Document:

Exhibit 4.1

 

EXECUTION COPY

 

BUNGE LIMITED FINANCE CORP.,

as Issuer

 

BUNGE LIMITED,

as Guarantor

 

AND

 

MUFG UNION BANK, N.A.,

as Trustee

 

3.500% Senior Notes Due 2020

 

INDENTURE

 

Dated as of November 24, 2015

 

 

TABLE OF CONTENTS

 

	
ARTICLE 1
    
	
Definitions and Incorporation by Reference
    
	
 
    	
 
    
	
Section 1.01.  Definitions
    	
1
    
	
 
    	
 
    
	
Section 1.02.  Incorporation by Reference of Trust   Indenture Act
    	
12
    
	
 
    	
 
    
	
Section 1.03.  Rules of Construction
    	
12
    
	
 
    	
 
    
	
ARTICLE 2
    
	
The Notes
    
	
 
    	
 
    
	
Section 2.01.  Form, Dating and Terms
    	
13
    
	
 
    	
 
    
	
Section 2.02.  Execution and Authentication
    	
15
    
	
 
    	
 
    
	
Section 2.03.  Registrar and Paying Agent
    	
16
    
	
 
    	
 
    
	
Section 2.04.  Paying Agent to Hold Money in Trust
    	
17
    
	
 
    	
 
    
	
Section 2.05.  Noteholder Lists
    	
17
    
	
 
    	
 
    
	
Section 2.06.  Transfer and Exchange
    	
17
    
	
 
    	
 
    
	
Section 2.07.  Mutilated, Destroyed, Lost or Stolen Notes
    	
19
    
	
 
    	
 
    
	
Section 2.08.  Outstanding Notes
    	
20
    
	
 
    	
 
    
	
Section 2.09.  Temporary Notes
    	
20
    
	
 
    	
 
    
	
Section 2.10.  Cancellation
    	
20
    
	
 
    	
 
    
	
Section 2.11.  Payment of Interest; Defaulted Interest
    	
21
    
	
 
    	
 
    
	
Section 2.12.  Computation of Interest
    	
22
    
	
 
    	
 
    
	
Section 2.13.  CUSIP and ISIN Numbers
    	
22
    
	
 
    	
 
    
	
Section 2.14.  Tax Treatment
    	
22
    
	
 
    	
 
    
	
ARTICLE 3
    
	
Covenants
    
	
 
    	
 
    
	
Section 3.01.  Payment of Notes
    	
22
    
	
 
    	
 
    
	
Section 3.02.  Limitation and Restrictions on Activities of   the Company
    	
22
    

 

i

 

	
Section 3.03.  Limitation on Liens
    	
24
    
	
 
    	
 
    
	
Section 3.04.  Limitation on Sale-Leaseback Transactions
    	
24
    
	
 
    	
 
    
	
Section 3.05.  Exclusion from Limitations
    	
24
    
	
 
    	
 
    
	
Section 3.06.  Maintenance of Office or Agency
    	
25
    
	
 
    	
 
    
	
Section 3.07.  Corporate Existence
    	
25
    
	
 
    	
 
    
	
Section 3.08.  Maintenance of Properties; Insurance
    	
25
    
	
 
    	
 
    
	
Section 3.09.  Payment of Taxes and Other Claims
    	
25
    
	
 
    	
 
    
	
Section 3.10.  Payments for Consent
    	
26
    
	
 
    	
 
    
	
Section 3.11.  Compliance Certificate
    	
26
    
	
 
    	
 
    
	
Section 3.12.  Further Instruments and Acts
    	
26
    
	
 
    	
 
    
	
Section 3.13.  Statement by Officers as to Default
    	
26
    
	
 
    	
 
    
	
Section 3.14.  Notice of Change in Bermuda Law, Debt   Ratings
    	
26
    
	
 
    	
 
    
	
Section 3.15.  Offer to Repurchase Upon Change of Control
    	
27
    
	
 
    	
 
    
	
ARTICLE 4
    
	
Successor Guarantor
    
	
 
    	
 
    
	
Section 4.01.  Consolidation, Merger, Amalgamation and Sale   of Assets by the Guarantor
    	
29
    
	
 
    	
 
    
	
ARTICLE 5
    
	
Optional   Redemption of Notes
    
	
 
    	
 
    
	
Section 5.01.  Optional Redemption by the Company
    	
30
    
	
 
    	
 
    
	
Section 5.02.  Applicability of Article
    	
30
    
	
 
    	
 
    
	
Section 5.03.  Election to Redeem; Notice to Trustee
    	
31
    
	
 
    	
 
    
	
Section 5.04.  Selection by Trustee of Notes to Be Redeemed
    	
31
    
	
 
    	
 
    
	
Section 5.05.  Notice of Redemption
    	
31
    
	
 
    	
 
    
	
Section 5.06.  Deposit of Redemption Price
    	
32
    
	
 
    	
 
    
	
Section 5.07.  Notes Payable on Redemption Date
    	
32
    
	
 
    	
 
    
	
Section 5.08.  Notes Redeemed in Part
    	
33
    

 

ii

 

	
ARTICLE 6
    
	
Defaults and Remedies
    
	
 
    	
 
    
	
Section 6.01.  Events of Default
    	
33
    
	
 
    	
 
    
	
Section 6.02.  Acceleration
    	
34
    
	
 
    	
 
    
	
Section 6.03.  Other Remedies
    	
35
    
	
 
    	
 
    
	
Section 6.04.  Waiver of Past Defaults
    	
35
    
	
 
    	
 
    
	
Section 6.05.  Control by Majority
    	
35
    
	
 
    	
 
    
	
Section 6.06.  Limitation on Suits
    	
36
    
	
 
    	
 
    
	
Section 6.07.  Rights of Holders to Receive Payment
    	
36
    
	
 
    	
 
    
	
Section 6.08.  Collection Suit by Trustee
    	
36
    
	
 
    	
 
    
	
Section 6.09.  Trustee May File Proofs of Claim
    	
36
    
	
 
    	
 
    
	
Section 6.10.  Priorities
    	
37
    
	
 
    	
 
    
	
Section 6.11.  Undertaking for Costs
    	
37
    
	
 
    	
 
    
	
ARTICLE 7
    
	
Trustee
    
	
 
    	
 
    
	
Section 7.01.  Duties of Trustee
    	
37
    
	
 
    	
 
    
	
Section 7.02.  Rights of Trustee
    	
39
    
	
 
    	
 
    
	
Section 7.03.  Individual Rights of Trustee
    	
40
    
	
 
    	
 
    
	
Section 7.04.  Trustee’s Disclaimer
    	
40
    
	
 
    	
 
    
	
Section 7.05.  Notice of Defaults
    	
41
    
	
 
    	
 
    
	
Section 7.06.  Report by Trustee to Holders
    	
41
    
	
 
    	
 
    
	
Section 7.07.  Compensation and Indemnity
    	
41
    
	
 
    	
 
    
	
Section 7.08.  Replacement of Trustee
    	
42
    
	
 
    	
 
    
	
Section 7.09.  Successor Trustee by Merger
    	
43
    
	
 
    	
 
    
	
Section 7.10.  Eligibility; Disqualification
    	
43
    
	
 
    	
 
    
	
Section 7.11.  Preferential Collection of Claims Against   Company
    	
43
    

 

iii

 

	
Section 7.12.  Trustee’s Application for Instruction from   the Company
    	
43
    
	
 
    	
 
    
	
ARTICLE 8
    
	
Discharge of Indenture; Defeasance
    
	
 
    	
 
    
	
Section 8.01.  Discharge of Liability on Notes; Defeasance
    	
44
    
	
 
    	
 
    
	
Section 8.02.  Conditions to Defeasance
    	
45
    
	
 
    	
 
    
	
Section 8.03.  Application of Trust Money
    	
46
    
	
 
    	
 
    
	
Section 8.04.  Repayment to Company
    	
46
    
	
 
    	
 
    
	
Section 8.05.  Indemnity for U.S. Government Securities
    	
46
    
	
 
    	
 
    
	
Section 8.06.  Reinstatement
    	
47
    
	
 
    	
 
    
	
ARTICLE 9
    
	
Amendments
    
	
 
    	
 
    
	
Section 9.01.  Without Consent of Holders
    	
47
    
	
 
    	
 
    
	
Section 9.02.  With Consent of Holders
    	
48
    
	
 
    	
 
    
	
Section 9.03.  Compliance with Trust Indenture Act
    	
48
    
	
 
    	
 
    
	
Section 9.04.  Revocation and Effect of Consents and   Waivers
    	
49
    
	
 
    	
 
    
	
Section 9.05.  Notation on or Exchange of Notes
    	
49
    
	
 
    	
 
    
	
Section 9.06.  Trustee to Sign Amendments
    	
49
    
	
 
    	
 
    
	
ARTICLE 10
    
	
Guarantee
    
	
 
    	
 
    
	
Section 10.01.  Guarantee
    	
49
    
	
 
    	
 
    
	
Section 10.02.  No Subrogation
    	
51
    
	
 
    	
 
    
	
Section 10.03.  Consideration
    	
51
    
	
 
    	
 
    
	
ARTICLE 11
    
	
Miscellaneous
    
	
 
    	
 
    
	
Section 11.01.  Trust Indenture Act Controls
    	
51
    
	
 
    	
 
    
	
Section 11.02.  Notices
    	
51
    
	
 
    	
 
    
	
Section 11.03.  Communication by Holders with Other Holders
    	
52
    

 

iv

 

	
Section 11.04.  Certificate and Opinion as to Conditions   Precedent
    	
53
    
	
 
    	
 
    
	
Section 11.05.  Statements Required in Certificate or   Opinion
    	
53
    
	
 
    	
 
    
	
Section 11.06.  When Notes Disregarded
    	
53
    
	
 
    	
 
    
	
Section 11.07.  Rules by Trustee, Paying Agent and   Registrar
    	
53
    
	
 
    	
 
    
	
Section 11.08.  Legal Holidays
    	
53
    
	
 
    	
 
    
	
Section 11.09.  Governing Law
    	
54
    
	
 
    	
 
    
	
Section 11.10.  No Recourse Against Others
    	
54
    
	
 
    	
 
    
	
Section 11.11.  Successors
    	
54
    
	
 
    	
 
    
	
Section 11.12.  Consent to Jurisdiction
    	
54
    
	
 
    	
 
    
	
Section 11.13.  Appointment for Agent for Service of Process
    	
54
    
	
 
    	
 
    
	
Section 11.14.  Waiver of Immunities
    	
54
    
	
 
    	
 
    
	
Section 11.15.  Additional Amounts
    	
55
    
	
 
    	
 
    
	
Section 11.16.  Judgment Currency
    	
55
    
	
 
    	
 
    
	
Section 11.17.  No Bankruptcy Petition Against the Company;   Liability of the Company
    	
55
    
	
 
    	
 
    
	
Section 11.18.  Multiple Originals
    	
56
    
	
 
    	
 
    
	
Section 11.19.  Qualification of Indenture
    	
56
    
	
 
    	
 
    
	
Section 11.20.  Table of Contents; Headings
    	
56
    
	
 
    	
 
    
	
Section 11.21.  Force Majeure
    	
56
    
	
 
    	
 
    
	
Section 11.22.  U.S.A. Patriot Act
    	
57
    

 

EXHIBIT A                                                                              Form of Face of Initial Notes and Subsequent Notes

SCHEDULE 1.1                                                        Designated Obligors and Material Subsidiaries

SCHEDULE 3.4                                                        Existing Liens

 

v

 

CROSS-REFERENCE TABLE

 

	
Trust Indenture
    	
 
    	
 
    
	
Act Section
    	
 
    	
Indenture
    
	
310(a)(1)
    	
 
    	
Section 7.10.
    
	
(a)(2)
    	
 
    	
Section 7.10.
    
	
(a)(3)
    	
 
    	
N.A.
    
	
(a)(4)
    	
 
    	
N.A.
    
	
(b)
    	
 
    	
Section 7.08.,   Section 7.10.
    
	
(c)
    	
 
    	
N.A.
    
	
311(a)
    	
 
    	
Section 7.11.
    
	
(b)
    	
 
    	
Section 7.11.
    
	
(c)
    	
 
    	
N.A.
    
	
312(a)
    	
 
    	
Section 2.05.
    
	
(b)
    	
 
    	
Section 11.03.
    
	
(c)
    	
 
    	
Section 11.03.
    
	
313(a)
    	
 
    	
Section 11.06.
    
	
(b)(1)
    	
 
    	
N.A.
    
	
(b)(2)
    	
 
    	
Section 7.06.
    
	
(c)
    	
 
    	
Section 7.06.
    
	
(d)
    	
 
    	
Section 7.06.
    
	
314(a)
    	
 
    	
Section 3.10.,   Section 11.02.
    
	
 
    	
 
    	
Section 11.05.
    
	
(b)
    	
 
    	
N.A.
    
	
(c)(1)
    	
 
    	
Section 11.04.
    
	
(c)(2)
    	
 
    	
Section 11.04.
    
	
(c)(3)
    	
 
    	
N.A.
    
	
(d)
    	
 
    	
N.A.
    
	
(e)
    	
 
    	
Section 11.05.
    
	
315(a)
    	
 
    	
Section 7.01.
    
	
(b)
    	
 
    	
Section 7.05.,   Section 11.02.
    
	
(c)
    	
 
    	
Section 7.01.
    
	
(d)
    	
 
    	
Section 7.01.
    
	
(e)
    	
 
    	
Section 6.11.
    
	
316(a)(last sentence)
    	
 
    	
Section 11.06.
    
	
(a)(1)(A)
    	
 
    	
Section 6.05.
    
	
(a)(1)(B)
    	
 
    	
Section 6.04.
    
	
(a)(2)
    	
 
    	
N.A.
    
	
(b)
    	
 
    	
Section 6.08.
    
	
317(a)(1)
    	
 
    	
Section 6.08.
    
	
(a)(2)
    	
 
    	
Section 6.09.
    
	
(b)
    	
 
    	
Section 2.04.
    
	
318(a)
    	
 
    	
Section 11.01.
    

 

N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

 

i

 

INDENTURE dated as of November 24, 2015, among BUNGE LIMITED FINANCE CORP., a Delaware corporation (the “Company”), as issuer, BUNGE LIMITED, a company formed under the laws of Bermuda with limited liability (the “Guarantor”), as guarantor, and MUFG UNION BANK, N.A., a national banking association (the “Trustee”), as trustee.

 

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Company’s 3.500% Senior Notes Due 2020 issued on the date hereof and the guarantees thereof by the Guarantor (the “Initial Notes”) and (ii) if and when issued, additional 3.500% Senior Notes Due 2020 which may be offered subsequent to the Issue Date and the guarantees thereof by the Guarantor (the “Subsequent Notes” and together with the Initial Notes, the “Notes”).

 

ARTICLE 1
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Definitions.

 

“Affiliate” means, with respect to any specified Person, any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided, however, that the existence of a management contract by the Company or an Affiliate of the Company to manage another entity shall not be deemed to be control.

 

“Agent Member” has the meaning ascribed to it in Section 2.01(d)(iii) hereof.

 

“Attributable Indebtedness” means, when used with respect to any Sale-Leaseback Transaction, as at the time of determination, the present value (discounted at the rate of interest set forth in or implicit in the terms of the lease) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale-Leaseback Transaction (including any period for which such lease has been extended).

 

“Authenticating Agent” has the meaning ascribed to it in Section 2.02 hereof.

 

“Below Investment Grade Rating Event” means the Notes are rated below an Investment Grade Rating by each of the Rating Agencies on any date from the date of the public notice of an event that would, if consummated, result in a Change of Control until the end of the sixty (60) day period following public notice of the occurrence of the Change of Control, which sixty (60) day period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by each of the Rating Agencies.

 

“Board of Directors” means, with respect to any Person, the board of directors of such Person or any duly authorized committee thereof.

 

1

 

“Bunge Master Trust” means the trust created pursuant to the Pooling Agreement, a beneficial interest in the assets of which the Company has acquired through the Series 2002-1 VFC.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banking institutions are authorized or required by law to close in The City of New York, New York.

 

“Capital Stock” means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (which includes, but is not limited to, common stock or shares, preferred stock or shares and partnership and joint venture interests) of such Person (excluding any debt securities convertible into, or exchangeable for, such equity).

 

“Change of Control” means the occurrence of any of the following:

 

(1)                                 the Guarantor becomes aware (by way of report or any other filing pursuant to Section 13(d) of the Exchange Act or written notice) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination, of 50% or more of the total voting power of the Voting Stock of the Guarantor then outstanding;

 

(2)                                 the sale, lease or transfer of all or substantially all of the assets of the Guarantor and its Subsidiaries, taken as a whole, to any Person that is not a Subsidiary of the Guarantor; or

 

(3)                                 the first day on which a majority of the members of the Guarantor’s Board of Directors are not Continuing Directors.

 

“Change of Control Offer” has the meaning ascribed to it in Section 3.15 hereof.

 

“Change of Control Payment” has the meaning ascribed to it in Section 3.15 hereof.

 

“Change of Control Payment Date” has the meaning ascribed to it in Section 3.15 hereof.

 

“Change of Control Triggering Event” means the occurrence of a Change of Control that results in a Below Investment Grade Rating Event.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Company” means Bunge Limited Finance Corp. or its successor.

 

“Company Order” has the meaning ascribed to it in Section 2.02 hereof.

 

“Company Permitted Lien” means:

 

2

 

(1) Liens for current taxes, assessments or other governmental charges which are not delinquent or remain payable without any penalty, or the validity of which is contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof or upon posting a bond in connection therewith;

 

(2) any Lien pursuant to any order or attachment or similar legal process arising in connection with court proceedings; provided that the execution or other enforcement thereof is effectively stayed or a sufficient bond had been posted and the claims secured thereby are being contested at the time in good faith by appropriate proceedings;

 

(3) any Liens securing bonds posted with respect to and in compliance with clauses (1) and (2) above;

 

(4) Liens to secure bonds posted in order to obtain stays of judgments, attachments or orders, the existence of which bonds would not otherwise constitute an Event of Default; and

 

(5) Liens securing obligations under a Hedge Agreement.

 

“Consolidated Net Tangible Assets” means, at any date of determination, the total amount of assets of the Guarantor and its consolidated Subsidiaries after deducting therefrom:

 

(1)                                 all current liabilities (excluding any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed);

 

(2)                                 total prepaid expenses and deferred charges; and

 

(3)                                 all goodwill, trade names, trademarks, patents, licenses, copyrights and other intangible assets, all as set forth, or on a pro forma basis would be set forth, on the consolidated balance sheet of the Guarantor and its consolidated Subsidiaries for its most recently completed fiscal quarter, prepared in accordance with U.S. GAAP.

 

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Guarantor who (1) was a member of such Board of Directors on the date of the issuance of the Initial Notes; or (2) was nominated for election, appointed or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Guarantor’s proxy statement in which such member was named as a nominee for election as a director).

 

“Corporate Trust Office” has the meaning ascribed to it in Section 3.06 hereof.

 

“covenant defeasance option” has the meaning ascribed to it in Section 8.01(b) hereof.

 

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

“Defaulted Interest” has the meaning ascribed to it in Section 2.11 hereof.

 

3

 

“Definitive Notes” means certificated Notes.

 

“Designated Obligor” means the Guarantor and the Subsidiaries of the Guarantor set forth on Schedule 1.1 hereto and any other Subsidiary designated by the Guarantor from time to time as eligible to be an obligor with respect to any intercompany loan sold to the master trust under the Master Trust Transaction Documents, and each of their successors.

 

“DTC” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company.

 

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

 

“Event of Default” has the meaning ascribed to it in Section 6.01 hereof.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, with respect to any property, the sale value of such property that would be realized in an arms-length sale at such time between an informed and willing buyer, and an informed and willing seller, under no compulsion to buy or sell, respectively.

 

“Fiscal Year” means the fiscal year of the Company ending on December 31 of each year.

 

“Fitch” means Fitch Ratings Limited.

 

“Global Note” has the meaning ascribed to it in Section 2.01(a) hereof.

 

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)                                 to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

 

(2)                                 entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

 

provided, however, that the term “guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee,” when used as a verb, has a corresponding meaning.

 

4

 

“Guarantee” means any guarantee of payment of the Notes and any other obligations of the Company by the Guarantor pursuant to the terms of this Indenture.

 

“Guarantor” means Bunge Limited.

 

“Guaranty” means the Eighth Amended and Restated Guaranty, dated as of November 20, 2014, by the Guarantor to Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank International,” New York Branch, JPMorgan Chase Bank, N.A. and the Master Trust Trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, subject to Section 3.02(f) hereof.

 

“Hedge Agreements” means all swaps, caps or collar agreements or similar arrangements dealing with interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies.

 

“Holder” or “Noteholder” means the Person in whose name a Note is registered in the Note Register.

 

“Indebtedness” means, as to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee which are capitalized in accordance with U.S. GAAP, (e) all obligations of such Person created or arising under any conditional sales or other title retention agreement with respect to any property acquired by such Person (including without limitation, obligations under any such agreement which provides that the rights and remedies of the seller or lender thereunder in the event of default are limited to repossession or sale of such property), (f) all obligations of such Person with respect to letters of credit and similar instruments, including without limitation obligations under reimbursement agreements, (g) all Indebtedness of others secured by (or for which the holder of such Indebtedness has existing right, contingent or otherwise, to be secured by) a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person and (h) all guarantees of such Person (other than guarantees of obligations of direct or indirect Subsidiaries of such Person).

 

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with its terms.

 

“Initial Notes” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P, BBB- (or the equivalent) by Fitch, or an equivalent rating by any other Rating Agency.

 

“Issue Date” means the date on which the Initial Notes are originally issued.

 

“legal defeasance option” has the meaning ascribed to it in Section 8.01(b) hereof.

 

5

 

“Legal Holiday” has the meaning ascribed to it in Section 11.08 hereof.

 

“Lien” means any mortgage, lien, security interest, pledge, charge or other encumbrance.

 

“Master Trust Transaction Documents” means the collective reference to the Pooling Agreement, the Series 2002-1 Supplement, the Series 2002-1 VFC, the Sale Agreement, the Servicing Agreement and the Guaranty.

 

“Master Trust Trustee” means The Bank of New York Mellon, as trustee under, and for the purposes of, the Master Trust Transaction Documents, and any successor thereto.

 

“Material Adverse Effect” means a material adverse effect, or any development involving a prospective material adverse effect, in the condition, financial or otherwise, or in the earnings, business or operations of the Guarantor and its consolidated Subsidiaries taken as a whole.

 

“Material Subsidiary” means, at any time, any Subsidiary of the Guarantor which at such time is a “significant subsidiary” within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.  The Material Subsidiaries as of the date hereof are set forth on Schedule 1.1 hereto.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

 

“Note Register” means the register of Notes, maintained by the Registrar, pursuant to Section 2.03 hereof.

 

“Notes” means the collective reference to the Initial Notes and the Subsequent Notes.

 

“Obligations” has the meaning ascribed to it in Section 10.01 hereof.

 

“Officer” means the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, the Controller or the Secretary of the Company or the Guarantor, as applicable.

 

“Officer’s Certificate” means a certificate signed by an Officer or attorney-in-fact of the Company or the Guarantor, as applicable.

 

“Opinion of Counsel” means a written opinion from legal counsel, which counsel may be an employee of or counsel to the Company.  The form and substance of such Opinion of Counsel shall likewise be acceptable to the Trustee.

 

“Pari Passu Indebtedness” means Indebtedness for borrowed money, the proceeds of which are used to either purchase interests in the Series 2002-1 VFC, refinance Indebtedness originally used for such purpose and/or pay expenses incurred in connection with this Indenture or any such other Indebtedness, and indebtedness incurred in connection with Hedge Agreements, in each case which ranks not greater than pari passu (in priority of payment) with the Notes.

 

6

 

“Paying Agent” means the Person (including the Company, the Guarantor or any Subsidiary) authorized by the Company to pay the principal of (or premium, if any) or interest, if any, on any Notes on behalf of the Company.

 

“Permitted Indebtedness” means (a) Indebtedness of the Company under the Notes and (b) Pari Passu Indebtedness.

 

“Permitted Liens” means:

 

(1)                                 Liens for current taxes, assessments or other governmental charges which are not delinquent or remain payable without any penalty, or the validity of which is contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof or upon posting a bond in connection therewith;

 

(2)                                 any Lien pursuant to any order or attachment or similar legal process arising in connection with court proceedings; provided that the execution or other enforcement thereof is effectively stayed or a sufficient bond had been posted and the claims secured thereby are being contested at the time in good faith by appropriate proceedings;

 

(3)                                 any Liens securing bonds posted with respect to and in compliance with clauses (1) and (2) above;

 

(4)                                 any Liens securing the claims of mechanics, laborers, workmen, repairmen, materialmen, suppliers, carriers, warehousemen, landlords, or vendors or other claims provided for by mandatory provisions of law which are not yet due and delinquent, or are being contested in good faith by appropriate proceedings;

 

(5)                                 any Lien on any Restricted Property securing Indebtedness incurred or assumed solely for the purpose of financing all or any part of the cost of constructing or acquiring such Restricted Property, which Lien attaches to such Restricted Property concurrently with or within 120 days after construction, acquisition or completion of a series of related acquisitions thereof;

 

(6)                                 Liens existing immediately prior to the execution and delivery of this Indenture (and listed on Schedule 3.4 hereto);

 

(7)                                 Liens to secure bonds posted in order to obtain stays of judgments, attachments or orders, the existence of which bonds would not otherwise constitute an Event of Default;

 

(8)                                 Liens on Restricted Property or with respect to the shares of stock or Indebtedness of any Restricted Subsidiary, that either (i) existed prior to the acquisition of (A) such Restricted Property, (B) any Subsidiary that is the owner of such Restricted Property or (C) with respect to the shares of stock or Indebtedness of any Restricted Subsidiary, any such Restricted Subsidiary, or (ii) arise as a result of contractual commitments to grant a Lien relating to (A) such Restricted Property, (B) any Subsidiary that is the owner of such Restricted Subsidiary or (C) with respect to the shares of stock or Indebtedness of any Restricted Subsidiary, any such Restricted Subsidiary, in each of (A), (B) and (C) existing prior to such acquisition;

 

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(9)                                 Liens created by a Restricted Subsidiary in favor of the Company, the Guarantor or a Subsidiary;

 

(10)                          Liens on any accounts receivable from or invoices to export customers (including, but not limited to, Subsidiaries) and the proceeds thereof;

 

(11)                          Liens on rights under contracts to sell, purchase or receive commodities to or from export customers (including, but not limited to, Subsidiaries) and the proceeds thereof;

 

(12)                          Liens on cash deposited as collateral in connection with financings where Liens are permitted under clause (10) and (11) of this definition;

 

(13)                          Liens extending, renewing or replacing, in whole or in part Liens permitted pursuant to (i) clauses (1) through (5) and (7) through (12), so long as the principal amount of the Indebtedness secured by such Lien does not exceed its original principal amount and (ii) in the case of clause (6), so long as the principal amount of the Indebtedness secured by such Lien does not exceed the principal amount thereof outstanding immediately prior to the execution and delivery of the Indenture;

 

(14)                          minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties that constitute Restricted Property, which are necessary for the conduct of the activities of the Guarantor or any Restricted Subsidiary or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Guarantor or any Restricted Subsidiary;

 

(15)                          Liens on accounts receivable and other related assets arising in connection with transfers thereof to the extent such transfers are treated as true sales of financial assets under FASB Statement No. 166, and such accounts receivable and related assets are not consolidated on the consolidated financial statements of the Guarantor and its Subsidiaries under FASB Statement No. 167;

 

(16)                          Liens on intercompany loans made to the Guarantor or its Subsidiaries or on any notes or other instruments representing an interest in such intercompany loans in each case as set forth in the Master Trust Transaction Documents;

 

(17)                          Liens securing obligations under a Hedge Agreement or swap, cap or collar agreement or similar arrangement related to equities or commodities;

 

(18)                          Liens on any checking account, saving account, clearing account, futures account, deposit account, securities account, brokerage account, custody account or other account (or on any assets held in such account), securing obligations under any agreement or arrangement related to the opening of or provision of clearing, pooling, zero-balancing, brokerage, settlement, margin or other services related to such account (or on any assets held in such account), which customarily exist on similar accounts (or on any assets held in such accounts) of corporations in connection with the opening of, or provision of clearing, pooling, zero-balancing, brokerage, settlement, margin or other services related, to such accounts; and

 

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(19)                          Liens securing any obligations related to the issuance of a letter of credit or any similar instrument, including without limitation, obligations under reimbursement agreements.

 

For purposes of this definition above, (A) the phrases “accounts receivable from or invoices to export customers” and “contracts to sell, purchase or receive commodities to (from) export customers” shall refer to invoices or accounts receivable derived from the sale of, or contracts to sell, purchase or receive wheat, soybeans or other commodities or products derived from the processing of wheat, soybeans or other commodities, by or to the Guarantor or a Restricted Subsidiary that have been or are to be exported from the country of origin whether or not such sale is made by a Restricted Subsidiary or to any of its Subsidiaries; and (B) property of a party to a corporate reorganization which is not the Guarantor or a Restricted Subsidiary shall be deemed to be or have been “acquired” by the Guarantor or such Restricted Subsidiary as part of such corporate reorganization even if the Guarantor or such Restricted Subsidiary, as the case may be, is not the surviving or continuing entity.

 

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

 

“Pooling Agreement” means the Fifth Amended and Restated Pooling Agreement, dated as of June 28, 2004, among Bunge Funding, Inc., Bunge Management Services, Inc., as servicer, and the Master Trust Trustee, as amended, modified or supplemented from time to time in accordance with its terms, subject to Section 3.02(f) hereof.

 

“Principal Trust Office” means the Corporate Trust Office or such other trust office or agency as may be designated by the Trustee in writing to the Company from time to time, or the designated corporate trust office of any successor Trustee.  The initial Principal Trust Office shall be the office of the Trustee to which notices are to be sent as set forth in Section 11.02 hereof.

 

“Property” means any property, whether presently owned or hereafter acquired, including any asset, revenue or right to receive income or any other property, whether tangible or intangible, real or personal.

 

“Rating Agencies” means (1) Moody’s, S&P and Fitch; and (2) if Moody’s, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by Bunge Limited which shall be substituted for any of Moody’s, S&P or Fitch, or all of them, as the case may be.

 

“Redemption Date” means, with respect to any redemption of Notes, the date of redemption with respect thereto.

 

“Redemption Price” has the meaning ascribed to it under the section entitled “Optional Redemption by the Company” on the reverse side of the Notes, the forms of which are attached as Exhibits A and B hereto.

 

“Registrar” has the meaning ascribed to it in Section 2.03 hereof.

 

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“Representatives to the Underwriters” means Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC.

 

“Restricted Property” means any building, mine, structure or other facility (together with the land on which it is erected and fixtures comprising a part thereof) and inventories now owned or hereafter acquired by the Guarantor or any Subsidiary and used for oilseed or grain origination, processing, transportation or storage, mining or fertilizer refining or storage.

 

“Restricted Subsidiary” means (a) any Designated Obligor or (b) any Material Subsidiary.

 

“Sale-Leaseback Transaction” means the sale or transfer by the Guarantor or any Restricted Subsidiary of any Restricted Property to a Person (other than the Guarantor or a Restricted Subsidiary) and the taking back by the Guarantor or any Restricted Subsidiary, as the case may be, of a lease of such Restricted Property.

 

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Securities Custodian” means the custodian with respect to the Global Note (as appointed by DTC), or any successor Person thereto and shall initially be the Trustee.

 

“Series 2002-1 Supplement” means the Sixth Amended and Restated Series 2002-1 Supplement to the Pooling Agreement, dated as of November 20, 2014, among the Company, Bunge Funding, Inc., Bunge Management Services, Inc. and the Master Trust Trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, subject to Section 3.02(f) hereof.

 

“Series 2002-1 VFC” means the interest in the Bunge Master Trust created and authorized pursuant to a supplement to the Pooling Agreement that is designated as the “Series 2002-1 VFC Certificate” in which the Company will acquire a beneficial interest with the net proceeds of the Notes and other Permitted Indebtedness.

 

“Servicing Agreement” means the Third Amended and Restated Servicing Agreement, dated as of December 23, 2003 among Bunge Funding, Inc., Bunge Management Services, Inc., as the servicer, and the Master Trust Trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, subject to Section 3.02(f) hereof.

 

“Special Interest Payment Date” has the meaning ascribed to it in Section 2.11 hereof.

 

“Special Record Date” has the meaning ascribed to it in Section 2.11 hereof.

 

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“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

 

“Subsequent Notes” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“Subsidiary” means any corporation, limited liability company or other business entity of which the requisite number of shares of stock or other equity ownership interests having ordinary voting power (without regard to the occurrence of any contingency) to elect a majority of the directors, managers or trustees thereof, or any partnership of which more than 50% of the partners’ equity interests (considering all partners’ equity interests as a single class) is, in each case, at the time owned or controlled, directly or indirectly, by a Person, one or more of the Subsidiaries of such Person, or combination thereof.

 

“Successor Guarantor” has the meaning ascribed to it in Section 4.01 hereof.

 

“Trust Indenture Act” means the U.S. Trust Indenture Act of 1939, as in effect on the date of this Indenture, except as provided in Section 9.03 hereof.

 

“Trust Officer” means, with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant treasurer, assistant secretary, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such individual’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

 

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, such successor.

 

“Underwriters” means, collectively, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., BNP Paribas Securities Corp., Morgan Stanley & Co. LLC, Rabo Securities USA, Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., ABN AMRO Securities (USA) LLC, Credit Agricole Securities (USA) Inc., ING Financial Markets LLC, Lloyds Securities Inc., Natixis Securities Americas LLC, SG Americas Securities, LLC, and Standard Chartered Bank.

 

“U.S. GAAP” means generally accepted accounting principles in the United States, as in effect on the Issue Date.

 

“U.S. Government Securities” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not

 

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callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Securities or a specific payment of principal of or interest on any such U.S. Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Securities or the specific payment of principal of or interest on the U.S. Government Securities evidenced by such depository receipt.

 

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

 

Section 1.02.  Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the mandatory provisions of the Trust Indenture Act which are incorporated by reference in and made a part of this Indenture.  The following Trust Indenture Act terms have the following meanings:

 

“Commission” means the SEC.

 

“indenture securities” means the Notes.

 

“indenture security holder” means a Noteholder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

 

All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined in the Trust Indenture Act by reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

 

Section 1.03.  Rules of Construction.  Unless the context otherwise requires:

 

(1)                                 a term has the meaning assigned to it;

 

(2)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with U.S. GAAP as in effect on the Issue Date;

 

(3)                                 “or” is not exclusive;

 

(4)                                 “including” means including without limitation;

 

(5)                                 words in the singular include the plural and words in the plural include the singular; and

 

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(6)                                 the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date and prepared in accordance with U.S. GAAP.

 

ARTICLE 2
 THE NOTES

 

Section 2.01.  Form, Dating and Terms.  (a)  The Initial Notes are being offered and sold by the Company pursuant to an Underwriting Agreement, dated November 19, 2015 among the Company, the Guarantor and Representatives to the Underwriters.

 

The Initial Notes offered and sold to the Underwriters will be issued on the Issue Date in the form of a permanent global Note, without interest coupons, substantially in the form of Exhibit A hereto, which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in Section 2.01(c) hereof (the “Global Note”), deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate.  The aggregate principal amount of the Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

 

Except as described in the succeeding two sentences, the principal of and premium, if any, and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.03 hereof; provided, however, that, at the option of the Company, each installment of interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Note Register.  Payments in respect of Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC.  Payments in respect of Notes represented by Definitive Notes (including principal, premium, if any, and interest) held by a Holder of at least U.S.$1,000,000 aggregate principal amount of Notes represented by Definitive Notes will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

 

Any Subsequent Notes shall be in the form of Exhibit A hereto.

 

The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A hereto and in Section 2.01(c) hereof.  The Company and the Trustee shall approve the forms of the Notes and any notation, endorsement or legend on them.  Each Note shall be dated the date of its authentication.  The terms of the Notes set forth in Exhibit A hereto are part of the terms of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

 

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The Notes shall be subject to repurchase by the Company pursuant to a Change of Control Offer as provided in Section 3.15 hereof.  The Notes shall not be redeemable, other than as provided in Article 5.

 

(b)                                                         Denominations.  The Notes shall be issuable only in fully registered form, without coupons, and only in denominations of U.S.$2,000 and any integral multiple of $1,000 in excess thereof.

 

(c)                                                          Legends.  Each of the Global Notes, whether or not an Initial Note, shall bear the following legend on the face thereof:

 

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE.”

 

(d)                                                         Book-Entry Provisions.  (i) This Section 2.01(d) shall apply only to Global Notes deposited with the Trustee, as custodian for DTC.

 

(ii)                                                          Each Global Note initially shall (A) be registered in the name of DTC or the nominee of DTC, (B) be delivered to the Trustee as custodian for DTC and (C) bear legends as set forth in Section 2.01(c) hereof.

 

(iii)                                                       Members of, or participants in, DTC (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by DTC or by the Trustee as the custodian of DTC or under such Global Note, and DTC may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of a Holder of a beneficial interest in any Global Note.

 

(iv)                                                      In connection with any transfer of a portion of the beneficial interest in a Global Note pursuant to Section 2.01(e) hereof to beneficial owners who are required to

 

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hold Definitive Notes, the Securities Custodian shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Definitive Notes of like tenor and amount.

 

(v)                                                         In connection with the transfer of an entire Global Note to beneficial owners pursuant to Section 2.01(e) hereof, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.

 

(vi)                                                      The registered Holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

(e)                                                          Definitive Notes.

 

(i)                                                             Except as provided below, owners of beneficial interests in Global Notes will not be entitled to receive Definitive Notes.  If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive Notes in exchange for their beneficial interests in a Global Note upon written request in accordance with DTC’s and the Registrar’s procedures.  In addition, Definitive Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (a) DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global Note, or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice, (b) subject to the procedures of DTC, the Company or the Guarantor executes and delivers to the Trustee and Registrar an Officer’s Certificate stating that such Global Note shall be so exchangeable or (c) an Event of Default has occurred and is continuing and the Registrar has received a request from DTC.

 

(ii)                                                          In connection with the exchange of a portion of a Definitive Note for a beneficial interest in a Global Note, the Trustee shall cancel such Definitive Note, and the Company shall execute, and the Trustee shall authenticate and deliver, to the transferring Holder a new Definitive Note representing the principal amount not so transferred.

 

Section 2.02.  Execution and Authentication.  One Officer shall execute the Notes, on behalf of the Company, by manual or facsimile signature.  If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

 

A Note shall not be valid until an authorized signatory of the Trustee manually authenticates the Note.  The signature of the Trustee on a Note shall be conclusive evidence that

 

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such Note has been duly and validly authenticated and issued under this Indenture.  A Note shall be dated the date of its authentication.

 

The Trustee shall authenticate and make available for delivery: (1) at any time and from time to time after the execution and delivery of this Indenture, the Initial Notes for original issue on the Issue Date initially in an aggregate principal amount of U.S. $500,000,000; and (2) if and when issued, the Subsequent Notes, in each case upon a written order of the Company signed by two Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company (the “Company Order”).  Such Company Order shall specify the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes or Subsequent Notes.  The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is initially limited to U.S. $500,000,000 outstanding (plus any Subsequent Notes), except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Notes of the same class pursuant to Section 2.06, Section 2.07, Section 2.09, Section 5.08 or Section 9.05 hereof.  All Notes issued on the Issue Date and all Subsequent Notes shall be identical in all respects other than issue date, issue price and the date from which interest accrues and any changes relating thereto; provided that if the Subsequent Notes are not fungible with the Initial Notes for United States federal income tax purposes, the Subsequent Notes will have a separate CUSIP number.  Notwithstanding anything to the contrary contained in this Indenture, the Initial Notes and any Subsequent Notes of the same class will be treated as a single class of securities under this Indenture.  Without limiting the generality of the foregoing sentence, unless otherwise provided in this Indenture, all Notes issued under this Indenture shall vote and consent together on all matters as one class and no Notes will have the right to vote or consent as a separate class on any matter.

 

The Trustee may appoint an agent (the “Authenticating Agent”) reasonably acceptable to the Company to authenticate the Notes.  Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by the Authenticating Agent.  An Authenticating Agent has the same rights as a Paying Agent to deal with Holders or an Affiliate of the Company.

 

Section 2.03.  Registrar and Paying Agent.  The Company shall cause to be kept a register for the Notes (the “Note Register”) in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of the Notes and of all transfers and exchanges with respect thereto.  The Note Register shall be maintained by the Trustee or such other Person (including the Company or the Guarantor) appointed by the Company as the registrar (the “Registrar”).  The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange and an office or agency where Notes may be presented for payment (the “Place of Payment”).  The Company shall cause each of the Registrar and the Paying Agent to maintain an office or agency in the Borough of Manhattan, The City of New York.  The Company may have one or more co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any additional paying agent.

 

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The Company shall enter into an appropriate agency agreement with any Registrar and Paying Agent that is not a party to this Indenture, which shall incorporate the terms of the Trust Indenture Act.  The agreement shall implement the provisions of this Indenture that relate to such agent.  The Company shall notify the Trustee of the name and address of each such agent.  If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07 hereof.  The Company, the Guarantor or any Subsidiary of the Company or the Guarantor may act as Paying Agent, Registrar, co registrar or transfer agent.

 

The Company initially appoints DTC to act as depository with respect to the Global Notes.  The Trustee is authorized to enter into a letter of representations with DTC in the form provided to the Trustee by the Company and to act in accordance with such letter.

 

The Company initially appoints the Trustee as Registrar and Paying Agent for the Notes.

 

Section 2.04.  Paying Agent to Hold Money in Trust.  By at least 10:00 a.m. (New York City time) on the date on which any principal of and premium, if any, or interest on any Note is due and payable, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal, premium, if any, or interest when due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by such Paying Agent for the payment of principal of and premium, if any, or interest on the Notes and shall notify the Trustee in writing of any default by the Company or the Guarantor in making any such payment.  If the Company, the Guarantor or a Subsidiary of the Company or the Guarantor acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent.  Upon complying with this Section 2.04, the Paying Agent (if other than the Company or a Subsidiary of the Company or the Guarantor) shall have no further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Notes.

 

Section 2.05.  Noteholder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders and shall otherwise comply with Trust Indenture Act, Section 312(a).  If the Trustee is not the Registrar, or to the extent otherwise required under the Trust Indenture Act, the Company, on its own behalf and on behalf of the Guarantor, shall furnish to the Trustee, in writing at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders and the Company shall otherwise comply with Trust Indenture Act, Section 312(a).

 

Section 2.06.  Transfer and Exchange.

 

(a)                                                         The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.01 hereof or this Section 2.06.  The Company shall have the right to inspect and make copies of all such letters, notices or other written

 

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communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar.

 

(b)                                                         Obligations with Respect to Transfers and Exchanges of Notes.

 

(i)                                                             To permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this Article 2, execute and the Trustee shall authenticate Definitive Notes and Global Notes at the Registrar’s or co-registrar’s request.

 

(ii)                                                          No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company or the Guarantor may require from a Holder payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to Section 3.15 and Section 9.05 hereof).

 

(iii)                                                       The Registrar or co-registrar shall not be required to register the transfer of, or exchange of, any Note for a period beginning (1) 15 days before the mailing of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such mailing or (2) 15 days before an interest payment date and ending on such interest payment date.

 

(iv)                                                      Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co registrar shall be affected by notice to the contrary.

 

(v)                                                         All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt, and shall be entitled to the same benefits under this Indenture, as the Notes surrendered upon such transfer or exchange.

 

(vi)                                                      All Global Notes shall be registered in the name of DTC, or a nominee thereof, and all transfers of beneficial ownership interests therein will be made in accordance with the rules of DTC.  No investor or other party purchasing, selling or otherwise transferring beneficial ownership interests in Global Notes shall receive, hold or deliver any certificate representing the same.  The Company, the Guarantor and the Trustee shall have no responsibility or liability for transfers of beneficial ownership interests in any Global Note.

 

(vii)                                                   Each Holder of a Note agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of this Indenture and/or applicable United States Federal or state securities law.

 

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(c)                                                          No Obligation of the Trustee.

 

(i)                                                             The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, an Agent Member or any other Person with respect to (A) the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes, (B) the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Notes (or other security or property) under or with respect to such Notes, or (C) the selection of the particular Notes or portions thereof to be redeemed or refunded in the event of a partial redemption or refunding of the Notes.  All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Note).  The rights of beneficial owners in any Global Note shall be exercised only through DTC subject to the applicable rules and procedures of DTC.  The Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners.

 

(ii)                                                          The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among DTC, its Agent Members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture with respect to transfers between Holders, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

(iii)                                                       None of the Trustee, the Paying Agent or the Registrar shall have any responsibility or liability for any actions taken or not taken by DTC.

 

Section 2.07.  Mutilated, Destroyed, Lost or Stolen Notes.  If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the New York Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee.  Such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Note is replaced, and, in the absence of notice to the Company, the Guarantor or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note.

 

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Upon the issuance of any new Note under this Section 2.07, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith.

 

Every new Note issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, the Guarantor (if applicable) and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

Section 2.08.  Outstanding Notes.  Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding.  A Note ceases to be outstanding in the event the Company holds the Note; provided, however, that (i) for purposes of determining which are outstanding for consent or voting purposes hereunder, Notes shall cease to be outstanding in the event the Company or an Affiliate of the Company holds the Note and (ii) in determining whether the Trustee shall be protected in making a determination whether the Holders of the requisite principal amount of outstanding Notes are present at a meeting of Holders of Notes for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only Notes which a Trust Officer of the Trustee actually knows to be held by the Company or an Affiliate of the Company shall not be considered outstanding.

 

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser.

 

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal, premium, if any, and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

 

Section 2.09.  Temporary Notes.  Until Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes.  Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes.  After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the

 

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temporary Notes at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, one or more Definitive Notes representing an equal principal amount of Notes.  Until so exchanged, the Holder of temporary Notes shall in all respects be entitled to the same benefits under this Indenture as a holder of Definitive Notes.

 

Section 2.10.  Cancellation.  The Company at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee, and no one else, shall cancel and dispose of all Notes surrendered for registration of transfer, exchange, payment or cancellation, in its customary manner.  The Company may not issue new Notes to replace Notes it has paid or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange.

 

Section 2.11.  Payment of Interest; Defaulted Interest.  Interest on any Note which is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular record date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 2.03 hereof.

 

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular record date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

 

(a)                                                         The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than 30 days after such notice) of the proposed payment (the “Special Interest Payment Date”), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.  Thereupon the Trustee shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 11.02 hereof, not less than 10 days prior to such Special Record

 

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Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

 

(b)                                                         The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section 2.11, each Note delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

 

Section 2.12.  Computation of Interest.  Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

 

Section 2.13.  CUSIP and ISIN Numbers.  The Company in issuing the Notes may use “CUSIP” and “ISIN” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” and “ISIN” numbers in notices of redemption as a convenience to Holders; provided, however, that the Trustee shall have no liability for any defect in the “CUSIP” or “ISIN” numbers as they appear on any Notes, notice or elsewhere, and provided further, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such CUSIP or ISIN numbers.  The Company shall promptly notify the Trustee in writing of any change in the CUSIP and ISIN numbers.

 

Section 2.14.  Tax Treatment.  The Company and each holder and beneficial owner intend, and will take all actions consistent with the intention, that the Notes be treated as indebtedness for all federal, state, local, and foreign income and franchise tax purposes.  The Company, by entering into this Indenture, and each holder and beneficial owner, by its acceptance of its Note, agree to treat the Notes as indebtedness for federal, state, local and foreign income and franchise tax purposes.

 

ARTICLE 3
 COVENANTS

 

Section 3.01.  Payment of Notes.  The Company shall promptly pay the principal of and premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture.  Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Noteholders on that date.

 

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The Company shall pay interest on overdue principal and premium, if any, at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

 

Notwithstanding anything to the contrary contained in this Indenture and subject to Section 11.15, the Company may, to the extent it is required to do so by law, deduct or withhold income or other taxes imposed by the United States of America (or any political subdivision thereof) from principal or interest payments hereunder.

 

Section 3.02.  Limitation and Restrictions on Activities of the Company.  (a) The Company shall not engage in any business or enterprise or enter into or be a party to any transaction or agreement other than in connection with (i) the issuance and sale of the Notes, (ii) the incurrence of other Permitted Indebtedness, (iii) the entering into of Hedge Agreements relating to the Notes or the other Permitted Indebtedness having a notional amount not exceeding the aggregate principal amount of the Notes and such other Permitted Indebtedness then outstanding and (iv) the use of the net proceeds from the issuance of the Notes or the other Permitted Indebtedness to either increase its investment in the Series 2002-1 VFC, repay the Notes or other Permitted Indebtedness outstanding from time to time or pay expenses incurred in connection with such Permitted Indebtedness.

 

(b)                                 The Company shall not acquire or own any subsidiary or other assets or property (either real or personal), except for (i) the Series 2002-1 VFC, (ii) Hedge Agreements, and (iii) instruments evidencing the interests in the foregoing.

 

(c)                                  The Company shall not create, incur, assume or suffer to exist any Indebtedness other than Permitted Indebtedness.

 

(d)                                 The Company shall not create, assume, incur or suffer to exist any Lien (other than Company Permitted Liens) upon or with respect to any of its Property; provided, however, it being understood, for the avoidance of doubt, that the Company shall not create, incur, assume or suffer to exist any Lien, including any Lien which would otherwise constitute a Permitted Lien in the case of the Guarantor or any Restricted Subsidiary, other than Company Permitted Liens.

 

(e)                                  The Company shall not enter into any consolidation, merger, amalgamation, joint venture, syndicate or other form of combination with any Person, and shall not sell, lease, convey or otherwise dispose of any of its assets or receivables, including, without limitation, the Series 2002-1 VFC or any interest in the Series 2002-1 VFC.

 

(f)                                   The Company shall not amend, supplement, waive or modify, or consent to any amendment, supplement, waiver or modification of, any Master Trust Transaction Document except in accordance with the provisions of this Section 3.02(f).  Any provision of any Master Trust Transaction Document may be amended, waived, supplemented, restated, discharged or terminated without the consent of the Holders so long as in each case, the Trustee shall have received prior notice thereof together with copies of any documentation related thereto; provided that such amendment, waiver, supplement or restatement does not (i) render the Series 2002-1 VFC subordinate in payment to any other Series under the Bunge Master Trust or otherwise adversely discriminate against the Series 2002-1 VFC relative to any other Series under the

 

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Bunge Master Trust, (ii) reduce in any manner the amount of, or delay the timing of, distributions which are required to be made on or in respect of the Series 2002-1 VFC, (iii) change the definition of, the manner of calculating, or in any way the amount of, the interest of the Company in the assets of the Bunge Master Trust, (iv) change the definition of “Eligible Loans” or, to the extent used in such definition, other defined terms used in such definition, (v) result in a Default or Event of Default, or (vi) terminate the Bunge Master Trust with respect to less than all of the then outstanding Series issued by the Bunge Master Trust; and provided, further, that, the Bunge Master Trust may be terminated at any time with respect to all Series then outstanding without the consent of the Holders.  Any amendment, waiver, supplement or restatement of a Master Trust Transaction Document (including any exhibit thereto) of the type described in clauses (i), (ii), (iii), (iv), (v) or (vi) of this Section 3.02(f) shall require the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes.

 

Section 3.03.  Limitation on Liens.  The Guarantor shall not, and shall not permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien, other than a Permitted Lien, upon or with respect to any Restricted Property or upon any shares of stock or Indebtedness of any Restricted Subsidiary, to secure any Indebtedness incurred or guaranteed by the Guarantor or any Restricted Subsidiary (other than the Notes), unless all of the outstanding Notes and the Guarantee are secured equally and ratably with, or prior to, such Indebtedness for so long as such Indebtedness shall be so secured.

 

Section 3.04.  Limitation on Sale-Leaseback Transactions.  The Guarantor shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale-Leaseback Transaction unless:

 

(a)                                                         the Sale-Leaseback Transaction occurs within six months from the date of the acquisition of the Restricted Property subject thereto or the date of the completion of construction or commencement of full operations of such Restricted Property, whichever is later; or

 

(b)                                                         the Sale-Leaseback Transaction is between the Guarantor and a Restricted Subsidiary of the Guarantor, or between Restricted Subsidiaries of the Guarantor; or

 

(c)                                                          the Sale-Leaseback Transaction involves a lease for a period, including renewals, of not more than three years; or

 

(d)                                                         the Sale-Leaseback Transaction constitutes a Permitted Lien for the purposes of Section 3.03 hereof; or

 

(e)                                                          the Guarantor or such Restricted Subsidiary, within a one year period after such Sale-Leaseback Transaction, (i) applies or causes to be applied an amount not less than the Attributable Indebtedness from such Sale-Leaseback Transaction to the prepayment, repayment, redemption, reduction or retirement of any Indebtedness of the Guarantor or any Subsidiary having a maturity of more than one year that is not subordinated to the Notes or the Guarantee or (ii) enters into a bona fide commitment to expend an amount not less than the Attributable

 

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Indebtedness for such Sale-Leaseback Transaction during such one-year period to the acquisition, construction or development of other similar Property.

 

Section 3.05.  Exclusion from Limitations.  Notwithstanding Sections 3.03 and 3.04 hereof, the Guarantor may, and may permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien (other than a Permitted Lien) upon any Restricted Property or the shares of stock or Indebtedness of any Restricted Subsidiary to secure Indebtedness incurred or guaranteed by the Guarantor or any Restricted Subsidiary (other than the Notes) or effect any Sale-Leaseback Transaction of a Restricted Property that is not excepted by Section 3.04(a), (b), (c), (d) or (e) hereof, without equally and ratably securing the Notes or the Guarantee; provided that, after giving effect thereto, the aggregate principal amount of outstanding Indebtedness (other than the Notes) secured by Liens (other than Permitted Liens) upon Restricted Property and the shares of stock or Indebtedness of any Restricted Subsidiary plus the Attributable Indebtedness from Sale-Leaseback Transactions of Restricted Property not so excepted, do not exceed 20% of the Consolidated Net Tangible Assets.

 

Section 3.06.  Maintenance of Office or Agency.  The Company will maintain in The City of New York, an office or agency where the Notes may be presented or surrendered for payment, where, if applicable, the Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served.  The office or agency (the “Corporate Trust Office”) used by the Trustee in The City of New York as its office or agency for receiving securities, as the same may from time to time be designated by the Trustee, shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes.  The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

 

The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes.  The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency.

 

Section 3.07.  Corporate Existence.  Subject to Article 4 hereof, each of the Company and the Guarantor will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain its corporate rights (charter and statutory), licenses, privileges and franchises; provided, however, that the Company and the Guarantor shall not be required to preserve any such right, license, privilege or franchise if the Board of Directors of the Company or the Guarantor, as applicable, shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not, and will not be, disadvantageous in any material respect to the

 

25

 

Holders; and provided further, the Guarantor may amalgamate or merge in accordance with Section 4.01 hereof.

 

Section 3.08.  Maintenance of Properties; Insurance.  The Guarantor shall, and shall cause each of its Subsidiaries to, keep all property useful and necessary in its business in good working order and condition, except where failure to do so would not have a Material Adverse Effect; and the Guarantor shall maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are customary for the Guarantor’s type of business.

 

Section 3.09.  Payment of Taxes and Other Claims.  Each of the Company and the Guarantor shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all federal income and other material taxes, assessments and similar governmental charges imposed on it, except where (i) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves to the extent required by U.S. GAAP with respect thereto have been provided on the books of the Company or the Guarantor or (ii) the nonpayment of such federal income and other material taxes, assessments and claims in the aggregate could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.10.  Payments for Consent.  Neither the Company, the Guarantor nor any Subsidiaries of the Company or the Guarantor will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

 

Section 3.11.  Compliance Certificate.  The Company and the Guarantor shall deliver to the Trustee within 120 days after the end of each Fiscal Year of the Company and the Guarantor a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company and the Guarantor, respectively, stating that in the course of the performance by the signer of his or her duties as an officer of the Company and the Guarantor he or she would normally have knowledge of any Default or Event of Default and whether or not the signer knows of any Default or Event of Default that occurred during such period.  If he or she does, the certificate shall describe the Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.  The Company also shall comply with Trust Indenture Act, Section 314(a)(4).

 

Section 3.12.  Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

 

Section 3.13.  Statement by Officers as to Default.  The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officer’s Certificate setting forth the details of

 

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such Event of Default or default and the action which the Company proposes to take with respect thereto.

 

Section 3.14.  Notice of Change in Bermuda Law, Debt Ratings.  The Guarantor shall give written notice to the Trustee promptly after becoming aware of (i) any changes in taxes, duties or other fees of Bermuda or any political subdivision or taxing authority thereof or any change in any laws of Bermuda, in each case, that may affect any payment due under this Indenture, (ii) any change in such Guarantor’s public or private debt ratings by a “nationally recognized statistical rating organization,” as such term is defined by the SEC for purposes of Rule 436(g)(2) under the Securities Act, and (iii) any development or event which has had, or which the Guarantor in its good faith judgment believes will have, a Material Adverse Effect; provided that the Trustee shall have no responsibilities or duties with respect to any such notice.  Delivery of any such notice to the Trustee is for informational purposes only and the Trustee’s receipt of such notice shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

 

Section 3.15.  Offer to Repurchase Upon Change of Control.  (a)  If a Change of Control Triggering Event occurs, unless the Company has previously or concurrently irrevocably exercised its right to redeem all the outstanding Notes as described under Section 5.05 hereof without such redemption being subject to any conditions precedent, the Company shall make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, subject to the right of Holders of the Notes of record on the relevant record date to receive interest due on the relevant interest payment date.  Within 60 days following any Change of Control Triggering Event, the Company shall send notice of such Change of Control Offer by first-class mail, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the security register or otherwise in accordance with the procedures of DTC with a copy to the Trustee, with the following information:

 

(i)                                                             that a Change of Control Offer is being made pursuant to this Section 3.15 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Company;

 

(ii)                                                          the date of the Change of Control Triggering Event;

 

(iii)                                                       the date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, by which the Company must purchase the Notes (the “Change of Control Payment Date”);

 

(iv)                                                      the price that the Company must pay for the Notes it is obligated to purchase;

 

(v)                                                         the name and address of the Trustee;

 

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(vi)                                                      that any Note not properly tendered will remain outstanding and continue to accrue interest;

 

(vii)                                                   that unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

 

(viii)                                                that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

 

(ix)                                                      that Holders shall be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes; provided that the paying agent receives, not later than the close of business on the 30th day following the date of the Change of Control notice, a facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

 

(x)                                                         that if the Company is repurchasing less than all of the Notes, the Holders of the remaining Notes will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered.  The unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof; and

 

(xi)                                                      the other instructions, as determined by the Company, consistent with this Section 3.15, that a Holder must follow.

 

The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice.  If (a) the notice is mailed in a manner herein provided and (b) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect.  The Company shall comply with all federal and state securities laws, including, specifically, Rule 13e-4, if applicable, under the Exchange Act, and any related Schedule 13E-4 required to be submitted under that rule, to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 3.15, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.15 by virtue thereof.

 

(b)                                                         On the Change of Control Payment Date, the Company shall, to the extent permitted by law:

 

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(i)                                                             accept for payment all Notes issued by it or portions thereof properly tendered pursuant to the Change of Control Offer,

 

(ii)                                                          deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered, and

 

(iii)                                                       deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating the aggregate principal amount of such Notes or portions thereof that have been tendered to, and purchased by, the Company.

 

(c)                                                          The Company shall not be required to make a Change of Control Offer following a Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 3.15 applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.  Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control Triggering Event, conditional upon such Change of Control Triggering Event, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

 

(d)                                                         Other than as specifically provided in this Section 3.15, any purchase pursuant to this Section 3.15 shall be made pursuant to the provisions of Section 5.04, 5.06 and 5.08 hereof.

 

(e)                                                          Notwithstanding any provision to the contrary in this Indenture, the Company shall not purchase any Notes if there has occurred and is continuing an Event of Default, unless such Event of Default results from the Company’s failure to pay the Change of Control Payment following the occurrence of a Change of Control Triggering Event.

 

ARTICLE 4
 SUCCESSOR GUARANTOR

 

Section 4.01.  Consolidation, Merger, Amalgamation and Sale of Assets by the Guarantor.  The Guarantor shall not, and shall not cause or permit any Subsidiary to, consolidate with or merge or amalgamate with or into, or sell, lease, or convey all or substantially all its assets to, any Person, unless:

 

(a)                                                         in the case of the Guarantor:

 

(i)                                                             the resulting, surviving or transferee Person (the “Successor Guarantor”) shall be either the Guarantor or a Person organized under the laws of Bermuda, the United States of America, any State thereof or the District of Columbia, any full member state of the European Union, Canada, Australia or Switzerland, and the Successor Guarantor (if not the Guarantor) shall expressly assume, by supplemental indenture, executed and delivered to the Trustee, all the obligations of the Guarantor under the Guarantee and this Indenture; and

 

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(ii)                                                          immediately after giving effect to such transaction, no Event of Default or event which with notice or lapse of time would be an Event of Default has occurred and is continuing; or

 

(b)                                                         in the case of any Subsidiary of the Guarantor (other than the Company):

 

(i)                                                             such transaction is a merger or amalgamation of such Subsidiary with or into, or a consolidation of such Subsidiary with, the Guarantor (so long as the Guarantor is the surviving, continuing or resulting entity) or another Subsidiary or the sale, lease or conveyance by such Subsidiary of all or substantially all of its property to the Guarantor or another Subsidiary; or

 

(ii)                                                          such transaction is the merger or amalgamation of such Subsidiary with or into, the consolidation of such Subsidiary with, or the sale, lease or conveyance by such Subsidiary of all or substantially all of its property to, another Person (provided that such Person is not an Affiliate of such Subsidiary), so long as immediately prior to, and after giving effect to such transaction, no Default or Event of Default exists or would exist.

 

For purposes of this Section 4.01, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Guarantor, which properties and assets, if held by the Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Guarantor on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Guarantor.

 

If the Guarantor engages in one of the transactions described above and complies with the conditions listed above, the Successor Guarantor will succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture, but, in the case of a lease of all or substantially all its assets, the Guarantor will not be released from the obligation to pay the principal of and premium, if any, and interest on the Notes (including additional amounts).

 

In the event that the Guarantor consolidates with or merges or amalgamates with or into, or sells, leases or conveys all or substantially all of its assets to, another Person subject to the terms of this Section 4.01 (a “Transfer”) and the Successor Guarantor is a Person organized under the laws of a member state of the European Union, Canada, Australia or Switzerland, then the Guarantor and the Successor Guarantor shall, as a condition to such Transfer, (A) enter into a supplemental indenture with the Trustee providing for full, unconditional and irrevocable indemnification of the holders and beneficial owners of the Notes and the Trustee against any tax or duty of whatever nature (other than any tax imposed by reason of the holders or beneficial owners of the Notes having some connection with any such jurisdiction, other than their participation as holders or beneficial owners of the Notes under this Indenture) which is incurred or otherwise suffered by such holders and beneficial owners and the Trustee with respect to the Notes and which would not have been incurred or otherwise suffered in the absence of such Transfer; and (B) deliver to the Trustee, for the benefit of the Holders of the Notes, legal opinions of independent legal counsel in New York and the applicable member state of the European Union, Canada, Australia or Switzerland the laws of which the Successor Guarantor is

 

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organized under, as applicable, to the effect that the Obligations of the Successor Guarantor with respect to the Guarantee, as the case may be, are legal, valid, binding and enforceable in accordance with their terms.

 

ARTICLE 5
 OPTIONAL REDEMPTION OF NOTES

 

Section 5.01.  Optional Redemption by the Company.  The Notes may be redeemed at any time as a whole or from time to time in part, subject to the conditions and at the Redemption Prices specified in the form of Notes set forth in Exhibit A hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the Redemption Date.

 

Section 5.02.  Applicability of Article.  Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article 5.

 

Section 5.03.  Election to Redeem; Notice to Trustee.  The election of the Company to redeem any Notes pursuant to Section 5.01 hereof shall be evidenced by a resolution of the Board of Directors of the Company.  In case of any redemption at the election of the Company, the Company shall, upon not later than the earlier of the date that is 30 days prior to the Redemption Date fixed by the Company or the date on which notice is given to the Holders (except as provided in Section 5.05 hereof or unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.04 hereof.

 

Section 5.04.  Selection by Trustee of Notes to Be Redeemed.  If less than all the Notes are to be redeemed at any time pursuant to an optional redemption, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the outstanding Notes not previously called for redemption, in compliance with the requirements of the principal securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate, which shall comply with the procedures of DTC and which may provide for the selection for redemption of portions of the principal of the Notes; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than U.S.$2,000.

 

The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

 

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

 

Section 5.05.  Notice of Redemption.  Notice of redemption shall be given in the manner

 

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provided for in Section 11.02 hereof not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed.  The Trustee shall give notice of redemption in the Company’s name and at the Company’s expense; provided, however, that the Company shall deliver to the Trustee, at least 15 days prior to the date the notice of redemption is to be given (unless a shorter period shall be acceptable to the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the following items.

 

All notices of redemption shall state:

 

(1)                                 the Redemption Date,

 

(2)                                 the Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 5.07 hereof, if any,

 

(3)                                 if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

 

(4)                                 in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder will receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

 

(5)                                 that on the Redemption Date the Redemption Price (and accrued interest, if any, to the Redemption Date payable as provided in Section 5.07 hereof) will become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) will cease to accrue on and after said date,

 

(6)                                 the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest, if any,

 

(7)                                 the name and address of the Paying Agent,

 

(8)                                 that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price,

 

(9)                                 the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes, and

 

(10)                          any conditions applicable to such redemption.

 

Section 5.06.  Deposit of Redemption Price.  Prior to 10:00 A.M. (New York City time) on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.04 hereof) an amount of money sufficient to pay the Redemption Price of, and accrued

 

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interest on, all the Notes which are to be redeemed on that date.

 

Section 5.07.  Notes Payable on Redemption Date.  Notice of redemption having been given as aforesaid, the Notes to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest.  Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date (subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

 

Section 5.08.  Notes Redeemed in Part.  Any Note which is to be redeemed only in part (pursuant to the provisions of this Article 5) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 3.05 hereof (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note at the expense of the Company, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered, provided that each such new Note will be in a principal amount of U.S.$2,000 or an integral multiple of $1,000 in excess thereof.  Notwithstanding the foregoing, DTC shall select the Notes for redemption if evidenced by a Global Note according to DTC’s stated procedures therefor.

 

ARTICLE 6
 DEFAULTS AND REMEDIES

 

Section 6.01.  Events of Default.  With respect to the Notes, an “Event of Default” occurs if:

 

(1)                                 the Company defaults in any payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 days;

 

(2)                                 the Company defaults in the payment of the principal or premium, if any, on any Note when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon declaration of acceleration or otherwise;

 

(3)                                 the Company or the Guarantor defaults in the performance of or a breach by the Company or the Guarantor of any other covenant or agreement in this Indenture or under any Note (other than those referred to in (1) or (2) above) and such default continues for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes;

 

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(4)                                 the Company, the Guarantor, a Designated Obligor or a Material Subsidiary shall (i) default in making any payment of any principal of any indebtedness for borrowed money, including obligations evidenced by any mortgage, indenture, bond, debenture, note, guarantee or other similar instruments to which it is a party on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, the effect of which default or condition is to cause, or to permit the holder or beneficiary of such indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such indebtedness to become due prior to its stated maturity or (in the case of any such indebtedness constituting a guarantee) to become payable and such acceleration has not been cured within 15 days after notice of acceleration; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (4) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (4) shall have occurred and be continuing with respect to such indebtedness in an amount exceeding U.S.$100,000,000; or

 

(5)                                 (i) the Company, the Guarantor, a Designated Obligor or a Material Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Company, the Guarantor, a Designated Obligor or any Material Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company, the Guarantor, a Designated Obligor or any Material Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company, the Guarantor, a Designated Obligor or any Material Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company, the Guarantor, a Designated Obligor or any Material Subsidiary shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company, the Guarantor, a Designated Obligor or any Material Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due.

 

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

 

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The Company shall deliver to the Trustee, within 10 days after becoming aware of the occurrence thereof, written notice in the form of an Officer’s Certificate of any Default or Event of Default under clauses (3), (4) or (5) of this Section 6.01, which such notice shall contain the status thereof and a description of the action being taken or proposed to be taken by the Company in respect thereof.

 

Section 6.02.  Acceleration.  (a) If an Event of Default occurs and is continuing with respect to the Notes, the Trustee by written notice to the Company, or the Holders of at least 25% in outstanding principal amount of the Notes by written notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of and premium, if any, and accrued and unpaid interest on all the Notes to be due and payable.  Upon such a declaration, such principal, premium, if any, and accrued and unpaid interest shall be immediately due and payable.  If an Event of Default described in paragraph (5) of Section 6.01 hereof occurs and is continuing with respect to the Notes, then in each and every such case, the principal amount of the Notes, the premium, if any, and all accrued and unpaid interest on all the Notes shall be immediately due and payable without any declaration or other act on the part of the Trustee or the Holders.

 

(b)                                 In the event the principal of and premium, if any, and accrued and unpaid interest on the Notes becomes due and payable pursuant to Section 6.02(a) hereof, the Trustee shall instruct the Company, and the Company shall instruct the Master Trust Trustee, to declare due and payable the principal and accrued interest in respect of the intercompany loans that had been made using the net proceeds from the sale of such Notes invested in the Series 2002-1 VFC.

 

Section 6.03.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of and premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

 

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the outstanding Notes that have been accelerated (voting as a single class) by notice to the Trustee may (a) waive, by their consent (including, without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), an existing Default or Event of Default and its consequences with respect to the Notes except (i) a Default or Event of Default in the payment of the principal of and premium, if any, or interest on a Note or (ii) a Default or Event of Default in respect of a provision that under Section 9.02 hereof cannot be amended without the consent of each Noteholder affected and (b) rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of and premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.  When a

 

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Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right.

 

Section 6.05.  Control by Majority.  The Holders of a majority in principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01 and Section 7.02 hereof, that the Trustee determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction.  Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

 

Section 6.06.  Limitation on Suits.  Subject to Section 6.07 hereof, a Noteholder may not pursue any remedy with respect to this Indenture or any of the Notes unless:

 

(1)                                 the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

 

(2)                                 the Holders of at least 25% in outstanding principal amount of the Notes make a request to the Trustee to pursue the remedy;

 

(3)                                 such Holder or Holders offer to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

 

(4)                                 the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

 

(5)                                 the Holders of a majority in principal amount of the Notes do not give the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request during such 60-day period.

 

A Noteholder may not use this Indenture to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Noteholders).

 

Section 6.07.  Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture (including, without limitation, Section 6.06 hereof), the right of any Holder to receive payment of principal of and premium, if any, or interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes (including in connection with a Change of Control Offer), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

Section 6.08.  Collection Suit by Trustee.  If an Event of Default specified in Section 6.01 (1) or (2) hereof occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing

 

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(together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 6.07 hereof.

 

Section 6.09.  Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Noteholders allowed in any judicial proceedings relative to the Company, the Guarantor, any of the Subsidiaries or their respective creditors or properties and, unless prohibited by law or applicable regulations, may be entitled and empowered to participate as a member of any official committee of creditors appointed in such matter and, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07 hereof.

 

Section 6.10.  Priorities.  If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

 

FIRST:  to the Trustee for amounts due under Section 7.07 hereof;

 

SECOND:  to Noteholders for amounts due and unpaid on the Notes for principal and premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

 

THIRD:  to the Company.

 

The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section 6.10.  At least 15 days before such record date, the Company shall mail to each Noteholder and the Trustee a notice that states the record date, the payment date and amount to be paid.

 

Section 6.11.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in outstanding principal amount of the Notes.

 

ARTICLE 7

TRUSTEE

 

Section 7.01.  Duties of Trustee.  (a) If an Event of Default has occurred and is

 

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continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security reasonably satisfactory to it against loss, liability or expense.

 

Except during the continuance of an Event of Default:

 

(1)                                 the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(2)                                 in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

(b)                                                         The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

(1)                                 this paragraph does not limit the effect of the second paragraph of Section 7.01(a);

 

(2)                                 the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(3)                                 the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

 

(c)                                                          Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs Section 7.01(a) and (b) hereof.

 

(d)                                                         The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

 

(e)                                                          Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(f)                                                           No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that

 

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repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

(g)                                                          Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to the provisions of the Trust Indenture Act.

 

(h)                                                         Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.

 

(i)                                                             The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

 

Section 7.02.  Rights of Trustee.  Subject to Section 7.01 hereof:

 

(a)                                                         The Trustee may conclusively rely on any document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.  The Trustee shall receive and retain financial reports and statements of the Company as provided herein, but shall have no duty to review or analyze such reports or statements to determine compliance under covenants or other obligations of the Company, and the receipt of such reports or statements shall not constitute constructive notice of any information contained therein or determinable from information contained therein;

 

(b)                                                         Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate and/or an Opinion of Counsel.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel;

 

(c)                                                          The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care;

 

(d)                                                         The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence;

 

(e)                                                          The Trustee may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel;

 

(f)                                                           The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Principal Trust Office of the Trustee, and such notice references the Notes and this Indenture;

 

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(g)                                                          The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder (including Registrar and Paying Agent), and each agent, custodian and other Person employed to act hereunder;

 

(h)                                                         The Trustee may request that the Company deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;

 

(i)                                                             The Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Indenture;

 

(j)                                                            The Trustee’s rights, powers, indemnities, immunities and protections from liability and its rights to compensation and indemnification in connection with the performance of its duties under this Indenture shall extend to (1) the Trustee, whether serving in any other capacity hereunder, including, without limitation, in the capacity of Paying Agent or Registrar and (2) the Trustee’s officers, directors, agents, counsel and employees.  Such immunities and protections and rights to indemnification, together with the Trustee’s right to compensation, shall survive the Trustee’s resignation or removal, the discharge of this Indenture and final payment of the Notes;

 

(k)                                                         The Trustee shall have no responsibility for any information in any offering document or other disclosure material distributed with respect to the Notes, and the Trustee shall have no responsibility for compliance with any state or federal securities laws in connection with the Notes, other than the filing of any documents required to be filed by an indenture trustee pursuant to the Trust Indenture Act or otherwise required in this Indenture;

 

(l)                                                             Notwithstanding anything else herein contained, whenever any provision of this Indenture indicates that any confirmation of a condition or event is qualified by the words “to the knowledge of” or “known to” the Trustee or other words of similar meaning, said words shall mean and refer to the current awareness of one or more Trust Officers who are located at the Principal Trust Office of the Trustee or who are otherwise responsible for administering the trusts created under this Indenture;

 

(m)                             The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, during regular business hours and upon providing reasonable advance notice to the Company, to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; and

 

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(n)                                 In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights.  However, the Trustee must comply with Section 7.10 and Section 7.11 hereof.  In addition, the Trustee shall be permitted to engage in transactions with the Company; provided, however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the Commission for permission to continue acting as Trustee or (iii) resign.

 

Section 7.04.  Trustee’s Disclaimer.  The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, shall not be accountable for the Company’s use of the proceeds from the Notes, shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee and shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

 

Section 7.05.  Notice of Defaults.  If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual knowledge thereof, the Trustee shall send to each Noteholder at the address set forth in the Note Register notice of the Default or Event of Default within 90 days after it occurs.  Except in the case of a Default or Event of Default in payment of principal of and premium, if any, or interest on any Note (including payments pursuant to the optional redemption or required repurchase provisions of such Note, if any), the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of Noteholders.

 

Section 7.06.  Report by Trustee to Holders.  Within 60 days after each February 15 beginning with the February 15 following the date of this Indenture, and in any event prior to April 15 in each year, the Trustee shall transmit to each Noteholder a brief report dated as of such February 15 that complies with Trust Indenture Act, Section 313(a), but only if required under such Section.  The Trustee also shall comply with Trust Indenture Act, Section 313(b).  The Trustee shall also transmit all reports required by Trust Indenture Act, Section 313(c).

 

A copy of each report at the time of its mailing to Noteholders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed.  The Company agrees to notify promptly the Trustee in writing whenever the Notes become listed on any stock exchange and of any delisting thereof.

 

Section 7.07.  Compensation and Indemnity.  The Company shall pay to the Trustee such compensation for its acceptance of this Indenture and for its services hereunder as Trustee, Paying Agent, Registrar and in all other capacities in which it is serving hereunder as the

 

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Company and the Trustee shall from time to time agree in writing.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Noteholders and reasonable costs of counsel retained by the Trustee, in addition to the compensation for its services.  Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Trustee, and any predecessor Trustee and their respective officers, directors, employees, counsel and agents, against any and all loss, liability, damages, claims or expense (including reasonable attorneys’ fees and expenses) incurred by it without negligence or willful misconduct on its part in connection with the administration of this trust or the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this Section 7.07) and of defending itself against any claims (whether asserted by any Noteholder, the Company or otherwise).  The Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder.  The Company shall defend the claim and the Trustee may have separate counsel, and the Company shall pay the fees and expenses of such counsel, provided that the Company shall not be required to pay such fees and expenses if it assumes the obligation for defending the Trustee, and, in the reasonable judgment of the Trustee, there is no conflict of interest between the Company and the Trustee in connection with such action, and there is no defense that could not be adequately raised if the Company assumes such obligation.  The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct or negligence.

 

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and premium, if any, and interest on particular Notes.  Such lien shall survive the satisfaction and discharge of this Indenture.  The Trustee’s right to receive payment of any amounts due under this Section 7.07 shall not be subordinate to any other liability or Indebtedness of the Company.

 

The Company’s payment obligations pursuant to this Section 7.07 shall survive the discharge of this Indenture.  When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(5) hereof with respect to the Company, the expenses are intended to constitute expenses of administration under any bankruptcy law.

 

The provisions of this Section shall survive the termination of this Indenture and the resignation and removal of the Trustee.

 

Section 7.08.  Replacement of Trustee.  The Trustee may resign at any time by so notifying the Company.  The Holders of a majority in principal amount of the Notes (voting as a single class) may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee.  The Company shall remove the Trustee if:

 

(1)                                 the Trustee fails to comply with Section 7.10 hereof;

 

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(2)                                 the Trustee is adjudged bankrupt or insolvent;

 

(3)                                 a receiver or other public officer takes charge of the Trustee or its property; or

 

(4)                                 the Trustee otherwise becomes incapable of acting.

 

If the Trustee resigns or is removed by the Company or by the Holders of a majority in principal amount of the Notes (voting as a single class) and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of the Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Noteholders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07 hereof.

 

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition, at the Company’s expense, any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee fails to comply with Section 7.10 hereof, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.

 

Section 7.09.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

 

In case at the time such successor or successors by merger, conversion, consolidation or transfer of assets to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee.

 

Section 7.10.  Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of Trust Indenture Act, Section 310(a).  The Trustee shall have a combined capital and surplus of at least U.S. $50,000,000 as set forth in its most recent filed annual report of

 

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condition.  The Trustee shall comply with Trust Indenture Act, Section 310(b); provided, however, that there shall be excluded from the operation of Trust Indenture Act, Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Trust Indenture Act, Section 310(b)(1) are met.

 

Section 7.11.  Preferential Collection of Claims Against Company.  The Trustee shall comply with Trust Indenture Act, Section 311(a), excluding any creditor relationship listed in Trust Indenture Act, Section 311(b).  A Trustee who has resigned or been removed shall be subject to Trust Indenture Act, Section 311(a) to the extent indicated.

 

Section 7.12.  Trustee’s Application for Instruction from the Company.  Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective.  The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted.

 

ARTICLE 8

DISCHARGE OF INDENTURE; DEFEASANCE

 

Section 8.01.  Discharge of Liability on Notes; Defeasance.  (a) Subject to Section 8.01(b) hereof, when (i)(x) the Company delivers to the Trustee all outstanding Notes (other than Notes replaced pursuant to Section 2.07 hereof) for cancellation or (y) all outstanding Notes not theretofore delivered for cancellation have become due and payable, whether at maturity or upon redemption or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name and at the expense of the Company and the Company or the Guarantor irrevocably deposits or causes to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders money in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal and premium, if any, and accrued interest to the date of maturity or redemption, (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or the Guarantor is a party or by which the Company or the Guarantor is bound; (iii) the Company or the Guarantor has paid or caused to be paid all sums payable by it under this Indenture and the Notes; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at maturity or the Redemption Date, as the case may be, then the Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of

 

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the Company (accompanied by an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with) and at the cost and expense of the Company.

 

(b)                                                         Subject to Section 8.01(c) and Section 8.02 hereof, the Company at any time may terminate (i) all its obligations under the Notes and this Indenture (“legal defeasance option”), and after giving effect to such legal defeasance, any omission to comply with such obligations shall no longer constitute a Default or Event of Default or (ii) its obligations under, Section 3.02, Section 3.03, Section 3.04, Section 3.05, Section 3.08, Section 3.09 and Section 3.15 hereof, and the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document, and the operation of Section 6.01(3) (only with respect to the covenants terminated pursuant to this Section 8.01(b)(ii)), Section 6.01(4) and Section 6.01(5) hereof, and the events specified in such Sections shall no longer constitute an Event of Default (clause (ii) being referred to as the “covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes shall be unaffected thereby.  The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its covenant defeasance option, the Company may elect to have the Guarantee terminate.

 

If the Company exercises its legal defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default, and the Guarantee shall terminate.  If the Company exercises its covenant defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.01(3) (only with respect to the covenants terminated pursuant to Section 8.01(b)(ii) above), Section 6.01(4) and Section 6.01(5) hereof.

 

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

 

(c)                                                          Notwithstanding the provisions of Section 8.01(a) and (b) hereof, the Company’s obligations in Section 2.02, Section 2.03, Section 2.04, Section 2.05, Section 2.06, Section 2.07, Section 2.08, Section 2.09, Section 2.10, Section 3.01, Section 3.06, Section 3.07, Section 3.10, Section 3.11, Section 3.12, Section 3.13, Section 3.14, Section 3.15, Section 6.07, Section 7.07, Section 7.08 hereof and in this Article 8 shall survive until the Notes have been paid in full.  Thereafter, the Company’s obligations in Section 7.07, Section 8.04 and Section 8.05 hereof shall survive.

 

Section 8.02.  Conditions to Defeasance.  The Company may exercise its legal defeasance option or its covenant defeasance option with respect to the Notes only if:

 

(1)                                 the Company irrevocably deposits in trust with the Trustee for the benefit of the Holders money in U.S. dollars or U.S. Government Securities or a combination thereof for the payment of principal of and premium, if any, and interest on the Notes to maturity or redemption, as the case may be;

 

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(2)                                 the Company delivers to the Trustee a certificate from a firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Securities plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Notes to maturity;

 

(3)                                 no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain bankruptcy or insolvency Events of Default, on the 91st day after such date of deposit;

 

(4)                                 such legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, this Indenture or any other material agreement or instrument to which the Company, the Guarantor or any of its Subsidiaries is a party or by which the Company, the Guarantor or any of its Subsidiaries is bound;

 

(5)                                 the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that (A) the Notes and (B) assuming no intervening bankruptcy of the Company between the date of deposit and the 91st day following the deposit and that no Holder of the Notes is an insider of the Company, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ right generally;

 

(6)                                 the deposit does not constitute a default under any other agreement binding on the Company;

 

(7)                                 the Company delivers to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the U.S. Investment Company Act of 1940, as amended;

 

(8)                                 in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States stating that (i) the Company has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the beneficial owners of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

 

(9)                                 in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States to the effect that the beneficial owners of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred; and

 

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(10)                          the Company delivers to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes and this Indenture as contemplated by this Article 8 have been complied with.

 

Section 8.03.  Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government Securities deposited with it pursuant to this Article 8.  It shall apply the deposited money and the money from U.S. Government Securities through the Paying Agent and in accordance with this Indenture to the payment of principal of and premium, if any, and interest on the Notes.

 

Section 8.04.  Repayment to Company.  The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them upon payment of all the obligations under this Indenture.

 

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal of and premium, if any, or interest on the Notes that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money must look to the Company for payment as general creditors.

 

Section 8.05.  Indemnity for U.S. Government Securities.  The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Securities or the principal and interest received on such U.S. Government Securities.

 

Section 8.06.  Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. Government Securities in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Securities in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Securities held by the Trustee or Paying Agent.

 

The Trustee’s rights under this Article 8 shall survive termination of this Indenture and the resignation or removal of the Trustee.

 

ARTICLE 9

AMENDMENTS

 

Section 9.01.  Without Consent of Holders.  The Company, the Guarantor and the Trustee may amend this Indenture or the Notes without notice to or consent of any Noteholder:

 

(1)                                 to cure any ambiguity, omission, defect or inconsistency;

 

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(2)                                 to comply with Article 4 in respect of the assumption by a Successor Guarantor or Successor Issuer of the respective obligation of the Guarantor or the Company under this Indenture;

 

(3)                                 to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

 

(4)                                 to add guarantees with respect to the Notes;

 

(5)                                 to secure the Notes;

 

(6)                                 to add to the covenants of the Company or the Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or the Guarantor;

 

(7)                                 to make any change that does not adversely affect the interests of any Noteholder;

 

(8)                                 to provide for the issuance of any Subsequent Notes; or

 

(9)                                 to comply with any requirement of the SEC in connection with the qualification of this Indenture under the Trust Indenture Act.

 

After an amendment under this Section 9.01 becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment.  The failure to give such notice to all Noteholders at the address set forth in the Note Register, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.

 

Section 9.02.  With Consent of Holders.  The Company, the Guarantor and the Trustee may amend this Indenture or the Notes without notice to any Noteholder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes.  However, without the consent of each Noteholder affected, an amendment may not:

 

(1)                                 reduce the percentage in principal amount of outstanding Notes whose Holders must consent to an amendment of this Indenture or the Notes;

 

(2)                                 reduce the percentage in principal amount of outstanding Notes whose Holders must consent to an amendment of provisions of the Master Trust Transaction Documents pursuant to Section 3.02(f) hereof;

 

(3)                                 reduce the stated rate of or extend the stated time for payment of interest on any Note;

 

(4)                                 reduce the principal of, or extend the Stated Maturity of, any Note;

 

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(5)                                 reduce the premium payable upon the redemption of any Note as described above under Article 5 hereof or any similar provision, whether through an amendment to or waiver of Article 5 hereof, a definition or otherwise;

 

(6)                                 make any Note payable in money other than that stated in the Note;

 

(7)                                 impair the right of any Holder to receive payment of principal of and premium, if any, and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

 

(8)                                 make any change to the amendment provisions which require each Holder’s consent or to the waiver provisions; or

 

(9)                                 release the Guarantor or modify the Guarantee other than in accordance with the provisions of this Indenture.

 

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

 

After an amendment under this Section 9.02 becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment.  The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.

 

Section 9.03.  Compliance with Trust Indenture Act.  Every amendment to this Indenture or the Notes shall comply with the Trust Indenture Act as then in effect.

 

Section 9.04.  Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note.  However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective or otherwise in accordance with any related solicitation documents.  After an amendment or waiver becomes effective, it shall bind every Noteholder.  An amendment or waiver shall become effective upon receipt by the Trustee of the requisite number of written consents under Section 9.01 or 9.02 hereof, as applicable.

 

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date.  No such consent shall become valid or effective more than 120 days after such record date.

 

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Section 9.05.  Notation on or Exchange of Notes.  If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms.  Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

 

Section 9.06.  Trustee to Sign Amendments.  The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not affect the rights, duties, protections, privileges, indemnities, powers, liabilities or immunities of the Trustee.  If it does, the Trustee may but need not sign it.  In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and (subject to Sections 7.01 and 7.02 hereof), shall be fully protected in conclusively relying upon an Officer’s Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture, that it conforms to the applicable requirements of the Trust Indenture Act and that such amendment is the legal, valid and binding obligation of the Company and any Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions and complies with the provisions hereof (including Section 9.03 hereof).

 

ARTICLE 10

GUARANTEE

 

Section 10.01.  Guarantee.  The Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to each Holder of the Notes and the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of and premium, if any, and interest on the Notes and all other obligations of the Company under this Indenture, including, without limitation, the obligations of the Company under Section 7.07 hereof (all the foregoing being hereinafter collectively called the “Obligations”).  The Guarantor further agrees (to the extent permitted by law) that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article 10 notwithstanding any extension or renewal of any Obligation.

 

The Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment.  The Guarantor waives notice of any default under the Notes or the Obligations.  The obligations of the Guarantor hereunder shall not be affected by (a) the failure of the Trustee or any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; or (e) any change in the ownership of the Company.

 

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The Guarantor further agrees that the Guarantee herein constitutes a guarantee of payment when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations.

 

The obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of the Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Guarantor or would otherwise operate as a discharge of the Guarantor as a matter of law or equity.

 

The Guarantor further agrees that the Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of and premium, if any, or interest on any of the Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

 

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against the Guarantor by virtue hereof, upon the failure of the Company to pay any of the Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, the Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid interest on such Obligations then due and owing (but only to the extent not prohibited by law).

 

The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of the Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

 

The Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

 

Section 10.02.  No Subrogation.  Notwithstanding any payment or payments made by the Guarantor hereunder, the Guarantor shall not be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall the

 

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Guarantor seek or be entitled to seek any contribution or reimbursement from the Company in respect of payments made by the Guarantor hereunder, until all amounts owing to the Trustee and the Holders, as well as the holders of any other Permitted Indebtedness, by the Company on account of the Obligations are paid in full.  If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Trustee and the Holders, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Trustee in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Trustee, if required), to be applied against the Obligations.

 

Section 10.03.  Consideration.  The Guarantor has received, or will receive, direct or indirect benefits from the making of the Guarantee.

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.01.  Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the Trust Indenture Act, the provision required by the Trust Indenture Act shall control.  The Guarantor in addition to performing its obligations under the Guarantee shall perform such other obligations as may be imposed upon it with respect to this Indenture under the Trust Indenture Act.

 

Section 11.02.  Notices.  Any notice or communication shall be in writing and (a) delivered in person, (b) sent by a recognized overnight delivery service (with charges prepaid), or (c) sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), addressed as follows:

 

If to the Company:

Bunge Limited Finance Corp.

11720 Borman Drive

St. Louis, Missouri 63146

Attention: Treasurer

Telephone No:  (314) 292-2908

Telecopy:  (314) 292-4908

 

with a copy to:

 

Rajat Gupta

Telecopy:  (914) 684-3283

 

If to the Guarantor:

 

Bunge Limited

50 Main Street

White Plains, New York 10606

Attention:  Treasurer

 

52

 

Telephone:  (914) 684-3365

Telecopy:  (914) 684-3283

 

if to the Trustee:

 

MUFG Union Bank, N.A.

1251 Avenue of the Americas, 19th Floor

New York, New York 10020

Attention:  Corporate Trust Department

Telecopy:  (212) 646-2000

 

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

Any notice or communication mailed to a registered Noteholder shall be mailed to the Noteholder at the Noteholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

 

Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders.  If a notice or communication is sent in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be effective only upon receipt.

 

Section 11.03.  Communication by Holders with Other Holders.  Noteholders may communicate pursuant to Trust Indenture Act, Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes.  The Company, the Trustee, the Registrar and anyone else shall have the protection of Trust Indenture Act, Section 312(c).

 

Section 11.04.  Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

 

(1)                                 an Officer’s Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signer, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

(2)                                 an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

 

Notwithstanding the foregoing, it is understood that an opinion under this Section will not be required in connection with the initial issuance of Notes.

 

Section 11.05.  Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

 

53

 

(1)                                 a statement that the individual making such certificate or opinion has read such covenant or condition;

 

(2)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(3)                                 a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4)                                 a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

 

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officer’s Certificate or on certificates of public officials.

 

Section 11.06.  When Notes Disregarded.  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by an Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded.  Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

 

Section 11.07.  Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for action by, or a meeting of, Noteholders.  The Registrar and the Paying Agent may make reasonable rules for their functions.

 

Section 11.08.  Legal Holidays.  A “Legal Holiday” is a Saturday, a Sunday or other day on which commercial banking institutions are authorized or required to be closed in New York, New York or Hamilton, Bermuda.  If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.  If a regular record date is a Legal Holiday, the record date shall not be affected.

 

Section 11.09.  GOVERNING LAW.  THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

 

Section 11.10.  No Recourse Against Others.  An incorporator, director, officer, employee, affiliate or stockholder of the Company or the Guarantor, solely by reason of this status, shall not have any liability for any obligations of the Company under the Notes, this Indenture or the Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Noteholder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Notes.

 

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Section 11.11.  Successors.  All agreements of the Company in this Indenture and the Notes shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

 

Section 11.12.  Consent to Jurisdiction.  The Company and the Guarantor irrevocably submit to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan, The City of New York, in any action or proceeding relating to its obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Notes.  The Company and the Guarantor hereby irrevocably agree that all claims in respect of any such action or proceeding may be heard and determined in such New York state or U.S. federal court.  The Company and the Guarantor also hereby irrevocably waive, to the fullest extent permitted by law, any objection to venue or the defense of an inconvenient forum to the maintenance of any such action or proceeding in any such court.  The Company and the Guarantor agree that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Company or the Guarantor, respectively, and may be enforced in any courts to the jurisdiction of which the Company or the Guarantor, respectively, is subject by a suit upon such judgment.

 

Section 11.13.  Appointment for Agent for Service of Process.  The Guarantor hereby (i) irrevocably designates and appoints its Chief Financial Officer (from time to time) at its principal executive offices at 50 Main Street, White Plains, New York 10606 (the “Authorized Agent”), as its agent upon which process may be served in any suit, action or proceeding described in the first sentence of Section 11.12 hereof and represents and warrants that the Authorized Agent has accepted such designation and (ii) agrees that service of process upon the Authorized Agent and written notice of said service to the Guarantor mailed or delivered to its Secretary at its registered office at 2 Church Street, Hamilton, Bermuda, shall be deemed in every respect effective service of process upon the Guarantor in any such suit or proceeding.  The Guarantor further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of the Authorized Agent in full force and effect so long as any of the Notes shall be outstanding.

 

Section 11.14.  Waiver of Immunities.  To the extent that the Company or the Guarantor, respectively, or any of their properties, assets or revenues may have or may hereafter become entitled to, or have attributed to them, any right of immunity, on the grounds of sovereignty, from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, or from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to their respective obligations, liabilities or any other matter under or arising out of or in connection with this Indenture or the Notes, the Company and the Guarantor hereby irrevocably and unconditionally, to the extent permitted by applicable law, waive and agree not to plead or claim any such immunity and consent to such relief and enforcement.

 

Section 11.15.  Additional Amounts.  In the event that payments are required to be made by the Guarantor pursuant to its obligations under the Guarantee, the Guarantor will pay to the Holder of any Note such additional amounts as may be necessary so that every net payment to a

 

55

 

holder or beneficial owner of the principal of and premium, if any, and interest on such Note, after deducting or withholding for or on account of any present or future tax, duty, assessment or other similar governmental charge duly imposed by Bermuda, will not be less than the amount provided in that Note to be then due and payable.  The Guarantor will not be required, however, to make any payment of additional amounts for or on account of any such tax imposed by reason of the holder or beneficial owner having some connection with Bermuda, other than its participation as a holder or beneficial owner of a Note.

 

Section 11.16.  Judgment Currency.  If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder into any currency other than U.S. dollars, the parties hereto agree, to the fullest extent permitted by law, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee or any Holder, as the case may be, could purchase U.S. dollars with such other currency in New York City on the Business Day preceding that on which final judgment is given.  The obligation of the Guarantor or the Company with respect to any sum due from it to the Trustee or any Holder shall, notwithstanding any judgment in a currency other than U.S. dollars, be discharged only if and to the extent that on the first Business Day following receipt by the Trustee or such Holder, as the case may be, of any sum adjudged to be so due in such other currency, the Trustee or such Holder may in accordance with normal banking procedures purchase U.S. dollars with such other currency.  If the U.S. dollars so purchased are less than the sum originally due to the Trustee or such Holder hereunder, the Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Trustee or such Holder against such loss.  If the U.S. dollars so purchased are greater than the sum originally due to the Trustee or such Holder hereunder, the Trustee or such Holder, as the case may be, agrees to pay to the Guarantor an amount equal to the excess of the U.S. dollars so purchased over the sum originally due to the Trustee or such Holder hereunder.

 

Section 11.17.  No Bankruptcy Petition Against the Company; Liability of the Company.  Each of the Noteholders and the Trustee hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of the last maturing Note and all other Indebtedness of the Company ranking equal with or junior to the Notes in right of payment, it will not institute against, or join with or assist any other Person in instituting against, the Company, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any applicable insolvency laws.

 

Notwithstanding any other provision hereof, the sole remedy of any Noteholder, the Trustee or any other Person against the Company in respect of any obligation, covenant, representation, warranty or agreement of the Company under or related to this Indenture or the Notes shall be against the assets of the Company.  Neither the Trustee, nor any Noteholder nor any other Person shall have any claim against the Company to the extent that such assets are insufficient to meet such obligations, covenant, representation, warranty or agreement (the difference being referred to herein as a “shortfall”) and all claims in respect of the shortfall shall be extinguished; provided, however, that the provisions of this Section 11.17 apply solely to the obligations of the Company and shall not extinguish such shortfall or otherwise restrict such Person’s rights or remedies against the Guarantor for purposes of the obligations of the Guarantor to any Person under the Guarantee.

 

56

 

The provisions of this Section 11.17 shall survive the termination of this Indenture and the resignation or removal of the Trustee.

 

Section 11.18.  Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 11.19.  Qualification of Indenture.  The Company shall qualify this Indenture under the Trust Indenture Act and shall pay all reasonable costs and expenses (including attorneys’ fees and expenses for the Company, the Trustee and the Holders) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Notes and printing this Indenture and the Notes.  The Trustee shall be entitled to receive from the Company any such Officer’s Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the Trust Indenture Act.

 

Section 11.20.  Table of Contents; Headings.  The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

 

Section 11.21                      Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and also including interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services resulting therefrom; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 11.22                      U.S.A. Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Indenture agree that they will provide the Trustee with such information as it may reasonably request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

57

 

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

 

	
 
    	
BUNGE   LIMITED FINANCE CORP., as Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rajat Gupta
    
	
 
    	
 
    	
Name:   Rajat Gupta
    
	
 
    	
 
    	
Title:   President 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BUNGE   LIMITED, as Guarantor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rajat Gupta
    
	
 
    	
 
    	
Name:   Rajat Gupta 
    
	
 
    	
 
    	
Title:   Treasurer 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Carla Heiss
    
	
 
    	
 
    	
Name:   Carla Heiss 
    
	
 
    	
 
    	
Title:   Secretary 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MUFG   UNION BANK, N.A., as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marion Zinowski 
    
	
 
    	
 
    	
Name:   Marion Zinowski 
    
	
 
    	
 
    	
Title:   Vice President 
    

 

58

 

EXHIBIT A

 

[FORM OF FACE OF INITIAL NOTE AND SUBSEQUENT NOTE]

 

[Depository Legend, if applicable]

 

	
No. [     ]
    	
Principal   Amount U.S. $[         ], as   revised by the Schedule of Increases and Decreases in Global Note attached   hereto
    
	
 
    	
 
    
	
 
    	
CUSIP NO.   [         ]
    
	
 
    	
ISIN:   [         ]
    

 

3.500% Senior Notes Due 2020

 

Bunge Limited Finance Corp., a Delaware corporation, promises to pay to CEDE & CO., or registered assigns, the principal sum of U.S.$[         ], as revised by the Schedule of Increases and Decreases in Note attached hereto, on November 24, 2020.

 

Interest Payment Dates:  November 24 and May 24

 

Record Dates:  November 9 and May 9

 

Additional provisions of this Note are set forth on the reverse side hereof.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

	
 
    	
BUNGE   LIMITED FINANCE CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
TRUSTEE’S   CERTIFICATE OF
    	
 
    
	
AUTHENTICATION
    	
 
    
	
 
    	
 
    
	
MUFG   UNION BANK, N.A.,
    	
 
    
	
as   Trustee, certifies that this is one of
    	
 
    
	
the   Notes referred to in the Indenture.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    
	
Date:                     , 20    
    	
 
    

 

 

[FORM OF REVERSE SIDE OF INITIAL NOTE AND SUBSEQUENT NOTE]

 

3.500% Senior Note Due 2020

 

1.                                      General

 

Bunge Limited Finance Corp., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), issued the Notes under an Indenture, dated as of November 24, 2015, among the Company, the Guarantor and the Trustee (as such Indenture may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”).  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the U.S. Trust Indenture Act of 1939 as in effect on the date of the Indenture (the “Trust Indenture Act”).  Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the Trust Indenture Act for a statement of those terms.

 

The Notes are general unsecured senior obligations of the Company, including (a) U.S. $500,000,000 in aggregate principal amount of 3.500% Notes being offered on the Issue Date (subject to Section 2.07 of the Indenture) and (b) any Subsequent Notes.  The Notes rank equally with all other unsecured and unsubordinated indebtedness of the Company.  This Note is one of the [Initial Notes] [Subsequent Notes] referred to in the Indenture.

 

The Company may from time to time, without the consent of existing Holders, create and issue Subsequent Notes having the same terms and conditions as the Initial Notes in all respects, except for the Issue Date, issue price and first payment of interest thereon.  Subsequent Notes issued in this manner will be consolidated with and will form a single class with the previously outstanding Notes; provided, that if the Subsequent Notes are not fungible with the Initial Notes for United States federal income tax purposes, the Subsequent Notes will have a separate CUSIP number.

 

Except as otherwise provided in the Indenture, the Initial Notes and any Subsequent Notes will be treated as a single class of securities under the Indenture.  The Indenture includes various covenants that limit the ability of the Company, among other things, to engage in any business or transaction, acquire assets or subsidiaries, incur Indebtedness or Liens or enter into any consolidations, mergers, amalgamations or sales of assets. In addition, the Indenture imposes certain limitations on, among other things, (i) the incurrence of Liens by the Guarantor or any Restricted Subsidiary, (ii) Sale-Leaseback Transactions by the Guarantor or any Restricted Subsidiary and (iii) consolidations, mergers, amalgamations and sales of assets of the Guarantor, the Company or any Subsidiary.

 

To guarantee the due and punctual payment of the principal of and premium, if any, and interest on the Notes and all other amounts payable by the Company under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Guarantor has unconditionally guaranteed such obligations pursuant to the terms of the Indenture.  The

 

 

Guarantee is an unsecured and unsubordinated obligation of the Guarantor and ranks equally with all other unsecured and unsubordinated indebtedness and obligations of the Guarantor.

 

2.                                      Interest

 

The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above.

 

The Company will pay interest semi-annually on November 24 and May 24 of each year commencing May 24, 2016.  Interest on the Notes will accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from November 24, 2015.  The Company shall pay interest on overdue principal or premium, if any, plus interest on such interest to the extent lawful, at the rate borne by the Notes to the extent lawful.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

3.                                      Method of Payment

 

By at least 10:00 a.m. (New York City time) on the date on which any principal of and premium, if any, or interest on any Note is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest.  The Company will pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the interest payment date even if Notes are cancelled, repurchased or redeemed after the record date and on or before the interest payment date.  Holders must surrender Notes to a Paying Agent to collect principal payments.  The Company will pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  Except as described in the succeeding two sentences, the principal of and premium, if any, and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.03 of the Indenture; provided, however, that, at the option of the Company, each installment of interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Note Register.  Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the account specified by The Depository Trust Company.  Payments in respect of Notes represented by Definitive Notes (including principal, premium, if any, and interest) held by a Holder of at least U.S.$1,000,000 aggregate principal amount of Notes will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

 

4.                                      Paying Agent and Registrar

 

Initially, MUFG Union Bank, N.A. (the “Trustee”), will act as Trustee, Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-

 

 

registrar without notice to any Noteholder.  The Company, the Guarantor or any Subsidiary may act as Paying Agent, Registrar or co-registrar.

 

5.                                      Optional Redemption by the Company

 

The Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, on at least 30 days but not more than 60 days’ prior notice mailed to the registered address of each Holder of Notes to be so redeemed, at a redemption price equal to (a) the greater of (i) 100% of their principal amount to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon from the date of redemption to the date of maturity (except for currently accrued but unpaid interest) discounted to the date of redemption, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at the applicable Treasury Yield (as defined below), plus 30 basis points (such greater amount, the “Redemption Price”), plus (b) accrued and unpaid interest, if any, to the date of redemption.

 

For purposes of determining the Redemption Price, the following definitions are applicable:

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (a) the bid price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) at 4:00 P.M. on the third business day preceding such Redemption Date, as set forth on “Bloomberg page PX1” (or such other page as may replace Bloomberg page PX1), or (b) if such page (or any successor page) is not displayed or does not contain such bid prices at such time, (i) the average of the Reference Treasury Dealer Quotations obtained by the Company for such date, after excluding the highest and lowest of four such Reference Treasury Dealer Quotations or (ii) if the Company is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Company.

 

“Independent Investment Banker” means any of Citigroup Global Markets Inc., J.P. Morgan Securities LLC and HSBC Securities (USA) Inc. or, if none of such firms are willing or able to select the applicable Comparable Treasury Issue, a leading independent investment banking institution appointed by the Company.

 

“Reference Treasury Dealer” means Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and two other primary U.S. Government securities dealer in New York City selected by the Independent Investment Banker (each, a “Primary Treasury Dealer”); provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company will substitute another Primary Treasury Dealer.

 

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date for the Notes, an average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue for the Notes (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 4:00 p.m., New York City time, on the third business day preceding such Redemption Date.

 

“Treasury Yield” means, with respect to any Redemption Date applicable to the Notes, the rate per annum equal to the semi-annual equivalent yield to maturity (computed as of the third Business Day immediately preceding such Redemption Date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such Redemption Date.

 

In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Notes of U.S. $2,000 in original principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note.  On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable Redemption Price pursuant to the Indenture.

 

6.             Offers to Repurchase

 

Upon the occurrence of a Change of Control Triggering Event, the Company shall make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 thereof) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in accordance with Section 3.15 of the Indenture.

 

7.             Additional Amounts

 

The Guarantor will pay to the Holder of any Note such additional amounts as may be necessary so that every net payment to a holder or beneficial owner of principal of and premium, if any, and interest on such Note, after deducting or withholding for or on account of any present or future tax, duty, fee, assessment or other similar governmental charge duly imposed by Bermuda, will not be less than the amount provided in such Note to be then due and payable.  The Guarantor will not be required, however, to make any payment of additional amounts for or on account of any such tax imposed by reason of the holder or beneficial owner having some connection with Bermuda, other than its participation as a holder or beneficial owner of a Note.

 

 

8.             Denominations; Transfer; Exchange

 

The Notes are in registered form without coupons in denominations of principal amount of U.S. $2,000 and whole multiples of U.S. $1,000 in excess thereof.  A Holder may transfer or exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer of or exchange (i) any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) for a period beginning 15 days before the mailing of a notice of Notes to be redeemed and ending on the date of such mailing or (ii) any Notes for a period beginning 15 days before an interest payment date and ending on such interest payment date.

 

9.             Persons Deemed Owners

 

The registered Holder of this Note may be treated as the owner of it for all purposes.

 

10.          Unclaimed Money

 

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

 

11.          Defeasance

 

Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Securities for the payment of principal and interest on such Notes to redemption or maturity, as the case may be.

 

12.          Amendment, Waiver

 

The Indenture or the Notes may be amended with the written consent of the Holders of at least a majority in principal amount of the then outstanding Notes; provided, however, that the consent of each Noteholder affected is required to (i) reduce the amount of Notes whose Holders must consent to an amendment of the Indenture, the Notes or specified provisions of the Master Trust Transaction Documents, (ii) reduce the stated rate or extend the stated time for payment of interest on a Note, (iii) reduce the principal of or extend the Stated Maturity of a Note, (iv) reduce the premium payable upon redemption of a Note, (v) make any Note payable in money other than that stated herein, (vi) impair the right of a Holder to receive payment under the Note or institute suit for the enforcement of such payment, (vii) make any change to the amendment provisions which require each Holder’s consent or the waiver provisions, or (viii) release the Guarantor or modify the Guarantee.

 

Subject to certain exceptions set forth in the Indenture, without the consent of any Noteholder, the Company and the Trustee may amend the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 4 of the Indenture, or to

 

 

provide for uncertificated Notes in addition to or in place of certificated Notes, or to add guarantees  with respect to the Notes, or to secure the Notes, or to add additional covenants of the Company, the Guarantor or any Subsidiary, or surrender rights and powers conferred on the Company, the Guarantor or any Subsidiary, issue Subsequent Notes, or to comply with any requirement of the SEC in connection with qualifying the Indenture under the Trust Indenture Act, or to make any change that does not adversely affect the rights of any Noteholder.

 

Subject to certain exceptions set forth in the Indenture, any default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Noteholder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the then outstanding Notes, on behalf of all Holders of the Notes.

 

13.          Defaults and Remedies

 

Under the Indenture, Events of Default include (1) default for 30 days in payment of interest or additional interest when due on the Notes; (2) default in payment of principal of or premium, if any, on the Notes at Stated Maturity, upon optional redemption, upon declaration or otherwise; (3) the failure by the Company or the Guarantor to comply for 60 days after written notice with its other agreements contained in the Indenture or under the Notes (other than those referred to in (1) or (2) above); (4) the failure of the Company, the Guarantor, a Designated Obligor or a Material Subsidiary (a) to pay the principal of any indebtedness for borrowed money, including obligations evidenced by any mortgage, indenture, bond, debenture, note, guarantee or other similar instruments, on the scheduled or original date due; (b) to pay interest on any such indebtedness beyond any provided grace period; or (c) to observe or perform any agreement or condition relating to such indebtedness, the effect of which is to cause such indebtedness to become due prior to its stated maturity and such acceleration has not been cured within 15 days after notice of acceleration; provided that an event described in clause (a), (b) or (c) above shall not constitute an Event of Default unless, at such time, one or more events of the type described in clauses (a), (b) or (c) shall have occurred or be continuing with respect to indebtedness in an amount exceeding U.S. $100,000,000; or (5) certain events of bankruptcy, insolvency or reorganization of the Company, the Guarantor, a Designated Obligor or a Material Subsidiary (the “bankruptcy events”).  However, a default under clause (3) with respect to the Notes will not constitute an Event of Default with respect to the Notes until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company or the Guarantor, as the case may be, of the default and the Company or the Guarantor, as the case may be, does not cure such default within the time specified in clause (3) hereof after receipt of such notice.

 

If an Event of Default other than a bankruptcy event occurs and is continuing with respect to the Notes, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes by written notice to the Company to be due and payable immediately.  If an Event of Default in connection with a bankruptcy event occurs and is continuing, the principal amount of the Notes, the premium, if any, and all accrued and unpaid interest shall be immediately due and payable without any action or other act on the part of the Trustee or the Holders.

 

 

Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Notes unless it receives reasonable indemnity or security.  Subject to certain limitations, Holders of a majority in principal  amount of the Notes (voting as a single class) may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Noteholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest.

 

14.          Trustee Dealings with the Company

 

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

 

15.          No Recourse Against Others

 

An incorporator, director, officer, employee, affiliate or stockholder of each of the Company or the Guarantor, solely by reason of this status, shall not have any liability for any obligations of the Company under the Notes, the Indenture or the Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Noteholder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Notes.

 

16.          No Petition

 

By its acquisition of this Note, each Holder hereof agrees that neither it nor the Trustee on its behalf may commence, or join with any other person in the commencement of, a bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding with respect to the Company under any applicable insolvency laws until one year and one date after the Notes and all other Indebtedness of the Company ranking equal with or junior to the Notes in right of payment, including all interest and premium thereon, if any, are paid in full.

 

17.          Authentication

 

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication appearing on this Note.

 

18.          Abbreviations

 

Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

 

 

19.          CUSIP Numbers

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to  Noteholders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

20.          Governing Law

 

This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of law principles thereof.

 

The Company will furnish to any Noteholder upon written request and without charge to the Noteholder a copy of the Indenture.  Requests may be made to:

 

Bunge Limited Finance Corp.

11720 Borman Drive

St. Louis, Missouri 63146

Attention: Treasurer

Telephone No:  (314) 292-2908

Telecopy:  (314) 292-4908

 

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to

 

	
 
    	
 
    	
 
    
	
(Print or type assignee’s name, address and zip code)
    
	
 
    
	
 
    	
 
    	
 
    
	
(Insert assignee’s soc. sec. or tax I.D. No.)
    
					

 

and irrevocably appoint              agent to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
 
    
	
 
    	
 
    
	
Date:                                Your Signature
    	
 
    
	
 
    
	
Signature   Guarantee:
    	
 
    
	
 
    	
                        (Signature   must be guaranteed)
    
	
 
    
	
 
    
	
Sign   exactly as your name appears on the other side of this Note.
    
			

 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

 

 

[TO BE ATTACHED TO NOTES]

SCHEDULE OF INCREASES OR DECREASES IN NOTE

 

The following increases or decreases in this Note have been made:

 

	
Date of Exchange
    	
 
    	
Amount of decrease in
   Principal Amount of this
   Note
    	
 
    	
Amount of increase in
   Principal Amount of this
   Note
    	
 
    	
Principal Amount of this
   Note following such
   decrease or increase
    	
 
    	
Signature of authorized
   signatory of Trustee or
   Securities Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to Section 3.15 of the Indenture, check the box below:

 

o Section 3.15

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 3.15 of the Indenture, state the amount you elect to have purchased:

 

$

 

	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
 
    
	
 
    	
Tax   Identification No.:
    	
 
    
	
 
    	
 
    
	
Signature   Guarantee*:
    	
 
    	
 
    
						

 

* Participant in a recognized Signature Guarantee Medallion Program (or other  signature guarantor acceptable to the Trustee).

 

 

SCHEDULE 1.1

 

Designated Obligors and Material Subsidiaries

 

The following Subsidiaries constitute all of the Designated Obligors as of the date hereof:

 

·                  Bunge Global Markets Inc.

 

·                  Bunge N.A. Holdings, Inc.

 

·                  Bunge North America, Inc.

 

·                  Koninklijke Bunge B.V.

 

·                  Bunge Alimentos S.A.

 

·                  Bunge Argentina S.A.

 

·                  Bunge Fertilizantes International Limited

 

·                  Bunge Fertilizantes S.A. (Brazil)

 

·                  Bunge International Commerce Ltd.

 

·                  Bunge Finance B.V.

 

·                  Bunge S.A.

 

The following Subsidiaries constitute all of the Material Subsidiaries as of the date hereof:

 

·              Bunge North America, Inc.

 

·              Koninklijke Bunge B.V.

 

·              Bunge Alimentos S.A.

 

·              Bunge Acucar & Bioenergia Ltda.

 

·              Bunge Argentina S.A.

 

·              Bunge Iberica S.A.

 

 

SCHEDULE 3.4

 

Existing Liens

 

	
Subsidiary/Joint
   Ventures
    	
 
    	
Facility
    	
 
    	
Amount
   Outstanding
    	
 
    	
Description of Collateral
    	
 
    
	
Terminal 6 SA   (unconsolidated joint ventures in Argentina)
    	
 
    	
Bank (Bunge’s share)
    	
 
    	
$
    	
1.6 million
    	
 
    	
Shares of Terminal 6 SA
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EGT LLC   (consolidated JV)
    	
 
    	
JV loan agreement
    	
 
    	
$
    	
8.0 million
    	
 
    	
Property, plant and equipment
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bunge Alimentos   S.A.
    	
 
    	
BNDES
    	
 
    	
$
    	
14.9 million
    	
 
    	
Land, buildings and equipment
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TGG   (consolidated JV)
    	
 
    	
BNDES
    	
 
    	
$
    	
49.6 million
    	
 
    	
Shares of TGG
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Black Sea   Industries Ukraine
    	
 
    	
EBRD Loan
    	
 
    	
$
    	
2.5 million
    	
 
    	
Extraction plant, Preparation plant and Boiler house   (buildings and equipment) of BSIU crushing plant at Illychevsk, UkraineEX-10.1

 Exhibit 10.1 

PURCHASE AGREEMENT 
 THIS
AGREEMENT is made as of the 23rd day of November, 2015, by and between Bank of the James Financial Group, Inc. (the “Company”), a corporation organized under the laws of the Commonwealth of Virginia, with its principal offices at
828 Main Street, Lynchburg, Virginia 24504 and the purchaser whose name and address is set forth on the signature page hereof (the “Purchaser”). 

IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows: 

SECTION 1. Authorization of Sale of the Shares. Subject to the terms and conditions of this Agreement, the Company has authorized the
issuance and sale of up to 1,000,000 shares (the “Shares”) of common stock, $2.14 par value per share (the “Common Stock”), of the Company at a purchase price of $11.52 per Share. 

SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as defined in Section 3), subject to the terms and
conditions of this Agreement, the Company will issue and sell to the Purchaser and the Purchaser will buy from the Company the number of Shares set forth on the signature page attached hereto at a purchase price of $11.52 per Share. The Company
proposes to enter into the same form of purchase agreement with certain other investors (the “Other Purchasers”) and expects to complete sales of the Shares to them. The Purchaser and the Other Purchasers are hereinafter sometimes
collectively referred to as the “Purchasers,” and this Agreement and the purchase agreements executed by the Other Purchasers are hereinafter sometimes collectively referred to as the “Agreements.” The term
“Placement Agent” shall mean Raymond James & Associates, Inc. 
 Notwithstanding the foregoing, nothing in this
Agreement shall be construed to permit or require the Purchaser to purchase a number of Shares that would cause the Purchaser, together with any other person whose Company securities would be aggregated with the Purchaser’s Company securities
for purposes of any banking or securities regulation or law, to collectively be deemed to own, control or have the power to vote shares of Common Stock which would represent more than 4.9% of the shares of Common Stock outstanding (the
“Ownership Limitation”). If, but for this sentence, the purchase of Shares at the Closing would otherwise cause the Purchaser to exceed the Ownership Limitation, then the number of Shares to be purchased by the Purchaser hereunder
at the Closing shall be automatically reduced by the minimum amount necessary to ensure that the Ownership Limitation is not exceeded by the Purchaser at Closing (in which case the Purchaser’s aggregate purchase price shall be proportionately
reduced). 
 SECTION 3. Delivery of the Shares at the Closing. 

(a) The Common Stock is currently listed for trading on the NASDAQ Capital Market (the “NASDAQ”) and, as a result, the Company
is subject to the NASDAQ Listing Rules. The Purchaser acknowledges that, pursuant to NASDAQ Listing Rule 5635(d), in the event the purchase price for the Shares is less than the greater of book or market value (as

 
defined and calculated in accordance with NASDAQ Listing Rule 5635(d)) of the Common Stock, the Company will be required to obtain the approval of its shareholders (“Shareholder
Approval”) prior to the issuance of any Shares hereunder in excess of 20% of the shares of Common Stock issued and outstanding immediately prior to the date of this Agreement (such excess number of Shares, the “Approval
Shares”). 
 In the event Shareholder Approval is required for the issuance of the Approval Shares, the Purchaser acknowledges that
the Company may conduct up to two closings (each, a “Closing”) to effect the issuance of all of the Shares subscribed for by the Purchasers under the Agreements. An initial Closing (the “Initial Closing”) shall
occur as soon as practicable and as agreed to by the parties hereto, within three business days following the execution of the Agreements, or on such later date as the parties shall agree in writing, but not prior to the date that the conditions for
Closing set forth below have been satisfied or waived by the appropriate party (the “Initial Closing Date”). If the Company determines that Shareholder Approval is not required for the issuance of any of the Shares, then at the
Initial Closing, the Purchaser shall deliver, in immediately available funds, the purchase price for the aggregate number of Shares set forth on the signature page attached hereto by wire transfer to an account designated by the Company and the
Company shall deliver to the Purchaser (or its designated custodian per its delivery instructions) one or more stock certificates or book-entry transfer registered in the name of the Purchaser, or in such nominee name(s) as designated by the
Purchaser in writing, representing the aggregate number of Shares set forth on the signature page attached hereto and bearing an appropriate legend (or the equivalent if such Shares are held in book entry form) referring to the fact that the
Shares were sold in reliance upon the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) thereof and Rule 506 thereunder. 

If the Company determines that Shareholder Approval is required for the issuance of the Approval Shares, the Company or the Placement Agent
shall promptly notify the Purchaser of such Shareholder Approval requirement and shall inform the Purchaser of the aggregate number of Shares set forth on the signature page attached hereto that the Purchaser shall purchase and the Company shall
issue on the Initial Closing Date. In such event, the aggregate number of Shares that shall be purchased by the Purchasers and issued by the Company pursuant to the Agreements shall be reduced on a pro rata basis such that the aggregate number of
the Shares issued to the Purchasers at the Initial Closing (such number of Shares, the “Initial Shares”) does not exceed 20% of the shares of Common Stock issued and outstanding immediately prior to the date of this Agreement. 

If the Company receives Shareholder Approval for the issuance of the Approval Shares, assuming the conditions for Closing set forth below have
been satisfied or waived by the appropriate party, a final Closing (the “Final Closing”) shall occur on or about the third business day after Shareholder Approval is obtained or on such other date after Shareholder Approval is
obtained as the Company and the Placement Agent may agree (the “Final Closing Date”). On the Final Closing Date, the Purchaser shall deliver, in immediately available funds, the aggregate purchase price for the balance of the
aggregate number of Shares set forth on the signature page attached hereto and not purchased by the Purchaser at the Initial Closing by wire transfer to an account designated by the Company and the Company shall deliver to the Purchaser (or its

  
 2 

 
designated custodian per its delivery instructions) one or more stock certificates (or book-entry transfer) registered in the name of the Purchaser, or in such nominee name(s) as designated by
the Purchaser in writing, representing such Shares and bearing an appropriate legend (or the equivalent if such Shares are held in book entry form) referring to the fact that the Shares were sold in reliance upon the exemption from registration
under the Securities Act, provided by Section 4(a)(2) thereof and Rule 506 thereunder. For the avoidance of doubt, if the Company does not receive Shareholder Approval, only the Initial Shares shall be purchased by the Purchasers and issued by
the Company pursuant to the terms of the Agreements. 
 The Company will promptly substitute one or more replacement stock certificates (or
update the book-entry transfer) without the legend (or the equivalent if such Shares are held in book entry form) at such time as the registration statement filed by the Company pursuant to Section 7.1 hereof (the “Registration
Statement”) becomes effective. The name(s) in which the stock certificates (or book-entry transfer) are to be registered are set forth in the Securities Certificate Questionnaire attached hereto as Appendix I. 

Each Closing shall take place at the offices of Edmunds & Williams, P. C., 828 Main Street, 19th Floor, Lynchburg, Virginia 24504 or
such other location as the parties shall agree in writing. 
 (b) The Company’s obligation to complete the purchase and sale of the
Shares and deliver the stock certificates (or book-entry transfer) to the Purchaser at the Initial Closing and, if applicable, the Final Closing shall be subject to the following conditions, any one or more of which may be waived by the Company in
writing: 
 (i) following the Purchaser’s receipt of its Shares, receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being purchased at the applicable Closing; 
 (ii) concurrent completion of the
purchases and sales under the Agreements with the Other Purchasers; 
 (iii) the accuracy of the representations and
warranties made by the Purchasers and the fulfillment of any and all undertakings of the Purchasers prior to the Closing; and 

(iv) if necessary for the Company to comply with NASDAQ Listing Rule 5635(d), the receipt of Shareholder Approval for the
issuance of the Approval Shares at the Final Closing. 
 (c) The Purchaser’s obligation to accept delivery of such stock certificates
(or book-entry transfer) and to pay for the Shares evidenced thereby shall be subject to the following conditions: 
 (i)
each of the representations and warranties of the Company made herein shall be accurate in all respects as of the Initial Closing Date and, if applicable, the Final Closing Date; 

  
 3 

 (ii) the delivery to the Placement Agent on behalf of the Purchaser by counsel to
the Company of a legal opinion in a form reasonably satisfactory to counsel for the Placement Agent; 
 (iii) receipt by the
Purchaser of a certificate executed by the chief executive officer and the chief financial or accounting officer of the Company, dated as of the Initial Closing Date and, if applicable, the Final Closing Date, to the effect that the representations
and warranties of the Company set forth herein are true and correct in all material respects (except to the extent that any of such representations and warranties is qualified by materiality or Material Adverse Effect, in such case, such
representations and warranties shall be accurate in all respects) as of the date of this Agreement and as of such Initial Closing Date and, if applicable, such Final Closing Date and that the Company has complied in all material respects with all
the agreements and satisfied all the conditions herein on its part to be performed or satisfied on or prior to such Initial Closing Date and, if applicable, such Final Closing Date; 

(iv) the fulfillment in all material respects of those undertakings of the Company to be fulfilled prior to Closing; 

(v) the Common Stock (a) shall be designated for listing and quotation on NASDAQ and (b) shall not have been
suspended, as of the Initial Closing Date and, if applicable, the Final Closing Date, by the Securities and Exchange Commission (the “Commission”) or NASDAQ from trading on NASDAQ nor shall suspension by the Commission or NASDAQ
have been threatened, as of the Initial Closing Date and, if applicable, the Final Closing Date, either (1) in writing by the Commission or NASDAQ or (2) by falling below the minimum listing maintenance requirements of NASDAQ; 

(vi) the purchase of Shares by the Purchaser shall not (a) cause the Purchaser or any of its affiliates to violate any
banking regulation, (b) require the Purchaser or any of its affiliates to file a prior notice under the Change in Bank Control Act (the “CIBC Act”), or otherwise seek prior approval of any banking regulator, (c) require
the Purchaser or any of its affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or any subsidiary or (d) cause the Purchaser, together with any other person whose Company securities would be
aggregated with the Purchaser’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control or have the power to vote securities which would represent more than 4.9% of any class of voting
securities of the Company outstanding at such time; 
 (vii) since the date hereof, there shall not be any action taken, or
any law, rule or regulation enacted, entered, enforced or deemed applicable to the Company or its subsidiaries, the Purchaser (or its affiliates) or the transactions contemplated by this Agreement, by any bank regulatory authority which imposes any
restriction or condition on the Company or its subsidiaries or the Purchaser or any of its affiliates (other than such restrictions as are described in any passivity or anti-association commitments, as

  
 4 

 
may be amended from time to time, entered into by the Purchaser) which the Purchaser determines, in its reasonable good faith judgment, is materially and unreasonably burdensome on the
Company’s business following the Closing or on the Purchaser (or any of its affiliates) or would reduce the economic benefits of the transactions contemplated by this Agreement to the Purchaser to such a degree that the Purchaser would not have
entered into this Agreement had such condition or restriction been known to it on the date hereof (any such condition or restriction, a “Burdensome Condition”), and, for the avoidance of doubt, any requirements to disclose the
identities of limited partners, shareholders or non-managing members of the Purchaser or its affiliates or its investment advisers shall be deemed a Burdensome Condition unless otherwise determined by the Purchaser in its sole discretion; and 

(viii) the Company will have entered into Agreements obligating Purchaser and Other Purchasers to purchase and Company to issue
Shares having an aggregate purchase price of not less than $7,000,000 at the Initial Closing. 
 SECTION 4. Representations, Warranties
and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Purchaser as follows: 
 4.1.
Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Virginia and the Company is qualified to do business as a foreign corporation in each
jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect (as defined in Section 4.5). The subsidiaries listed on Exhibit B hereto (the “Significant
Subsidiaries”) are the Company’s only “significant subsidiaries,” as such term is defined in Rule 405 of the Securities Act and the rules and regulations promulgated thereunder (the “Securities Act Rules and
Regulations”). Each of the Significant Subsidiaries is a direct or indirect wholly-owned subsidiary of the Company. Each of the Significant Subsidiaries is duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect (as defined below). 

4.2. Reporting Company; Form S-1. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and, except with respect to a Current Report on Form 8-K filed with the Commission on June 8, 2015 announcing the results of the Company’s 2015 Annual Meeting of Shareholders, the Purchaser
has filed all reports required thereby to be filed since December 31, 2013 (the “SEC Filings”) on a timely basis. Provided none of the Purchasers is deemed to be an underwriter with respect to any shares, to the Company’s
actual knowledge, there exist no facts or circumstances (including without limitation any required approvals or waivers or any circumstances that may delay or prevent the obtaining of accountant’s consents) that reasonably could be expected to
prohibit or materially delay the preparation and filing of a registration statement on Form S-1 (or such other form which the Company is eligible to use at the time of such filing) that will be available for the resale of the Shares by the
Purchaser. 

  
 5 

 4.3. Authorized Capital Stock. The Company had duly authorized and validly issued
outstanding capitalization as set forth in the SEC Filings as of the date set forth therein; the issued and outstanding shares of the Company’s Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the
description thereof contained in the SEC Filings. Except as disclosed in the SEC Filings, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations. With respect to each of the Significant Subsidiaries (i) all the
issued and outstanding shares of each Significant Subsidiary’s capital stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and (ii) there are no outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of such Significant Subsidiary’s capital stock or any such options, rights, convertible securities or obligations. There are no securities
or instruments issued by or to which the Company is a party containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares. 

4.4. Issuance, Sale and Delivery of the Shares. The Shares have been duly authorized and, when issued, delivered and paid for in the
manner set forth in this Agreement, will be validly issued, fully paid and nonassessable and free and clear of all pledges, liens, restrictions and encumbrances (other than restrictions on transfer under state and/or federal securities laws), and
will conform in all material respects to the description thereof set forth in the Incorporated Documents. No preemptive rights or other rights to subscribe for or purchase any shares of Common Stock of the Company exist with respect to the issuance
and sale of the Shares by the Company pursuant to this Agreement. No shareholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company’s intention to file the
Registration Statement) to require the Company to register the sale of any capital stock owned by such shareholder under the Registration Statement. Except with respect to Shareholder Approval for the issuance of the Approval Shares, if required for
compliance with NASDAQ Listing Rule 5635(d), no further approval or authority of the shareholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein. The
Company understands that the Shares are being offered and sold in reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that the Purchaser is relying upon
the truth and accuracy of, and the Company’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Company set forth herein in order to determine the availability of such exemptions and the
eligibility of the Company to issue the Shares. The Company irrevocably authorizes the Purchaser and the Placement Agent to produce this Agreement or a copy hereof to (i) any regulatory authority having jurisdiction over the Purchaser and its
subsidiaries and (B) any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby, in each case, to the extent required by any court or governmental authority to which the
Purchaser is subject, provided that the Purchaser provides the Company with prior written notice of such disclosure to the extent practicable and allowed by applicable law. 

  
 6 

 4.5. Due Execution, Delivery and Performance of this Agreement. The Company has full legal
right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. Each of the Agreements has been duly authorized, executed and delivered by the Company. Each of the Agreements
constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, conservatorship
and supervisory powers of bank regulatory agencies generally, or other laws of general application relating to or affecting the enforcement of creditors’ rights and the application of equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution, including but not limited to, indemnification provisions set forth in Section 7.8 of this Agreement may be limited by federal or state securities law or the public policy underlying
such laws. The execution, delivery and performance of the Agreements by the Company and (assuming Shareholder Approval is obtained with respect to the issuance of the Approval Shares, if required for compliance with NASDAQ Listing Rule 5635(d)) the
consummation of the transactions herein and therein contemplated will not violate any provision of the articles of incorporation or regulations of the Company or any organizational documents of any Significant Subsidiary and will not result in the
creation of any lien, charge, security interest or encumbrance upon any assets of the Company or any Significant Subsidiary pursuant to the terms or provisions of, and will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under (i) any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or any Significant Subsidiary is a
party or by which the Company or any Significant Subsidiary or their respective properties may be bound or affected and in each case that would have a Material Adverse Effect or (ii) any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the Company or any Significant Subsidiary or any of their respective properties. 

No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body
is required for the Company’s execution and delivery of this Agreement or the Company’s consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to
the offering of the Shares. For the purposes of this Agreement the term “Material Adverse Effect” shall mean a material adverse effect on the financial condition, business, prospects or results of operations of the Company and its
subsidiaries, taken as a whole. 
 4.6. Accountants. Yount, Hyde & Barbour, P.C., which has expressed its opinion with
respect to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, are registered independent public accountants as required by the Securities Act and the Securities
Act Rules and Regulations and by the rules of the Public Accounting Oversight Board. 

  
 7 

 4.7. No Defaults or Consents. Neither the execution, delivery and performance of the
Agreements by the Company nor (assuming Shareholder Approval is obtained with respect to the issuance of the Approval Shares, if required for compliance with NASDAQ Listing Rule 5635(d)) the consummation of any of the transactions contemplated
hereby or thereby (including, without limitation, the issuance and sale by the Company of the Shares) will give rise to a right to terminate or accelerate the due date of any payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under this Agreement, except such defaults that individually or in the aggregate would not cause a Material Adverse Effect, or
require any consent or waiver under, or result in the execution or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or its subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is a party or by which either the Company or its subsidiaries or any of their properties or businesses is bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation applicable to the Company or any of its subsidiaries or violate any provision of the charter or by-laws of the Company or any of its subsidiaries, except for such consents or waivers which have already been
obtained and are in full force and effect. 
 4.8. Contracts. The material contracts to which the Company is a party have been duly
and validly authorized, executed and delivered by the Company and constitute the legal, valid and binding agreements of the Company, enforceable by and against it in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, conservatorship and supervisory powers of bank regulatory agencies generally, or other similar laws relating to enforcement of creditors’ rights generally, and general
equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution may be limited by federal or state securities laws and the public policy underlying such laws. 

4.9. No Actions. There are no legal or governmental actions, suits or proceedings pending or, to the Company’s actual knowledge,
threatened against the Company or any Significant Subsidiary before or by any court, regulatory body or administrative agency or any other governmental agency or body, domestic, or foreign, which actions, suits or proceedings, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect; and no labor disturbance by the employees of the Company exists or, to the Company’s actual knowledge, is imminent, that would reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Significant Subsidiary is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental agency or body that
might have a Material Adverse Effect. 
 4.10. Properties. Each of the Company and its subsidiaries has good and marketable title to
all the properties and assets described as owned by it in the consolidated financial statements included in the SEC Filings, free and clear of all liens, mortgages, pledges, or encumbrances of any kind except (i) those, if any, reflected in
such consolidated financial statements, or (ii) those that are not material in amount and do not adversely affect the use made and proposed to be made of such property by the Company or its subsidiaries. Each of the

  
 8 

 
Company and its subsidiaries hold its leased properties under valid and binding leases, the Company and any subsidiary owns or leases all such properties as are necessary to its operations as now
conducted. 
 4.11. No Material Adverse Change. Since June 30, 2015 (i) there has not occurred any event that has had or
would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect and (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (a) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (b) liabilities not required to be reflected in the Company’s financial statements pursuant to generally accepted accounting
principles or required to be disclosed in filings made with the Commission. 
 4.12. Intellectual Property. The Company and each of
its subsidiaries own, is licensed or otherwise possesses all rights to use, all patents, patent rights, inventions, know-how (including trade secrets and other unpatented or unpatentable or confidential information, systems, or procedures),
trademarks, service marks, trade names, copyrights and other intellectual property rights (collectively, the “Intellectual Property”) material and necessary for the conduct of its business as described in the SEC Filings, except
where the failure to own, license or otherwise possess all rights to use Intellectual Property would not reasonably be expected to have a Material Adverse Effect. No claims have been asserted against the Company or any subsidiary by any person with
respect to the use of any such Intellectual Property or challenging the validity of any such Intellectual Property, other than claims which could not reasonably be expected to have a Material Adverse Effect. 

4.13. Compliance. Neither the Company nor any of its subsidiaries has been advised, nor do any of them have any reason to believe, that
it is (i) not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in compliance would not have a Material Adverse Effect,
(ii) in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any of its subsidiaries under), nor has the Company or any of
its subsidiaries received written notice of a claim that it is in default under or that it is in violation of, any material contract (whether or not such default or violation has been waived), or (iii) in violation of any order of any court,
arbitrator or governmental body having jurisdiction over the Company, its subsidiaries or their respective properties or assets, except, in the case of clauses (ii) or (iii), where such failure or violation would not have a Material Adverse
Effect. 
 4.14. Taxes. The Company and each Significant Subsidiary has filed on a timely basis (giving effect to extensions) all
required federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and none of the Company or any of its subsidiaries has actual knowledge of a tax deficiency that has been or might be
asserted or threatened against it that could have a Material Adverse Effect. All tax liabilities accrued through the date hereof have been adequately reserved for on the books of the Company. 

  
 9 

 4.15. Transfer Taxes. On the Closing Date, all stock (or equivalent) transfer or other
similar taxes (other than income taxes) that are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will have been, fully paid or provided for by the Company and all laws imposing such
taxes will have been fully complied with. 
 4.16. Investment Company. The Company is not, and after application of the proceeds of
the sale of Shares, will not be, an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated thereunder. 
 4.17. Offering Materials. None of the
Company, its directors or officers has distributed and none of them will distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the investor presentation prepared in connection
with the offering of the Shares (including all exhibits, supplements and amendments thereto and all information incorporated by reference therein, the “Investor Presentation”). The Company has not in the past nor will it hereafter
take any action independent of the Placement Agent to sell, offer for sale or solicit offers to buy any securities of the Company that could result in the initial sale of the Shares not being exempt from the registration requirements of
Section 5 of the Securities Act. 
 4.18. Insurance. The Company maintains insurance underwritten by insurers of recognized
financial responsibility, of the types and in the amounts that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other risks customarily insured against, with such deductibles as are customary for companies in the same or similar business, all of which insurance is in full force and effect. 

4.19. Additional Information. The information contained in the following documents, which the Placement Agent has furnished to the
Purchaser, as of the dates thereof, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were
made not misleading: (i) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; (ii) the Company’s Definitive Proxy Statement for Annual Meeting of Shareholders held May 19, 2015;
(iii) the Company’s Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 2015, the fiscal quarter ended June 30, 2015, and the fiscal quarter ended September 30, 2015; (iv) the Company’s Current
Reports on Form 8-K filed with the Commission on January 26, 2015, April 28, 2015, May 13, 2015, June 8, 2015, July 24, 2015, September 4, 2015, September 16,
2015, October 20, 2015, and October 21, 2015; (v) the Investor Presentation; and (vi) all other documents, if any, filed by the Company with the Commission since December 31, 2014 pursuant to the reporting requirements
of the Exchange Act;. 
 4.20. SEC Filings. Each of the Company’s SEC Filings, and any document attached as an exhibit thereto
(the “Incorporated Documents”), at the time it became effective or was filed with the Commission, as the case may be, complied in all material respects with the requirements 

  
 10 

 
of the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder (the “Exchange Act Rules and Regulations” and, together with the Securities Act
Rules and Regulations, the “Rules and Regulations”). In the past 12 calendar months, the Company has filed all documents required to be filed by it prior to the date hereof with the Commission pursuant to the reporting requirements
of the Exchange Act in a timely manner other than the Current Report on Form 8-K filed with the Commission on June 8, 2015 announcing the results of the Company’s 2015 Annual Meeting of Shareholders. 

4.21. Bad Actor. None of the Company nor any predecessor entity, nor, to the Company’s knowledge, any affiliated issuer, director,
general partner, managing member, executive officer, other officer of the Company participating in the offering of the Shares, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, a “Company Covered Person” and, together, “Company Covered
Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its
disclosure obligations set forth in Rule 506(e) under the Securities Act, and the Company has furnished to the Placement Agent a copy of any disclosures provided thereunder. The Company will notify the Placement Agent in writing, prior to the
Closing Date, if any, of any Disqualification Event relating to any Company Covered Person not previously disclosed to the Placement Agent in accordance with this Section. 

4.22. Price of Common Stock. The Company has not taken, and will not take, directly or indirectly, any action designed to cause or
result in, or that has constituted or that might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of the Common Stock to facilitate the sale or resale of the Shares. 

4.23. Non-Public Information. The information included in the Investor Presentation constitutes material, non-public information. Other
than the material, non-public information included in the Investor Presentation, the Company confirms that neither it nor any of its officers or directors nor any other person acting on its or their behalf has provided, and it has not authorized the
Placement Agent to provide, the Purchaser or its respective agents or counsel with any information that it believes constitutes or could reasonably be expected to constitute material, non-public information. On or before 9:00 a.m., New York City
time, on the third business day after the date hereof, the Company shall file a Current Report on Form 8-K disclosing all material, non-public information previously disclosed to the Purchaser, including, without limitation, all material, non-public
information included in the Investor Presentation and the material terms of the transactions contemplated by this Agreement, and attaching as an exhibit to such Form 8-K a form of this Agreement (including such exhibit, the “8-K
Filing”). From and after the filing of the 8-K Filing, the Purchaser shall not be in possession of any material, non-public information received from the Company, any subsidiary or any of their respective officers, directors or employees or
the Placement Agent. The Company shall not, and shall use its best efforts to cause each of its officers, directors, employees and agents not to, 

  
 11 

 
provide the Purchaser with any material nonpublic information regarding the Company from and after the filing of the 8-K Filing without the express written consent of the Placement Agent. The
Company understands and confirms that the Purchaser will rely on the representations and covenants set forth in this section in effecting transactions in securities of the Company. 

4.24. Use of Purchaser Name. Except as otherwise required by applicable law or regulation, the Company shall not use the
Purchaser’s name or the name of any of its affiliates or investment advisers in any advertisement, announcement, press release or other similar public communication unless it has received the prior written consent of the Purchaser for the
specific use contemplated. 
 4.25. Related Party Transactions. No transaction has occurred between or among the Company, on the one
hand, and its affiliates, officers or directors on the other hand, that is required to have been described under applicable securities laws in its Exchange Act filings and is not so described in such filings. 

4.26. Off-Balance Sheet Arrangements. There is no transaction, arrangement or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect. There are no such
transactions, arrangements or other relationships with the Company that may reasonably be expected to create contingencies or liabilities that are not otherwise disclosed by the Company in its Exchange Act filings. 

4.27. Governmental Permits, Etc. The Company and its subsidiaries have all franchises, licenses, certificates and other authorizations
from such federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company as currently conducted, except where the failure to possess currently such
franchises, licenses, certificates and other authorizations is not reasonably expected to have a Material Adverse Effect. Neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of any
such permit that, if the subject of an unfavorable decision, ruling or finding, could reasonably be expected to have a Material Adverse Effect. 

4.28. Financial Statements. The consolidated financial statements of the Company and the related notes and schedules thereto included
in its Exchange Act filings since December 31, 2014 (i) comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing and
(ii) fairly present the financial position, results of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries at the dates and for the periods specified therein, in all material respects. Such
financial statements and the related notes and schedules thereto have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise noted therein) and all
adjustments necessary for a fair presentation of results for such periods have been made; provided, however, that the unaudited financial statements are subject to normal year-end audit adjustments (which are not expected to be material) and do not
contain all footnotes required under generally accepted accounting principles. 

  
 12 

 4.29. Bank Holding Company Act. The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The Company’s banking subsidiary, Bank of the James (the “Bank”), holds the requisite authority from the Virginia Bureau of Financial
Institutions (the “VBFI”) to do business as a Virginia state bank and is a member of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Company and the Bank are in compliance in
all material respects with all laws administered by VBFI, the Federal Reserve Board, the Federal Deposit Insurance Corporation (the “FDIC”) and any other federal authorities (together with the VBFI, the Federal Reserve Board, and
the FDIC, the “Bank Regulatory Authorities”) with jurisdiction over the Company and the Bank, except for failures to be so in compliance that would not, individually or in the aggregate, have a Material Adverse Effect. 

4.30. Deposit Accounts. The deposit accounts of the Bank are insured up to the maximum amount provided by the FDIC and no proceedings
for the modification, termination or revocation of any such insurance are pending or threatened. 
 4.31. No Restrictions on
Subsidiaries. No subsidiary of the Company is currently prohibited, directly or indirectly, under any order of the Federal Reserve Board (other than orders applicable to bank holding companies and their subsidiaries generally), or any agreement
or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary
from the Company or from transferring any of such Subsidiary’s properties or assets to the Company or any other Subsidiary of the Company. 

4.32. Listing Compliance. The Company is in material compliance with the requirements of the NASDAQ for continued listing of the Common
Stock thereon. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or the listing of the Common Stock on the NASDAQ, nor has the Company received any
notification that the Commission or the NASDAQ is contemplating terminating such registration or listing. Assuming Shareholder Approval is obtained prior to the issuance of the Approval Shares, if required for compliance with NASDAQ Listing Rule
5635(d), the transactions contemplated by the Agreements will not contravene in any material respect the rules and regulations of the NASDAQ. The Company will comply with all requirements of the NASDAQ with respect to the issuance of the Shares and
shall cause the Shares to be listed on the NASDAQ and listed on any other exchange on which the Common Stock is listed on or before the Initial Closing Date and, if applicable, with respect to the Approval Shares, the Final Closing Date. 

4.33. Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted 

  
 13 

 
only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company has disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) that are designed to ensure that material information relating to the
Company is made known to the Company’s principal executive officer and the Company’s principal financial officer or persons performing similar functions. The Company is otherwise in compliance in all material respects with all applicable
provisions of the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder. 
 4.34. Foreign Corrupt
Practices. Neither the Company, nor any Significant Subsidiary, nor, to the actual knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the Company or any Significant Subsidiary has, in the course
of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 
 4.35.
ERISA. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder
(herein called “ERISA”); no “reportable event” (as defined in ERISA), other than those events as to which the thirty-day notice period is waived, has occurred with respect to any “pension plan” (as defined in
ERISA) for which the Company would have any material liability; the Company has not incurred and does not reasonably expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension
plan”; or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “Pension Plan” for which the Company
would have liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would reasonably be expected to result in
the loss of such qualification. 
 4.36. Environmental Matters. To the Company’s actual knowledge, there has been no material
storage, disposal, generation, manufacture, transportation, handling or treatment of toxic wastes, hazardous wastes or hazardous substances by the Company or any of its subsidiaries (or, to the actual knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or any of its subsidiaries in material violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or
that would require material remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind into
such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of its

  
 14 

 
subsidiaries or with respect to which the Company or any of its subsidiaries have actual knowledge; the terms “hazardous wastes”, “toxic wastes”, “hazardous
substances”, and “medical wastes” shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. 

4.37. Integration; Other Issuances of Shares. Neither the Company nor its subsidiaries or any affiliates, nor any Person acting on its
or their behalf, has issued any shares of Common Stock or shares of any series of preferred stock or other securities or instruments convertible into, exchangeable for or otherwise entitling the holder thereof to acquire shares of Common Stock which
would be integrated with the sale of the Shares to such Purchaser for purposes of the Securities Act or of any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or designated, nor will the Company or its subsidiaries or affiliates take any action or steps that would require registration of the Shares offered hereby under the
Securities Act or cause the offering of the Shares to be integrated with other securities offerings. Assuming the accuracy of the representations and warranties of Purchasers, the offer and sale of the Shares by the Company to the Purchasers
pursuant to this Agreement will be exempt from the registration requirements of the Securities Act. 
 4.38. Application of Takeover
Protections; Rights Agreements. The Company has not adopted any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company. The Company and its Board of
Directors have taken all action necessary to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
articles of incorporation or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise, which is or could become applicable to the Purchaser as a direct consequence of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the Shares and the Purchaser’s ownership of the Shares. 

4.39. OFAC. Neither the Company nor any subsidiary nor, to the Company’s actual knowledge, any director, officer, agent, employee,
affiliate or person acting on behalf of the Company or any subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
knowingly, directly or indirectly, use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, towards any sales or operations in any
country sanctioned by OFAC or for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC. 

4.40. Money Laundering Laws. The operations of each of the Company and any subsidiary are and have been conducted at all times in
material compliance with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental
agency (collectively, the “Money Laundering Laws”) and, to the Company’s knowledge, no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company and/or
any subsidiary with respect to the Money Laundering Laws is pending or threatened. 

  
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 4.41. Compliance with Certain Banking Regulations. The Company has no actual knowledge of
any facts and circumstances that would cause the Bank, in any material respect: (i) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act and the regulations promulgated thereunder or to be assigned a CRA rating
by federal or state banking regulators of lower than “satisfactory”; (ii) to be deemed to be operating in violation, in any material respect, of the Bank Secrecy Act of 1970 (or otherwise known as the “Currency and Foreign
Transactions Reporting Act”), the USA Patriot Act (or otherwise known as “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001”), any order issued with respect to
anti-money laundering by OFAC or any other anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance, in any material respect, with all applicable privacy of customer information requirements
contained in any federal and state privacy laws and regulations as well as the provisions of all information security programs adopted by the Bank. 

4.42. No Additional Agreements. Except as disclosed in that certain section entitled “Securities Authorized for Issuance Under
Equity Compensation Plans” of the Company’s most recent proxy statement filed with the SEC on April 10, 2015, the Company has no other agreements or understandings (including, without limitation, side letters) with any Purchaser or
other person to purchase Shares on terms more favorable to such Person than as set forth herein. 
 4.43. Reports, Registrations and
Statements. Since January 1, 2014, the Company and the Bank have filed all material reports, registrations and statements, together with any required amendments thereto, that it was required to file with the Bank Regulatory Authorities and
any other applicable federal or state securities or banking authorities, including, without limitation, all financial statements and financial information required to be filed by it under the Federal Deposit Insurance Act and the BHC Act. All such
reports and statements filed with any such regulatory body or authority are collectively referred to herein as the “Company Reports.” Except with respect to a Current Report on Form 8-K filed by the Company with the Commission on
June 8, 2015 announcing the results of the Company’s 2015 Annual Meeting of Shareholders, all such Company Reports were filed on a timely basis or the Company or the applicable subsidiary, as applicable, received a valid extension of such
time of filing and has filed any such Company Reports prior to the expiration of any such extension. As of their respective dates, the Company Reports complied in all material respects with all the rules and regulations promulgated by the Bank
Regulatory Authorities and any other applicable foreign, federal or state securities or banking authorities, as the case may be. 
 4.44.
Agreements with Regulatory Agencies. Neither the Company nor any subsidiary is subject to any cease-and-desist order or other similar order or enforcement action issued by, is a party to any written agreement, consent agreement, memorandum of
understanding, commitment letter or similar agreement with, or is subject to any capital directive from, any governmental entity. In addition, since January 1, 2012, neither the Company nor any subsidiary has adopted any board resolutions at
the request of any governmental entity the effect of which have not been disclosed in the risk factors attached hereto as Exhibit C, that currently restricts in 

  
 16 

 
any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends,
its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each such regulatory order, enforcement action, board resolutions or directive referred to in this Section 4.44, a
“Regulatory Agreement”). In addition, neither the Company nor any subsidiary has been advised by any governmental entity that it is currently considering issuing, initiating, ordering or requesting a Regulatory Agreement. 

4.45. Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1). 

SECTION 5. Representations, Warranties and Covenants of the Purchaser. The Purchaser represents and warrants to, and covenants with,
the Company that: 
 5.1. Experience. (i) The Purchaser is knowledgeable, sophisticated and experienced in financial and
business matters, in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company
and comparable entities, has the ability to bear the economic risks of an investment in the Shares and has reviewed carefully the Investor Presentation and has requested, received, reviewed and considered all information it deems relevant in making
an informed decision to purchase the Shares; (ii) the Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the
number of Shares set forth on the signature page attached hereto in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares (this representation and warranty not limiting the Purchaser’s right to sell pursuant to the Registration Statement or in compliance with the Securities Act and the Rules and
Regulations, or, other than with respect to any claims arising out of a breach of this representation and warranty, the Purchaser’s right to indemnification under Section 7.8); (iii) the Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares, nor will the Purchaser engage in any short sale that results in a disposition of any of the
Shares by the Purchaser, except in compliance with the Securities Act and the Rules and Regulations and any applicable state securities laws; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire
attached hereto as part of Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true and correct as of the date hereof and will be true and correct as of the effective date of the Registration
Statement and the Purchaser will notify the Company immediately of any material change in any such information provided in the Registration Statement Questionnaire until such time as the Purchaser has sold all of its Shares or until the Company is
no longer required to keep the Registration Statement effective; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page attached hereto, relied solely upon the Investor
Presentation and the representations and warranties of the Company contained herein has not relied on the Placement Agent or on any statements or other information provided by the Placement Agent concerning the Company or the terms of this offering;
and (vi) the Purchaser is, and at the time the Purchaser was offered the Shares was, an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. 

  
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 5.2. Reliance on Exemptions. The Purchaser understands that the Shares are being offered
and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that the Company and the Placement Agent (on behalf of its client) is relying upon
the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Shares. The Purchaser irrevocably authorizes the Company and the Placement Agent to produce this Agreement or a copy hereof to (i) any regulatory authority having jurisdiction over the Company and its
subsidiaries and (B) any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby, in each case, to the extent required by any court or governmental authority to which the Company
is subject, provided that the Company provides the Purchaser with prior written notice of such disclosure to the extent practicable and allowed by applicable law. If any of the representations deemed to have been made by it by its purchase of the
Shares are no longer accurate prior to Closing, the Purchaser shall immediately notify the Company and the Placement Agent. If the Purchaser is acquiring the Shares as a fiduciary or agent for one or more investor accounts, it represents that it has
sole investment discretion with respect to each such account and it has full power to make the foregoing representations, acknowledgements and agreements on behalf of such account. 

5.3. No Reliance on Placement Agent. The Purchaser acknowledges that the Placement Agent and its directors, officers, employees,
representatives and controlling persons have no responsibility for making any independent investigation of the information contained in the Investor Presentation or the Company’s Exchange Act Filings and make no representation or warranty to
the Purchaser, express or implied, with respect to the Company or the Shares or the accuracy, completeness or adequacy of the Investor Presentation, the Company’s Exchange Act Filings or any other publicly available information, nor shall any
of the foregoing persons be liable for any loss or damages of any kind resulting from the use of the information contained therein or otherwise supplied to the Purchaser. 

5.4. Confidentiality. Pursuant to the Confidentiality Agreement between Purchaser and Company, Purchaser has previously agreed to keep
confidential all information concerning this private placement. The Purchaser understands that the information contained in the Investor Presentation is strictly confidential and proprietary to the Company and has been prepared from the
Company’s publicly available documents and other information and is being submitted to the Purchaser solely for such Purchaser’s confidential use. The Purchaser agrees to use the information contained in the Investor Presentation for the
sole purpose of evaluating a possible investment in the Shares and the Purchaser acknowledges that it is prohibited from reproducing or distributing the Investor Presentation, this Agreement, or any other offering materials or other information
provided by the Company in connection with the Purchaser’s consideration of its investment in the Company, in whole or in part, or divulging or discussing any of their contents, except to its financial, investment or legal advisors in
connection with its proposed investment in the Shares, or to Other Purchasers subject to a similar duty of confidentiality with the Company, 

  
 18 

 
or as otherwise permitted pursuant to this Agreement. Further, the Purchaser understands that the existence and nature of all conversations and presentations, if any, regarding the Company and
this offering must be kept strictly confidential in accordance with the Confidentiality Agreement. The Purchaser understands that the federal securities laws impose restrictions on trading based on information regarding this offering. In addition,
the Purchaser hereby acknowledges that unauthorized disclosure of information regarding this offering may result in a violation of Regulation FD. The obligations under this Section 5.4 will terminate upon the issuance by the Company of a public
announcement describing this offering, including, without limitation, the 8-K Filing. In addition to the above, the Purchaser shall maintain in confidence the receipt and content of any notice of a Suspension (as defined in Section 7.3 below).
The foregoing agreements shall not apply to any information that is or becomes publicly available through no fault of the Purchaser, or that the Purchaser is legally required to disclose; provided, however, that if the Purchaser is requested or
ordered to disclose any such information pursuant to any court or other government order or any other applicable legal procedure, it shall use commercially reasonable efforts to give prior written notice (unless prohibited by order, law, regulation
or regulatory authority) to the Company within a reasonable time prior to such proposed disclosure so that Company may obtain at its own expense an appropriate protective order or confidential treatment. 

5.5. Investment Decision. The Purchaser understands that nothing in the Agreement or any other materials presented to the Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares. 
 5.6. Risk of Loss. The Purchaser understands that its investment in the Shares involves a
significant degree of risk, including a risk of total loss of the Purchaser’s investment, and the Purchaser has full cognizance of and understands all of the risk factors related to the Purchaser’s purchase of the Shares, including those
risk factors listed in Exhibit C attached hereto. The Purchaser understands that no representation is being made as to the future value or market price of the Common Stock. 

5.7. Residency. The Purchaser’s principal executive offices are in the jurisdiction set forth immediately below the
Purchaser’s name on the signature pages hereto. 
 5.8. Organization; Validity; Enforcements. The Purchaser further represents
and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, (ii) the making and performance of this Agreement by the Purchaser and the consummation of the transactions herein contemplated will not violate any provision of the
organizational documents of the Purchaser or conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Purchaser is a party or, any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body,

  
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administrative agency or other governmental agency or body applicable to the Purchaser, (iii) no consent, approval, authorization or other order of any court, regulatory body, administrative
agency or other governmental agency or body is required on the part of the Purchaser for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, (iv) upon the execution and delivery
of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or the enforcement of creditor’s rights and the application of equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution,
including, but not limited to, the indemnification provisions set forth in Section 7.8 of this Agreement, may be limited by federal or state securities laws or the public policy underlying such laws and (v) there is not in effect any order
enjoining or restraining the Purchaser from entering into or engaging in any of the transactions contemplated by this Agreement. 
 5.9.
Short Sales. Since the time the Purchaser was first contacted by the Placement Agent, the Purchaser has not taken, and prior to the public announcement of the transaction after the Closing the Purchaser shall not take, any action that has
caused or will cause the Purchaser to have, directly or indirectly, sold or agreed to sell any shares of Common Stock, effected any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule
16a-1(h) under the Exchange Act with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived
any significant part of its value from the Common Stock. 
 SECTION 6. Survival of Agreements; Non-Survival of Company Representations
and Warranties. Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants and agreements made by the Company and the Purchaser herein and in the certificates for the Shares (or book–entry
transfer) delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor. Each Purchaser shall be responsible only for its own representations and
warranties, agreements and covenants hereunder. The representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares (or book–entry transfer) delivered pursuant hereto shall survive for a period
of eighteen months following the later of the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor. 

SECTION 7. Other Agreements of the Parties.  

7.1 Shareholder Approval. If the Company is required to obtain Shareholder Approval prior to the issuance of the Approval Shares
pursuant to NASDAQ Listing Rule 5635(d), the Company shall call a special meeting of its shareholders (the “Shareholders’ Meeting”) for the purpose of obtaining the Requisite Shareholder Vote (as defined below) and shall use
its commercially reasonable efforts to cause such Shareholders’ Meeting to occur as promptly as reasonably practicable and in any event no later than 60 days after the Initial Closing Date. Pursuant to the Company’s Amended and Restated
Articles of Incorporation and 

  
 20 

 
applicable law, Shareholder Approval will be obtained if the votes cast by holders of the outstanding Common Stock voting in favor of the issuance of the Approval Shares exceed the votes cast by
holders of the outstanding Common Stock voting against the issuance of the Approval Shares (the “Requisite Shareholder Vote”). Company’s management will use its best efforts to obtain (a) the Board’s recommendation to
the shareholders for approval of the issuance of the Approval Shares, and (b) the Requisite Shareholder Vote. 
 7.2. Registration
Procedures and Expenses. The Company shall: 
 (i) no later than thirty (30) business days following the Initial
Closing Date, prepare and file with the Commission the Registration Statement on Form S-1 (or such other registration statement form which the Company is eligible to use with respect to the resale from time to time) relating to the resale of the
Shares by the Purchaser and the Other Purchasers from time to time on the NASDAQ or the facilities of any national securities exchange on which the Common Stock is then traded or in privately-negotiated transactions; provided, however, that if the
Company seeks Shareholder Approval of the Proposal pursuant to the terms of this Agreement, the Company shall prepare and file the Registration Statement no later than three (3) business days following the later of (a) the Final Closing
Date or (b) the conclusion of the Shareholders’ Meeting pursuant to which the Requisite Shareholder Vote for Shareholder Approval was not obtained (the “Filing Deadline”); 

(ii) use its commercially reasonable efforts, subject to receipt of necessary information from the Purchasers, to cause the
Commission to declare the Registration Statement effective by the earlier of (i) 60 days or, if the Registration Statement is selected for review by the Commission, 90 days, after the Filing Deadline and (ii) the 5th business day after the
date the Company is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be reviewed or will not be subject to further review (such earlier date, the “Effective Deadline”);

 (iii) use its commercially reasonable efforts to promptly prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earliest of (a) two (2) years after the effective date of the Registration
Statement, (b) such time as all of the Shares have been sold pursuant to the Registration Statement, or (c) such time as the Shares become eligible for resale by non-affiliates without any volume limitations or other restrictions pursuant
to Rule 144(b)(1)(i) under the Securities Act or any other rule of similar effect; 
 (iv) furnish to the Purchaser with
respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such number of copies of prospectuses and such other documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser; 

  
 21 

 (v) bear all expenses in connection with the procedures in paragraphs
(i) through (iv) of this Section 7.2 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or
underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any in connection with the offering of the Shares pursuant to the Registration Statement; 

(vi) file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof to the Purchaser
promptly after filing; and 
 (vii) in order to enable the Purchasers to sell the Shares under Rule 144 to the Securities
Act, for a period of one year from the Closing, use its commercially reasonable efforts to comply with the requirements of Rule 144, including without limitation, use its commercially reasonable efforts to comply with the requirements of Rule
144(c)(1) with respect to public information about the Company and to timely file all reports required to be filed by the Company under the Exchange Act. 

The Company understands that the Purchaser disclaims being an underwriter. A draft of the proposed form of the questionnaire related to the
Registration Statement to be completed by the Purchaser is attached hereto as Appendix I.
 7.3. Public Sale or Distribution.
The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without complying with the provisions of this Agreement and without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule) until such time as the Shares can be sold under Rule 144 under the Securities Act without delivery of a prospectus,
and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate (or book-entry transfer) submitted to the transfer agent evidencing the Shares are accompanied by a separate
Purchaser’s Certificate of Subsequent Sale: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (a) Shares have
been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or Blue Sky laws and (b) the prospectus delivery requirement effectively has been satisfied. The Purchaser acknowledges that there
may occasionally be times when the Company must suspend the use of the prospectus (the “Prospectus”) forming a part of the Registration Statement (a “Suspension”) until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. Without the Company’s prior written consent,
which consent shall not unreasonably be withheld or delayed, the Purchaser shall not use any written materials to offer the Shares for resale other than the Prospectus, including any “free writing prospectus” as defined in Rule 405 under
the Securities Act. The Purchaser covenants that it will not sell any Shares pursuant to said Prospectus during the period commencing at the time when Company gives the Purchaser written notice of the suspension of the use of said Prospectus and
ending at the time when the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said Prospectus. Notwithstanding the foregoing, the Company agrees that no Suspension shall be for

  
 22 

 
a period of longer than 60 consecutive days, and no Suspension shall be for a period longer than 90 days in the aggregate in any 365-day period. The Purchaser further covenants to notify the
Company promptly of the sale of all of its Shares. 
 7.4. Delay in Filing or Effectiveness of Registration Statement. If the
Registration Statement is not filed by the Company with the Commission on or prior to the Filing Deadline, then for each day following the Filing Deadline, until but excluding the date the Registration Statement is filed, or if the Registration
Statement is not declared effective by the Commission by the Effective Deadline due to a breach by the Company of its obligations under Section 7.2(ii) hereof, then for each day following the Effective Deadline, until but excluding the date the
Commission declares the Registration Statement effective, the Company shall, for each such day, pay the Purchaser with respect to any such failure, as liquidated damages and not as a penalty, an amount per 30-day period equal to 2.0% of the purchase
price paid by such Purchaser for its Shares pursuant to this Agreement (calculated on a daily pro rata basis for any portion of such 30-day period prior to the cure of such failure); and for any such 30-day period (or earlier period if such failure
is cured prior to 30 days), such payment shall be made no later than three business days following such 30-day period (or earlier period if such failure is cured prior to 30 days). If, due to any failure of the Company to use its commercially
reasonable efforts, the Purchaser shall be prohibited from selling Shares under the Registration Statement as a result of a Suspension of more than thirty (30) days or Suspensions on more than two (2) occasions of not more than thirty
(30) days each in any 12-month period, then for each day on which a Suspension is in effect that exceeds the maximum allowed period for a Suspension or Suspensions, but not including any day on which a Suspension is lifted, the Company shall
pay the Purchaser, as liquidated damages and not as a penalty, an amount per 30-day period equal to 2.0% of the purchase price paid by such Purchaser for its Shares pursuant to this Agreement for each such day (calculated on a daily pro rata basis
for any portion of such 30-day period prior to the cure of such event), and such payment shall be made no later than the first business day of the calendar month next succeeding the month in which such day occurs. For purposes of this
Section 7.4, a Suspension shall be deemed lifted on the date that notice that the Suspension has been lifted is delivered to the Purchaser. Any payments made pursuant to this Section 7.4 shall constitute the Purchaser’s sole and
exclusive legal remedy for such events (provided, that the Purchaser may, in lieu of such legal remedy, sue for specific performance for such events). Notwithstanding the foregoing provisions, in no event shall the Company be obligated to pay any
liquidated damages pursuant to this Section 7.4 to more than one Purchaser in respect of the same Shares for the same period of time. 

7.5. Transfer of Securities After Registration. The Purchaser agrees that it will not effect any disposition of the Shares or its right
to purchase the Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any applicable state securities laws, except as contemplated in the Registration Statement referred to in Section 7.2 or as otherwise
permitted by law, including, without limitation, Rule 144 under the Securities Act. 

  
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 7.6. Legend. The Purchaser understands that, until such time as the Registration Statement
has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the certificates for the Shares
will bear a restrictive legend (or the equivalent if such Shares are held in book entry form) in substantially the following form: 

“THE ISSUANCE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT
FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.” 

7.7. Stop Transfer. The certificates (or book entry transfer) representing the Shares will be subject to a stop transfer order with the
Company’s transfer agent that restricts the transfer of such shares except upon receipt by the transfer agent of a written confirmation from the Purchaser to the effect that the Purchaser has satisfied its prospectus delivery requirements, in
the form attached as Exhibit A hereto. At such time as the Shares are no longer required to bear a restrictive legend (or the equivalent if such Shares are held in book entry form), the Company agrees that it will, no later than five business
days after delivery by the Purchaser to the Company or its transfer agent of a certificate (or book-entry transfer) (in the case of a transfer, in the proper form for transfer) representing Shares issued with the foregoing restrictive legend (or the
equivalent if such Shares are held in book entry form), deliver or cause to be delivered to the Purchaser a certificate (or book-entry transfer) representing such Shares that is free from all restrictive and other legends (or the equivalent if such
Shares are held in book entry form). 
 7.8. Indemnification. For the purpose of this Section 7.8: (i) the term
“Purchaser/Affiliate” shall mean any affiliate of the Purchaser, including, without limitation, any general partner or managing member of the Purchaser, any investment adviser of the Purchaser, or any transferee who is an affiliate
of the Purchaser, and any person who controls the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act; and (ii) the term “Registration
Statement” shall include any preliminary prospectus, final prospectus, free writing prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated by reference in, the Registration Statement referred
to in Section 7.2. 
 (a) The Company agrees to indemnify and hold harmless the Purchaser and each Purchaser/Affiliate, against any
losses, claims, damages, liabilities or expenses, joint or several, that the Purchaser or Purchaser/Affiliate incurs, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the 

  
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Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) (i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the
Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rules 430B, 430C or 434, of the Rules and Regulations, or the Prospectus, in
the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading
or in the Prospectus or any amendment or supplement thereto not misleading in light of the circumstances under which they were made or (ii) arise out of or are based in whole or in part on any inaccuracy in the representations or warranties of
the Company contained in this Agreement, or any failure of the Company to perform its obligations hereunder or under law, and will promptly reimburse each Purchaser and each Purchaser/Affiliate for any legal and other out-of-pocket expenses as such
expenses are reasonably incurred and documented by such Purchaser or such Purchaser/Affiliate in connection with investigating, defending or preparing to defend, settling, compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable for amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld, and the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) the gross negligence or willful misconduct of such
Purchaser, or (ii) an untrue statement or omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use therein, or (iii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 7.3 or 7.5 hereof respecting the sale of the Shares, or (iv) the material inaccuracy of any
representation or warranty made by such Purchaser herein , or (v) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser. Any such indemnified Purchaser shall return all payments made hereunder if it is determined, by a final, non-appealable judgment by a court or arbitral tribunal, that the losses for which such payments were made resulted from such
Indemnified Person’s gross negligence or willful misconduct. 
 (b) Each Purchaser will severally, but not jointly, indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any losses, claims, damages, liabilities or expenses that the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person incurs, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, but only if such settlement is effected with the written 

  
 25 

 
consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are proximately based upon
(i) any failure to comply with the covenants and agreements contained in Sections 7.3 or 7.5 hereof respecting the sale of the Shares or (ii) the material inaccuracy of any representation or warranty made by such Purchaser herein or
(iii) any untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under
which they were made, in each case to the extent, but only to the extent, that such untrue statement or omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser expressly for use therein; and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that each Purchaser’s aggregate liability under this Section 7.8 shall not exceed the amount of proceeds received by such Purchaser on the sale of the Shares
pursuant to the Registration Statement. 
 (c) Promptly after receipt by an indemnified party under this Section 7.8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.8 promptly notify the indemnifying party in writing thereof, but the omission to notify the
indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 7.8 to the extent it is not prejudiced as a result of such
failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it
may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the
indemnified party, and the indemnifying party and the indemnified party shall have reasonably concluded, based on an opinion of counsel reasonably satisfactory to the indemnifying party, that there may be a conflict of interest between the positions
of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its election to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under
this Section 7.8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the

  
 26 

 
assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than
one separate counsel, reasonably satisfactory to such indemnifying party, representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. In no event
shall any indemnifying party be liable in respect of any amounts paid in settlement of any action unless the indemnifying party shall have approved in writing the terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and
indemnification could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 

(d) If the indemnification provided for in this Section 7.8 is required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 7.8 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the private placement of Shares hereunder or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement and/or the
Registration Statement that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and each Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the
“Difference”) between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company on the one hand
and each Purchaser on the other shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged
inaccurate representation and/or warranty relates to information supplied by the Company or by such Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 7.8, any legal
or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (c) of this Section 7.8 with respect to the notice of the commencement of
any action shall apply if a claim for contribution is to be made under this paragraph (d); 

  
 27 

 
provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (c) for purposes of indemnification. The
Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 7.8 were determined solely by pro rata allocation (even if the Purchaser were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.8, no Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers’ obligations to contribute pursuant to
this Section 7.8 are several and not joint. 
 7.9. Termination of Conditions and Obligations. The restrictions imposed by
Section 7.3 or Section 7.5 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the earlier of (i) the passage of two years from the effective date of the Registration
Statement covering such Shares and (ii) at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities
Act. 
 7.10. Information Available. The Company, upon the reasonable request of the Purchaser, shall make available for inspection
by each Purchaser, any deemed underwriter participating in any disposition pursuant to the Registration Statement and any attorney, accountant or other agent retained by the Purchaser or any deemed underwriter, all financial and other records,
pertinent corporate documents and properties of the Company. 
 SECTION 8. Broker’s Fee. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. The Purchaser and the Company agree that the Purchaser shall not be responsible for such fee and that the Company will indemnify and hold
harmless the Purchaser and each Purchaser/Affiliate against any losses, claims, damages, liabilities or expenses, joint or several, that such Purchaser or Purchaser/Affiliate incurs with respect to such fee. Each of the parties hereto represents
that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser. 

SECTION 9. Independent Nature of Purchasers’ Obligations and Rights. The obligations of the Purchaser under this Agreement are
several and not joint with the obligations of any Other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any Other Purchaser under the Agreements. The decision of each Purchaser to purchase the
Shares pursuant to the Agreements has been made by such Purchaser independently of any other Purchaser. Nothing contained in the Agreements, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Agreements.
Each Purchaser acknowledges that no other 

  
 28 

 
Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring
its investment in the Shares or enforcing its rights under this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. 
 SECTION 10. Notices. All
notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and
shall be deemed given when so mailed and shall be delivered as addressed as follows: 
 (a) if to the Company, to: 

Bank of the James Financial Group, Inc. 

828 Main Street 
 Lynchburg,
Virginia 24504 
 Attention: Robert R. Chapman III 

Facsimile: (434) 455-7575 

E-mail: rchapman@bankofthejames.com 

with a copy to: 

Edmunds & Williams, P.C. 

828 Main Street, 19th Floor 

Lynchburg, Virginia 24504 

Attention: Darryl D. Whitesell or Eric J. 

Sorenson, Jr. 
 Facsimile:
(434) 846-0337 
 E-mail: dwhitesell@ewlaw.com or 

rsorenson@ewlaw.com 
 or to such other person at
such other place as the Company shall designate to the Purchaser in writing; and 
 (b) if to the Purchaser, at its address as set forth at
the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing. 
 SECTION 11.
Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Purchaser. Any amendment or waiver effected in accordance with this Section 11 shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding, each future holder of all such securities, and the Company. 

SECTION 12. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and
shall not be deemed to be part of this Agreement. 

  
 29 

 SECTION 13. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect and in lieu of such invalid or unenforceable provision there shall be automatically added as part
of this Agreement a valid and enforceable provision as similar in terms to the invalid or unenforceable provision as possible, provided that this Agreement as amended, (i) reflects the intent of the parties hereto, and (ii) does not change
the bargained for consideration or benefits to be received by each party hereto. 
 SECTION 14. Governing Law; Venue. This Agreement
is to be construed in accordance with and governed by the federal law of the United States of America and the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the Commonwealth of Virginia to the rights and duties of the parties. 
 SECTION 15.
Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties. Facsimile signatures shall be deemed original signatures. 

SECTION 16. Entire Agreement. This Agreement and the instruments referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. Each party
expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement. 

SECTION 17. Fees and Expenses. Except as set forth herein, each of the Company and the Purchaser shall pay its respective fees and
expenses related to the transactions contemplated by this Agreement. 
 SECTION 18. Parties. This Agreement is made solely for the
benefit of and is binding upon the Purchaser and the Company and to the extent provided in Section 7.8, any person entitled to indemnification thereunder, and their respective executors, administrators, successors and assigns and, subject to
the provisions of Section 7.8, no other person shall acquire or have any right under or by virtue of this Agreement. The term “successor and assigns” shall not include any subsequent purchaser, as such purchaser, of the Shares sold to
the Purchaser pursuant to this Agreement. 
 SECTION 19. Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to give such further written assurance as may be reasonably requested by any other party to evidence and reflect the transactions described herein and contemplated hereby
and to carry into effect the intents and purposes of this Agreement. 

  
 30 

 SECTION 20. Third-Party Beneficiary. The Company and the Purchaser each agrees that the
Placement Agent shall be, and is hereby, named as an express third-party beneficiary of this Agreement solely with respect to the representations and warranties of the Company and the Purchaser contained in Section 4 and Section 5,
respectively, with full rights as such. 
 SECTION 21. No Change of Control. The Company shall use reasonable best efforts to obtain
all necessary irrevocable waivers, adopt any required amendments and make all appropriate determinations so that the issuance of the Shares to the Purchasers will not trigger a “change of control” or other similar provision in any of the
agreements to which the Company or any of its subsidiaries is a party, including without limitation any employment, “change in control,” severance or other agreements and any benefit plan, which results in payments to the counterparty or
the acceleration of vesting of benefits. 
 SECTION 22. Avoidance of Control. Notwithstanding anything to the contrary in this
Agreement, neither the Company nor any subsidiary shall take any action (including, without limitation, any redemption, repurchase, rescission or recapitalization of Common Stock, or securities or rights, options or warrants to purchase Common
Stock, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for Common Stock in each case, where the Purchaser is not given the right to participate in such redemption, repurchase,
rescission or recapitalization to the extent of the Purchaser’s pro rata proportion), that would cause the Purchaser’s ownership of any class of voting securities of the Company (together with the ownership by such Purchaser’s
affiliates (as such term is used under the BHC Act) of voting securities of the Company) to exceed 4.9%, without the prior written consent of the Purchaser, or to increase to an amount that would constitute “control” under the BHC Act, the
CIBC Act or any rules or regulations promulgated thereunder (or any successor provisions) or otherwise cause the Purchaser to “control” the Company under and for purposes of the BHC Act, the CIBC Act or any rules or regulations promulgated
thereunder (or any successor provisions). Notwithstanding anything to the contrary in this Agreement, no Purchaser (together with its affiliates (as such term is used under the BHC Act)) shall have the ability to purchase more than 9.9% of the total
outstanding voting securities of the Company. In the event either the Company or the Purchaser breaches its obligations under this Section 22 or believes that it is reasonably likely to breach such an obligation, it shall promptly notify the
other party hereto and shall cooperate in good faith with such party to modify ownership or make other arrangements or take any other action, in each case, as is necessary to cure or avoid such breach. 

SECTION 23. Termination. 

(a) This Agreement may be terminated and the sale and purchase of the Shares abandoned at any time prior to the Initial Closing by either the
Company or the Purchaser upon written notice to the other, if the Initial Closing has not been consummated on or prior to 5:00 p.m., Eastern Standard time, on the 30th day following the date of this Agreement; provided that if such day is not a
business day, the first day following such day that is a business day; provided, however, that the right to terminate this Agreement under this Section 23 shall not be available to any person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Initial Closing to occur on or before such time. 

  
 31 

 (b) If the Company is required to obtain Shareholder Approval prior to the issuance of the
Approval Shares pursuant to NASDAQ Listing Rule 5635(d), this Agreement may be terminated with respect to the sale and purchase of the Approval Shares at any time prior to the Final Closing by either the Company or the Purchaser upon written notice
to the other, if the Final Closing has not been consummated on or prior to 5:00 p.m., Eastern Standard time, on the 30th day following the date of the Shareholders’ Meeting (including any adjournments or postponements thereof); provided that if
such day is not a business day, the first day following such day that is a business day; provided, however, that the right to terminate this Agreement under this Section 23(b) shall not be available to any person whose failure to comply with
its obligations under this Agreement has been the cause of or resulted in the failure of the Final Closing to occur on or before such time. 

(c) Nothing in this Section 23 shall be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement. In the event of a termination pursuant to this Section 23, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with this Section, the Company and the Purchaser shall not have any further obligation or liability (including arising from such termination) to the other. 

  
 32 

 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above written. 
 BANK OF THE JAMES FINANCIAL GROUP, INC. 

 

			
	By:	 	  

	Name:	 	
	Title:	 	

 Print or Type: 
  

			
	  

	 Name of Purchaser
 (Individual or
Institution)

	
	  

	Jurisdiction of Purchaser’s Executive Offices
	
	  

	 Name of Individual representing

Purchaser (if an Institution)

	
	  

	 Title of Individual representing

Purchaser (if an Institution)

 Signature by: 
  

			
	Individual Purchaser or Individual representing Purchaser:
	  

	Address:	 	  

	Telephone:	 	  

	Facsimile:	 	  

	E-mail:	 	  

  

									
	 Number of Shares to Be Purchased
	  	Price Per
Share in Dollars	 	  	Aggregate
Price	 
		  	$	                	  	  	$	                	  

  
 33 

 EXHIBIT A 

LETTER TO TRANSFER AGENT 

                , 2015 

                          
   

	
	Attention:                            

                          
   

                          
   

                          
   
 Re: Bank of the James Financial Group, Inc. (the “Company”) PIPE Transaction 

Dear Ladies and Gentlemen: 

                       
             , a purchaser in the Bank of the James Financial Group, Inc. PIPE transaction, understands: (i) that the shares of common stock were offered and sold in reliance
upon specific exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and (ii) that the Company is relying on the truth and accuracy of, and compliance by each purchaser
with, the representations, warranties, agreements, acknowledgements and understandings made by the purchaser pursuant to Section 5 of that certain Purchase Agreement, dated on or about November     , 2015 (the
“Purchase Agreement”) as executed by the Company and the purchaser. 
 In connection therewith, we hereby covenant with the
Company not to make any sale of the shares without complying in all material respects with the provisions of the Purchase Agreement and without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied. We
agree with the Company that the shares will be transferable only upon the delivery to the transfer agent of the Purchaser’s Certificate of Subsequent Sale pursuant to the Registration Statement (included as an appendix to the Purchase
Agreement). We acknowledge receipt of the shares, free of restrictive legend (or the equivalent if such Shares are held in book entry form), in recognition of the fact that a registration statement relating to their resale by us from time to time
has been declared effective, subject to these limitations on transferability. We further understand that you will be relying on our representations and covenants made in the Purchase Agreement and in this letter. 

 

			
	Sincerely,
		
	By:	 	  

	Name:	 	
	Title:	 	

 EXHIBIT B 

SIGNIFICANT SUBSIDIARIES 
  

					
	 Subsidiary
	  	Jurisdiction of
Incorporation	 
	 Bank of the James
	  	 	Virginia	  

 EXHIBIT C 

RISK FACTORS 
 The following risk
factors and other information included in this Agreement and the Company’s filings with the SEC should be carefully considered. Our business, financial condition, results of operations and cash flows could be harmed by any of the risk factors
described below, or other risks that have not been identified or which we believe are immaterial or unlikely. 
 As used herein, the
“Company”, “we” and “us” interchangeably refer to Bank of the James Financial Group, Inc., and the “Bank”, “we” and “us” interchangeably refer to our subsidiary bank, Bank of the James,
Inc., as appropriate to the context. 
 RISKS RELATED TO OUR BUSINESS 

Our profitability depends significantly on local economic conditions. 

Our success depends primarily on the general economic conditions of the primary markets in Virginia in which we operate and where our loans are concentrated.
Unlike nationwide banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in the Lynchburg metropolitan statistical area (“MSA”). Lynchburg’s MSA, which is often
referred to as Region 2000, consists of approximately 2,122 square miles, and includes the City of Lynchburg and the Counties of Bedford, Campbell, Amherst and Appomattox. To a lesser extent, our lending market includes, or is planned to include,
the Roanoke, Charlottesville and Harrisonburg MSAs. Our Roanoke presence is limited to mortgage origination and our existing and planned Charlottesville operations are (or will be) less than full service banking. Our existing business presence in
localities outside of Region 2000 has a short operating history or is presently limited in scope, or both. As of July 2015, the Lynchburg MSA had an unemployment rate of 5.3% compared to a statewide average of 4.7%. 

The local economic conditions in these areas have a significant impact on the Company’s commercial and industrial, real estate and construction loans,
the ability of its borrowers to repay their loans and the value of the collateral securing these loans. In addition, if the population or income growth in the Company’s market areas is slower than projected, income levels, deposits and housing
starts could be adversely affected and could result in a reduction of the Company’s expansion, growth and profitability. If the Company’s market areas experience a downturn or a recession for a prolonged period of time, the Company could
experience significant increases in nonperforming loans, which could lead to operating losses, impaired liquidity and eroding capital. A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, outbreaks
of hostilities or other international or domestic calamities, unemployment, monetary and fiscal policies of the federal government or other factors could impact these local economic conditions and could negatively affect the Company’s financial
condition, results of operations and cash flows. 
 Our business may be adversely affected by conditions in the financial markets and economic
conditions generally.
 The Company’s financial performance generally, and in particular the ability of borrowers to pay interest on and repay
principal of outstanding loans and the value of collateral securing those loans, is highly dependent upon the business environment in the markets where the Company operates and in the United States as a whole. A favorable business environment is
generally characterized by, among other factors, economic growth, efficient capital markets, 

 
low inflation, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business
activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; natural disasters; or a combination of these or other factors.

The United States has not returned to the level of growth typical prior to the severe economic recession in 2008 and 2009. Loan portfolio quality is impacted
by weak general economic conditions, which hamper prospects for loan repayment and pressure the value of real estate collateral that supports many commercial and residential loans. These events have also reduced demand for the construction of new
housing and increased delinquencies in construction, residential and commercial mortgage loans in many markets in the United States. 
 Our lending business
is tied in part to the real estate market, which could be weakened if economic conditions worsen. We remain vulnerable to adverse changes affecting the real estate market and business conditions. Such conditions or a significant weakening in general
economic conditions such as inflation, recession, unemployment or other factors beyond our control, or both, could negatively affect the credit quality of the Company’s loans, results of operations and our financial results. Finally, negative
developments in the securities markets could adversely affect the value of our securities. 
 A significant portion of our loan portfolio is secured
by real estate, and events that negatively impact the real estate market could hurt our business. 
 At June 30, 2015 and December 31,
2014, approximately 64.73% and 65.03%, respectively, of our loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the
borrower and may deteriorate in value during the time the credit is extended. Because most of our loans are concentrated in the Region 2000 area in and surrounding the City of Lynchburg, a decline in local economic conditions may have a greater
effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse. A weakening of the real estate market in our primary market areas could
result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality. If we are required to
liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected. Additionally, acts of nature, including hurricanes, tornados, earthquakes, fires and
floods, which may cause uninsured damage and other loss of value to real estate that secures these loans, may also negatively impact our financial condition. 

Our loan portfolio contains a number of real estate loans with relatively large balances. 

At December 31, 2014, the portion of our loan portfolio that contained real estate loans with balances in excess of $1,000,000 was $82.7 million, which
represented 20.82% of our total loan portfolio. Because our loan portfolio contains a number of real estate loans with balances in excess of $1,000,000, the deterioration of one or a few of these loans could cause a significant increase in
nonperforming loans, which could result in a net loss of earnings, an increase in the provision for loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on our financial condition and results of
operations. 

 Commercial real estate loans increase our exposure to credit risk. 

At June 30, 2015 and December 31, 2014, 51.74% and 51.90%, respectively, of our loan portfolio was secured by commercial real estate. Loans secured
by commercial real estate are generally viewed as having more risk of default than loans secured by residential real estate or consumer loans because repayment of the loans often depends on the successful operation of the property, the income stream
of the borrowers, the accuracy of the estimate of the property’s value at completion of construction, and the estimated cost of construction. An adverse development with respect to one lending relationship can expose us to a significantly
greater risk of loss compared with a single-family residential mortgage loan because we typically have more than one loan with such borrowers. Additionally, these loans typically involve larger loan balances to single borrowers or groups of related
borrowers compared with single-family residential mortgage loans. Therefore, the deterioration of one or a few of these loans could cause a significant decline in the related asset quality. These loans represent higher risk and could result in a
sharp increase in loans charged-off and could require us to significantly increase our allowance for loan losses, which could have a material adverse impact on our business, financial condition, results of operations, and cash flows. 

A percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines. 

All of the loans that we make are subject to written loan policies adopted by our board of directors and to supervisory guidelines imposed by our regulators.
Our loan policies are designed to reduce the risks associated with the loans that we make by requiring our loan officers to take certain steps that vary depending on the type and amount of the loan, prior to closing a loan. These steps include,
among other things, making sure the proper liens are documented and perfected on property securing a loan, and requiring proof of adequate insurance coverage on property securing loans. Loans that do not fully comply with our loan policies are known
as “exceptions.” We categorize exceptions as policy exceptions, financial statement exceptions and document exceptions. As a result of these exceptions, such loans may have a higher risk of loan loss than the other loans in our portfolio
that fully comply with our loan policies. In addition, we may be subject to regulatory action by federal or state banking authorities if they believe the number of exceptions in our loan portfolio represents an unsafe banking practice. 

As a community bank, we have different lending risks than larger banks. We provide services to individuals and small to medium-sized businesses in our
local markets who may have fewer financial resources to weather a downturn in the economy. 
 Our ability to diversify our economic risks is limited
by our own local markets and economies. We lend primarily to small to medium-sized businesses, professionals, and individuals which may expose us to greater lending risks than those of banks lending to larger, better-capitalized
businesses with longer operating histories. For instance, small to medium-sized businesses frequently have smaller market share than their competition, may be more vulnerable to economic downturns, have fewer financial resources in terms of
capital or borrowing capacity than larger entities, often need substantial additional capital to expand or compete and may experience significant volatility in operating results. Any one or more of these factors may impair the borrower’s
ability to repay a loan. In addition, the success of a small to medium-sized business often depends on the management talents and efforts of one or two persons or a small group of persons, and the death, disability or resignation of one or more of
these persons could have a material adverse impact on the business and its ability to repay a loan. Economic downturns and other events that negatively impact the Company’s market areas could cause the Company to incur substantial credit losses
that could negatively affect the Company’s results of operations and financial condition. 

 We depend on the accuracy and completeness of information about clients and counterparties and our
financial condition could be adversely affected if it relies on misleading information. 
 In deciding whether to extend credit or to enter into
other transactions with clients and counterparties, we may rely on information furnished to us by or on behalf of clients and counterparties, including financial statements and other financial information, which we do not independently verify as a
matter of course. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding
whether to extend credit to customers, we may assume that a customer’s audited financial statements conform with U.S. Generally Accepted Accounting Principles (“GAAP”) and present fairly, in all material respects, the financial
condition, results of operations and cash flows of the customer. Our financial condition and results of operations could be negatively impacted to the extent we rely on financial statements that do not comply with GAAP or are materially misleading.

 If we suffer loan losses from a decline in credit quality, our earnings will decrease. 

We could sustain losses if borrowers, guarantors, and related parties fail to perform in accordance with the terms of their loans. We have adopted underwriting
and credit monitoring procedures and policies, including the establishment and review of the allowance for loan losses that we believe are appropriate to minimize this risk by assessing the likelihood of nonperformance, tracking loan performance,
and diversifying our credit portfolio. These policies and procedures, however, may not prevent unexpected losses that could materially adversely affect our results of operations. 

These policies and procedures necessarily rely on our making various assumption and judgments about the collectability of our loan portfolio, including the
creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and
delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover probable incurred losses in our loan portfolio, resulting in additions to our allowance.
While our allowance for loan losses was 1.20% of total loans at December 31, 2014 and 1.10% as of June 30, 2015, future additions to our allowance could materially decrease our net income. 

In addition, the Federal Reserve Bank of Richmond (“Federal Reserve”) and the Virginia Bureau of Financial Institutions (“BFI”)
periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by regulatory
authorities might have a material adverse effect on our financial condition and results of operations. 
 The markets for our deposit and lending
products and services are highly competitive, and we face substantial competition. 
 The banking and financial services industry is highly
competitive. We compete as a financial intermediary with other commercial banks, savings banks, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms soliciting business from residents of and
businesses located in the Virginia localities where the Bank has a presence, surrounding areas and elsewhere. Many of these competing institutions have nationwide or regional operations and have greater resources than we have. We also face
competition from local community institutions such as ours that serve the local markets only. Many of our competitors enjoy competitive advantages, including greater name recognition, financial resources, a wider geographic presence or more
accessible branch office locations, the ability to offer additional services, greater marketing resources, 

 
more favorable pricing alternatives for loans and deposits, and lower origination and operating costs. We are also subject to lower lending limits than our larger competitors. Our
profitability depends upon our continued ability to successfully compete in our market areas. Increased deposit competition could increase our cost of funds and could adversely affect our ability to generate the funds necessary for our lending
operations. If we must raise interest rates paid on deposits or lower interest rates charged on our loans, our net interest margin and profitability could be adversely affected. Competition could result in a decrease in loans we originate
and could negatively affect our ability to grow and the results of operations. 
 Technology has lowered barriers to entry and made it possible for
non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to
their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can. 

We have increased and plan to continue to increase our levels of commercial and industrial loans. We may not be successful in continuing to penetrate
this market segment, which has helped to drive some of our recent earnings. 
 At December 31, 2014, approximately15.84% of our loans were
commercial and industrial loans and, as of June 30, 2015, the Bank’s portfolio of commercial and industrial loans increased to 16.41%. We intend to originate these types of loans in a manner that is consistent with safety and soundness.

 These non-residential loans generally expose us to greater risk of loss than one- to four-family residential mortgage loans, as repayment of such
commercial and industrial loans generally depends, in large part, on the borrower’s business to cover operating expenses and debt service. In addition, these types of loans typically involve larger loan balances to single borrowers or groups of
related borrowers compared to one- to four-family residential mortgage loans. Changes in economic conditions that are beyond our and the borrower’s control could affect the value of the security for the loan, the future cash flow of the
affected business. As we increase our portfolio of these loans, we may experience higher levels of non-performing assets or loan losses, or both. 

Opening new branches may not result in increased assets or revenues for us, or may negatively impact our earnings. 

We opened a new branch in Harrisonburg, Virginia on October 1, 2015 and plan to open an additional branch in Charlottesville, Virginia in 2016. The
initial costs to start up, and the additional costs to operate, these new branches may negatively impact our earnings and efficiency ratio in the short term. There is a risk that we will be unable to manage our growth, as the process of opening new
branches may divert our time and resources. There is a risk that, if we do open the Charlottesville branch or other new branches, they may not be profitable, which would negatively impact our results of operations. In addition, any new branches will
be subject to regulatory approval, and there can be no assurance that we will succeed in securing such approval. 

 Our plans for future expansion depend, in some instances, on factors beyond our control, and an
unsuccessful attempt to achieve growth could have a material adverse effect on our business, financial condition, results of operations and future prospects. 

We expect to continue to engage in new branch expansion in the future. We may also seek to acquire other financial institutions, or parts of those
institutions, though we have no present plans in that regard. Expansion involves a number of risks, including:
  

	 	•	 	the time and costs of evaluating new markets, hiring experienced local management and opening new offices;

  

	 	•	 	the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion;

  

	 	•	 	our entrance into new markets where we lack experience; 

  

	 	•	 	the introduction of new products and services with which we have no prior experience into our business; 

  

	 	•	 	failure to culturally integrate an acquisition target or new branches or failing to identify and select the optimal candidate for integration or expansion; and 

 

	 	•	 	failure to identify and retain experienced key management members with local expertise and relationships in new markets. 

We may continue to acquire and hold other real estate owned (“OREO”) properties, which could lead to increased operating expenses and
vulnerability to additional declines in the market value of real estate in our areas of operations. 
 At June 30, 2015 and December 31,
2014, our OREO balances were $2,065,000 and $956,000, respectively. From time-to-time, we foreclose on and take title to the real estate serving as collateral for our loans as part of our business. If our OREO balance increases, management expects
that our earnings will be negatively affected by various expenses associated with OREO, including personnel costs, insurance and taxes, completion and repair costs, valuation adjustments, and other expenses associated with property ownership. Also,
at the time that we foreclose on a loan and take possession of a property we estimate the value of that property using third party appraisals and opinions and internal judgments. OREO property is valued on our books at the estimated market value of
the property, less the estimated costs to sell (or “fair value”). Upon foreclosure, a charge-off to the allowance for credit losses is recorded for any excess between the value of the asset on our books over its fair value. Thereafter, we
periodically reassess our judgment of fair value based on updated appraisals or other factors, including, at times, at the request of our regulators. Any further declines in our estimate of fair value for OREO will result in additional charge-offs,
with a corresponding expense in our statements of income that is recorded under the line item for “OREO Write-downs.” As a result, our results of operations are vulnerable to additional declines in the market for residential and commercial
real estate in the areas in which we operate. The expenses associated with OREO and any further property write downs could have a material adverse effect on our results of operations and financial condition. Any increase in nonaccrual loans may lead
to further increases in our OREO balance in the future.
 Additional growth and regulatory requirements may require us to raise additional capital in
the future, and capital may not be available when it is needed, which could adversely affect our financial condition, and results of operations. 

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. The boards of the Company and the
Bank are taking steps to ensure that the capital plan aligns with the Bank’s strategic plan, that all material risks to the Bank are identified and measured, and that capital limits are appropriate for the institution’s risk profile.
Failure to successfully implement such steps could have a material adverse effect on our financial condition and results of operations. We intend to use the proceeds of this offering to 

 
retire $10,000,000 of the Company’s debt. This will more closely align our consolidated capital ratios with those of the Bank. We anticipate that this will provide us with capital resources
sufficient to satisfy our capital requirements that we need for continued growth. We may at some point, however, need to raise additional capital to support our continued growth. Our ability to raise additional capital, if needed, will depend on
conditions in the capital markets at that time, which are outside of our control, and on our financial performance. Accordingly, we can make no assurances of our ability to raise additional capital, if needed, on terms acceptable to us. If we cannot
raise additional capital when needed, our ability to further expand our operations could be materially impaired.
 Our corporate culture has
contributed to our success, and if we cannot maintain this culture as we grow, we could lose the teamwork and increased productivity fostered by our culture, which could harm our business. 

We believe that a critical contributor to our success has been our corporate culture, which we believe fosters teamwork and increased productivity. As our
organization grows and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our future
success.
 If we fail to retain our key employees, our growth and profitability could be adversely affected. 

Our success is, and is expected to remain, highly dependent on our executive management team. Four of our key executives are Robert R. Chapman III
(President of the Company and President and CEO of the Bank), J. Todd Scruggs (Secretary-Treasurer of the Company and Executive Vice President and CFO of the Bank), Harry P. “Chip” Umberger (Executive Vice President and Senior Credit
Officer of the Bank), and Michael A. Syrek (Executive Vice President and Senior Loan Officer of the Bank). We are especially dependent on these executives as well as other key personnel because, as a community bank, we depend on our management
team’s ties to the community to generate business for us, and our executives have key expertise needed to implement our business strategy. Our executive management and other key personnel have not signed non-competition covenants. 

Competition for personnel is intense, and we may not be successful in attracting or retaining qualified personnel. Our failure to compete for these personnel,
or the loss of the services of several of such key personnel, could adversely affect our growth strategy and seriously harm our business, results of operations, and financial condition. 

As a community bank, our ability to maintain our reputation is critical to the success of our business and our failure to do so may materially adversely
affect our performance. 
 As a community bank, our reputation is one of the most valuable components of our business. As such, we strive to conduct
our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers
and caring about our customers and associates. Negative publicity can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance, acquisitions, and actions taken by government regulators
and community organizations in response to those activities. If our reputation is negatively affected, by the actions of our employees or otherwise, there may be an adverse effect on our ability to keep and attract customers, and we might be exposed
to litigation and regulatory action. Any of such events could harm our business, and, therefore, our operating results may be materially adversely affected. As a financial services company with a high profile in our market area, we are inherently
exposed to this risk. While we take steps to minimize reputation risk in dealing with customers and other constituencies, we will continue to face additional challenges maintaining our reputation with respect to customers of the Bank in our current
primary market area in Region 2000 and in building our reputation in the new market areas where we are establishing our reputation. 

 Our decisions regarding how we manage our credit exposure may materially and adversely affect our business.

 We manage our credit exposure through careful monitoring of lending relationships and loan concentrations in particular industries, and through
loan approval and review procedures. 
 We have established an evaluation process designed to determine the adequacy of our allowance for loan losses. While
this evaluation process uses historical and other objective information, the classification of loans and the establishment of loan losses is an estimate based on experience, judgment, and expectations regarding our borrowers, the economies in which
we and our borrowers operate, as well as the judgment of our regulators. Our board and senior management are continuing to improve the Bank’s risk management framework and align the Bank’s risk philosophy with its capital and strategic
plans. Failure to continue to improve such risk management framework could have a material adverse effect on our financial condition and results of operations. We can make no assurances that our loan loss reserves will be sufficient to absorb future
loan losses or prevent a material adverse effect on our business, financial condition, or results of operations.
 Our profitability is vulnerable to
interest rate fluctuations and changes in monetary policies. 
 Our profitability depends substantially upon our net interest income. Net interest
income is the difference between the interest earned on interest-earning assets, such as loans and investment securities, and the interest expense paid on interest-bearing liabilities, such as NOW accounts, savings accounts, time deposits and other
borrowings. Market interest rates for loans, investments and deposits are highly sensitive to many factors beyond our control. Interest rate spreads have seen a sustained period of narrowness due to many factors, such as market conditions, policies
of various government and regulatory authorities and competitive pricing pressures, and we cannot predict whether these rate spreads will narrow further. This narrowing of interest rate spreads could adversely affect our financial condition and
results of operations. In addition, we cannot predict whether interest rates will continue to remain at present levels. Changes in interest rates may cause significant changes, up or down, in our net interest income. Depending on our portfolio of
loans and investments, our results of operations may be adversely affected by changes in interest rates.
 Our financial condition and results of operations
are affected by credit policies of monetary authorities, particularly the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). Actions by monetary and fiscal authorities, including the Federal Reserve Board,
could have an adverse effect on our deposit levels, loan demand or business and earnings.
 Our information systems may experience an interruption or
breach in security. 
 We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in
security of these systems could result in failures or disruptions in our customer-relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure,
interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur; or, if they do occur, that they will be adequately addressed. The occurrence of any
failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial
liability; any of which could have a material adverse effect on our financial condition and results of operations. 

 We face the risk of cyber-attack to our computer systems. 

Our computer systems, software and networks have been and will continue to be vulnerable to unauthorized access, loss or destruction of data (including
confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events. These threats may derive from human error, fraud or malice on the part of employees or third
parties, or may result from accidental technological failure. If one or more of these events occurs, it could result in the disclosure of confidential client information, damage to our reputation with our clients and the market, additional costs to
us (such as repairing systems or adding new personnel or protection technologies), costs of breach response, regulatory penalties and financial losses, to both us and our clients and customers. Such events could also cause interruptions or
malfunctions in our operations (such as the lack of availability of our online banking system), as well as the operations of our clients, customers or other third parties. Although we maintain safeguards to protect against these risks, there can be
no assurance that we will not suffer losses in the future that may be material in amount. 
 Changes in consumers’ use of banks and changes in
consumers’ spending and saving habits could adversely affect our financial results. 
 Technology and other changes now allow many consumers to
complete financial transactions without using banks. For example, consumers can pay bills and transfer funds directly without going through a bank. This disintermediation could result in the loss of fee income, as well as the loss of customer
deposits and income generated from those deposits. In addition, changes in consumer spending and saving habits could adversely affect our operations, and we may be unable to timely develop competitive new products and services in response to
these changes that are accepted by new and existing customers. 
 Failure to implement new technologies in our operations may adversely affect our
growth or profits. 
 The market for financial services, including banking services and consumer finance services, is increasingly affected by
advances in technology, including developments in telecommunications, data processing, computers, automation, Internet-based banking and telebanking. Our ability to compete successfully in our markets may depend on the extent to which we are able to
exploit such technological changes. However, we can provide no assurance that we will be able to properly or timely anticipate or implement such technologies or properly train our staff to use such technologies. Any failure to adapt to new
technologies could adversely affect our business, financial condition or operating results. 
 We are subject to operational risks. 

The Company may also be subject to disruptions of its systems arising from events that are wholly or partially beyond its control (including, for example,
computer viruses or electrical or telecommunications outages), which may give rise to losses in service to customers and to financial loss or liability. The Company is further exposed to the risk that its external vendors may be unable to fulfill
their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as is the Company) and to the risk that the Company’s (or its vendors’) business continuity and data security
systems prove to be inadequate. 

 We are subject to liquidity risk. 

Liquidity risk is the potential that we will be unable to meet our obligations as they become due, capitalize on growth opportunities as they arise, or pay
regular cash dividends because of an inability to liquidate assets or obtain adequate funding in a timely basis, at a reasonable cost and within acceptable risk tolerances. At the direction of the Federal Reserve, the boards and senior management of
the Company and the Bank are in the process of enhancing liquidity risk management practices, including developing a liquidity policy that establishes limits on the use of aggregate wholesale funding as well as individual specific wholesale funding
sources and unencumbered liquid assets, and improving management information services (MIS) to ensure that accurate reporting is aligned with approved policies, commensurate with the Bank’s liquidity profile and growth strategies. These
practices are being refined to manage, but will not be effective to eliminate, liquidity risk. A failure to adequately manage our liquidity risk could adversely affect our business, financial condition or operating results, especially in the event
of another financial crisis. Further, the Federal Reserve could impose additional requirements on the Company if the agency determines that our enhanced liquidity risk management practices do not adequately manage our liquidity risk. 

We may lose lower-cost funding sources. 
 Checking,
savings, and money market deposit account balances and other forms of customer deposits can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. If customers move money out
of bank deposits and into other investments, the Bank could lose a relatively low-cost source of funds, increasing its funding costs and reducing the Bank’s net interest income and net income. 

If we fail to maintain an effective system of internal and disclosure controls, we may not be able to accurately report our financial results or prevent
or detect fraud. 
 Effective internal control over financial reporting and disclosure controls and procedures are necessary for us to provide
reliable financial reports and effectively prevent or detect fraud and to operate successfully as a public company. 
 The Company faces the risk that the
design of its controls and procedures, including those to mitigate the risk of fraud by employees or outsiders, may prove to be inadequate or are circumvented, thereby causing delays in detection of errors or inaccuracies in data and information. We
regularly review and update the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain
assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and
procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. 
 Any failure to maintain
effective controls or timely effect any necessary improvement of our internal and disclosure controls could hinder our ability to accurately report our operating results or cause us to fail to meet our reporting obligations, which could affect our
ability to remain listed with The NASDAQ Capital Market. Ineffective internal and disclosure controls could also harm our reputation, negatively impact our operating results, and cause investors to lose confidence in our reported financial
information, which would likely have a negative effect on the trading price of our securities. 

 Changes in the financial markets could impair the value of our investment portfolio. 

Our investment securities portfolio is a significant component of our total earning assets. Total investment securities averaged $28.9 million in the
first six months of 2015, as compared to $39.1 million in 2014. This represents 6.4% and 9.4% of the average earning assets for the six month period ended June 30, 2015 and the year ended December 31, 2014, respectively. At
June 30, 2015, the portfolio was 6.9% of earning assets. Turmoil in the financial markets could impair the market value of our investment portfolio, which could adversely affect our net income and possibly our capital. 

As of June 30, 2015, our securities which have unrealized losses (representing 86.94% of our securities portfolio) were not considered to be “other
than temporarily impaired,” and we believe it is more likely than not we will be able to hold these until they mature or recover our current book value. We currently maintain substantial liquidity which supports our intent and ability to hold
these investments until they mature, or until there is a market price recovery. However, if we were to cease to have the ability and intent to hold these investments until maturity or the market prices do not recover, and we were to sell these
securities at a loss, it could adversely affect our net income and possibly our capital. 
 Our deposit insurance premiums could be substantially
higher in the future, which could have a material adverse effect on our future earnings. 
 The FDIC insures deposits at FDIC-insured depository
institutions, such as the Bank, up to applicable limits. The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An
institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators. Recent market developments and bank failures significantly depleted the FDIC’s Deposit
Insurance Fund and reduced the ratio of reserves to insured deposits. As a result of recent economic conditions and the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), banks are now
assessed deposit insurance premiums based on the bank’s average consolidated total assets, and the FDIC has modified certain risk-based adjustments, which increase or decrease a bank’s overall assessment rate. This has resulted in
increases to the deposit insurance assessment rates and thus raised deposit premiums for many insured depository institutions. If these increases are insufficient for the Deposit Insurance Fund to meet its funding requirements, further special
assessments or increases in deposit insurance premiums may be required. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional bank or financial institution failures, we may
be required to pay even higher FDIC premiums than the recently increased levels. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain
business opportunities or otherwise negatively impact our operations. 
 We may be adversely affected by the soundness of other financial
institutions. 
 Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have
exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients.
Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by the Bank cannot be realized upon or is liquidated at prices not
sufficient to recover the full amount of the credit or derivative exposure due to the Bank. Any such losses could have a material adverse effect on our financial condition and results of operations. 

 REGULATORY AND LEGAL RISKS 

We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our
business, which limitations or restrictions could adversely affect our profitability. 
 As a bank holding company, we are primarily regulated by the
Federal Reserve. The Bank is primarily regulated by the BFI. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a
financial institution, the classification of assets by a financial institution, and the adequacy of a financial institution’s allowance for loan losses. The Company periodically reviews its policies, procedures and limits, and undertakes
reporting, to ensure all guidance is appropriate for the Bank’s current and planned operations and aligns with regulatory expectations. In this regard, regulatory authorities may impose particular requirements on the Bank, which could have a
material adverse effect on our results of operations. Upon the direction of the Federal Reserve, the boards and management of the Company and the Bank are taking a more proactive role in strengthening and implementing the Bank’s risk management
framework; improving the existing capital plan to ensure that it aligns with the Bank’s strategic plan; and enhancing liquidity risk management practices commensurate with the Bank’s liquidity profile and growth strategies. Any change in
such regulation and regulatory oversight, whether in the form of regulatory policy, regulations, or legislation, could have a material impact on us and our operations. Further, our compliance with Federal Reserve and the BFI regulations is costly.
Because our business is highly regulated, the applicable laws, rules and regulations are subject to regular modification and change. Laws, rules and regulations may be adopted in the future that could make compliance more difficult or expensive or
otherwise adversely affect our business, financial condition or prospects. For instance, such changes may limit our growth and restrict certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and
interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capital requirements by our regulators.
 The
laws and regulations, including the Dodd-Frank Act, applicable to the banking industry could change at any time, and these changes may adversely affect our business and profitability. 

We are subject to extensive federal and state regulation. Because government regulation greatly affects the business and financial results of all commercial
banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably. The increased scope, complexity, and cost of corporate governance, reporting, and disclosure practices are proportionately higher
for a company of our size and will affect our profitability more than that of some of our larger competitors. We expect to experience increasing compliance costs related to this supervision and regulation.

The Consumer Financial Protection Bureau (the “CFPB”) recently issued “ability-to-repay” and “qualified mortgage” rules
that may have a negative impact on our loan origination process and foreclosure proceedings, which could adversely affect our business, operating results, and financial condition. 

On January 10, 2013, the CFPB issued a final rule to implement the “qualified mortgage” provisions of the Dodd-Frank Act requiring mortgage
lenders to consider consumers’ ability to repay home loans before extending them credit. The CFPB’s “qualified mortgage” rule, which became effective on January 10, 2014, describes certain minimum requirements for lenders
making ability-to-repay determinations, but does not dictate that they follow 

 
particular underwriting models. Lenders will be presumed to have complied with the ability-to-repay rule if they issue “qualified mortgages,” which are generally defined as mortgage
loans prohibiting or limiting certain risky features. Loans that do not meet the ability-to-repay standard can be challenged in court by borrowers who default and the absence of ability-to-repay status can be used against a lender in foreclosure
proceedings. Any loans that we make outside of the “qualified mortgage” criteria could expose us to an increased risk of liability and reduce or delay our ability to foreclose on the underlying property. Any decreases in loan origination
volume or increases in compliance and foreclosure costs caused by the rule could negatively affect our business, operating results and financial condition. 

Compliance with the Dodd-Frank Act will increase our regulatory compliance burdens, and may increase our operating costs and may adversely impact our
earnings or capital ratios, or both. 
 On July 21, 2010, President Obama signed the Dodd-Frank Act, which represented a significant overhaul of
many aspects of the regulation of the financial services industry. Among other things, the Dodd-Frank Act created the CFPB, tightened capital standards, imposed clearing and margining requirements on many derivatives activities, and generally
increased oversight and regulation of financial institutions and financial activities. 
 In addition to the self-implementing provisions of the statute,
the Dodd-Frank Act calls for over 200 administrative rulemakings by numerous federal agencies to implement various parts of the legislation. While many rules have been finalized or issued in proposed form, additional rules have yet to be proposed.
It is not possible at this time to predict when all such additional rules will be issued or finalized, and what the content of such rules will be. We will have to apply resources to ensure that we are in compliance with all applicable provisions of
the Dodd-Frank Act and any implementing rules, which may increase our costs of operations and adversely impact our earnings or capital, or both. 
 The
Dodd-Frank Act and any implementing rules that are ultimately issued could have adverse implications on the financial industry, the competitive environment, and our ability to conduct business. 

Negative developments in the financial services industry and in the credit markets may adversely impact our operations and results. 

Financial institution regulatory agencies have been very aggressive in responding to concerns and trends identified in examinations, including the expected
issuance of many formal enforcement actions. Negative developments in the financial services industry and the impact of new legislation in response to those developments could negatively impact our operations by restricting our business operations,
including our ability to originate or sell loans, and adversely impact our financial performance. 
 The short-term and long-term impact of the
changing regulatory capital requirements and new capital rules is uncertain. 
 On July 2, 2013, the Federal Reserve Board, and shortly
thereafter, the other federal bank regulatory agencies issued a final rule that will revise their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the
Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions, top-tier bank holding companies and top-tier savings and loan holding companies with total consolidated
assets of $500 million or more. Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-

 
weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4.0% to 6.0% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that
are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on
certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. The Bank exercised this one-time opt-out. The rule limits a
banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets
in addition to the amount necessary to meet its minimum risk-based capital requirements. The final rule became effective for the Bank on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1,
2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective. 
 Under the new capital standards, in order
to be well-capitalized, the Bank would be required to have a common equity to tier 1 capital ratio of 6.5% and a tier 1 capital ratio of 8.0%. We have conducted a pro forma analysis of the application of these new capital requirements as of
December 31, 2014 and have determined that the Bank meets all of these new requirements, including the full 2.5% capital conservation buffer, as if these new requirements had been in effect on that date. 

The application of more stringent capital requirements for the Bank could, among other things, result in lower returns on invested capital, require the
raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our
having to lengthen the term of our funding, restructure our business models, or increase our holdings of liquid assets, or all or any combination of the foregoing. Implementation of changes to asset risk weightings for risk based capital
calculations, items included or deducted in calculating regulatory capital or additional capital conservation buffers, or both, could result in management modifying its business strategy, and could limit our ability to make distributions, including
paying out dividends or buying back shares. Specifically, beginning in 2016, the Bank’s ability to pay dividends will be limited if the Bank does not have the capital conservation buffer required by the new capital rules, which may limit our
ability to pay dividends to stockholders. 
 RISKS RELATED TO OUR STOCK 

Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so. 

The Company is a legal entity, separate and distinct from the Bank. The Company currently does not have any significant sources of revenue other than cash
dividends paid to it by its subsidiaries. Both the Company and the Bank are subject to laws and regulations that limit the payment of cash dividends, including requirements to maintain capital at or above regulatory minimums. As a bank that is a
member of the Federal Reserve System, the Bank must obtain prior written approval for any cash dividend if the total of all dividends declared in any calendar year would exceed the total of its net profits for that year combined with its retained
net profits for the preceding two years. 
 Banking regulators have indicated that Virginia banking organizations should generally pay dividends only
(1) from net undivided profits of the bank, after providing for all expenses, losses, interest and taxes accrued or due by the 

 
bank and (2) if the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition. In addition, the
Federal Deposit Insurance Act (FDIA) prohibits insured depository institutions such as the Bank from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become undercapitalized
as defined in the statute. Moreover, the Federal Reserve is authorized to determine under certain circumstances relating to the financial condition of a bank that the payment of dividends would be an unsafe and unsound practice and to prohibit
payment thereof. The payment of dividends that deplete a bank’s capital base could be deemed to constitute such an unsafe and unsound banking practice. The Federal Reserve has indicated that banking organizations generally pay dividends only
out of current operating earnings. The Bank may be prohibited under Virginia law from the payment of dividends if the Virginia Bureau of Financial Institutions determines that a limitation of dividends is in the public interest and is necessary to
ensure the Bank’s financial soundness, and may also permit the payment of dividends not otherwise allowed by Virginia law. 
 The capital conservation
buffer requirement will be phased in beginning January 1, 2016, at 0.625% of risk-weighted assets, increasing each year until fully implemented at 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during
periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the
amount of the shortfall. 
 If the Bank is not permitted to pay cash dividends to the Company, it is unlikely that the Company would be able to pay cash
dividends on our common stock. Moreover, holders of our common stock are entitled to receive dividends only when and if declared by our board of directors. Although we currently pay cash dividends on our common stock, we are not required to do so
and our board of directors could reduce or eliminate the amount of our common stock dividends in the future. 
 A limited market exists for our common
stock. 
 Our common stock commenced trading on The Nasdaq Capital Market on January 25, 2012 and trading volumes since that time have been
relatively low as compared to other larger financial services companies. The limited trading market for our common stock may cause fluctuations in the market value of our common stock to be exaggerated, leading to price volatility in excess of that
which would occur in a more active trading market. Accordingly, holders of our common stock may have difficulty selling our common stock at prices which holders find acceptable or which accurately reflect the value of the Company. 

Future offerings of debt or other securities may adversely affect the market price of our stock. 

In the future, we may attempt to increase our capital resources or, if our or the Bank’s capital ratios fall below the required minimums, we or the Bank
could be forced to raise additional capital by making additional offerings of debt or preferred equity securities, including medium-term notes, trust preferred securities, senior or subordinated notes and preferred stock. Upon liquidation, holders
of any debt securities and shares of preferred stock and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our
existing stockholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. 

 Virginia law and the provisions of our articles of incorporation and bylaws could deter or prevent takeover
attempts by a potential purchaser of our common stock that would be willing to pay holders a premium for their shares of our common stock. 
 Our
articles of incorporation and bylaws contain provisions that may be deemed to have the effect of discouraging or delaying uninvited attempts by third parties to gain control of us. These provisions include the division of our board of directors into
classes with staggered terms, the ability of our board of directors to set the price, terms and rights of, and to issue, one or more series of our preferred stock and the ability of our board of directors, in evaluating a proposed business
combination or other fundamental change transaction, to consider the effect of the business combination on us and our stockholders, employees, customers and the communities which we serve. Similarly, the Virginia Stock Corporation Act contains
provisions designed to protect Virginia corporations and employees from the adverse effects of hostile corporate takeovers. These provisions reduce the possibility that a third party could affect a change in control without the support of our
incumbent directors. These provisions may also strengthen the position of current management by restricting the ability of stockholders to change the composition of the board of directors, to affect its policies generally and to benefit from actions
which are opposed by the current board of directors. 
 An investment in our common stock is not an insured deposit. 

Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or by any other public or
private entity. An investment in our common stock is inherently risky for the reasons described in these “Risk Factors” and the Company’s filings with the SEC and is subject to the same market forces that affect the price of common
stock in any company. As a result, if you acquire our common stock, you may lose some or all of your investment. 

 APPENDIX I 

SUMMARY INSTRUCTION SHEET FOR PURCHASER 

(to be read in conjunction with the entire Purchase Agreement which follows) 

A. Complete the following items on the Purchase Agreement (Please sign two originals): 

1. Signature Page: 
  

	 	(i)	Name of Purchaser (Individual or Institution) 

  

	 	(ii)	Name of Individual representing Purchaser (if an Institution) 

  

	 	(iii)	Title of Individual representing Purchaser (if an Institution) 

  

	 	(iv)	Signature of Individual Purchaser or Individual representing Purchaser 

 2. Appendix I –
Securities Certificate Questionnaire/Registration Statement Questionnaire: 
 Provide the information requested by the Securities Certificate
Questionnaire and the Registration Statement Questionnaire. 
 3. Return the properly completed and signed Purchase Agreement including the
properly completed Appendix I to (initially by facsimile or email with original by overnight delivery): 
 Raymond James &
Associates 

                       
                          

                       
                          

Attention: 
 Email: 

B. Instructions regarding the transfer of funds for the purchase of Shares will be sent by facsimile to the Purchaser by the Placement Agent. 

C. Upon the resale of the Shares by the Purchasers after the Registration Statement covering the Shares is effective, as described in the Purchase Agreement,
the Purchaser: 
 (i) must deliver a current prospectus of the Company to the buyer (prospectuses must be obtained from the Company at the
Purchaser’s request); and 
 (ii) must send a letter in the form of Appendix II to the Company so that the Shares may be properly
transferred. 

 BANK OF THE JAMES FINANCIAL GROUP, INC. 

SECURITIES CERTIFICATE QUESTIONNAIRE 

Pursuant to Section 3 of the Agreement, please provide us with the following information: 

 

					
	1.	  	 The exact name that your Shares are to be registered in (this is the name that will appear on your stock certificate(s) (or book-entry
transfer)). You may use a nominee
 name if appropriate:
	  	  

			
	2.	  	The relationship between the Purchaser of the Shares and the Registered Holder listed in response to item 1 above:	  	  

			
	3.	  	The mailing address of the Registered Holder listed in response to item 1 above:	  	  

		  	  	  

		  	  	  

		  	  	  

			
	4.	  	The Social Security Number or Tax Identification Number of the Registered Holder listed in response to item 1 above:	  	  

 BANK OF THE JAMES FINANCIAL GROUP, INC. 

REGISTRATION STATEMENT QUESTIONNAIRE 
 In
connection with the preparation of the Registration Statement, please provide us with the following information: 
 SECTION 1. Pursuant to
the “Selling Shareholder” section of the Registration Statement, please state your or your organization’s name exactly as it should appear in the Registration Statement: 

 
  
  

 
 SECTION 2. Please provide the
number of shares of Common Stock of the Company that you or your organization will own immediately after Closing, including those Shares purchased by you or your organization pursuant to this Purchase Agreement and those shares purchased by you or
your organization through other transactions and provide the number of shares that you have or your organization has the right to acquire within 60 days of Closing: 
  

 
  

 
 SECTION 3. Have you or your
organization had any position, office or other material relationship within the past three years with the Company or its affiliates? 

             Yes
             No 
 If yes, please indicate the nature of any such
relationships below: 
  
  

 
  
  

 
  

 
 SECTION 4. Are you (i) a
FINRA Member (see definition), (ii) a Controlling (see definition) shareholder of a FINRA Member, (iii) a Person Associated with a Member of the FINRA (see definition), or (iv) an Underwriter or a Related Person (see definition) with
respect to the proposed offering; or (b) do you own any shares or other securities of any FINRA Member not purchased in the open market; or (c) have you made any outstanding subordinated loans to any FINRA Member? 

 Answer: [ ] Yes [ ] No If “yes,” please describe below: 

 
  
  

 
  

 
  

 
 FINRA Member. The term
“FINRA Member” means either any broker or dealer admitted to membership in the Financial Industry Regulatory Authority (formerly, the National Association of Securities Dealers, Inc., “FINRA”). (FINRA Manual, By-laws of FINRA
Regulation, Inc. Article I, Definitions) 
 Control. The term “control” (including the terms “controlling,”
“controlled by” and “under common control with”) means the possession, direct or indirect, of the power, either individually or with others, 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. (Rule 405 under the Securities Act of 1933, as amended) 
 Person
Associated with a member of the FINRA. The term “person associated with a member of the FINRA” means every sole proprietor, partner, officer, director, branch manager or executive representative of any FINRA Member, or any natural
person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a FINRA Member, whether or not such person
is registered or exempt from registration with the FINRA pursuant to its bylaws. (FINRA Manual, By-laws of FINRA Regulation, Inc. Article I, Definitions) 

Underwriter or a Related Person. The term “underwriter or a related person” means, with respect to a proposed offering,
underwriters, underwriters’ counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all other persons associated with or related to any of such persons. (FINRA Interpretation) 

 APPENDIX II 
  

                          
   

                          
   

                          
   
 Attention: 

PURCHASER’S CERTIFICATE OF SUBSEQUENT SALE 

The undersigned, [an officer of, or other person duly authorized by] 

                          
                                         
                                         
                                         
                hereby certifies 

                [fill in official name of
individual or institution] 
 that he/she [said institution] is the Purchaser of the shares evidenced by the attached certificate (or book-entry transfer),

 and as such, sold such shares on
                                     in accordance with the
terms of the 

                     
                     [date] 
 Purchase Agreement and
in accordance with Registration Statement 
 number
                                         
                                         
                                       or otherwise in
accordance with 
   [fill in the number of or otherwise identify Registration Statement] 

the Securities Act of 1933, as amended, and, in the case of a transfer pursuant to the Registration 

Statement, the requirement of delivering a current prospectus by the Company has been 

complied with in connection with such sale. 
 Print or Type: 

 

							
	 Name of Purchaser
 (Individual or

Institution):
	 	  
	 		 	
				
	 Name of Individual
 representing

Purchaser (if an
 Institution)
	 	  
	 		 	
				
	 Title of Individual
 representing

Purchaser (if an
 Institution):
	 	  
	 		 	
	Signature by:	 		 		 	
				
	 Individual Purchaser
 or Individual repre-

senting Purchaser:

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