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notepurchaseagreementnpa

Note Purchase Agreement NPA (Regal Rexnord) 4888-2909-8508 v36.docx  4377784  Execution Version    REGAL REXNORD CORPORATION      $500,000,000      3.90% Senior Notes Due April 7, 2032      ______________    NOTE PURCHASE AGREEMENT    ______________      Dated April 7, 2022                

 

  -i-  TABLE OF CONTENTS  SECTION HEADING PAGE  SECTION 1. AUTHORIZATION OF NOTES; INCREMENTAL LEVERAGE FEE ........................ 1  Section 1.1. Authorization of Notes .......................................................................... 1  Section 1.2. Incremental Leverage Fee ..................................................................... 1  SECTION 2. SALE AND PURCHASE OF NOTES ................................................................... 2  Section 2.1. Notes ...................................................................................................... 2  Section 2.2. Subsidiary Guaranty .............................................................................. 2  SECTION 3. CLOSING ....................................................................................................... 2  SECTION 4. CONDITIONS TO CLOSING ............................................................................. 3  Section 4.1. Representations and Warranties ............................................................ 3  Section 4.2. Performance; No Default ....................................................................... 3  Section 4.3. Compliance Certificates ........................................................................ 3  Section 4.4. Opinions of Counsel .............................................................................. 4  Section 4.5. Purchase Permitted By Applicable Law, Etc ........................................ 4  Section 4.6. Sale of Other Notes ............................................................................... 4  Section 4.7. Payment of Special Counsel Fees .......................................................... 4  Section 4.8. Private Placement Number .................................................................... 4  Section 4.9. Changes in Corporate Structure ............................................................. 4  Section 4.10. Subsidiary Guaranty .............................................................................. 5  Section 4.11. Funding Instructions .............................................................................. 5  Section 4.12. Proceedings and Documents .................................................................. 5  Section 4.13. Completion of the First Closing ............................................................ 5  SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................ 5  Section 5.1. Organization; Power and Authority ....................................................... 5  Section 5.2. Authorization, Etc .................................................................................. 6  Section 5.3. Disclosure .............................................................................................. 6  Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates ....... 6  Section 5.5. Financial Statements; Material Liabilities ............................................. 7  Section 5.6. Compliance with Laws, Other Instruments, Etc .................................... 7  Section 5.7. Governmental Authorizations, Etc ........................................................ 8  Section 5.8. Litigation; Observance of Agreements, Statutes and Orders ................ 8  Section 5.9. Taxes ...................................................................................................... 8  Section 5.10. Title to Property; Leases ........................................................................ 8  Section 5.11. Licenses, Permits, Etc ............................................................................ 8  Section 5.12. Compliance with Employee Benefit Plans ............................................ 9  Section 5.13. Private Offering by the Company ........................................................ 10  Section 5.14. Use of Proceeds; Margin Regulations ................................................. 10  

 

  -ii-  Section 5.15. Existing Debt; Future Liens ................................................................. 11  Section 5.16. Foreign Assets Control Regulations, Etc ............................................. 11  Section 5.17. Status under Certain Statutes ............................................................... 12  Section 5.18. Environmental Matters ........................................................................ 12  SECTION 6. REPRESENTATIONS OF THE PURCHASERS .................................................... 12  Section 6.1. Purchase for Investment ...................................................................... 12  Section 6.2. Source of Funds ................................................................................... 13  SECTION 7. INFORMATION AS TO COMPANY .................................................................. 14  Section 7.1. Financial and Business Information .................................................... 14  Section 7.2. Officer’s Certificate ............................................................................. 17  Section 7.3. Visitation ............................................................................................. 18  Section 7.4.  Electronic Delivery .............................................................................. 18  SECTION 8. PAYMENT AND PREPAYMENT OF THE NOTES .............................................. 19  Section 8.1. Maturity ............................................................................................... 19  Section 8.2. Optional Prepayments with Make-Whole Amount ............................. 19  Section 8.3. Allocation of Partial Prepayments ....................................................... 20  Section 8.4. Maturity; Surrender, Etc. ..................................................................... 20  Section 8.5. Purchase of Notes ................................................................................ 20  Section 8.6. Make-Whole Amount .......................................................................... 21  Section 8.7. Payments Due on Non-Business Days ................................................ 22  Section 8.8. Change of Control ............................................................................... 22  SECTION 9. AFFIRMATIVE COVENANTS. ........................................................................ 24  Section 9.1. Compliance with Laws ........................................................................ 24  Section 9.2. Insurance .............................................................................................. 24  Section 9.3. Maintenance of Properties ................................................................... 24  Section 9.4. Payment of Taxes and Claims ............................................................. 24  Section 9.5. Corporate Existence, Etc ..................................................................... 25  Section 9.6. Books and Records .............................................................................. 25  Section 9.7. Subsidiary Guarantors ......................................................................... 25  SECTION 10. NEGATIVE COVENANTS. ............................................................................. 27  Section 10.1. Transactions with Affiliates ................................................................ 27  Section 10.2. Merger, Consolidation, Etc .................................................................. 27  Section 10.3. Line of Business .................................................................................. 28  Section 10.4. Economic Sanctions, Etc ..................................................................... 28  Section 10.5. Sale of Assets, Etc. .............................................................................. 28  Section 10.6. Liens .................................................................................................... 30  Section 10.7. Financial Covenants. ........................................................................... 31  Section 10.8. Priority Debt. ....................................................................................... 32  

 

  -iii-  SECTION 11. EVENTS OF DEFAULT .................................................................................. 32  SECTION 12. REMEDIES ON DEFAULT, ETC ..................................................................... 35  Section 12.1. Acceleration ......................................................................................... 35  Section 12.2. Other Remedies ................................................................................... 35  Section 12.3. Rescission ............................................................................................ 35  Section 12.4. No Waivers or Election of Remedies, Expenses, Etc .......................... 36  SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES .............................. 36  Section 13.1. Registration of Notes ........................................................................... 36  Section 13.2. Transfer and Exchange of Notes ......................................................... 36  Section 13.3. Replacement of Notes .......................................................................... 37  SECTION 14. PAYMENTS ON NOTES ................................................................................. 37  Section 14.1. Place of Payment ................................................................................. 37  Section 14.2. Payment by Wire Transfer ................................................................... 37  Section 14.3. FATCA Information ............................................................................ 38  SECTION 15. EXPENSES, ETC ........................................................................................... 38  Section 15.1. Transaction Expenses .......................................................................... 38  Section 15.2. Certain Taxes ....................................................................................... 39  Section 15.3. Survival ................................................................................................ 39  SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT  ................................................................................................................... 39  SECTION 17. AMENDMENT AND WAIVER ........................................................................ 40  Section 17.1. Requirements ....................................................................................... 40  Section 17.2. Solicitation of Holders of Notes .......................................................... 40  Section 17.3. Binding Effect, Etc .............................................................................. 41  Section 17.4. Notes Held by Company, Etc .............................................................. 41  SECTION  18. NOTICES ..................................................................................................... 41  SECTION  19. REPRODUCTION OF DOCUMENTS ................................................................ 42  SECTION  20. CONFIDENTIAL INFORMATION .................................................................... 42  SECTION  21. SUBSTITUTION OF PURCHASER ................................................................... 43  SECTION 22. MISCELLANEOUS ........................................................................................ 43  Section 22.1. Successors and Assigns ....................................................................... 43  Section 22.2. Accounting Terms ............................................................................... 44  

 

  -iv-  Section 22.3. Severability .......................................................................................... 44  Section 22.4. Construction, Etc ................................................................................. 45  Section 22.5. Counterparts ........................................................................................ 45  Section 22.6. Governing Law .................................................................................... 46  Section 22.7. Jurisdiction and Process; Waiver of Jury Trial .................................... 46  Signature ........................................................................................................................................ 47  

 

  -v-  SCHEDULE A  — Defined Terms    SCHEDULE 1  — Form of 3.90% Senior Notes Due April 7, 2032    SCHEDULE 2.2  — Form of Subsidiary Guaranty    SCHEDULE 4.4(a) —  Form of Opinion of Special Counsel for the Company    SCHEDULE 4.4(b) — Form of Opinion of Special Counsel for the Purchasers    SCHEDULE 5.3  — Disclosure Materials    SCHEDULE 5.4  — Subsidiaries of the Company and Ownership of Subsidiary Stock    SCHEDULE 5.5  — Financial Statements    SCHEDULE 5.15  — Existing Debt    SCHEDULE 10.6   — Existing Liens    EXHIBIT 14.2   — Form of Tax Compliance Certificate     PURCHASER SCHEDULE — Information Relating to Purchasers         

 

    REGAL REXNORD CORPORATION  6133 N. River Road, Suite 700  Rosemont, Illinois 60018    $500,000,000 3.90% Senior Notes Due April 7, 2032        April 7, 2022      TO EACH OF THE PURCHASERS LISTED IN   THE PURCHASER SCHEDULE HERETO:  Ladies and Gentlemen:  Regal Rexnord Corporation, a Wisconsin corporation (the “Company”), agrees with each  of the Purchasers as follows:  SECTION 1. AUTHORIZATION OF NOTES; INCREMENTAL LEVERAGE FEE.  Section 1.1. Authorization of Notes The Company will authorize the issue and sale of  $500,000,000 3.90% Senior Notes due April 7, 2032 (the “Notes”).  The Notes shall be  substantially in the form set out in Schedule 1.  Certain capitalized and other terms used in this  Agreement are defined in Schedule A and, for purposes of this Agreement, the rules of construction  set forth in Section 22.4 shall govern.   Section 1.2. Incremental Leverage Fee.  (a) If the Funded Debt to EBITDA Ratio  exceeds 3.75 to 1.00 as permitted by Section 10.7(a), as evidenced by an Officer’s Certificate  delivered pursuant to Section 7.2(a), an incremental leverage fee shall be due on the aggregate  outstanding principal amount of the Notes in an aggregate amount equal to (x) 0.50% (per annum)  during any period in which the Funded Debt to EBITDA Ratio exceeds 3.75 to 1.00, but does not  exceed 4.0 to 1.00, and (y) an additional 0.25% (per annum, for a total of 0.75% per annum) during  any period in which the Funded Debt to EBITDA Ratio exceeds 4.0 to 1.00, but does not exceed  4.25 to 1.00 (the “Incremental Leverage Fee”), which shall be due and payable on the Notes as  and to the extent provided in Section 1.2(b) below.  Such Incremental Leverage Fee shall begin to  accrue on the first day of the Fiscal Quarter following the Fiscal Quarter in respect of which such  Officer’s Certificate was delivered, and shall continue to accrue until the Company has provided  an Officer’s Certificate pursuant to Section 7.2(a) demonstrating that, as of the last day of the  Fiscal Quarter in respect of which such Officer’s Certificate is delivered, the Funded Debt to  EBITDA Ratio is not more than 3.75 to 1.00.  In the event such Officer’s Certificate evidencing  that the Funded Debt to EBITDA Ratio is not more than 3.75 to 1.00 is delivered, the Incremental  Leverage Fee shall cease to accrue on and as of the last day of the Fiscal Quarter in respect of  which such Officer’s Certificate is delivered.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -2-   (b) Within 10 Business Days of the delivery of an Officer’s Certificate pursuant to  Section 7.2(a) for any Fiscal Quarter in which the Incremental Leverage Fee accrued, the Company  shall pay to each holder of a Note the amount attributable to the Incremental Leverage Fee (the  “Incremental Leverage Fee Payment”) which shall be the product of (i) the aggregate  outstanding principal amount of Notes held by such holder (or its predecessor(s) in interest, to the  extent of the aggregate outstanding principal amount of Notes transferred by such predecessor(s)  in interest to such holder) as of the first day that the Incremental Leverage Fee begins to accrue  with respect to the period covered by such Officer’s Certificate, (ii) 0.50% or 0.75%, as the case  may be (to reflect the Incremental Leverage Fee as described in Section 1.2(a) above) and (iii) 0.25  (to reflect that the Incremental Leverage Fee is payable quarterly).  The Incremental Leverage Fee  Payment, if any, shall be paid by wire transfer of immediately available funds to each holder of  the Notes in accordance with the terms of this Agreement.  The Company, the Purchasers and each  holder agree that, for purposes of the Code, the Incremental Leverage Fee Payment constitutes  additional interest.   (c) For avoidance of doubt, no Incremental Leverage Fee will be used in calculating any  Make-Whole Amount.  SECTION 2. SALE AND PURCHASE OF NOTES .   Section 2.1. Notes.  Subject to the terms and conditions of this Agreement, the Company  will issue and sell to each Purchaser and each Purchaser will purchase from the Company (i)  $250,000,000 3.90% Senior Notes due April 7, 2032 to be issued and sold at the First Closing (as  defined in Section 3 below) and (ii) $250,000,000 3.90% Senior Notes due April 7, 2032 to be  issued and sold at the Second Closing (as defined in Section 3 below), in the principal amount  specified opposite such Purchaser’s name in the Purchaser Schedule at the purchase price of 100%  of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint  obligations and no Purchaser shall have any liability to any Person for the performance or  non-performance of any obligation by any other Purchaser hereunder.   Section 2.2. Subsidiary Guaranty.  The payment by the Company of all amounts due  with respect to the Notes and the performance by the Company of its obligations under this  Agreement will be absolutely and unconditionally guaranteed by the Subsidiary Guarantors  pursuant to the Subsidiary Guaranty Agreement dated as of even date herewith, which shall be  substantially in the form of Schedule 2.2 attached hereto, and otherwise in accordance with the  provisions of Section 9.7 hereof.   SECTION 3. CLOSING.  The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the  offices of Chapman and Cutler LLP, 320 South Canal Street, Chicago, Illinois 60606 at 10:00 a.m.  Central time, at two closings (each a “Closing”).  The first closing shall occur on April 7, 2022  (the “First Closing”) and the second closing shall occur on June 7, 2022 (the “Second Closing”).   At each Closing the Company will deliver to each Purchaser the Notes to be purchased by such  Purchaser in the form of a single Note (or such greater number of Notes in denominations of at  least $50,000 as such Purchaser may request) dated the date of such Closing and registered in such  

 

Regal Rexnord Corporation  Note Purchase Agreement  -3-  Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the  Company or its order of immediately available funds in the amount of the purchase price therefor  by wire transfer of immediately available funds for the account of the Company to the account  designated by the Company in the funding instructions to be delivered by the Company in  accordance with Section 4.11 hereof.  If at such Closing the Company shall fail to tender such  Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in  Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its  election, be relieved of all further obligations under this Agreement, without thereby waiving any  rights such Purchaser may have by reason of such failure by the Company to tender such Notes or  any of the conditions specified in Section 4 not having been fulfilled to such Purchaser’s  satisfaction.  SECTION 4. CONDITIONS TO CLOSING.  Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser  at each Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at such  Closing, of the following conditions:   Section 4.1. Representations and Warranties.     (a) Representations and Warranties of the Company.  The representations and  warranties of the Company in this Agreement shall be correct when made and at each Closing  (except to the extent that any such representation or warranty expressly relates to a specified earlier  date, in which case such representation and warranty shall be true and correct as of such earlier  date).   (b) Representations and Warranties of the Subsidiary Guarantors. The representations  and warranties of the Subsidiary Guarantors in the Subsidiary Guaranty shall be correct when made  and at each Closing (except to the extent that any such representation or warranty expressly relates  to a specified earlier date, in which case such representation and warranty shall be true and correct  as of such earlier date).   Section 4.2. Performance; No Default.  Each of the Company and the Subsidiary  Guarantors shall have performed and complied with all agreements and conditions contained in  this Agreement and the Subsidiary Guaranty required to be performed or complied with by it prior  to or at such Closing.  Immediately before and after giving effect to the issue and sale of the Notes  (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event  of Default shall have occurred and be continuing.  Neither the Company nor any Subsidiary shall  have entered into any transaction since the date of the Investor Presentation that would have been  prohibited by Section 10 had such Section applied since such date.   Section 4.3. Compliance Certificates.   (a) Officer’s Certificate.  Each of the Company and the Subsidiary Guarantors shall have  delivered to such Purchaser an Officer’s Certificate, dated the date of such Closing, certifying that  the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -4-   (b) Secretary’s Certificate.  Each of the Company and the Subsidiary Guarantors shall  have delivered to such Purchaser a certificate of its Secretary, Assistant Secretary or other  Responsible Officer, dated the date of such Closing, certifying as to (i) the resolutions attached  thereto and other corporate proceedings relating to the authorization, execution and delivery of  any Note Document to which it is party or which it is executing and (ii) such Person’s  organizational documents as then in effect.     Section 4.4. Opinions of Counsel.  Such Purchaser shall have received opinions in form  and substance satisfactory to such Purchaser, dated the date of such Closing (a) from Keating  Muething & Klekamp PLL, counsel for the Company and the Subsidiary Guarantors, covering the  matters set forth in Schedule 4.4(a) and covering such other matters incident to the transactions  contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company  hereby instructs its counsel to deliver such opinion to the Purchasers) and (b) from Chapman and  Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in  the form set forth in Schedule 4.4(b) and covering such other matters incident to such transactions  as such Purchaser may reasonably request.   Section 4.5. Purchase Permitted By Applicable Law, Etc.  On the date of such Closing,  such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each  jurisdiction to which such Purchaser is subject, without recourse to provisions (such as  section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance  companies without restriction as to the character of the particular investment, (b) not violate any  applicable law or regulation (including Regulation T, U or X of the Board of Governors of the  Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under  or pursuant to any applicable law or regulation, which law or regulation was not in effect on the  date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer’s  Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable  such Purchaser to determine whether such purchase is so permitted.   Section 4.6. Sale of Other Notes.  Contemporaneously with such Closing, the Company  shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased  by it at such Closing as specified in the Purchaser Schedule.   Section 4.7. Payment of Special Counsel Fees.  Without limiting Section 15.1, the  Company shall have paid on or before such Closing the fees, charges and disbursements of the  Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such  counsel rendered to the Company at least one Business Day prior to such Closing.   Section 4.8. Private Placement Number.  A Private Placement Number issued by the  PPN CUSIP Unit of CUSIP Global Services (in cooperation with the SVO) shall have been  obtained for the Notes.   Section 4.9. Changes in Corporate Structure.  Neither the Company nor the Subsidiary  Guarantors shall have changed their jurisdiction of incorporation or organization, as applicable, or  been a party to any merger or consolidation or succeeded to all or any substantial part of the  

 

Regal Rexnord Corporation  Note Purchase Agreement  -5-  liabilities of any other entity, at any time following the date of the most recent financial statements  referred to in Schedule 5.5.     Section 4.10. Subsidiary Guaranty.  The Subsidiary Guaranty shall have been duly  authorized, executed and delivered by each Subsidiary Guarantor, shall constitute the legal, valid  and binding contract and agreement of each Subsidiary Guarantor and such Purchaser or its special  counsel shall have received a true, correct and complete copy thereof.   Section 4.11. Funding Instructions.  At least five (5) Business Days prior to such Closing  Date, each Purchaser shall have received written instructions signed by a Responsible Officer on  letterhead of the Company confirming the information specified in Section 3 including (a) the  name and address of the transferee bank, (b) such transferee bank’s ABA number/Swift  Code/IBAN, and (c) the account name and number into which the purchase price for the Notes is  to be deposited, which account shall be fully opened and able to receive micro deposits in  accordance with this Section at least five (5) Business Days prior to such Closing Date.  Each  Purchaser has the right, but not the obligation, upon written notice (which may be by email) to the  Company, to elect to deliver a micro deposit (less than $51.00) to the account identified in the  written instructions no later than two (2) Business Days prior to such Closing Date. If a Purchaser  delivers a micro deposit, a Responsible Officer must verbally verify the receipt and amount of the  micro deposit to such Purchaser on a telephone call initiated by such Purchaser prior to such  Closing Date.  The Company shall not be obligated to return the amount of the micro deposit, nor  will the amount of the micro deposit be netted against the Purchaser’s purchase price of the Notes.   Following the reasonable request of a Purchaser, an identifiable Responsible Officer of the  Company shall confirm the written instructions by a live videoconference made available to such  requesting Purchaser(s) no later than two (2) Business Days prior to Closing.   Section 4.12. Proceedings and Documents.  All corporate and other proceedings in  connection with the transactions contemplated by this Agreement and all documents and  instruments incident to such transactions shall be satisfactory to such Purchaser and its special  counsel, and such Purchaser and its special counsel shall have received all such counterpart  originals or certified or other copies of such documents as such Purchaser or such special counsel  may reasonably request.   Section 4.13. Completion of the First Closing.  It shall be a condition to the Second  Closing that the First Closing shall have occurred.     SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents and warrants to each Purchaser as of the date of this Agreement  and as of the date of each Closing that:   Section 5.1. Organization; Power and Authority.  The Company is a corporation duly  organized, validly existing and in good standing under the laws of its jurisdiction of incorporation,  and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which  such qualification is required by law, other than those jurisdictions as to which the failure to be so  qualified or in good standing would not, individually or in the aggregate, reasonably be expected  

 

Regal Rexnord Corporation  Note Purchase Agreement  -6-  to have a Material Adverse Effect.  The Company has the corporate power and authority to own  or hold under lease the properties it purports to own or hold under lease, to transact the business it  transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to  perform the provisions hereof and thereof.   Section 5.2. Authorization, Etc.  This Agreement and the Notes have been duly au- thorized by all necessary corporate action on the part of the Company, and this Agreement  constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and  binding obligation of the Company enforceable against the Company in accordance with its terms,  except as such enforceability may be limited by (i) applicable bankruptcy, insolvency,  reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights  generally and (ii) general principles of equity (regardless of whether such enforceability is  considered in a proceeding in equity or at law).   Section 5.3. Disclosure.  The Company, through its agents, BofA Securities, Inc., JP  Morgan Securities LLC, and U.S. Bancorp Investments, Inc., have delivered to each Purchaser a  copy of an Investor Presentation, dated March 2022 (the “Investor Presentation”), relating to the  transactions contemplated hereby.  The Investor Presentation fairly describes, in all material  respects, the general nature of the business and principal properties of the Company and its  Subsidiaries.  This Agreement, the Investor Presentation, the financial statements listed in  Schedule 5.5 and the documents, certificates or other writings delivered to the Purchasers by or on  behalf of the Company prior to March 24, 2022 in connection with the transactions contemplated  hereby and identified in Schedule 5.3 (this Agreement, the Investor Presentation and such  documents, certificates or other writings and such financial statements delivered to each Purchaser  being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain  any untrue statement of a material fact or omit to state any material fact necessary to make the  statements therein not misleading in light of the circumstances under which they were made;  provided that, with respect to management projections or forward-looking statements, the  Company represents only that such information was prepared in good faith based on assumptions  believed to be reasonable at the time, it being recognized by the Purchasers that such financial  information as it relates to future events is not to be viewed as fact and that actual results during  the period or periods covered by such financial information may differ from the projected results  set forth therein.  Except as disclosed in the Disclosure Documents, since January 1, 2022 there  has been no change in the financial condition, operations, business, properties or prospects of the  Company or any Subsidiary except changes that would not, individually or in the aggregate,  reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company  that would reasonably be expected to have a Material Adverse Effect that has not been set forth  herein or in the Disclosure Documents.   Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.   (a) Schedule 5.4 contains (except as noted therein) complete and correct lists as of the date of this  Agreement of (i) the Company’s Subsidiaries, showing, as to each Subsidiary, the name thereof,  the jurisdiction of its organization, the percentage of shares of each class of its capital stock or  similar equity interests outstanding owned by the Company and each other Subsidiary and whether  such Subsidiary is a Subsidiary Guarantor, (ii) the Company’s Affiliates, other than Subsidiaries,  and (iii) the Company’s directors and senior officers.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -7-   (b) All of the outstanding shares of capital stock or similar equity interests of each  Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries as of the  date of this Agreement have been validly issued, are fully paid and non-assessable and are owned  by the Company or another Subsidiary free and clear of any Lien that is prohibited by this  Agreement (except as noted on Schedule 5.4).   (c) Each Subsidiary is a corporation or other legal entity duly organized, validly existing  and, where applicable, in good standing under the laws of its jurisdiction of organization, and is  duly qualified as a foreign corporation or other legal entity and, where applicable, is in good  standing in each jurisdiction in which such qualification is required by law, other than those  jurisdictions as to which the failure to be so qualified or in good standing would not, individually  or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each such  Subsidiary has the corporate or other power and authority to own or hold under lease the properties  it purports to own or hold under lease and to transact the business it transacts and proposes to  transact.   (d) No Subsidiary is subject to any legal, regulatory, contractual or other restriction (other  than the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law  or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make  any other similar distributions of profits to the Company or any of its Subsidiaries that owns  outstanding shares of capital stock or similar equity interests of such Subsidiary.   Section 5.5. Financial Statements; Material Liabilities.  The Company has delivered to  each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on  Schedule 5.5.  All of such financial statements (including in each case the related schedules and  notes) fairly present in all material respects the consolidated financial position of the Company  and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated  results of their operations and cash flows for the respective periods so specified and have been  prepared in accordance with GAAP consistently applied throughout the periods involved except  as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal  year-end adjustments).  The Company and its Subsidiaries do not have any Material liabilities that  are not disclosed in the Disclosure Documents.   Section 5.6. Compliance with Laws, Other Instruments, Etc.  The execution, delivery  and performance by the Company of this Agreement and the Notes will not (i) contravene, result  in any breach of, or constitute a default under, or result in the creation of any Lien in respect of  any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust,  loan, purchase or credit agreement, lease, corporate charter, regulations or by-laws, shareholders  agreement or any other Material agreement or instrument to which the Company or any Subsidiary  is bound or by which the Company or any Subsidiary or any of their respective properties may be  bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or  provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental  Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute  or other rule or regulation of any Governmental Authority applicable to the Company or any  Subsidiary.   

 

Regal Rexnord Corporation  Note Purchase Agreement  -8-   Section 5.7. Governmental Authorizations, Etc.  No consent, approval or authorization  of, or registration, filing or declaration with, any Governmental Authority is required in connection  with the execution, delivery or performance by the Company of this Agreement or the Notes.   Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.  (a) There  are no actions, suits, investigations or proceedings pending or, to the best knowledge of the  Company, threatened against or affecting the Company or any Subsidiary or any property of the  Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any  Governmental Authority that would, individually or in the aggregate, reasonably be expected to  have a Material Adverse Effect.   (b) Neither the Company nor any Subsidiary is (i) in default under any agreement or  instrument to which it is a party or by which it is bound, (ii) in violation of any order, judgment,  decree or ruling of any court, any arbitrator of any kind or any Governmental Authority or (iii) in  violation of any applicable law, ordinance, rule or regulation of any Governmental Authority  (including Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations  that are referred to in Section 5.16), which default or violation would, individually or in the  aggregate, reasonably be expected to have a Material Adverse Effect.   Section 5.9. Taxes.  The Company and its Subsidiaries have filed all Material tax returns  that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and  payable on such returns and all other taxes and assessments levied upon them or their properties,  assets, income or franchises, to the extent such taxes and assessments have become due and  payable and before they have become delinquent, except for any taxes and assessments (i) the  amount of which, individually or in the aggregate, is not Material or (ii) the amount, applicability  or validity of which is currently being contested in good faith by appropriate proceedings and with  respect to which the Company or a Subsidiary, as the case may be, has established adequate  reserves in accordance with GAAP.  The Company knows of no basis for any other tax or  assessment that would, individually or in the aggregate, reasonably be expected to have a Material  Adverse Effect.  The charges, accruals and reserves on the books of the Company and its  Subsidiaries in respect of U.S. federal, state or other taxes for all fiscal periods are adequate.  The  U.S. federal income tax liabilities of the Company and its Subsidiaries have been finally  determined (whether by reason of completed audits or the statute of limitations having run) for all  fiscal years up to and including the fiscal year ended December 31, 2016.   Section 5.10. Title to Property; Leases.  The Company and its Subsidiaries have good and  sufficient title to their respective properties that individually or in the aggregate are Material,  including all such properties reflected in the most recent audited balance sheet referred to in  Section 5.5 or purported to have been acquired by the Company or any Subsidiary after such date  (except as sold or otherwise disposed of in the ordinary course of business), in each case free and  clear of Liens prohibited by this Agreement.  All leases that individually or in the aggregate are  Material are valid and subsisting and are in full force and effect in all material respects.    Section 5.11. Licenses, Permits, Etc.  (a) The Company and its Subsidiaries own or  possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software,  service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate  

 

Regal Rexnord Corporation  Note Purchase Agreement  -9-  are Material, without known conflict with the rights of others except for those conflicts that,  individually or in the aggregate, would not have a Material Adverse Effect.   (b) No product or service of the Company or any of its Subsidiaries infringes in any  material respect any license, permit, franchise, authorization, patent, copyright, proprietary  software, service mark, trademark, trade name or other right owned by any other Person except for  those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect.   (c) There is no Material violation by any Person of any right of the Company or any of  its Subsidiaries with respect to any license, permit, franchise, authorization, patent, copyright,  proprietary software, service mark, trademark, trade name or other right owned or used by the  Company or any of its Subsidiaries that would, individually or in the aggregate, reasonably be  expected have a Material Adverse Effect.   Section 5.12. Compliance with Employee Benefit Plans.  (a) The Company and each  ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws  except for such instances of noncompliance as have not resulted in and would not, individually or  in the aggregate, reasonably be expected to result in a Material Adverse Effect.  Neither the  Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or  the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in  section 3 of ERISA), and no event, transaction or condition has occurred or exists that would,  individually or in the aggregate, reasonably be expected to result in the incurrence of any such  liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the  rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I  or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions  under the Code or federal law or section 4068 of ERISA or by the granting of a security interest in  connection with the amendment of a Plan, other than such liabilities or Liens as would not be  individually or in the aggregate Material.   (b) The present value of the aggregate benefit liabilities under each of the Plans (other  than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year  on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent  actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan  allocable to such benefit liabilities by an amount that is Material in the case of any such single  Plan or in the aggregate for all such Plans.  The present value of the accrued benefit liabilities  (whether or not vested) under each Non-U.S. Plan that is funded, determined as of the end of the  Company’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, did  not exceed the current value of the assets of such Non-U.S. Plan allocable to such benefit liabilities  by an amount that is Material.  The term “benefit liabilities” has the meaning specified in  section 4001 of ERISA and the terms “current value” and “present value” have the meaning  specified in section 3 of ERISA.   (c) The Company and its ERISA Affiliates have not incurred (i) withdrawal liabilities  (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in  respect of Multiemployer Plans that individually or in the aggregate are Material or (ii) any  

 

Regal Rexnord Corporation  Note Purchase Agreement  -10-  obligation in connection with the termination of or withdrawal from any Non-U.S. Plan that  individually or in the aggregate are Material.   (d) The expected postretirement benefit obligation (determined as of the last day of the  Company’s most recently ended fiscal year in accordance with Financial Accounting Standards  Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable  to continuation coverage mandated by section 4980B of the Code) of the Company and its  Subsidiaries is not Material.   (e) The execution and delivery of this Agreement and the issuance and sale of the Notes  hereunder will not involve any transaction that is subject to the prohibitions of section 406 of  ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D)  of the Code.  The representation by the Company to each Purchaser in the first sentence of this  Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s  representation in Section 6.2 as to the sources of the funds to be used to pay the purchase price of  the Notes to be purchased by such Purchaser.   (f) All Non-U.S. Plans have been established, operated, administered and maintained in  compliance with all laws, regulations and orders applicable thereto, except where failure so to  comply would not be reasonably expected to have a Material Adverse Effect.  All premiums,  contributions and any other amounts required by applicable Non-U.S. Plan documents or  applicable laws to be paid or accrued by the Company and its Subsidiaries have been paid or  accrued as required, except where failure so to pay or accrue would not be reasonably expected to  have a Material Adverse Effect.   Section 5.13. Private Offering by the Company.  Neither the Company nor anyone acting  on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy  the Notes or any similar Securities from, or otherwise approached or negotiated in respect thereof  with, any Person other than the Purchasers and not more than twenty (20) other Institutional  Investors, each of which has been offered the Notes at a private sale for investment.  Neither the  Company nor anyone acting on its behalf has taken, or will take, any action that would subject the  issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or  to the registration requirements of any Securities or blue sky laws of any applicable jurisdiction.   The representations and warranties of the Company in the second sentence of this Section 5.13 are  made in reliance upon and subject to the accuracy and completeness of the Purchaser’s  representations and warranties set forth in Section 6.1.   Section 5.14. Use of Proceeds; Margin Regulations.  The Company will apply the  proceeds of the sale of the Notes hereunder to refinance existing indebtedness and for general  corporate purposes.  No part of the proceeds from the sale of the Notes hereunder will be used,  directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning  of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for  the purpose of buying or carrying or trading in any Securities under such circumstances as to  involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any  broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does  not constitute more than 5% of the value of the consolidated assets of the Company and its  

 

Regal Rexnord Corporation  Note Purchase Agreement  -11-  Subsidiaries and the Company does not have any present intention that margin stock will constitute  more than 5% of the value of such assets.  As used in this Section, the terms “margin stock” and  “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.   Section 5.15. Existing Debt; Future Liens.  (a) Except as described therein, Schedule 5.15  sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries  (other than (i) intercompany Debt and (ii) Debt with an aggregate principal amount of less than  $2,500,000) as of March 31, 2022 (including descriptions of the obligors and obligees, principal  amounts outstanding, any collateral therefor and any Guaranty thereof), since which date there has  been no Material change in the amounts, interest rates, sinking funds, installment payments or  maturities of the Debt of the Company or its Subsidiaries.  Neither the Company nor any  Subsidiary is in default and no waiver of default is currently in effect, in the payment of any  principal or interest on any Debt of the Company or such Subsidiary and no event or condition  exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with  notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to  become due and payable before its stated maturity or before its regularly scheduled dates of  payment.   (b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has  agreed or consented to cause or permit any of its property, whether now owned or hereafter  acquired, to be subject to a Lien that secures Debt or to cause or permit in the future (upon the  happening of a contingency or otherwise) any of its property, whether now owned or hereafter  acquired, to be subject to a Lien that secures Debt.   (c) Neither the Company nor any Subsidiary is a party to, or otherwise subject to any  provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any  agreement relating thereto or any other agreement (including its charter or any other organizational  document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt  of the Company, except as disclosed in Schedule 5.15.   Section 5.16. Foreign Assets Control Regulations, Etc.  (a) Neither the Company nor any  Controlled Entity (i) is a Blocked Person, (ii) has been notified that its name appears or may in the  future appear on a State Sanctions List or (iii) is a target of sanctions that have been imposed by  the United Nations or the European Union.   (b) Neither the Company nor any Controlled Entity (i) has violated, been found in  violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws,  Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is  under investigation by any Governmental Authority for possible violation of any U.S. Economic  Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws.   (c) No part of the proceeds from the sale of the Notes hereunder:  (i) constitutes or will constitute funds obtained on behalf of any Blocked  Person or will otherwise be used by the Company or any Controlled Entity, directly or  indirectly, (A) in connection with any investment in, or any transactions or dealings with,  

 

Regal Rexnord Corporation  Note Purchase Agreement  -12-  any Blocked Person, (B) for any purpose that would cause any Purchaser to be in violation  of any U.S. Economic Sanctions Laws or (C) otherwise in violation of any U.S. Economic  Sanctions Laws;  (ii) will be used, directly or indirectly, in violation of, or cause any Purchaser  to be in violation of, any applicable Anti-Money Laundering Laws; or  (iii) will be used, directly or indirectly, for the purpose of making any improper  payments, including bribes, to any Governmental Official or commercial counterparty in  order to obtain, retain or direct business or obtain any improper advantage, in each case  which would be in violation of, or cause any Purchaser to be in violation of, any applicable  Anti-Corruption Laws.   (d) The Company has established procedures and controls which it reasonably believes  are adequate (and otherwise comply with applicable law) to ensure that the Company and each  Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic  Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.   Section 5.17. Status under Certain Statutes.  Neither the Company nor any Subsidiary is  subject to regulation under the Investment Company Act of 1940, the Public Utility Holding  Company Act of 2005, the ICC Termination Act of 1995, or the Federal Power Act.   Section 5.18. Environmental Matters.  Neither the Company nor any Subsidiary has  knowledge of any claim or has received any notice of any claim and no proceeding has been  instituted asserting any claim against the Company or any of its Subsidiaries or any of their  respective real properties or other assets now or formerly owned, leased or operated by any of  them, alleging any damage to the environment or violation of any Environmental Laws, except, in  each case, such as would not reasonably be expected to result in a Material Adverse Effect.   SECTION 6. REPRESENTATIONS OF THE PURCHASERS.   Section 6.1. Purchase for Investment.  Each Purchaser severally represents, as of the  date hereof, that it (a) is an institutional “accredited investor” within the meaning of Rule 501 of  the Securities Act and is purchasing the Notes for its own account or for one or more separate  accounts maintained by such Purchaser or for the account of one or more pension or trust funds  (which others are also institutional “accredited investors”) and not with a view to the distribution  thereof (except for any transfer of the Notes effected pursuant to an applicable exemption from the  registration requirements of the Securities Act), (b) has received and reviewed the Investor  Presentation; (c) has relied upon the Investor Presentation and the representations and warranties  of the Company set forth herein in making a decision to purchase the Notes and has a full  understanding and appreciation of the risks inherent in such an investment, and (d) has been given  an opportunity to ask, and has to the extent such Purchaser considered necessary, asked questions  of, and has received answers from, officers of the Company concerning the terms and conditions  of the offering and sale of Notes and the affairs of the Company and its proposed activities  (provided that it is understood that no information obtained by any Purchaser in any manner  indicated in this clause (d) in any way limits the scope and substance of the representations and  

 

Regal Rexnord Corporation  Note Purchase Agreement  -13-  warranties made by the Company set forth in this Agreement upon which each Purchaser may rely  in full regardless of any such information), provided that the disposition of such Purchaser’s or  their property shall at all times be within such Purchaser’s or their control.  Each Purchaser  understands that the Notes have not been registered under the Securities Act and may be resold  only if registered pursuant to the provisions of the Securities Act or if an exemption from  registration is available, except under circumstances where neither such registration nor such an  exemption is required by law, and that the Company is not required to register the Notes.   Section 6.2. Source of Funds.  Each Purchaser severally represents that at least one of the  following statements is an accurate representation as to each source of funds (a “Source”) to be  used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser  hereunder:   (a) the Source is an “insurance company general account” (as the term is  defined in the United States Department of Labor’s Prohibited Transaction Exemption  (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual  statement for life insurance companies approved by the NAIC (the “NAIC Annual  Statement”)) for the general account contract(s) held by or on behalf of any employee  benefit plan together with the amount of the reserves and liabilities for the general account  contract(s) held by or on behalf of any other employee benefit plans maintained by the  same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee  organization in the general account do not exceed 10% of the total reserves and liabilities  of the general account (exclusive of separate account liabilities) plus surplus as set forth in  the NAIC Annual Statement filed with such Purchaser’s state of domicile; or   (b) the Source is a separate account that is maintained solely in connection with  such Purchaser’s fixed contractual obligations under which the amounts payable, or  credited, to any employee benefit plan (or its related trust) that has any interest in such  separate account (or to any participant or beneficiary of such plan (including any  annuitant)) are not affected in any manner by the investment performance of the separate  account; or   (c) the Source is either (i) an insurance company pooled separate account,  within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the  meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in  writing pursuant to this clause (c), no employee benefit plan or group of plans maintained  by the same employer or employee organization beneficially owns more than 10% of all  assets allocated to such pooled separate account or collective investment fund; or   (d) the Source constitutes assets of an “investment fund” (within the meaning  of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional  asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no  employee benefit plan’s assets that are managed by the QPAM in such investment fund,  when combined with the assets of all other employee benefit plans established or  maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of  the QPAM Exemption) of such employer or by the same employee organization and  

 

Regal Rexnord Corporation  Note Purchase Agreement  -14-  managed by such QPAM, represent more than 20% of the total client assets managed by  such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,  neither the QPAM nor a person controlling or controlled by the QPAM maintains an  ownership interest in the Company that would cause the QPAM and the Company to be  “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of  such QPAM and (ii) the names of any employee benefit plans whose assets in the  investment fund, when combined with the assets of all other employee benefit plans  established or maintained by the same employer or by an affiliate (within the meaning of  Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee  organization, represent 10% or more of the assets of such investment fund, have been  disclosed to the Company in writing pursuant to this clause (d);or   (e) the Source constitutes assets of a “plan(s)” (within the meaning of  Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset  manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the  conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the  INHAM nor a person controlling or controlled by the INHAM (applying the definition of  “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the  Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit  plan(s) whose assets constitute the Source have been disclosed to the Company in writing  pursuant to this clause (e); or   (f) the Source is a governmental plan; or   (g) the Source is one or more employee benefit plans, or a separate account or  trust fund comprised of one or more employee benefit plans, each of which has been  identified to the Company in writing pursuant to this clause (g); or   (h) the Source does not include assets of any employee benefit plan, other than  a plan exempt from the coverage of ERISA.  As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and  “separate account” shall have the respective meanings assigned to such terms in section 3 of  ERISA.  SECTION 7. INFORMATION AS TO COMPANY   Section 7.1. Financial and Business Information.  The Company shall deliver to each  Purchaser and each holder of a Note that is an Institutional Investor:   (a) Quarterly Statements — within 45 days (or such shorter period as is the  earlier of (x) 15 days greater than the period applicable to the filing of the Company’s  Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether  the Company is subject to the filing requirements thereof and (y) the date by which such  financial statements are required to be delivered under any Material Credit Facility or the  date on which such corresponding financial statements are delivered under any Material  

 

Regal Rexnord Corporation  Note Purchase Agreement  -15-  Credit Facility if such delivery occurs earlier than such required delivery date) after the  end of each quarterly fiscal period in each fiscal year of the Company (other than the last  quarterly fiscal period of each such fiscal year), duplicate copies of,   (i) a consolidated balance sheet of the Company and its Subsidiaries as  at the end of such quarter, and   (ii) consolidated statements of income, changes in shareholders’ equity  and cash flows of the Company and its Subsidiaries, for such quarter and (in the  case of the second and third quarters) for the portion of the fiscal year ending with  such quarter,  setting forth in each case in comparative form the figures for the corresponding periods in  the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP  (subject to normal year-end audit adjustments and the absence of footnotes) applicable to  quarterly financial statements generally, and certified by a Senior Financial Officer as fairly  presenting, in all material respects, the financial position of the companies being reported  on and their results of operations and cash flows, subject to changes resulting from year-end  adjustments;   (b) Annual Statements — within 105 days (or such shorter period as is the  earlier of (x) 15 days greater than the period applicable to the filing of the Company’s  Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the  Company is subject to the filing requirements thereof and (y) the date by which such  financial statements are required to be delivered under any Material Credit Facility or the  date on which such corresponding financial statements are delivered under any Material  Credit Facility if such delivery occurs earlier than such required delivery date) after the  end of each fiscal year of the Company, duplicate copies of   (i) a consolidated balance sheet of the Company and its Subsidiaries as  at the end of such year, and   (ii) consolidated statements of income, changes in shareholders’ equity  and cash flows of the Company and its Subsidiaries for such year,  setting forth in each case in comparative form the figures for the previous fiscal year, all in  reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion  thereon (without a “going concern” or similar qualification or exception and without any  qualification or exception as to the scope of the audit on which such opinion is based) of  independent public accountants of recognized national standing, which opinion shall state  that such financial statements present fairly, in all material respects, the financial position  of the companies being reported upon and their results of operations and cash flows and  have been prepared in conformity with GAAP, and that the examination of such  accountants in connection with such financial statements has been made in accordance with  generally accepted auditing standards, and that such audit provides a reasonable basis for  such opinion in the circumstances;  

 

Regal Rexnord Corporation  Note Purchase Agreement  -16-   (c) SEC and Other Reports — (i) promptly upon their becoming available, one  copy of each financial statement, report, notice, proxy statement or similar document sent  by the Company or any Subsidiary (x) to its creditors under any Material Credit Facility  (excluding information sent to such creditors in the ordinary course of administration of a  credit facility, such as information relating to pricing and borrowing availability) or (y) to  its public Securities holders generally, and (ii) within 15 days after the filing or sending  thereof, one copy of each regular or periodic report, each registration statement (without  exhibits except as expressly requested by such holder), and each prospectus and all  amendments thereto filed by the Company or any Subsidiary with the SEC and of all press  releases and other statements made available generally by the Company or any Subsidiary  to the public concerning developments that are Material;    (d) Notice of Default or Event of Default — promptly, and in any event within  5 Business Days after a Responsible Officer becoming aware of the existence of any  Default or Event of Default or that any Person has given any notice or taken any action  with respect to a claimed default hereunder or that any Person has given any notice or taken  any action with respect to a claimed default of the type referred to in Section 11(f), a written  notice specifying the nature and period of existence thereof and what action the Company  is taking or proposes to take with respect thereto;   (e) Employee Benefits Matters — promptly, and in any event within 5 Business  Days after a Responsible Officer becoming aware of any of the following, a written notice  setting forth the nature thereof and the action, if any, that the Company or an ERISA  Affiliate proposes to take with respect thereto:   (i) with respect to any Plan, any reportable event, as defined in  section 4043(c) of ERISA and the regulations thereunder, for which notice thereof  has not been waived pursuant to such regulations as in effect on the date hereof;   (ii) the taking by the PBGC of steps to institute, or the threatening by  the PBGC of the institution of, proceedings under section 4042 of ERISA for the  termination of, or the appointment of a trustee to administer, any Plan, or the receipt  by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that  such action has been taken by the PBGC with respect to such Multiemployer Plan;    (iii) any event, transaction or condition that could result in the incurrence  of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of  ERISA or the penalty or excise tax provisions of the Code relating to employee  benefit plans, or in the imposition of any Lien on any of the rights, properties or  assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA  or such penalty or excise tax provisions, if such liability or Lien, taken together  with any other such liabilities or Liens then existing, would reasonably be expected  to have a Material Adverse Effect; or  

 

Regal Rexnord Corporation  Note Purchase Agreement  -17-   (iv) receipt of notice of the imposition of a Material financial penalty  (which for this purpose shall mean any tax, penalty or other liability, whether by  way of indemnity or otherwise) with respect to one or more Non-U.S. Plans;   (f) Notices from Governmental Authority — promptly, and in any event within  30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any  Governmental Authority relating to any violation of any order, ruling, statute or other law  or regulation that would reasonably be expected to have a Material Adverse Effect;   (g) Resignation or Replacement of Auditors — within 10 days following the  date on which the Company’s auditors resign or the Company elects to change auditors, as  the case may be, notification thereof, together with such further information as the  Required Holders may request; provided that the filing by the Company of a current report  on Form 8-K with the SEC regarding such resignation or change shall be deemed to  constitute notification pursuant to this clause (g); and   (h) Requested Information — with reasonable promptness, such other data and  information relating to the business, operations, affairs, financial condition, assets or  properties of the Company or any of its Subsidiaries (including actual copies of the  Company’s Form 10-Q and Form 10-K) or relating to the ability of the Company to  perform its obligations hereunder and under the Notes as from time to time may be  reasonably requested by any such Purchaser or holder of a Note; provided that the  Company will not be required to provide any information (i) that constitutes non-financial  trade secrets or non-financial proprietary information of the Company or any of its  Subsidiaries or any of their respective customers or suppliers, (ii) in respect of which  disclosure to any holder of a Note (or any of its respective representatives) is prohibited by  applicable law or (iii) the revelation of which would violate any confidentiality obligations  owed to any third party by the Company or any Subsidiary.   Section 7.2. Officer’s Certificate.  Within five days of furnishing a copy of each set of  financial statements delivered to a Purchaser or a holder of a Note pursuant to Section 7.1(a) or  Section 7.1(b), the Company shall deliver to each Purchaser or holder of a Note a certificate of a  Senior Financial Officer:   (a) Covenant Compliance — setting forth the information from such financial  statements that is required in order to establish whether the Company was in compliance  with the requirements of Section 10 during the quarterly or annual period covered by the  financial statements then being furnished (including with respect to each such provision  that involves mathematical calculations, the information from such financial statements  that is required to perform such calculations) and detailed calculations of the maximum or  minimum amount, ratio or percentage, as the case may be, permissible under the terms of  such Section, and the calculation of the amount, ratio or percentage then in existence,  together with a reconciliation  of assets, liabilities, income and expenses of such financial  statements with Static GAAP (if Static GAAP is being applied at such time), showing in  reasonable detail of  the effect of the application of Static GAAP.  In the event that the  Company or any Subsidiary has made an election to measure any financial liability using  

 

Regal Rexnord Corporation  Note Purchase Agreement  -18-  fair value (which election is being disregarded for purposes of determining compliance  with this Agreement pursuant to Section 22.2) as to the period covered by any such  financial statement, such Senior Financial Officer’s certificate as to such period shall  include a reconciliation from GAAP with respect to such election;    (b) Event of Default — certifying that such Senior Financial Officer has  reviewed the relevant terms hereof and has made, or caused to be made, under his or her  supervision, a review of the transactions and conditions of the Company and its  Subsidiaries from the beginning of the quarterly or annual period covered by the statements  then being furnished to the date of the certificate and that such review shall not have  disclosed the existence during such period of any condition or event that constitutes a  Default or an Event of Default or, if any such condition or event existed or exists (including  any such event or condition resulting from the failure of the Company or any Subsidiary to  comply with any Environmental Law), specifying the nature and period of existence  thereof and what action the Company shall have taken or proposes to take with respect  thereto; and   (c) Subsidiary Guarantors – setting forth a list of all Subsidiaries that are  Subsidiary Guarantors and certifying that each Subsidiary that is required to be a  Subsidiary Guarantor pursuant to Section 9.7 is a Subsidiary Guarantor, in each case, as of  the date of such certificate of Senior Financial Officer.   Section 7.3. Visitation.  The Company shall permit the representatives of each Purchaser  and each holder of a Note that is an Institutional Investor:   (a) No Default — if no Default or Event of Default then exists, at the expense  of such Purchaser or such holder and upon reasonable prior notice to the Company, to visit  the principal executive office of the Company, to discuss the affairs, finances and accounts  of the Company and its Subsidiaries with the Company’s officers, and (with the consent of  the Company, which consent will not be unreasonably withheld) its independent public  accountants, and (with the consent of the Company, which consent will not be  unreasonably withheld) to visit the other offices and properties of the Company and each  Subsidiary, all at such reasonable times and as often as may be reasonably requested in  writing; and   (b) Default — if a Default or Event of Default then exists, at the expense of the  Company to visit and inspect any of the offices or properties of the Company or any  Subsidiary, to examine all their respective books of account, records, reports and other  papers, to make copies and extracts therefrom, and to discuss their respective affairs,  finances and accounts with their respective officers and independent public accountants  (and by this provision the Company authorizes said accountants to discuss the affairs,  finances and accounts of the Company and its Subsidiaries), all at such times and as often  as may be requested.   Section 7.4. Electronic Delivery.  Financial statements, opinions of independent certified  public accountants, other information and Officer’s Certificates that are required to be delivered  

 

Regal Rexnord Corporation  Note Purchase Agreement  -19-  for purposes thereof by the Company pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall  be deemed to have been delivered if the Company satisfies any of the following requirements with  respect thereto:   (a) such financial statements satisfying the requirements of Section 7.1(a)  or (b) and related Officer’s Certificate satisfying the requirements of Section 7.2 and any  other information required under Section 7.1(c) are delivered to each Purchaser and holder  of a Note by e-mail at the e-mail address set forth in such holder’s Purchaser Schedule or  as communicated from time to time in a separate writing delivered to the Company;   (b) the Company shall have timely filed such Form 10–Q or Form 10–K,  satisfying the requirements of Section 7.1(a) or Section 7.1(b), as the case may be, with the  SEC on EDGAR and shall have made such form and the related Officer’s Certificate  satisfying the requirements of Section 7.2 accessible through its home page on the internet,  which is located at https://www.regalrexnord.com as of the date of this Agreement;   (c) such financial statements satisfying the requirements of Section 7.1(a) or  Section 7.1(b) and related Officer’s Certificate(s) satisfying the requirements of  Section 7.2 and any other information required under Section 7.1(c) are timely posted by  or on behalf of the Company on IntraLinks or on any other similar website to which each  holder of Notes has free access; or    (d) the Company shall have timely filed any of the items referred to in  Section 7.1(a), (b) or (c) with the SEC on EDGAR and shall have made such items  available on its home page on the internet or on IntraLinks or on any other similar website  to which each holder of Notes has free access;  provided however, that in no case shall access to such financial statements, other information and  Officer’s Certificates be conditioned upon any waiver or other agreement or consent (other than  confidentiality provisions consistent with Section 20 of this Agreement); provided further, that in  the case of any of clauses (b), (c) or (d), the Company shall have given each holder of a Note prior  written notice, which may be by e-mail or in accordance with Section 18, of such posting or filing  in connection with each delivery, provided further, that upon request of any holder to receive paper  copies of such forms, financial statements, other information and Officer’s Certificates or to  receive them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as  the case may be, to such holder.  SECTION 8.  PAYMENT AND PREPAYMENT OF THE NOTES.   Section 8.1. Maturity.  As provided therein, the entire unpaid principal balance of each  Note shall be due and payable on the Maturity Date thereof.   Section 8.2. Optional Prepayments with Make-Whole Amount.  The Company may,  at its option, upon notice as provided below, prepay at any time all, or from time to time any part  of, the Notes, in an amount not less than 5% of the aggregate principal amount of the Notes then  outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and  

 

Regal Rexnord Corporation  Note Purchase Agreement  -20-  the Make-Whole Amount determined for the prepayment date with respect to such principal  amount.  The Company will give each holder of Notes written notice of each optional prepayment  under this Section 8.2 not less than 10 days and not more than 60 days prior to the date fixed for  such prepayment unless the Company and the Required Holders agree to another time period  pursuant to Section 17.  Each such notice shall specify such date (which shall be a Business Day),  the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of  each Note held by such holder to be prepaid (determined in accordance with Section 8.3), the  Incremental Leverage Fee, if any, and the interest to be paid on the prepayment date with respect  to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior  Financial Officer as to the estimated Make-Whole Amount due in connection with such  prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth  the details of such computation.  Two Business Days prior to such prepayment, the Company shall  deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation  of such Make-Whole Amount as of the specified prepayment date.   Section 8.3. Allocation of Partial Prepayments.  In the case of each partial prepayment  of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be  allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to  the respective unpaid principal amounts thereof not theretofore called for prepayment.   Section 8.4. Maturity; Surrender, Etc.   In the case of each prepayment of Notes  pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become  due and payable on the date fixed for such prepayment (which shall be a Business Day), together  with interest and the Incremental Leverage Fee, if any, on such principal amount accrued to such  date and the applicable Make-Whole Amount, if any.  From and after such date, unless the  Company shall fail to pay such principal amount when so due and payable, together with the  interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall  cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the Company and  cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal  amount of any Note.   Section 8.5. Purchase of Notes.  The Company will not and will not permit any Affiliate  to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding  Notes except (a) upon the payment or prepayment of the Notes in accordance with this Agreement  and the Notes or (b) pursuant to an offer to purchase made by the Company, any Subsidiary or an  Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and  conditions. Any such offer shall provide each holder with sufficient information to enable it to  make an informed decision with respect to such offer, and shall remain open for at least 10  Business Days.  If the holders of more than 25% of the principal amount of the Notes then  outstanding accept such offer, the Company shall promptly notify the remaining holders of the  Notes of such fact and the expiration date for the acceptance by holders of Notes of such offer  shall be extended by the number of days necessary to give each such remaining holder at least 5  Business Days from its receipt of such notice to accept such offer.  The Company will promptly  cancel all Notes acquired by it, any Subsidiary or any Affiliate pursuant to any payment,  prepayment or purchase of Notes pursuant to this Agreement and no Notes may be issued in  substitution or exchange for any such Notes.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -21-   Section 8.6. Make-Whole Amount.  The term “Make-Whole Amount” means, with respect to any Note, an amount equal to  the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to  the Called Principal of such Note over the amount of such Called Principal, provided that the  Make-Whole Amount may in no event be less than zero.  For the purposes of determining the  Make-Whole Amount, the following terms have the following meanings:   “Called Principal” means, with respect to any Note, the principal of such Note that is to  be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable  pursuant to Section 12.1, as the context requires.  “Discounted Value” means, with respect to the Called Principal of any Note, the amount  obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal  from their respective scheduled due dates to the Settlement Date with respect to such Called  Principal, in accordance with accepted financial practice and at a discount factor (applied on the  same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment  Yield with respect to such Called Principal.  “Reinvestment Yield” means, with respect to the Called Principal of any Note, the sum  of (a) 0.50% plus (b) the yield to maturity implied by the “Ask Yield(s)” reported as of 10:00 a.m.  (New York City time) on the second Business Day preceding the Settlement Date with respect to  such Called Principal, on the display designated as “Page PX1” (or such other display as may  replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded  on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining  Average Life of such Called Principal as of such Settlement Date.  If there are no such U.S.  Treasury securities Reported having a maturity equal to such Remaining Average Life, then such  implied yield to maturity will be determined by (i) converting U.S. Treasury bill quotations to  bond equivalent yields in accordance with accepted financial practice and (ii) interpolating linearly  between the “Ask Yields” Reported for the applicable most recently issued actively traded  on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such  Remaining Average Life and (2) closest to and less than such Remaining Average Life.  The  Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest  rate of the applicable Note.    If such yields are not Reported or the yields Reported as of such time are not ascertainable  (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called  Principal of any Note, the sum of (x) 0.50% plus (y) the yield to maturity implied by the U.S.  Treasury constant maturity yields reported, for the latest day for which such yields have been so  reported as of the second Business Day preceding the Settlement Date with respect to such Called  Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication)  for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such  Called Principal as of such Settlement Date.  If there is no such U.S. Treasury constant maturity  having a term equal to such Remaining Average Life, such implied yield to maturity will be  determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported  with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury  

 

Regal Rexnord Corporation  Note Purchase Agreement  -22-  constant maturity so reported with the term closest to and less than such Remaining Average Life.   The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest  rate of the applicable Note.  “Remaining Average Life” means, with respect to any Called Principal, the number of  years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by  multiplying (a) the principal component of each Remaining Scheduled Payment with respect to  such Called Principal by (b) the number of years, computed on the basis of a 360-day year  comprised of twelve 30-day months and calculated to two decimal places, that will elapse between  the Settlement Date with respect to such Called Principal and the scheduled due date of such  Remaining Scheduled Payment.  “Remaining Scheduled Payments” means, with respect to the Called Principal of any  Note, all payments of such Called Principal and interest thereon that would be due after the  Settlement Date with respect to such Called Principal if no payment of such Called Principal were  made prior to its scheduled due date, provided that if such Settlement Date is not a date on which  interest payments are due to be made under the Notes, then the amount of the next succeeding  scheduled interest payment will be reduced by the amount of interest accrued to such Settlement  Date and required to be paid on such Settlement Date pursuant to Section 8.2 or Section 12.1.  “Settlement Date” means, with respect to the Called Principal of any Note, the date on  which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared  to be immediately due and payable pursuant to Section 12.1, as the context requires.   Section 8.7. Payments Due on Non-Business Days.  Anything in this Agreement or the  Notes to the contrary notwithstanding, (x) except as set forth in clause (y), any payment of interest  on any Note that is due on a date that is not a Business Day shall be made on the next succeeding  Business Day without including the additional days elapsed in the computation of the interest  payable on such next succeeding Business Day; and (y) any payment of principal of or  Make-Whole Amount on any Note (including principal due on the Maturity Date of such Note)  that is due on a date that is not a Business Day shall be made on the next succeeding Business Day  and shall include the additional days elapsed in the computation of interest payable on such next  succeeding Business Day.   Section 8.8. Change of Control.   (a) Notice of Change of Control.  The Company will,  within 15 Business Days after any Responsible Officer has knowledge of the occurrence of any  Change of Control, give written notice of such Change of Control to each holder of Notes unless  notice in respect of such Change of Control is given pursuant to Section 8.8(b).  If a Change of  Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described  in Section 8.8(c) and shall be accompanied by the certificate described in Section 8.8(g).   (b) Condition to Company Action.  The Company will not take any action that  consummates or finalizes a Change of Control unless (i) at least 15 Business Days prior to such  action it shall have given to each holder of Notes written notice containing and constituting an  offer to prepay Notes as described in Section 8.8(c), accompanied by the certificate described in  

 

Regal Rexnord Corporation  Note Purchase Agreement  -23-  Section 8.8(g), and (ii) contemporaneously with such action, it prepays all Notes required to be  prepaid in accordance with this Section 8.8.   (c) Offer to Prepay Notes.  The offer to prepay Notes contemplated by Section 8.8(a) and  Section 8.8(b) shall be an offer to prepay, in accordance with and subject to this Section 8.8, all,  but not less than all, the Notes held by each holder (in this case only, “holder” in respect of any  Note registered in the name of a nominee for a disclosed beneficial owner shall mean such  beneficial owner) on a Business Day specified in such offer (the “Proposed Prepayment Date”).   If such Proposed Prepayment Date is in connection with an offer contemplated by Section 8.8(a),  such Business Day shall be not less than 20 days and not more than 30 days after the date of such  offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed  Prepayment Date shall be the 20th day after the date of such offer, or the next succeeding Business  Day thereafter if such 20th day is not a Business Day).   (d) Acceptance; Rejection.  A holder of Notes may accept or reject the offer to prepay  made pursuant to this Section 8.8 by causing a notice of such acceptance or rejection to be  delivered to the Company at least 5 Business Days prior to the Proposed Prepayment Date.  A  failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.8 shall  be deemed to constitute a rejection of such offer by such holder.   (e) Prepayment.  Prepayment of the Notes to be prepaid pursuant to this Section 8.8 shall  be at 100% of the principal amount of such Notes, together with interest and the Incremental  Leverage Fee, if any, on such Notes accrued to the date of prepayment, and without any Make- Whole Amount.  The prepayment shall be made on the Proposed Prepayment Date except as  provided in Section 8.8(f).   (f) Deferral Pending Change of Control.  The obligation of the Company to prepay  Notes pursuant to the offers required by Section 8.8(b) and accepted in accordance with  Section 8.8(d) is subject to the occurrence of the Change of Control in respect of which such offers  and acceptances shall have been made.  In the event that such Change of Control does not occur  on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and  shall be made on the date on which such Change of Control occurs.  The Company shall keep each  holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment,  (ii) the date on which such Change of Control and the prepayment are expected to occur, and  (iii) any determination by the Company that efforts to effect such Change of Control have ceased  or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.8 in  respect of such Change of Control shall be deemed rescinded).   (g) Officer’s Certificate.  Each offer to prepay the Notes pursuant to this Section 8.8 shall  be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated  the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made  pursuant to this Section 8.8; (iii) the principal amount of each Note offered to be prepaid; (iv) the  interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment  Date; (v) that the conditions of this Section 8.8 have been fulfilled; and (vi) in reasonable detail,  the nature and date or proposed date of the Change of Control.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -24-   (h) “Change of Control” Defined.  “Change of Control” means any Person or group  of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall  acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of  more than 50% of the outstanding shares of common stock of the Company.  SECTION 9. AFFIRMATIVE COVENANTS.  The Company covenants that so long as any of the Notes are outstanding:   Section 9.1. Compliance with Laws.  Without limiting Section 10.4, the Company will,  and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules  or regulations to which each of them is subject (including ERISA, Environmental Laws, the USA  PATRIOT Act and the other laws and regulations that are referred to in Section 5.16) and will  obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental  authorizations necessary to the ownership of their respective properties or to the conduct of their  respective businesses, in each case to the extent necessary to ensure that non-compliance with such  laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect  such licenses, certificates, permits, franchises and other governmental authorizations would not,  individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   Section 9.2. Insurance.  The Company will, and will cause each of its Subsidiaries to,  maintain, with financially sound and reputable insurers, insurance with respect to their respective  properties and businesses against such casualties and contingencies, of such types, on such terms  and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves  are maintained with respect thereto) as is customary in the case of entities of established  reputations engaged in the same or a similar business and similarly situated.   Section 9.3. Maintenance of Properties.  The Company will, and will cause each of its  Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties  in good repair, working order and condition (other than ordinary wear and tear), so that the business  carried on in connection therewith may be properly conducted at all times, provided that this  Section 9.3 shall not prevent the Company or any Subsidiary from discontinuing the operation and  the maintenance of any of its properties if such discontinuance is desirable in the conduct of its  business and the Company has concluded that such discontinuance would not, individually or in  the aggregate, reasonably be expected to have a Material Adverse Effect.   Section 9.4. Payment of Taxes and Claims.  The Company will, and will cause each of  its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and  discharge all taxes shown to be due and payable on such returns and all other Material taxes,  assessments, governmental charges, or levies imposed on them or any of their properties, assets,  income or franchises, to the extent the same have become due and payable and before they have  become delinquent and all claims for which sums have become due and payable that have or might  become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the  Company nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (i) the  amount, applicability or validity thereof is contested by the Company or such Subsidiary on a  timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has  

 

Regal Rexnord Corporation  Note Purchase Agreement  -25-  established adequate reserves therefor in accordance with GAAP on the books of the Company or  such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges, levies and claims  would not, individually or in the aggregate, reasonably be expected to have a Material Adverse  Effect.   Section 9.5. Corporate Existence, Etc.  Subject to Section 10.2, the Company will at all  times preserve and keep its corporate existence in full force and effect.  Subject to Sections 10.2  and 10.5, the Company will at all times preserve and keep in full force and effect the corporate  existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned  Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good  faith judgment of the Company, the termination of or failure to preserve and keep in full force and  effect such corporate existence, right or franchise would not, individually or in the aggregate, have  a Material Adverse Effect.    Section 9.6. Books and Records.  The Company will, and will cause each of its  Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all  applicable requirements of any Governmental Authority having legal or regulatory jurisdiction  over the Company or such Subsidiary, as the case may be.  The Company will, and will cause each  of its Subsidiaries to, keep books, records and accounts which, in reasonable detail, accurately  reflect all transactions and dispositions of assets.  The Company and its Subsidiaries have devised  a system of internal accounting controls sufficient to provide reasonable assurances that their  respective books, records, and accounts accurately reflect all transactions and dispositions of assets  and the Company will, and will cause each of its Subsidiaries to, continue to maintain such system.   Section 9.7. Subsidiary Guarantors.  (a) The Company will cause each of its  Subsidiaries that guarantees or otherwise becomes liable at any time, whether as a borrower or an  additional or co-borrower or otherwise, for or in respect of any Debt under any Material Credit  Facility to concurrently therewith:   (i) enter into an agreement in form and substance reasonably satisfactory to the  Required Holders providing for the guaranty by such Subsidiary, on a joint and several  basis with all other such Subsidiaries, of (x) the prompt payment in full when due of all  amounts payable by the Company pursuant to the Notes (whether for principal, interest,  Make-Whole Amount or otherwise) and this Agreement, including all indemnities, fees  and expenses payable by the Company thereunder and (y) the prompt, full and faithful  performance, observance and discharge by the Company of each and every covenant,  agreement, undertaking and provision required pursuant to the Notes or this Agreement to  be performed, observed or discharged by it (a “Subsidiary Guaranty”); and    (ii) deliver the following to each holder of a Note:   (A) an executed counterpart of such Subsidiary Guaranty;   (B) a certificate signed by an authorized responsible officer of such  Subsidiary containing representations and warranties on behalf of such Subsidiary  to the same effect, mutatis mutandis, as those contained in Sections 5.1, 5.2, 5.6,  

 

Regal Rexnord Corporation  Note Purchase Agreement  -26-  5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.17, and 5.18 of this Agreement (but only with  respect to such Subsidiary and such Subsidiary Guaranty rather than the Company  and its Subsidiaries);   (C) all documents as may be reasonably requested by the Required  Holders to evidence the due organization, continuing existence and, where  applicable, good standing of such Subsidiary and the due authorization by all  requisite action on the part of such Subsidiary of the execution and delivery of such  Subsidiary Guaranty and the performance by such Subsidiary of its obligations  thereunder; and   (D) an opinion of counsel reasonably satisfactory to the Required  Holders covering such matters relating to such Subsidiary and such Subsidiary  Guaranty as the Required Holders may reasonably request.  provided, that notwithstanding anything contained in this Section 9.7(a) to the contrary, the  Company shall be under no obligation to (but may in its sole discretion) require any Foreign  Subsidiary to become a Subsidiary Guarantor in respect of this Agreement and the Notes to the  extent (x) such Foreign Subsidiary’s obligations under all Material Credit Facilities consist solely  of direct borrowings solely to such Foreign Subsidiary (a “Foreign Borrowing”) or guaranties of  a Foreign Borrowing by another Foreign Subsidiary (a “Foreign Guarantee”) and (y) such  Foreign Subsidiary does not guarantee or otherwise become liable at any time, whether as a  borrower or an additional co-borrower or otherwise, for or in respect of Debt of the Company or  any Domestic Subsidiary under any Material Credit Facility.  For all purposes of this Agreement,  all Foreign Borrowings and Foreign Guarantees of any Foreign Subsidiary shall constitute Priority  Debt so long as such Foreign Subsidiary is not a Subsidiary Guarantor in respect of this Agreement  and Notes.   (b) At the election of the Company and by written notice to each holder of Notes, any  Subsidiary Guarantor that has provided a Subsidiary Guaranty may be discharged from all of its  obligations and liabilities under its Subsidiary Guaranty and shall be automatically released from  its obligations thereunder without the need for the execution or delivery of any other document by  the holders, provided that (i) if such Subsidiary Guarantor is a guarantor or is otherwise liable for  or in respect of any Material Credit Facility, then such Subsidiary Guarantor has been released and  discharged (or will be released and discharged concurrently with the release of such Subsidiary  Guarantor under its Subsidiary Guaranty) under such Material Credit Facility, (ii) at the time of,  and after giving effect to, such release and discharge, no Default or Event of Default shall be  existing, (iii) no amount is then due and payable under such Subsidiary Guaranty, (iv) if in  connection with such Subsidiary Guarantor being released and discharged under any Material  Credit Facility, any fee or other form of consideration is given to any holder of Debt under such  Material Credit Facility for such release, the holders of the Notes shall receive equivalent  consideration substantially concurrently therewith, and (v) each holder shall have received a  certificate of a Responsible Officer certifying as to the matters set forth in clauses (i) through (iv).   In the event of any such release, for purposes of Section 10.7 and Section 10.8, all Debt of such  Subsidiary shall be deemed to have been incurred concurrently with such release.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -27-  SECTION 10. NEGATIVE COVENANTS.  The Company covenants that so long as any of the Notes are outstanding:   Section 10.1. Transactions with Affiliates.  The Company will not, and will not permit  any Subsidiary to, enter into directly or indirectly any Material transaction or Material group of  related transactions (including the purchase, lease, sale or exchange of properties of any kind or  the rendering of any service) with any Affiliate (other than the Company or another Subsidiary),  except in the ordinary course and pursuant to the reasonable requirements of the Company’s or  such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company  or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a  Person not an Affiliate.   Section 10.2. Merger, Consolidation, Etc.  The Company will not, and will not permit  any Subsidiary Guarantor to, consolidate with or merge with any other Person or convey, transfer  or lease all or substantially all of its assets in a single transaction or series of transactions to any  Person unless:   (a) in the case of any such transaction involving the Company, the successor  formed by such consolidation or the survivor of such merger or the Person that acquires by  conveyance, transfer or lease all or substantially all of the assets of the Company as an  entirety, as the case may be, shall be a solvent corporation or limited liability company  organized and existing under the laws of the United States or any state thereof (including  the District of Columbia), and, if the Company is not such corporation or limited liability  company, (i) such corporation or limited liability company shall have executed and  delivered to each holder of any Notes its assumption of the due and punctual performance  and observance of each covenant and condition of this Agreement and the Notes and  (ii) such corporation or limited liability company shall have caused to be delivered to each  holder of any Notes an opinion of nationally recognized independent counsel, or other  independent counsel reasonably satisfactory to the Required Holders, to the effect that all  agreements or instruments effecting such assumption are enforceable in accordance with  their terms and comply with the terms hereof;   (b) in the case of any such transaction involving a Subsidiary Guarantor, the  successor formed by such consolidation or the survivor of such merger or the Person that  acquires by conveyance, transfer or lease all or substantially all of the assets of such  Subsidiary Guarantor as an entirety, as the case may be, shall be (1) the Company, such  Subsidiary Guarantor or another Subsidiary Guarantor; (2) a solvent corporation or limited  liability company (other than the Company or another Subsidiary Guarantor) that is  organized and existing under the laws of the United States or any state thereof (including  the District of Columbia) and, if such Subsidiary Guarantor is not such corporation or  limited liability company, (A) such corporation or limited liability company shall have  executed and delivered to each holder of Notes its assumption of the due and punctual  performance and observance of each covenant and condition of the Subsidiary Guaranty of  such Subsidiary Guarantor and (B) the Company shall have caused to be delivered to each  holder of Notes an opinion of nationally recognized independent counsel, or other  

 

Regal Rexnord Corporation  Note Purchase Agreement  -28-  independent counsel reasonably satisfactory to the Required Holders, to the effect that all  agreements or instruments effecting such assumption are enforceable in accordance with  their terms and comply with the terms hereof (except as such enforceability may be limited  by (x) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting  the enforcement of creditors’ rights generally and (y) general principles of equity); or  (3) any other Person so long as the transaction is treated as a disposition of all of the assets  of such Subsidiary Guarantor for purposes of Section 10.5 and, based on such  characterization, would be permitted pursuant to Section 10.5;   (c) each Subsidiary Guarantor under any Subsidiary Guaranty that is  outstanding at the time such transaction or each transaction in such a series of transactions  occurs reaffirms its obligations under such Subsidiary Guaranty in writing at such time  pursuant to documentation that is reasonably acceptable to the Required Holders; and   (d) immediately before and immediately after giving effect to such transaction  or each transaction in any such series of transactions, no Default or Event of Default shall  have occurred and be continuing.  No such conveyance, transfer or lease of substantially all of the assets of the Company or any  Subsidiary Guarantor shall have the effect of releasing the Company or such Subsidiary Guarantor,  as the case may be, or any successor corporation or limited liability company that shall theretofore  have become such in the manner prescribed in this Section 10.2, from its liability under (x) this  Agreement or the Notes (in the case of the Company) or (y) the Subsidiary Guaranty (in the case  of any Subsidiary Guarantor), unless, in the case of the conveyance, transfer or lease of  substantially all of the assets of a Subsidiary Guarantor, such Subsidiary Guarantor is released  from its Subsidiary Guaranty in accordance with Section 9.7(b) in connection with or immediately  following such conveyance, transfer or lease.   Section 10.3. Line of Business.  The Company will not and will not permit any Subsidiary  to engage in any business if, as a result, the general nature of the business in which the Company  and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from  the general nature of the business in which the Company and its Subsidiaries, taken as a whole,  are engaged on the date of this Agreement as described in the Investor Presentation.   Section 10.4. Economic Sanctions, Etc.  The Company will not, and will not permit any  Controlled Entity to (a) become (including by virtue of being owned or controlled by a Blocked  Person), own or control a Blocked Person or (b) directly or indirectly have any investment in or  engage in any dealing or transaction (including any investment, dealing or transaction involving  the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would  cause any Purchaser or holder or any affiliate of such Purchaser or holder to be in violation of, or  subject to sanctions under, any law or regulation applicable to such Purchaser or holder, or (ii) is  prohibited by or subject to sanctions under any U.S. Economic Sanctions Laws.   Section 10.5. Sale of Assets, Etc.  The Company will not, and will not permit any  Subsidiary to, sell, lease or otherwise dispose of any substantial part (as defined below) of the  assets of the Company and its Subsidiaries (taken as a whole); provided, however, the Company  

 

Regal Rexnord Corporation  Note Purchase Agreement  -29-  or any Subsidiary may sell, lease or otherwise dispose of assets constituting a substantial part of  the assets of the Company and its Subsidiaries (taken as a whole) if such assets are sold, leased or  otherwise disposed of in an arm’s length transaction and, at such time and after giving effect  thereto, no Default or Event of Default shall have occurred and be continuing and an amount equal  to the net cash proceeds received from such sale, lease or other disposition (but only with respect  to that portion of such assets that exceeds the definition of “substantial part” set forth below) shall  be used within 365 days of such sale, lease or disposition, in any combination:   (1) to acquire productive assets used or useful in carrying on the business of the  Company and its Subsidiaries and having a value at least equal to the portion of the value  of such assets sold, leased or otherwise disposed of in excess of the definition of  “substantial part” set forth below; and/or   (2) to prepay or retire Senior Debt of the Company and/or its Subsidiaries,  provided that (i) the Company shall offer to prepay each outstanding Note in a principal  amount which equals the Ratable Portion for such Note, and (ii) any such prepayment of  the Notes shall be made at par, together with accrued interest and the Incremental Leverage  Fee, if any, thereon to the date of such prepayment, but without the payment of the Make- Whole Amount or any other premium.  Any offer of prepayment of the Notes pursuant to  this Section 10.5 shall be given to each holder of the Notes by written notice that shall be  delivered not less than ten (10) days and not more than sixty (60) days prior to the proposed  prepayment date.  Each such notice shall state that it is given pursuant to this Section and  that the offer set forth in such notice must be accepted by such holder in writing and shall  also set forth (i) the prepayment date, (ii) a description of the circumstances which give  rise to the proposed prepayment, (iii) a calculation of the Ratable Portion for such holder’s  Notes, and (iv) the amount of interest to be paid on the prepayment date.  Each holder of  the Notes which desires to have its Notes prepaid shall notify the Company in writing  delivered not less than five (5) Business Days prior to the proposed prepayment date of its  acceptance of such offer of prepayment.  If a holder does not accept an offer to prepay as  set forth in this Section 10.5, the Company shall be permitted to retain the Ratable Portion  of the net proceeds allocable to the Notes of such holder without any further requirements  for reinvestment or prepayment as set forth in this Section 10.5.  As used in this Section 10.5, a sale, lease or other disposition of assets shall be deemed to be a  “substantial part” of the assets of the Company and its Subsidiaries if the book value of such  assets, when added to the book value of all other assets sold, leased or otherwise disposed of by  the Company and its Subsidiaries during the period of 12 consecutive months ending on the date  of such sale, lease or other disposition, exceeds 10% of the book value of Consolidated Total  Assets, determined as of the end of the most recent Fiscal Quarter for which financial statements  have been delivered in accordance with Section 7.1(a) or 7.1(b) hereof immediately preceding  such sale, lease or other disposition; provided that there shall be excluded from any determination  of a “substantial part” (i) any sale, lease or disposition of assets in the ordinary course of business  of the Company and its Subsidiaries, (ii) any transfer of assets from the Company to any Subsidiary  or from any Subsidiary to the Company or a Subsidiary or (iii) any transfer of assets from the  Company or any Subsidiary to any Securitization Subsidiary in connection with the Permitted  Securitization transaction that is secured by a Lien permitted by Section 10.6(i).   

 

Regal Rexnord Corporation  Note Purchase Agreement  -30-   Section 10.6. Liens.  The Company will not and will not permit any of its Subsidiaries to,  create or permit to exist any Lien on any of its real or personal properties, assets or rights of  whatsoever nature (whether now owned or hereafter acquired), except:   (a) Liens for taxes or other governmental charges not at the time delinquent for  more than 90 days or thereafter payable without penalty or being contested in good faith  by appropriate action and, in each case, for which it maintains adequate reserves, provided  that no notice of lien has been filed or recorded under the Code;   (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers,  warehousemen, mechanics and materialmen and other similar Liens imposed by law and  (ii) Liens incurred in connection with worker’s compensation, unemployment  compensation and other types of social security (excluding Liens arising under ERISA) or  in connection with surety bonds, bids, performance bonds and similar obligations) for sums  not overdue or being contested in good faith by appropriate action and not involving  borrowed money, and, in each case, for which it maintains adequate reserves;   (c) Liens identified in Schedule 10.6 and any refinancing, renewal, extension  or replacement of any such Lien (to the extent the aggregate principal amount of the Debt  or other obligation secured thereby is not increased and so long as the scope of the property  subject to such Lien is not increased);   (d) attachments, appeal bonds, judgments and other similar Liens arising in  connection with court proceedings to the extent such attachments, appeal bonds, judgments  and other similar Liens do not constitute an Event of Default pursuant to Section 11(j);   (e) leases or subleases or licenses or sublicenses granted to others in the  ordinary course of business, easements, rights of way, restrictions, minor defects or  irregularities in title and other similar Liens not interfering in any material respect with the  ordinary conduct of the business of the Company or any Subsidiary;   (f) Liens on property of a Person immediately prior to its being consolidated  with or merged into the Company or a Subsidiary or otherwise becoming a Subsidiary and  Liens on assets existing at the time of acquisition (by merger or otherwise) of such property  by the Company or a Subsidiary, in each case not created in contemplation thereof,  provided that such Liens do not extend to or cover additional assets, and, in each case, any  refinancing, renewal, extension or replacement of any such Lien (to the extent the  aggregate principal amount of the Debt or other obligation secured thereby is not increased  and so long as the property subject to such Lien is not increased);   (g) Liens securing Debt incurred to finance the acquisition, construction or  improvement of any fixed or capital asset including (i) obligations under Capital Leases  and (ii) Debt assumed in connection with the acquisition of any such asset or secured by a  Lien on such asset prior to the acquisition thereof (and not incurred in contemplation of  such acquisition), or any refinancing, renewal, extension or replacement thereof (to the  extent the aggregate principal amount of such Debt is not increased); provided that (x) such  

 

Regal Rexnord Corporation  Note Purchase Agreement  -31-  Debt is incurred prior to or substantially concurrently with such acquisition or not later  than 45 days following the completion of such construction or improvement, as the case  may be and (y) such Debt does not exceed the cost of such asset as of the date of such  acquisition or completion of construction thereof or of such improvement on the date of  completion thereof, as the case may be; provided that such Lien attaches solely to the  property so acquired, constructed or improved in such transaction;   (h) Liens arising solely by virtue of any statutory or common law provision  relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit  accounts or other funds maintained with a creditor depository institution and/or Liens  arising in the ordinary course of business with respect to deposit accounts relating to  intercompany cash pooling, interest set-off and/or sweeping arrangements; provided that  (i) such deposit account is not a dedicated cash collateral account and is not subject to  restrictions against access by the Company or the applicable Subsidiary in excess of those  set forth by regulations promulgated by the FRB and (ii) such deposit account is not  intended by the Company or any Subsidiary to provide collateral to such depository  institution;   (i) Liens securing Securitization Obligations in an aggregate outstanding  amount not exceeding at the time of incurrence of any such Securitization Obligations the  greater of (i) $500,000,000 and (ii) 7.5% of the Consolidated Total Assets of the Company  and its Subsidiaries as of the last day of the Fiscal Quarter most recently ended for which  financial statements have been delivered pursuant to Section 7;   (j) Liens on cash, cash equivalents and/or securities deposited in connection  with the defeasance and/or discharge of Debt; and   (k) Liens securing Debt of the Company or any Subsidiary not otherwise  permitted by Section 10.6(a) through Section 10.6(j), provided that the aggregate principal  amount of any such Debt shall be permitted by Sections 10.7 and 10.8, provided, further,  that notwithstanding the foregoing, the Company shall not, and shall not permit any of its  Subsidiaries to, secure pursuant to this Section 10.6(k) any Debt outstanding under or  pursuant to any Material Credit Facility unless and until the Notes (and any guaranty  delivered in connection therewith) shall concurrently be secured equally and ratably with  such Debt pursuant to documentation reasonably acceptable to the Required Holders in  substance and in form, including an intercreditor agreement and opinions of counsel to the  Company and/or any such Subsidiary, as the case may be, from counsel that is reasonably  acceptable to the Required Holders.   Section 10.7. Financial Covenants.   (a) Funded Debt to EBITDA Ratio.  The Company  will not permit the Funded Debt to EBITDA Ratio as of the last day of any Fiscal Quarter of the  Company to be greater than 3.75 to 1.00.  Notwithstanding the foregoing, during the Transition  Period in respect of any Covenant Holiday Acquisition, the ratio of Funded Debt to EBITDA may  exceed 3.75 to 1.00 (the “Ratio Step-Up”), but in no event shall such ratio of Funded Debt to  EBITDA exceed 4.25 to 1.00 and in which event, the Company shall be obligated to pay the  additional interest provided for in Section 1.2, provided that a Ratio Step-Up may not occur on  

 

Regal Rexnord Corporation  Note Purchase Agreement  -32-  more than three separate occasions during the term of this Agreement and the Funded Debt to  EBITDA Ratio may not exceed 3.75 to 1.00 for at least two Fiscal Quarters in between each  Transition Period.   (b) Interest Coverage Ratio.  The Company will not permit the Interest Coverage Ratio  as of the last day of any Fiscal Quarter of the Company and its Subsidiaries to be less than 3.00 to  1.00.   Section 10.8. Priority Debt.  The Company will not at any time permit the aggregate  amount of all Priority Debt to exceed 15% of Consolidated Total Assets (Consolidated Total  Assets to be determined as of the end of the then most recently ended Fiscal Quarter of the  Company).   SECTION 11. EVENTS OF DEFAULT.  An “Event of Default” shall exist if any of the following conditions or events shall occur  and be continuing:   (a) the Company defaults in the payment of any principal or Make-Whole  Amount, if any, on any Note when the same becomes due and payable, whether at maturity  or at a date fixed for prepayment or by declaration or otherwise; or   (b) the Company defaults in the payment of any interest on any Note for more  than five Business Days after the same becomes due and payable; or   (c) the Company defaults in the performance of or compliance with any term  contained in Section 7.1(d) or Section 10; or   (d) the Company or any Subsidiary Guarantor defaults in the performance of or  compliance with any term contained herein (other than those referred to in Sections 11(a),  (b) and (c)) or in any Subsidiary Guaranty and such default is not remedied within 30 days  after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and  (ii) the Company receiving written notice of such default from any holder of a Note (any  such written notice to be identified as a “notice of default” and to refer specifically to this  Section 11(d)); or   (e) (i) any representation or warranty made in writing by or on behalf of the  Company or by any officer of the Company in this Agreement or any writing furnished in  connection with the transactions contemplated hereby proves to have been false or  incorrect in any material respect on the date as of which made, or (ii) any representation or  warranty made in writing by or on behalf of any Subsidiary Guarantor or by any officer of  such Subsidiary Guarantor in any Subsidiary Guaranty or any writing furnished in  connection with such Subsidiary Guaranty proves to have been false or incorrect in any  material respect on the date as of which made; or  

 

Regal Rexnord Corporation  Note Purchase Agreement  -33-   (f) (i) the Company or any Subsidiary is in default (as principal or as guarantor  or other surety) in the payment of any principal of or premium or make-whole amount or  interest on any Debt that is outstanding in an aggregate principal amount of at least  $100,000,000 (or its equivalent in the relevant currency of payment) beyond any period of  grace provided with respect thereto, or (ii) the Company or any Subsidiary is in default in  the performance of or compliance with any term of any evidence of any Debt in an  aggregate outstanding principal amount of at least $100,000,000 (or its equivalent in the  relevant currency of payment) or of any mortgage, indenture or other agreement relating  thereto or any other condition exists, and as a consequence of such default or condition  such Debt has become, or has been declared (or one or more Persons are entitled to declare  such Debt to be), due and payable before its stated maturity or before its regularly  scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of  any event or condition (other than the passage of time or the right of the holder of Debt to  convert such Debt into equity interests), (x) the Company or any Subsidiary has become  obligated to purchase or repay Debt before its regular maturity or before its regularly  scheduled dates of payment in an aggregate outstanding principal amount of at least  $100,000,000 (or its equivalent in the relevant currency of payment), or (y) one or more  Persons have the right to require the Company or any Subsidiary so to purchase or repay  such Debt; or   (g) the Company or any Subsidiary (i) is generally not paying, or admits in  writing its inability to pay, its debts as they become due, (ii) files, or consents by answer  or otherwise to the filing against it of, a petition for relief or reorganization or arrangement  or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy,  insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes  an assignment for the benefit of its creditors, (iv) consents to the appointment of a  custodian, receiver, trustee or other officer with similar powers with respect to it or with  respect to any substantial part of its property, (v) is adjudicated as insolvent or to be  liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or   (h) a court or other Governmental Authority of competent jurisdiction enters an  order appointing, without consent by the Company or any of its Subsidiaries, a custodian,  receiver, trustee or other officer with similar powers with respect to it or with respect to  any substantial part of its property, or constituting an order for relief or approving a petition  for relief or reorganization or any other petition in bankruptcy or for liquidation or to take  advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the  dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any  such petition shall be filed against the Company or any of its Subsidiaries and such petition  shall not be dismissed within 60 days; or   (i) any event occurs with respect to the Company or any Subsidiary which  under the laws of any jurisdiction is analogous to any of the events described in  Section 11(g) or Section 11(h), provided that the applicable grace period, if any, which  shall apply shall be the one applicable to the relevant proceeding which most closely  corresponds to the proceeding described in Section 11(g) or Section 11(h); or  

 

Regal Rexnord Corporation  Note Purchase Agreement  -34-   (j) one or more final judgments or orders for the payment of money  aggregating in excess of $100,000,000 (or its equivalent in the relevant currency of  payment), including any such final order enforcing a binding arbitration decision, are  rendered against one or more of the Company and its Subsidiaries and which judgments  are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal,  or are not discharged within 60 days after the expiration of such stay; or   (k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA  or the Code for any plan year or part thereof or a waiver of such standards or extension of  any amortization period is sought or granted under section 412 of the Code, (ii) a notice of  intent to terminate any Plan shall have been or is reasonably expected to be filed with the  PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to  terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the  Company or any ERISA Affiliate that a Plan may become a subject of any such  proceedings, (iii) there is any “amount of unfunded benefit liabilities” (within the meaning  of section 4001(a)(18) of ERISA) under one or more Plans, determined in accordance with  Title IV of ERISA, (iv) the aggregate present value of accrued benefit liabilities under all  funded Non-U.S. Plans exceeds the aggregate current value of the assets of such Non-U.S.  Plans allocable to such liabilities, (v) the Company or any ERISA Affiliate shall have  incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA  or the penalty or excise tax provisions of the Code relating to employee benefit plans,  (vi) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan,  (vii) the Company or any Subsidiary establishes or amends any employee welfare benefit  plan that provides post-employment welfare benefits in a manner that would increase the  liability of the Company or any Subsidiary thereunder, (viii) the Company or any  Subsidiary fails to administer or maintain a Non-U.S. Plan in compliance with the  requirements of any and all applicable laws, statutes, rules, regulations or court orders or  any Non-U.S. Plan is involuntarily terminated or wound up, or (ix) the Company or any  Subsidiary becomes subject to the imposition of a financial penalty (which for this purpose  shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise)  with respect to one or more Non-U.S. Plans; and any such event or events described in  clauses (i) through (ix) above, either individually or together with any other such event or  events, would reasonably be expected to have a Material Adverse Effect.  As used in this  Section 11(k), the terms “employee benefit plan” and “employee welfare benefit plan”  shall have the respective meanings assigned to such terms in section 3 of ERISA; or   (l) any Subsidiary Guaranty shall cease to be in full force and effect, any  Subsidiary Guarantor or any Person acting on behalf of any Subsidiary Guarantor shall  contest in any manner the validity, binding nature or enforceability of any Subsidiary  Guaranty, or the obligations of any Subsidiary Guarantor under any Subsidiary Guaranty  are not or cease to be legal, valid, binding and enforceable in accordance with the terms of  such Subsidiary Guaranty.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -35-  SECTION 12. REMEDIES ON DEFAULT, ETC.   Section 12.1. Acceleration.  (a) If an Event of Default with respect to the Company  described in Section 11(g), (h) or (i) (other than an Event of Default described in clause (i) of  Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause  encompasses clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall  automatically become immediately due and payable.   (b) If any other Event of Default has occurred and is continuing, the Required Holders  may at any time at its or their option, by notice or notices to the Company, declare all the Notes  then outstanding to be immediately due and payable.   (c) If any Event of Default described in Section 11(a) or (b) has occurred and is  continuing, any holder or holders of Notes at the time outstanding affected by such Event of  Default may at any time, at its or their option, by notice or notices to the Company, declare all the  Notes held by it or them to be immediately due and payable.  Upon any Notes becoming due and payable under this Section 12.1, whether automatically  or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such  Notes, plus (x) all accrued and unpaid interest thereon (including interest accrued thereon at the  Default Rate and any applicable Incremental Leverage Fee) and (y) the Make-Whole Amount  determined in respect of such principal amount, shall all be immediately due and payable, in each  and every case without presentment, demand, protest or further notice, all of which are hereby  waived.  The Company acknowledges, and the parties hereto agree, that each holder of a Note has  the right to maintain its investment in the Notes free from repayment by the Company (except as  herein specifically provided for) and that the provision for payment of a Make-Whole Amount by  the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of  Default, is intended to provide compensation for the deprivation of such right under such  circumstances.   Section 12.2. Other Remedies.  If any Default or Event of Default has occurred and is  continuing, and irrespective of whether any Notes have become or have been declared immediately  due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed  to protect and enforce the rights of such holder by an action at law, suit in equity or other  appropriate proceeding, whether for the specific performance of any agreement contained herein  or in any Note or Subsidiary Guaranty, or for an injunction against a violation of any of the terms  hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or  otherwise.   Section 12.3. Rescission.  At any time after any Notes have been declared due and payable  pursuant to Section 12.1(b) or (c), the Required Holders, by written notice to the Company, may  rescind and annul any such declaration and its consequences if (a) the Company has paid all  overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that  are due and payable and are unpaid other than by reason of such declaration, and all interest on  such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable  law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor  

 

Regal Rexnord Corporation  Note Purchase Agreement  -36-  any other Person shall have paid any amounts which have become due solely by reason of such  declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have  become due solely by reason of such declaration, have been cured or have been waived pursuant  to Section 17, and (d) no judgment or decree has been entered for the payment of any monies due  pursuant hereto or to the Notes.  No rescission and annulment under this Section 12.3 will extend  to or affect any subsequent Event of Default or Default or impair any right consequent thereon.   Section 12.4. No Waivers or Election of Remedies, Expenses, Etc.  No course of dealing  and no delay on the part of any holder of any Note in exercising any right, power or remedy shall  operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies.  No  right, power or remedy conferred by this Agreement, any Subsidiary Guaranty or any Note upon  any holder thereof shall be exclusive of any other right, power or remedy referred to herein or  therein or now or hereafter available at law, in equity, by statute or otherwise.  Without limiting  the obligations of the Company under Section 15, the Company will pay to the holder of each Note  on demand such further amount as shall be sufficient to cover all costs and expenses of such holder  incurred in any enforcement or collection under this Section 12, including reasonable attorneys’  fees, expenses and disbursements.  SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.   Section 13.1. Registration of Notes.  The Company shall keep at its principal executive  office a register for the registration and registration of transfers of Notes.  The name and address  of each holder of one or more Notes, each transfer thereof and the name and address of each  transferee of one or more Notes shall be registered in such register.  If any holder of one or more  Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes  shall also be registered in such register as an owner and holder thereof and (b) at any such  beneficial owner’s option, either such beneficial owner or its nominee may execute any  amendment, waiver or consent pursuant to this Agreement.  Prior to due presentment for  registration of transfer, the Person in whose name any Note shall be registered shall be deemed  and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be  affected by any notice or knowledge to the contrary.  The Company shall give to any holder of a  Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy  of the names and addresses of all registered holders of Notes.   Section 13.2. Transfer and Exchange of Notes.  Upon surrender of any Note to the  Company at the address and to the attention of the designated officer (all as specified in  Section 18(iii)), for registration of transfer or exchange (and in the case of a surrender for  registration of transfer accompanied by a written instrument of transfer duly executed by the  registered holder of such Note or such holder’s attorney duly authorized in writing and  accompanied by the relevant name, address and other information for notices of each transferee of  such Note or part thereof), within 10 Business Days thereafter, the Company shall execute and  deliver, at the Company’s expense (except as provided below), one or more new Notes (as  requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to  the unpaid principal amount of the surrendered Note.  Each such new Note shall be payable to such  Person as such holder may request and shall be substantially in the form of such Note as set forth  on Schedule 1.  Each such new Note shall be dated and bear interest from the date to which interest  

 

Regal Rexnord Corporation  Note Purchase Agreement  -37-  shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest  shall have been paid thereon.  The Company may require payment of a sum sufficient to cover any  stamp tax or governmental charge imposed in respect of any such transfer of Notes.  Notes shall  not be transferred in denominations of less than $100,000, provided that if necessary to enable the  registration of transfer by a holder of its entire holding of Notes, one Note may be in a  denomination of less than $100,000.  Any transferee, by its acceptance of a Note registered in its  name (or the name of its nominee), shall be deemed to have made the representation set forth in  Section 6.2.   Section 13.3. Replacement of Notes.  Upon receipt by the Company at the address and to  the attention of the designated officer (all as specified in Section 18(iii)) of evidence reasonably  satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note  (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional  Investor of such ownership and such loss, theft, destruction or mutilation), and   (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory  to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser  or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified  Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed  to be satisfactory), or   (b) in the case of mutilation, upon surrender and cancellation thereof,  within 10 Business Days thereafter, the Company at its own expense shall execute and deliver, in  lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been  paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen,  destroyed or mutilated Note if no interest shall have been paid thereon.  SECTION 14. PAYMENTS ON NOTES.   Section 14.1. Place of Payment.  Subject to Section 14.2, payments of principal,  Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made  in New York, New York at the principal office of Bank of America, N.A. or JPMorgan Chase  Bank, N.A. in such jurisdiction.  The Company may at any time, by notice to each holder of a  Note, change the place of payment of the Notes so long as such place of payment shall be either  the principal office of the Company in such jurisdiction or the principal office of a bank or trust  company in such jurisdiction.   Section 14.2. Payment by Wire Transfer.  So long as any Purchaser or its nominee shall  be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note  to the contrary, the Company will pay all sums becoming due on such Note for principal,  Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the  method and at the address specified for such purpose below such Purchaser’s name in the  Purchaser Schedule, or by such other method or at such other address as such Purchaser shall have  from time to time specified to the Company in writing for such purpose, without the presentation  or surrender of such Note or the making of any notation thereon, except that upon written request  

 

Regal Rexnord Corporation  Note Purchase Agreement  -38-  of the Company made concurrently with or reasonably promptly after payment or prepayment in  full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly  after any such request, to the Company at its principal executive office or at the place of payment  most recently designated by the Company pursuant to Section 14.1.  Prior to any sale or other  disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election,  either endorse thereon the amount of principal paid thereon and the last date to which interest has  been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes  pursuant to Section 13.2.  The Company will afford the benefits of this Section 14.2 to any  Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser  under this Agreement and that has made the same agreement relating to such Note as the  Purchasers have made in this Section 14.2.  Except as otherwise required by applicable law, the  Company does not intend to withhold from any applicable payment to be made to a holder of a  Note that is not a United States Person any tax levied by the United States so long as such holder  shall have delivered to the Company (in such number of copies as shall be requested) on or about  the date on which such holder becomes a holder under this Agreement (and from time to time  thereafter upon the reasonable request of the Company), executed copies of IRS Form W-8BEN,  IRS Form W-8ECI or IRS Form W-8BEN-E, as applicable, as well as the applicable “U.S. Tax  Compliance Certificate” substantially in the form attached as Exhibit 14.2, in both cases correctly  completed and executed.   Section 14.3. FATCA Information.  By acceptance of any Note, the holder of such Note  agrees that such holder will with reasonable promptness duly complete and deliver to the  Company, or to such other Person as may be reasonably requested by the Company, from time to  time (a) in the case of any such holder that is a United States Person, such holder’s United States  tax identification number or other Forms reasonably requested by the Company necessary to  establish such holder’s status as a United States Person under FATCA and as may otherwise be  necessary for the Company to comply with its obligations under FATCA and (b) in the case of any  such holder that is not a United States Person, such documentation prescribed by applicable law  (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional  documentation as may be necessary for the Company to comply with its obligations under FATCA  and to determine that such holder has complied with such holder’s obligations under FATCA or  to determine the amount (if any) to deduct and withhold from any such payment made to such  holder.  Nothing in this Section 14.3 shall require any holder to provide information that is  confidential or proprietary to such holder unless the Company is required to obtain such  information under FATCA and, in such event, the Company shall treat any such information it  receives as confidential.  SECTION 15. EXPENSES, ETC.   Section 15.1. Transaction Expenses.  Whether or not the transactions contemplated  hereby are consummated, the Company will pay all costs and expenses (including reasonable  attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or  other counsel) incurred by the Purchasers and each other holder of a Note in connection with such  transactions and in connection with any amendments, waivers or consents under or in respect of  this Agreement, any Subsidiary Guaranty or the Notes (whether or not such amendment, waiver  or consent becomes effective), including: (a) the costs and expenses incurred in enforcing or  

 

Regal Rexnord Corporation  Note Purchase Agreement  -39-  defending (or determining whether or how to enforce or defend) any rights under this Agreement,  any Subsidiary Guaranty or the Notes or in responding to any subpoena or other legal process or  informal investigative demand issued in connection with this Agreement, any Subsidiary Guaranty  or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses, including  financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company  or any Subsidiary or in connection with any work-out or restructuring of the transactions  contemplated hereby and by the Notes and any Subsidiary Guaranty and (c) the costs and expenses  incurred in connection with the initial filing of this Agreement and all related documents and  financial information with the SVO provided, that such costs and expenses under this clause (c)  shall not exceed $5,000.  If required by the NAIC, the Company shall obtain and maintain at its  own cost and expense a Legal Entity Identifier (LEI).    The Company will pay, and will save each Purchaser and each other holder of a Note  harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders  (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of  the Notes), (ii) any and all wire transfer fees that any bank or other financial institution deducts  from any payment under such Note to such holder or otherwise charges to a holder of a Note with  respect to a payment under such Note and (iii) any judgment, liability, claim, order, decree, fine,  penalty, cost, fee, expense (including reasonable attorneys’ fees and expenses) or obligation  resulting from the consummation of the transactions contemplated hereby, including the use of the  proceeds of the Notes by the Company.   Section 15.2. Certain Taxes.  The Company agrees to pay all stamp, documentary or  similar taxes or fees which may be payable in respect of the execution and delivery or the  enforcement of this Agreement or any Subsidiary Guaranty or the execution and delivery (but not  the transfer) or the enforcement of any of the Notes in the United States or any other jurisdiction  where the Company or any Subsidiary Guarantor has assets or of any amendment of, or waiver or  consent under or with respect to, this Agreement or any Subsidiary Guaranty or of any of the Notes,  and to pay any value added tax due and payable in respect of reimbursement of costs and expenses  by the Company pursuant to this Section 15, and will save each holder of a Note to the extent  permitted by applicable law harmless against any loss or liability resulting from nonpayment or  delay in payment of any such tax or fee required to be paid by the Company hereunder.   Section 15.3. Survival.  The obligations of the Company under this Section 15 will survive  the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of  this Agreement, any Subsidiary Guaranty or the Notes, and the termination of this Agreement.  SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.  All representations and warranties contained herein shall survive the execution and  delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note  or portion thereof or interest therein and the payment of any Note, and may be relied upon by any  subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of  such Purchaser or any other holder of a Note.  All statements contained in any certificate or other  instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed  representations and warranties of the Company under this Agreement.  Subject to the preceding  

 

Regal Rexnord Corporation  Note Purchase Agreement  -40-  sentence, this Agreement, the Notes and any Subsidiary Guaranties embody the entire agreement  and understanding between each Purchaser and the Company and supersede all prior agreements  and understandings relating to the subject matter hereof.  SECTION 17. AMENDMENT AND WAIVER.     Section 17.1. Requirements.  This Agreement and the Notes may be amended, and the  observance of any term hereof or of the Notes may be waived (either retroactively or  prospectively), only with the written consent of the Company and the Required Holders, except  that:   (a) no amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or  any defined term (as it is used therein), will be effective as to any Purchaser unless  consented to by such Purchaser in writing; and   (b) no amendment or waiver may, without the written consent of each  Purchaser and the holder of each Note at the time outstanding, (i) subject to Section 12  relating to acceleration or rescission, change the amount or time of any prepayment or  payment of principal of, or reduce the rate or change the time of payment or method of  computation of (x) interest on the Notes or (y) the Make-Whole Amount, (ii) change the  percentage of the principal amount of the Notes the holders of which are required to consent  to any amendment or waiver or the principal amount of the Notes that the Purchasers are  to purchase pursuant to Section 2 upon the satisfaction of the conditions to Closing that  appear in Section 4, or (iii) amend any of Sections 8 (except as set forth in the second  sentence of Section 8.2), 11(a), 11(b), 12, 17, or 20.   Section 17.2. Solicitation of Holders of Notes.   (a) Solicitation.  The Company will provide each Purchaser and each holder of a Note  with sufficient information, sufficiently far in advance of the date a decision is required, to enable  such Purchaser and such holder to make an informed and considered decision with respect to any  proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes  or any Subsidiary Guaranty.  The Company will deliver executed or true and correct copies of each  amendment, waiver or consent effected pursuant to this Section 17 or any Subsidiary Guaranty to  each Purchaser and each holder of a Note promptly following the date on which it is executed and  delivered by, or receives the consent or approval of, the requisite Purchasers or holders of Notes.   (b) Payment.  The Company will not directly or indirectly pay or cause to be paid any  remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant  any security or provide other credit support, to any Purchaser or holder of a Note as consideration  for or as an inducement to the entering into by such Purchaser or holder of any waiver or  amendment of any of the terms and provisions hereof or of any Subsidiary Guaranty or any Note  unless such remuneration is concurrently paid, or security is concurrently granted or other credit  support concurrently provided, on the same terms, ratably to each Purchaser and holder of a Note  even if such Purchaser or holder did not consent to such waiver or amendment.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -41-   (c) Consent in Contemplation of Transfer.  Any consent given pursuant to this  Section 17.2 or any Subsidiary Guaranty by a holder of a Note that has transferred or has agreed  to transfer its Note to (i) the Company, (ii) any Subsidiary or any other Affiliate or (iii) any other  Person in connection with, or in anticipation of, such other Person acquiring, making a tender offer  for or merging with the Company and/or any of its Affiliates, in each case in connection with such  consent, shall be void and of no force or effect except solely as to such holder, and any amendments  effected or waivers granted or to be effected or granted that would not have been or would not be  so effected or granted but for such consent (and the consents of all other holders of Notes that were  acquired under the same or similar conditions) shall be void and of no force or effect except solely  as to such holder.   Section 17.3. Binding Effect, Etc.  Any amendment or waiver consented to as provided in  this Section 17 or any Subsidiary Guaranty applies equally to all Purchasers and holders of Notes  and is binding upon them and upon each future holder of any Note and upon the Company without  regard to whether such Note has been marked to indicate such amendment or waiver.  No such  amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or  Event of Default not expressly amended or waived or impair any right consequent thereon.  No  course of dealing between the Company and any Purchaser or holder of a Note and no delay in  exercising any rights hereunder or under any Note or Subsidiary Guaranty shall operate as a waiver  of any rights of any Purchaser or holder of such Note.   Section 17.4. Notes Held by Company, Etc.  Solely for the purpose of determining  whether the holders of the requisite percentage of the aggregate principal amount of Notes then  outstanding approved or consented to any amendment, waiver or consent to be given under this  Agreement, any Subsidiary Guaranty or the Notes, or have directed the taking of any action  provided herein or in any Subsidiary Guaranty or the Notes to be taken upon the direction of the  holders of a specified percentage of the aggregate principal amount of Notes then outstanding,  Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to  be outstanding.  SECTION 18. NOTICES.  Except to the extent otherwise provided in Section 7.4, all notices and communications  provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day  sends a confirming copy of such notice by an internationally recognized overnight delivery service  (charges prepaid), (b) by registered or certified mail with return receipt requested (postage  prepaid), or (c) by an internationally recognized overnight delivery service (charges prepaid).  Any  such notice must be sent:   (i) if to any Purchaser or its nominee, to such Purchaser or nominee at the  address specified for such communications in the Purchaser Schedule, or at such other  address as such Purchaser or nominee shall have specified to the Company in writing,   (ii) if to any other holder of any Note, to such holder at such address as such  other holder shall have specified to the Company in writing, or  

 

Regal Rexnord Corporation  Note Purchase Agreement  -42-   (iii) if to the Company, to the Company at its address set forth at the beginning  hereof to the attention of Chief Financial Officer and General Counsel, or at such other  address as the Company shall have specified to the holder of each Note in writing.  Notices under this Section 18 will be deemed given only when actually received.  SECTION 19. REPRODUCTION OF DOCUMENTS.  This Agreement and all documents relating thereto, including (a) consents, waivers and  modifications that may hereafter be executed, (b) documents received by any Purchaser at each  Closing (except the Notes themselves), and (c) financial statements, certificates and other  information previously or hereafter furnished to any Purchaser, may be reproduced by such  Purchaser by any photographic, photostatic, electronic, digital, or other similar process and such  Purchaser may destroy any original document so reproduced.  The Company agrees and stipulates  that, to the extent permitted by applicable law, any such reproduction shall be admissible in  evidence as the original itself in any judicial or administrative proceeding (whether or not the  original is in existence and whether or not such reproduction was made by such Purchaser in the  regular course of business) and any enlargement, facsimile or further reproduction of such  reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit the  Company or any other holder of Notes from contesting any such reproduction to the same extent  that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of  any such reproduction.  SECTION 20. CONFIDENTIAL INFORMATION.  For the purposes of this Section 20, “Confidential Information” means information  delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with  the transactions contemplated by or otherwise pursuant to this Agreement, provided that such term  does not include information that (a) was publicly known or otherwise known to such Purchaser  prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or  omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise  becomes known to such Purchaser other than through disclosure by the Company or any  Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1  that are otherwise publicly available.  Each Purchaser will maintain the confidentiality of such  Confidential Information in accordance with procedures adopted by such Purchaser in good faith  to protect confidential information of third parties delivered to such Purchaser, provided that such  Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees,  agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the  administration of the investment represented by its Notes), (ii) its auditors, financial advisors and  other professional advisors who agree to hold confidential the Confidential Information  substantially in accordance with this Section 20, (iii) any other holder of any Note, (iv) any  Institutional Investor to which it sells or offers to sell such Note or any part thereof or any  participation therein (if such Person has agreed in writing prior to its receipt of such Confidential  Information to be bound by this Section 20), (v) any Person from which it offers to purchase any  Security of the Company (if such Person has agreed in writing prior to its receipt of such  Confidential Information to be bound by this Section 20), (vi) any federal or state regulatory  

 

Regal Rexnord Corporation  Note Purchase Agreement  -43-  authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any  similar organization, or any nationally recognized rating agency that requires access to information  about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or  disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation  or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in  connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has  occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery  and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights  and remedies under such Purchaser’s Notes, this Agreement or any Subsidiary Guaranty.  Each  holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and  to be entitled to the benefits of this Section 20 as though it were a party to this Agreement.  On  reasonable request by the Company in connection with the delivery to any holder of a Note of  information required to be delivered to such holder under this Agreement or requested by such  holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter  into an agreement with the Company embodying this Section 20.  In the event that as a condition to receiving access to information relating to the Company  or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to  this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality  undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or  otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby  and, as between such Purchaser or such holder and the Company, this Section 20 shall supersede  any such other confidentiality undertaking.  SECTION 21. SUBSTITUTION OF PURCHASER.  Each Purchaser shall have the right to substitute any one of its Affiliates or another  Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser”) as the  purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company,  which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain  such Substitute Purchaser’s agreement to be bound by this Agreement and shall contain a  confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations  set forth in Section 6.  Upon receipt of such notice, any reference to such Purchaser in this  Agreement (other than in this Section 21), shall be deemed to refer to such Substitute Purchaser in  lieu of such original Purchaser.  In the event that such Substitute Purchaser is so substituted as a  Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser  all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of  such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other  than in this Section 21), shall no longer be deemed to refer to such Substitute Purchaser, but shall  refer to such original Purchaser, and such original Purchaser shall again have all the rights of an  original holder of the Notes under this Agreement.  SECTION 22. MISCELLANEOUS.   Section 22.1. Successors and Assigns.  All covenants and other agreements contained in  this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their  

 

Regal Rexnord Corporation  Note Purchase Agreement  -44-  respective successors and assigns (including any subsequent holder of a Note) whether so  expressed or not, except that, subject to Section 10.2, the Company may not assign or otherwise  transfer any of its rights or obligations hereunder or under the Notes without the prior written  consent of each holder.  Nothing in this Agreement, expressed or implied, shall be construed to  confer upon any Person (other than the parties hereto and their respective successors and assigns  permitted hereby) any legal or equitable right, remedy or claim under or by reason of this  Agreement.  Section 22.2. Accounting Terms.  (a) All accounting terms used herein which are not  expressly defined in this Agreement have the meanings respectively given to them in accordance  with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant  to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall  be prepared in accordance with GAAP.  For purposes of determining compliance with this  Agreement  or any other Note Document (including Section 9, Section 10 and the definition of  “Debt”), any election by the Company or any Subsidiary to measure any financial liability using  fair value (as permitted by Financial Accounting Standards Board Accounting Standards  Codification Topic No. 825-10-25 – Fair Value Option, International Accounting Standard 39  – Financial Instruments: Recognition and Measurement or any similar accounting standard) shall  be disregarded and such determination shall be made as if such election had not been made , and  all calculations and deliverables under this Agreement shall be made or delivered, as applicable,  in accordance therewith.   (b)  Notwithstanding the foregoing, if the Company notifies the holders of Notes that,  in the Company’s reasonable opinion, or if the Required Holders notify the Company that, in the  Required Holders’ reasonable opinion, as a result of changes in GAAP from time to time  (“Subsequent Changes”), the covenants contained in Section 10.7 or any of the defined terms  used therein, no longer apply as intended such that such covenant is more or less restrictive to the  Company than is such covenant immediately prior to giving effect to such Subsequent Changes,  the Company and the holders of Notes shall negotiate in good faith to reset or amend such covenant  or defined terms, or establish alternative covenants or defined terms, so as to negate such  Subsequent Changes. Until the Company and the Required Holders so agree to reset, amend or  establish alternative covenants or defined terms, the covenants contained in Section 10.7, together  with the relevant defined terms, shall continue to apply and compliance therewith shall be  determined assuming that the Subsequent Changes shall not have occurred (“Static GAAP”).  During any period that compliance with any covenants shall be determined pursuant to Static  GAAP, the Company shall include relevant reconciliations in reasonable detail between GAAP  and Static GAAP with respect to the applicable covenant compliance calculations contained in  each certificate of a Senior Financial Officer delivered pursuant to Section 7.2 during such period.   Section 22.3. 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 hereof, and any such  prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not  invalidate or render unenforceable such provision in any other jurisdiction.  

 

Regal Rexnord Corporation  Note Purchase Agreement  -45-   Section 22.4. Construction, Etc.  Each covenant contained herein shall be construed  (absent express provision to the contrary) as being independent of each other covenant contained  herein, so that compliance with any one covenant shall not (absent such an express contrary  provision) be deemed to excuse compliance with any other covenant.  Where any provision herein  refers to action to be taken by any Person, or which such Person is prohibited from taking, such  provision shall be applicable whether such action is taken directly or indirectly by such Person.  Defined terms herein shall apply equally to the singular and plural forms of the terms  defined.  Whenever the context may require, any pronoun shall include the corresponding  masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be  deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to  have the same meaning and effect as the word “shall.”  Unless the context requires otherwise  (a) any definition of or reference to any agreement, instrument or other document herein shall be  construed as referring to such agreement, instrument or other document as from time to time  amended, supplemented or otherwise modified (subject to any restrictions on such amendments,  supplements or modifications set forth herein) and, for purposes of the Notes, shall also include  any such notes issued in substitution therefor pursuant to Section 13, (b) subject to Section 22.1,  any reference herein to any Person shall be construed to include such Person’s successors and  assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be  construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all  references herein to Sections and Schedules shall be construed to refer to Sections of, and  Schedules to, this Agreement, and (e) any reference to any law or regulation herein shall, unless  otherwise specified, refer to such law or regulation as amended, modified or supplemented from  time to time.   Section 22.5. Counterparts.  This Agreement, the other Note Documents, the Officer’s  Certificates, and any other documents to be delivered pursuant to this Agreement (collectively, the  “Transaction Documents”) may be executed in any number of counterparts, each of which shall  be an original but all of which together shall constitute one instrument.  Each counterpart may  consist of a number of copies hereof, each signed by less than all, but together signed by all, of the  parties hereto.  The parties agree to electronic contracting and signatures with respect to this  Agreement and the other Transaction Documents (other than the Notes).  Delivery of an electronic  signature to, or a signed copy of, this Agreement and such other Transaction Documents (other  than the Notes) by facsimile, email or other electronic transmission shall be fully binding on the  parties to the same extent as the delivery of the signed originals and shall be admissible into  evidence for all purposes.  The words “execution”, “execute”, “signed”, “signature”, and words of  like import in or related to any document to be signed in connection with this Agreement and the  other Transaction Documents (other than the Notes) shall be deemed to include electronic  signatures, the electronic matching of assignment terms and contract formations on electronic  platforms approved by the Company, or the keeping of records in electronic form, each of which  shall be of the same legal effect, validity or enforceability as a manually executed signature or the  use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for  in any applicable law, including the Federal Electronic Signatures in Global and National  Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar  state laws based on the Uniform Electronic Transactions Act.    

 

Regal Rexnord Corporation  Note Purchase Agreement  -46-   Section 22.6. Governing Law.  This Agreement shall be construed and enforced in  accordance with, and the rights of the parties shall be governed by, the law of the State of  New York excluding choice-of-law principles of the law of such State that would permit the  application of the laws of a jurisdiction other than such State.   Section 22.7. Jurisdiction and Process; Waiver of Jury Trial.  (a) The Company  irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting  in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising  out of or relating to this Agreement or the Notes.  To the fullest extent permitted by applicable  law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or  otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that  it may now or hereafter have to the laying of the venue of any such suit, action or proceeding  brought in any such court and any claim that any such suit, action or proceeding brought in any  such court has been brought in an inconvenient forum.   (b) The Company agrees, to the fullest extent permitted by applicable law, that a final  judgment in any suit, action or proceeding of the nature referred to in Section 22.7(a) brought in  any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may  be, and may be enforced in the courts of the United States of America or the State of New York  (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a  suit upon such judgment.   (c) The Company consents to process being served by or on behalf of any holder of Notes  in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy  thereof by registered, certified, priority or express mail (or any substantially similar form of mail),  postage prepaid, return receipt or delivery confirmation requested, to it at its address specified in  Section 18 or at such other address of which such holder shall then have been notified pursuant to  said Section.  The Company agrees that such service upon receipt (i) shall be deemed in every  respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to  the fullest extent permitted by applicable law, be taken and held to be valid personal service upon  and personal delivery to it.  Notices hereunder shall be conclusively presumed received as  evidenced by a delivery receipt furnished by the United States Postal Service or any reputable  commercial delivery service.   (d) Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve  process in any manner permitted by law, or limit any right that the holders of any of the Notes may  have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to  enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.   (e) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR  WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN  CONNECTION HEREWITH OR THEREWITH.    *    *    *    *    *    

 

 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    METROPOLITAN LIFE INSURANCE COMPANY  by MetLife Investment Management, LLC, Its  Investment Manager  METLIFE INSURANCE K.K.  by MetLife Investment Management, LLC, its  investment manager  METROPOLITAN TOWER LIFE INSURANCE COMPANY  by MetLife Investment Management, LLC, Its  Investment Manager      By: ______________________________________  Name: Thomas Ho  Title:  Authorized Signatory      MISSOURI REINSURANCE, INC.  by MetLife Investment Management, LLC, Its  Investment Manager      By: ______________________________________  Name: Thomas Ho  Title:  Authorized Signatory      AMERICAN FIDELITY ASSURANCE COMPANY  by MetLife Investment Management, LLC, Its  Investment Manager      By: ______________________________________  Name: Thomas Ho  Title:  Authorized Signatory      BRIGHTHOUSE LIFE INSURANCE COMPANY  by MetLife Investment Management, LLC, Its  Investment Manager      By: ______________________________________  Name: Thomas Ho  Title:  Authorized Signatory     

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    TRANSAMERICA LIFE INSURANCE COMPANY  By:  AEGON USA Investment Management, LLC,  its investment manager      By:  ______________________________________  Name: Christopher D. Pahlke  Title: Vice President      TRANSAMERICA LIFE (BERMUDA) LTD  By:  AEGON USA Investment Management, LLC,  its investment manager      By:  ______________________________________  Name: Christopher D. Pahlke  Title: Vice President         

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    EQUITABLE FINANCIAL LIFE INSURANCE COMPANY        By: ______________________________________  Name: Amy Judd  Title:  Investment Officer         DocuSign Envelope ID: 0ED57C2E-CA44-4D9D-B6F4-CBD2D53FA7D5 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    CORPORATE SOLUTIONS LIFE REINSURANCE  COMPANY  By:  AllianceBernstein, LP, its Investment Advisor        By: ______________________________________  Name: Amy Judd  Title:  Senior Vice President         DocuSign Envelope ID: 0ED57C2E-CA44-4D9D-B6F4-CBD2D53FA7D5 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    HORIZON HEALTHCARE SERVICES, INC D/B/A  HORIZON BLUE CROSS BLUE SHIELD OF NEW  JERSEY  By:  AllianceBernstein, LP, its Investment Advisor      By: ______________________________________  Name: Amy Judd  Title:  Senior Vice President         DocuSign Envelope ID: 0ED57C2E-CA44-4D9D-B6F4-CBD2D53FA7D5 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    NEW YORK STATE INSURANCE FUND  By:  AllianceBernstein, LP, its Investment Advisor      By: ______________________________________  Name: Amy Judd  Title:  Senior Vice President         DocuSign Envelope ID: 0ED57C2E-CA44-4D9D-B6F4-CBD2D53FA7D5 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    NEW YORK LIFE INSURANCE COMPANY      By: ______________________________________  Name:  Jean J. Wauters  Title:    Corporate Vice President      NEW YORK LIFE INSURANCE AND ANNUITY   CORPORATION  By: NYL Investors LLC, its Investment Manager      By: ______________________________________  Name:  Jean J. Wauters  Title:    Director    THE BANK OF NEW YORK MELLON, A BANKING  CORPORATION ORGANIZED UNDER THE LAWS OF NEW  YORK, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY  AS TRUSTEE UNDER THAT CERTAIN TRUST  AGREEMENT DATED AS OF JULY 1ST, 2015 BETWEEN  NEW YORK LIFE INSURANCE COMPANY, AS  GRANTOR, JOHN HANCOCK LIFE INSURANCE  COMPANY (U.S.A.), AS BENEFICIARY, JOHN  HANCOCK LIFE INSURANCE COMPANY OF NEW  YORK, AS BENEFICIARY, AND THE BANK OF NEW  YORK MELLON, AS TRUSTEE  By: New York Life Insurance Company, its  attorney-in-fact      By: ______________________________________  Name:  Jean J. Wauters  Title:    Director     DocuSign Envelope ID: 084AE56E-9A58-4ECC-911F-FA1A2A820907 

 

Regal Rexnord Corporation Note Purchase Agreement  Accepted as of the date first written above.  THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY  By: Northwestern Mutual Investment Management  Company, LLC, its investment adviser  By: ______________________________________  Name:  Title: Managing Director  THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY for its Group Annuity Separate  Account  By: Northwestern Mutual Investment Management  Company, LLC, its investment adviser  By: ______________________________________  Name:  Title:  Managing Director  Michael H. Leske Michael H. Leske 

 

Regal Rexnord Corporation  Note Purchase Agreement    Accepted as of the date first written above.    TEACHERS INSURANCE AND ANNUITY ASSOCIATION  OF AMERICA, a New York domiciled life  insurance company    By:  Nuveen Alternatives Advisors LLC,   a Delaware limited liability company,   its investment manager      By: ______________________________________  Name:  Elena Unger  Title:  Senior Director      CSAA INSURANCE EXCHANGE    By:  Nuveen Alternatives Advisors LLC,   a Delaware limited liability company,   its investment manager      By: ______________________________________  Name:  Elena Unger  Title:  Senior Director  

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    BCBSM, INC. DBA BLUE CROSS AND BLUE  SHIELD OF MINNESOTA    By: PGIM Private Placement Investors, L.P. (as  Investment Advisor)    By: PGIM Private Placement Investors, Inc. (as its  General Partner)      By:___________________________________           Vice President      PHYSICIANS MUTUAL INSURANCE  COMPANY    By: PGIM Private Placement Investors, L.P. (as  Investment Advisor)    By: PGIM Private Placement Investors, Inc. (as its  General Partner)      By:___________________________________           Vice President      PRUCO LIFE INSURANCE COMPANY    By: PGIM, Inc., as investment manager      By:___________________________________           Vice President         

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    FARMERS INSURANCE EXCHANGE    By: PGIM Private Placement Investors, L.P. (as  Investment Advisor)    By: PGIM Private Placement Investors, Inc. (as its  General Partner)      By:___________________________________           Vice President      MID CENTURY INSURANCE COMPANY    By: PGIM Private Placement Investors, L.P. (as  Investment Advisor)    By: PGIM Private Placement Investors, Inc. (as its  General Partner)      By:___________________________________           Vice President       

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    THRIVENT FINANCIAL FOR LUTHERANS        By: ______________________________________  Name:  Christopher Patton  Title:  Managing Director       DocuSign Envelope ID: BEA5C4E3-2998-426C-989F-159DFF22B347 

 

Regal Rexnord Corporation  Note Purchase Agreement      Accepted as of the date first written above.    SECURITY LIFE OF DENVER INSURANCE  COMPANY  CORPORATE SOLUTIONS LIFE REINSURANCE  COMPANY  AMERICAN FIDELITY ASSURANCE COMPANY  VOYA PENSION COMMITTEE ON BEHALF OF  THE VOYA RETIREMENT PLAN  STANDARD GUARANTY INSURANCE  COMPANY  AMERICAN SECURITY INSURANCE COMPANY  CONSUMER PROGRAM ADMINISTRATORS,  INC.  UNITED SERVICE PROTECTION  CORPORATION  VIRGINIA SURETY COMPANY, INC.  AMERICAN BANKERS INSURANCE COMPANY  OF FLORIDA  FEDERAL WARRANTY SERVICE  CORPORATION  BRIGHTHOUSE LIFE INSURANCE COMPANY  STARR INDEMNITY & LIABILITY COMPANY  SELECTIVE WAY INSURANCE COMPANY  HORACE MANN LIFE INSURANCE COMPANY  CAREFIRST OF MARYLAND, INC.  GROUP HOSPITALIZATION AND MEDICAL  SERVICES, INC.  MUTUAL OF AMERICA LIFE INSURANCE  COMPANY  METROPOLITAN LIFE INSURANCE COMPANY    By: Voya Investment Management Co. LLC, as  Agent    By:  _____________________________________  Name:  Justin Stach  Title:    Senior Vice President       

 

Regal Rexnord Corporation  Note Purchase Agreement    Accepted as of the date first written above.    VOYA RETIREMENT INSURANCE AND  ANNUITY COMPANY  RELIASTAR LIFE INSURANCE COMPANY    By:  Voya Investment Management LLC, as Agent      By:  _____________________________________  Name:  Justin Stach  Title:    Senior Vice President      VOYA PRIVATE CREDIT TRUST FUND  VOYA PRIVATE CREDIT TRUST FUND- GOLDMAN SACHS    By:  Voya Investment Trust Co., as Trustee      By:  _____________________________________  Name:  Justin Stach  Title:    Senior Vice President      NN LIFE INSURANCE COMPANY LTD.    By: Voya Investment Management LLC, as Attorney  in fact      By:  _____________________________________  Name:  Justin Stach  Title:    Senior Vice President    

 

 

 

Regal Rexnord Corporation Note Purchase Agreement  Accepted as of the date first written above.  MASSACHUSETTS MUTUAL LIFE INSURANCE  COMPANY  By: Barings LLC as Investment Adviser  By: ______________________________________  Name: John Wheeler  Title:  Managing Director BRIGHTHOUSE LIFE INSURANCE COMPANY  By: Barings LLC as Investment Adviser  By: ______________________________________  Name: John Wheeler Title:  Managing Director 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    STATE FARM LIFE INSURANCE COMPANY      By: ______________________________________  Name:  Jeffrey Attwood  Title:    Investment Professional      By: ______________________________________  Name:  Rebekah L. Holt  Title:    Investment Professional      STATE FARM LIFE AND ACCIDENT ASSURANCE  COMPANY      By: ______________________________________  Name:  Jeffrey Attwood  Title:    Investment Professional      By: ______________________________________  Name:  Rebekah L. Holt  Title:    Investment Professional           

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    GREAT-WEST LIFE & ANNUITY INSURANCE  COMPANY OF NEW YORK        By: ______________________________________  Name:  Robyn Richards    Title:  Assistant Vice President, Investments          

 

 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above    NATIONWIDE LIFE INSURANCE COMPANY  NATIONWIDE LIFE AND ANNUITY INSURANCE  COMPANY        By ____________________________________    Name:  Jason M. Comisar  Title:    Authorized Signatory               DocuSign Envelope ID: 61ED324E-A408-4BFE-A457-2C234CD822B8 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above    JACKSON NATIONAL LIFE INSURANCE COMPANY    By:  PPM America, Inc., as attorney in fact, on  behalf of Jackson National Life Insurance  Company       By: ______________________________________  Name:  Title:       Jacqueline Baum Assistant Vice President 

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    PRINCIPAL LIFE INSURANCE COMPANY    By: Principal Global Investors, LLC   a Delaware limited liability company,   its authorized signatory      By: ______________________________________  Name:    Title:        By: ______________________________________  Name:    Title:          Karl Goodman Apr    CDT Karl Goodman Co n el Wei erh Chen Apr 5  2022 06 5  CDT Wei-e h Chen Wei erh Chen Co n el 

 

 

 

Regal Rexnord Corporation Note Purchase Agreement  Accepted as of the date first written above.  CONNECTICUT GENERAL LIFE INSURANCE COMPANY  By: Cigna Investments, Inc. (authorized agent)  By:   Name:  Lori E. Hopkins  Title:    Managing Director  HEALTHSPRING LIFE & HEALTH INSURANCE COMPANY, INC.  By: Cigna Investments, Inc. (authorized agent)  By:   Name:  Lori E. Hopkins  Title:    Managing Director  

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    CMFG LIFE INSURANCE COMPANY    By: MEMBERS Capital Advisors, Inc.,   acting as Investment Advisor      By:  ______________________________________  Name:  Stan J. Van Aartsen  Title:  Managing Director, Investments         

 

Regal Rexnord Corporation  Note Purchase Agreement  Accepted as of the date first written above.    UNITED OF OMAHA LIFE INSURANCE COMPANY        By: ______________________________________  Name:  Justin P. Kavan  Title:    Head of Private Placements             

 

 

 

  SCHEDULE A  (to Note Purchase Agreement)  DEFINED TERMS  As used herein, the following terms have the respective meanings set forth below or set  forth in the Section hereof following such term:  “Acquisition” means any transaction or series of related transactions (excluding any  transaction or series of related transactions solely among the Company and/or one or more of its  Subsidiaries) for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or  substantially all of the assets of a Person, or of all or substantially all of any business or division  of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests,  membership interests or equity of any Person, or otherwise causing any Person to become a  Subsidiary, or (c) a merger or consolidation or any other combination with another Person;  provided that the Company or a Subsidiary is the surviving entity.  “Acquisition Debt” means Debt incurred in connection with an Acquisition.  “Affiliate” means, at any time, and with respect to any Person, any other Person that at  such time directly or indirectly through one or more intermediaries Controls, or is Controlled by,  or is under common Control with, such first Person, and, with respect to the Company, shall  include any Person beneficially owning or holding, directly or indirectly, 15% or more of any class  of voting or equity interests of the Company or any Subsidiary or any Person of which the  Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,  15% or more of any class of voting or equity interests.  Unless the context otherwise clearly  requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.    “Agreement” means this Note Purchase Agreement, including all Schedules attached to  this Agreement.  “Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S.  jurisdiction regarding bribery or any other corrupt activity, including the U.S. Foreign Corrupt  Practices Act and the U.K. Bribery Act 2010.  “Anti-Money Laundering Laws” means any law or regulation in a U.S. or any non-U.S.  jurisdiction regarding money laundering, drug trafficking, terrorist-related activities or other  money laundering predicate crimes, including the Currency and Foreign Transactions Reporting  Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.  “Applicable Law” means, as to any Person, all applicable Laws binding upon such Person  or to which such Person is subject.  “Blocked Person” means (a) a Person whose name appears on the list of Specially  Designated Nationals and Blocked Persons published by OFAC, (b) a Person, entity, organization,  country or regime that is blocked or a target of sanctions that have been imposed under  U.S. Economic Sanctions Laws or (c) a Person that is an agent, department or instrumentality of,  or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly,  any Person, entity, organization, country or regime described in clause (a) or (b).  

 

  A-2  “Business Day” means (a) for the purposes of Section 8.6 only, any day other than a  Saturday, a Sunday or a day on which commercial banks in New York City are required or  authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day  other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or  Chicago, Illinois  are required or authorized to be closed.  “Capital Lease” means, at any time, a lease with respect to which the lessee is required  concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance  with GAAP.  “Change of Control” is defined in Section 8.8(h).   “Closing” is defined in Section 3.  “Closing Date” is defined in Section 3.  “Code” means the Internal Revenue Code of 1986 and the rules and regulations  promulgated thereunder from time to time.  “Company” is defined in the first paragraph of this Agreement.  “Computation Period” means each period of four consecutive Fiscal Quarters of the  Company ending on the last day of a Fiscal Quarter.  “Confidential Information” is defined in Section 20.  “Consolidated Interest Charges” means, for any Computation Period, the consolidated  interest expense of the Company and its Subsidiaries for such Computation Period to the extent  paid or payable in cash (net of cash payments received in respect of interest rate hedging  transactions under Hedging Agreements).  “Consolidated Net Income” means, with respect to the Company and its Subsidiaries for  any period, the consolidated net income (or loss) of the Company and its Subsidiaries for such  period.  “Consolidated Total Assets” means, as of the date of any determination thereof, total  assets of the Company and its Subsidiaries calculated in accordance with GAAP on a consolidated  basis as of such date.  “Control” means the possession, directly or indirectly, of the power to direct or cause the  direction of the management and policies of a Person, whether through the ownership of voting  securities, by contract or otherwise; and the terms “Controlled” and “Controlling” shall have  meanings correlative to the foregoing.  

 

  A-3  “Controlled Entity” means (a) any of the Subsidiaries of the Company and any of their  or the Company’s respective Controlled Affiliates and (b) if the Company has a parent company,  such parent company and its Controlled Affiliates.  “Covenant Holiday Acquisition” means an Acquisition (a) in respect of which the  Company or any Subsidiary creates, assumes, incurs, guarantees or otherwise becomes liable in  respect of Acquisition Debt of $75,000,000 or more and (b) for which the Company provides  written notice to each holder of a Note that such Acquisition is designated as a “Covenant Holiday  Acquisition.”  “Credit Agreement” means that certain Second Amended and Restated Credit Agreement  dated as of March 28, 2022 amongst the Company, certain Subsidiaries of the Company named  therein, JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions  party thereto, as amended, restated, joined, supplemented or otherwise modified from time to time,  and any renewals, extensions or replacements thereof.  “Debt” of any Person means, without duplication, (a) all indebtedness of such Person for  borrowed money, whether or not evidenced by bonds, debentures, notes or similar instruments,  (b) all obligations of such Person as lessee under Capital Leases which have been or should be  recorded as liabilities on a balance sheet of such Person, (c) all obligations of such Person to pay  the deferred purchase price of property or services (excluding (i) trade and similar accounts  payable and accrued expenses in the ordinary course of business and (ii) accrued pension costs and  other employee benefit and compensation obligations arising in the ordinary course of business),  (d) all indebtedness secured by a Lien on the property of such Person, whether or not such  indebtedness shall have been assumed by such Person (it being understood that if such Person has  not assumed or otherwise become personally liable for any such indebtedness, the amount of the  Debt of such Person in connection therewith shall be limited to the lesser of the face amount of  such indebtedness and the fair market value of all property of such Person securing such  indebtedness), (e) all obligations, contingent or otherwise, under letters of credit (whether or not  drawn), including the Letters of Credit, but otherwise excluding trade letters of credit, and banker’s  acceptances issued for the account of such Person, (f) all Securitization Obligations of such Person,  to the extent such obligations would be required to be included on the consolidated balance sheet  of the Company in accordance with GAAP, (g) the net obligations of such Person under Hedging  Agreements, (h) all Suretyship Liabilities of such Person with respect to obligations of the type  described in any of the foregoing clauses (a) through (g) and (i) all Debt of any partnership in  which such Person is a general partner.  The amount of any net obligation under any Hedging  Agreement on any date shall be deemed to be the Swap Termination Value thereof as of such date.   If any of the foregoing Debt is limited to recourse against a particular asset or assets of such Person,  the amount of the corresponding Debt shall be equal to the lesser of the amount of such Debt and  the fair market value of such asset or assets at the date for determination of the amount of such  Debt.  The amount of Debt of the Company and its Subsidiaries hereunder shall be calculated  without duplication of Suretyship Liabilities of the Company or any Subsidiary in respect thereof.   “Debt” shall not include (1) indebtedness owing to the Company by any Subsidiary or  indebtedness owing to any Subsidiary by the Company or another Subsidiary, (2) any customary  earnout or holdback in connection with Acquisitions permitted hereunder, (3) any obligations of  the Company or its Subsidiaries in respect of customer advances received and held in the ordinary  

 

  A-4  course of business, (4) performance bonds or performance guaranties (or bank guaranties or letters  of credit in lieu thereof) entered into in the ordinary course of business, (5) indebtedness that has  been defeased and/or discharged in accordance with its terms by the deposit of cash, cash  equivalents and/or securities or (6) interest, fees, premium or expenses, if any, relating to the  principal amount of Debt.  “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other  liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,  rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United  States or other applicable jurisdictions from time to time in effect and affecting the rights of  creditors generally.  “Default” means an event or condition the occurrence or existence of which would, with  the lapse of time or the giving of notice or both, become an Event of Default.  “Default Rate” means that rate of interest per annum that is the greater of (a) 2.00% above  the rate of interest stated in clause (a) of the first paragraph of the Notes or (b) 2.00% over the rate  of interest publicly announced by Bank of America, N.A. in New York, New York as its “base”  or “prime” rate.  “Disclosure Documents” is defined in Section 5.3.  “Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction  located in the United States of America.  “EBITDA” means, for any period, Consolidated Net Income for such period plus, in each  case (other than with respect to clause (h) below) to the extent deducted in determining such  Consolidated Net Income but without duplication:   (a) Consolidated Interest Charges, amortization or write-off of debt discount  and debt issuance costs and commissions, discounts and other fees and charges associated  with Debt (including the Notes), and commissions, discounts and other fees and charges  with respect to letters of credit, bankers’ acceptance financing and Permitted  Securitizations,   (b) taxes on or measured by income,   (c) depreciation and amortization expense,   (d) charges, expenses, losses and other deductions that, in each case, are  non-cash,   (e) fees, costs, expenses, make-whole or penalty payments and other similar  items arising out of (i) Permitted Acquisitions, (ii) investments and dispositions permitted  by this Agreement, (iii) any incurrence, issuance, repayment or refinancing of Debt  

 

  A-5  permitted by this Agreement and (iv) any issuance of Equity Interests not prohibited by  this Agreement,   (f) the amount of “net income attributable to noncontrolling interests, net of  tax” (as such term is used in the Company’s financial statements referred to in Section 5.5),   (g) unusual or non-recurring charges, expenses, losses or other deductions  (including, whether or not otherwise includable as a separate item in the statement of such  Consolidated Net Income for such period, losses on sales of assets outside of the ordinary  course of business); provided that the aggregate amount of all unusual or non-recurring  charges, expenses, losses or other deductions added back in reliance on this clause (g) in  any four-Fiscal Quarter period, when aggregated with all amounts added back in reliance  on clauses (h), (i) and (j)(x) below for such four-Fiscal Quarter period, shall not exceed  15% of EBITDA for such four-Fiscal Quarter period (calculated before giving effect to any  such addbacks and adjustments),   (h) synergies and cost-savings of the Company and its Subsidiaries related to  operational changes, restructuring, reorganizations, operating expense reductions,  operating improvements and similar restructuring initiatives relating to an Acquisition (it  being understood any such increases pursuant to this clause (h) shall only be available  subject to the consummation of such Acquisition and not in contemplation thereof), in each  case, that are set forth in a certificate of an Executive Officer of the Company and are  factually supportable (in the good faith determination of the Company, as certified in the  applicable certificate) and are reasonably anticipated by the Company in good faith to be  realized within 24 months following the completion of such Acquisition (in each case  calculated for the applicable period on a pro forma basis as if the synergies and cost-savings  with respect to such period had been realized on the first day of such period, and net of the  amount of actual benefits realized during such period from such actions to the extent  already included in Consolidated Net Income for such period); provided that the aggregate  amount of all synergies and cost savings added back in reliance on this clause (h) in any  four-Fiscal Quarter period, when aggregated with all amounts added back in reliance on  clauses (g) above, (i) and (j)(x) below for such four-Fiscal Quarter period, shall not exceed  15% of EBITDA for such four-Fiscal Quarter period (calculated before giving effect to any  such addbacks and adjustments),   (i) costs, charges, accruals, reserves or expenses attributable to the undertaking  and/or implementation of cost savings, operating expense reductions, synergies,  integration, reconstruction, decommissioning, recommissioning or reconfiguration of fixed  assets for alternative uses, facilities opening and pre-opening, business optimization and  restructuring costs, charges, accruals, reserves and expenses (including inventory  optimization programs, software development costs, costs related to the closure or  consolidation of facilities, curtailments, consulting fees, signing costs, retention or  completion bonuses, expansion and relocation expenses, severance payments,  modifications to pension and post-retirement employee benefit plans, new systems design  and implementation costs and project startup costs); provided that (x) such costs, charges,  accruals, reserves or expenses are set forth in a certificate of an Executive Officer of the  

 

  A-6  Company and are factually supportable (in the good faith determination of the Company  as certified in the applicable certificate) and (y) the aggregate amount of all costs, charges,  accruals, reserves or expenses added back in reliance on this clause (i) in any four-Fiscal  Quarter period, when aggregated with all amounts added back in reliance on clauses (g)  and (h) above and (j)(x) below for such four-Fiscal Quarter period, shall not exceed 15%  of EBITDA for such four-Fiscal Quarter period (calculated before giving effect to any such  addbacks and adjustments), and   (j) fees, costs, expenses and losses from (x) restructurings, (y) casualty and  condemnation events to the extent covered by insurance and expected to result in insurance  proceeds of at least the amount added back and (z) discontinued operations; provided that  the aggregate amount of all fees, costs, expenses and losses added back in reliance on  clause (j)(x) in any four-Fiscal Quarter period, when aggregated with all amounts added  back in reliance on clauses (g), (h) and (i) above for such four-Fiscal Quarter period, shall  not exceed 15% of EBITDA for such four-Fiscal Quarter period (calculated before giving  effect to any such addbacks and adjustments)  minus, in each case to the extent included in determining such Consolidated Net Income, but  without duplication:   (x) non-cash income for such period (excluding the accrual of revenue in  accordance with GAAP),   (y) unusual or non-recurring income or gains for such period (including,  whether or not otherwise includable as a separate item in the statement of such  Consolidated Net Income for such period, income or gains on sales of assets outside of the  ordinary course of business), and   (z) income and gains for such period relating to discontinued operations (but if  such earnings are classified as discontinued due to the fact that they are subject to an  agreement to dispose of such operations, such earnings shall be excluded in the calculation  of EBITDA only when and to the extent such operations are actually disposed of).  “EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval System or  any successor SEC electronic filing system for such purposes.  “Environmental Laws” means any and all federal, state, local, and foreign statutes, laws,  regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises,  licenses, agreements or governmental restrictions relating to pollution and the protection of the  environment or the release of any materials into the environment, including those related to  hazardous substances or wastes, air emissions and discharges to waste or public systems.  “Equity Interests” means shares of capital stock, partnership interests, membership  interests in a limited liability company, beneficial interests in a trust or other equity ownership  interests in a Person, and any warrants, options or other rights entitling the holder thereof to  purchase or acquire any such equity interest.  

 

  A-7  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and  the rules and regulations promulgated thereunder from time to time in effect.   “ERISA Affiliate” means any trade or business (whether or not incorporated) that is  treated as a single employer together with the Company under section 414 of the Code.  “Event of Default” is defined in Section 11.  “FATCA” means (a) sections 1471 through 1474 of the Code, as of the date of this  Agreement (or any amended or successor version that is substantively comparable and not  materially more onerous to comply with), together with any current or future regulations or official  interpretations thereof, (b) any treaty, law or regulation of any other jurisdiction, or relating to an  intergovernmental agreement between the United States of America and any other jurisdiction,  which (in either case) facilitates the implementation of the foregoing clause (a), and (c) any  agreements entered into pursuant to section 1471(b)(1) of the Code.  “First Closing” is defined in Section 3.  “Fiscal Quarter” means a fiscal quarter of a Fiscal Year.  “Fiscal Year” means the fiscal year of the Company and its Subsidiaries, which period  shall be the 52- or 53-week fiscal year ending on the Saturday closest to December 31 of each year  or, at the Company’s election, the calendar year (so long as such election is consistent with the  Company’s filings with the SEC).  “Foreign Borrowing” is defined in Section 9.7.  “Foreign Guarantee” is defined in Section 9.7.  “Foreign Subsidiary” means any Subsidiary of the Company that is not a Domestic  Subsidiary.  “Form 10-K” is defined in Section 7.1(b).  “Form 10-Q” is defined in Section 7.1(a).  “FRB” means the Board of Governors of the Federal Reserve System or any successor  thereto.  “Funded Debt” means all Debt of the Company and its Subsidiaries, excluding  (i) contingent obligations in respect of undrawn letters of credit, bank guarantees and banker’s  acceptances and Suretyship Liabilities in respect of obligations not constituting Debt, (ii) Hedging  Obligations, (iii) Securitization Obligations to the extent such obligations would not be required  to be included on the consolidated balance sheet of the Company in accordance with GAAP, and  (iv) obligations to pay the deferred purchase price of services.  

 

  A-8  “Funded Debt to EBITDA Ratio” means, for any Computation Period, the ratio of  (i) Funded Debt as of the last day of such Computation Period, net of (1) the lesser of  (x) unrestricted cash and cash equivalents on hand of the Company and its Subsidiaries in excess  of $50,000,000, and (y) $400,000,000, and (2) Pending Acquisition Debt, to (b) EBITDA for the  most recently completed Computation Period.  “GAAP” means (a) generally accepted accounting principles as in effect from time to time  in the United States of America and (b) for purposes of Section 9.6, with respect to any Subsidiary,  generally accepted accounting principles (including International Financial Reporting Standards,  as applicable) as in effect from time to time in the jurisdiction of organization of such Subsidiary.  “Governmental Authority” means   (a) the government of   (i) the United States of America or any state or other political  subdivision thereof, or   (ii) any other jurisdiction in which the Company or any Subsidiary  conducts all or any part of its business, or which asserts jurisdiction over any  properties of the Company or any Subsidiary, or   (b) any entity exercising executive, legislative, judicial, taxing, regulatory or  administrative functions of, or pertaining to, any such government.  “Governmental Official” means any governmental official or employee, employee of any  government-owned or government-controlled entity, political party, any official of a political  party, candidate for political office, official of any public international organization or anyone else  acting in an official capacity.  “Hedging Agreement” means any interest rate, currency or commodity swap agreement,  cap agreement or collar agreement, and any other agreement or arrangement designed to protect  against fluctuations in interest rates, currency exchange rates or commodity prices.  “Hedging Obligations” means, with respect to any Person, all liabilities of such Person  under Hedging Agreements.  “holder” means, with respect to any Note, the Person in whose name such Note is  registered in the register maintained by the Company pursuant to Section 13.1, provided, however,  that if such Person is a nominee, then for the purposes of Sections 7, 12, 17.2 and 18 and any  related definitions in this Schedule A, “holder” shall mean the beneficial owner of such Note  whose name and address appears in such register.  “Incremental Leverage Fee” is defined in Section 1.2(a).   “Incremental Leverage Fee Payment” is defined in Section 1.2(b).  

 

  A-9  “INHAM Exemption” is defined in Section 6.2(e).  “Interest Coverage Ratio” means, as of any date of determination, the ratio of  (a) EBITDA for the most recently completed Computation Period to (b) Consolidated Interest  Charges for the most recently completed Computation Period to the extent paid in cash.  “Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note  holding (together with one or more of its affiliates) more than 3% of the aggregate principal amount  of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other  financial institution, any pension plan, any investment company, any insurance company, any  broker or dealer, or any other similar financial institution or entity, regardless of legal form, and  (d) any Related Fund of any holder of any Note.  “Investor Presentation” is defined in Section 5.3.  “knowledge” when used with respect to the Company or any Responsible Officer to  qualify a representation or warranty of the Company or such Responsible Officer, shall be deemed  to be the actual knowledge of such Responsible Officer.  “Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security  interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured  party to or of such Person under any conditional sale or other title retention agreement or Capital  Lease, upon or with respect to any property or asset of such Person (including in the case of stock,  stockholder agreements, voting trust agreements and all similar arrangements).    “Make-Whole Amount” is defined in Section 8.6.  “Material” means material in relation to the business, operations, affairs, financial  condition, assets, or properties, of the Company and its Subsidiaries taken as a whole.  “Material Adverse Effect” means a material adverse effect on (a) the business,  operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries  taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement  and the Notes, (c) the ability of any Subsidiary Guarantor to perform its obligations under its  Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement, the Notes or any  Subsidiary Guaranty.  “Material Credit Facility” means, as to the Company and its Subsidiaries,   (a) the Credit Agreement, including any renewals, extensions, amendments,  supplements, restatements, replacements or refinancing thereof; and   (b) any other agreement(s) creating or evidencing indebtedness for borrowed  money entered into on or after the date of the First Closing by the Company or any  Subsidiary, or in respect of which the Company or any Subsidiary is an obligor or otherwise  provides a guarantee or other credit support (“Credit Facility”), in a principal amount  

 

  A-10  outstanding or available for borrowing equal to or greater than $75,000,000(or the  equivalent of such amount in the relevant currency of payment, determined as of the date  of the closing of such facility based on the exchange rate of such other currency); and if no  Credit Facility or Credit Facilities equal or exceed such amounts, then the largest Credit  Facility shall be deemed to be a Material Credit Facility.   “Maturity Date” is defined in the first paragraph of each Note.  “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is  defined in section 4001(a)(3) of ERISA).  “NAIC” means the National Association of Insurance Commissioners.  “Non-U.S. Plan” means any plan, fund or other similar program that (a) is established or  maintained outside the United States of America by the Company or any Subsidiary primarily for  the benefit of employees of the Company or one or more Subsidiaries residing outside the United  States of America, which plan, fund or other similar program provides, or results in, retirement  income, a deferral of income in contemplation of retirement or payments to be made upon  termination of employment, and (b) is not subject to ERISA or the Code.  “Note Documents” means the Notes, this Agreement and the Subsidiary Guaranties.   “Notes” is defined in Section 1.  “OFAC” means the Office of Foreign Assets Control of the United States Department of  the Treasury.  “OFAC Sanctions Program” means any economic or trade sanction that OFAC is  responsible for administering and enforcing.  A list of OFAC Sanctions Programs may be found  at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.  “Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other  officer of the Company whose responsibilities extend to the subject matter of such certificate.  “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in  ERISA.  “Pending Acquisition Debt” means as of any date of determination, the lesser of:   (1) the aggregate amount of cash proceeds received and held by or on  behalf of the Company or its Subsidiaries in connection with any offering, issuance  or other incurrence of Debt (“Specified Indebtedness”) in connection with a  Pending Transaction; and    (2) the lowest maximum amount (for the avoidance of doubt, not to be  less than $0) that may be deducted as of such date when calculating “Funded Debt”  

 

  A-11  (or other corresponding definition) for purposes of determining compliance with  any leverage ratio financial covenant (or other corresponding provision) in any  Material Credit Facility.    provided that the Company may only deduct the aggregate amount of cash proceeds received and  held by or on behalf of the Company or its Subsidiaries in connection with Specified Indebtedness  for purposes of clause (1) above in connection with not more than three Pending Transactions; and  provided, further, that if the Company shall not have delivered to the holders of the Notes evidence  of an investment grade rating from at least two accredited rating agencies on a pro forma basis for  a Pending Transaction prior to incurring such Specified Indebtedness, the aggregate amount of  cash proceeds received and held by or on behalf of the Company or its Subsidiaries in connection  with such Specified Indebtedness for purposes of clause (1) shall be deemed to be $0; and  provided, further, that if a Pending Acquisition Transaction is not consummated by the date that  is 270 days after the offering, issuance or other incurrence of such Specified Indebtedness (the  “Pending Acquisition Transaction Effective Date”), then from and after the Pending  Acquisition Transaction Effective Date (or such later date as the Required Holders may agree), the  aggregate amount of cash proceeds received and held by or on behalf of the Company or its  Subsidiaries in connection with such Specified Indebtedness for purposes of clause (1) shall be  deemed to be $0; and  provided, further, that if a Pending Refinancing Transaction is not consummated by the date that  is 60 days after the offering, issuance or other incurrence of such Specified Indebtedness (the  “Pending Refinancing Transaction Effective Date”), then from and after the Pending  Refinancing Transaction Effective Date (or such later date as the Required Holders may agree),  the aggregate amount of cash proceeds received and held by or on behalf of the Company or its  Subsidiaries in connection with such Specified Indebtedness for purposes of clause (1) shall be  deemed to be $0; and  provided, further, that upon and after the consummation of a Pending Transaction, the aggregate  amount of any cash proceeds received and still held by or on behalf of the Company or its  Subsidiaries in connection with such Specified Indebtedness for purposes of clause (1) above shall  be deemed to be $0.  “Pending Acquisition Transaction” means any pending acquisition or investment not  prohibited under this Agreement in excess of $75,000,000.  “Pending Acquisition Transaction Effective Date” has the meaning set forth in the  definition of “Pending Acquisition Debt”.  “Pending Refinancing Transaction” means any refinancing, prepayment, repayment,  redemption, repurchase, settlement, discharge or defeasance of existing registered public Debt and  not, for the avoidance of doubt, Debt owed to banks under revolving or term loan facilities or  privately placed securities.  

 

  A-12  “Pending Refinancing Transaction Effective Date” has the meaning set forth in the  definition of “Pending Acquisition Debt”.  “Pending Transaction” means a Pending Acquisition Transaction or a Pending  Refinancing Transaction.  “Permitted Acquisition” means any Acquisition by the Company or a Subsidiary which  satisfies each of the following requirements: (a) no Default or Event of Default has occurred and  is continuing at the time of, or immediately after giving effect to, such Acquisition; (b) the Person  to be acquired is in, or the assets to be acquired are for use in, the same or a similar line of business  as the Company and its Subsidiaries or a reasonable extension thereof; (c) if the aggregate  consideration to be paid by the Company and its Subsidiaries in connection with such Acquisition  (including Debt assumed, but excluding capital stock of the Company or any Subsidiary) exceeds  $400,000,000, the Company shall have delivered to the holders a certificate demonstrating that,  after giving effect to such Acquisition, the Company will be in pro forma compliance with the  covenants in Section 10.7; and (d) in the case of the Acquisition of a Person, the board of directors  (or equivalent governing body) of the Person being acquired shall have approved such Acquisition.  “Permitted Securitization” means any program providing for (a) the direct or indirect  sale, contribution and/or transfer to a Securitization Subsidiary, in one or more related and  substantially concurrent transactions, of accounts receivable, general intangibles, chattel paper or  other financial assets (including rights in respect of capitalized leases) and related rights of the  Company or any Subsidiary in transactions intended to constitute (and opined by nationally  recognized outside legal counsel in connection therewith to constitute) true sales or true  contributions to such Securitization Subsidiary and (b) the provision of financing secured by the  assets so sold, contributed and/or transferred, whether in the form of secured loans or the  acquisition of undivided interests in such assets.  “Person” means an individual, partnership, corporation, limited liability company,  association, trust, unincorporated organization, business entity or Governmental Authority.  “Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to  Title I of ERISA that is or, within the preceding five years, has been established or maintained, or  to which contributions are or, within the preceding five years, have been made or required to be  made, by the Company or any ERISA Affiliate or with respect to which the Company or any  ERISA Affiliate may have any liability.  “Preferred Stock” means any class of capital stock of a Person that is preferred over any  other class of capital stock (or similar equity interests) of such Person as to the payment of  dividends or the payment of any amount upon liquidation or dissolution of such Person.  “Priority Debt” means (without duplication), as of the date of any determination thereof,  the sum of (i) all unsecured Debt of Subsidiaries (including all Guarantees of Debt by any  Subsidiary) but excluding (a) Debt owing to the Company or any Subsidiary, (b) Debt outstanding  at the time such Person became a Subsidiary or such Person merges into or consolidates with the  Company or any Subsidiary, provided that such Debt shall have not been incurred in contemplation  

 

  A-13  thereof, and (c) all Debt of Subsidiary Guarantors, and (ii) all Debt of the Company and its  Subsidiaries secured by Liens other than Debt secured by Liens permitted by Section 10.6(a)  through Section 10.6(j).  For the avoidance of doubt, except as set forth in the preceding sentence  subject to Section 9.7(a), all Debt of any Foreign Subsidiary that does not become a Subsidiary  Guarantor under the terms of this Agreement will constitute Priority Debt for all purposes of this  Agreement.  “property” or “properties” means, unless otherwise specifically limited, real or personal  property of any kind, tangible or intangible, choate or inchoate.  “Proposed Prepayment Date” is defined in Section 8.8(c).   “PTE” is defined in Section 6.2(a).  “Purchaser” or “Purchasers” means each of the purchasers that has executed and  delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as  any such assignment complies with Section 13.2), provided, however, that (x) any Purchaser of a  Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note  as the result of a transfer thereof pursuant to Section 13.2 shall cease to be included within the  meaning of “Purchaser” of such Note, and (y) any Purchaser that assigns all of its rights under this  Agreement after the First Closing and prior to the Second Closing, shall cease to be included within  the meaning of “Purchaser”, in each case, for the purposes of this Agreement upon such transfer.  “Purchaser Schedule” means the Purchaser Schedule to this Agreement listing the  Purchasers of the Notes and including their notice and payment information.  “Qualified Institutional Buyer” means any Person who is a “qualified institutional  buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.  “QPAM Exemption” is defined in Section 6.2(d).  “Ratable Portion” means, with respect to any Note, an amount equal to the product of  (x) the amount equal to the net proceeds being so applied to the prepayment of Senior Debt in  accordance with Section 10.5(2), multiplied by (y) a fraction the numerator of which is the  outstanding principal amount of such Note and the denominator of which is the aggregate principal  amount of Senior Debt of the Company and its Subsidiaries being prepaid pursuant to  Section 10.5(2).    “Ratio Step-Up” is defined in Section 10.7.  “Related Fund” means, with respect to any holder of any Note, any fund or entity that  (a) invests in Securities or bank loans, and (b) is advised or managed by such holder, the same  investment advisor as such holder or by an affiliate of such holder or such investment advisor.  

 

  A-14  “Required Holders” means at any time (i) prior to the Second Closing, the Purchasers and  (ii) on or after the Second Closing, the holders of at least 51% in principal amount of the Notes at  the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).  “Responsible Officer” means any Senior Financial Officer and any other officer of the  Company with responsibility for the administration of the relevant portion of this Agreement.  “SEC” means the Securities and Exchange Commission of the United States of America.  “Second Closing” is defined in Section 3.  “Securities” or “Security” shall have the meaning specified in section 2(1) of the  Securities Act.   “Securities Act” means the Securities Act of 1933 and the rules and regulations  promulgated thereunder from time to time in effect.  “Securitization Obligations” means the aggregate investment or claim (as opposed to the  value of the underlying assets subject to the applicable Permitted Securitization) held at any time  by all purchasers, assignees or transferees of (or of interests in), or holders of obligations that are  supported or secured by, accounts receivable, general intangibles, chattel paper or other financial  assets (including rights in respect of capitalized leases) and related rights of the Company or any  Subsidiary in connection with Permitted Securitizations.  “Securitization Subsidiary” means a special purpose, bankruptcy remote, directly or  indirectly wholly-owned Subsidiary of the Company that is formed for the sole and exclusive  purpose of engaging in activities in connection with the purchase, contribution, transfer, sale and  financing of assets and related rights in connection with and pursuant to one or more Permitted  Securitizations.  “Senior Financial Officer” means the chief financial officer, principal accounting officer,  treasurer or comptroller of the Company.  “Senior Debt” means all Debt of the Company or any Subsidiary which is not expressed  to be subordinate or junior in rank to any other Debt of the Company or such Subsidiary.    “Source” is defined in Section 6.2.  “Specified Indebtedness” is defined in the definition of “Pending Acquisition Debt”.  “State Sanctions List” means a list that is adopted by any state Governmental Authority  within the United States of America pertaining to Persons that engage in investment or other  commercial activities in Iran or any other country that is a target of economic sanctions imposed  under U.S. Economic Sanctions Laws.  “Static GAAP” is defined in Section 22.2(b).  

 

  A-15  “Subsequent Changes” is defined in Section 22.2(b).  “Subsidiary” means, as to any Person, any other Person in which such first Person or one  or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient  equity or voting interests to enable it or them (as a group) ordinarily, in the absence of  contingencies, to elect a majority of the directors (or Persons performing similar functions) of such  second Person, and any partnership or joint venture if more than a 50% interest in the profits or  capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person  and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily  take major business actions without the prior approval of such Person or one or more of its  Subsidiaries).  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a  reference to a Subsidiary of the Company.  “Subsidiary Guarantor” means each Subsidiary that has executed and delivered a  Subsidiary Guaranty.  “Subsidiary Guaranty” is defined in Section 9.7(a).  “Substitute Purchaser” is defined in Section 21.  “Suretyship Liability” means any agreement, undertaking or arrangement by which any  Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or  indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or  otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any indebtedness,  obligation or other liability of any other Person (other than by endorsements of instruments in the  course of collection), or guarantees the payment of dividends or other distributions upon the shares  of any other Person.  The amount of any Person’s obligation in respect of any Suretyship Liability  shall (subject to any limitation set forth therein) be deemed to be equal to the lesser of (i) the stated  or determinable amount of the related primary obligation, or portion thereof, in respect of which  such Suretyship Liability is incurred or, if not stated or determinable, the maximum reasonably  anticipated liability in respect thereof, and (ii) the stated amount of such Suretyship Liability.  “SVO” means the Securities Valuation Office of the NAIC.  “Swap Contract” means (a) any and all interest rate swap transactions, basis swap  transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity  swaps, commodity options, forward commodity contracts, equity or equity index swaps or options,  bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap  transactions, floor transactions, currency options, spot contracts or any other similar transactions  or any of the foregoing (including any options to enter into any of the foregoing), and (b) any and  all transactions of any kind, and the related confirmations, which are subject to the terms and  conditions of, or governed by, any form of master agreement published by the International Swaps  and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement.  “Swap Termination Value” means, in respect of any one or more Swap Contracts, after  taking into account the effect of any legally enforceable netting agreement relating to such Swap  

 

  A-16  Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and  termination value(s) determined in accordance therewith, such termination value(s), and (b) for  any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market  value(s) for such Swap Contracts, as determined based upon one or more mid-market or other  readily available quotations provided by any recognized dealer in such Swap Contracts.  “Synthetic Lease” means, at any time, any lease (including leases that may be terminated  by the lessee at any time) of any property (a) that is accounted for as an operating lease under  GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased  for U.S. federal income tax purposes, other than any such lease under which such Person is the  lessor.  “Transaction Documents” is defined in Section 22.5.   “Transition Period” means the period commencing on (and including) the first day of the  Fiscal Quarter during which the Company or any Subsidiary consummated the acquisition of any  person or line of business and ending on (and including) the last day of the fourth Fiscal Quarter  following such date of consummation.  “United States Person” has the meaning set forth in Section 7701(a)(30) of the Code.  “USA PATRIOT Act” means United States Public Law 107-56, Uniting and  Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct  Terrorism (USA PATRIOT ACT) Act of 2001 and the rules and regulations promulgated  thereunder from time to time in effect.  “U.S. Economic Sanctions Laws” means those laws, executive orders, enabling  legislation or regulations administered and enforced by the United States pursuant to which  economic sanctions have been imposed on any Person, entity, organization, country or regime,  including the Trading with the Enemy Act, the International Emergency Economic Powers Act,  the Iran Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC  Sanctions Program.  “Wholly-Owned Subsidiary” means, at any time, any Subsidiary all of the equity interests  (except directors’ qualifying shares) and voting interests of which are owned by any one or more  of the Company and the Company’s other Wholly-Owned Subsidiaries at such time.ex_356309.htm

 

Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

GIGA-TRONICS INCORPORATED

 

Initial Exercise Price: $3.00

Warrant Shares: 433,333

 

This Common Stock Purchase Agreement (the “Warrant”) certifies that, for value received, Gresham Worldwide, Inc., or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, to subscribe for and purchase from Giga-tronics Incorporated, a California corporation (the “Company”), 433,333 shares of Common Stock (the “Warrant Shares”) at any time until three years after this Warrant is first exercisable but not later than December 31, 2025 (the “Termination Date”).

 

Section 1.         Piggyback Registration.

 

(a)         Once the Company is eligible to use Form S-3 (or any successor form), each time it proposes for any reason to register any of its Common Stock under the Securities Act in connection with the proposed offer and sale of its Common Stock for money, either for its own account or on behalf of any other security holder (“Proposed Registration”), other than pursuant to a registration statement on Forms S-4 or S-8 (or successor forms) it shall promptly give written notice of such Proposed Registration to the Holder and shall offer the Holder the right to request inclusion of its Warrant Shares (the “Registrable Securities”) in the Proposed Registration.

 

(b)         the Holder shall have 30 days from the receipt of such notice to deliver to a written request specifying the number of shares of the Holder ’s Registrable Securities, as the case may be, such Investor intends to sell in the Proposed Registration and the Holder's intended method of disposition.

 

1

 

 

(c)         In the event that the Proposed Registration is, in whole or in part, an underwritten public offering, the Company shall so advise the Holder as part of the written notice given pursuant to Section 2(a), and any request under Section 1(b) must specify that the Holder’s Registrable Securities be included in the underwriting on the same terms and conditions as the shares of Common Stock, if any, otherwise being sold through underwriters under such registration.

 

(d)         Upon receipt of a written request pursuant to Section 1(b), the Company shall promptly use commercially reasonable efforts to cause all such shares of the Holder’s Registrable Securities to be registered under the Securities Act (and included in any related qualifications under blue sky laws or other compliance), to the extent required to permit sale or disposition as set forth in the Proposed Registration.

 

(e)         In the event that the offering is to be an underwritten offering, if the Holder propose to distribute its Warrant Shares through such underwritten offering, then the Holder agrees to enter into an underwriting agreement with the underwriter or underwriters selected for such underwriting.

 

Section 2.         Exercise.

 

(a)     The exercise of this Warrant shall only be permissible if the Company fails to close that certain Share Exchange Agreement by and among the Company, Gresham Worldwide, Inc. and BitNile Holdings, Inc. dated as of December 27, 2021, as amended (the “Agreement”), unless the failure to close results (i) solely from the breach of the Agreement by Gresham Worldwide, Inc. and/or BitNile Holdings, Inc. or (ii) BitNile Holdings, Inc.’s termination of the Agreement pursuant to Section 8.02(a) thereof. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within the earlier of (i) two Trading Days following the date of exercise as aforesaid or (ii) the Standard Settlement Period, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. In the event that the Holder is required to make any payments to the Company’s stock transfer agent in connection with its exercise of this Warrant resulting from any failure or alleged failure of the Company to pay the transfer agent, the Holder may deduct such sums it pays the transfer agent from the total Exercise Price due. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within five Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one Trading Day of delivery of such notice. The Holder by acceptance of this Warrant, acknowledges and agrees that by reason of the provisions of this Section 2(a) following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

2

 

 

(b)    Exercise Price. The initial exercise price per share of the Common Stock under this Warrant shall be equal to $3.00 per share, subject to adjustment under Section 3 (the “Exercise Price”).

 

(c)    Cashless Exercise. If at any time after the six months anniversary of the Initial Exercise Date, , there is no effective Registration Statement covering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the number obtained by dividing [(A x B) – (A x C)] by (D), where:

 

	 	
			(A)

				=	
			the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

			

 

	 	
			(B)

				=	
			the greater of (i) the arithmetic average of the VWAPs for the five consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election;

			
	 	 	 	 
	 	(C)	=	the Exercise Price of this Warrant, as adjusted hereunder, at the time of such exercise; and
	 	 	 	 
	 	(D)	=	the lesser of (i) the arithmetic average of the VWAPs for the five consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c).

 

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Notwithstanding anything herein to the contrary, if on the Termination Date (unless the Holder notifies the Company otherwise) if there is no effective Registration Statement covering the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

(d)    Mechanics of Exercise.

 

(i)    Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted to the Holder by the Transfer Agent by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and (A) there is an effective Registration Statement covering the sale of the Warrant Shares by the Holder, or (B) this Warrant is being exercised via cashless exercise and Rule 144 under the Securities Act is available or otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is equal to the number of Trading Days in the Standard Settlement period Standard Settlement Period after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (unless by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”). As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary trading market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (unless by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing to $20 per Trading Day after the fifth Trading Day) after the Warrant Share Delivery Date for each $1,000 of the value of the Warrant Shares for which this Warrant is exercised (based on the Exercise Price) which are not timely delivered. The Company shall pay any payment incurred under this Section 2(d)(i) in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company or the date the Warrant Shares are delivered to the Holder, whichever date is earlier.

 

(ii)    Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

 

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(iii)    Rescission Rights. If the Company fails to deliver the Warrant Shares or cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.

 

(iv)    Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to deliver the Warrant Shares, or cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon written request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

(v)    No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi)    Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate including any charges (limited to $100 per issuance) of any clearing firm, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

5

 

 

(vii)    Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(e)    Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant pursuant to this Section 2 or otherwise to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice (including an email) by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company including this Warrant by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. Upon at least 61 days written notice, the holder may increase the Beneficial Ownership Limitation to 9.99%. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. If after giving effect to an exercise of this Warrant, the Holder would beneficially own Common Stock in excess of the Beneficial Ownership Limitation, the Warrant Shares issued shall be treated as null and void. The provisions of this Section 2(e) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct any provisions (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 2(e) shall apply to a successor holder of this Warrant.

 

6

 

 

Section 3.         Certain Adjustments.

 

(a)    Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‐classification.

 

(b)    Adjustments for Issuance of Additional Securities. If the Company at any time while this Warrant or the Notes are outstanding, issues or sells any additional shares of Common Stock or Common Stock Equivalents (as defined) (“Additional Shares of Common Stock”) in a transaction other than an Exempt Issuance, at a price per share less than the Exercise Price then in effect or without consideration (a “Dilutive Issuance” based on a “Dilutive Issuance Price”), then the Exercise Price upon each such issuance shall be reduced to the lower of (i) an amount equal to the Dilutive Issuance Price, or (ii) the VWAP on the next Trading Day following the first public disclosure of the Dilutive Issuance. For the purposes of this Section 3(b), the next Trading Day if an announcement is made before 4:00 pm New York, NY time is either the day of the announcement or the following Trading Day.

 

7

 

 

Provided, however, that this Section 3(b) shall not apply if the Common Stock is listed on a Principal Market which is any of the NYSE, the NYSE American, or the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select.

 

In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents (except for indebtedness) will be deemed to have been issued for the par value of the Common Stock and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the par value. Any indebtedness shall be valued at the principal less any original issue discount. If multiple shares of Common Stock are contained in a unit, the aggregate consideration shall be divided by the number of shares of Common Stock in a unit. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

 

“Common Stock Equivalents” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any indebtedness, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

8

 

 

The provisions of this Section 3(b) shall apply each time the Company, at any time after the Initial Exercise Date and while this Warrant or the Note is outstanding, shall issue any securities with a Dilutive Issuance Price.  Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(b) with respect to an Exempt Issuance. Exempt Issuance means the issuance of: (a) shares of the Common Stock or options to employees, officers, directors or consultants of the Company pursuant to any equity incentive plan or any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose; (b) securities issued upon the exercise or exchange of or conversion of any securities issued and outstanding on the date hereof, including pursuant to any anti-dilution provision in such securities provided, that such securities have not been amended since the date hereof to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities or to include or amend any anti-dilution provision in such securities; (c) securities issuable pursuant to certain anti-dilution rights under agreements entered into prior to the date of this Warrant, provided, that such agreements have not been amended since the date of this Warrant to include or amend (to increase the number of shares issuable or the applicable price for such issuance) any anti-dilution rights in such agreement; and (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided, that any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its subsidiaries, an operating company or any owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business in investing in securities.;

 

(c)    Reserved. 

 

(d)    Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, no Purchase Rights will be made under this Section 3(d) in respect of an Exempt Issuance.

 

(e)    Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(d)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

9

 

 

(f)    Fundamental Transaction.

 

(i)    If, at any time while this Warrant is outstanding the Company enters into a Fundamental Transaction, then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), at the option of the Holder the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall not effect a Fundamental Transaction unless it gives the Holder at least 10 Trading Days’ prior notice together with sufficient details so the Holder can make an informed decision as to whether it elects to accept the Alternative Consideration. Within two Trading Days after the Holder has been given such notice, the Company shall file a Form 8-K disclosing all material information about the Fundamental Transaction which has been given to the Holder.

 

(ii)    Fundamental Transaction means (1) If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”). If a Fundamental Transaction occurs, then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the conversion of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is convertible immediately prior to such Fundamental Transaction (without regard to any limitation on the conversion of this Warrant). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Warrant following such Fundamental Transaction. The Company shall not effect a Fundamental Transaction unless it gives the Holder at least 10 Trading Days prior notice together with sufficient details so the Holder can make an informed decision as to whether it elects to accept the Alternative Consideration. If a public announcement of the Fundamental Transaction has not been made, the notice to the Holder may not be given until the Company files a Form 8-K or other report disclosing the Fundamental Transaction. (2) Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (x) an all cash transaction, (y) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (z) a Fundamental Transaction involving a person or entity not traded on a national securities exchange or trading market (with such exchange or market including, without limitation, the Nasdaq Global Select Trading Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the New York Stock Exchange, Inc., the NYSE American or any market operated by the OTC Markets, Inc.), the Company or any Successor Entity (as defined below) shall, at the Holder’s option, concurrently with the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder the higher of (i) an amount of cash equal to the Black Scholes Value of the outstanding principal of this Warrant on the date of the consummation of such Fundamental Transaction, or (ii) the product of (a) the number of Conversion Shares issuable upon full conversion of this Warrant (without regard to any limitation on conversion of this Warrant) and (b) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Conversion Price. (3) If Section 3(f)(1) and (2) are not applicable, the Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(f) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Warrant (without regard to any limitations on the conversion of this Warrant) prior to such Fundamental Transaction, and with a conversion price which applies the Conversion Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding anything in this Section 5(e), an Exempt Issuance shall not be deemed a Fundamental Transaction. “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

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(iii)    Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

 

(iv)    “Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.

 

(v)    Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(f) with respect to an Exempt Issuance (as defined in the Agreement).

 

(g)    Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(h)    Notice to Holder.

 

(i)    Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Holder may supply an email address to the Company and change such address.

 

(ii)    Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days’ prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to email such notice or any defect therein or in the emailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4.       Transfer of Warrant.

 

(a)    Transferability. Subject to compliance with any applicable securities laws and the provisions of the Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b)    New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c)    Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5.         Miscellaneous.

 

(a)    No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof other than as explicitly set forth in Section 3.

 

(b)    Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. In no event shall the Holder be required to post a bond or other security.

 

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(c)    Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

(d)    Authorized Shares. The Company covenants that during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock, free of preemptive rights three times the number of shares of Common Stock issuable upon exercise of this Warrant, subject to adjustment pursuant to Section 3. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any trading market or national securities exchange upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

In addition to any other remedies provided by this Warrant or the Agreement, if the Company at any time fails to meet this reservation of Common Stock requirement within 45 days after written notice from the Holder, it shall pay the Holder as partial liquidated damages and not as a penalty a sum equal to $500 per day for each $100,000 of such Holder’s Warrant Value. Warrant Value means the Exercise Price, as adjusted times the number of Warrant Shares that can not be issued. The Company shall not enter into any agreement or file any amendment to its Certificate of Incorporation (including the filing of a Certificate of Designation or similar instrument) which conflicts with this Section 5(d) while the and Warrants remain outstanding.

 

Except and to the extent waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its Certificate of Incorporation (or charter) or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(e)    Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined by and construed in accordance with the laws of the State of Delaware.

 

(f)    Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered or if not exercised on a cashless basis when Rule 144 is available, will have restrictions upon resale imposed by state and federal securities laws.

 

(g)    Non-waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h)    Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Agreement.

 

(i)     Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j)    Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate or that there is no irreparable harm and not to require the posting of a bond or other security.

 

(k)    Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by any Holder from time to time of this Warrant or any Warrant Shares.

 

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(l)       Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m)    Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n)    Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

(o)    Most Favored Nations. From the Initial Exercise Date until the Termination Date, in the event that the Company issues or sells any shares of Common Stock, any securities of the Company which would entitle the holder of such securities to acquire at any time Common Stock, including, without limitation, any preferred stock, Convertible Securities, rights, Options, warrants, or other debt or equity instrument that is at any time convertible into, exercisable for, or exchangeable for, or otherwise entitles the holder to receive Common Stock, the Company shall provide notice to the Holder of such issuance and, if the Holder reasonably believes that any of the terms and conditions are more favorable to such investors than the terms and conditions of this Warrant, upon notice to the Company, the Company shall within five Trading Days amend the terms of this Warrant to give the Holder the benefit of the more favorable terms and conditions. If such issuance or sale involves a unit which includes warrants, the Holder may retain this Warrant and receive the other securities contained in the unit or exchange this Warrant for the unit. The number of units shall be based upon the product of the number of Warrant Shares issuable times the Exercise Price. The Holder shall be entitled to rely upon the Company’s representations and warranties set forth in any agreement containing the more favorable terms and conditions.

 

********************

 

(Signature Page Follows)

 

15

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	
			 

				
			GIGA-TRONICS INCORPORATED

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ John Regazzi

				
			 

			
	
			 

				
			Name:

				
			John Regazzi

				
			 

			
	
			 

				
			Title:

				
			President and Chief Executive Offcier

				
			 

			

 

16

 

 

NOTICE OF EXERCISE

 

TO:         GIGA-TRONICS INCORPORATED.

 

(1)    The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)    Payment shall take the form of (check applicable box):

 

[ ] in lawful money of the United States; or

 

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)    Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

(4)    After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

 

 

 

SIGNATURE OF HOLDER

 

Name of Investing Entity: _______________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________

Name of Authorized Signatory: _________________________________________________________

Title of Authorized Signatory: __________________________________________________________

Date: ____________________________________________________________________________

 

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

GIGA-TRONICS INCORPORATED 

 

FOR VALUE RECEIVED, ____ all of or _______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________

 

 

 

_______________________________________________________________

 

Dated: ______________, _______

 

 

Holder’s Signature:       _____________________________

 

Holder’s Address:         _____________________________

 

                                      _____________________________

 

 

 

Signature Guaranteed: ___________________________________________

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

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