Document:

f10q1210ex10vi_techprec.htm

Exhibit 10.6

 

ISDA®

International Swaps and Derivatives Association, Inc.

 

2002 MASTER AGREEMENT

dated as of December 30, 2010

 

	
SOVEREIGN BANK

	
and

	
RANOR, INC.

 

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this 2002 Master Agreement, which includes the -schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions. This 2002 Master Agreement and the Schedule are together referred to as this “Master Agreement”.

 

Accordingly, the parties agree as follows:

 

1. Interpretation

 

(a) Definitions. The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.

 

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.

 

(c) Single Agreement. All Transactions are entered into in reliance on the feet that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement” and the parties would not otherwise enter into any Transactions.

 

2. Obligations

 

(a) General Conditions.

 

(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.

 

(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

 

(iii) Each obligation of each party undo- Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that the Early Termination Date in respect of file relevant Transaction has occurred or been effectively designated and (3) each other condition specified in this Agreement to be a condition precedent for the purpose of this Section 2(a)(iii).

 

  

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(b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the Scheduled Settlement Date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.

 

(c) Netting of Payments. If on any date amounts would otherwise be payable;

 

(i) in the same currency; and

 

(ii) in respect of the same Transaction,

 

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by which the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

 

The parties may elect in respect of two or more Transactions feat a net amount and payment obligation will be determined in respect of all amounts payable on the same date in the same currency in respect of those Transactions, regardless of whether such amounts are payable m respect of the same Transaction, The election may he made m the Schedule or any Confirmation by specifying that “Multiple Transaction Payment Netting” applies to the Transactions identified as being subject to the election (in which case clause (ii) above will not apply to such Transactions), if Multiple Transaction Payment Netting is applicable to Transactions, it will apply to those Transactions with effect from the starting date specified in the Schedule or such Confirmation, or, if a starting date is not specified in the Schedule or such Confirmation, fee starting date otherwise agreed by the parties in writing. This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.

 

(d) Deduction or Withholding for Tax.

 

(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax. unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect If a party is so required to deduct or withhold, then that party (“X”) will:

 

(1) promptly notify the other party (“Y”) of such requirement;

 

(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the foil amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;

 

(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and

 

  

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(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:

 

(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(m) or 4(d); or

 

(B) fee failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (1) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is token or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.

 

(ii) Liability. If:

 

(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

 

(2) X does not so deduct or withhold; and

 

(3) a liability resulting from such Tax is assessed directly against X,

 

then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has foiled to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

 

3. Representations

 

Each party makes the representations contained in Sections 3(a), 3(b), 3(c), 3(4), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(1), at all times until the termination of this Agreement). If any “Additional Representation” is specified in the Schedule or any Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or times specified for such Additional Representation.

 

(a) Basic Representations.

 

(i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing;

 

(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform, its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance;

 

  

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(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;

 

(iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and

 

(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, Enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

 

(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.

 

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it, any of its credit support providers or any of its applicable Specified Entities any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.

 

(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect

 

(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and title.

 

(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.

 

(g) No Agency. It is entering into this Agreement, including each Transaction, as principal aid not as agent of any person or entity.

 

4. Agreements

 

Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:

 

  

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(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under clause (iii) below, to such government or taxing authority as the other party reasonably directs:

 

(i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;

 

(ii) any other documents specified in the Schedule or any Confirmation; and

 

(iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of &e party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,

 

in each case by the date specified in me Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.

 

(b) Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.

 

(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.

 

(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure,

 

(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organized, managed and controlled or considered to have its seat, or where an Office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”), and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.

 

5. Events of Default and Termination Events

 

(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes (subject to Sections 5(c) and 6(e)(iv) an event of default (an “Event of Default”) with respect to such party:

 

  

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(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) required to be made by it if such failure is not remedied on. or before the first Local Business Day in the case of any such payment or the first Local .Delivery Day in the case of any such delivery after, in each case, notice of such failure is given to the party;

 

(ii) Breach of Agreement; Repudiation of Agreement.

 

(1) Failure by the patty to comply with or perform any agreement or obligation (other than an obligation to make any payment under taxis Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied within 30 days after notice of such failure is given to the party;

 

(2) the party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, this Master Agreement, any Confirmation executed and delivered by that party or any Transaction evidenced by such a Confirmation (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);

 

(iii) Credit Support Default.

 

(1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period bas elapsed;

 

(2) the expiration or termination of such Credit Support Document or the tailing or ceasing of such Credit Support Document, or any security interest granted by such party or such Credit Support Provider to the other party pursuant to any such Credit Support Document, to be in full force and effect for fee purpose of this Agreement (is each case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or

 

(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);

 

(iv) Misrepresentation. A representation (other than a representation under section 3(e) or 3(f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;

 

(v) Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:

 

(1) defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;

 

  

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(2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment an early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one Local Business Day);

 

(3) defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or

 

(4) disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified Transaction or any credit support arrangement relating to a Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party, Credit Support Provider or Specified Entity (or such action is taken by any person or entity appointed or empowered to operate it or act all its behalf);

 

(vi) Cross-Default. If “Cross-Default” is specified in the Schedule as applying to the party, the occurrence or existence of:

 

(1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) where the aggregate principal amount of such agreements or instruments, either alone or together with the amount, if any, referenced to in clause (2) below, is not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments before it would otherwise have been due and payable: or

 

(2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments under- such agreements or instruments on the due date for payment (after giving effect to any applicable notice requirement or grace period) in an aggregate amount, either alone or together with the amount, if any, referred to in clause (1) above, of not less than the applicable Threshold Amount;

 

(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:

 

  

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(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due: (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors: (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official wife primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law effecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution,, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval o£ or acquiescence in, any of the foregoing acts; or

 

(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, or reorganizes, reincorporates or reconstitutes into or as, another entity and, at the time of such consolidation, amalgamation, merger, transfer, reorganization, reincorporation or reconstitution:

 

(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party; or

 

(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving, or transferee entity of its obligations under this Agreement.

 

relevant petition upon the occurrence with respect to such party of an Event of Default specified! in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

 

(b) Right to Terminate Following Termination Event.

 

(i) Notice. If a Termination Event other than a Force Majeure Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event, and each Affected Transaction, and will also give the other party such other information about that Termination Event as the other party may reasonably require. If a Force Majeure Event occurs, each party will, promptly upon becoming aware of it, use ell reasonable efforts to notify the other party, specifying the nature of that Force Majeure Event, and will also give the other party such other information about that Force Majeure Event as the other party may reasonably require,

 

(ii) Transfer to Avoid Termination Event. If a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and die Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, other than immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement is respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist

 

  

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If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).

 

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.

 

(iii) Two Affected Parties. If a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days alter notice of such occurrence is given under Section 6(b)(i) to avoid that Termination Event

 

(iv) Right to Terminate.

 

(1) If:

 

(A) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or

 

(B) a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,

 

the Burdened Party in the case of a Tax Event Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there are two Affected Parties, or the Non-affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, if the relevant Termination Event is then continuing, by not more than 20 days notice to the other party, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.

 

  

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(2) If at any time an Illegality or a Force Majeure Event has occurred and is then continuing and any applicable Waiting Period has expired:

 

(A) Subject to clause (B) below, either party may, by not more than 20 days notice to the other party, designate (I) a day not earlier than the day on which such notice becomes effective as an Early Termination Date in respect of all Affected Transactions or (II) by specifying in that notice the Affected Transactions in respect of which it is designating the relevant day as an Early Termination Date, a day not earlier than two Local Business Days following the day on which such notice becomes effective as an Early Termination Date in respect of less than all Affected Transactions. Upon receipt of a notice designating an Early Termination Date in respect of less than all Affected Transactions, the other party may, by notice to the designating party, if such notice is effective on or before the day so designated, designate that same day as an Early Termination Date in respect of any or all other Affected Transactions.

 

(B) An Affected Party (if the Illegality or Force Majeure Event relates to performance by such party or any Credit Support Provider of such party of an obligation to make any payment or delivery under, or to compliance with any other material provision of, the relevant Credit Support Document) will only have the right to designate an Early Termination Date under Section 6 (b)(iv)(2)(A) as a result of an Illegality under Section 5 (b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2) following the prior designation by the other party of an Early Termination Date, pursuant to Section 6(b)(iv)(2)(A), in respect of less than all Affected Transactions.

 

(c) Effect of Designation.

 

(i) If notice designating an Early Termination Date is given under Section 6(a) or 6(b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing,

 

(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement The amount, if any, payable in respect of an Early Termination Date will be determined pursuant to Sections 6(e) and 9(h)(ii).

 

(d) Calculations; Payment Date.

 

(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including any quotations, market data or information from internal sources used in making such calculations), (2) specifying (except where there are two Affected Parties) any Early Termination Amount payable and (3) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation or market data obtained in determining a Close-out Amount, the records of the party obtaining such quotation or market data will be conclusive evidence of the existence and accuracy of such quotation or market data.

 

(ii) Payment Date. An Early Termination Amount due in respect of any Early Termination Date will, together with any amount of interest payable pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which notice of the amount payable is effective in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default and (2) on the day which is two Local Business Days after the day on which notice of the amount payable is effective (or, if there are two Affected Parties, after the day on which the statement provided pursuant to clause (i) above by the second party to provide such a statement is effective) in the case of an Early Termination Date which is designated as a result of a Termination Event

 

(e) Payments On Early Termination. If an Early Termination Date occurs, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to this Section 6(e) and will be subject to Section 6(f).

 

(i) Events of Default. If the Early Termination Date results from an Event of Default, the Early Termination Amount will be an amount equal to (1) lie sum of (A) the Termination Currency Equivalent of the Close-out Amount or Close-out Amounts (whether positive or negative) determined by the Non-defaulting Party for each Terminated. Transaction or group of Terminated Transactions, as the case may be, and (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (2) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If the Early Termination Amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of the Early Termination Amount to the Defaulting Party,

 

  

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(ii) Termination Events. If the Early Termination Date results from a Termination Event:

 

(1) One Affected Party. Subject to clause (3) below, if there is one Affected Party, the Early Termination Amount will be determined in accordance with Section 6(e)(i), except that references to the Defaulting Party and to the Hon-defaulting Party will be deemed to be references to the Affected Party and to the Non-affected Party, respectively.

 

(2) Two Affected Parties. Subject to clause (3) below, if there are two Affected Parties, each party will determine an amount equal to the Termination Currency Equivalent of the sum of the Close-out Amount or Close-out Amounts (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions, as the case may be, and the Early Termination Amount will be an amount equal to (A) the sum of (I) one-half of the difference between the higher amount so determined (by party “X”) and the lower amount so determined (by party “Y”) and (II) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to Y. If the Early Termination Amount is a positive number, Y will pay it to X; if it is a negative number. X will pay the absolute value of the Early Termination Amount to Y.

 

(3) Mid-Market Events. If that Termination Event is an Illegality or a Force Majeure Event, then the Early Termination Amount will be determined in accordance with clause (1) or (2) above, as appropriate, except that, for the purpose of determining a Close-out Amount or Close-out Amounts, the Determining Party will:

 

(A) if obtaining quotations from one or more third parties (or from any of the Determining Party’s Affiliates), ask each third party or Affiliate (I) not to take account of the current credit Worthiness of the Determining Party or any existing Credit Support Document and (II) to provide mid-market quotations; and

 

(B) in any other case, use mid-market values without regard to the creditworthiness of the Determining Party.

 

(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because Automatic Early Termination applies in respect of a party, the Early Termination Amount will be subject to such adjustments as are appropriate and permitted by applicable law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(i).

 

(iv) Adjustment for Illegality or Force Majeure Event. The failure by a party or any Credit Support Provider of such party to pay, when due, any Early Termination Amount will not constitute an Event of Default under Section 5(a)(i) or 5(a)(m)(1) if such failure is due to the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction constitute or give rise to an Illegality or a Force Majeure Event Such amount will (1) accrue interest and otherwise be treated as an Unpaid Amount owing to the other party if subsequently an Early Termination Date results from an Event of Default, a Credit Event Upon Merger or son Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions and (2) otherwise accrue interest in accordance with Section 9(h)(ii)(2).

 

  

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(v) Pre-Estimate. The parties agree that an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks, and, except as otherwise provided in this Agreement, neither party will be entitled to recover any additional damages as a consequence of the termination of the Terminated Transactions.

 

(f) Set-Off. Any Early Termination Amount payable to one party (the “Payee”) by the other party (the “Payer”), in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”) (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will notice to the other party of any set-off effected under this Section 6(f).

 

For this purpose, either the Early Termination Amount or the Other Amounts (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, in good faith and using commercially reasonable procedures, to purchase the relevant amount of such currency.

 

If an obligation is unascertained, X may in good faith estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.

 

Nothing in this Section 6(f) will be effective to create a charge or other security interest. This Section 6(f) will be without prejudice and in addition to any right of set-off, offset, combination of accounts, lien, right of retention or withholding or similar right or requirement to which any party is at any time otherwise entitled or subject (whether by operation of law, contract or otherwise).

 

6. Transfer

 

Subject to Section 6(b)(ii) and to the extent permitted by applicable law, neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that

 

(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and

 

(b) a party may make such a transfer of all or any part of its interest in any Early Termination Amount payable to it by a Defaulting Party, together with any amounts payable on or with respect to that interest and any other rights associated with that interest pursuant to Sections 8, 9(h) and 11.

 

Any purported transfer that is not in compliance with this Section. 7 will be void.

 

  

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7. Contractual Currency

 

(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into fee Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for me shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.

 

(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in clause (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purpose of such judgment or order and the rate of exchange at which such party is able, acting in good faith and using commercially reasonable procedures in converting the currency received into me Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the Judgment or order actually received by such party.

 

(c) Separate Indemnities. To the extent permitted by applicable law, the indemnities m this Section 8 constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.

 

(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

 

8. Miscellaneous

 

(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud.

 

  

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(b) Amendments. An amendment, modification or waiver in respect of this Agreement will only be effective if in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system.

 

(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.

 

(d) Remedies Cumulative. Except as provided in this Agreement; the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights,, powers, remedies and privileges provided by law.

 

(e) Counterparts and Confirmations.

 

(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission and by electronic messaging system), each of which will be deemed an original.

 

(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation will be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes, by an exchange of electronic messages on an electronic messaging system or by an exchange of e-mails, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex, electronic message or e-mail constitutes a Confirmation.

 

(f) No Waiver of Rights. A failure or delay in exercising any right power or privilege m respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.

 

(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.

 

(h) Interest and Compensation.

 

(i) Prior to Early Termination. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction:

 

(1) Interest on Defaulted Payments. If a party defaults in the performance of any payment obligation, it will, to the extent permitted by applicable law and subject to Section 6(c), pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (3)(B) or (C) below), at the Default Rate.

 

  

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(2) Compensation for Defaulted Deliveries. If a party defaults in the performance of any obligations required to be settled by delivery, it will on demand (A) compensate the other party to the extent provided for in The relevant Confirmation or elsewhere in this Agreement and (B) unless otherwise provided in the relevant Confirmation or elsewhere in this Agreement, to the extent permitted by applicable law and subject to Section 6(c), pay to the other party interest (before as well as after judgment) on an amount equal to the fair market value of that which was required to be delivered in the same currency as that amount, for the period from (and including) the originally scheduled date for delivery to (but excluding) the date of actual delivery (and excluding any period in respect of which interest or compensation in respect of that amount is due pursuant to clause (4) below), at the Default Rate. The fair market value of any obligation referred to above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party that was entitled to take delivery.

 

(3) Interest on Deferred Payments. If:

 

(A) a party does not pay any amount that, but for Section 2(a)(iii), would have been payable, it will, to the extent permitted by applicable law and subject to Section 6(c) and clauses (B) and (C) below, pay interest (before as well as after judgment) on that amount to the other party on demand (after such amount becomes payable) in the same currency as that amount, for the period from (and including) the date the amount would, but for Section 2(a)(iii), have been payable to (but excluding) the date the amount actually becomes payable, at the Applicable Deferral Rate;

 

(B) a payment is deferred pursuant to Section 5(d), the party which would otherwise have been required to make that payment will, to the extent permitted by applicable law, subject to Section 6(c) and for so long as no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the amount of the deferred payment to the other party on demand (after such amount becomes payable) in the same currency as the deterred payment, for the period from (and including) the dale the amount would, but for Section 5(d), have been payable to (but excluding) fee earlier of the date (he payment is no longer deferred pursuant to Section and the date during the deferral period upon which an Event of Default or Potential Event of Default with respect to that party occurs, at the Applicable Deferral Rate; or

 

(C) a party fails to make any payment due to the occurrence of an Illegality or a Force Majeure Event (after giving effect to any deferral period contemplated by clause (B) above), it will, to the extent permitted applicable law, subject to Section 6(c) and for so long as the event or circumstance giving rise to that Illegality or Force Majeure Event continues and no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the date the party fails to make the payment due to the occurrence of the relevant Illegality or Force Majeure Event (or, if later, the date the payment is no longer deferred pursuant to Section 5(d)) to (but excluding) the earlier of the date the event or circumstance giving rise to that Illegality or Force Majeure Event ceases to exist and the date during the period upon which an Event of Default or Potential Event of Default with respect to that party occurs (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (B) above), at the Applicable Deferral Rate.

 

  

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(4) Compensation for Deferred Deliveries. If:

 

(A) a party does not perform any obligation that, but for Section 2(a)(iii), would have been required to be settled by delivery;

 

(B) a delivery is deferred pursuant to Section 5(d); or

 

(C) a party fails to make a delivery due to the occurrence of an Illegality or a Force Majeure Event at a time when any applicable Waiting Period has expired,

 

the party required (or that would otherwise have been required) to make the delivery will, to the extent permitted by applicable law and subject to Section 6(c), compensate and pay interest to the other party on demand (after, in the case of clauses (A) and (B) above, such delivery is required) if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.

 

(i) Early Termination. Upon the occurrence or effective designation of an Early Termination Date in respect of a Transaction:

 

(1) Unpaid Amounts. For the purpose of determining an Unpaid Amount in respect of the relevant Transaction, and to the extent permitted by applicable law, interest will accrue on the amount of any payment obligation or the amount equal to the Stir market value of any obligation required to be settled by delivery included m such determination in the same currency as that amount, for the period from (and including) the date the relevant obligation was (or would have been but for Section 2(a)(iii) or 5(d)) required to have bees performed to (but excluding) the relevant Early Termination Date, at the Applicable Close-out Rate.

 

(2) Interest on Early Termination Amounts. If an Early Termination Amount is due in respect of such Early Termination Date, that amount will, to the extent permitted by applicable law, be paid together with interest (before as well as after judgment) on that amount in the Termination Currency, for fee period from (and including) such Early Termination Date to (but excluding) the date the amount is paid, at the Applicable Close-out Rate.

 

(ii) Interest Calculation. Any interest pursuant to this Section 9(h) will be calculated on the basis of daily compounding and the actual number of days elapsed.

 

9. Offices; Multibranch Parties

 

(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction trough an Office other man its head or home office represents to and agrees with the other party that, notwithstanding the place of booking or its jurisdiction of incorporation or organization, its obligations are the same in terms of recourse against it as if it had entered into the Transaction through its head or home office, except that a party will not have recourse to the head or home office of the other party in respect of any payment or delivery deferred pursuant to Section 5(d) for so long as the payment or deli very is so deferred. This representation and agreement will be deemed to be repeated by each party on each date on which the parties enter into a Transaction.

 

(b) If a party is specified as a Multibranch Party in the Schedule, such party may, subject to clause (c) below, enter into a Transaction through, book a Transaction in and make and receive payments and deliveries with respect to a Transaction through any Office listed in respect of that party in the Schedule (but not any other Office unless otherwise agreed by the parties in writing).

 

  

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(c) The Office through which a party enters into a Transaction will be the Office specified for that party in the relevant Confirmation or as otherwise agreed by the parties in writing, and, if an Office for that party is not specified in the Confirmation or otherwise agreed by the parties in writing, its head or home office. Unless the parties otherwise agree in writing, the Office through which a party enters into a Transaction will also be the Office in which it books the Transaction and the Office through which it makes and receives payments and deliveries with respect to the Transaction. Subject to Section 6(b)(ii), neither party may change the Office in which it books the Transaction or the Office through which it makes and receives payments or deliveries with respect to a Transaction without the prior written consent of the other party.

 

10. Expenses

 

A Defaulting Party will on demand indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, execution fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a. party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.

 

11. Notices

 

(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:

 

(i) if in writing and delivered is person or by courier, on the date it is delivered;

 

(ii) if sent by telex, on the date the recipient’s answerback is received;

 

(iii) if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine);

 

(iv) if sent by certified or registered mall (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery is attempted;

 

(v) if sent by electronic messaging system, on the date it is received; or

 

(vi) if sent by e-mail, on the date it is delivered,

 

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication will be deemed given and effective on the first following day that is a Local Business Day.

 

  

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(b) Change of Details. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system or e-mail details at which notices or other communications are to be given to it.

 

12. Governing Law and Jurisdiction

 

(a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.

 

(b) Jurisdiction. With respect to any suit, action or proceedings relating to any dispute arising out of or in connection with this Agreement (“Proceedings”), each party irrevocably:

 

(i) submits;

 

(1) if this Agreement is expressed to be governed by English law, to (A) the non-exclusive jurisdiction of the English courts if the Proceedings do not involve a Convention Court and (B) the exclusive jurisdiction of the English courts if the Proceedings do involve a Convention Court; or

 

(2) if this Agreement is expressed to be governed by the laws of the State of New York, to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan is New York City;

 

(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party; and

 

(iii) agrees, to the extent permitted by applicable law, that the bringing of Proceedings in any one or more jurisdictions will not preclude the bringing of Proceedings in any other jurisdiction.

 

(c) Service of Process. Each party irrevocably appoints the Process Agent, if any, specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by applicable law.

 

(d) Waiver of Immunities. Each party irrevocably waives, to the extent permitted by applicable law, wife respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction or order for specific performance or recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

 

  

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13. Definitions

 

As used in this Agreement:

 

“Additional Representation” has the meaning specified in Section 3.

 

“Additional Termination Event” has the meaning specified in Section 5(b).

 

“Affected Party” has the meaning specified in Section 5(b).

 

“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Force Majeure Event, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event (which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2), means all Transactions unless the relevant Credit Support Document references only certain Transactions, in which case those Transactions and, if the relevant Credit Support Document constitutes a Confirmation: for a Transaction, that Transaction) and (b) with respect to any other Termination Event all Transactions.

 

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person.

 

“Agreement” has the meaning specified in Section 1(c).

 

“Applicable Close-out Rate” means:

 

(a) in respect of the determination of an Unpaid Amount:

 

(i) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

 

(ii) In respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Hon-defaulting Party, die Non-default Rate;

 

(iii) in respect of obligations deferred pursuant to Section 5(d), if there is no Defaulting Party and for so long as the deferral period continues, the Applicable Deferral Rate; and

 

(iv) in all other cases following the occurrence of a Termination Event (except where interest accrues pursuant to clause (iii) above), the Applicable Deferral Rate; and

 

(b) in respect of an Early Termination Amount-

 

(i) for the period from (and including) the relevant Early Termination Date to (but excluding) the date (determined in accordance with Section 6(d)(ii)) on which mat amount is payable;

 

  

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(1) if the Early Termination Amount is payable by a Defaulting Party, the Default Rate;

 

(2) if the Early Termination Amount is payable by a Non-defaulting Party, the Non-default Rate; and

 

(3) m ail other cases, the Applicable Deferral Rate; and

 

(ii) for the period from (and including) the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable to (but excluding) the date of actual payment:

 

(1) if a party fails to pay the Early Termination Amount due to fee occurrence of an event or circumstance which would, if it occurred with respect to a payment or delivery under a Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and for so long as the Early Termination Amount remains unpaid due to the continuing existence of such event or circumstance, the Applicable Deferral Rate;

 

(2) if the Early Termination Amount is payable by a Defaulting Party (but excluding any period in respect of which clause (1) above applies), the Default Rate;

 

(3) if the Early Termination Amount is payable by a Non-defaulting Party (but excluding any period in respect of which clause (1) above applies), the Non-default Rate; and

 

(4) in all other cases, fee Termination Rate.

 

“Applicable Deferral Rate” means:

 

(a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in fee applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market;

 

(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition of Applicable Close-out Rate, the rate certified by the relevant payer to be a rate offered to prime banks by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer after consultation with the other party, if practicable, for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; and

 

(c) for purposes of Section 9(h)(i)(3) and clauses (a)(iv), (b)(i)(3) and (b)(n)Q) of the definition of Applicable Close-out Rate, a rate equal to die arithmetic mean of the rate determined pursuant to clause (a) above and a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fond or of funding the relevant amount.

 

“Automatic Early Termination” has the meaning specified in Section 6(a).

 

  

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“Burdened Party” has the meaning specified in Section 5(b)(iv).

 

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs after the parties enter into the relevant Transaction.

 

“Close-out Amount” means, with respect to each Terminated Transaction or each group of Terminated Transactions and a Determining Party, the amount of the losses or costs of the Determining Party that are or would be incurred under then prevailing circumstances (expressed as a positive number) or gains of the Determining Party that are or would be realized under then prevailing circumstances (expressed as a negative number) in replacing, or in providing for file Determining Party the economic equivalent of, (a) the material terms of that Terminated Transaction or group of Terminated Transactions, including the payments and deliveries by the patties under Section 2(a)(i) in respect of mat Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date (assuming satisfaction of the conditions precedent in Section 2(a)(iii) and (b) the option rights of the parties in respect of that Terminated Transaction or group of Terminated Transactions.

 

Any Close-out Amount will be determined by the Determining Party (or its agent), which will act in good faith and use commercially reasonable procedures in order to produce a commercially reasonable result. The Determining Party may determine a Close-out Amount for any group of Terminated Transactions or any individual Terminated Transaction but, in the aggregate, for not less than all Terminated Transactions. Each Close-out Amount will be determined as of die Early Termination Date or, if that would not be commercially reasonable, as of the date or dates following the Early Termination Date as would be commercially reasonable.

 

Unpaid Amounts in respect of a Terminated Transaction or group of Terminated Transactions and legal fees and out-of-pocket expenses referred to in Section 11 are to be excluded in all determinations of Close-out Amounts.

 

In determining a Close-out Amount, the Determining Party may consider any relevant information, including, without limitation, one or more of the following types of information:

 

(i) quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into .account the creditworthiness of the Determining Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Determining Party and the third party providing the quotation;

 

(ii) information consisting of relevant market data in the relevant market supplied by one or more third parties including, without limitation, relevant rates, prices, yields, yield curves, volatilities, spreads, correlations or other relevant market data in the relevant market; or

 

(iii) information of the types described in clause (i) or (ii) above from internal sources (including any of the Determining Party’s Affiliates) if that information is of the same type used by the Determining Party in the regular course of its business for the valuation of similar transactions.

 

The Determining Party will consider, taking into account the standards and procedures described in this definition, quotations pursuant to clause (i) above or relevant market data pursuant to clause (ii) above unless the Determining Party reasonably believes in good faith that such quotations or relevant market data are not readily available or would produce a result that would not satisfy those standards. When considering information described in clause (i), (ii) or (iii) above, die Determining Party may include costs of funding, to the extern costs of funding are not and would not be a component of the other information being utilized. Third parties supplying quotations pursuant to clause (i) above or market data pursuant to clause (ii) above may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other sources of market information.

 

  

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Without duplication of amounts calculated based on information described in clause (i), (ii) or (iii) above, or other relevant information, and when it is commercially reasonable to do so, the Determining Party may in addition consider in calculating a Close-out Amount any loss or cost incurred in connection with its terminating, liquidating or re-establishing any hedge related to a Terminated Transaction or group of Terminated Transactions (or any gain resulting from any of them).

 

Commercially reasonable procedures used b determining a Closeout Amount may include the following:

 

(1) application to relevant market data from third parties pursuant to clause (ii) above or information from internal sources pursuant to clause (iii) above of pricing or other valuation models that are, at the time of the determination of the Close-out Amount, used by the Determining Party in the regular course of its business in pricing or valuing transactions between the Determining Party and unrelated third parties that are similar to the Terminated Transaction or group of Terminated Transactions; and

 

(2) application of different valuation methods to Terminated Transactions or groups of Terminated Transactions depending on the type, complexity, size or number of the Terminated Transactions or group of Terminated Transactions.

 

“Confirmation “ has the meaning specified in me preamble.

 

“consent” includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent.

 

“Contractual Currency” has the meaning specified in Section 8(a).

 

“Convention Court” means any court which is bound to apply to the Proceedings either Article 17 of the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.

 

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

 

“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.

 

“Credit Support Provider” has the meaning specified in the Schedule.

 

“Cross-Default” means the event specified in Section 5(a)(vi).

 

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.

 

  

22

  

 

“Defaulting Party” has the meaning specified in Section 6(a).

 

“Designated Event” has the meaning specified in Section 5(b)(v).

 

“Determining Party” means the party determining a Close-out Amount.

 

“Early Termination Amount” has me meaning specified in Section 6(e).

 

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

 

“electronic messages” does not include e-mails but does include documents expressed in markup languages, and “electronic messaging system” will be construed accordingly.

 

“English law “ means the law of England and Wales, and “English “ will be construed accordingly.

 

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

 

“Force Majeure Event” has the meaning specified in Section 5(b).

 

“General Business Day” means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits).

 

“Illegality” has the meaning specified in Section 5(b).

 

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business hi such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction; but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).

 

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority), and “unlawful” will be construed accordingly.

 

“Local Business Day” means (a) in relation to any obligation under Section 2(a)(i), a General Business Day m the place or places specified in die relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement (b) for the purpose of determining when a Waiting Period expires, a General Business Day in the place where the event or circumstance that constitutes or gives rise to the Illegality or Force Majeure Event, as (he case may be, occurs, (c) in relation to any other payment, a General Business Day in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment and, if that currency does not have a single recognized principal financial centre, a day on which the settlement system necessary to accomplish such payment is open, (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General Business Day but for the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction.

 

  

23

  

 

“Local Delivery Day” means, for purposes of Sections 5(a)(i) and 5(d), a day on which settlement systems necessary to accomplish the relevant delivery are generally open for business so that the delivery is capable of being accomplished in accordance with customary market practice, in the place specified in the relevant Confirmation or, if not so specified, in a location as determined in accordance with customary market practice for the relevant delivery.

 

“Master Agreement” has the meaning in the preamble.

 

“Merger Without Assumption” means the event specified in Section 5(a)(viii).

 

“Multiple Transaction Payment Netting” has the meaning specified in Section 2(c).

 

“‘Non-affected Party” means, so long as there is only one Affected Party, the other party.

 

“Non-default Rate” means the rate certified by the Non-defaulting Party to be a rate offered to the Non-defaulting Party by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the Non-defaulting Party for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market.

 

“Non-defaulting Party” has the meaning specified in Section 6(a).

 

“Office” means a branch or office of a party, which may be such party’s head or home office.

 

“Other Amounts” has the meaning in Section 6(1).

 

“Payee” has the meaning specified in Section 6(f).

 

“Payer” has the meaning specified in Section 6(f).

 

“Potential Event of Default” means any event which, wife the giving of notice or the lapse of time or both, would constitute an Event of Default.

 

“Proceedings” has the meaning specified in Section 13(b).

 

“Process Agent” has the meaning specified in the Schedule.

 

“rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.

 

  

24

  

 

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organized, managed and controlled or considered to have its seal, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.

 

“Schedule” has the meaning specified in the preamble.

 

“Scheduled Settlement Date” means a date on which a payment or delivery is to be made under Section 2(a)(1) with respect to a Transaction,

 

“Specified Entity” has the meaning specified in the Schedule.

 

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surely or otherwise) in respect of borrowed money.

 

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which, is not a Transaction under this Agreement but (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit delimit option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

 

“Stamp Tax” means say stamp, documentation or similar tax.

 

“Stamp Tax Jurisdiction” has the meaning in Section 4(e).

 

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other man a stamp, registration, documentation or similar tax.

 

“Tax Event” has the meaning specified in Section 5(b).

 

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

 

“Terminated Transactions” means, with respect to any Early Termination Date, (a) if resulting from an Illegality or a Force Majeure Event, all Affected Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if resulting from any other Termination Event, all Affected Transactions and (c) if resulting from an Event of Default, all Transactions in effect either immediately before the effectiveness of the notice designating that Early Termination Date or, if Automatic Early Termination applies, immediately before that Early Termination Date.

 

  

25

  

 

“Termination Currency” means (a) if a Termination Currency is specified in the Schedule and that currency is freely available, that currency, and (b) otherwise, euro if this Agreement is expressed to be governed by English law or United States Dollars if this Agreement is expressed to be governed by tee laws of the Sate of Hew York.

 

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Close-out Amount is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for fie purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for me purchase of such Other Currency for value on we relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.

 

“Termination Event” means an Illegality, a Force Majeure Event, a Tax Event, a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.

 

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.

 

“Threshold Amount” means the amount, if any, specified as such in the Schedule.

 

“Transaction” has the meaning specified in the preamble.

 

“Unpaid Amounts” owing to any party means with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii) or due but for Section 5(d) to such party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date, (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii) or 5(d)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered and (c) if the Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are effected Transactions, any Early Termination Amount due prior to such Early Termination Date and which remains unpaid as of such Early Termination Date, in each case together with any amount of interest accrued or other compensation in respect of that obligation or deferred obligation, as the case may be, pursuant to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any obligation referred to in clause (b) above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it will be the average of the Termination Currency Equivalents of the fair market values so determined by both parties.

 

  

26

  

 

“Waiting Period” means:

 

(a) in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on fee relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and

 

(b) in respect of an event or circumstance under Section 5(b)(ii), other than the case of Section 5(b)(ii)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of eight Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance.

 

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

 

 

 

	
SOVEREIGN BANK

 

By: /s/ Stephen R. Andrews                                                   

Name: Stephen R. Andrews

Title: Senior Vice President

Date: December 30, 2010

	
RANOR, INC.

 

By: /s/ Stanely Youtt                                                                                                                                

Name: Stanley Youtt

Title: President and CEO

Date: December 28, 2010

 

  

27

  

 

ISDA®

International Swap and Derivatives Association, Inc.

SCHEDULE

 

to the

Master Agreement

dated as of

December 30, 2010

between

	
SOVEREIGN BANK

	
And

	
RANOR, INC.

	
(“Party A”)

	  	
(“Party B”)

 

	
  

	
Part 1. Termination Provisions.

In The Agreement:

	
(a)

	
“Specified Entity” means in relation to Party A for the purpose of:

	
Section 5(a)(v),

	
None;

	
Section 5(a)(vi),

	
None;

	
Section 5(a)(vii),

	
None; and

	
Section 5(b)(v),

	
None;

	
  

	
and in relation to Party B for the purpose of:

	
Section 5(a)(v),

	
None;

	
Section 5(a)(vi),

	
None;

	
Section 5(a)(vii),

	
None; and

	
Section 5(b)(v),

	
None.

 

If a party or any Credit Support Provider of a party is a partnership, then for purposes of Section 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v), “Specified Entity” also means each general partner of that partnership.

 (b)           “Specified Transaction” will have the meaning specified in Section 14 of this Agreement.

	
(c)  

	
The “Cross Default” provisions of Section 5(a)(vi) will apply to Party A and to Party B.

“Specified Indebtedness” will have the meaning specified in Section 14 of this Agreement; provided, however, that indebtedness or obligations in respect of deposits received in the ordinary course of the banking business shall not constitute Specified Indebtedness.

 

  

28

  

 

	
  

	
“Threshold Amount” will mean

	
(i)  

	
with respect to Party A, the greater of $100,000,000 or 2% of stockholders’ equity of Party A as reflected on its most recent financial statements , and

	
(ii)  

	
with respect to Party B, an amount equal to any amount of Specified Indebtedness.

	
(d)  

	
The “Credit Event Upon Merger” provisions of Section 5(b)(v) will apply to Party A and to Party B.

	
(e)  

	
The “Automatic Early Termination” provisions of Section 6(a) will not apply to Party A or to Party B.

	
(f)  

	
“Termination Currency” will mean U.S. Dollars as per Section 14 of this Agreement.

	
(g)  

	
Payments On Early Termination. If an Early Termination Date occurs for any reason, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to Section 6(e) and will be subject to Section 6(f). Party A will always be the Determining Party for the purpose of determining the Close-out Amount, notwithstanding any provision in Section 6(e) or 6(f).

	
(h)  

	
Additional Termination Event. In addition to the Termination Events specified in Section 5(b), the occurrence of either of the following shall constitute an Additional Termination Event, subject to Section 5(b)(vi):

	
(i)  

	
Both (a) all of the principal, interest, fees and other amounts owing by Party B (which will be the Affected Party) under or in respect of the Financial Agreement shall have been paid in full and (b) all commitments of Party A to make extensions of credit under or in respect of, or as contemplated by, the Financial Agreement shall have expired or been terminated in accordance with their terms.

	
(ii)  

	
If a party (which will be the Affected Party), or Specified Entity of that party is a natural person, the death of, or the appointment of a guardian for that natural person.

	
  

	
 (i)

	
The following provision is hereby added to Section 5(a) of the Agreement as an Event of Default:

	
  

	
“(ix) Unsatisfied Judgments. With respect to Party B, the party, any Credit Support Provider of such party or any Specified Entity of such party for the purpose of Section 5(a)(vii) has a final judgment issued against it by a court of competent jurisdiction and such judgment is not discharged or its execution stayed pending appeal within 30 days of such judgment or such judgment is not discharged within 30 days of the expiration of any such stay.”

	
Part 2.

	
Tax Representations.

	
(a)

	
Payer Representations. For the purpose of Section 3(e) of this Agreement, Party A and Party B each makes the following representation:

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, except that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

 

  

29

  

 

	
(b)

	
Payee Representations. For the purpose of Section 3(f) of this Agreement, Party A and Party B each makes the following representation:

It is a “U.S. person” (as that term is used in section 1.l441-4(a)(3)(ii) of United States Treasury Regulations) for United States federal income tax purposes.

Part 3.                      Agreement to Deliver Documents.

For the purpose of Section 4(a) of this Agreement, each party agrees to deliver the following documents, as applicable:

	
Party required to deliver document

	
Form/Document Certificate

	
Date by which to be delivered

	
Covered by Section 3(d)

Representation?

	
Party B

	
A certificate of an authorized officer for such party and any Credit Support Provider of 

such party certifying the authority, names and true signatures of the officers signing this Agreement, each Confirmation and any Credit Support Document, reasonably 

satisfactory in form and substance to Party A.

	
Upon execution of this Agreement and as deemed necessary for any further documentation.

 

	
Yes

	
Party B

	
Certified copies of documents evidencing each action taken by Party B and any 

Credit Support Provider of such party to authorize its execution of this Agreement, 

each Confirmation, and any Credit Support Document referred to in Part 3 of 

this Schedule, and the performance of its obligations hereunder as well 

as its bylaws and articles of incorporation.

	
Upon execution of this Agreement.

	
Yes

	
Party B

	
Annual financial statements prepared in a form acceptable to Party A.

	
Promptly upon request.

	
Yes

	
Party B

	
Quarterly financial statements prepared in a form acceptable to Party A.

	
Promptly upon request.

	
Yes

	
Party B

	
A written opinion of legal counsel to Party B and any Credit Support Provider 

for Party B reasonably satisfactory in form and substance to Party A.

	
Upon execution of this Agreement if requested and as deemed necessary.

	
No

	
Party B

	
Such other documents as Party A may reasonably request in 

connection with each transaction.

	
Promptly upon request.

	
Yes

 

  

30

  

 

Part 4. Miscellaneous.

	

(a)

	
 

	
Addresses for Notices. For the purpose of Section 12(a) of this Agreement:

	  	
Address for notices or communications to Party A:

	
Sovereign Bank

Derivatives Desk

75 State Street

MA1-SST-0413

Boston, MA 02109

 

Attention: Nancy Cronin

 

Telephone Number: 617-757-5501

Facsimile Number: 617-346-7494

E-Mail: ncronin@sovereignbank.com

 

	  	
Address for notices or communications to Party B:

	
Ranor, Inc.

 

Ranor, Inc.

Attention: Mary Desmond

 

Telephone Number: 978-874-0591 ext 102

Facsimile Number: 978-874-2748

E-Mail: desmondm@ranor.com

Electronic Messaging System Details:

Specific Instructions:

(b) Process Agent. For the purpose of Section 13(c) of this Agreement

 

Party A appoints as its Process Agent:                                                                           Not Applicable

Party B appoints as its Process Agent:                                                                           Not Applicable

(c)           Offices. The provisions of Section 10(a) will not apply to this Agreement.

	
(d)

	
Multibranch Party. For the purpose of Section 10 of this Agreement, neither Party A nor Party B is a Multibranch Party.

	
(e)

	
Calculation Agent. The Calculation Agent is Party A.

	
(f)

	
 “Credit Support Document” means each document which, by its terms, secures, guarantees or otherwise supports Party B’s obligations hereunder from time to time, whether or not this Agreement, any Transaction, or any type of Transaction entered into hereunder is specifically referenced or described in any such document.

(g)           “Credit Support Default” is amended by adding at the end of Section 5(a)(iii):

“(4) any default, event of default or other similar condition or event (however described) exists under any Credit Support Document, any action is taken to realize upon any collateral provided to secure such party’s obligations hereunder or under any Transaction, or the other party fails at any time to have a valid and perfected first priority security interest in any such collateral.”

 

  

31

  

	
(h)

	
Definitions. Section 14 of this Agreement is hereby amended to add the following definitions in their appropriate alphabetical order:

	
  

	
“Stockholders Equity” means, at any time, the sum (as shown on the most recent Annual Audited Financial Statements of the applicable Party at such time) of (i) its capital stock (including preferred stock) outstanding, taken at par value, (ii) its capital surplus and (iii) its retained earnings, minus (iv) treasury stock, each to be determined in accordance with generally accepted accounting principles.

	
  

	
“Financial Agreement” for the purposes hereof, means each existing or future agreement or instrument relating to any loan or extension of credit from Party A to Party B (whether or not anyone else is a Party hereto), as the same exists when executed and without regard to any termination or cancellation thereof, or unless consented to in writing by Party A, any amendment, modification, addition, waiver or consent thereto or thereof.

	
(i)

	
“Credit Support Provider” means each party to a Credit Support Document that provides or is expected to provide security, a guaranty or other credit support for Party B’s obligations hereunder.

	
(j)

	
Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine.

	
(k)

	
Netting of Payments. “Multiple Transaction Payment Netting” will apply for the purpose of Section 2(c) of this Agreement to all Transactions in each case starting from the date of this Agreement.

(l)           “Affiliate” will have the meaning specified in Section 14 of this Agreement.

(m)           Absence of Litigation. For the purpose of Section 3(c):

“Specified Entity” means in relation to Party A, None.

“Specified Entity” means in relation to Party B, None.

(n)           No Agency. The provisions of Section 3(g) will apply to this Agreement.

	
(o)

	
Consent to Recording. Each party (i) consents to the recording of telephone conversations between the trading, marketing and other relevant personnel of the parties in connection with this Agreement or any potential Transaction, (ii) agrees to obtain any necessary consent of, and give any necessary notice of such recording to, its relevant personnel and (iii) agrees, to the extent permitted by applicable law, that recordings may be submitted in evidence in any Proceedings.

	
(p)  

	
Waiver of Jury Trial. To the extent permitted by applicable law, each party irrevocably waives any and all right to trial by jury in any legal proceeding in connection with this Agreement, any Credit Support Document to which it is a party, or any Transaction.

	
(q)

	
Joint Party. If more than one entity or natural person is executing this Agreement as Party B, then

 

  

32

  

 

	
(i)  

	
the obligations of the party B hereunder and under each Transaction shall be the joint and several obligations of each such entity or natural person,

	
(ii)  

	
any Event of Default or Potential Event of Default occurring with respect to any such entity or natural person shall be an Event of Default or Potential Event of Default, respectively, with respect to party B,

	
(iii)  

	
the death, release or discharge, in whole or in part, of any such entity or natural person, or the occurrence of any bankruptcy, liquidation, dissolution or any other event described in Section 5(a)(vii) with respect to any such entity or natural person, shall not discharge or affect the liabilities of any other such entity or natural person, shall not discharge or affect the liabilities of any other such entity or natural person;

	
(iv)  

	
unless the context otherwise requires, each reference herein or in any Confirmation to “party” shall, as applied to Party B, be construed as a joint and several reference to each such entity or natural person; and

	
(v)  

	
any person or entity receiving notices given to Party B, at the address shown above shall be deemed to receive such notices on behalf of each such entity or person.

	
(r) 

	
Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction. The Parties hereto shall endeavor in good faith negotiations to replace the prohibited or unenforceable provisions with a valid provision, the economic effect of which comes as close as possible to that of the prohibited or unenforceable provision.

 

Part 5. Other Provisions.

 

	
 (a)

	
2000 ISDA Definitions. The definitions and provisions contained in the 2000 ISDA Definitions (the “2000 Definitions”) and the 1998 FX and Currency Option Definitions (the “FX Definitions”) as published by the International Swaps and Derivatives Association, Inc. are incorporated into this Agreement by reference. For these purposes, all references in the 2000 Definitions to a “Swap Transaction” and all references in the FX Definitions to a “FX Transaction” or “Currency Option” shall be deemed to apply to each Transaction under this Agreement. With respect to FX Transactions, in the event of any inconsistency between the 2000 Definitions and the FX Definitions, the FX Definitions will prevail. Any definitions incorporated into a Confirmation shall prevail over the provisions of this Agreement, or the 2000 Definitions or the FX Definitions.

	
(b)

	
Right of Set-off. If any amount payable hereunder is not paid as and when due, the party (“Party X”) obligated to make that payment hereby authorizes the other party (“Party Y”) and each Affiliate of Party Y to proceed, to the fullest extent permitted by applicable law, without prior notice, by Right of Set-off, banker’s lien, counterclaim or otherwise, against any assets of Party X that may at any time be in the possession of Party Y or that Affiliate, at any branch or office, to the full extent of all amounts payable to Party Y hereunder.

 

  

33

  

 

	
  

	
In addition, if a party would, but for this provision, have an obligation to pay the other party any amount calculated pursuant to Section 6(e) in connection with early termination which occurs on the ground of (i) a Termination Event in which that other party is the only Affected Party or (ii) an Event of Default with respect to that other party at a time when any amount is payable (whether at such time or in the future or upon the occurrence of a contingency) to that party or its Affiliate by that other party under any other agreement between them or any instrument or undertaking of that other party (each such amount, an “Other Obligation”), the party that, but for this provision would have an obligation to make a payment hereunder is authorized by that other party to Set-off that obligation hereunder against any Other Obligation, without prior notice. If an obligation is unascertained, the party exercising a Right of Set-off hereunder may in good faith estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.

If the party exercises a Right of Set-off hereunder, it shall give the other party notice of the amounts of the obligations hereunder and the Other Obligations reduced and discharged by the Set-off, as soon as practicable after the Set-off is effected.

 

Nothing in this provision, titled Right of Set-off, shall be effective to create a charge or other security interest. This provision, titled Right of Set-off, shall be without prejudice and in addition to any Right of Setoff, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law or otherwise).

	
(c)  

	
Confirmations. For each Transaction Party A and Party B agree to enter into hereunder, Party A shall promptly send to Party B a Confirmation setting forth the terms of such Transaction. Party B shall execute and return the Confirmation to Party A or request correction of any error within two Local Business Days of trade date. Failure of Party B to respond within such period shall not affect the validity or enforceability of such Transaction and shall be deemed to be an affirmation of such terms.

	
(d)  

	
Notice of Event of Default. Each party agrees, upon learning of the occurrence of any event or commencement of any condition that constitutes an Event of Default or a Potential Event of Default with respect to itself, promptly to give the other party notice of such event or condition. Failure to give notice within 30 days of learning of such event or condition shall constitute an Event of Default with respect to such party.

	
(e)  

	
Change of Account. Section 2(b) of this Agreement is hereby amended by the addition of the following after the word “delivery” in the first line thereof:

“to another account in the same legal and tax jurisdiction as the original account,”

	
(f)  

	
Consent to Transfer. Section 7 of this Agreement is amended by deleting the word “and” at the end of paragraph (a); replacing the period at the end of paragraph (b) with the phrase “; and”; and inserting the following paragraph:

“(c)           Party A may transfer, without the consent of Party B (or any Credit Support Provider and Specified Entity of Party B), this Agreement and all or any portion of the Transactions under this Agreement in the event that any of Party B’s obligation(s) to Party A or its Affiliates, as identified in Part 3 of this Agreement, are sold, transferred, or otherwise assigned by Party A to another party, in which case Party B (and each Credit Support Provider and Specified Entity of Party B) shall execute, or cause to be executed, such documents, instruments and agreements, including without limitation, amendments to this Agreement, as Party A shall deem necessary to effect the foregoing, including, but not limited to any release by Party B (or any Credit Support Provider or Specified Entity of Party B) of Party A’s obligations under this Agreement.”

 

  

34

  

 

	
(g)  

	
Pari Passu Basis of Security for Obligations. All of the obligations of Party B (or any Credit Support Provider or Specified Entity of Party B) under this Agreement shall be secured on a pari passu basis by all of the collateral provided to secure Party B’s obligations under any Financial Agreement unless it would result in a default under any such Financial Agreement.

	
(h)  

	
Covenants of Financial Agreements.

(i)           Party B shall provide Party A at all times hereunder with the same covenant protection as Party A requires of Party B under Financial Agreements. Therefore, in addition to the Cross Default provisions of this Agreement, and notwithstanding the satisfaction of any obligation or promise to pay money to Party A under any Financial Agreement, or the termination or cancellation of any Financial Agreement, Party B hereby agrees to perform, comply with and observe for the benefit of Party A hereunder all affirmative and negative covenants contained in each Financial Agreement applicable to Party B (excluding any obligation or promise to pay money under any Financial Agreement) at any time Party B has any obligation (whether absolute or contingent) under this Agreement.

(ii)           For purposes hereof: (A) the affirmative and negative covenants of each Financial Agreement applicable to Party B (together with related definitions and ancillary provisions, but in any event excluding any obligation or promise to pay money under any Financial Agreement) are incorporated (and upon execution of any future Financial Agreement, shall automatically be incorporated) by reference herein (mutatis mutandis): (B) if other lenders or creditors are parties to any Financial Agreement then references therein to the lenders or creditors shall be deemed references to Party A: and (C) for any such covenant applying only when any loan, other extension of credit, obligation or commitment under the Financial Agreement is outstanding, that covenant shall be deemed to apply hereunder at any time Party B has any obligation (whether absolute or contingent) under this agreement.

(iii)           Notwithstanding the foregoing, if the incorporation of any provision by reference from any Financial Agreement would result in the violation by Party B of the terms of that Financial Agreement, this Agreement shall not incorporate that provision.

	
(i)

	
Representations. The introductory clause of Section 3 of this Agreement is hereby amended to read in its entirety as follows:

“Each party makes each of the representations contained in Section 3 to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Sections 3(a) and 3(f), at all times until the termination of this Agreement), absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction. If any “Additional Representation” is specified in the Schedule or any Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or times specified for such Additional Representation, absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction.”

 

  

35

  

 

	
(j)

	
Accuracy of Specified Information. Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period:

	
  

	
“or, in the case of audited or unaudited financial statements, a fair presentation of the financial condition of the relevant party”

	
(k)  

	
Additional Representations. For purposes of Section 3 of this Agreement, the following shall be added, immediately following paragraph (g) thereof and the parties agree that each additional representation contained in this Part 5(k) shall be deemed repeated by the party making such representation on each date on which a Transaction is entered into:

	
  

	
(h)

	
This Agreement and each Transaction constitutes a “swap agreement” within the meaning of Commodity Futures Trading Commission (“CFTC”) regulations Section 35.1(b)(1).

	
  

	
(i)

	
It is an “eligible swap participant” within the meaning of CFTC Regulations Section 35.1(b)(2).

	
  

	
(j)

	
Neither this Agreement nor any Transaction is one of a fungible class of agreements that are standardized as to their material economic terms, within the meaning of CFTC Regulations Section 35.2(b).

	
  

	
(k)

	
The creditworthiness of the other party was or will be a material consideration in entering into or determining the terms of this Agreement and each Transaction, including pricing, cost or credit enhancement terms of the Agreement or Transaction, within the meaning of CFTC Regulations Section 35.2(c).

	
  

	
(l)

	
It has entered into this Agreement (including each Transaction evidenced hereby) in conjunction with its line of business (including financial intermediation services) or the financing of its business rather than for any speculative purpose.

	
  

	 (m)	
The individual(s) executing and delivering this Agreement and any other documentation (including any Credit Support Document) relating to this Agreement to which it is a party or that it is required to deliver are duly empowered and authorized to do so, and it has duly executed and delivered this Agreement and any Credit Support Documents to which it is a party.

	 	
(n)  

	
Party B represents and warrants that, since the date of Party B’s (and any Credit Support Provider’s or Specified Entity’s) latest audited financial statements, there has been no material adverse change in its financial condition or results of operations which has not been disclosed to Party A.

	
  

	
(o)

	
Non-Reliance. In connection with the negotiation of, the entering into, and the confirming of the execution of this Agreement, and Credit Support Document to which it is a party, each Transaction, and any other documentation relating to this Agreement to which it is a party or that it is required by this Agreement to deliver:

 

  

36

  

 

	
  

	
(i)

	
it is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel, or representations (whether written or oral) of the other party to this Agreement, such Credit Support Document, each Transaction or such other documentation other than the representations expressly set forth in this Agreement, such Credit Support Document and in any Confirmation;

	
  

	
(ii)

	
it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent it has deemed necessary, and it has made its own independent investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction pursuant to this Agreement) based upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party to this Agreement, such Credit Support Document, each Transaction or such other documentation;

	
  

	
(iii)

	
it is capable of assessing the merits of and of understanding (on its own behalf or through independent professional advice) and understands all the terms, conditions, and risks (economic and otherwise) of the Agreement, such Credit Support Document, each Transaction, and such other documentation and is capable of assuming and willing to assume (financially and otherwise) those terms, conditions, and risks;

	
  

	
(iv)

	
it is entering into this Agreement, such Credit Support Document, each Transaction, and such other documentation for the purposes of managing its borrowings or investments, hedging its underlying assets or liabilities or in connection with a line of business and not for purposes of speculation;

 

	 	
(v)

	it is entering into this Agreement, such Credit Support Document, each Transaction, and such other documentation as principal, and not as agent or in any other capacity, fiduciary or otherwise.

 

	 	
(vi)

	
 it is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction will not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party will be deemed to be an assurance or guarantee as to the expected results of that Transaction.

 

	
SOVEREIGN BANK

	  	
RANOR, INC.

 

	
By:

	
/s/ Stephen R. Andrews

	  	
By:

	
/s/ Stanley Youtt                                           

	
Name:

	
Stephen R. Andrews

	  	
Name:

	
Stanley Youtt

	
Title:

	
Senior Vice President

	  	
Title:

	
President & CEO

  

37f10q1210ex10vii_techprec.htm

Exhibit 10.7

 

RANOR, INC.

BOND PURCHASE AGREEMENT

Dated as of December 30, 2010

 

Sovereign Bank

446 Main Street

Worcester, Massachusetts 01608

Attention:        Edward S. Borden

Senior Vice President

	
RE:

	
$4,250,000 Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010A and $1,950,000 Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010B

This Bond Purchase Agreement (this “Agreement”) will confirm our agreement under which the Massachusetts Development Finance Agency (the “Agency”) is issuing and selling to Sovereign Bank (the “Purchaser” or the “Bank”), and the Purchaser is purchasing from the Agency $4,250,000 principal amount of the Agency’s Revenue Bonds, Ranor Issue, Series 2010A (together with any bonds issued in exchange or replacement therefor, the “Series 2010A Bonds”) and $1,950,000 principal amount of the Agency’s Revenue Bonds, Ranor Issue, Series 2010B (together with any bonds issued in exchange or replacement therefor, the “Series 2010B Bonds,” and collectively with the Series 2010A Bonds, the “Bonds”). The Bonds are being issued pursuant to the Mortgage, Loan and Security Agreement, dated as of December 1, 2010 (the “Loan Agreement”), among the Agency, Ranor, Inc. (the “Borrower”), and the Purchaser, as Bondowner and Disbursing Agent. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Loan Agreement, provided that “Bond Documents” as used herein means the Bond Documents to which the Borrower is a party. The proceeds of the Bonds are being loaned to the Borrower, a Delaware corporation doing business in The Commonwealth of Massachusetts (the “Commonwealth”), to finance and refinance the acquisition of the manufacturing facility currently leased by the Borrower, the construction of an addition thereto, the improvement and equipping thereof, and the costs of issuance of the Bonds. TechPrecision Corporation, a Delaware corporation and parent of the Borrower (the “Guarantor”) is guaranteeing the Borrower’s obligations under the Bond Documents pursuant to a Guaranty (Unlimited), dated as of the date hereof, from the Guarantor to the Purchaser (individually and collectively, the “Guaranty”).

As an inducement to the Purchaser and each subsequent owner of Bonds (collectively, the “Bondowner”) to purchase and hold the Bonds, the parties hereby represent, warrant and agree as follows:

 

  

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1. Representations and Warranties of the Borrower and the Guarantor. The Borrower and the Guarantor represent and warrant as follows:

 

1.1. Corporate Existence and Power. The Borrower is a corporation duly organized and validly existing under the laws of the State of Delaware and is qualified to do business in the Commonwealth, with the full power to own its properties and conduct its business as now conducted and to enter into and perform the Bond Documents. The Guarantor is a corporation duly organized and validly existing under the laws of the State of Delaware, with the full power to own its properties and conduct its business as now conducted and to enter into and perform the Guaranty.

 

1.2. Corporate Authority. The execution, delivery and performance of the Bond Documents have been duly authorized on the part of the Borrower by all necessary corporate action, and will not violate or constitute a default under its charter or by-laws, any applicable law, or any agreement or instrument binding upon it or its properties. The execution, delivery and performance of the Guaranty has been duly authorized on the part of the Guarantor by all necessary corporate action, and will not violate or constitute a default under its charter or by-laws, any applicable law, or any agreement or instrument binding upon it or its properties.

 

1.3. Binding Effect. The Bond Documents are the legal, valid and binding obligations of the Borrower, and are enforceable against the Borrower in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law and the availability of the remedy of specific performance. The Guaranty is the legal, valid and binding obligation of the Guarantor, and is enforceable against the Guarantor in accordance with its terms, subject to applicable bankruptcy and other similar laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law and the availability of the remedy of specific performance.

 

1.4. Financial Condition. The Borrower has delivered to the Purchaser the consolidated and consolidating financial statements of the Borrower and the Guarantor, including balance sheets as of March 31, 2009 and March 31, 2010, and the related statements of operations and statements of cash flows for the fiscal years then ended, audited by Tabriztch & Co. CPA. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) consistently applied throughout the periods involved and are correct and complete and fairly present the financial condition and the results of operations of the Borrower and the Guarantor at the dates and for the periods indicated. As of March 31, 2010, neither the Borrower nor the Guarantor had any material liabilities, contingent or otherwise, except as set forth on such statements, and since such date there has been no material adverse change in the financial condition, business operations or properties of the Borrower or the Guarantor and no material liabilities have been incurred by the Borrower or the Guarantor, except as disclosed in writing to the Purchaser.

 

  

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1.5. Nature of Business. The Borrower is a manufacturer of precision metal components and equipment.

 

1.6. Existence of Assets and Title Thereto. Each of the Borrower and the Guarantor has good and valid title to all its respective properties and assets reflected in the balance sheet as of March 31, 2010 referred to above, subject to no lien, encumbrance or charge of any kind except as disclosed in such balance sheet and Permitted Encumbrances.

 

1.7. Indebtedness. As of the date hereof, the Borrower has no indebtedness outstanding other than the Bonds, indebtedness to the Bondowner and Permitted Indebtedness (as hereinafter defined). As of the date hereof, the Guarantor has no indebtedness outstanding other than as set forth on the financial statements referred to in Section 1.4, above.

 

1.8. Third-Party Compliance. To the best of the Borrower’s knowledge, all parties to all material leases, contracts, and other commitments to which the Borrower is a party (“third-party agreements”) have complied with the provisions of such third-party agreements and no party is in default under any such third-party agreement and no event has occurred which, but for the giving of notice or the passage of time, or both, would constitute a default under any such third-party agreement.

 

1.9. First Priority Liens. The liens and security interests created pursuant to the Loan Agreement and the other Bond Documents are in all cases first priority liens, subject only to Permitted Encumbrances.

 

1.10. Litigation. There are no suits or proceedings pending or, to the best knowledge of the Borrower or the Guarantor, threatened against or affecting the Borrower or the Guarantor, or their respective properties, or by or before any court or governmental authority that have not been disclosed in writing to the Purchaser.

 

1.11. Compliance with Applicable Laws. Neither the Borrower nor the Guarantor is in default under any order or decree of any court or governmental authority. Each of the Borrower and the Guarantor is complying with all applicable statutes and regulations of all governmental authorities having jurisdiction over it or its business. To its best knowledge, Borrower has, and is in good standing with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business. Neither the zoning authorizations, approvals or variances or any other right to construct or to use the Project is to any extent dependent upon or related to any real estate other than the Property. All consents, licenses and permits and all other authorizations or approvals (collectively, “Governmental Approvals”) required for construction in accordance with the Project have been obtained or will be obtained prior to the Bond closing, and all laws relating to the construction and operation of the Project will be complied with and all permits and licenses required for the operation of the Project which cannot be obtained until such construction is completed can be obtained if the Project is completed in accordance with the plans for the Project. When the construction of the Project is completed in accordance with the plans for the Project, no building or other improvement will encroach upon any property line, building line, setback line, side yard line or any recorded or visible easement (or other easement of which Borrower is aware or has reason to believe may exist) with respect to the Project, except as may be located on the survey delivered to Bondowner and approved by Bondowner at the closing of the Bond or thereafter and/or as reflected in the plans of the Project.

 

  

3

  

 

1.12. Tax Returns and Payments. All tax returns and reports of the Borrower and the Guarantor required by law to be filed have been duly filed and all taxes, fees and other governmental charges shown thereon which are due and payable have been paid. No deficiency assessment or proposed adjustment of any federal, state or local taxes of the Borrower or the Guarantor is pending, and neither the Borrower nor the Guarantor knows of any liability or basis therefor for any income or other tax to be imposed upon either of them or any of their properties or assets for which adequate provision has not been made.

 

1.13. Licenses, Patents and Trademarks. Each of the Borrower and the Guarantor possesses all governmental licenses, approvals and authorizations and such patents, other licenses, trademarks, trade names, copyrights, and franchises as may be necessary to enable it to conduct its business.

 

1.14. Burdensome Contracts. Neither the Borrower nor the Guarantor is a party to any contract or agreement, the terms of which now have or, as far as can be foreseen, may have an adverse effect on the financial condition, business or properties of either of them.

 

1.15. Application. The Application, dated August 23, 2010, as amended, furnished by the Borrower to the Agency, is true and complete and accurately describes the Project in all material respects.

 

1.16. Disclosure. Neither this Agreement nor any other document, certificate or statement furnished to the Purchaser by or on behalf of the Borrower or the Guarantor in connection with the issuance, sale and purchase of the Bonds contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not materially misleading. To the best knowledge of each of the Borrower and the Guarantor, there is no fact, not of general knowledge, having a material adverse effect on the financial condition, business or properties of the Borrower or the Guarantor which has not been disclosed herein or in another written document furnished to the Purchaser by the Borrower or the Guarantor.

 

1.17. Fiscal Year. Each of the Borrower’s and the Guarantor’s fiscal year ends on March 31.

 

1.18. Environmental Matters. To Borrower’s and Guarantor’s knowledge, except as set forth in the phase 1 environmental site assessment report delivered to Lender, (a) each of the Borrower and the Guarantor has complied with all environmental laws regarding transfer, construction on and operation of its business and property, including but not limited to notifying authorities, observing restrictions on use, transferring, modifying or obtaining permits, licenses, approvals and registrations, making required notices, certifications and submissions, complying with financial liability requirements, managing hazardous substances, and responding to the presence or release of hazardous substances connected with operation of its business or property; (b) neither the Borrower nor the Guarantor shall, nor shall it permit others to, manage hazardous substances except in full compliance with environmental laws; (c) the Borrower and the Guarantor shall take prompt action in full compliance with environmental laws to respond to the on site or off site release of hazardous substances connected with its operation of its business or property; and (d) neither the Borrower nor the Guarantor has received any written notice from any regulatory body regarding any of the foregoing.

 

  

4

  

 

1.19. ERISA Compliance. Any Employee Pension Benefit Plans, as defined in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), of the Borrower or the Guarantor meets, as of the date hereof, the minimum funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or Prohibited Transaction (as defined in ERISA), has occurred with respect to any Employee Benefit Plans (as defined in ERISA) of either the Borrower or the Guarantor.

 

1.20. Solvency. The Borrower hereby represents to the Bondowner that it is solvent and is generally paying its debts as such debts become due.

 

1.21. Event of Default. No default or Event of Default (as specified in Section 7) exists.

 

1.22. Foreign Person. Borrower is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code.

 

2. Financial and other Information. The Borrower and the Guarantor agree that so long as the Bonds are outstanding, they will furnish to the Bondowner the following:

 

	
2.1.  

	
Financial Information.

 

(a) Annual Statement. On or before ninety (90) days after the end of its fiscal year, the annual financial statement of Borrower and Guarantor on a consolidated basis audited by a firm of certified public accountants in scope and with exceptions acceptable to the Bank, accompanied by a certificate by such accountant and by an officer of the Borrower that to the best of their knowledge no default exists under this Agreement, or under any indenture pursuant to which any other indebtedness of the Borrower is outstanding, and that all the terms of this Agreement have been fully performed, or if to the knowledge of either of them, any of the terms of this Agreement have not been fully performed, such certificate shall specify the nature of the default and the steps taken by the Borrower to correct such default;

 

(b) Quarterly Statement. On or before forty-five (45) days after the end of each quarter, the consolidated quarterly financial statement of Borrower and Guarantor;

 

(c) Quarterly Certificate. On or before forty-five (45) days after the end of each quarter, a quarterly covenant compliance certificate;

 

(d) Monthly Statements. On or before fifteen (15) days of month-end, a financial statement of Borrower for the preceding month in form satisfactory to the Lender, and a monthly borrowing base certificate in a form acceptable to Bank; and

 

(e) Other Information. Promptly after the Bank’s request, such other information as the Bank may, from time to time, reasonably request.

 

  

5

  

 

The foregoing shall be certified to the Bank as correct by an authorized representative of the Borrower and/or Guarantor, as applicable. Such financial statements shall consist of balance sheets, income statements and supporting information, including without limitation, leases, schedule and pledge status of liquid assets, schedule of debt maturities, schedule of contingent liabilities, and cash flow schedules for income producing property. The financial statements shall fairly and consistently represent the financial condition of the Borrower and/or the Guarantor, as applicable.

Whether requested or not, the Borrower will furnish to the Bank promptly upon receipt thereof copies of any and all management letters and financial statements submitted to the Borrower by its accountants and copies of all regular statements and all regular or periodic financial reports which the Borrower is or may be required to file with the Securities and Exchange Commission.

 

(f) Field Exams. Bank may cause commercial finance field examinations to be completed annually, at Borrower’s sole cost and expense; provided that no field examination shall be required for any year in which the average of the total principal amount outstanding under this Agreement as of the close of each month is less than $1,000,000.

 

2.2. Additional Information. From time to time such other information on the financial condition, properties and businesses of the Borrower and the Guarantor, including the Project, as the Bondowner may reasonably request. The Borrower and the Guarantor will permit persons designated by the Bondowner to inspect their properties and corporate and financial books and records and to discuss their respective affairs with their officers and employees at such reasonable times as requested and upon reasonable notice.

 

2.3. Budget. Disbursement of the Bond proceeds for Series 2010A Bonds shall be governed by a budget (hereinafter the “Budget”). The Budget shall specify the amount of Borrower’s cash equity invested in the Project, and all costs and expenses of every kind and nature whatever to be incurred by Borrower in connection with the Project. All changes to the Budget shall in all respects be subject to the prior written approval of Bondowner. The Budget shall include as line items (“Budget Line Items”), to the extent determined to be applicable by Bondowner in its reasonable discretion. Borrower agrees that all Bond proceeds disbursed by Disbursing Agent shall be used only for the Budget Line Items for which such proceeds were disbursed. Bondowner shall not be obligated to disburse any amount for any category of costs set forth as Budget Line Item which is greater than the amount set forth for such category in the applicable Budget Line Item. Notwithstanding, so long as no Event of Default exists, Borrower shall have the right, with Bondowner’s reasonable consent, to re-allocate cost savings from one line to another line item so long as the sum of all line items as adjusted do not exceed the sum of the line items as they appear in the Bondowner approved Budget. Borrower shall pay as they become due all amounts set forth in the Budget with respect to costs to be paid by Borrower

 

3. Financial Maintenance Covenants. The Borrower and the Guarantor agree that so long as any Bonds are outstanding, it shall not (on a consolidated basis):

 

(a) Fixed Charge Coverage Ratio. Permit Earnings Available for Fixed Charges to be less than 120% of Fixed Charges.

 

  

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(b) Interest Coverage. Permit the Interest Coverage Ratio to be less than 2:1 as at the end of each fiscal quarter.

 

(c) Leverage Ratio. Borrower will not permit its Leverage Ratio to be greater than 3.0 to 1.0 at any time, tested annually.

 

(d) Loan to Value. Exceed a loan to value ratio regarding the Mortgaged Property of not greater than seventy-five percent (75%), as determined by Bondowner, in its sole discretion, and shall be based upon the ratio of the then outstanding balance of the Series A Bond to the fair market value of the Property at the time of determination. If the loan to value ratio is not satisfied from time to time, the Bondowner shall have the option to declare an Event of Default under the Bonds, provided, however, the Borrower shall have the opportunity to cure such default within 60 days thereof by redeeming Bonds to the extent necessary or providing additional collateral to bring the loan to value ratio down to no greater than 75%.

 

(e) Calculation of Financial Covenants. The calculation of the financial covenants set forth above shall: (i) be measured against the consolidated financial performance with Borrower and Guarantor as set forth in the financial statements required to be delivered to the Bank, which statements shall be prepared on a consolidated basis with the Guarantor; and (ii) be tested at the end of each fiscal quarter on a trailing 12 month basis commencing with the quarter ending March 31.

 

(f) For the purpose of the financial maintenance covenants, the following definitions shall apply (terms not otherwise defined herein shall have the meaning ascribed to them under GAAP), and references to the Borrower shall also include the Guarantor to the extent consolidated with the Guarantor on the financial statements:

 

 (i) “Capital Expenditures” means, for or any period, the sum of (i) all expenditures that, in accordance with GAAP, are required to be included in land, property, plant or equipment or similar fixed asset account (whether involving real or personal property), and (ii) Capital Lease Obligations incurred during such period (excluding renewals of Capital Leases;

 (ii) “Capital Lease” means any lease of property by Borrower, as lessee, that, in accordance with GAAP, would be capitalized on a balance sheet;

(iii) “Capital Lease Obligations” means the aggregate capitalized amount of the obligations of Borrower under all Capital Leases;

 

(iv) “Earnings Available for Fixed Charges” means, for any period, EBIT plus all amounts deducted in computing net income in respect of depreciation and amortization, less dividends and distributions less non-financed Capital Expenditures less cash taxes paid plus rent.

(v) “EBIT” means the total of (i) net earnings of Borrower plus (ii) all amounts deducted in computing such net income in respect of (a) interest expense on indebtedness and (b) taxes based upon or measured by income, as each such item is determined in accordance with GAAP;

 

  

7

  

 

(vi) “Fixed Charges” means, for any period, the aggregate amount of Borrower’s interest expense plus current maturities of long term debt (including subordinated debt and Capital Lease Obligations) during such period and mortgage payments;

(vii) “GAAP” means generally accepted accounting principles in the United States of America, as in effect on the date of the preparation and delivery of the financial statements described in Section 6 and consistently followed, without giving effect to any subsequent changes other than changes consented to in writing by the Lender;

(viii) “Interest Coverage Ratio” means for any period, the ratio of EBIT to Borrower’s current interest payments due during such period on Indebtedness for borrowed money; and

 

(ix) “Leverage Ratio” means the ratio of (a) the total liabilities that would be shown on the balance sheet of the Borrower as of any date, to (b) the Borrower’s net worth as of such date.

 

(x) “Intangible Assets” means assets that in accordance with GAAP are properly classifiable as intangible assets, including, but not limited to, goodwill, franchises, licenses, patents, trademarks, trade names and copyrights.

 

(xi) “Tangible Net Worth” means total assets determined in accordance with GAAP minus the sum of (i) Intangible Assets and (ii) total liabilities determined in accordance with GAAP.

 

4. Negative Covenants of the Borrower. The Borrower agrees that so long as any Bonds are outstanding, it will not, without the prior written consent of the Bondowner:

 

4.1. Maintenance of Corporate Existence. Merge or consolidate with another entity; sell, lease, transfer or otherwise dispose of all or a substantial part of its assets; or purchase all or a substantial part of the assets of, or acquire a controlling interest in, any other partnership, corporation, trust or other entity; or permit any other corporation, trust or other entity to obtain a controlling interest in the Borrower or the Guarantor. The Borrower shall not make any change in its capital structure or in any of its business objectives, purposes and operations which might (i) in any way adversely affect the ability of the Borrower to repay the Bonds, or (ii) permit a transfer of more than 10% of its equity interests without the prior written consent of the Bondowner.

 

4.2. Maintenance of Operations. Sell or otherwise dispose of, or for any reason cease operating, any of its locations, divisions, franchises, or lines of business.

 

4.3. Additional Indebtedness. Incur additional indebtedness, except as permitted by Bondowner, in writing; provided, however, that Borrower shall be permitted to incur purchase money indebtedness for the purchase of capital assets in an amount not to exceed $500,000 in the aggregate at any one time (“Permitted Indebtedness”), and (b) indebtedness to the Bondowner.

 

4.4. Liens. Lien, pledge, mortgage, grant or permit to exist a security interest in any of its assets, including the Mortgaged Property, to any Person, other than Permitted Encumbrances, or covenant with any Person (other than the Bondowner) that it will not so lien, pledge, mortgage, grant or permit to exist a security interest in any of its assets, including the Mortgaged Property.

 

  

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4.5. Change of Name; Location. Cause or permit any change in its name, state of organization, state identification number or federal tax identification number, or the location of any of its places of business, without at least thirty (30) days’ prior written notice to the Bondowner.

 

4.6. Guarantees. Become liable, directly or indirectly, as guarantor or otherwise for any obligation of any other Person, except for the endorsement of commercial paper for deposit or collection in the ordinary course of business.

 

4.7. Subsidiaries. Form any subsidiary, make any investment in (including any assignment of inventory or other property), or make any loan in the nature of an investment to, any Person, except for Permitted Investments.

 

4.8. Sale-Leaseback. Enter into any sale-leaseback transaction.

 

4.9. Investments. Acquire or agree to acquire any stock in, or any of the assets of, any Person, except for Permitted Investments.

 

4.10. Margin Securities. Directly or indirectly apply any part of the proceeds of the Bonds to the purchasing or carrying of any “margin security” or “margin stock” within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System, or any regulations, interpretations, or rulings thereunder.

 

4.11. Misstatements. Furnish the Bondowner any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished.

 

4.12. Employee Loans and Investments. Make any loan or advance to any officer, member, trustee, director or employee, except for business travel and similar temporary advances in the ordinary course of business. Make or suffer to exist any advances or loans to, or any investments in (by transfers or property, contributions to capital, purchase of stock or securities or evidence of indebtedness, acquisition of assets or business or otherwise) any Person other than the securities of the United States of America and other investments as may be offered by the Bondowner.

 

4.13. Capital Expenditures. Directly or indirectly make or commit to make any capital expenditure; provided, however, that so long as no Event of Default exists at the time thereof or after giving effect thereto, Borrower may make capital expenditures in the ordinary course of business and not exceeding $500,000 per year.

 

4.14. Fiscal Year. Change its fiscal year.

 

  

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4.15. Limitation on Dividends and Distributions. Declare or pay any dividend or distribution (whether in cash, property or otherwise) unless Borrower is current on all debt payments to the Bondowner or no Event of Default has occurred.

 

4.16. Limitation on Issuance or Acquisition of Equity Interest. Issue any additional equity interests (except to existing holders), or redeem, retire, purchase or otherwise acquire for value any equity interests.

 

4.17. Limitation on Disposition of Assets. Other than in the ordinary course of business, sell, exchange or otherwise dispose of any of its assets, or any part thereof or any interest therein, without the express written authorization of the Bondowner.

 

5. Negative Covenants of the Guarantor. The Guarantor agrees that so long as any Bonds are outstanding, it will not, without the prior written consent of the Bondowner:

 

5.1. Maintenance of Corporate Existence. Merge or consolidate with another entity; sell, lease, transfer or otherwise dispose of all or a substantial part of its assets; or purchase all or a substantial part of the assets of, or acquire a controlling interest in, any other partnership, corporation, trust or other entity; or permit any other corporation, trust or other entity to obtain a controlling interest in the Borrower or the Guarantor. The Borrower shall not make any change in its capital structure or in any of its business objectives, purposes and operations which might (i) in any way adversely affect the ability of the Borrower to repay the Bonds, or (ii) permit a transfer of more than 10% of its equity interests without the prior written consent of the Bondowner.

 

5.2. Maintenance of Operations. Sell or otherwise dispose of, or for any reason cease operating, any of its locations, divisions, franchises, or lines of business.

 

5.3. Liens. Lien, pledge, mortgage, grant or permit to exist a security interest in any of its assets, including the Mortgaged Property, to any Person, other than Permitted Encumbrances, or covenant with any Person (other than the Bondowner) that it will not so lien, pledge, mortgage, grant or permit to exist a security interest in any of its assets, including the Mortgaged Property.

 

5.4. Change of Name; Location. Cause or permit any change in its name, state of organization, state identification number or federal tax identification number, or the location of any of its places of business, without at least thirty (30) days’ prior written notice to the Bondowner.

 

5.5. Margin Securities. Directly or indirectly apply any part of the proceeds of the Bonds to the purchasing or carrying of any “margin security” or “margin stock” within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System, or any regulations, interpretations, or rulings thereunder.

 

5.6. Misstatements. Furnish the Bondowner any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished.

 

  

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5.7. Employee Loans and Investments. Make any loan or advance to any officer, member, trustee, director or employee, except for business travel and similar temporary advances in the ordinary course of business. Make or suffer to exist any advances or loans to, or any investments in (by transfers or property, contributions to capital, purchase of stock or securities or evidence of indebtedness, acquisition of assets or business or otherwise) any Person other than the securities of the United States of America and other investments as may be offered by the Bondowner.

 

5.8. Fiscal Year. Change its fiscal year.

 

6. Additional Covenants. Each of the Borrower and the Guarantor agrees that so long as any Bonds are outstanding, unless the Bondowner otherwise consents in writing, it will:

 

6.1. Corporate Existence. Maintain its corporate existence and qualification in each jurisdiction in which the failure to be so qualified would have a material adverse effect on its business or properties, and continue to be engaged principally in the business in which it is presently engaged.

 

6.2. Insurance. Maintain or cause to be maintained insurance with insurance companies satisfactory to the Bondowner as provided in the Commitment and the Loan Agreement, and file with the Bondowner annually current certificates of all such insurance.

 

6.3. Maintenance of Properties. Maintain its properties, including without limitation all properties held by it as lessee, in good repair so that its business may be properly and advantageously conducted at all times. Upon Bondowner’s request, Borrower shall deliver to Bondowner a foundation and/or slab survey, within thirty (30) days after completion of the foundation and/or slab of the Project comprising the improvement of the Property.

 

6.4. Tax Liabilities. During its fiscal year accrue all current tax liabilities, required withholding of income taxes of employees, required social security, pension and unemployment contributions, and pay the same when they become due, except such liabilities as are being contested in good faith against which adequate reserves have been established and as to which no proceedings to foreclose have been commenced.

 

6.5. Accounting Practices. Keep proper books of account in which complete and accurate entries will be made of all transactions in accordance with GAAP accounting principles and use reasonable efforts to collect its accounts.

 

6.6. Compliance with Laws. Comply with all applicable statutes and regulations of each governmental authority having jurisdiction over its business, noncompliance with which would have a material adverse effect on its financial condition, business or properties.

 

6.7. Deposit Accounts of the Borrower. Establish on behalf of the Borrower, within thirty (30) days following the date hereof and maintain throughout the term of the Bonds the Borrower’s primary deposit and operating accounts at the Bank.

 

  

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6.8. Notice of Default. Promptly upon becoming aware of the existence of any condition or event which constitutes a default, after the expiration of any applicable grace or notice period, or an Event of Default under this Agreement, the Loan Agreement, or any other Bond Document, or any condition or event which would upon notice or lapse of time or both constitute such an event or of any other event or condition which would have a material adverse effect on the financial condition, business or properties of the Borrower, give written notice to the Bondowner specifying the nature and duration thereof and the action proposed to be taken with respect thereto. Without limiting the foregoing, Borrower shall give prompt written notice to Bondowner (but in any event within seven (7) days) of:

 

(ii)           any labor controversy resulting or likely to result in a strike or work stoppage against the Borrower;

 

(iii)           any written proposal by any public authority to acquire any asset or all or any portion of the business of the Borrower;

 

(iv)           any proposed or actual change of the Borrower’s or any Guarantor’s name, trade names, identities or corporate structure;

 

(v)           any change in its place of business or the location of assets from its present place of business and/or locations;

 

(vi)           any other matter which has resulted or is reasonably likely to result in a material adverse change in the Borrower’s or Guarantor’s financial condition or operations; and

 

(vii)           any event or the existence of any fact which renders any representation or warranty in this Agreement or any of the other Bond Documents inaccurate, incomplete or misleading in any material respect.

 

6.9. Inspection. The Bondowner shall have the right, at all reasonable times, upon reasonable notice, during normal business hours (except that following a default or an Event of Default that has not been waived or in the case of an emergency as determined by the Bondowner, the Bondowner may enter at any time without such notice) to call at the Borrower’s place or places of business (or any other place where the Mortgaged Property or any information relating thereto or to the Project is kept or located), and without hindrance or delay, (a) to inspect, audit, check and make copies of and extracts from the Borrower’s books, records, journals, orders, receipts and any correspondence and other data relating to the Borrower’s business or to any transactions between the parties hereto, (b) to make such verification concerning the Project or the Mortgaged Property as the Bondowner may consider reasonable under the circumstances, and (c) to discuss the affairs, finances and business of the Borrower with any of their officers, key employees or directors.

 

6.10. Notice of Suit or Adverse Change in Business. As soon as practicable, and in any event within seven (7) days after either the Borrower or the Guarantor learns of the following, give written notice to the Bondowner of any proceeding(s) being instituted or threatened to be instituted by or against the Borrower or the Guarantor in any federal, state, local or foreign court or before any arbitration or mediation panel, commission or other regulatory body (federal, state, local or foreign).

 

  

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6.11. Transfer of Interests in the Borrower, or the Mortgaged Property. Except for the Residential Parcels (as defined below) as specifically provided for below and upon the satisfaction of the conditions precedent listed below, the Borrower shall not convey or permit the conveyance of its ownership interest in or control of or any part of the Mortgaged Property, or any legal or beneficial interests therein, including without limitation, its right to receive rents, issues or profits arising from the Mortgaged Property.

 

Except as specifically provided below, in the event any ownership interest becomes vested in a person or persons or entity or entities in a manner which violate the terms hereof, the Bondowner may, without notice to the Borrower, or any other party, and notwithstanding the existence of such default, deal with such successor or successors in interest with reference to the Bond Documents in the same manner as with the Borrower, without in any way releasing, discharging or otherwise affecting any liability of the Borrower hereunder or under the Bond Documents. No sale or conveyance of all or any portion of the Mortgaged Property, no extension of the time for the payment of the Bonds or any change in the terms thereof consented to by the Bondowner shall in any way whatsoever operate to release, discharge, modify, change or affect the original liability of the Borrower (if any), either in whole or in part, or the Event of Default arising from such sale or conveyance.

Notwithstanding anything to the contrary contained herein, Borrower shall have the right, upon request, to have the three residential properties identified on Exhibit A attached hereto and made a part hereof, consisting of approximately 3.55 acres in the aggregate (collectively, the “Residential Parcels”), released from the lien of the Mortgage and other Bond Documents for the sum of $1.00 to be reconveyed to WM Realty Management, LLC (“Seller”) or its nominee, provided that (a) Borrower submits or causes the submittal of an Approvals Not Required Plan (“ANR Plan”) for the creation of the Residential Parcels within thirty (30) days of the closing date of the financing, (b) Borrower furnishes to Lender evidence satisfactory to Lender that all necessary governmental approvals, including the ANR Plan approved by the Town of Westminster, have been obtained for such releases and the separate transfers and conveyances of the Residential Parcels within ninety (90) days after the closing date of the financing; and (c) Borrower provides Lender a written release from the Seller as to the remainder of the Premises. Borrower acknowledges that the proceeds of the Bond were not allocated to the portion of the purchase price applicable to the Residential Parcels.

For the purposes of this section and the release of the Residential Parcels, the following shall be conditions precedent. The Effective Date of the Title Policy shall be updated to the time of the recording of the release of the Residential Parcels and shall reflect that the remaining parcel is a legal valid lot. This endorsement shall also reflect that there are no other matters of record that might impact the willingness of the Lender to release the Residential Lots, such as intervening mechanics lien filings. An updated Zoning Endorsement of the Title Policy shall address the parcel remaining after the release of the Residential Parcels and its intended use are in compliance with all applicable provisions of the zoning code. Any requirements from the title insurance company shall have been satisfied. An Opinion of Borrower’s counsel acceptable to the Lender shall be delivered.

  

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6.12. Payment of Indebtedness. Pay when due (or within applicable grace or notice period) any indebtedness permitted by this Agreement, including without limitation all purchase money mortgages, capitalized leases, or similar instruments in the nature of a borrowing, except when the amount thereof is being contested in good faith by appropriate proceedings and with adequate reserves therefor being set aside on its books. If default be made by the Borrower in the payment of any principal (or installment thereof) of, or interest on, any such indebtedness beyond any applicable notice and cure periods, the Bondowner shall have the right, in its sole discretion, to pay such interest or principal for the account of the Borrower and be reimbursed by the Borrower therefor.

 

6.13. ERISA Compliance. (a) Fund any of its Employee Pension Benefit Plans in accordance with no less than the minimum funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA); (b) furnish the Bondowner upon request with copies of any reports or other statements filed with the United States Department of Labor or the Internal Revenue Service with respect to any such Plan; and (c) promptly advise the Bondowner of the occurrence of any Reportable Event or Prohibited Transaction with respect to any Employee Benefit Plan.

 

6.14. Maintenance and Use of Premises. Maintain, or cause to be maintained, the Mortgaged Property in as good condition as it is now or may be in the future, reasonable wear and tear and damage by taking excepted. The Borrower shall not permit (a) removal, demolition or other waste of the Mortgaged Property, (b) lapse or revocation of any license, permit or other governmental authorization issued with respect to the Mortgaged Property, (c) material change in the structure or use of the Mortgaged Property (other than the projects to be financed with the proceeds of the Bonds or otherwise consented to by the Bondowner), or (d) violation of a law or ordinance affecting the Mortgaged Property or its use.

 

6.15. F.I.C.A. and Withholding Taxes. Upon request of the Bondowner, the Borrower will furnish the Bondowner with proof satisfactory to the Bondowner of the payment or deposit of F.I.C.A. and withholding taxes required of the Borrower by applicable law. Should the Borrower fail to make any such payment or deposit or furnish such proof within a reasonable time, the Bondowner may, in its sole and absolute discretion, and without notice to the Borrower: (a) make payment of the same or any part thereof; or (b) set up such reserves in the Borrower’s account as the Bondowner may deem necessary to satisfy the liability therefor. Nothing herein contained shall obligate the Bondowner to make such deposit or payment or set up such reserve, or to ascertain whether such deposit payments are being made by Borrower, nor shall the making of one or more such deposits or payments or the setting up of any such reserve constitute: (i) an agreement on the Bondowner’s part to take any further or similar action; or (ii) a waiver of any default by the Borrower under the terms hereof or of any other agreements between the Borrower and the Bondowner. Upon the expiration or termination of this Agreement or transactions hereunder, the Bondowner shall retain its security interest in all the collateral held by the Bondowner until the Borrower shall have paid or discharged all such F.I.C.A. and tax obligations accrued to the date of such expiration or termination, or shall have supplied to the Bondowner evidence satisfactory to the Bondowner that due provisions have been made therefor.

 

  

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7. Waiver of Right to Trial by Jury. BORROWER AND BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS AGREEMENT.

 

8. Counsel Fees and Expenses. The Borrower agrees to pay all reasonable counsel fees and expenses, including recording and filing fees, incurred by the Bondowner in connection with the Bonds incurred by the Bondowner, whether in connection with efforts to collect the indebtedness of Borrower, or in the enforcement or defense of any of the provisions of this Agreement; or negotiations regarding and consultation concerning this Agreement, or preparation therefor, or the financing extended thereunder; or the defense of any proceedings involving any claims made or threatened against or arising out of this Agreement, or the financing extended thereunder, or which the Bondonwer may hereafter incur in protecting, enforcing, increasing or releasing any security held by the Bondowner or any of Borrower’s obligations or any provision of this Agreement. Borrower’s obligation to pay such counsel fees and expenses of the Bondowner shall exist whether or not proceedings are instituted or legal appearances are made in any court on behalf of the Bondowner. All amounts chargeable to Borrower under this Agreement shall be payable on demand to Borrower.

 

9. Default and Remedies.

 

9.1. Event of Default. The occurrence of any of the following events shall constitute an Event of Default hereunder:

 

(a) Representations. Any representation or warranty made by the Borrower or the Guarantor herein or in any document or instrument furnished to the Bondowner in connection with the purchase of the Bonds or pursuant to this Agreement, the Loan Agreement or any other Bond Document is false or misleading on the date it was intended to be effective.

 

(b) Certain Covenants. The Borrower or the Guarantor shall fail to observe or perform any covenant or agreement contained in Sections 3, 4, 5, 6.1, 6.2, 6.7, 6.8 or 6.11 herein.

 

(c) Other Covenants. The Borrower or the Guarantor shall fail to (i) make any payment required hereunder or under any other Bond Document within ten (10) days of the same becoming due, or (ii) observe or perform any covenant or agreement (other than those set forth in Section 10.1(b)) and such failure is not remedied within thirty (30) days after written notice thereof is given to the Borrower.

 

(d) Bond Documents; Other Indebtedness. (i) An Event of Default as defined in the Loan Agreement shall exist, or (ii) any default, after the expiration of any applicable grace or notice period, or Event of Default under any other Bond Document shall exist, or (iii) an Event of Default shall occur as defined in the Loan Agreement by and between the Borrower and Bank dated February 24, 2006, as amended, or (iv) a default, after the expiration of any applicable grace or notice period, shall exist with respect to any other obligation of the Borrower or the Guarantor to the Bondowner, or (v) a breach shall occur (and continue beyond any applicable grace or notice period) with respect to the payment by the Borrower or the Guarantor with respect to other indebtedness in excess of $50,000.00, or with respect to the performance of any agreement securing such indebtedness or pursuant to which the same was issued or incurred, or an event shall occur with respect to provisions of any such agreement relating to matters of the character referred to in this section, so that a holder or holders of such indebtedness or a trustee or trustees under any such agreement accelerates or is empowered to accelerate any such indebtedness. The Borrower or the Guarantor shall notify the Bondowner of any such breach or event immediately upon the Borrower’s or the Guarantor’s becoming aware of its occurrence and shall from time to time furnish such information as the Bondowner may reasonably request for the purpose of determining whether a breach or event described in this clause (iv) has occurred.

 

  

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(e) Voluntary Bankruptcy. The Borrower or the Guarantor shall commence a voluntary case under the federal bankruptcy or state receivership laws, or shall admit in writing its insolvency or its inability to pay its debts as they become due, or shall make an assignment for the benefit of creditors, or shall apply for, consent to or acquiesce in the appointment of, or taking possession by, a trustee, receiver, custodian or similar official or agent for itself or any substantial part of its property or shall generally not pay its debts as they become due.

 

(f) Appointment of Receiver. A trustee, receiver, custodian or similar official or agent shall be appointed for the Borrower or the Guarantor or any substantial part of its property and shall remain undismissed after thirty (30) days.

 

(g) Involuntary Bankruptcy. The Borrower or the Guarantor shall have an order or decree for relief in an involuntary case under the federal bankruptcy or state receivership laws entered against it, or a petition seeking reorganization, readjustment, arrangement, composition, or other similar relief as to it under the federal bankruptcy laws or any similar law for the relief of debtors shall be brought against it and shall be consented to by it or shall remain undismissed for thirty (30) days.

 

(h) Judgments. One or more final judgments for payment of money in excess of the amount of insurance coverage available therefor shall be rendered against the Borrower or the Guarantor and shall remain undischarged for a period of thirty (30) days during which execution shall not be effectively stayed.

 

(i) No Sale of the Mortgaged Property. If (i) the Mortgaged Property, or any part thereof or any interest in the Mortgaged Property, is sold or conveyed, except such conveyance as permitted under Section 6.11 hereof, (ii) title to the Mortgaged Property or any interest therein is divested, (iii) the Mortgaged Property is further encumbered or pledged, or (iv) any lease which gives the lessee any option to purchase the Mortgaged Property or any part thereof is entered into, the Bondowner shall at its sole discretion be entitled to accelerate the Bonds and declare the then Outstanding principal amount and all accrued interest and other sums due and payable under the Loan Agreement due and payable, and exercise all remedies available to the Bondowner under the Bond Documents.

 

  

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(j) Material Adverse Effect. Any event or condition shall occur which has, or upon notice or lapse of time or both would have, a material adverse effect on (i) the ability of the Borrower to perform its obligations under this Agreement, the Loan Agreement or the other Bond Documents, (ii) the ability of the Guarantor to perform its obligations under the Guaranty, (iii) the validity or enforceability of any of the Bonds Documents, or (iv) the financial condition, assets and liabilities, or operations of the Borrower.

 

(k) Illegality. If this Agreement or any other Bond Document shall be held to be illegal or unenforceable by a court of competent jurisdiction.

 

A default shall exist hereunder upon the occurrence of any of the foregoing events without regard to any lapse of time or notice.

 

9.2. Remedies. Upon an Event of Default hereunder, the Bondowner shall have all of the same rights and remedies available to the Bondowner following an Event of Default under the Loan Agreement and the other Bond Documents.

 

10. Consent to Amendments. This Agreement may be amended by an instrument in writing executed by the Borrower, the Guarantor and the Bondowner. Any covenant or agreement required to be performed by the Borrower or the Guarantor may be modified or waived, and any Event of Default may be waived, with the written consent of the Bondowner. The Bondowner at the time of any consent authorized by this section and each subsequent Bondowner shall be bound by such consent, whether or not its Bonds have been marked to indicate such consent.

 

11. Purchase for Investment; Disclosure Material. By acceptance of this Agreement, the Purchaser hereby confirms that it is purchasing the Bonds for its own account and does not presently intend to sell or otherwise distribute the Bonds or any interest or participation therein, and the Purchaser acknowledges that the nature of the disclosure material in this transaction has been based upon the foregoing. The Purchaser further acknowledges for the benefit of the Agency that the Purchaser has not looked to it or to Bond Counsel for any information about the Borrower, the Guarantor, the Project, or the Bonds in connection with the decision to purchase the Bonds.

 

12. Payment of Expenses; Brokerage. The Borrower shall pay on demand all of the Purchaser’s reasonable expenses (including reasonable fees and disbursements of counsel) in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Bond Documents, and in connection with any default under, and any waiver, amendment or enforcement of any provisions of any Bond Document. The Borrower shall also pay and save the Purchaser harmless against any liability with respect to claims for or on account of brokers’ or finders’ fees or commissions with respect to the placement of the Bonds.

 

13. No Waiver. No failure or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

14. Provisions to Survive. All representations, warranties, covenants and agreements contained herein shall survive the execution and delivery of this Agreement, the Loan Agreement and the Bonds and payment therefore and Bondowner shall retain its lien in the Project and all its right and remedies under the Bond Documents, notwithstanding such termination, until Borrower has paid its Obligations to Bondowner, in full, in immediately available funds.

 

  

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15. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (including any subsequent Bondowner whether or not an express assignment of rights hereunder is made). No other person or entity shall acquire or have any right under or by virtue of this Agreement.

 

16. Notices. Any request, authorization, direction, notice, consent, waiver or other document provided by this Agreement shall be in writing and shall be deemed sufficiently given when mailed by registered or certified mail, postage prepaid, or by recognized courier service providing evidence of receipt, or delivered during business hours as follows: (i) to the Purchaser or Bondowner at 446 Main Street, Worcester, Massachusetts 01608, Attention of Edward S. Borden, Senior Vice President; or (ii) to the Borrower or the Guarantor at One Bella Drive, Westminster, Massachusetts 01473, Attention of Chief Financial Officer. Notice hereunder may be waived prospectively or retroactively by the person entitled to the notice, but no waiver shall affect any notice requirement as to other Persons. All notices shall be effective upon receipt.

 

17. Sale or Transfer of Bonds. The Bondowner shall provide written notice to the Borrower if the Bondowner sells, assigns or transfers all or a portion of the Bonds to another Person.

 

18. Miscellaneous. The captions of this Agreement are for convenience only and shall not affect the construction hereof. The Bond Documents constitute the entire agreement of the parties with respect to the subject matter thereof and supersede all prior undertakings and agreements. This Agreement may be executed in several counterparts, each of which shall be deemed an original, may not be terminated or modified orally, and shall be governed by and interpreted in accordance with the laws of the Commonwealth.

 

 

 

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If the foregoing correctly sets forth our understanding, please sign and return to the Borrower the enclosed counterpart of this letter, whereupon this letter shall become a binding agreement between the undersigned and the Purchaser.

 

	 	Very truly yours,	 
	 	 	 
	 	RANOR, INC.,	 
	 	as Borrower	 
	 	 	 	 
	
 

	
By: 

	
/s/ Stanley Youtt

	 
	 	 	
Stanley Youtt

	 
	 	 	President and Chief Executive Officer	 

 

 

	 	
TECHPRECISION CORPORATION,

	 
	 	as Guarantor	 
	 	 	 	 
	
 

	
By: 

	/s/ Richard F. Fitzgerald	 
	 	 	
Name: Richard F. Fitzgerald

	 
	 	 	
Title: Chief Financial Officer

	 

 

	 	
ACCEPTED BY:

	 
	 	 	 
	 	SOVEREIGN BANK	 
	 	 	 	 
	
 

	
By: 

	/s/ Edward S. Borden	 
	 	 	
Edward S. Borden

	 
	 	 	Senior Vice President	 

 

	 	
ACKNOWLEDGED:

	 
	 	 	 
	 	MASSACHUSETTS DEVELOPMENT FINANCE AGENCY	 
	 	 	 	 
	
 

	
By: 

	/s/ Steven Chilton	 
	 	 	
Authorized Officer

	 
	 	 	 	 
	 	 	 	 

 

  

19

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