Document:

Hybrid Coating Technologies Inc.: Exhibit 4.4 - Filed by newsfilecorp.com

Exhibit 4.4

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE"ACT") OR
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
REASONABLY SATISFACTORY TO COUNSEL TO THE BORROWER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

Original Issue Date: February 21, 2012 

Conversion Price:
US $1.45 

AMENDED AND RESTATED CONVERTIBLE DEBENTURE 

DUE FEBRUARY 21,
2017 

FOR VALUE RECEIVED, Hybrid Coating Technologies Inc., a Nevada
Company (hereinafter called the "Borrower" or “Company”), hereby promises to pay
to the order of ________or its registered assigns (the "Holder") the sum of
$______US Dollars (_______USD), on February 21, 2017 (the "Maturity Date"), or
such earlier date as this Debenture is required or permitted to be repaid as
provided hereunder, and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Convertible Debenture (including all
Convertible Debentures issued in exchange, transfer or replacement hereof, this
"Debenture") is a duly authorized issue of Debentures of the Company, designated
as its Convertible Debentures dated February 21, 2012 (the "Debentures") issued
pursuant to a Securities Purchase Agreement entered into between the Company and
the Holder on February 21, 2012 (“Securities Purchase Agreement”). This herein
Debenture amends and restates the Convertible Debenture originally dated as of
February 21, 2012 and originally due February 21, 2015. 

Except as otherwise expressly provided herein, including but
not limited to Section 7(c) below, this Debenture may not be prepaid by the
Borrower. All payments due hereunder (to the extent not converted into Units as
defined in Section 2(a)(i) herein, of the Borrower in accordance with the terms
hereof shall be made in lawful money of the United States and any accrued
Interest shall be added to the principal amount of this Debenture, in which
event Interest shall accrue thereon in accordance with the terms of this
Debenture and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Debenture. All payments shall be made
at the address of the Holder as designated by the Holder or at such address as
the Holder shall hereafter give to the Borrower by written notice made in
accordance with the provisions of this Debenture. Whenever any amount expressed
to be due by the terms of this Debenture is due on any day which is not a
Business Day (as defined below), the same shall instead be due on the next succeeding
day which is a Business Day.

This Debenture is subject to the following additional
provisions: 

Section 1. Interest. Subject to the terms and conditions
of this Debenture, The Company shall pay interest (“Interest”) to the Holder on
the aggregate unconverted and then outstanding principal amount of this
Debenture at the rate of ten percent (10%) per annum (the “Interest Rate”) from
the Original Issue Date (as defined herein) until the same becomes due and
payable at maturity. Interest shall commence accruing on the Original Issue
Date, shall be computed on the basis of a 365-day year and the actual number of
days elapsed and shall be payable on an annual basis every twelve (12) months,
in accordance with the terms hereof. The Company shall have the option of paying
the Holder the amount of interest due and payable in cash or in Shares of the
Company pursuant to the terms of conversion herein and the price per Share shall
be equal to the average price per Share in the ten trading days preceding the
date on which the Interest becomes due and payable. The amount of interest
payable in respect of the Debenture shall be reduced proportionately in the
event of its partial or full conversion prior to maturity.

Section 2. Conversion. 

(a) Conversion Right. 

(i) Conversion Timing and Amount. Subject to the
limitations on Conversion contained herein, the record Holder of this Debenture
shall have the right (a “Conversion Right”) from time to time, and at any time
on or after the Original Issue Date hereof and prior to the Maturity Date, to
convert any part or all of the Debenture into a total of up to
______(_____________) units (“Units” and individually each a or "Unit") of the
Company at the price of USD $1.45 (“Conversion Price”) per Unit. Each Unit shall
be comprised of the following: (i) 1 (one) share of the Company’s common stock
(“Common Stock”) par value $0.001 per share (“Share” and collectively
“Shares”); and (ii) 2 (two) stock purchase warrants. Each stock purchase warrant
(“Warrant” and collectively “Warrants”) is exercisable at any time within 36
(thirty-six months) of the date of issuance of the Warrants, at an exercise
price per Share equal to the Conversion Price, to purchase 1 (one) additional
Share. Any Shares issuable pursuant to the exercise of the Conversion Right
shall be issued as fully paid and non-assessable shares of Common Stock, or any
shares of capital stock or other securities of the Company into which such
Common Stock shall hereafter be changed or reclassified, at the Conversion Price
determined as provided herein (a "Conversion"). The Conversion Rights set forth
in this Section 2 shall remain in full force and effect immediately from the
Original Issue Date until the Debenture is paid in full. 

(ii) Limitation On Conversion. Notwithstanding
the above, in no event shall the Holder be entitled to convert any portion of
this Debenture in excess of that portion of this Debenture upon Conversion of
which the sum of (1) the number of
shares of Common Stock beneficially owned by the Holder and any applicable affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Debenture or the unexercised or
unconverted portion of the Warrants or of any other security of the Company subject to a limitation on Conversion or exercise analogous to the limitations contained herein)(the “Beneficially Owned Shares”) and (2) the number of shares of
Common Stock issuable upon the Conversion of the portion of the Debenture with respect to which the determination of this proviso is being made would result in beneficial ownership by the Holder and its affiliates of more than 4.99% (the
“Maximum Percentage”) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder (the “Beneficial
Ownership Limitation”). For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso in the immediately preceding sentence, and provided that the Beneficial Ownership Limitation shall be conclusively satisfied if the applicable Notice of Conversion includes a signed representation by
the Holder, if requested by the Company, that the issuance of the shares in such Notice of Conversion will not violate the Beneficial Ownership Limitation, and the Company shall not be entitled to require additional documentation of such
satisfaction.

(iii) Calculation of Conversion Amount. The number of Units to be issued upon each Conversion of this Debenture shall be determined by dividing the Conversion Amount (as defined herein) by the applicable Conversion Price. The term "Conversion
Amount" means, with respect to any Conversion of the Debenture, the sum of (i) the Principal Amount of the Debenture to be converted in such Conversion, and (ii) at the Company’s discretion, any Interest accrued and due. 

(b) Mechanics of Conversion. In order to convert the Debentures into full shares of Common Stock and Warrants, the Holder shall deliver a copy of the fully executed notice of conversion in the form on the rear of the certificate evidencing
the Debenture (‘Notice of Conversion’) to the Company at the office of the Company which notice shall specify the amount of the Debenture to be converted (together with a copy of the first page of each Debenture to be converted) prior to
Midnight, Eastern time (the ‘Conversion Notice Deadline’) on the date of Conversion specified on the Notice of Conversion and (ii) surrender the original Debenture(s); provided, however, that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion and Warrants unless either the Debentures are delivered to the Company as provided above, or the Holder notifies the Company that such Debenture(s) have been lost,
stolen or destroyed. In the case of a dispute as the calculation of the Conversion Price, the Company’s calculation shall be deemed conclusive absent manifest error. 

(i) Lost or Stolen Debentures. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of a Debenture, and (in the case of loss, theft or destruction) indemnity or security reasonably satisfactory to the Company,
and upon
surrender and cancellation of the Debenture, if mutilated, the Company shall execute and deliver new Debenture(s) of like tenor and date. 

(ii) Delivery of Common Stock and Warrants upon Conversion. The Company shall issue and use its best efforts to deliver within a reasonable time after delivery to the Company of a Debenture and Notice of Conversion, or after provision for
security or indemnification required by (i) above, to such Holder of the Debenture at the address of the Holder on the books of the Company, a certificate for the number of shares of Common Stock and a number of Warrants to which the Holder shall be
entitled as aforesaid. 

(iii) No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of a Debenture. If any conversion of the Debenture would create a fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, a cash adjustment will be made for the fractional interest. 

(iv) Date of Conversion. The date of which conversion occurs (the ‘Date of Conversion’) shall be deemed to be the date set forth in such Notice of Conversion, provided that the copy of the Notice of Conversion is delivered or
faxed to the Company before midnight, Pacific time, on the Date of Conversion, and (ii) that the original Debentures to be converted are surrendered, and received by the Company within five business days from the Date of Conversion. The person or
persons entitled to receive the shares of common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. If the original Debentures to be converted are not
received by the Transfer Agent or the Company within five business days after the Date of Conversion or if the facsimile of the Notice of Conversion is not received by the Company or its designated transfer agent prior to the Conversion Notice
Deadline, the Notice of Conversion, at the Company’s option, may be declared null and void. 

(c) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Debentures, such
number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding Debentures; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding Debentures, the Company will immediately take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for
such purpose. 

(d) Adjustment to Conversion Price.  

(i) Adjustment Due to Stock Split, Stock Dividend, Etc. If at any time when the Debentures are issued and outstanding, the number of outstanding shares of Common Stock is increased by a stock split, stock dividend, or other similar event, the
Conversion Price shall be proportionately reduced, or if the number of outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Price shall
be proportionately increased. 

(ii) Adjustment Due to Merger, Consolidation, Etc. If at
any time when the Debentures are issued and outstanding, there shall be any
merger, amalgamation, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common
Stock of the Company shall be changed into the same or a different number of
shares of another class or classes of stock or securities of the company or
another entity (“Material Transaction”), then the Holders of the Debentures
shall thereafter have the right to receive upon conversion of the Debentures,
upon the basis and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock immediately theretofore issuable upon conversion,
such stock and/or securities which the Holder would have been entitled to
receive in such transaction had the Debentures been converted immediately prior
to the Material Transaction.

(iii) Anti-Dilution Pursuant to Share Issuances. If at
any time, when the Debentures are issued and outstanding the Company issues
Additional Securities (as defined below) (a “Dilutive Issuance”) the Company
shall adjust the Conversion Price (“Adjusted Conversion Price”) of this
Debenture using the following formula below.

“Additional Shares” shall mean all shares of Common Stock
issued by the Company other than (i) shares of Common Stock and/or options, to
employees, officers, or directors of, or consultants or advisors to, the Company
or any subsidiary pursuant to any stock option plans, that are approved by the
Board of Directors of the Company, (“ ESOP Shares Issuances”)

X = Y
(A) 
          
B

	 	Where 	X = 	the Adjusted Conversion Price 
	 	 	  	 
	 	  	Y = 	9,250,000 
	 	 	  	 
	 	  	A= 	the Conversion Price 
	 	 	  	 
	 	 	B =	the total number of shares of Common Stock
    outstanding of the Company immediately following the Dilutive Issuance
    calculated on a fully diluted basis, excluding any ESOP Shares Issuances. 

(iv) Anti-Dilution Pursuant to Securities Issuances within
the context of a Financing. If at any time, when the Debentures are issued
and outstanding the Company undergoes an offering or financing (“Financing”)
which results in the issuance of Shares, debentures, or other convertible
securities at an exercise or conversion price that is equal to less than the Conversion
Price herein per Share (“Base Financing Price”), then the Conversion Price shall
be reduced and shall be equal to the Base Financing Price minus a twenty-five
percent (25%) discount (the “Percentage Discount”) (“Discounted Conversion
Price”). The Discounted Conversion Price shall be calculated using the following
formula: 

A=     B        

      (1 + C)

	 	Where 	A= 	Discounted Conversion Price 
	 	 	  	 
	 	  	B= 	the Base Financing Price per Share 
	 	 	  	 
	 	  	C= 	the Percentage Discount. 

Section 4. No Voting Rights. The Debentures shall not
entitle the Holders thereof to any of the rights of a stockholder of the
Company, including without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend meetings of
stockholders or any other proceedings of the Company. 

Section 5. Rule 144 Hold Period. For purposes of Rule
144, it is intended, understood and acknowledged that the Common Stock issuable
upon Conversion of this Debenture shall be deemed to have been acquired at the
time the Debenture was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon
Conversion of this Debenture shall be deemed to have commenced on the date this
Debenture was issued.

Section 6. Regulation S Agreement of the
Holder 

6.1 The Holder represents and warrants to the Company that the
Holder is not a "U.S. Person" as defined by Regulation S of the Securities Act
and is not acquiring the Shares for the account or benefit of a U.S. Person.

A "U. S. Person" is defined by Regulation S of the Securities
Act to be any person who is: 

Any natural person resident in the United States; 

Any partnership or corporation organized or incorporated
under the laws of the United States; 

	 	
i.	
Any estate of which any executor or administrator is a U.S. person;   
	 	 	 
	 	
ii.	
Any trust of which any trustee is a U.S. person;
	 	
 	
 
	 	
iii.  	
Any agency or branch of a
    foreign entity located in the United States;  
	 	
 	
 
	 	
iv.	
Any non-discretionary account or similar account (other than an estate or
    trust) held by a dealer or other fiduciary for the benefit or account of a
    U.S. person; 
	 	 	 
	 	
v.	
Any discretionary account or similar account (other than an estate or trust)
    held by a dealer or other fiduciary organized, incorporated, or (if an
    individual) resident in the United States; and 
	 	 	 
	 	
vi. 	
Any partnership or corporation if: 

	 	 	
A. 	
Organized or incorporated under the laws of any foreign jurisdiction; and 
	 	 	 	 
	 	 	
B. 	
Formed by a U.S. person principally for the purpose of investing in
    securities not registered under the Act, unless it is organized or
    incorporated, and owned, by accredited investors (as defined in Rule 501(a))
    who are not natural persons, estates or trusts. 

6.2 The Holder acknowledges that the Holder was not in the United States at the time the offer to purchase the Shares was received. 

6.3 The Holder acknowledges that the Shares are "restricted securities" within the meaning of the Securities Act and will be issued to the Holder in accordance with Regulation S of the Securities Act. 

6.4 The Holder agrees not to engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act. 

6.5 The Holder and the Company agree that the Company will refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S of the Securities Act, pursuant to registration under the Securities Act, pursuant to
an available exemption from registration, or pursuant to this Agreement. 

6.6 The Holder agrees to resell the Shares only in accordance with the provisions of Regulation S of the Securities Act, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration pursuant to the
Securities Act. 

6.7 The Holder acknowledges and agrees that all certificates representing the Shares will be endorsed with the following legend in accordance with Regulation S of the Securities Act: 

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S
PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT". 

Section 8. Transfer to Comply with the Securities Act. This Debenture shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. This Debenture may be
sold, assigned or transferred only in compliance with applicable federal and state securities laws and regulations. 

Section 9. Governing Law. The Debenture shall be governed by and construed in accordance with the laws of the State of Nevada. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be
governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the State of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of the Debenture, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 

Section 10. Business Day Definition. For purposes hereof, the term ‘business day’ shall mean any day on which banks are generally open for business in the State of Nevada and excluding any Saturday and Sunday. 

Section 11. Notices. Any notice or other communication required or permitted to be given hereunder shall be given as provided herein or delivered against receipt if to (i) the Company at 950 John Daly blvd., Suite 260, Daly City, CA 94015
(ii) the Holder of a Debenture, to such holder at its last address as shown on the Debenture Register (or to such other address as the party shall have furnished in writing as its new address to be entered on the Debenture Register. Any notice or
other communication needs to be made by facsimile and delivery shall be deemed give, except as otherwise required herein, at the time of transmission of said facsimile. Any notice given on a day that is not a business day shall be effective upon the
next business day. 

Section 12. Waiver of any Breach to be in Writing. Any waiver by the Company or the Holder of a Debenture of a breach of any provision of the Debenture shall not operate as, or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of the Debenture. The failure of the Company or the Holder hereof to insist upon strict adherence to any term of the Debenture on one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other term of the Debenture. Any waiver must be in writing. 

Section 13. Unenforceable Provisions. If any provision of a Debenture is invalid, illegal or unenforceable, the balance of the Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. 

Section 14. Construction; Headings. This Debenture shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed against any person as the drafter hereof.  The headings of this Debenture are for
convenience of reference and shall not form part of, or affect the interpretation of, this Debenture. 

IN WITNESS WHEREOF, Company has caused this Amended and Restated Debenture to be signed in its name by its duly authorized officer this ____ , 2013. 

COMPANY: 

Hybrid Coating Technologies Inc. 

By: __________________________________ 

      
Joseph Kristul, CEO

EXHIBIT A 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert
the Debenture) 

The undersigned hereby irrevocably elects to convert
$__________in principal amount of the Debenture (defined herein) into Units, of
Hybrid Coating Technologies., a Nevada Company (the "Company"),
plus: 

-$_________any Interest owing, if applicable and at the Company’s sole
discretion 

all according to the conditions of the Debenture of the Company dated
as of February 21, 2012, (the "Debenture"), as of the date written below.
If securities are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the Holder for any Conversion, except for transfer taxes, if any. By submitting
this Notice of Conversion, the Holder certifies that the issuance of the number
of shares of Common Stock requested hereby will not result in a violation of the
Beneficial Ownership Limitation. 

The undersigned hereby requests that the Company issue a
certificate or certificates for the number of shares of Common Stock set forth
above and Warrants for the number set forth above (which numbers are based on
the Holder's calculation attached hereto) in the name(s) specified immediately
below or, if additional space is necessary, on an attachment hereto: 

Name:
_________________________________________________

Address:
_______________________________________________

The undersigned represents and warrants that all offers and
sales by the undersigned of the securities issuable to the undersigned upon
Conversion of the Debenture shall be made pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "ACT"). 

(i) Date of
Conversion:_______________________________
Applicable Conversion
Price:________________________
Number of Shares of Common Sock to be
Issued _______________
Number of Warrants______________________________

Conversion of the Debenture:_______________________
 

Signature: ______________________________________________________
 Name: _________________________________________________________
 Address: _______________________________________________________
 

Upon Conversion of the Debenture in accordance with the terms thereof, the Holder shall not be required to physically surrender the Debenture (or evidence of loss, theft or destruction thereof) to the Company unless all of the Debenture is
converted, in which case such Holder shall deliver the Debenture being converted to the Company promptly following the Conversion Date at issue. The Company shall issue and deliver shares of Common Stock to an overnight courier not later than the
fifth Business Day following receipt of the Notice of Conversion with respect to the Debenture(s) to be converted, and shall make payments pursuant to the Debenture for the number of Business Days such issuance and delivery is late.exh10-1_17591.htm

EXHIBIT 10.1

 

 

AMENDMENT NO. 4 TO CREDIT AGREEMENT

 

This Amendment No. 4 to Credit Agreement (this "Amendment") dated as of November 19, 2013, is made by and between j2 Global, Inc., formerly known as j2 Global Communications, Inc., a Delaware corporation ("Borrower"), and Union Bank, N.A., a national banking association ("Bank").

 

RECITALS

 

This Amendment is made with reference to the following facts:

 

A.           Borrower and Bank have entered into that certain Credit Agreement dated as of January 5, 2009 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement").  Capitalized terms used herein and not otherwise defined shall have the meanings set forth for such terms in the Credit Agreement.

 

B.           Borrower has requested that Bank make certain amendments to the Credit Agreement.

 

C.           Subject to the terms and conditions set forth herein, Borrower and Bank have agreed to amend the Credit Agreement as set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and benefits contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Borrower and Bank agree as follows:

 

1.   AMENDMENTS OF CREDIT AGREEMENT

 

1.1 Section 1.1 (Definitions).

 

(a) The following definition of "Leverage Ratio" is added to Section 1.1 of the Credit Agreement:

 

"Leverage Ratio" shall mean, as of the last day of any fiscal quarter of Borrower, the ratio of (a) Indebtedness of Borrower and its Subsidiaries as of such date to (b) EBITDA of Borrower and its Subsidiaries for the four fiscal quarter period ending on such date.

 

(b) The following definition of "Unused Line Fee" is added to Section 1.1 of the Credit Agreement:

 

"Unused Line Fee" shall mean the fee payable pursuant to Section 2.7(a) of this Agreement at the applicable percentage per annum set forth below based upon the Leverage Ratio as set forth in the most recent Compliance Certificate received by Bank:

 

 

 

 

 

  

- 1 -

  

	
Pricing Level

	
Leverage Ratio

	
"Unused Line Fee"

	
1

	
≥  1.75:1.00

	
0.30%

	
2

	
≥  1.50:1.00 but  < 1.75:1.00

	
0.25%

	
3

	
<  1.50:1.00

	
0.25%

 

Any increase or decrease in the Unused Line Fee resulting from a change in the Leverage Ratio shall become effective commencing on the 2nd Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 5.4(c) of this Agreement.

 

(c) The definition of "Net Worth" is deleted from Section 1.1 of the Credit Agreement.

 

(d) The definition of "EBITDA" in Section 1.1 of the Credit Agreement is amended and restated to read as follows:

 

"EBITDA" shall mean, for any period of determination, with respect to Borrower and its Subsidiaries, (a) the net income of Borrower and its Subsidiaries for such period (provided that, in the calculation of net income, (x) non-cash items and non-recurring losses (to the extent reducing net income) shall be added back and (y) non-cash items and non-recurring gains (to the extent increasing net income) shall be subtracted), plus (b) interest expense of Borrower and its Subsidiaries for such period, plus (c) the aggregate amount of federal and state taxes on or measured by income of Borrower and its Subsidiaries for such period (whether or not payable during such period), plus (d) depreciation and amortization expense of Borrower and its Subsidiaries for such period, in each case as determined in accordance with GAAP, plus (e) in the event that a Permitted Acquisition has occurred during the period of determination, EBITDA of the entity acquired in such Permitted Acquisition, determined in accordance with the foregoing definition as if such acquired entity had been a Subsidiary of Borrower since the first day of such period.

 

(e) The definition of "Permitted Acquisition" in Section 1.1 of the Credit Agreement is amended and restated to read as follows:

 

"Permitted Acquisition" shall mean any Acquisition by Borrower or any of its Subsidiaries (as applicable, the "acquiror") of another Person, or the business or assets of such Person, engaged in a line of business comparable or complementary to the Business (the "target"), provided that: (a) no Default or Event of Default shall exist at the time of such Acquisition or occur after giving effect to such Acquisition; (b) such Acquisition shall have been approved by the board of directors or the owners of the target; (c) with respect to any Acquisition involving a purchase price which exceeds an amount equal to ten percent (10%) 

 

 

 

 

  

- 2 -

  

of the consolidated total assets of Borrower as of the last day of the fiscal year most recently ended, the pro-forma balance sheets as of the date of such Acquisition and the projections for the four (4) fiscal quarters immediately following the date of such Acquisition (including pro-forma financial covenants), which shall be provided by Borrower to Bank in connection with such Acquisition, shall have demonstrated that, after giving effect to such Acquisition, Borrower would be and would remain in compliance with the financial covenants set forth in Sections 6.11 and 6.12, inclusive, of this Agreement; (d) the consideration paid by any acquiror in connection with any single Acquisition (which for these purposes shall be limited to the aggregate amount of cash paid and Indebtedness assumed by such acquiror in connection with such Acquisition) made during any single fiscal year shall not exceed One Hundred Million Dollars ($100,000,000); and (e) the aggregate consideration paid by acquirors in connection with all of such Acquisitions (which for these purposes shall be limited to the aggregate amount of cash paid and Indebtedness assumed by such acquirors in connection with such Acquisitions) made during any single fiscal year shall not exceed (together with the aggregate amount of Strategic Advances made during such fiscal year) Two Hundred Million Dollars ($200,000,000).

 

(f) The definition of "Material Disposition" is hereby amended and restated in its entirety to read as follows:

 

"Material Disposition" shall mean a Disposition by Borrower or any Subsidiary (other than an "Unrestricted Subsidiary" as defined in the Senior Notes Indenture and any Subsidiaries of any such Unrestricted Subsidiary) of a line of business that (a) generated EBITDA for the fiscal year then most recently ended in excess of fifteen percent (15%) of Borrower's consolidated EBITDA for such fiscal year or (b) holds assets in excess of fifteen percent (15%) of the total assets of Borrower and its Subsidiaries on a consolidated basis as of the end of the fiscal year most recently ended

 

(g) The definition of "Permitted Indebtedness" is hereby amended by replacing, in each of clauses (d), (e), and (h) thereof, the words "Five Million Dollars ($5,000,000)" with the words "Seven Million Five Hundred Thousand Dollars ($7,500,000)”.

 

(h) The definition of "Revolving Credit Commitment Termination Date" in Section 1.1 of the Credit Agreement is amended and restated to read as follows:

 

"Revolving Credit Commitment Termination Date" shall mean November 14, 2016.

 

(i) The definition of "Significant Domestic Subsidiary" in Section 1.1 of the Credit Agreement is amended and restated to read as follows:

 

"Significant Domestic Subsidiary" means a Domestic Subsidiary (excluding any "Unrestricted Subsidiary" as defined in the Senior Notes Indenture 

 

 

 

 

 

 

  

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and any Subsidiaries of any such Unrestricted Subsidiary) that (a) has total assets in excess of 4% of the total consolidated assets of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture) as of the end of the most recent fiscal quarter of Borrower or (b) has EBITDA (on a standalone basis) that exceeds 4% of EBITDA of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture) for the period of four consecutive fiscal quarters of Borrower most recently ended; provided that no Domestic Subsidiary (excluding any "Unrestricted Subsidiary" as defined in the Senior Notes Indenture and any Subsidiaries of any such Unrestricted Subsidiary) shall fail to be designated as a Significant Domestic Subsidiary if such Subsidiary, together with all other Domestic Subsidiaries (excluding any "Unrestricted Subsidiary" as defined in the Senior Notes Indenture and any Subsidiaries of any such Unrestricted Subsidiary) that are otherwise not deemed to be Significant Domestic Subsidiaries would represent, in the aggregate (x) 8% or more of the total consolidated assets of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture) at the end of the most recently ended fiscal year of Borrower or (y) 8% or more of EBITDA of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture) for the most recently ended period of four consecutive fiscal quarters of Borrower, in each case, based upon the most recent financial statements required to be delivered pursuant to this Agreement.  If at any date of determination, Borrower's non-Guarantor Domestic Subsidiaries (excluding any "Unrestricted Subsidiary" as defined in the Senior Notes Indenture and any Subsidiaries of any such Unrestricted Subsidiary) would represent, in the aggregate, more than 8% of total consolidated assets of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture) or 8% of EBITDA of Borrower and its "Restricted Subsidiaries" (as defined in the Senior Notes Indenture), then Borrower shall cause one or more of such non-Guarantor Domestic Subsidiaries (the selection thereof to be at Borrower's discretion) to execute and deliver a Guaranty to Bank in accordance with Section 5.11 hereof such that, after giving effect thereto, the remaining non-Guarantor Domestic Subsidiaries (excluding any "Unrestricted Subsidiary" as defined in the Senior Notes Indenture and any Subsidiaries of any such Unrestricted Subsidiary) would represent less than 8% of such total assets and less than 8% of such EBITDA and otherwise not constitute Significant Domestic Subsidiaries  The Significant Domestic Subsidiaries as of the effective date of this Agreement are identified on Exhibit A annexed hereto.

 

(j) The definition of "Strategic Advance" in Section 1.1 of the Credit Agreement is amended and restated to read as follows:

 

"Strategic Advance" shall mean any loan or advance to, or minority investment in a Strategic Business made during any fiscal year which (a) does not exceed One Hundred Million Dollars ($100,000,000) and (b) when aggregated with other such loans, advances or minority investments and with the aggregate amount of cash paid and Indebtedness assumed in connection with Permitted Acquisitions during such fiscal year does not exceed Two Hundred Million Dollars ($200,000,000).

 

 

 

 

 

 

 

 

  

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1.2 Section 2.7(a) (Fees).  Section 2.7(a) of the Credit Agreement is amended and restated to read as follows:

 

(a)  On the first day of each calendar quarter and on the date of termination of the Revolving Credit Commitment and this Agreement, Borrower shall pay to Bank a fee in an amount equal to the applicable Unused Line Fee (as provided in the definition of such term) times the result of (i) the amount of the Revolving Credit Commitment less (ii) the average daily balance of outstanding Revolving Loans plus Letter of Credit Usage during the immediately preceding quarter (or portion thereof).

 

1.3 Section 5.4(c) (Compliance Certificate; Internally Prepared Balance Sheets).  Section 5.4(c) of the Credit Agreement is amended and restated to read as follows:

 

(c)  Compliance Certificate; Internally Prepared Balance Sheets.  Contemporaneously with the furnishing of each of the Financial Statements required pursuant to subsections (a) and (b) of this Section 5.4, internally prepared balance sheets showing assets and liabilities of Borrower and each of its Subsidiaries and a Compliance Certificate (i) setting forth in reasonable detail the calculations required to establish that Borrower was in compliance with the financial covenants set forth in Section 6.11 and Section 6.12, inclusive, hereof during the period covered by such Financial Statements and (ii) stating that, except as explained in reasonable detail in such Compliance Certificate, (A) all of the representations, warranties and covenants of Borrower contained in this Agreement and the other Loan Documents to which Borrower is a party are correct and complete as at the date of such Compliance Certificate, except for those representations and warranties which relate to a particular date and (B) no Default or Event of Default then exists or existed during the period covered by such Financial Statements.  If such Compliance Certificate discloses that a representation or warranty is not correct or complete, that a financial covenant has not been complied with, or that a Default or Event of Default exists or existed, such Compliance Certificate shall set forth the action, if any, that Borrower has taken or proposes to take with respect thereto;

 

1.4 Section 6.11 (EBITDA).  Section 6.11 of the Credit Agreement is amended and restated to read as follows:

 

6.11           EBITDA.  Borrower shall not permit EBITDA, calculated as of the end of each fiscal quarter, to be less than Thirty-Five Million Dollars ($35,000,000) for such quarter.

 

1.5 Section 6.12 (Leverage Ratio).  Section 6.12 (Net Worth) of the Credit Agreement is deleted and replaced with the following Section 6.12 (Leverage Ratio):

 

 

 

 

 

 

 

 

 

  

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6.12           Leverage Ratio.   Borrower shall not permit the Leverage Ratio, calculated as of the end of each fiscal quarter, to be greater than 2.0:1.0.

 

1.6 Section 6.13 (Liquid Assets).  Section 6.13 of the Credit Agreement is amended and restated to read as follows:

 

6.13           [Intentionally Omitted].

 

1.7 Section 6.14 (Operating Lease Obligations).  Section 6.14 of the Credit Agreement is amended and restated to read as follows:

 

6.14           [Intentionally Omitted].

 

1.8 All references to Section 6.13 set forth in Sections 6.7, 6.9 and 6.10 of the Credit Agreement are deleted.

 

1.9 Exhibit A (Listing of Subsidiaries, Significant Domestic Subsidiaries, Significant Foreign Subsidiaries) to the Credit Agreement is amended and restated as set forth on Exhibit A attached hereto.

 

1.10 The form of Compliance Certificate attached to the Credit Agreement as Exhibit B is amended and restated as set forth on the form attached to this Amendment as Exhibit B.

 

2.    CONDITIONS PRECEDENT

 

The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

 

2.1 Amendment Documentation.  Borrower shall have delivered or caused to be delivered to Bank, at Borrower's sole cost and expense, the following, each of which shall be in form and substance satisfactory to Bank:

 

(a) This Amendment duly executed by Borrower;

 

(b) A Second Amended and Restated Revolving Note in the principal amount of $40,000,000 duly executed by Borrower;

 

(c) A fee letter providing for payment of an amendment fee to Bank (the "Fee Letter"), duly executed by Borrower; and

 

(d) Such additional agreements, certificates, reports, approvals, instruments, documents, consents and/or reaffirmations as Bank may reasonably request.

 

2.2 No Default.  No Default or Event of Default shall have occurred and be continuing.

 

 

 

 

  

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2.3 No Material Adverse Change.  No material adverse change shall have occurred in the business, property, operations, prospects or condition (financial or otherwise) of Borrower and its Subsidiaries since December 31, 2012.  No litigation shall be pending that could reasonably be expected to result in such a material adverse change.

 

3.   REPRESENTATIONS AND WARRANTIES.  Borrower hereby reaffirms and restates as of the date hereof, all of the representations and warranties made by Borrower in the Credit Agreement and the other Loan Documents, except to the extent such representations and warranties specifically relate to an earlier date.  Borrower hereby represents and warrants to Bank that (a) the execution, delivery and performance of this Amendment has been duly authorized by its board of directors (or equivalent governing body), (b) no consents are necessary from any third person for the execution, delivery or performance of this Amendment which have not already been obtained and a copy thereof delivered to Bank, and (c) this Amendment constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except to the extent that the enforceability thereof against it may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally or by equitable principles of general application (whether considered in an action at law or in equity).

 

4.     MISCELLANEOUS

 

4.1 Recitals Incorporated.  The Recitals set forth above are incorporated into and are made a part of this Amendment.

 

4.2 Costs and Expenses; Amendment Fee.  In addition to the Obligations of Borrower under the Credit Agreement, Borrower agrees to pay (a) all costs and expenses (including without limitation reasonable attorneys' fees) expended or incurred by Bank in connection with the negotiation, documentation and preparation of this Amendment and any other documents executed in connection herewith, and in carrying out the terms of this Amendment, whether incurred before or after the effective date hereof, and (b) the amendment fee as set forth in the Fee Letter.

 

4.3 Integration; Interpretation.  The Loan Documents, including this Amendment and the documents, instruments and agreements executed in connection herewith, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated herein and supersede all prior negotiations, discussions and correspondence.

 

4.4 Counterpart Execution.  This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Execution and delivery of this Amendment by facsimile transmission or electronic mail shall be equally as effective as delivery of a signed original of this Amendment.

 

4.5 Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of California.

 

 

 

 

 

  

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4.6 Non-Impairment of Loan Documents.  On the date all conditions precedent set forth herein are satisfied in full, this Amendment shall be a part of the Credit Agreement.  Except as expressly provided in this Amendment or in any other document, instrument or agreement executed in connection herewith, all provisions of the Loan Documents remain in full force and effect, and Bank shall continue to have all of its rights and remedies under the Loan Documents.

 

4.7 Phone People Holdings Corporation.  Borrower and Bank acknowledge that Phone People Holdings Corporation, formerly a Guarantor, has been merged with and into Borrower.

 

 

 

 

[signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first set forth above.

 

 

 

	j2 GLOBAL, INC.	 	UNION BANK, N.A.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:    	
/s/ Kathleen Griggs

	 	By:    	
/s/ James Heim

	 
	 	
Kathleen Griggs

	 	 	
James Heim

	 
	 	

Chief Financial Officer

	 	 	

Vice President

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