Document:

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BRIDGE LOAN AGREEMENT 

BETWEEN 

WHEREAS the Lender has agreed to make available to the Borrower the Bridge Loan in the aggregate amounts set forth in Schedule A, at the times set forth in such Schedule, and on the terms and conditions set forth herein; and

WHEREAS as security for such Bridge Loan, the Corporations have agreed to grant certain security and provide certain guarantees in favour of the Lender, the whole as set forth herein and in the Security Documents.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereto agree as follows:

1.

INTERPRETATIONS

1.1

Definitions

In this Agreement, unless something in the subject matter or context is inconsistent therewith:

“Agreement” means this Bridge Loan Agreement, including all schedules hereto, as same may be amended, supplemented, restated or replaced from time to time;

“Applicable Legislation” means all applicable federal, provincial, municipal, foreign or other laws, statutes, rules, regulations, by-laws, orders, judgements, decisions, policies, directives, standards, guidelines, requirements, injunctions, awards or decrees which are applicable to the Corporations, their respective property, activities or operations, including the Environmental Legislation and laws relating to corruption and bribery, all as the same shall be in effect from time to time;

“Assets” means all of the assets, corporeal and incorporeal, tangible and intangible, of a Party, of every kind and description and wherever situated;

“Borrower GSA” means the general security agreement between the Borrower and Lender dated on or about the date hereof;

“Borrower Assignment of Agreements” means the general assignment of agreements made by the Borrower in favour of the Lender dated on or about the date hereof;

“Bridge Loan” means the amounts loaned to the Borrower in accordance with this Agreement, as set forth in Schedule A;

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in the Province of Ontario ;

“Closing” means the execution and delivery of the Definitive Agreements;

“Closing Date” means the date upon which the Closing occurs or such other date as may be mutually agreed to by the Lender and the Borrower;

  “Definitive Agreements” means those agreements and documents which shall evidence the Investment, to be executed at Closing;

“Deposit” means the advance of funds to HONI by the Lender as set forth in Section (i);

“Development Payment” means the advance of funds to Borrower by the Lender as set forth in Section (ii);

“Environmental Legislation” means all applicable federal, provincial, municipal, regional or foreign laws, statutes, rules, regulations, by-laws, judgements, decisions, decrees, guidelines, directives, standards, requirements, injunctions, awards, orders, policies, permits, notices, approvals, licences, certificates or other authorisations of any governmental authority in effect relating to the environment or to occupational health and safety;

“Event of Default” has the meaning ascribed thereto in section ;

“FIT Contract” means the Feed-in Tariff Contract;

“GAAP” means generally accepted accounting principles accepted in Canada as set out in the Handbook of the Canadian Institute of Chartered Accountants, at the relevant time, or IFRS, as applicable, in each case consistently applied;

“Governmental Body” means any government, parliament, legislature, regulatory authority, agency, commission, decision-making authority, board or court or other law, rule, or regulation-making entity having or purporting to have jurisdiction on behalf of any nation or state or province or other subdivision thereof including any municipality or district;

 “HONI” means Hydro One Networks Inc.;

“IFRS” means the International Financing Reporting Standards as issued by the International Accounting Standard Board;

  “Loan Amounts” has the meaning ascribed thereto in section ;

“Maturity Date” means the Closing Date;

“Option Agreements” means certain option agreements entered into by the Borrower with the parties and with respect to those properties identified in Schedule “B” attached hereto;

“Parties” means collectively the Lender and the Corporations;

“Person” means any individual, legal person with or without share capital (regardless of its jurisdiction of incorporation), partnership, limited partnership, joint venture, association, trust, unincorporated organisation, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

“Project” means the development, construction, finance, ownership of the Wind Farm xxx wind energy project in accordance with the FIT Contract;

“Project Agreements” means any material agreement or document entered into by the Borrower in connection with the Project and includes the FIT Contract;

“Security Documents” means collectively the GSA, Borrower Assignment of Agreements, ZEP Guarantee, ZEP SPA and WWPC Guarantee;

“Security Interest” means any hypothec, prior claim, mortgage, pledge, assignment, charge, security, lease intended as security, trust intended as security, reservation of or right to redeem title to property, seizure, attachment, garnishment or other similar encumbrance and includes any contractual restriction which, if contravened, may give rise to a Security Interest;

“Subsidiary” means any legal entity presently or in the future Controlled by a Corporation;

“Taxes” means any tax, duty, fee, royalty, levy, impost, assessment, deduction, charge or withholding, any installments and all liabilities with respect thereto including any penalty and interest payable with respect thereto, levied, imposed or assessed from time to time by any Governmental Body, domestic or foreign, and shall include all stamp, documentary, property, added value, severance, gross income, gross receipt, gross profits, production, commodity, occupation, excise, sales including goods and services, franchise, income, capital, payroll, unemployment insurance, Canada, United States or provincial or state pension plan payments, employer health, workers' compensation payments, custom, land transfer and other taxes and assessments of any kind whatsoever imposed on or assessed with respect to or measured by or charged against or attributable to any Person, together with any interest, penalties, additions to tax or additional amounts imposed by any Governmental Body;

“WWPC Guarantee” means the guarantee from WWPC in favour of the Lender dated on or about the date hereof;

“ZEP Guarantee” means the guarantee from ZEP in favour of the Lender dated on or about the date hereof; and

“ZEP SPA” means the securities pledge agreement between ZEP and the Lender dated on or about the date hereof regarding the pledge by ZEP of all of its securities in the capital of 

1.2

Recitals and Schedules 

The recitals and the Schedules herein form an integral part of this Agreement.

1.3

Headings

The inclusion of headings in this Agreement is for convenience of reference only and shall not affect its construction or interpretation.

1.4

Gender and Number

In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

1.5

Time Periods

Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day if the last day of the period is not a Business Day.

1.6

Including

Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

1.7

Currency

Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian Dollars.

1.8

Invalidity of Provisions

Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.

1.9

Entire Agreement

This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof. This Agreement supersedes and replaces all prior contracts, agreements, commitments and undertakings relating to the subject matter hereof, including any term sheet accepted and agreed to by the Corporations and the Lender relating to the matters contemplated herein.

1.10

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Any action, suit or proceeding arising out of or relating to this Agreement shall be brought before a court of the City of Toronto and each of the Parties hereby irrevocably submits to the non-exclusive jurisdiction of such courts.

2.

BRIDGE LOAN

2.1

Bridge Loan

In consideration of the covenants, representations, warranties and undertakings set out herein, the Lender hereby agrees to make available to the Borrower on the dates indicated in subparagraphs (i) and (ii) below the amounts indicated in Schedule “A” hereto in respect of the Deposit and Development Payment. Such obligation shall be fully satisfied, at the Lender’s discretion, by:

(i)

in respect of the Deposit, the delivery by the Lender to HONI, a letter of credit satisfying the obligation of the Borrower to make a deposit in accordance with the Agreement entered into by and between the Borrower and HONI; and

(ii)

in respect of the Development Payment, the delivery to Borrower concurrently with the signature of this Agreement and against acknowledgement of receipt by Borrower of the Development Payment amount by way of certified cheque or wire transfer;

the whole subject to the terms and conditions of this Agreement and all such Deposit and Development Payment amounts being hereinafter sometimes collectively referred to as the “Loan Amounts”.

i.1

Interest and Fees

The Loan Amounts shall bear interest..

i.2

Term

The Bridge Loan shall be due and payable on the earlier of (a) the Maturity Date and (b) the occurrence of an Event of Default, subject to the terms of this Agreement, and shall not be pre-payable. Repayment of the Bridge Loan on the Closing Date shall take place in accordance with the provisions of the term sheet prepared in respect of the subscription by Lender for convertible debentures, regardless of whether or not such term sheet has been executed by the date hereof.

i.3

Place and Manner of Payment

All repayments of principal by the Borrower under this Agreement will be made by the Borrower at the Lender’s address as specified in Article , or at such other place as may be designated, from time to time, in writing by the Lender to the Borrower in accordance with Article , no later than 5:00 p.m. (Toronto time) on a Business Day on the due date therefor. Any payments received by the Lender after 5:00 p.m. on a Business Day shall be deemed to have been received on the next Business Day unless the Lender otherwise agrees in writing. Where payments are to be made in cash, they shall be made in immediately available funds. Where the Deposit has been effected by issuance of a letter of credit, return of such letter of credit, undrawn in whole, to Lender shall be deemed to be repayment in full of the Deposit.

i.4

Judgement Currency

If, for the purpose of obtaining judgement in any court in any jurisdiction with respect to this Agreement, it is necessary to convert into the currency of such jurisdiction (the “Judgement Currency”) any amount due under this Agreement in any currency other than the Judgement Currency, then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgement is given. For this purpose “rate of exchange” means the rate at which the Lender would, on the relevant date, be prepared to sell a similar amount of such currency in the Toronto foreign exchange market, against the Judgement Currency, in accordance with normal banking procedures.

In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which judgement is given and the date of payment of the amount due, the Borrower will, on the date of payment, pay such additional amounts as may be necessary to ensure that the amount paid on such date is the amount in the Judgement Currency which, when converted at the rate of exchange prevailing on the date of payment, is the amount then due under this Agreement in such other currency together with interest. Any additional amount due from the Borrower under this section will be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of this Agreement.

i.5

Withholding Taxes

All repayment of principal, costs or fees made under this Agreement shall be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge imposed or levied by or on behalf of any Governmental Authority in Canada, the United States of America or any political subdivision thereof, or by any authority or agency thereof or therein having power to tax (collectively, the “Withholding Taxes”), unless the Borrower or a Corporation guaranteeing the obligations of the Borrower is required to withhold or deduct Withholding Taxes by Applicable Legislation or by the interpretation or administration thereof by the relevant governmental authority.

If the Borrower or a Corporation guaranteeing the obligations of the Borrower is required to withhold or deduct any amount for or on account of Withholding Taxes from any payment made or deemed to be made under this Agreement, the Borrower or such other Corporation will make such withholding or deduction and will remit the full amount withheld or deducted to the relevant governmental authority as and when required by Applicable Legislation. The Borrower or such other Corporation will pay to the Lender such additional amounts under this section  (the “Additional Amounts”) as may be necessary so that the net amount received by the Lender after such withholding or deduction referred to in the preceding sentence, if any, will not be less than the amount the Lender would have received if such Withholding Taxes (including any Withholding Taxes applicable to any Additional Amounts payable under this paragraph) had not been withheld or deducted.

The Borrower and/or any Corporation guaranteeing the obligations of the Borrower will indemnify and hold harmless the Lender, and upon written request reimburse the Lender, for the amount of any Withholding Taxes (including any Withholding Taxes applicable to any Additional Amounts payable under the preceding paragraph) levied or imposed on and paid by the Lender as a result of payments made or deemed to be made under this Agreement. 

2.

EVENTS OF DEFAULT

2.1

Events of Default

The occurrence of any one or more of the following events shall constitute an event of default (each an “Event of Default”):

2.1.1

Closing fails to occur on or prior toXXX, or such other date as may be mutually agreed to by the Lender and the Borrower;

2.1.2

the Borrower fails to pay any amount which become due and payable hereunder, and such failure continues for a period of five (5) Business Days following receipt by the Borrower of written notice from the Lender requesting that the Borrower remedy such breach; or

2.1.3

a Corporation is in breach of a covenant hereunder, and such failure continues for a period of five (5) Business Days following receipt by such Corporation of written notice from the Lender requesting that such Corporation remedy such breach; or

2.1.4

proceedings are commenced for the dissolution, liquidation or winding up of a Corporation, or for the suspension of the operations of a Corporation, unless such proceedings are actively and diligently contested in good faith on a timely basis and no judgment or order is rendered by a court of competent jurisdiction against a Corporation in connection therewith; or

2.1.5

a Corporation becomes insolvent, makes an assignment in bankruptcy or makes any other assignment for the benefit of its creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) ), any bankruptcy or similar law of the United States, or any comparable law, is adjudged bankrupt, files a petition or proposal to take advantage of any act of insolvency, consents to or acquiesces in the appointment of a trustee, receiver, receiver-manager, interim receiver, custodian, sequestrator or other Person with similar powers of a Corporation or all or any substantial portion of its assets, or files a petition or otherwise commences any proceeding seeking any reorganization, arrangement, composition or readjustment under any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors’ rights, or consents to, or acquiesces in the filing of such a petition; or

2.1.6

if a trustee, receiver, receiver-manager, interim receiver, custodian, sequestrator or any other Person with similar powers is appointed of the Corporation or of all or any substantial portion of its assets, a judgment or an order is made by a court of competent jurisdiction restraining the ability of a Corporation to deal with all or any substantial portion of its assets or a judgment or order is made by a court of competent jurisdiction approving any reorganization, arrangement, composition or readjustment under any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors’ rights and such appointment, judgment or order is not vacated, stayed or set aside within sixty (60) days of the date thereof; 

2.1.7

any material representation or warranty contained hereunder is revealed to be false or misleading at the time it was made in any material respect;

2.1.8

the security granted in favour of the Lender by any of the Corporations in connection with this Agreement and the Security Documents is or becomes void, ineffective, invalid, non-enforceable, not effective as against third parties, or loses its priority, in whole or in part, or is not accepted by the Ontario Power Authority (if required) by the date which is 60 days from the date hereof, or such other date as the Lender may agree to;

2.1.9

if the Borrower breaches or defaults under any material term, condition, provision, covenant, representation or warranty contained in the FIT Contract or any other Project Agreement and such breach or default shall continue unremedied for a period of time equal to the applicable cure period provided in the FIT Contract or the Project Agreement (as applicable);

2.1.10

if the Borrower undergoes a change of Control without first obtaining the written consent of the Lender, not to be unreasonably withheld, and the Ontario Power Authority if required under the FIT Contract; or 

2.1.11

if any of the Completion and Performance Security (as defined in the FIT Contract), including any letters of credit or other security required to be delivered or maintained in connection with the FIT Contract is not delivered or maintained pursuant to the terms thereof.

2.2

Effect of an Event of Default

If an Event of Default occurs under Subsection , the Bridge Loan shall immediately become due and payable, without presentation, demand, protest or other notice of any nature, to which the Borrower and the Corporations hereby expressly renounce. If any other Event of Default occurs, the Lender may, by written notice to the Borrower, declare the Bridge Loan and all other amounts payable by the Borrower under or pursuant to this Agreement due and payable, whereupon the Bridge Loan and all such other amounts shall become and be due and payable on the date which is thirty (30) days after such written notice of Lender, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.

2.3

Additional Remedies

At any time after the date which is five (5) days after the Bridge Loan becomes due and payable in accordance with section  (except as a result of a default under section ), the Lender may (a) exercise the security granted by the Corporations pursuant to the Security Documents, in whole or in part, and/or (b) require the Borrower to provide HONI and Ontario Power Authority with notice of cancellation of the Project and request the reimbursement by HONI of the Deposit paid or otherwise supplied by the Lender.  All funds reimbursed or other security returned by HONI shall be paid over forthwith to the Lender, without any deduction or withholding. Any funds or other security not paid over to the Lender within three (3) Business Days of release by HONI or receipt by the Borrower shall become a debt owed to the Lender, secured by the Security Documents, and bear interest at the rate of ten percent (10%) per annum, calculated quarterly. For clarity, in the event of the default contemplated in section , the Lender may exercise its remedies under this section  immediately.

2.4

Security

The security evidenced by the Security Documents shall apply, with such modifications as are necessary in the circumstances, to the Loan Amounts made in accordance with section  of this Agreement.

3.

SECURITY

3.1

Security Documents

The obligations of the Borrower hereunder and under any other Loan Document, towards the Lender, present and future, direct and indirect, will be secured by:

(a)

the grant, by WWPC in favour of the Lender, of a guarantee of the obligations of the Borrower hereunder pursuant to the WWPC Guarantee;

(b)

the grant, by ZEP in favour of the Lender, of a guarantee of all of obligations of the Borrower hereunder pursuant to the ZEP Guarantee, and the grant by ZEP of a first ranking security interest in favour of the Lender in all of the securities pursuant to the ZEP SPA;

(c)

the grant, by the Borrower in favour of the Lender, of a first ranking security interest in all of the Borrower’s assets pursuant to the Borrower GSA and the assignment of all Project Agreements of the Borrower pursuant to the Borrower Assignment of Agreements.

3.2

Insurance

The Borrower shall maintain, in respect of itself and each of its Subsidiaries, insurance at all times with responsible insurance carriers in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or any such Subsidiaries, as the case may be, operate.

3.3

Effectiveness and Contents of Security Documents

The security granted pursuant to the Security Documents must be at all times effective against third parties, and first-ranking with respect to all property intended to be covered thereby. Each Security Document must be in form and substance satisfactory to the Lender and remain valid and in force at all times. The Security Documents will include such legal opinions, lien searches and certificates as the Lender may reasonably require. 

4.

COVENANTS

4.1

Positive Covenants of the Corporations

As of the date of this Agreement, and for so long as the Bridge Loan remains outstanding, the Corporations covenant and agree as follows, and acknowledge that the Lender are relying on these covenants for the purpose of granting the Loan Amounts:

4.1.1

The Borrower shall use the Deposit made available to it exclusively for the purposes of making deposits in accordance with the Connection and Cost Recovery Agreement entered into between the Borrower and HONI and shall use the Development Payment made available to it exclusively for the purposes of satisfying ongoing development costs relating to the Project.

4.1.2

The Borrower shall duly pay to the Lender all sums of money due under the terms of this Agreement at the time and place and in the manner provided for by this Agreement (or such other time, place and manner as are accepted by Lender) and shall duly and punctually perform and observe all other obligations on its part to be performed or observed hereunder at the times and in the manner provided for herein.

4.1.3

Each Corporation shall (i) comply in all material respects with the Applicable Legislation and, in respect of the Borrower, with the FIT Contract, (ii) duly observe and conform to all valid requirements of any Governmental Body relative to the conduct of its business or to its properties or assets, (iii) maintain and keep in full force and effect its corporate existence and all licences and permits necessary to ensure the proper conduct of its business, (iv) promptly pay when due all of its obligations and liabilities, including without limitation, all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits or upon its properties or assets, except if contested in good faith and (v) keep true and complete books and records and accounts in accordance with GAAP.

If the Corporations fail to perform any covenant contained in Subsections  to  inclusively or any other provisions in this Agreement, the Lender may, in its discretion, perform any such covenant capable of being performed by them and if any such covenant requires the payment of money, the Lender may make such payments.

4.2

Negative Covenants of the Corporations

As of the date of this Agreement, and for so long as the Bridge Loan remains outstanding, the Corporations covenant and agree not to do the following, without the prior written consent of the Lender, and acknowledge that the Lender is relying on these covenants for the purpose of granting the Loan Amounts:

4.2.1

None of the Corporations will create, incur, assume or suffer to exist any Security Interest on the collateral and property used to secure the Loan Amount pursuant to the Security Agreements, other than the security evidenced by the Security Documents.

4.2.2

None of the Corporations will create, incur, assume or permit to exist any debt, other than obligations to reimburse expenses incurred in the ordinary course of business, and other than the existing obligations of WWPC toward its debenture holders.

4.2.3

The Borrower will not (a) lease, transfer, assign, sale or dispose of any of its material Assets, except for sale of inventory in the ordinary course of business or in respect of obsolete or damaged equipment or inventory and except where such lease, transfer, assignment, sale or disposition is made to a wholly-owned subsidiary, (b) assign or purport to assign the Project Agreements, the Option Agreements or the letter of credit issued to HONI pursuant to the Deposit, if returned by HONI to the Borrower, or (c) execute or permit the execution of any agreement controlling or purporting to control the use of any funds deposited in its bank accounts.

4.2.4

None of the Corporations will remove any of its corporeal (tangible) Assets or any books of account or other records of the Corporations from the jurisdictions where same are presently located.

4.3

Right of the First Refusal

If the Borrower enters into any discussion or correspondence with any third party concerning the assignment, sale or other transfer of the Project, the Project Agreements, the Option Agreements or any of its other Assets (in each case, a “Sale”), it shall not enter into any agreement, written or oral, to consummate any such Sale without first offering Lender the opportunity to acquire such Project, the Project Agreements, the Option Agreements or its other Assets, at the same price, and subject to substantially the same terms, as those offered to or by such third party.

5.

REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS

Each Corporation represents and warrants to the Lender as follows as of the date hereof. It is acknowledged that the Lender are relying upon said representations and warranties for the purpose of consummating the transactions herein contemplated, and that each of these representations and warranties constitutes an essential condition to the granting of the Loan Amounts.

5.1

Each Corporation is a legal person duly constituted, organized and validly subsisting under the laws of its jurisdiction of incorporation and has all requisite power and capacity to execute and deliver this Agreement and the Security Documents to which it is a party and to perform its obligations thereunder. Each Corporation is duly qualified to own or lease its assets and to carry on its business as it presently does.

5.2

Each Corporation has taken all corporate action necessary to authorize the execution and delivery of, its performance of its obligations under, and its consummation of the transactions contemplated by, this Agreement and the Security Documents to which it is a party. This Agreement and the Security Documents has been executed and delivered by an authorized representative of each Corporation, in accordance with that authorization.

5.3

This Agreement and each of the Security Documents constitute legally valid and binding obligations of the Corporations enforceable against each of them in accordance with their respective terms subject to applicable bankruptcy, insolvency or other laws of general application affecting the enforcement of creditors' rights generally and to general equitable principles.

5.4

The execution and delivery of this Agreement and the Security Documents and the consummation of the transactions contemplated thereunder (a) will not violate or conflict with the Corporations’ articles, certificate of incorporation or by-laws or other charter or constituting documents, (b) require any consents or approvals, except such as have been obtained, nor (c) violate any Applicable Legislation.

5.5

Each Corporation has good, valid and marketable title to all of its properties and assets, free and clear of any Security Interest, other than the security evidenced by the Security Documents (and other than existing security granted by WWPC to secure its obligations toward its debenture holders). The only Affiliates of the Corporations are those listed in Schedule . 

5.6

There is no claim, action, prosecution or other proceeding of any kind pending or to its knowledge threatened against the Corporations or any of their property or assets before any court or administrative agency and there are no circumstances of which a Corporation is aware which might give rise to any such proceeding which it has not fully disclosed to the Lender.

5.7

No Event of Default exists.

5.8

The Corporations have timely paid when due all Taxes required to be paid by them through the date hereof and the Corporations have made adequate provision in accordance with GAAP in their financial statements for all Taxes payable by the Corporations that are not then due and payable.

5.9

None of the Corporations is delinquent in the payment of any Taxes. There are no pending tax audits of any returns of Taxes. No deficiency or addition to any Taxes or interest or penalty for any Taxes has been proposed, asserted or assessed against any of the Corporations for which the Corporation has not made adequate reserves.

5.10

The Corporations have withheld or collected and remitted all amounts required to be withheld or collected and remitted by it in respect of any Taxes, governmental charges or assessments. 

5.11

All tax loss carry forwards appearing in the Corporations’ financial statements are valid and useable by the Corporations as set forth therein, assuming income against which same may be deducted.

5.12

The Corporations have timely filed or caused to be filed on their behalf within the times and in the manner prescribed by law, all federal, provincial, state, local and foreign Tax returns and reports that are required to be filed by or with respect to the Corporations.

5.13

No claim has ever been made by a Tax authority in a jurisdiction where either of the Corporations does not file Tax returns that either of the Corporations is or may be subject to Tax in that jurisdiction. 

5.14

The Borrower has not (a) assigned or purported to assign the Project Agreements or the Option Agreements, or (b) executed any agreement controlling, or purporting to control, the use of any funds deposited in any of its bank accounts.

6.

REPRESENTATIONS AND WARRANTIES OF THE LENDER

The Lender hereby represents and warrants to each Corporation as follows as of the date hereof (and acknowledges that each Corporation is relying upon these representations and warranties in connection with its execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder):

6.1

the Lender is a corporation established.  The Lender has been duly constituted and is validly existing and has all requisite, power and capacity to execute and deliver this Agreement and each of the Security Documents, to perform its obligations hereunder;

6.2

the Lender has taken all corporate action necessary to authorize the execution and delivery of, its performance of its obligations under, and its consummation of the transactions contemplated by, this Agreement or any of the Security Documents;

6.3

this Agreement constitutes a legally valid and binding obligation of the Lender, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency or other laws of general application affecting the enforcement of creditors' rights generally and to general equitable principles; and

6.4

the execution and delivery by the Lender of this Agreement and each of the Security Documents and its consummation of the transactions contemplated hereby and its compliance with the provisions hereof, will not violate or conflict with the Lender’s articles or by-laws or other charter or constituting documents.

7.

INDEMNIFICATION

7.1

The representations and warranties contained in Subsections  to  inclusively shall survive the execution of this Agreement and shall remain in full force and effect until the expiration of all applicable limitation periods and all other applicable legislation respecting Taxes.

7.2

The Corporations will jointly and severally indemnify, defend and hold the Lender and their affiliates, attorneys, members’ agents, employees, officers, representatives, directors and partners (collectively, the “Indemnified Parties”) harmless against all liability, loss or damage, obligation, claim or charge, together with all reasonable costs and expenses related thereto (including the reasonable legal fees and expenses resulting from any suits, actions, enquiries, investigations, notices, claims or proceedings, which legal fees and expenses shall be payable in advance for the amounts expected to be incurred) (“Damages”), relating to or arising from the untruth, inaccuracy or breach of any of the representations or warranties of the Corporations contained in this Agreement and from any breach of any of the Corporations’ respective obligations hereunder.

7.3

If the indemnification provided for in section  is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Damage, then the indemnifying party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the Indemnified Party, on the other, in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the Indemnified Party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

8.

NOTICES

8.1

Any notice or other communication required herein shall be given in writing and transmitted by facsimile (provided that a copy is subsequently sent by messenger and its receipt confirmed) or delivered by hand:

(a)

if to the Corporations:

(b)

if to the Lender:

or to such other address or facsimile number which may be designated by such Party in a written notice transmitted to the other Parties in accordance with this section .

8.2

The notices or communications provided in section  shall be presumed to have been received the day they are sent, if delivered by hand or transmitted by facsimile; failing this, the facsimile transmission shall be deemed to have been received the next Business Day.

8.3

All notices must specify the delay in which a decision or an act must be made and must set forth all of the elements on which a decision or an act is to be made.

9.

GENERAL MATTERS

9.1

Public Notices

All public notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned and co-ordinated by the Lender and the Corporations and no Party shall act unilaterally in this regard without the prior approval of the other Parties (such approval not to be unreasonably withheld). The transactions contemplated by this Agreement are confidential and the Corporations agree not to disclose same to any third party other than its professional advisers, except with the prior approval of the Lender.

9.2

Assignment

No Party may assign its rights or benefits under this Agreement without the prior written approval of the other Parties. UNLESS PERMITTED UNDER THE APPLICABLE SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (I) THE DATE HEREOF, AND (II) THE DATE THE LENDER BECAME A REPORTING ISSUER IN ANY CANADIAN PROVINCE OR TERRITORY.

9.3

Further Assurances

Each of the Parties shall promptly do, make, execute, deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as the other Parties hereto may reasonably require from time to time for the purpose of giving effect to this Agreement and shall use reasonable efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement.

9.4

Survival of Obligations

Except as otherwise provided herein, all of the obligations of this Agreement shall survive in favour of the Party to whom they are made for so long as the Corporations are indebted towards the Lender under this Agreement.

9.5

Amendments

No modification or amendments to this Agreement shall be valid or binding unless set forth in writing and duly executed by the Corporations and the Lender, and no waiver of any breach of any term or provision of this Agreement shall be effective or binding unless made in writing and signed by the Corporations and/or the Lender, as the case may be, and, unless otherwise provided, shall be limited to the specific breach waived.

9.6

Waivers

No waiver by any of the Parties hereto of the conditions, or of the breach of any term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or as a waiver of any condition nor of the breach of any other term, covenant, representation or warranty contained in this Agreement.

9.7

Successors and Assigns

This Agreement will enure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties hereto.

9.8

Time of the Essence

Time is of the essence in this Agreement. Each Party shall be in default by the mere lapse of time for the performance of any of its obligations hereunder without the necessity of any notice to that effect.

9.9

Injunctive Relief

Any breach of any provisions of this Agreement, without prejudice to any other recourse or remedy provided by this Agreement or by law, shall give rise to a recourse for injunctive relief or to any other recourse intended to stop the breach which the Parties recognize to be an appropriate recourse and to which they expressly and irrevocably consent, if the conditions required for such recourse are met.

9.10

Counterparts

This Agreement may be executed by facsimile or any other electronic means and may be executed in counterparts and each such counterpart shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument.

9.11

Risk of Force Majeure

The Corporations expressly assume all risks of force majeure, such that the Corporations shall be bound to timely execute each and every of its obligations under this Agreement notwithstanding the existence or occurrence of any event or circumstance constituting a force majeure within the meaning given to such term under the laws of Ontario.

(Signature page follows)

IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN EXECUTED BY THE PARTIES HERETOExhibit 4.1

 

FORM OF NOTE

[GLOBAL NOTE LEGEND](1)

 

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

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE REGISTERED FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC, OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC, OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR TO A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

[RESTRICTIVE LEGEND](2)

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-

 

(1)  Remove if a definitive note.

(2)  Remove if in accordance with Section 305(2)(b) of the Indenture.

 

 

DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

 

2

 

GFI GROUP INC.

 

8.375% Senior Notes due 2018

 

	
Certificate   No. [ ]
    	
CUSIP No. [ ]
    
	
Global   Security
    	
ISIN No. [ ]
    

 

GFI GROUP INC., a Delaware corporation (the “Company,” which term includes any successor corporation under the Indenture referred to herein), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal amount of [                        ] Dollars ($[              ]) on July 19, 2018 (the “Stated Maturity Date”), unless redeemed on any Redemption Date (as defined on the reverse hereof) (the Stated Maturity Date or any Redemption Date is referred to herein as the “Maturity Date” with respect to the principal repayable on such date), upon surrender of this Note at the office or agency of the Company for such payment in The City of New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on the outstanding principal amount until the Maturity Date at the rate of 8.375% per annum based on a 360-day year of twelve 30-day months (the “Interest Rate”), in like coin or currency, semi-annually on January 19 and July 19 of each year, commencing on January 19, 2012, until the date on which payment of said principal amount has been made or duly provided for; provided, however, that if this Note is in the form of a global Security, then payments of principal of or premium, if any, or interest on this Note may be made at the Company’s option by wire transfer of immediately available funds to the account specified by the Depositary for this Note; provided further, that if this Note is not in the form of a global Security, then payments of principal of and premium, if any, and interest on this Note may be made at the Company’s option by check mailed to the address of the person entitled thereto as such address shall appear in the records of the Security Registrar.  Interest on this Note shall accrue on the outstanding principal amount thereof from, and including, the most recent Interest Payment Date to which interest has been paid or provided for or, if no interest has been paid or duly provided for, from, and including, July 19, 2011, in each case to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be.    The interest payable on any Interest Payment Date shall be payable to the person in whose name this Note is registered at the close of business on the 15th calendar day  immediately preceding the applicable Interest Payment Date (whether or not a Business Day), except as otherwise provided in the Indenture.

 

If the Maturity Date or any Interest Payment Date falls on a day which is not a Business Day, principal, premium, if any, and interest, if any, payable with respect to the Maturity Date or such Interest Payment Date, as the case may be, will be paid on the next Business Day with the same force and effect as if made on the Maturity Date or such Interest Payment Date, as the case may be, and no additional interest shall accrue on the amount so payable for the period from and after the Maturity Date or such Interest Payment Date, as the case may be, to the next Business Day.  As used herein, “Business Day” means any day, other than a Saturday or Sunday or other day on which banking institutions or trust companies in the City of New York are authorized or obligated by law, regulation, or executive order to close.

 

3

 

This Note is issued pursuant to, and shall be governed by, that certain Indenture (the “Indenture”), dated as of July 19, 2011, between the Company and The Bank of New York Mellon Trust Company, N. A., as Trustee (the “Trustee”).  Capitalized terms used in this Note without definition shall have the respective meanings ascribed to them in the Indenture.

 

The provisions of this Note are continued on the reverse hereof, and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee by the manual signature of one of its authorized signatories, this Note shall not be entitled to the benefit under the Indenture or be valid or obligatory for any purpose.

 

[This Space Intentionally Left Blank]

 

4

 

IN WITNESS WHEREOF, GFI Group Inc. has caused this instrument to be duly signed.

 

 

	
 
    	
GFI   GROUP INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James   A. Peers
    
	
 
    	
Title:
    	
Chief   Financial Officer
    

 

5

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
 
    	
THE   BANK OF NEW YORK MELLON TRUST COMPANY, N. A., as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    
	
Dated:   July 19, 2011
    	
 
    
				

 

6

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of a series of debt securities (the “Securities”) of the Company, designated as its 8.375% Senior Notes due 2018 (such series, the “Notes”).  The Securities, including the Notes, are all issued or to be issued under and pursuant to the Indenture, to which Indenture, and all Company Resolutions and Officers’ Certificates as provided therein, reference is hereby made for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes, and the terms upon which the Notes are, and are to be, authenticated and delivered.  The Notes are initially limited to TWO HUNDRED FIFTY MILLION Dollars ($250,000,000) aggregate principal amount; provided, however, that, without the consent of the Holders of any Securities, the Company may at any time (other than when an Event of Default has occurred and is continuing with respect to the Notes) issue additional Securities under the Indenture in unlimited amounts having the same terms as the Notes other than the issue price, the date from which interest accrues and in certain circumstances, the first Interest Payment Date applicable thereto.  Any such Securities will constitute a single series of Securities with such Notes for all purposes under the Indenture.

 

This Note will constitute part of the Company’s general unsecured and senior obligations and will rank equally with all of the Company’s other senior indebtedness from time to time outstanding.  This Note will be issuable in fully registered book-entry form only without coupons, in minimum denominations of two thousand Dollars ($2,000) and integral multiples of one thousand Dollars ($1,000) in excess thereof.

 

In case an Event of Default shall have occurred and be continuing with respect to this Note, the principal hereof may be declared due and payable immediately, and upon such declaration shall become immediately due and payable, in the manner, with the effect, and subject to the conditions provided in the Indenture.  The Indenture permits the Holders of at least a majority in aggregate principal amount of the Notes at the time outstanding, on behalf of the Holders of all of the Notes, in the manner and subject to the provisions of the Indenture, to waive certain past defaults and rescind and annul such past declarations and their consequences under the Indenture.

 

The Indenture contains provisions permitting the Company and the Trustee, with consent of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding, evidenced as provided in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture with respect to the Notes or of modifying in any manner the rights of the Holders of the Notes; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the principal amount thereof or the premium thereon, if any, or reduce the rate or extend the time of payment of interest, if any, thereon or make the principal thereof or premium, if any, or interest, if any, thereon payable in any currency other than as provided pursuant to the Indenture or this Note, without the consent of the Holders of each Note so affected; or (ii) reduce the aforesaid percentage in principal amount of the Notes, without the consent of the Holder of all Notes then outstanding, the Holders of which are required to consent to any such supplemental indenture, or waive compliance with any of the provisions contained in Article Ten of the Indenture.

 

7

 

The Notes shall not be subject to any sinking fund or analogous provisions and no Holder of the Notes shall have any right to cause the Company to redeem any Notes at the option of the Holder.

 

The Notes will be redeemable, in whole or in part, at the option of the Company at any time or from time to time, on a date fixed for redemption (any such date, a “Redemption Date”), for cash, at a redemption price equal to the greater of:

 

(i)                                     100% of the aggregate principal amount of the Notes being redeemed on such Redemption Date; or

 

(ii)                                  as calculated by the Quotation Agent (as defined below), an amount equal to the sum of the present values of the remaining scheduled payments of principal of and interest on the Notes being redeemed on such Redemption Date (not including the amount, if any, of unpaid interest accrued to, but excluding, such Redemption Date) discounted to such Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), plus 0.50% (or 50 basis points);

 

plus, in each case, unpaid interest accrued on such Notes to, but excluding, such Redemption Date.

 

Notwithstanding the foregoing, installments of interest on the Notes that are due and payable on each Interest Payment Date falling on or prior to a Redemption Date will be payable on such Interest Payment Date to the registered Holder as of the close of business on the relevant Regular Record Date immediately preceding such Interest Payment Date.

 

The Company shall mail notice of each redemption in the manner provided in the Indenture not less than thirty nor more than sixty days prior to the Redemption Date to each Holder of Notes to be redeemed.  Once notice of redemption is mailed, the Notes called for redemption will become due and payable on the applicable Redemption Date at the applicable redemption price together with accrued and unpaid interest, if any, thereon, but excluding the Redemption Date.

 

In connection with such optional redemption, the following defined terms apply:

 

“Comparable Treasury Issue” means, for the Notes, the United States Treasury security selected by the Quotation Agent as having a maturity (or interpolated maturities) comparable to the remaining term of such Notes to be redeemed 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 and the Notes to be redeemed, (A) the average of four Reference Treasury Dealer Quotations for such Redemption Date and Notes, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

8

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means (A) Jefferies & Company, Inc. (and its affiliates that are Primary Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (B) three other Primary Treasury Dealer(s) selected by the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any Redemption Date and the Notes to be redeemed, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue for such Notes (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 3:30 p.m. (New York City time) on the third (3rd) Business Day preceding such Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date for the Notes, the rate per annum equal to the semi—annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

On and after any Redemption Date, interest will cease to accrue on the Notes or any portion of the Notes called for redemption (unless the Company defaults in the payment of the redemption price therefor).  On or prior to 11:00a.m. (local time in New York City) on any Redemption Date, the Company will deposit with a paying agent (or the Trustee) an amount of money sufficient to pay the redemption price of, and (except if the Redemption Date will be an Interest Payment Date) any accrued interest on, the Notes to be redeemed on such date to, but excluding, the Redemption Date.  If fewer than all of the Notes are to be redeemed, then the Notes to be redeemed shall be selected by lot by the Depositary, or pursuant to the customary procedures of the Depository in the case of Notes represented by a global Security, or by the Trustee by a method the Trustee deems to be fair and appropriate, in the case of Notes that are not represented by a global Security.

 

The Interest Rate will be subject to adjustment from time to time if any of S&P, Moody’s or Fitch (or, if applicable, any Substitute Rating Agency for any of the foregoing downgrades (or subsequently upgrades) the debt rating assigned to the Notes (a “Rating”) as set forth below:

 

If the Rating from S&P (or any Substitute Rating Agency thereof) of the Notes is decreased to a Rating set forth in the immediately following table, the Interest Rate on the Notes will increase from the interest rate payable on the Notes when originally issued by the percentage points set forth opposite that Rating:

 

 

	
S&P Rating*
    	
 
    	
Interest Rate
   Adjustment
    	
 
    
	
BB+ 
    	
 
    	
0.25
    	
%
    
	
BB 
    	
 
    	
0.50
    	
%
    
	
BB- 
    	
 
    	
0.75
    	
%
    
	
B+ or below 
    	
 
    	
1.00
    	
%
    

 

9

 

*Or the equivalent ratings of any Substitute Rating Agency.

 

If the Rating from Moody’s (or any Substitute Rating Agency thereof) of the Notes is decreased to a Rating set forth in the immediately following table, the interest rate on the Notes will increase from the interest rate payable on the Notes when originally issued by the percentage points set forth opposite that Rating:

 

	
Moody’s Rating*
    	
 
    	
Interest Rate
   Adjustment
    	
 
    
	
Ba3 
    	
 
    	
0.25
    	
%
    
	
B1 
    	
 
    	
0.50
    	
%
    
	
B2 
    	
 
    	
0.75
    	
%
    
	
B3 or below 
    	
 
    	
1.00
    	
%
    

 

*Or the equivalent ratings of any Substitute Rating Agency.

 

If the Rating from Fitch (or any Substitute Rating Agency thereof) of the Notes is decreased to a Rating set forth in the immediately following table, the interest rate on the Notes will increase from the interest rate payable on the Notes when originally issued by the percentage points set forth opposite that Rating:

 

	
Fitch Rating*
    	
 
    	
Interest Rate
   Adjustment
    	
 
    
	
BB+ 
    	
 
    	
0.25
    	
%
    
	
BB 
    	
 
    	
0.50
    	
%
    
	
BB- 
    	
 
    	
0.75
    	
%
    
	
B+ or below 
    	
 
    	
1.00
    	
%
    

 

* Or the equivalent ratings of any Substitute Rating Agency.

 

If subsequent to a Rating decrease any of S&P, Moody’s or Fitch (or, if applicable, a Substitute Rating Agency for any of the foregoing), as the case may be, subsequently increases or decreases its Rating of the Notes to any of the Ratings set forth above, the applicable per annum interest rate on the Notes will be increased or decreased such that the applicable per annum interest rate for the Notes equals the interest rate payable on the Notes when originally issued plus (if applicable) the sum of the percentages set forth opposite the applicable Ratings from the tables above in effect immediately following the Rating increase or decrease. If S&P (or any Substitute Rating Agency thereof) subsequently increases its rating of the Notes to BBB- (or its equivalent, in the case of a Substitute Rating Agency) or higher, Moody’s (or any Substitute Rating Agency thereof) increases its rating to Ba2 (or its equivalent, in the case of a Substitute Rating Agency) or higher and Fitch (or any Substitute Rating Agency thereof) subsequently increases its Rating to BBB (or its equivalent, in the case of a Substitute Rating Agency) or higher, the applicable per annum interest rate on the Notes will be decreased to the interest rate payable on the Notes when originally issued.

 

Each adjustment to the applicable per annum interest rate required by any decrease or increase in the Ratings set forth above, whether occasioned by the action of S&P, Moody’s or Fitch (or, if applicable, any Substitute Rating Agency for any of the foregoing),

 

10

 

shall be made independent of any and all other adjustments. Notwithstanding anything to the contrary contained herein, in no event shall (1) the applicable per annum interest rate for the Notes be reduced to below the interest rate payable on the Notes when originally issued or (2) the total increase in the applicable per annum interest rate on the notes exceed 2.00% above the interest rate payable on the Notes when originally issued.

 

Except as provided below, no adjustments in the applicable per annum interest rate of the Notes shall be made solely as a result of a Rating Agency ceasing to provide a Rating of the Notes. If at any time fewer than two Rating Agencies provide a Rating of the notes for a reason beyond the Company’s control, the Company will use its commercially reasonable efforts to obtain a Rating of the Notes from a Substitute Rating Agency, to the extent one exists, and if a Substitute Rating Agency exists, for purposes of determining any increase or decrease in the applicable per annum interest rate on the Notes pursuant to the tables above (a) such Substitute Rating Agency will be substituted for the last Rating Agency to provide a Rating of the Notes but which has since ceased to provide such Rating, (b) the relative ratings scale used by such Substitute Rating Agency to assign ratings to senior unsecured debt will be determined in good faith by an independent investment banking institution of national standing appointed by the Company and, for purposes of determining the applicable Ratings included in the applicable table above with respect to such Substitute Rating Agency, such Ratings will be deemed to be the equivalent Ratings used by S&P, Moody’s or Fitch, as applicable, in such table and (c) the applicable per annum interest rate on the Notes will increase or decrease, as the case may be, such that the applicable per annum interest rate equals the interest rate payable on the Notes when originally issued plus the appropriate percentage points, if any, set forth opposite the Rating from such Substitute Rating Agency in the applicable table above (taking into account the provisions of clause (b) above) (plus any applicable percentage points resulting from a decreased Rating by any other Rating Agency). For so long as only one Rating Agency (including any Substitute Rating Agency) provides a Rating of the Notes, any subsequent increase or decrease in the applicable per annum interest rate of the Notes necessitated by a reduction or increase in the Rating by the Rating Agency providing the Rating shall be two times the percentage points set forth in the applicable table above. For so long as no Rating Agency (including any Substitute Rating Agency) provides a Rating of the Notes, the applicable per annum interest rate on the Notes will increase to, or remain at, as the case may be, 2.00 percentage points above the interest rate payable on the Notes when originally issued; provided, however, that no adjustments in the applicable per annum interest rate of the Notes shall be made solely as a result of a Rating Agency ceasing to exist or ceasing to provide Ratings generally at such time.  Notwithstanding anything to the contrary contained herein, if at any point in time the Rating Agencies (including any Substitute Rating Agency) cease to exist or cease to provide Ratings generally and the Company has not been able to appoint any Substitute Rating Agency despite the use of its commercially reasonable best efforts as required above, the interest rate on the Notes shall be the interest rate payable on the Notes when originally issued.  The Company agrees to use its commercially reasonable efforts to maintain a Rating on the Notes from each of Moody’s, S&P and Fitch.

 

Any increase or decrease in the applicable per annum interest rate, as described above, will take effect from the first day of the interest period immediately following the applicable interest period during which a Rating change requires an adjustment in the applicable per annum interest rate. If the applicable per annum interest rate adjusts up and then

 

11

 

subsequently adjust down during the same interest period, the applicable per annum interest rate shall be determined based on the Ratings in effect at the end of the interest period.

 

If a Change of Control Repurchase Event (as defined below) occurs, unless the Company has exercised its right to redeem all of the Notes in accordance with the redemption terms as set forth in the Notes and the Indenture, the Company shall make an irrevocable offer to each Holder of the Notes to repurchase all or any part (in minimum denominations of $2,000 and in any integral multiple of $1,000 in excess thereof) of such Holder’s Notes at the Change of Control Repurchase Price (as defined below).

 

Within 30 days following any Change of Control Repurchase Event or, at the Company’s option, prior to any Change of Control (as defined below), but in either case, after the public announcement of such Change of Control, the Company shall mail to each Holder of the Notes, with a copy to the Trustee, a notice:

 

(i)            describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event;

 

(ii)           offering to repurchase all Notes tendered;

 

(iii)          setting forth the Change of Control Repurchase Date (as defined below);

 

(iv)          if mailed prior to the date of consummation of the Change of Control, stating that the offer to repurchase is conditioned on a Change of Control Repurchase Event occurring on or prior to the Change of Control Repurchase Date specified in such notice;

 

(v)           disclosing that any Note not tendered for repurchase will continue to accrue interest; and

 

(vi)          specifying the procedures for tendering Notes.

 

The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder, to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with this section, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this section by virtue of such conflict.

 

On the Change of Control Repurchase Date, the Company shall, to the extent lawful:

 

(i)            accept for payment all Notes or portions thereof (in minimum denominations of $2,000 and any integral multiples of $1,000 in excess thereof) properly tendered pursuant to such offer;

 

12

 

(ii)           deposit with the Paying Agent an amount equal to the aggregate purchase price in respect of all Notes or portions thereof properly tendered; and

 

(iii)          deliver or cause to be delivered to the Trustee for cancellation the Notes properly accepted, together with an Officers’ Certificate stating the aggregate principal amount of Notes being repurchased by the Company.

 

The Paying Agent will promptly mail to each Holder of Notes properly tendered the Change of Control Repurchase Price, and the Trustee, upon the execution and delivery by the Company of such Notes, will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.

 

The Company shall not be required to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.

 

In connection with such interest rate adjustment and change of control covenant set forth above, the following defined terms shall apply:

 

“Below Investment Grade Rating Event” means the Notes cease to be Rated Investment Grade by at least two of the Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of the related Change of Control (which period shall be extended so long as the Rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in Rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if any of the Rating Agencies making the reduction in Rating to which this definition would otherwise apply does not announce or publicly confirm or inform the Trustee in writing that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

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

 

(1)           the direct or indirect sale, transfer, lease, conveyance or other disposition (other than by way of merger or consolidation), in one or a

 

13

 

series of related transactions, of all or substantially all of the Company’s properties or assets and those of the Company’s subsidiaries taken as a whole to any “person” or “group” within the meaning of Section 13(d)(3) of the Exchange Act, other than the Company or one of its wholly-owned subsidiaries;

 

(2)           the adoption of a plan relating to the Company’s liquidation or dissolution;

 

(3)           the consummation of any transaction or series of related transactions (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” within the meaning of Section 13(d)(3) of the Exchange Act, other than the Company, one or more of the Company’s wholly-owned Subsidiaries or a Permitted Holder, becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting Stock, measured by voting power rather than number of shares; provided that a transaction shall not constitute a “Change of Control” under this definition if (i) the sole purpose of the transaction is to change the Company’s jurisdiction of incorporation and (ii) the Company’s shareholders and the number of shares of the Company’s Voting Stock, measured by voting power and number of shares, owned by each of them immediately before and immediately following such transaction are identical; or

 

(4)           the Company consolidates with, or merges with or into, any “person” within the meaning of Section 13(d)(3) of the Exchange Act, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding shares of the Company’s Voting Stock or such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person immediately after giving effect to such transaction.

 

“Change of Control Repurchase Date” means the date on which the Company will repurchase the  Notes upon a Change of Control Repurchase Event, which date shall not be less than thirty nor more than sixty days after the date of the Company’s mailing of notice to Holders that a Change of Control Repurchase Event had occurred.

 

“Change of Control Repurchase Event” means the occurrence of a Change of Control and a related Below Investment Grade Rating Event.

 

“Change of Control Repurchase Price” means an amount in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid

 

14

 

interest on those Notes, to but not including, the Change of Control Repurchase Date.

 

“Fitch” means Fitch Inc., a subsidiary of Fimalac, S.A. and any successors thereto.

 

“Investment Grade” means a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch), a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s),  and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) or the equivalent investment grade credit rating from any Substitute Rating Agency.

 

“Moody’s” means Moody’s Investors Services, Inc. (or any successor to the rating agency business thereof).

 

“Permitted Holder” means:

 

(i)            Mr. Michael A. Gooch and his guardians, conservators, committees or attorneys-in-fact;

 

(ii)           lineal descendants of Mr. Gooch (a “descendant”) and their respective guardians, conservators, committees or attorneys-in-fact;

 

(iii)          any trusts created for the benefit of any of the persons described in clauses (i) and (ii) of this definition; and

 

(iv)          Jersey Partners Inc. and any of its affiliates.

 

“Rating Agency” means each of Fitch, Moody’s and S&P; provided, that if any of Fitch, Moody’s or S&P ceases to rate the Notes or fails to make a Rating of the Notes publicly available for reasons outside of the Company’s control, the Company may select another “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act as a replacement agency for such Rating Agency, a “Substitute Rating Agency”; provided, that no single Substitute Rating Agency may be a replacement agency for more than one Rating Agency.

 

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successors thereto.

 

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such person, even if the right so to vote has been suspended by the happening of such a contingency.

 

15

 

The Company will promptly furnish to the Holders of the Notes notices of:

 

(i)             any Payment Default under any instrument evidencing Indebtedness for borrowed money, and

 

(ii)           any acceleration of such Indebtedness prior to its express maturity.

 

In addition to the Events of Default included in the Indenture, the following additional Event of Default shall be applicable to the Notes:

 

Failure by the Company to make an offer to repurchase or repurchase the Notes tendered for repurchase following the occurrence of a Change of Control Repurchase Event in conformity with the covenant set forth above.

 

Sections 401 and 402 of the Indenture shall be applicable to the Notes.

 

The Company shall not pay any additional amounts on any of the Notes to any person, including any Holder who is not a United States Person in respect of any tax, assessment or governmental charge withheld or deducted.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture or of any Company Resolution shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the times and places and at the rate and in the coin and currency herein prescribed.

 

This Note is transferable by the Holder hereof in person or by his attorney duly authorized in writing on the books of the Company at the office or agency to be maintained by the Company for that purpose in the City of New York, but only in the manner, subject to the limitations and upon payment of any tax or governmental charge for which the Company may require reimbursement as provided in the Indenture, and upon surrender and cancellation of this Note.  Upon any registration of transfer, a new registered Note or Notes, of authorized denomination or authorized denominations and like tenor and terms, and in the same aggregate principal amount, will be issued to the transferee in exchange therefor.

 

The Company, the Trustee, any Paying Agent and any Security Registrar may deem and treat the Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notations of ownership or other writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon as herein provided and for all other purposes, and none of the Company, the Trustee, any Paying Agent or any Security Registrar shall be affected by any notice to the contrary.

 

No recourse shall be had for the payment of the principal of or premium, if any, or interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto or any Company Resolution, against any Person other than the Company or against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or any other Person, whether by virtue

 

16

 

of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance of this Note, expressly waived and released.

 

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

 

17

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

 

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

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal amount
   of this Global Note
    	
 
    	
Amount of increase
   in Principal
   amount of this
   Global Note
    	
 
    	
Principal amount
   of this Global Note
   following such
   decrease or
   increase
    	
 
    	
Signature of
   authorized officer
   of Trustee or Notes
   Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

18

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