Document:

Alon Second Amendment to Second Amended Revolving Credit Agreement

EXECUTION VERSION

SECOND AMENDMENT TO
SECOND AMENDED REVOLVING CREDIT AGREEMENT AND PARTIAL RELEASE
SECOND AMENDMENT TO SECOND AMENDED REVOLVING CREDIT AGREEMENT AND PARTIAL RELEASE, dated as of May 6, 2015 (this "Agreement"), is entered into by and among Alon USA Energy, Inc., a Delaware corporation (the "Parent"), Alon USA, LP, a Texas limited partnership (the "Borrower"), all direct and indirect subsidiaries of the Parent other than the Excluded Subsidiaries (as defined in the Credit Agreement) (the Parent and such direct and indirect subsidiaries that are not Excluded Subsidiaries are hereinafter referred to individually as a "Guarantor Company" and, collectively, as the "Guarantor Companies"), the Lenders (as defined below), Israel Discount Bank of New York, as administrative agent, co-arranger and collateral agent for the Lenders (in such capacity, the "Agent"), and Bank Leumi USA, as co-arranger for the Lenders ("Bank Leumi").
WITNESSETH
WHEREAS, the Borrower, the Guarantor Companies, the financial institutions from time to time party thereto (each a "Lender" and collectively, the "Lenders"), the Agent and Bank Leumi are parties to the Second Amended Revolving Credit Agreement, dated as of June 22, 2006, as amended as of May 23, 2013 (as heretofore amended and otherwise modified and as hereafter further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), pursuant to which the Lenders agreed to make revolving loans to the Borrowers and to participate in letters of credit issued for the account of the Borrowers and the Guarantor Companies agreed to guarantee the Obligations; 
WHEREAS, the Borrower and the Guarantor Companies have entered into the Security Agreement and the Pledge Agreement, pursuant to which each of the Borrower and the Guarantor Companies granted to the Agent, for the benefit of the Agent and the Lenders, a security interest in all of its right, title and interest in and to its Collateral to secure the Obligations; and
WHEREAS, the Loan Parties have requested that the Lenders, Bank Leumi and the Agent enter into this Agreement to modify certain provisions of the Credit Agreement, subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.Defined Terms; Other Definitional Provisions.  Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary. 

	
			
	DOC ID - 22160545.10
	 
	 

Section 2.    Amendments to the Credit Agreement.
(a)    New Definitions.  Section 1.01 of the Credit Agreement is hereby amended by, as applicable, adding the following definitions that are new in appropriate alphabetical order or replacing the terms already defined therein with the following definitions of such terms:
""Continuing Directors" means the directors of Delek on the Second Amendment Effective Date and each other director of Delek, if, in each case, such other director's nomination for election to the board of directors of Delek is recommended by at least 60% of the then Continuing Directors."
""Control Investment Affiliate" means as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise."
""Delek" means Delek US Holdings, Inc., a Delaware corporation."
""Delek Acquisition" means the acquisition by Delek of approximately 33,700,000 shares, or approximately 48% of the outstanding shares, of the Parent's common stock owned by Alon Israel.""
""Permitted Holders" means, (a) prior to the consummation of the Acquisition, Alon Israel and (b) on and after the consummation of the Acquisition (but if and only if the Acquisition shall occur on or before September 30, 2015), Delek."
""Second Amendment" means the Second Amendment to Second Amended Revolving Credit Agreement, dated as of May 6, 2015, by and among the Borrower, the Guarantor Companies, the Lenders and the Agent."
""Second Amendment Effective Date" means the date on which the Second Amendment shall become effective in accordance with its terms." 
(b)    The definition of "Change of Control" is hereby amended by restating it in its entirety to read as follows:
""Change of Control" means, an event or series of events by which:
(i)    the Permitted Holders shall cease to own and control legally and beneficially, either directly or indirectly, equity securities in the Parent representing 25% or more of the combined voting power of all of equity securities entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such securities that each such person or group has the right to acquire pursuant to any option right); 

	
			
	DOC ID - 22160545.10
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(ii)    any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Holders becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more of the equity securities of the Parent entitled to vote for members of the board of directors of the Parent on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) than the Permitted Holders; 
(iii)    the Permitted Holders shall cease to have the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Parent, Alon USA or Alon LP; 
(iv)    any Person or two or more Persons acting in concert, other than the Permitted Holders or in the case of a Significant Refinery, the Company owning such Significant Refinery immediately after the Effective Date, shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Parent or the day to day operations and management of any Significant Refinery; 
(v)    the Parent shall cease to own and control legally and beneficially, either directly or indirectly, equity securities in Alon USA representing 90% or more of the combined voting power of all equity securities entitled to vote for members of the board of directors of Alon USA on a fully-diluted basis (and taking into account all such securities that any Person has the right to acquire pursuant to any option right); 
(vi)    Alon USA shall cease to own (free and clear of all Liens other than Permitted Liens), and control legally and beneficially, either directly or indirectly, equity securities in (A) Alon LP representing 90%, or (B) Alon Refining representing 81%, in each case, of the combined voting power of all of the equity securities entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that any Person has the right to acquire pursuant to any option right); 
(vii)    Alon USA shall cease to directly or indirectly own any Significant Refinery, (free and clear of all Liens other than Permitted Liens); 
(viii)    during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent cease to be composed of Persons (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (A) above 

	
			
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constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by Persons referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (B) and clause (C), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or
(ix)    on and after the consummation of the Acquisition (but if and only if the Acquisition shall occur on or before September 30, 2015), the members of the board of directors or other equivalent governing body of Delek shall cease to consist of a majority of Continuing Directors.
provided that (I) non-voting Capital Stock owned by any manager or employee of Alon Assets issued under any employee stock option or stock purchase plan or employee benefit plan in existence as of the date hereof or hereafter adopted, or otherwise in connection with the employment or retention of any manager or employee, in each case shall not be included in the determination of whether a Change of Control has occurred so long as such Capital Stock does not constitute, in the aggregate, more than 20% of the Capital Stock of any such Subsidiary, and (II) Capital Stock acquired by any employee of a Company (other than with respect to the Capital Stock of Alon Assets to the extent specified in clause (I)) through the exercise by such employee of any stock options granted under the stock option plan described in Schedule F hereto, shall not be included in the determination of whether a Change of Control has occurred so long as such Capital Stock does not constitute, in the aggregate, more than 16% of the Capital Stock of any Company."

	
			
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(c)    The definition of "Excluded Subsidiary" is hereby amended by restating it in its entirety to read as follows:
""Excluded Subsidiaries" means (i) the Alon Brands Excluded Subsidiaries, (ii) the Paramount Excluded Subsidiaries, (iii) Alon Paramount Holdings, Inc., a Delaware corporation, (iv) Alon Crude Pipeline, LLC, a Texas limited liability company, (v) the Alon Louisiana Subsidiaries, (vi) the Bakersfield Subsidiaries and (vii) Alon Supply, Inc., a Delaware corporation.  For the avoidance of doubt and notwithstanding anything herein to the contrary, it is understood and agreed that any Person that is a Loan Party as of the Second Amendment Effective Date, shall continue to be a Loan Party and shall not be an Excluded Subsidiary even if such Person shall become a Subsidiary of any of Alon Brands, Paramount Petroleum Holdings or any other Person that (based on this definition or the definition of the Alon Brands Excluded Subsidiaries, the Paramount Excluded Subsidiaries, the Alon Louisiana Subsidiaries or the Bakersfield Subsidiaries) would cause it to be an Excluded Subsidiary."
(d)    The definition of "Termination Date" is hereby amended by restating it in its entirety to read as follows:
""Termination Date" means the earlier of (a) May 6, 2019, and (b) the date that is six months prior to (i) the final maturity date of the Drop Down Term Loan Agreement and (ii) the final maturity date of any Permitted Refinancing Term Loan Agreement."
(e)    Section 2.06 – Interest.  Section 2.06(a) of the Credit Agreement is hereby restated to read in its entirety as follows:
"(a)    Revolving Credit Loans.  Each Revolving Credit Loan which is a Eurodollar Loan shall bear interest on the principal amount thereof from time to time outstanding, from the date of such Revolving Credit Loan until such principal amount becomes due, at a rate per annum equal to (i) prior to the Second Amendment Effective Date, the greater of (A) the Eurodollar Rate for the Interest Period in effect for such Revolving Credit Loan plus 3.5%, and (B) 4.0%, and (ii) on and after the Second Amendment Effective Date, the Eurodollar Rate for the Interest Period in effect for such Revolving Credit Loan plus 3.0%.  Each Revolving Credit Loan which is a Base Rate Loan shall bear interest on the principal amount thereof from time to time outstanding from the date of such Revolving Credit Loan until such principal amount becomes due, at a rate per annum equal to the greater of (I) the Base Rate plus 1.0% and (II) 4.0%." 
(f)    Section 2.08 – Fees.  Section 2.08(a) of the Credit Agreement is hereby restated to read in its entirety as follows:
"(a)    Unused Line Fee.  From and after the Second Amendment Effective Date until the Final Maturity Date, the Borrowers shall pay to the Agent for the account of the Lenders in accordance with the Lenders' respective Pro Rata Shares and in immediately available funds, an unused line fee (the "Unused Line Fee") accruing at the rate of (i) prior to the Second Amendment Effective Date, 85/100ths of 1% (0.85%) per annum, and (ii) on and after the Second Amendment Effective Date, 65/100ths of 1% (0.65%) per 

	
			
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annum, in each case on the excess, if any, of the Total Commitment over the sum of the average amount of all Revolving Credit Loans and Letter of Credit Obligations outstanding from time to time.  Solely for the purposes of calculating the Unused Line Fee, the total amount of Letters of Credit Obligations shall be determined based upon the maximum stated amount of each Letter of Credit and each such Letter of Credit shall be deemed to be outstanding at the maximum stated amount until the expiry date of each such Letter of Credit, irrespective of whether the maximum stated amount was reduced or such Letter of Credit was terminated prior to the expiry date of such Letter of Credit.  The Unused Line Fee shall be payable quarterly in arrears on the first Business Day of each January, April, July and October of each year and shall be non-refundable." 
(g)    Section 3.03(b) – Letter of Credit Fees.  Section 3.03(b)(i) of the Credit Agreement is hereby restated to read in its entirety as follows:
"(i)    The Borrowers shall pay to the Agent for the ratable account of the applicable L/C Issuer a nonrefundable administration fee (a "Letter of Credit Administration Fee") for each Letter of Credit issued hereunder and for each amendment to a Letter of Credit that increases the stated amount of such Letter of Credit or extends the expiration date or stated termination date thereof, such fee to be equal to (A) prior to the Second Amendment Effective Date, 1/10 of 1% (0.10%) of the initial stated amount of such Letter of Credit or the increase in the stated amount of such existing Letter of Credit, as the case may be, and (B) on or after the Second Amendment Effective Date, (I) 7.5/100ths of 1% (0.075%) flat of the initial stated amount of such Letter of Credit (for the initial issuance of any Letter of Credit), (II) 7/100ths of 1% (0.07%) of the increase in the stated amount of such existing Letter of Credit (for any increase of the stated amount of a Letter of Credit), and (III) 7.5/100ths of 1% (0.075%) of the stated amount of any Letter of Credit (for any Letter of Credit being extended), provided that, if the same Letter of Credit is being simultaneously extended and increased, the Letter of Credit Administrative Fee shall be 7/100ths of 1% (0.07%).  The Letter of Credit Administration Fee shall be payable, in the case of the issuance of a Letter of Credit, in advance of or prior to the issuance of such Letter of Credit and, in the case of an amendment of an existing Letter of Credit, in advance of or prior to the amendment of such existing Letter of Credit.  In addition, the Borrowers shall pay to the Agent for the account of the Lenders, in accordance with the Lenders' Pro Rata Shares, (x) for each Letter of Credit issued hereunder, a nonrefundable issuance fee (a "Letter of Credit Issuance Fee") equal to 2.25% per annum of the stated amount of such Letter of Credit, and (y) for any amendment to an existing Letter of Credit that increases the stated amount of such Letter of Credit, a nonrefundable amendment fee (a "Letter of Credit Amendment Fee") equal to 2.25% per annum of the increase in the stated amount of such Letter of Credit."
Section 3.    Second Amendment Fee. The Borrowers shall pay to the Agent for the account of the Lenders, in accordance with their Pro Rata Shares, an amendment fee (the "Second Amendment Fee") equal to $1,800,000, which shall be due and payable on the Second Amendment Effective Date.   The Borrowers agree that the Second Amendment Fee has been fully earned as of the date hereof and that no portion of the Second Amendment Fee shall be refundable for any reason whatsoever.

	
			
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Section 4.    Release of Released Companies.  
(a)    Without recourse and without any representation or warranty of any kind, subject to Section 5 hereof, (i) the Agent hereby irrevocably terminates and releases any and all liens, security interests or other charges or encumbrances in favor of the Agent for the benefit of the Secured Parties in the assets and property of each of Alon Paramount Holdings, Inc. and Alon Crude Pipeline, LLC (collectively, the "Released Companies"), and (ii) each Loan Party hereby releases the Agent and the Lenders from any duty, liability or obligation (if any) under the Credit Agreement and any other Loan Document with respect to such assets and property of the Released Companies.
(b)    Without recourse and without any representation or warranty of any kind, subject to Section 5 hereof, the Agent hereby irrevocably releases and discharges the Released Companies from any and all Obligations under or pursuant to the Credit Agreement and the other Loan Documents, including the Guaranties made by Released Companies pursuant to the Credit Agreement, other than any Obligations that survive the termination of the Loan Documents by express provisions thereof.
Section 5.    Conditions to Effectiveness. The effectiveness of the amendments provided for in Section 2 and the release provided for in Section 4 are subject to the fulfillment of the following conditions (the date such conditions are fulfilled is hereafter referred to as the "Second Amendment Effective Date"):
(a)    Payment of Fees, Etc.    The Borrowers shall have paid to the Agent (i) the Second Amendment Fee and (ii) all other costs and expenses payable on the Second Amendment Effective Date pursuant to Section 12.05 of the Credit Agreement.
(b)    Representations and Warranties; No Event of Default. The representations and warranties contained in this Agreement, the Credit Agreement (after giving effect to this Agreement) and in each other Loan Document and certificate or other writing delivered to the Agent or any Lender pursuant thereto on or prior to the Second Amendment Effective Date shall be true and correct, (i) in the case of the representations and warranties qualified or modified as to materiality in the text thereof, in all respects, and (ii) otherwise, in all material respects, in each case on and as of the Second Amendment Effective Date as though made on and as of such date, except to the extent that any such representation and warranty expressly relates solely to an earlier date (in which case such representation and warranty shall be true and correct on and as of such date); and, after giving effect to this Agreement, no Default or Event of Default shall have occurred and be continuing. 
(c)    Delivery of Documents.  The Agent shall have received on or before the Second Amendment Effective Date the following, each in form and substance satisfactory to the Agent and, unless indicated otherwise, dated the Second Amendment Effective Date:
(i)    counterparts to this Agreement, duly executed by the Loan Parties, the Agent and the Lenders;
(ii)    certified copies of request for copies of information on Form UCC‐11, listing all effective financing statements that name as debtor any Loan Party and which are filed in any office necessary or, in the reasonable opinion of the Agent, desirable to perfect any security interest 

	
			
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created by a Security Document, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Agent, shall cover any of the Collateral and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Agent, shall not show any such Liens;
(iii)    a copy of the resolutions adopted by the Board of Directors or equivalent governing body of each Loan Party, certified as of the Second Amendment Effective Date by authorized officers thereof, authorizing (A) the borrowings hereunder and the transactions contemplated by this Agreement and the other documents, instruments and agreements executed and/or to be delivered in connection herewith or therewith, and (B) the execution, delivery and performance by each Loan Party of this Agreement and the other documents, instruments and agreements executed and/or to be delivered in connection herewith or therewith;
(iv)    a certificate of an authorized officer of each Loan Party, certifying the names and true signatures of the officers of such Loan Party authorized to sign this Agreement and the other agreements, instruments and documents to which such Loan Party is or will be a party and the other documents to be executed and delivered by such Loan Party in connection herewith, together with evidence of the incumbency of such authorized officers;
(v)    a certificate, dated as of a date (A) not more than thirty days prior to the Second Amendment Effective Date, of the appropriate official(s) of the states of incorporation, and (B) not more than one hundred and eighty days prior to the Second Amendment Effective Date, of the appropriate official(s) of each state of foreign qualification of each Loan Party, in each case, certifying as to the subsistence in good standing of, and the payment of taxes by, such Loan Party in such states;
(vi)    a certificate from an authorized officer of each Loan Party, certifying (A) its charter, certificate of formation or other organizational document, or (B) its by-laws, limited liability agreement or limited partnership agreement or equivalent, and attaching a true, correct and complete copy of such document;
(vii)    an opinion of Vinson & Elkins LLP, special counsel to the Loan Parties, as to such matters as the Agent may reasonably request;
(viii)    a certificate of the chief executive officer or the chief financial officer of the Administrative Borrower, certifying as to the matters set forth in subsection (b) of this Section 5; 
(ix)    a copy of the projections required by Section 7.01(a)(vi); and
(x)    such other agreements, instruments, approvals, opinions and other documents as the Agent may reasonably request including, without limitation, all inter-company management services agreements among the Borrowers and the Guarantors or between the Borrowers and third parties.

	
			
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Section 6.    Representations and Warranties.  To induce the other parties hereto to enter into this Agreement, the Loan Parties represent and warrant to the Agent and the Lenders that:
(a)    Each of the Companies and the Parent (i) is a corporation, limited liability company or limited partnership (as applicable) duly organized, validly existing and in good standing under the laws of the state of its organization, (ii) has all requisite power and authority to execute, deliver and perform this Agreement, and to perform the Credit Agreement, as amended hereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the failure to so qualify individually or in the aggregate is not reasonably likely to have a Material Adverse Effect.
(b)    The execution, delivery and performance by each of the Companies and the Parent of this Agreement and the performance by each of the Companies and the Parent of the Credit Agreement, as amended hereby, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene, in the case of a corporation, its charter or by-laws, in the case of a limited liability company, its certificate of formation and limited liability operating agreement, or any applicable equivalent document, and in the case of a limited partnership, its certificate of limited partnership and limited partnership agreement, or any applicable equivalent document, or any applicable law or any material contractual restriction binding on or otherwise affecting it or any of its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any such Loan Document or Term Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties except where such suspension, revocation, impairment, forfeiture or nonrenewal is not reasonably likely to have a Material Adverse Effect.  The execution, delivery and performance by each of the Companies and the Parent of the New Parent Term Loan Agreement do not and will not violate any provision of the Credit Agreement or other Loan Documents.
(c)    No authorization, approval or consent of or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body is required in connection with the due execution, delivery and performance by each Company and the Parent of this Agreement, or for the performance of the Credit Agreement, as amended hereby.
(d)    Each Loan Party has disclosed to the Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  None of the reports, financial statements, certificates or other information furnished in writing by or on behalf of any Loan Party to the Agent in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which it was made, not misleading; provided that, with respect to projected financial information, each 

	
			
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Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time prepared.
(e)    This Agreement, the Credit Agreement, as amended hereby, and each other Loan Document to which a Company or the Parent is a party is a legal, valid and binding obligation of such Company or the Parent, as applicable, enforceable against such Company or the Parent, as applicable, in accordance with its terms except to the extent that the enforceability thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors' rights and remedies and by general principles of equity.
(f)    The representations and warranties contained in this Agreement, the Credit Agreement (after giving effect to this Agreement) and in each other Loan Document and certificate or other writing delivered to the Agent or any Lender pursuant thereto on or prior to the Second Amendment Effective Date are true and correct, (i) in the case of the representations and warranties qualified or modified as to materiality in the text thereof, in all respects, and (ii) otherwise, in all material respects, in each case on and as of the Second Amendment Effective Date as though made on and as of such date, except to the extent that any such representation and warranty expressly relates solely to an earlier date (in which case such representation and warranty shall be true and correct on and as of such date); and, after giving effect to this Agreement, no Default or Event of Default shall have occurred and be continuing.
Section 7.    Reservation of Rights.  No action or acquiescence by the Agent and the Lenders, including, without limitation, this Agreement of, or the acceptance of any payments under, the Credit Agreement, shall constitute a waiver of any Default or Event of Default that may exist as of the Second Amendment Effective Date, except as otherwise expressly provided herein.  Accordingly, the Agent and the Lenders reserve all of their rights under the Credit Agreement, the Loan Documents, at law and otherwise regarding any such Default or Event of Default, except as otherwise expressly provided herein.
Section 8.    Continued Effectiveness of the Credit Agreement and Other Loan Documents.  Each Loan Party hereby (i) acknowledges and consents to this Agreement, (ii) confirms and agrees that the Credit Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the Second Amendment Effective Date all references in any such Loan Document to "the Credit Agreement", the "Agreement", "thereto", "thereof", "thereunder" or words of like import referring to the Credit Agreement shall mean the Credit Agreement as modified by this Agreement, and (iii) confirms and agrees that to the extent that any such Loan Document purports to assign or pledge to the WC Collateral Agent or the Agent for the benefit of the Lenders, or to grant to the WC Collateral Agent or the Agent for the benefit of the Lenders a security interest in or Lien on, any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Credit Agreement (as modified hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects.  This Agreement does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties' obligations to repay the Obligations in accordance with the terms of Credit Agreement, or the obligations of the Loan Parties under any 

	
			
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Loan Document to which they are a party, all of which obligations shall remain in full force and effect.  Except as expressly provided herein, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of WC Collateral Agent, the Agent or any Lender under the Credit Agreement or any other Loan Document, nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document.
Section 9.    Miscellaneous.
(a)    This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of a counterpart hereby by facsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart hereof.
(b)    Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(c)    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(d)    THE LOAN PARTIES, THE AGENT AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(e)    Each Loan Party hereby acknowledges and agrees that this Agreement constitutes a "Loan Document" under the Credit Agreement. Accordingly, it shall be an Event of Default under the Credit Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Agreement shall have been untrue, false or misleading in any material respect when made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Agreement.
(f)    The Loan Parties will pay on demand all reasonable fees, reasonable out-of-pocket costs and expenses of the Agent in connection with the preparation, execution and delivery of this Agreement and the administration of the Credit Agreement, including, without limitation, the reasonable fees, out-of-pocket disbursements and other client charges of Schulte Roth & Zabel LLP. 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
	
		
	Borrower:

ALON USA, LP

By:  Alon USA GP II, LLC, its general partner

	 

	By 
	/s/ Shai Even

	 
	Name: Shai Even

	 
	Title: Senior Vice President and Chief Financial Officer

	

Guarantor Companies

ALON USA REFINING, LLC
ALON USA, INC.
ALON USA ENERGY, INC.
ALON USA GP, LLC
ALON USA GP II, LLC
ALON ASSETS, INC.
ALON USA CAPITAL, INC.
ALON BRANDS, INC.
ALON USA DELAWARE, LLC
ALON USA PARTNERS GP, LLC
ALON USA HOLDINGS, LLC

	 

	By 
	/s/ Shai Even

	 
	Name: Shai Even

	 
	Title: Senior Vice President and Chief Financial Officer

	 

	ALON USA PARTNERS, LP

By:  Alon USA Partners GP, LLC, its general partner

	 

	By 
	/s/ Shai Even

	 
	Name: Shai Even

	 
	Title: Senior Vice President and Chief Financial Officer

	
			
	 
	Second Amendment
	 

	
		
	Lender::

ISRAEL DISCOUNT BANK OF NEW YORK

	 

	By 
	/s/ Ilya Teplitskiy

	 
	Name: Ilya Teplitskiy

	 
	Title: Vice President

	 
	 

	By 
	/s/ Zahi Levy

	 
	Name: Zahi Levy

	 
	Title: Senior Vice President

	
			
	 
	Second Amendment
	 

	
		
	Lender::

BANK LEUMI USA

	 

	By 
	/s/ Dr. Avram Keusch - 827

	 
	Name: Dr. Avram Keusch - 827

	 
	Title: First Vice President

	 
	 

	By 
	/s/ Omri Offer - 972

	 
	Name: Omri Offer - 972

	 
	Title: Assistant Vice President

	
			
	 
	Second AmendmentEX 03.31.2015 10.1

Exhibit 10.1

PERFORMANT FINANCIAL CORPORATION
2012 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION GRANT
You have been granted the following Option to purchase Common Stock of Performant Financial Corporation (the “Company”) under the Company’s 2012 Stock Incentive Plan (the “Plan”): 
	
		
	Name of Optionee:
	 

	Total Number of Option Shares Granted:
	 

	Type of Option:
	[Nonstatutory Stock Option/Incentive Stock Option]

	Exercise Price Per Share:
	$

	Grant Date:
	 

	Vesting Commencement Date:
	 

	Vesting Schedule:
	This Option becomes exercisable with respect to the first 1/4th of the Shares subject to this Option when you complete 12 months of continuous Service as an Employee or a Consultant from the Vesting Commencement Date. Thereafter, this Option becomes exercisable with respect to an additional 1/48th of the Shares subject to this Option when you complete each additional month of such Service.

	Expiration Date:
	This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the term and conditions of the Plan and the Stock Option Agreement (the “Agreement”), both of which are attached to and made a part of this document. 
By signing this document you further agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by e-mail.
	
					
	OPTIONEE:
	Performant Financial Corporation

	 
	 

	 
	 

	 
	 
	By:
	 

	Optionee’s Signature
	 

	 
	 

	 
	 
	Title:
	 

	Optionee’s Printed Name
	 

PERFORMANT FINANCIAL CORPORATION
NOTICE OF STOCK OPTION GRANT
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PERFORMANT FINANCIAL CORPORATION
2012 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
	
			
	Tax Treatment
	This Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code or a nonstatutory option, as provided in the Notice of Stock Option Grant. Even if this Option is designated as an incentive stock option, it shall be deemed to be a nonstatutory option to the extent required by the $100,000 annual limitation under Section 422(d) of the Internal Revenue Code.

	Vesting
	This Option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. This Option will in no event become exercisable for additional Shares after your Service as an Employee or a Consultant has terminated for any reason.

	Term
	This Option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the Notice of Stock Option Grant (fifth anniversary for a more than 10% shareholder as provided under the Plan if this is an incentive stock option). This Option may expire earlier if your Service terminates, as described below.

	Regular Termination
	If your Service terminates for any reason except death or “Total and Permanent Disability” (as defined in the Plan), then this Option will expire at the close of business at Company headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). The Company determines when your Service terminates for this purpose and all purposes under the Plan and its determinations are conclusive and binding on all persons.

	Death
	If your Service terminates because of death, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if earlier, the Expiration Date). During that period of up to 12 months, your estate or heirs may exercise the Option.

	Disability
	If your Service terminates because of your Total and Permanent Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if earlier, the Expiration Date).

	Leaves of Absence
	For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

	Restrictions on Exercise
	The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Company stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Company stock as to which such approval shall not have been obtained.

	Notice of Exercise
	When you wish to exercise this Option you must provide a notice of exercise form in accordance with such procedures as are established by the Company and communicated to you from time to time. Any notice of exercise must specify how many Shares you wish to purchase and how your Shares should be registered. The notice of exercise will be effective when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.

	Form of Payment
	When you submit your notice of exercise, you must include payment of the Option exercise price for the Shares you are purchasing. Payment may be made in the following form(s):

	 
	•
	Your personal check, a cashier’s check or a money order.

	 
	•
	Certificates for Shares that you own, along with any forms needed to effect a transfer of those Shares to the Company. The value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering Shares, you may attest to the ownership of those Shares on a form provided by the Company and have the same number of Shares subtracted from the Shares issued to you upon exercise of the Option. However, you may not surrender or attest to the ownership of Shares in payment of the exercise price if your action would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes.

	 
	•
	By delivery on a form approved by the Company of an irrevocable direction to a securities broker approved by the Company to sell all or part of the Shares that are issued to you when you exercise this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any, will be delivered to you. The directions must be given by providing a notice of exercise form approved by the Company.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	•
	By delivery on a form approved by the Company of an irrevocable direction to a securities broker or lender approved by the Company to pledge Shares that are issued to you when you exercise this Option as security for a loan and to deliver to the Company from the loan proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The directions must be given by providing a notice of exercise form approved by the Company.

	 
	•
	If permitted by the Committee, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by you in cash other form of payment permitted under this Option.  The directions must be given by providing a notice of exercise form approved by the Company.

	 
	•
	Any other form permitted by the Committee in its sole discretion.

	 
	Notwithstanding the foregoing, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	Withholding Taxes and Stock Withholding
	Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items.
Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer.  With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company.  The Fair Market Value of these Shares, determined as of the effective date of the Option exercise, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described.  The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.

	Restrictions on Resale
	You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

	Transfer of Option
	In general, only you can exercise this Option prior to your death. You may not sell, transfer, assign, pledge or otherwise dispose of this Option, other than as designated by you by will or by the laws of descent and distribution, except as provided below. For instance, you may not use this Option as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may in any event dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your Option in any other way.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	However, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.

	 
	In addition, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights.

	 
	The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.

	Retention Rights
	Neither your Option nor this Agreement gives you the right to be employed or retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause.

	Shareholder Rights
	Your Options carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a shareholder of the Company unless and until you have exercised this Option by giving the required notice to the Company and paying the exercise price. No adjustments will be made for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan.

	Adjustments
	The number of Shares covered by this Option and the exercise price per Share shall be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Company Shares, and in other circumstances, as set forth in the Plan.

	Successors and Assigns
	Except as otherwise provided in the Plan or this Agreement, every term of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.

	Notice
	Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon the earliest of personal delivery, receipt or the third full day following mailing with postage and fees prepaid, addressed to the other party hereto at the address last known in the Company’s records or at such other address as such party may designate by ten (10) days’ advance written notice to the other party hereto.

	Applicable Law
	This Agreement will be interpreted and enforced under the laws of the State of California (without regard to their choice-of-law provisions).

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	Miscellaneous
	You understand and acknowledge that (i) the Plan is entirely discretionary, (ii) the Company and your employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of an option does not in any way create any contractual or other right to receive additional grants of options (or benefits in lieu of options) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when options will be granted, the number of Shares offered, the exercise price and the vesting schedule, will be at the sole discretion of the Company.
The value of this Option shall be an extraordinary item of compensation outside the scope of your employment contract, if any, and shall not be considered a part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.
You hereby authorize and direct your employer to disclose to the Company or any Subsidiary any information regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, as your employer deems necessary or appropriate to facilitate the administration of the Plan.
You consent to the collection, use and transfer of personal data as described in this subsection. You understand and acknowledge that the Company, your employer and the Company’s other Subsidiaries hold certain personal information regarding you for the purpose of managing and administering the Plan, including (without limitation) your name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all options or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in the your favor (the “Data”). You further understand and acknowledge that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. You understand and acknowledge that the recipients of Data may be located in the United States or elsewhere. You authorize such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering your participation in the Plan, including a transfer to any broker or other third party with whom you elect to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf. You may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this subsection by contacting the Human Resources Department of the Company in writing.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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	The Plan and Other Agreements
	The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in the Agreement shall have the meanings assigned to them in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under the Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT,
YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.

PERFORMANT FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
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PERFORMANT FINANCIAL CORPORATION 
2012 STOCK INCENTIVE PLAN 
NOTICE OF CASH EXERCISE OF STOCK OPTION
	
								
	OPTIONEE INFORMATION:
	 

	 
	 

	Name:
	 
	 
	Social Security Number:
	 

	 
	 
	 
	 
	 

	Address:
	 
	 
	Employee Number:
	 

	OPTION INFORMATION:
	 

	 
	 

	Date of Grant:
	_______________, 20__
	Type of Stock Option:

	Exercise Price per Share:  $______________
	 
	Nonstatutory (NSO)

	Total number of Shares of PERFORMANT FINANCIAL CORPORATION (the “Company”) covered by option:  __________

	 
	Incentive (ISO)

Number of Shares of the Company for which option is being exercised now:            (“Purchased Shares”). 
Total exercise price for the Purchased Shares: $                              
Form of payment enclosed: 
	
		
	 
	Check for $                    , payable to “PERFORMANT FINANCIAL CORPORATION” 

Name(s) in which the Purchased Shares should be registered: 
_______________________________________________________ 
	
		
	The certificate for the Purchased Shares should be sent to the following address:
	____________________________________________ 
____________________________________________ 
____________________________________________ 
____________________________________________

ACKNOWLEDGMENTS:
	
		
	1.
	I understand that all sales of Purchased Shares are subject to compliance with the Company’s policy on securities trades.

	2.
	I hereby acknowledge that I received and read a copy of the prospectus describing the Company’s 2012 Stock Incentive Plan and the tax consequences of an exercise.

	3.
	In the case of a nonstatutory option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of exercise and the exercise price. I further understand that I am required to pay withholding taxes at the time of exercising a nonstatutory option.

	4.
	In the case of an incentive stock option, I agree to notify the Company if I dispose of the Purchased Shares before I have met both of the tax holding periods applicable to incentive stock options (that is, if I make a disqualifying disposition).

PERFORMANT FINANCIAL CORPORATION
NOTICE OF EXERCISE
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	SIGNATURE AND DATE:
	 

	 
	 

	 
	 

	 
	 
	 
	__, 20__

PERFORMANT FINANCIAL CORPORATION
NOTICE OF EXERCISE
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PERFORMANT FINANCIAL CORPORATION
2012 STOCK INCENTIVE PLAN
NOTICE OF STOCK UNIT AWARD
You have been granted the following Stock Units representing Common Stock of Performant Financial Corporation (the “Company”) under the Company’s 2012 Stock Incentive Plan (the “Plan”).  
	
		
	Name of Participant:
	 

	 
	 

	Name of Participant:
	 

	 
	 

	Date of Grant:
	 

	 
	 

	Vesting Commencement Date:
	 

	 
	 

	Vesting Schedule:
	The Stock Units subject to this Award will vest in four (4) equal annual installments on the first, second, third and fourth anniversaries of the Vesting Commencement Date, subject to continuous Service as an Employee or a Consultant from the Vesting Commencement Date through the applicable vesting date.

By your signature and the signature of the Company’s representative below, you and the Company agree that these Stock Units are granted under and governed by the term and conditions of the Plan and the Stock Unit Agreement (the “Agreement”), both of which are attached to and made a part of this document. 
By signing this document you further agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by e-mail.
	
		
	[ ]

	PERFORMANT FINANCIAL CORPORATION

By:

Its:

PERFORMANT FINANCIAL CORPORATION
NOTICE OF STOCK UNIT AWARD
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PERFORMANT FINANCIAL CORPORATION
2012 STOCK INCENTIVE PLAN
STOCK UNIT AGREEMENT
	
		
	Payment for Stock Units
	No cash payment is required for the Stock Units you receive.  You are receiving the Stock Units in consideration for Services rendered by you.

	Vesting
	The Stock Units that you are receiving will vest in installments, as shown in the Notice of Stock Unit Award. 
No additional Stock Units vest after your Service as an Employee or a Consultant has terminated for any reason.

	Forfeiture
	If your Service terminates for any reason, then your Award expires immediately as to the number of Stock Units that have not vested before the termination date and do not vest as a result of termination.
This means that the unvested Stock Units will immediately be cancelled.  You receive no payment for Stock Units that are forfeited.
The Company determines when your Service terminates for this purpose and all purposes under the Plan and its determinations are conclusive and binding on all persons.

	Leaves of Absence
	For purposes of this Award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave of absence was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law.  But your Service terminates when the approved leave ends, unless you immediately return to active work.
If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Unit Award may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Unit Award may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.

	Nature of Stock Units
	Your Stock Units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Shares on a future date. As a holder of Stock Units, you have no rights other than the rights of a general creditor of the Company.

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	No Voting Rights or Dividends; Dividend Equivalents
	Your Stock Units carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a shareholder of the Company unless and until your Stock Units are settled by issuing Shares.  No adjustments will be made for dividends or other rights if the applicable record date occurs before your Shares are issued, except as described in the Plan.  
Notwithstanding the foregoing, dividend equivalents shall be paid or credited on Stock Units (other than Stock Units that, at the relevant record date, previously have been settled or forfeited) as follows, except that the Committee may specify an alternative treatment from that specified in (i), (ii), or (iii) below for any dividend or distribution: 
(i) Cash Dividends 
If the Company declares and pays a dividend or distribution on the Shares in the form of cash, then you will be credited, as of the payment date for such dividend or distribution, an amount equal to the number of Stock Units credited to you as of the record date for such dividend or distribution multiplied by the amount that would have been paid as a dividend or distribution on each outstanding Share at such payment date. Any amounts credited under this paragraph (i) shall be subject to the restrictions and conditions that apply to the Stock Unit with respect to which the amounts are credited and will be payable when the underlying Stock Unit becomes payable. At the time the underlying Stock Unit becomes payable, the Company has the discretion to pay any accrued dividend equivalents either in cash or in Shares. If the underlying Stock Unit does not vest or is forfeited, any amounts credited under this paragraph (i) with respect to the underlying Stock Unit will also fail to vest and be forfeited.
(ii)  Non-Share Dividends
 If the Company declares and pays a dividend or distribution on Shares in the form of property other than Shares, then a number of additional Stock Units shall be credited to you as of the payment date for such dividend or distribution equal to the number of Stock Units credited to you as of the record date for such dividend or distribution multiplied by the fair market value of such property actually paid as a dividend or distribution on each outstanding Share at such payment date, divided by the Fair Market Value of a Share at such payment date. Any Stock Units credited to you under this paragraph (ii) shall be subject to the restrictions and conditions that apply to the Stock Unit with respect to which the Stock Units are credited and will be payable when the underlying Stock Unit becomes payable. If the underlying Stock Unit does not vest or is forfeited, any Stock Units credited under this paragraph (ii) with respect to the underlying Stock Unit will also fail to vest and be forfeited.
 (iii) Stock Dividends and Splits 
If the Company declares and pays a dividend or distribution on Shares in the form of additional Shares, or there occurs a forward split of Stock, then a number of additional Stock Units shall be credited to you as of the payment date for such dividend or distribution or forward split equal to the number of Stock Units credited to you as of the record date for such dividend or distribution or split multiplied by the number of additional Shares actually paid as a dividend or distribution or issued in such split in respect of each outstanding Share. Any Stock Units credited to you under this paragraph (iii) shall be subject to the restrictions and conditions that apply to the Stock Unit with respect to which the Stock Units are credited and will be payable when the underlying Stock Unit becomes payable. If the underlying Stock Unit does not vest or is forfeited, any Stock Units credited under this paragraph (iii) with respect to the underlying Stock Unit will also fail to vest and be forfeited. 

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	Stock Units Nontransferable
	You may not sell, transfer, assign, pledge or otherwise dispose of any Stock Units. For instance, you may not use your Stock Units as security for a loan. If you attempt to do any of these things, your Stock Units will immediately become invalid.

	Settlement of Stock Units
	Each of your vested Stock Units will be settled when it vests; provided, however, that settlement of each Stock Unit will be deferred to the first permissible trading day for the Shares, if later than the applicable vesting date, but in no event later than December 31 of the calendar year in which the applicable vesting date occurs.
For purposes of this Agreement, “permissible trading day” means a day that satisfies all of the following requirements: (a) the exchange on which the Shares are traded is open for trading on that day; (b) you are permitted to sell Shares on that day without incurring liability under section 16(b) of the Exchange Act, (c) either (i) you are not in possession of material non-public information that would make it illegal for you to sell Shares on that day under Rule 10b-5 under the Exchange Act or (ii) Rule 10b5-1 under the Exchange Act would apply to the sale; (d) you are permitted to sell Shares on that day under such written insider trading policy as may have been adopted by the Company; and (e) you are not prohibited from selling Shares on that day by a written agreement between you and the Company or a third party.
At the time of settlement, you will receive one Share for each vested Stock Unit; provided, however, that no fractional Shares will be issued or delivered pursuant to the Plan or this Agreement, and the Committee will determine whether cash will be paid in lieu of any fractional Share or whether such fractional Share and any rights thereto will be canceled, terminated or otherwise eliminated.  In addition, the Shares are issued to you subject to the condition that the issuance of the Shares not violate any law or regulation.  

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	Withholding Taxes and Stock Withholding
	Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the settlement of the Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the Award or any aspect of the Stock Units to reduce or eliminate your liability for Tax-Related Items.
Prior to the settlement of your Stock Units, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer.  With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your Stock Units are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company.  The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described.  The Company may refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, and your rights to the Shares shall be forfeited if you do not comply with such obligations on or before December 31 of the calendar year in which the applicable vesting date for the Stock Units occurs.

	Restrictions on Resale
	You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

	No Retention Rights
	Neither your Award nor this Agreement gives you the right to be employed or retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause.

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	Adjustments
	The number of Stock Units covered by this Award shall be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Company Shares, and in other circumstances, as set forth in the Plan.

	Successors and Assigns
	Except as otherwise provided in the Plan or this Agreement, every term of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.

	Notice
	Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon the earliest of personal delivery, receipt or the third full day following mailing with postage and fees prepaid, addressed to the other party hereto at the address last known in the Company’s records or at such other address as such party may designate by ten (10) days’ advance written notice to the other party hereto.

	Applicable Law
	This Agreement will be interpreted and enforced under the laws of the State of California (without regard to their choice-of-law provisions).

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	Miscellaneous
	You understand and acknowledge that (i) the Plan is entirely discretionary, (ii) the Company and your employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of your Award does not in any way create any contractual or other right to receive additional grants of awards (or benefits in lieu of awards) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when awards will be granted, the number of Shares subject to the awards, and the vesting schedule, will be at the sole discretion of the Company.
The value of this Award shall be an extraordinary item of compensation outside the scope of your employment contract, if any, and shall not be considered a part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.
You hereby authorize and direct your employer to disclose to the Company or any Subsidiary any information regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, as your employer deems necessary or appropriate to facilitate the administration of the Plan.
You consent to the collection, use and transfer of personal data as described in this subsection.  You understand and acknowledge that the Company, your employer and the Company’s other Subsidiaries hold certain personal information regarding you for the purpose of managing and administering the Plan, including (without limitation) your name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all awards or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Data”).  You further understand and acknowledge that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan.  You understand and acknowledge that the recipients of Data may be located in the United States or elsewhere.  You authorize such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering your participation in the Plan, including a transfer to any broker or other third party with whom you elect to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf.  You may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this subsection by contacting the Human Resources Department of the Company in writing.

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
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	The Plan and Other Agreements
	The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in this Agreement shall have the meanings assigned to them in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award. Any prior agreements, commitments or negotiations concerning this Award are superseded. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under the Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT,
YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.

PERFORMANT FINANCIAL CORPORATION
STOCK UNIT AGREEMENT
-7-

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