on or before December 31 in every year thereafter, so long as the Special Voting Share is registered in the name of the Trustee, the Trustee shall transmit to Rockford, Callco and Subco a brief report, dated as of the preceding August 31st, with respect to:

 

	
(a)  

	
the property and funds comprising the Trust Estate as of that date;

 

	
(b)  

	
the number of exercises of the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance and delivery by Rockford or Callco of Rockford Shares in connection with the Exchange Right, during the year ended on such August 31st; and

 

	
(c)  

	
any action taken by the Trustee in the performance of its duties under this Agreement which it had not previously reported.

 

	
6.5  

	
Income Tax Returns and Reports

 

The Trustee shall, to the extent necessary, prepare and file, or cause to be prepared and filed, on behalf of the Trust appropriate Canadian income tax returns and any other returns or reports as may be required by applicable laws or pursuant to the rules and regulations of any securities exchange or other trading system through which the Exchangeable Shares are traded.  In connection therewith, the Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers necessary or advisable.  If requested by the Trustee, Rockford shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance.

 

	
6.6  

	
Indemnification Prior to Certain Actions by Trustee

 

	
(a)  

	
The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this Agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Special Voting Share pursuant to Section 4, subject to Section 6.14, and with respect to the Exchange Right and the Automatic Exchange Right pursuant to Section 5.

 

	
(b)  

	
None of the provisions contained in this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid.

 

 

15

 

	
6.7  

	
Action of Beneficiaries

 

No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this Agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security or indemnity referred to in Section 6.6 and the Trustee shall have failed to act within a reasonable time thereafter.  In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or the Voting Rights, the Exchange Right or the Automatic Exchange Right except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries.

 

	
6.8  

	
Reliance Upon Declarations

 

The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon statutory declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such statutory declarations, certificates, opinions or reports comply with the provisions of Section 6.9, if applicable, and with any other applicable provisions of this Agreement.

 

	
6.9  

	
Evidence and Authority to Trustee

 

	
(a)  

	
Rockford, Callco and/or Subco shall furnish to the Trustee evidence of compliance with the conditions provided for in this Agreement relating to any action or step required or permitted to be taken by Rockford, Callco and/or Subco or the Trustee under this Agreement or as a result of any obligation imposed under this Agreement, including in respect of the Voting Rights, the Exchange Right or the Automatic Exchange Right and the taking of any other action to be taken by the Trustee at the request of or on the application of Rockford, Callco and/or Subco promptly if and when:

 

	
(i)  

	
such evidence is required by any other section of this Agreement to be furnished to the Trustee in accordance with the terms of this Section 6.9; or

 

	
(ii)  

	
the Trustee, in the exercise of its rights, powers, duties and authorities under this Agreement, gives Rockford, Callco and/or Subco written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.

 

	
(b)  

	
Such evidence shall consist of an Officer’s Certificate of Rockford, Callco and/or Subco or a statutory declaration made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this Agreement.

 

 

16

 

 

	
(c)  

	
Whenever such evidence relates to a matter other than the Voting Rights or the Exchange Right or the Automatic Exchange Right or the taking of any other action to be taken by the Trustee at the request or on the application of Rockford, Callco and/or Subco, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by such person; provided, however, that if such a report or opinion is furnished by a director, officer or employee of Rockford, Callco and/or Subco it shall be in the form of an Officer’s Certificate or a statutory declaration.

 

	
(d)  

	
Each Officer’s Certificate, statutory declaration, report or opinion furnished to the Trustee as evidence of compliance with a condition provided for in this Agreement shall include a statement by the person giving the evidence:

 

	
(i)  

	
declaring that such person has read and understands the provisions of this Agreement relating to the condition in question;

 

	
(ii)  

	
describing the nature and scope of the examination or investigation upon which such person based the Officer’s Certificate, statutory declaration, report or opinion; and

 

	
(iii)  

	
declaring that such person has made such examination or investigation as such person believes is necessary to enable such person to make the statements or give the opinions contained or expressed therein.

 

	
6.10  

	
Experts, Advisers and Agents

 

The Trustee may:

 

	
(a)  

	
in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by Rockford, Callco and/or Subco or otherwise, and may retain or employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid;

 

	
(b)  

	
employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder; and

 

	
(c)  

	
pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all reasonable disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust.

 

 

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6.11  

	
Investment of Moneys Held by Trustee

 

Unless otherwise provided in this Agreement, any moneys held by or on behalf of the Trustee which under the terms of this Agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee may be invested or reinvested in the name or under the control of the Trustee in securities in which trustees are authorized to invest trust moneys under applicable laws, provided that such securities are stated to mature within two years after their purchase by the Trustee and the Trustee shall so invest such money on the written direction of Subco.  Pending the investment of any money as herein provided, such moneys may be deposited in the name of the Trustee in any chartered bank in Ontario at the rate of interest then current on similar deposits.  The Trustee shall not be held liable for any losses incurred in the investment of any funds as herein provided and all interest on monies held by or on behalf of the Trustee shall be for the account of Subco and held by the Trustee for the benefit of Subco.

 

	
6.12  

	
Trustee Not Required to Give Security

 

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this Agreement or otherwise in respect of the premises.

 

	
6.13  

	
Trustee Not Bound to Act on Request

 

Except as otherwise specifically provided in this Agreement, the Trustee shall not be bound to act in accordance with any direction or request of Rockford, Callco and/or Subco or of the respective directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.  The Trustee shall have the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation or regulation. Further, should the Trustee, in its sole judgment, determine at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation or regulation, then it shall have the right to resign on 10 days written notice to the other parties to this Agreement, provided that (a) the Trustee’s written notice shall describe the circumstances of such non-compliance and (b) if such circumstances are rectified to the Trustee’s satisfaction within such 10 day period, such resignation shall not be effective.

 

 

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6.14  

	
Conflicting Claims

 

	
(a)  

	
If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands.  In so refusing, the Trustee may elect not to exercise any Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands.  The Trustee shall be entitled to continue to refrain from acting and to refuse to act until:

 

	
(i)  

	
the rights of all adverse claimants with respect to the Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands have been adjudicated by a final judgment of a court of competent jurisdiction and all rights of appeal have expired; or

 

	
(ii)  

	
all differences with respect to the Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect.

 

	
(b)  

	
If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands.

 

	
6.15  

	
Acceptance of Trust

 

The Trustee hereby accepts the Trust created and provided for, by and in this Agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth.

 

	
6.16  

	
Third Party Interests

 

Each party to this Agreement hereby represents to the Trustee that any account to be opened by, or interest to be held by the Trustee in connection with this Agreement, for or to the credit of such party, either (a) is not intended to be used by or on behalf of any third party or (b) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Trustee’s prescribed form as to the particulars of such third party.

 

	
6.17  

	
Privacy

 

The parties acknowledge that Canadian federal and/or provincial legislation that addresses the protection of individuals’ personal information (collectively, “Privacy Laws”) applies to obligations and activities under this Agreement.  Despite any other provision of this Agreement, no party shall take or direct any action that would contravene, or cause the others to contravene, applicable Privacy Laws.  The parties shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws.  Specifically, the Trustee agrees (a) to protect personal information and to receive and respond to any privacy complaint or inquiry, (b) to use personal information solely for the purposes of providing its services under or ancillary to this Agreement and not to use it for any purpose except with the consent of or direction from the other parties or the individual involved, (c) not to sell or otherwise improperly disclose personal information to any third party and (d) to employ administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.

 

 

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7.  COMPENSATION

 

	
7.1  

	
Fees and Expenses of the Trustee

 

Rockford, Callco and Subco jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this Agreement and shall reimburse the Trustee for all reasonable expenses (including taxes (other than taxes based on the net income or capital of the Trustee), fees paid to legal counsel and other experts and advisors and agents and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental agency, in each case reasonably incurred by the Trustee in connection with its duties under this Agreement; provided, however, that Rockford, Callco and Subco shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation or any such proceedings in which the Trustee is determined to have acted in bad faith or with fraud, gross negligence, recklessness or wilful misconduct.

 

8.  INDEMNIFICATION AND LIMITATION OF LIABILITY

 

	
8.1  

	
Indemnification of the Trustee

 

	
(a)  

	
Rockford, Callco and Subco jointly and severally agree to indemnify and hold harmless the Trustee and each of its agents appointed and acting in accordance with this Agreement (collectively, the “Indemnified Parties”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without bad faith, fraud, gross negligence, recklessness or wilful misconduct on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this Agreement, or any written or oral instruction delivered to the Trustee by Rockford, Callco or Subco pursuant hereto.

 

	
(b)  

	
The Trustee shall promptly notify Rockford, Callco and Subco of a claim or of any action commenced against any Indemnified Parties promptly after the Trustee or any of the Indemnified Parties shall have received written assertion of such a claim or action or have been served with a summons or other first legal process giving information as to the nature and basis of the claim or action; provided, however, that the omission to so notify Rockford, Callco or Subco shall not relieve Rockford, Callco or Subco of any liability which any of them may have to any Indemnified Party except to the extent that any such delay prejudices the defence of any such claim or action or results in any increase in the liability which Rockford, Callco or Subco have under this indemnity.  Subject to (ii) below, Rockford, Callco and Subco shall be entitled to participate at their own expense in the defence and, if Rockford, Callco and Subco so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim.  The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless (i) the employment of such counsel has been authorized by Rockford, Callco or Subco or (ii) the named parties to any such suit include both the Trustee and Rockford, Callco or Subco and the Trustee shall have been advised by counsel acceptable to Rockford, Callco and Subco that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to Rockford, Callco or Subco and that, in the judgment of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case Rockford, Callco and Subco shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee).  This indemnity shall survive the termination of the Trust and the resignation or removal of the Trustee.

 

 

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8.2  

	
Limitation of Liability

 

The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this Agreement, except to the extent that such loss is attributable to bad faith, fraud, gross negligence, recklessness or wilful misconduct on the part of the Trustee.

 

9.  CHANGE OF TRUSTEE

 

	
9.1  

	
Resignation

 

The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to Rockford, Callco and Subco specifying the date on which it desires to resign, provided that such notice shall not be given less than 30 days before such desired resignation date unless Rockford, Callco and Subco otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee.  Upon receiving such notice of resignation, Rockford, Callco and Subco shall promptly appoint a successor trustee by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee.  Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this Agreement.  If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, Rockford, Callco and Subco shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same.

 

	
9.2  

	
Removal

 

The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than 30 days’ prior notice by written instrument executed by Rockford, Callco and Subco, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee, provided that such removal shall not take effect until the date of acceptance of appointment by the successor trustee.

 

	
9.3  

	
Successor Trustee

 

Any successor trustee appointed as provided under this Agreement shall execute, acknowledge and deliver to Rockford, Callco and Subco and to its predecessor trustee an instrument accepting such appointment.  Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with the like effect as if originally named as trustee in this Agreement.  However, on the written request of Rockford, Callco and Subco or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of this Agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act.  Upon the request of any such successor trustee, Rockford, Callco, Subco and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.  Notwithstanding the foregoing, any corporation to which all or substantially all of the business of the Trustee is transferred shall automatically become the successor trustee without any further act.

 

 

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9.4  

	
Notice of Successor Trustee

 

Upon acceptance of appointment by a successor trustee as provided herein, Rockford, Callco and Subco shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List.  If Rockford, Callco or Subco shall fail to cause such notice to be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of Rockford, Callco and Subco.

 

10.  ROCKFORD SUCCESSORS

 

	
10.1  

	
Certain Requirements in Respect of Combination, etc.

 

So long as any Exchangeable Shares not owned by Rockford or its affiliates are outstanding, Rockford shall not enter into any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, amalgamation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom, provided that it may do so if:

 

	
(a)  

	
such other person or continuing corporation (the “Rockford Successor”), by operation of law, becomes, without more, bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the Rockford Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Rockford Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Rockford under this Agreement; and

 

	
(b)  

	
such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder.

 

	
10.2  

	
Vesting of Powers in Successor

 

Whenever the conditions of Section 10.1 have been duly observed and performed, the parties, if required by Section 10.1, shall execute and deliver the supplemental trust agreement provided for in Section 11 and thereupon the Rockford Successor and such other person that may then be the issuer of the Rockford Shares shall possess and from time to time may exercise each and every right and power of Rockford under this Agreement in the name of Rockford or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of Rockford or any officers of Rockford may be done and performed with like force and effect by the directors or officers of such Rockford Successor.

 

	
10.3  

	
Wholly-Owned Subsidiaries

 

Nothing herein shall be construed as preventing (a) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Rockford with or into Rockford, (b) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Rockford, provided that all of the assets of such subsidiary are transferred to Rockford or another wholly-owned direct or indirect subsidiary of Rockford, (c) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Rockford among the shareholders of such subsidiary for the purpose of winding up its affairs and (d) any such transactions which are expressly permitted by this Section 10.

 

 

22

 

	
10.4  

	
Successor Transactions

 

Notwithstanding the foregoing provisions of this Section 10, in the event of a Rockford Control Transaction:

 

	
(a)  

	
in which Rockford merges or amalgamates with, or in which all or substantially all of the then outstanding Rockford Shares are acquired by, one or more other corporations to which Rockford is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the Income Tax Act (Canada) (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof);

 

	
(b)  

	
which does not result in an acceleration of the Redemption Date in accordance with paragraph (ii) of that definition; and

 

	
(c)  

	
in which all or substantially all of the then outstanding Rockford Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) of another corporation (the “Other Corporation”) that, immediately after such Rockford Control Transaction, owns or controls, directly or indirectly, Rockford,

 

then, (i) all references herein to “Rockford” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Rockford Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments, if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions or the exchange of such shares pursuant to this Agreement immediately subsequent to the Rockford Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions or the exchange of such shares pursuant to this Agreement had occurred immediately prior to the Rockford Control Transaction and the Rockford Control Transaction was completed) without any need to amend the terms and conditions of this Agreement and without any further action required and (ii) Rockford shall cause the Other Corporation to deposit one or more voting securities of such Other Corporation to allow the Beneficiaries to exercise voting rights in respect of the Other Corporation substantially similar to those provided for in this Agreement.

 

11.  AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS

 

	
11.1  

	
Amendments, Modifications, etc.

 

Subject to Section 11.2, this Agreement may not be amended or modified except by an agreement in writing executed by Rockford, Callco, Subco and the Trustee and approved by the Beneficiaries in accordance with Section 11(b) of the Exchangeable Share Provisions.

 

	
11.2  

	
Permitted Amendments

 

Notwithstanding the provisions of Section 11.1, the parties to this Agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this Agreement for the purposes of:

 

	
(a)  

	
adding to the covenants of any or all parties hereto for the protection of the Beneficiaries if the board of directors of each of Rockford, Callco and Subco shall be of the good faith opinion and the Trustee, acting on the advice of counsel, shall be of the opinion that such additions will not be prejudicial in any material respect to the rights or interests of the Beneficiaries as a whole;

 

	
(b)  

	
evidencing the succession of Rockford Successors and the covenants of and obligations assumed by each such Rockford Successor in accordance with the provisions of Section 10;

 

	
(c)  

	
making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions arising hereunder which, in the good faith opinion of the board of directors of each of Rockford, Callco and Subco and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries as a whole, it may be expedient to make, provided that each such board of directors and the Trustee shall be of the good faith opinion, after consultation with counsel, that such amendments or modifications will not be prejudicial in any material respect to the rights or interests of the Beneficiaries as a whole; or

 

	
(d)  

	
making such changes or corrections which, on the advice of counsel to Rockford, Callco, Subco and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that each such board of directors and the Trustee shall be of the good faith opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the Beneficiaries as a whole.

 

 

23

 

	
11.3  

	
Meeting to Consider Amendments

 

Subco, at the request of Rockford, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto.  Any such meeting or meetings shall be called and held in accordance with the articles and by-laws of Subco, the Exchangeable Share Provisions and all applicable laws.

 

	
11.4  

	
Changes in Capital of Rockford and Subco

 

At all times after the occurrence of any event contemplated pursuant to Section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either Rockford Shares or the Exchangeable Shares or both are in any way changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which Rockford Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications.

 

	
11.5  

	
Execution of Supplemental Trust Agreements

 

Notwithstanding the provisions of Section 11.1, from time to time Rockford, Callco and Subco (in each case, when authorized by a resolution of its board of directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes:

 

	
(a)  

	
evidencing the succession of Rockford Successors and the covenants of and obligations assumed by each such Rockford Successor in accordance with the provisions of Section 10 and the successors of the Trustee or any successor trustee in accordance with the provisions of Section 9;

 

	
(b)  

	
making any additions to, deletions from or alterations of the provisions of this Agreement or the Voting Rights, the Exchange Right or the Automatic Exchange Right which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to Rockford, Callco, Subco, the Trustee or this Agreement; and

 

	
(c)  

	
for any other purposes not inconsistent with the provisions of this Agreement, including to make or evidence any amendment or modification to this Agreement as contemplated hereby; provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby.

 

 

24

 

12.  TERMINATION

 

	
12.1  

	
Term

 

The Trust created by this Agreement shall continue until the earliest to occur of the following events:

 

	
(a)  

	
no outstanding Exchangeable Shares are held by a Beneficiary; and

 

	
(b)  

	
each of Rockford, Callco and Subco elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 11(b) of the Exchangeable Share Provisions.

 

	
12.2  

	
Survival of Agreement

 

This Agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Section 7 and Section 8 shall survive any such termination of this Agreement.

 

13.  GENERAL

 

	
13.1  

	
Severability

 

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

 

	
13.2  

	
Enurement

 

This Agreement shall be binding upon and enure to the benefit of the parties and their respective successors and assigns and, subject to the terms hereof, to the benefit of the Beneficiaries.

 

 

25

 

	
13.3  

	
Notices to Parties

 

Any notice and other communications required or permitted to be given pursuant to this Agreement shall be sufficiently given if delivered in person or if emailed with electronic confirmation of delivery to the parties at the following addresses:

 

	
(a)  

	
In the case of Rockford, Callco or Subco to the following address:

 

Rockford Minerals Inc.

369 Shuter Street

Toronto, ON M5A 1X2

 

Attention:        Gregory Neely

Email:             greg@forgemedia.ca

 

	
(b)  

	
In the case of Trustee to:

 

John Marmora

1057 Parkinson Road, Unit 9

Woodstock, ON N4S 7W3

 

Email:             jmarmora@tropicspatan.com

 

or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.

 

	
13.4  

	
Notice to Beneficiaries

 

Any notice, request or other communication to be given to a Beneficiary shall be in writing and shall be valid and effective if given by mail (postage pre-paid or by delivery, to the address of the holder recorded in the securities register of Subco or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder.  Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the fifth day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery.  The accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares, or any defect in such notice, shall not invalidate or otherwise alter or affect any action or proceeding to be taken pursuant thereto.

 

	
13.5  

	
Counterparts

 

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

 

	
13.6  

	
Jurisdiction

 

This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

	
13.7  

	
Attornment

 

Each of Rockford, Callco, Subco and the Trustee agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the non-exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgment of the said courts and not to seek, and hereby waives, any review of the merits of any such judgment by the courts of any other jurisdiction, and Rockford hereby appoints Subco at its registered office in the Province of Ontario as attorney for service of process.

 

 

26

 

 

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

 

ROCKFORD MINERALS INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

1896431 ONTARIO INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

 

1896432 ONTARIO INC.

 

Per:      /s/ Gregory Neely

Name:  Gregory Neely

Title:     President

 

 

/s/ John Marmora

JOHN MARMORA

 

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