Document:

UFG Joinder Agreement

Exhibit 10.1

ASSIGNMENT, JOINDER, ASSUMPTION, AND RELEASE AGREEMENT

THIS ASSIGNMENT, JOINDER, ASSUMPTION, AND RELEASE AGREEMENT (this “Joinder Agreement”) is made and entered into as of this 4th day of June, 2013, by and among

		
	(i)
	UNITED FIRE & CASUALTY COMPANY, an Iowa corporation, and its successors and permitted assigns (“United Fire”);

		
	(ii)
	UNITED FIRE GROUP, INC., an Iowa corporation, and its successors and permitted assigns (“Holding”);

		
	(iii)
	the LENDERS party hereto;

		
	(iv)
	KEYBANK NATIONAL ASSOCIATION, a national banking association, in its capacity as Administrative Agent; and

		
	(v)
	KEYBANK NATIONAL ASSOCIATION, a national banking association, in its capacities as the Swingline Lender and as a Letter of Credit Issuer.

Recitals:

A.    United Fire and the other parties hereto (other than Holding) are the parties to that certain Credit Agreement dated as of December 22, 2011, as amended by a First Amendment dated January 26, 2012 and a Second Amendment dated December 21, 2012 (the “Credit Agreement”).

B.    The Permitted Reorganization (as this and other capitalized terms used herein and not otherwise defined herein are defined in the Credit Agreement) was consummated on January 26, 2012.

C.    Holding owns 100% of the issued and outstanding Equity Interests of United Fire.

D.    As of the close of business, June 4, 2013, the aggregate unpaid principal balance of the Loans was $-0- and the aggregate LC Exposure was $-0-.

E.    On June 4, 2013 United Fire delivered to the Administrative Agent written notice of the Holding Assumption Transaction, which notice was accompanied by the respective pro forma balance sheets of Holding and United Fire immediately prior to the Holding Assumption Transaction and immediately after giving effect thereto.  Such notice proposes that the effective date of the Holding Assumption Transaction occur on the date hereof.

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F.    It is a requirement of the Credit Agreement that, as one of the Holding Assumption Conditions, United Fire assign to Holding, and Holding accept and assume, all of United Fire's rights and all of its Debt and other obligations as “Borrower” under and pursuant to the Credit Agreement and each and every other Loan Document, including, without limitation, each promissory note issued by United Fire pursuant to Section 2.09(e) of the Credit Agreement.

Agreements:

NOW THEREFORE, in consideration of the foregoing Recitals, of the agreements hereinafter set forth, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Joinder Agreement hereby agree as follows:

1.    Incorporation by Reference.  Each of United Fire and Holding represents and warrants to each of the Lender Parties the accuracy in all material respects of the statements made in all of the foregoing Recitals, which are hereby incorporated by reference into this Joinder Agreement as if fully restated herein.

2.    Assignment and Assumption of Credit Agreement Obligations.  On the Assumption Effective Date (defined below), and subject to the satisfaction of the conditions set forth in Paragraph 6, below (as evidenced by the Administrative Agent's issuance of the Lender Confirmation, defined below), United Fire hereby assigns and transfers to Holding, and Holding hereby accepts, joins in and assumes and agrees to pay and perform, all of the Debt, covenants, representations, warranties and other obligations of United Fire as the “Borrower” under and pursuant to the Credit Agreement and of United Fire under and pursuant to each of the other Loan Documents to which United Fire is a party or by which United Fire or any of its property is bound, including, without limitation:

		
	(i)
	the Promissory Note dated December 22, 2011, in the face amount of $35,000,000 made by United Fire to the order of KeyBank National Association;

		
	(ii)
	the Promissory Note dated December 22, 2011, in the face amount of $30,000,000 made by United Fire to the order of Bankers Trust Company;

		
	(iii)
	the Promissory Note dated December 22, 2011, in the face amount of $25,000,000 made by United Fire to the order of The Northern Trust Company; 

		
	(i)
	the Promissory Note dated December 22, 2011, in the face amount of $10,000,000 made by United Fire to the order of Cedar Rapids Bank and Trust Company; and

		
	(ii)
	the Swingline Note dated December 22, 2011, in the face amount of $5,000,000 made by United Fire to the order of KeyBank National Association.

The foregoing Promissory Notes and Swingline Note are hereinafter referred to collectively as the “Current Notes.”  After giving effect to the foregoing and upon the Administrative Agent's issuance of the Lender Confirmation, Holding shall be and become the “Borrower” and United 

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Fire shall cease to be the “Borrower”, in each case under and for all purposes of the Credit Agreement and the other Loan Documents.

3.    Conforming Amendments to the Loan Documents.  Each of United Fire, Holding, and the Lender Parties agrees that on the Assumption Effective Date, and subject to the satisfaction of the conditions set forth in Paragraph 6, below (as evidenced by the Administrative Agent's issuance of the Lender Confirmation):

		
	(i)
	this Joinder Agreement shall be deemed to be a Loan Document; and

		
	(ii)
	the amended and restated Schedule 3.06 to the Credit Agreement attached hereto as Attachment 1 is hereby substituted for the Schedule 3.06 heretofore attached to the Credit Agreement.

4.    Release.  Each of the Lender Parties agrees that on the Assumption Effective Date, and subject to the satisfaction of the conditions set forth in Paragraph 6, below (as evidenced by the Administrative Agent's issuance of the Lender Confirmation), and only following the effectiveness of the assumptions by Holding contemplated by Paragraph 2, above:

(a)    United Fire shall be released from all Debt and all other obligations under and pursuant to the Credit Agreement, the Current Notes and the other Loan Documents, shall cease to be a party thereto or have any further liabilities or obligations thereunder of any kind or nature;

(b)    the Continuing Guaranty of Payment dated February 1, 2012 made by Holding for the benefit of the Lender Parties shall be terminated, cancelled and released, and shall be of no further force or effect; and

(c)    to confirm in writing the releases described in clauses (a) and (b), above, the Administrative Agent shall execute and deliver to (i) United Fire a release of its Debt and other obligations under and pursuant to the Credit Agreement, the Current Notes and the other Loan Documents, as provided in Paragraph 6, below and (ii) Holding a release of its Debt and other obligations under and pursuant to the above-described Continuing Guaranty of Payment dated February 1, 2012.

On and after the Assumption Effective Date and following the effectiveness of the assumptions by Holding as provided in this Joinder Agreement, the Lender Parties agree that they shall look solely to Holding for the payment and performance of any and all of the Debt, covenants, representations, warranties and other obligations of United Fire as the “Borrower” under and pursuant to the Credit Agreement and the other Loan Documents

5.    Representations, Warranties and Covenant.  In connection with such assignment, acceptance, joinder, assumption, and release:

(a)    each of United Fire and Holding hereby jointly and severally represents and warrants to each of the Lender Parties that, as of the Assumption Effective Date, the structural 

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chart attached as Attachment 2 hereto accurately represents the names, entity types, jurisdiction of formation and percentage of ownership of the Equity Interests of each of the Subsidiaries of Holding; 

(b)     each of United Fire and Holding hereby jointly and severally confirms and reaffirms to each of the Lender Parties each and all of the representations and warranties contained in Article 3 of the Credit Agreement as of the Assumption Effective Date and after giving effect to the joinder and assumption by Holding, the release of United Fire and the conforming amendments to the Credit Agreement contemplated by Paragraph 3 of this Joinder Agreement (except to the extent any such representation or warranty speaks only as of an earlier date, in which case such representation or warranty is confirmed and reaffirmed only as of such earlier date);

(d)    each of United Fire and Holding hereby jointly and severally represents and warrants to each of the Lender Parties that each of the components of the Holding Assumption Transaction, including, without limitation, the assignment, acceptance, joinder and assumption contemplated hereby, will occur in compliance in all material respects with all applicable laws, including without limitation applicable securities laws and Applicable Insurance Codes; and

(e)    each of United Fire and Holding hereby jointly and severally represents and warrants to each of the Lender Parties that all consents and approvals that are necessary for each of the components of the Holding Assumption Transaction, including, without limitation, the assignment, acceptance, joinder and assumption contemplated hereby, have been obtained.

6.    Agreement Effective Date; Conditions Precedent.  The assignment, acceptance, joinder, assumption, and release provided for under and pursuant to this Joinder Agreement shall not be effective unless and until the date on which United Fire and Holding have satisfied all of the following conditions precedent (such date of effectiveness being the “Assumption Effective Date”):

(a)    Officer's Certificates.  On the Assumption Effective Date and after giving effect to the provisions of this Joinder Agreement, there shall exist no Default, and the President, a Vice President or a Financial Officer of each of United Fire and Holding shall have delivered to the Administrative Agent written confirmation thereof dated as of the Assumption Effective Date, which certificates shall also confirm such of the other Holding Assumption Conditions as the Administrative Agent shall reasonably request.

(b)    Corporate Authorizations.  Each of United Fire and Holding shall have delivered to the Administrative Agent a copy, certified by its Secretary or Assistant Secretary, of its respective directors' resolutions authorizing the execution and delivery of this Joinder Agreement and the other Loan Documents contemplated by this Paragraph 6.

(c)    Good Standing Certificates.  Holding shall have delivered to the Administrative Agent a certificate of good standing for Holding, certified by the office of the Secretary of State of Iowa, and certificates of qualification for Holding to transact business as a foreign corporation in every other state where its failure so to qualify could have a Material Adverse Effect.

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(d)    Formation and Governance Documents.  Holding shall have delivered to the Administrative Agent (i) a copy of the articles of incorporation of Holding, including any amendments or restatements thereof, certified as of a recent date by the Secretary of State of Iowa, and (ii) a copy of the by-laws of Holding, certified as true, correct and in full force and effect by the Secretary or an Assistant Secretary of Holding.

(e)    Promissory Notes and Swingline Note.  Holding shall have executed and delivered to the Administrative Agent, for the benefit of each of the Lenders a Promissory Note, in favor of each of such Lender, in the principal amount of such Lender's Commitment and, for the account of the Swingline Lender, a Swingline Note, in each case otherwise substantially in the form of the applicable Current Note (collectively, the “Replacement Notes”).

(f)    Statutory Surplus of Qualifying Subsidiaries.  Holding shall have delivered to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent that as of the Fiscal Quarter of United Fire most recently ended prior to the Holding Assumption Transaction, Qualifying Subsidiaries had, on a combined basis, Statutory Surplus of not less than $200,000,000 in the aggregate.

(g)    Legal Opinions.  United Fire and Holding shall have caused the delivery to the Administrative Agent of the favorable opinion or favorable opinions of counsel for United Fire and Holding, all in form and substance reasonably satisfactory to the Administrative Agent.

(h)    Required Ratings.  The Administrative Agent shall have received evidence reasonably satisfactory to it that the Best Holding Rating immediately following the Holding Assumption Transaction shall not be lower than the Required Rating.

(i)    Legal Matters.  All legal matters incident to this Joinder Agreement and the consummation of the transactions contemplated hereby shall be reasonably satisfactory to Squire Sanders (US) LLP, Cleveland, Ohio, special counsel to the Administrative Agent (the “Special Counsel”).

Upon the Administrative Agent's agreement that each and all of the foregoing conditions have been satisfied to its reasonable satisfaction, the Administrative Agent will issue to United Fire and Holding its written confirmation of that fact in the form of Attachment 3 hereto (the “Lender Confirmation”) and will deliver to United Fire its executed Release in the form of Attachment 4 hereto.

7.    Other Loan Documents; Delivery of Replacement Notes.  (a)  Any reference in the other Loan Documents to the Credit Agreement shall, from and after the Assumption Effective Date, be deemed to refer to the Credit Agreement, as assumed and modified by this Joinder Agreement; and any reference in the Loan Documents to the notes issued pursuant to Section 2.09(e) of the Credit Agreement shall, from and after the Assumption Effective Date, be deemed to refer to the Replacement Notes (or any subsequent replacements thereof).

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(b)    Upon the Administrative Agent's issuance of the Lender Confirmation the Administrative Agent is hereby authorized by Holding to deliver to the appropriate Lender its respective Replacement Note, subject to such Lender's delivery to the Administrative Agent for cancellation such Lender's Current Note.

8.    Confirmation of Debt; Absence of Claims; Return of Notes.  United Fire hereby affirms as of the date hereof (prior to giving effect to the Holding Assumption Transaction), and Holding hereby affirms as of the Assumption Effective Date (after giving effect to the Holding Assumption Transaction), all of its respective Debt and other obligations to each of the Lender Parties under and pursuant to the Credit Agreement and each of the other Loan Documents and that such Debt and other obligations are owed to each of the Lender Parties according to their respective terms.  United Fire hereby affirms as of the date hereof (prior to giving effect to the Holding Assumption Transaction), and Holding hereby affirms as of the Assumption Effective Date (after giving effect to the Holding Assumption Transaction), and each further acknowledges and agrees, that there are no claims or defenses to the enforcement by the Lender Parties of the Debt and other obligations of, as the case may be, United Fire or Holding to each of them under and pursuant to the Credit Agreement or any of the other Loan Documents.  Each Lender agrees to return to United Fire promptly following the Assumption Effective Date the Current Note issued by United Fire to it on the Effective Date pursuant to Section 2.09(e) of the Credit Agreement.

9.    Agent's Expense.  Holding agrees to reimburse the Administrative Agent promptly for its reasonable and invoiced costs and expenses incurred in connection with this Joinder Agreement and the other Loan Documents delivered hereunder and the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and expenses of the Special Counsel.

10.    No Other Modifications; Same Indebtedness.  Except as expressly provided in this Joinder Agreement and the Replacement Notes, all of the terms and conditions of the Credit Agreement and the other Loan Documents remain unchanged and in full force and effect.  The joinder, assumption, amendments and release effected by this Joinder Agreement and by the other documents contemplated hereby shall not be deemed to provide for or effect a repayment and re-advance of any of the Loans now outstanding, it being the intention of all of United Fire, Holding, and the Lender Parties hereby that the Debt owing under the Credit Agreement, as assumed and amended by this Joinder Agreement, and the Replacement Notes be and hereby is the same Debt as that owing under the Credit Agreement and the Current Notes immediately prior to the effectiveness hereof.

11.    Governing Law; Binding Effect.  This Joinder Agreement shall be governed by and construed in accordance with the laws of the State of New York and shall be binding upon and inure to the benefit of the United Fire, Holding, the Lenders, the Administrative Agent and the Letter of Credit Issuer and their respective successors and assigns.

12.    Execution in Counterparts.  This Joinder Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which 

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when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

13.    Waiver of Jury Trial.  EACH PARTY HERETO 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 JOINDER AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY TRANSACTION 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 PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 JOINDER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[No additional provisions are on this page; the page next following is the signature.]

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IN WITNESS WHEREOF, United Fire, Holding, the Lenders, the Administrative Agent, the Swingline Lender and the Letter of Credit Issuer have hereunto set their hands as of the date first above written. 

BORROWER PARTIES:    ADMINISTRATIVE AGENT:

		
	UNITED FIRE & CASUALTY COMPANY
	KEYBANK NATIONAL ASSOCIATION,

as Administrative Agent

By:  /s/ Dianne M. Lyons        By:  /s/ James Cribbet            
Dianne M. Lyons, Vice President             James Cribbet, Vice President
Chief Financial Officer

UNITED FIRE GROUP, INC.

By:  /s/ Dianne M. Lyons    
Dianne M. Lyons, Vice President
Chief Financial Officer
 

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LENDERS:

KEYBANK NATIONAL ASSOCIATION, as Lender, Swingline Lender and Letter of Credit Issuer

By:  /s/ James Cribbet                
James Cribbet, Vice President

BANKERS TRUST COMPANY, as Lender

By:  /s/ Patrick Deignan            
Patrick Deignan, President

THE NORTHERN TRUST COMPANY, as Lender

By:  /s/ Karen Czys                
Karen Czys, Second Vice President

CEDAR RAPIDS BANK AND TRUST
COMPANY, as Lender

By:  /s/ Patricia L. Ellison            
Patricia L. Ellison, Senior Vice President

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ATTACHMENT 1
SCHEDULE 3.06

PART A.    UNITED FIRE GROUP, INC.'S SUBSIDIARIES

	
			
	Subsidiary Name
	State of Incorporation
	Material Subsidiary

	United Fire & Casualty Company
	Iowa
	Yes

	United Life Insurance Company
	Iowa
	Yes

	Addison Insurance Company
	Iowa
	No

	American Indemnity Financial Corporation
	Delaware
	No

	Texas General Indemnity Corporation
	Colorado
	No

	Lafayette Insurance Company
	Louisiana
	No

	Mercer Insurance Group, Inc.
	Pennsylvania
	Yes

	Financial Pacific Insurance Group, Inc.
	Delaware
	Yes

	Financial Pacific Insurance Company
	California
	Yes

	Financial Pacific Insurance Agency
	California
	No

	Mercer Insurance Company
	Pennsylvania
	Yes

	Mercer Insurance Company of New Jersey Inc.
	New Jersey
	No

	Franklin Insurance Company
	Pennsylvania
	No

	BICUS Services Corporation
	Pennsylvania
	No

	United Fire & Indemnity Company
	Texas
	No

	United Fire Lloyds
	Texas
	No

PART B.    OTHER INVESTMENTS PERMITTED UNDER SECTION 6.04.

NONEex1029.htm

EXHIBIT 10.29

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”), is entered into as of the 20th   day of May 2013, by and between John Wiley & Sons, Inc., a New York corporation, with offices at 111 River Street, Hoboken, New Jersey 07030 (hereinafter referred to as the “Company”), and John A. Kritzmacher presently residing at,XXXXXXX (hereinafter referred to as “Executive”).

 

WHEREAS, the executive will be employed as Executive Vice President and Chief Financial Officer (“CFO”) of the Company, and Executive desires to serve the Company in such capacity.

 

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.           Employment.  The Company agrees to employ Executive and Executive agrees to be employed by the Company for the Period of Employment (as defined below) and upon the terms and conditions provided in this Agreement.

 

2.           Position and Responsibilities.

 

(a)           During the Period of Employment, Executive will first serve as Senior Advisor for the period June 17, 2013 until June 30, 2013, and will then serve as CFO of the Company, and subject to the direction of the Company’s Chief Executive Officer (“CEO”) will perform such duties and exercise such supervision with regard to the business of the Company as are associated with such position, as well as such other duties as may be prescribed from time to time by the CEO.  Executive shall be subject to and shall observe and carry out such reasonable rules, regulations, policies, directions and restrictions consistent with the duties to be performed by Executive hereunder as the Company shall from time to time establish.

 

(b)           Executive will, during the Period of Employment, devote Executive’s full business time and attention to the faithful and competent performance of services for the Company.  Executive hereby represents and warrants to the Company that Executive has no obligations under any existing employment or service agreement and that Executive’s performance of the services required of Executive hereunder will not conflict with any other existing obligations or commitments.  Nothing in this Agreement shall preclude Executive from engaging, consistent with Executive’s duties and responsibilities hereunder, in charitable and community affairs or from serving on the board of directors of any corporate or other business entity on which he is serving on the date hereof or any other entity that shall hereafter be approved by the CEO and/or the Board of Directors of the Company.

 

(c)           Executive shall perform the duties contemplated hereunder at the principal executive office of the Company and at such other locations as may be reasonably necessary to the performance of such duties, and Executive shall do such traveling as may be reasonably required of Executive in the performance of such duties.

 

3.           Period of Employment.  The period of Executive’s employment under this Agreement (the “Period of Employment”) will begin on June 17, 2013  (the “Commencement Date”), and end on the second anniversary thereof, subject to earlier termination and further renewal as provided in this Agreement.  Executive’s Period of Employment shall automatically renew for subsequent two year periods, subject to the terms of this Agreement, unless either party gives written notice 90 days or more prior to the expiration of the then existing Period of Employment of Executive’s or the Company’s decision not to renew.  A decision by the Company not to renew other than as a result of Executive’s death or Disability (as defined below), and other than in circumstances which would give rise to a Termination for Cause (as defined below) shall be treated as a Without Cause Termination (as defined below), and so governed by the provisions of Section 9 hereof.

 

4.           Compensation and Benefits.  For all services rendered by Executive pursuant to this Agreement during the Period of Employment, including services as an executive, officer, director or committee member of the Company or any of its subsidiaries or affiliates, Executive will be compensated as follows:

 

(a)           Base Salary.  The Company will pay Executive a fixed base salary (“Base Salary”) of not less than $600,000 per annum.  Executive will be eligible to receive annual increases as the Company’s Board of Directors (the “Board”) deems appropriate, in accordance with the Company’s customary procedures regarding the salaries of senior officers.  Base Salary will be payable according to the customary payroll practices of the Company but in no event less frequently than once each month.

 

(b)           Executive Compensation Plans.  Executive shall be eligible to participate in all of the Company’s executive compensation plans in effect on the date hereof in which any senior executive of the Company is eligible to participate, including but not limited to the Company’s Executive Annual Incentive Plan (the “EAIP”), the Company’s Annual Strategic Milestones Incentive Plan, and the Company’s Long Term Incentive Plan (the “LTIP”), or equivalents, as such plans are amended or restated from time to time, for so long as such plans remain in effect.  Nothing in this Agreement shall require the Company or its affiliates to establish, maintain or continue any executive compensation plan or restrict the right of the Company or any of its affiliates to amend, modify or terminate any such plan.

 

(c)           Participation in Benefit Plans.  To the extent that Executive’s participation or coverage is not duplicative of that provided under an executive compensation plan or arrangement in which Executive is eligible to participate, the Company shall afford Executive with an opportunity to participate in any health care, dental, disability insurance, life insurance,  savings, deferred compensation and any other employee benefits plans, policies or arrangements which the Company maintains for its employees in accordance with the written terms of such plans, policies or arrangements.  Nothing in this Agreement shall require the Company or its affiliates to establish, maintain or continue any benefit plans, policies or arrangements or restrict the right of the Company or any of its affiliates to amend, modify or terminate any such benefit plan, policy or arrangement.

 

(d)           Paid Time Off, Holidays or Temporary Leave. Executive shall be entitled to take up to 29 paid time off days per calendar year, or such greater amount, if any, as provided in the policies of the Company then applicable to Executive, without loss or diminution of compensation.  Such planned paid time off shall be taken at such time or times consistent with the needs of the Company’s business.  Executive shall further be entitled to the number of paid holidays, and leaves for illness or temporary disability in accordance with the Company’s policies as such policies may be amended from time to time or terminated in the Company’s sole discretion.

 

5.           Other Offices.  Executive agrees to serve without additional compensation, if elected or appointed thereto, as an officer or director of any of the Company’s subsidiaries or affiliates or as any other officer of the Company.

 

6.           Business Expenses.  The Company will reimburse Executive for all reasonable travel and other expenses incurred by Executive in connection with the performance of Executive’s duties and obligations under this Agreement.  Executive will comply with such limitations and reporting requirements with respect to expenses as may be established by Company from time to time and will promptly provide all appropriate and requested documentation in connection with such expenses.

 

7.           Disability.  If Executive becomes Disabled (as defined below) during the Period of Employment, the Company may, in its discretion, hire a permanent replacement to fill the position previously held and to perform the duties previously performed by Executive, provided, however, the Company shall continue Executive’s employment with the Company on an inactive basis to the extent necessary to continue to maintain Executive’s eligibility for benefits available under the Company’s Group Long-Term Disability Insurance Plan or under any generally similar plan then in effect (the “LTD Plan”) and such other employee benefit plans that are generally available to employees receiving benefits under the LTD Plan, in accordance with the terms of  such plan(s) as they may be amended from time to time.  For purposes of this Agreement, “Disabled” or “Disability” means Executive’s inability, because of mental or physical illness or incapacity, whether total or partial, to perform one or more of the primary duties of Executive’s employment, with or without reasonable accommodation, for a length of time that the Company determines is sufficient to satisfy such obligations as it may have under the Family and Medical Leave Act (“FMLA”) and such “reasonable accommodation” obligations it may have under federal, state or local disability laws.  Upon Executive’s entitlement to receive benefits available under the LTD Plan and such other benefits generally available to employees receiving benefits under the LTD Plan, the Company’s obligation to provide Executive compensation and other benefits pursuant to Section 4 hereof shall cease.  In the event that Executive ceases to be Disabled and Executive is able to return to work and Executive’s former position is not open, the Company will endeavor to find, and will work interactively with Executive to find, a position of comparable responsibility, compensation and benefits and to reinstate Executive to such position, if such a position is available at the conclusion of Executive’s disability leave of absence.  Prior to restoration of Executive to active employment with the Company, Executive shall cooperate in obtaining all fitness for duty certifications from Executive’s treating physician(s) and such other physicians as the Company may request in accordance with the FMLA and federal, state and local disability and worker’s compensation laws.  Within fifteen (15) days of receipt of all medical certification(s) requested by the Company, if the Company does not restore Executive to active employment with the Company, then at that time Executive’s employment with the Company will be deemed to have terminated. Under the policy currently in effect for employees of the Company, such termination will be treated as a Without Cause Termination in accordance with Paragraph 9(a) below, provided the Executive has not then attained the age of 65.  Nothing in this Agreement shall require the Company to continue such policy, and such termination shall be treated in accordance with the policy applicable at the time the Executive becomes disabled.

 

8.           Death.  In the event of the death of Executive during the Period of Employment, the Period of Employment will end and the Company’s obligation to make payments under this Agreement will cease as of the date of death, except that the Company will pay Executive’s beneficiary designated for purposes of Executive’s life insurance provided by the Company or absent such designation to Executive’s estate Executive’s Base Salary until the end of the month in which Executive dies, and except for any rights and benefits of Executive under the benefit plans and programs of the Company,  as determined in accordance with the terms and provisions of such plans and programs.  The payout under the EAIP, or equivalent, for the fiscal year in which Executive’s death occurs, shall be annualized and paid at the normal time to Executive’s estate pro rata to the date of death.  The payment, in shares, for any executive long term incentive plan established by the Company, the plan cycle of which ends within 12 months after the date of Executive’s death, shall be paid based on actual performance within 2 1⁄2 months after the end of the plan period to Executive’s estate.

 

9.           Effect of Termination of Employment.

 

(a)           Without Cause Termination and Constructive Discharge Absent a Change of Control.  If Executive’s employment terminates during the Period of Employment prior to the occurrence of a Change of Control (as defined below) due to a Without Cause Termination (as defined below) or a Constructive Discharge (as defined below), subject to Executive executing a general release of claims as more fully described in Section 9(f) hereof, then the Company will pay or provide Executive (or Executive’s surviving spouse, estate or personal representative, as applicable) the following payments and/or benefits upon such event:  (i) Base Salary earned but unpaid as of the effective date of such termination of employment; (ii) a lump sum payment equal to the Severance Pay Amount (as defined below);  (iii) coverage during the Benefits Continuation Period (as defined below) under the following employee benefit plans or provisions for comparable benefits outside such plans, but only to the extent comparable coverage is not provided by any new employer, (x) the Company’s Group Health Insurance Program, (y) the LTD Plan (as provided under such plan, Executive shall be required to pay the premium), and (z) the Company’s Group Life and Accidental Death and Dismemberment Insurance (at the levels in effect at the date of termination of employment), and (iv) accelerated vesting of the 12,500 shares of Class A restricted stock granted to Executive as part of the Offer of Employment to Executive on May 17, 2013, but not yet vested on the effective date of termination of employment.  If coverage under clause (iii) cannot be provided on a tax-advantaged basis under the Company’s employee benefit programs, the Company will make a supplemental lump-sum payment to the Executive such that his after-tax cost of coverage will be no greater than the cost for such coverage to a similarly-situated employee under the respective program.  Any increase in premium cost resulting from a change in the Executive’s coverage election shall be borne by the Executive.  In order to receive such continued medical and dental coverage, the Executive must be eligible for and elect continuation coverage under “COBRA” under the terms of the applicable program for the first 18 months of such coverage.

 

(b)           Without Cause Termination and Constructive Discharge Following a Change of Control.  If Executive’s employment terminates during the Period of Employment due to a Without Cause Termination or a Constructive Discharge within the twenty-four (24) month period following a Change of Control, then, subject to Executive executing a general release of claims as more fully described in Section 9(f) hereof, in addition to the payments and benefits described in 9(a) hereof, the Company will provide Executive (or Executive’s surviving spouse, estate or personal representative, as applicable) the following payments and/or benefits upon such event:  (i) the “target incentive amount” under any executive annual incentive plan established by the Company for the fiscal year in which Executive’s termination of employment occurs, prorated to reflect Executive’s partial year of employment; (ii) accelerated vesting of all “target” restricted performance shares awarded to Executive under any executive long term incentive plan established by the Company outstanding on the date of Change in Control but not yet vested on the date of termination of employment, in cases where the acquiring company is not a publicly traded company or the acquiring company does not assume or replace the outstanding equity; and (iii) accelerated vesting of all other stock options and restricted stock granted to Executive under any executive long term incentive plan established by the Company outstanding on the date of the Change in Control but not yet vested on the effective date of termination of employment, in cases where the acquiring company is not a publicly traded company or the acquiring company does not assume or replace the outstanding equity.

 

(c)           Without Cause Termination Following Change of CEO.   Notwithstanding the foregoing, in the event that during the Period of Employment the Company shall hire a new CEO and the new CEO terminates Executive’s employment in circumstances constituting a Without Cause Termination (as defined below) or Executive incurs a Constructive Discharge during the new CEO’s first  eighteen (18) months of employment, and in circumstances in which no Change of Control (as defined below) has occurred, then, subject to Executive executing a general release of claims as more fully described in Section 9(f) hereof, in addition to the payments and benefits described in 9(a) hereof, the Company will provide Executive the following payments and/or benefits upon such event:  (i)  the actual incentive amount earned by Executive under any executive annual incentive plan established by the Company for the fiscal year in which Executive’s termination occurs, prorated to reflect Executive’s partial year of employment; (ii) accelerated vesting of all restricted performance shares earned by Executive under any executive long term incentive plan established by the Company for the plan cycle which ends within 12 months after the effective date of termination; and (iii) accelerated vesting of all stock options and restricted stock granted to Executive under any executive long term incentive plan established by the Company but not yet vested on the effective date of termination of employment.

 

(d)           Termination for Cause; Resignation.  If Executive’s employment terminates due to a Termination for Cause (as defined below) or a Resignation (as defined below), Base Salary earned but unpaid as of the date of such termination will be paid to Executive in a lump sum and the Company will have no further obligations to Executive hereunder.  In the event any termination of Executive’s employment for any reason, Executive if so requested by the Company agrees to assist in the orderly transfer of authority and responsibility to Executive’s successor.

 

(e)           Definitions.  For purposes of this Agreement, the following capitalized terms have the following meanings:

 

(i)           “Benefits Continuation Period” means that number of months which is equal to the number of months of Base Salary that Executive receives as a lump sum severance payment in accordance with Sections 9(a), 9(b), or 9(c) hereof.

 

(ii)           “Change of Control” shall mean an event which shall occur if there is: (i) a change in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership of a substantial portion of the assets of the Corporation.

 

For purposes of this Section, a change in the ownership occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Corporation.

 

A change in the effective control occurs on the date on which either (i) a person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock possessing 30% or more of the total voting power of the stock of the Corporation, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder.

 

A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), other than a person or group of persons that is related to the Corporation, acquires assets that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Corporation immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

 

The determination as to the occurrence of a Change in Control shall be based on objective facts and in accordance with the requirements of Code Section 409A and the regulations promulgated thereunder.

 

(iii)           “Constructive Discharge” means:  (A) any material failure by the Company to fulfill its obligations under this Agreement (including, without limitation, any reduction of Base Salary, as the same may be increased during the Period of Employment, or other material element of compensation);  (B) a material and adverse change to, or a material reduction of, Executive’s duties and responsibilities to the Company;  or (C) the relocation of Executive’s primary office to any location more than fifty (50) miles from the Company’s principal executive offices, resulting in a materially longer commute for Executive.  Executive will provide the Company a written notice which describes the circumstances being relied upon for all terminations of employment by Executive resulting from any circumstances claimed to be a Constructive Discharge thirty (30) days after the event giving rise to the notice.  The Company will have thirty (30) days after receipt of such notice to remedy the situation prior to Executive’s termination of employment due to a Constructive Discharge.

 

(iv)           “Resignation” means a termination of Executive’s employment by Executive, other than in connection with Executive’s Disability pursuant to Section 7 hereof, Death pursuant to Section 8 hereof or Constructive Discharge pursuant to Sections 9(a) or 9(b) hereof.  A termination of Executive’s employment under this Agreement shall mean the ceasing of employment with the Company.  For purposes of this Agreement:

 

	
  

	
(A)

	
the Executive shall not be treated as having incurred a voluntary termination of employment while on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company is provided either by statute or by contract.  If the period of leave exceeds six months and the right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

 

	
  

	
(B)

	
Whether the Executive shall have incurred a termination of employment shall be determined based on all relevant facts and circumstances.  In situations in which the Executive continues to be carried on the payroll of the Company but performs only nominal services, or ceases to be an employee but continues to provide substantial services in another capacity, such as pursuant to a consulting agreement, the determination of whether a termination of employment has occurred shall be determined in accordance with Final Regulations Section 1.409A-1(h)(1)(ii), or any successor thereto.

 

 (v)           “Severance Pay Amount” means, with respect to a termination of employment covered under Section 9(a), the sum of Executive’s then current Base Salary payable during one month  multiplied by (x) twelve (12) if Executive has been employed by the Company for less than ten (10) continuous unbroken years of service, or (y) eighteen (18) if Executive has been employed by the Company for between ten (10) and twenty (20) continuous unbroken years of service, or (z) twenty-four (24) if Executive has been employed by the Company for more than twenty (20) continuous unbroken years of service.  “Severance Pay Amount” means, with respect to a termination of employment covered under Section 9(b), the sum of Executive’s then current Base Salary payable during one month, plus one-twelfth of Executive’s most recent target annual incentive under any executive annual incentive plan established by the Company, multiplied by twenty-four (24).  “Severance Pay Amount” means, with respect to a termination of employment covered under Section 9(c), the sum of Executive’s then current Base Salary payable during one month plus one-twelfth of Executive’s most recent target annual incentive under any executive annual incentive plan established by the Company multiplied by (x) eighteen (18) if Executive has been employed by the Company for less than five (5) continuous unbroken years of service, or (y) twenty-four (24) if Executive has been employed by the Company for more than five (5) continuous unbroken years of service.

 

(vi)           “Termination for Cause” means:  (A) Executive’s refusal  or willful and continued failure to substantially perform Executive’s material duties to the best of Executive’s ability under this Agreement (for reasons other than death or disability), in any such case after written notice thereof; (B) Executive’s gross negligence in the performance of Executive’s material duties under this Agreement; (C) any act of fraud, misappropriation, material dishonesty, embezzlement, willful misconduct or similar conduct; (D) Executive’s conviction of or plea of guilty or nolo contendere to a felony or any crime involving moral turpitude; or (E) Executive’s material and willful violation of any of the Company’s reasonable rules, regulations, policies, directions and restrictions.

 

(vii)           “Without Cause Termination” or “Terminated Without Cause” means termination of Executive’s employment by the Company other than in connection with Executive’s Disability pursuant to Section 7 hereof, death pursuant to Section 8 hereof, Constructive Discharge pursuant to Sections 9(a) or 9(b) hereof, or the Company’s Termination for Cause of Executive.

 

        (f)           Conditions to Payment.  All payments and benefits due to Executive under this Section 9 shall be contingent upon the execution by Executive (or Executive’s beneficiary or estate) of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates, and their current and former officers, directors, employees and agents in such form as determined by the Company in its sole discretion.

 

        (g)           No Other Payments.  Except as provided in this Section 9, Executive shall not be entitled to receive any other payments or benefits from the Company due to the termination of Executive’s employment, including but not limited to, any employee benefits under any of the Company’s employee benefits plans or arrangements (other than health benefits at Executive’s expense under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or pursuant to the written terms of any qualified 401(k) savings  plan or non-qualified deferred compensation plan in which the Company may have in effect from time to time) or any right to severance benefits.  Notwithstanding the foregoing sentence, in the event of a termination of employment by Executive under the circumstances described in Section 9(b) hereof following a Change of Control, nothing in this Agreement shall reduce Executive’s entitlement, if any, to any payment or benefit pursuant to the LTIP resulting from Executive’s termination of employment following a Change of Control.

(h)           Timing of Severance Payments and Compliance with Code Section 409A.

 

(i)           Payments of earned but unpaid Base Salary required to be made under Section 9(a)(i) shall be made as of the next regular payroll date following the Executive’s termination of employment.

 

(ii)           Payments of Severance Pay Amounts required to be made under Section 9(a)(ii) shall be made within ten business days following the later of the date the Company receives the release of claims described in Section 9(f) properly executed by the Executive, and the expiration of any period permitted for the Executive to revoke the Agreement after its execution; provided, however, that in no event may Executive return the executed release of claims later than 90 days after termination of employment (or, if earlier, the end of the second month following the later of the end of the Company’s taxable year or the Executive’s taxable year in which the Executive’s termination of employment occurs).

 

(iii)           The reimbursement of an eligible expense hereunder shall be made promptly upon the Executive’s submission of request for reimbursement, accompanied by evidence of such expense reasonably acceptable to the Company, but in any event on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; provided, however, that the supplemental payment with respect to the tax cost of continuation employee benefit coverage under Section 9(a) shall be paid under Section 9(h)(ii) above.

 

(iv)           The payment of “target incentive amounts” as described in Section 9(b)(i), vesting of “target” restricted performance shares as described in Sections 9(b)(ii), vesting of restricted stock as described in Section 9(a)(iv), and vesting of stock options and restricted stock as described in Sections 9(b)(iii) and 9(c)(iii) shall be made as described in Section 9(h)(ii).

 

(v)           The payment of the annual incentive amount under an executive annual incentive plan as described in Section 9(c)(i) shall be based upon actual achievement of performance goals and paid in a single sum cash payment within 21⁄2 months after the conclusion of the performance period to which such annual incentive relates.  The payment of restricted performance shares as described in Section 9(c)(ii) shall be based upon actual achievement of performance goals and paid within 21⁄2 months after the conclusion of the performance period to which such performance shares relate.

 

 (vi)           Each of the payments and benefits under Section 9(a), (b) or (c) above are designated as separate payments for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F), the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), and the exemption for medical expense reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B).  As a result, (1) any payments that become vested as a result of a qualifying termination that are made on or before the 15th day of the third month following the later of the end of the Company’s taxable year or the end of the Executive’s taxable year in which occurs the Executive’s termination of employment, (2) any additional payments that are made on or before the last day of the second calendar year following the year of the Executive’s termination and do not exceed the lesser of two times Base Salary or two times the limit under Code Section 401(a)(17) then in effect, and (3) the payment of medical expenses within the applicable COBRA period, are exempt from the requirements of Code Section 409A.  If Executive is designated as a “specified employee” within the meaning of Code Section 409A, to the extent that any deferred compensation payments to be made during the first six month period following Executive’s termination of employment exceed such exempt amounts, the payments shall be withheld and the  amount of the payments withheld will be paid in a lump sum (with interest at the rate paid on 12-month Treasury bills as of the date of Executive’s termination of employment), during the seventh month after Executive’s termination.  The Company shall identify in writing delivered to the Executive any payments it reasonably determines are subject to delay under this Section 9(h)(vi).  In no event shall the Company have any liability or obligation with respect to taxes for which the Executive may become liable as a result of the application of Code Section 409A.

 

10.           Other Duties of Executive During and After the Period of Employment.

 

(a)           Non-Competition and Non-Disclosure Agreement.  Simultaneously with the execution of this Agreement, Executive agrees to execute and to comply with the terms of the Non-Competition and Non-Disclosure Agreement (hereinafter referred to as the “Non-Competition Agreement”) in the form provided to Executive by the Company.  The terms and conditions of the Non-Competition Agreement are incorporated herein by reference and made a part of this Agreement as if fully set forth herein.

 

(b)           Agreement To Arbitrate.  Simultaneous with the execution of this Agreement, Executive agrees to execute and to comply with the terms of the Agreement to Arbitrate (hereinafter referred to as the “Agreement to Arbitrate”) in the form provided to Executive by the Company.  The terms and conditions of the Agreement to Arbitrate are incorporated herein by reference and made a part of this Agreement as if fully set forth herein.

 

11.           Indemnification.  The Company will indemnify Executive to the fullest extent permitted by the laws of the state of the Company’s incorporation in effect at that time, or the certificate of incorporation and by-laws of Company, whichever affords the greater protection to Executive.

 

12.           Mitigation.  Executive will not be required to mitigate the amount of any payment provided for hereunder by seeking other employment or otherwise, nor will the amount of any such payment be reduced by any compensation earned by Executive as the result of employment by another employer after the date Executive’s employment hereunder terminates.

 

13.           Withholding Taxes.  Executive acknowledges and agrees that the Company may directly or indirectly withhold from any payments under this Agreement all federal, state, city or other taxes that will be required pursuant to any law or governmental regulation.

 

14.           Effect of Prior Agreements.  This Agreement, together with the Offer of Employment to Executive on May 17, 2013, the Non-Competition Agreement and the Agreement to Arbitrate, constitute the sole and entire agreements and understandings between Executive and the Company with respect to the matters covered thereby, and there are no other promises, agreements, representations, warranties or other statements between Executive and the Company in respect to such matters not expressly set forth in these agreements.  These agreements supersede all prior and contemporaneous agreements, understandings or other arrangements, whether written or oral, concerning the subject matter thereof.  Upon execution of this Agreement, Executive’s existing employment agreement with the Company shall be superseded by this Agreement in its entirety and shall be of no further force and effect.

 

15.           Notices.  Any notice required, permitted, or desired to be given pursuant to any of the provisions of this Agreement shall be deemed to have been sufficiently given or served for all purposes if delivered in person or sent by registered or certified mail, return receipt requested, postage and fees prepaid, as follows:

 

If to the Company, at:

John Wiley & Sons, Inc.

111 River Street

Hoboken, New Jersey 07030

Attention:  Chief Executive Officer

with a copy to:

John Wiley & Sons, Inc.

111 River Street

Hoboken, New Jersey 07030

Attention: General Counsel

If to Executive, at:

John A. Kritzmacher

XXXXX

XXXXX

 

Either of the parties hereto may at any time and from time to time change the address to which notices shall be sent hereunder by notice to the other party.

 

16.            Assignability.  The obligations of Executive may not be delegated and, except as expressly provided in Section 8 hereof relating to the designation of a beneficiary in the event of death, Executive may not, without the Company’s written consent thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest therein.  Any such attempted delegation or disposition shall be null and void and without effect.  The Company and Executive agree that this Agreement and all of the Company’s rights and obligations hereunder may be assigned or transferred by the Company to and may be assumed by and become binding upon and may inure to the benefit of any affiliate of or successor to the Company.  The term “successor” shall mean (with respect to the Company or any of its subsidiaries) any other corporation or other business entity which, by merger, consolidation, purchase of the assets, or otherwise, acquires all or a material part of the assets of the Company.  Any assignment by the Company of its rights or obligations hereunder to any affiliate of or successor to the Company shall not be a termination of employment for purposes of this Agreement.

 

17.           Modification.  This Agreement may not be modified or amended except in writing signed by the parties.  No term or condition of this Agreement will be deemed to have been waived except in writing by the party charged with waiver.  A waiver will operate only as to the specific term or condition waived and will not constitute a waiver for the future or act on anything other than that which is specifically waived.

 

18.           Governing Law.  This Agreement will be construed and interpreted pursuant to the laws of the State of New York, without regard to such State’s conflict of law rules.

 

19.           Separability.  All provisions of this Agreement are intended to be severable.  In the event any provision or restriction contained herein is held to be invalid or unenforceable in any respect, in whole or in part, such finding will in no way affect the validity or enforceability of any other provision of this Agreement.  The parties hereto further agree that any such invalid or unenforceable provision will be deemed modified so that it will be enforced to the greatest extent permissible under law, and to the extent that any court of competent jurisdiction determines any restriction herein to be unreasonable in any respect, such court may limit this Agreement to render it reasonable in the light of the circumstances in which it was entered into and specifically enforce this Agreement as limited.

 

20.           No Waiver:  No course of dealing or any delay on the part of the Company or Executive in exercising any rights hereunder shall operate as a waiver of any such rights.  No waiver of any default or breach of this Agreement shall be deemed a continuing waiver of any other breach or default.

 

21.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered, effective as of the date first indicated above by a duly authorized officer of the Company.

 

 

	 EXECUTIVE:       	 	   JOHN WILEY & SONS, INC.
	 	 	 	 
	 By:	 /s/ John A. Kritzmacher                                     	 By:	 /s/ Stephen M. Smith 
	 	 Signature  	 	Signature
	 	 	 	 
	 	 John A. Kritzmacher 	 	 Stephen M. Smith 
	 	 Print name     	 	 Print name
	 	 	 	 
	 	 5/30/13   	 	 President and Chief Executive Officer 
	 	 Date signed	 	 Title
	 	 	 	 
	 	 	 	 6/3/13    
	 	 	 	 Date signed

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