Document:

Exhibit 10.7

 

Blue
Capital Reinsurance Holdings Ltd.

 

2013 LONG-TERM INCENTIVE PLAN

 

1.                 
Purpose

 

The purposes of the Blue Capital Reinsurance
Holdings Ltd. 2013 Long-Term Incentive Plan (the “Plan”) are to encourage selected employees, non-employee directors
and consultants of Blue Capital Reinsurance Holdings Ltd. (together with any successor thereto, the “Company”)
and its Affiliates (as defined below) to acquire a proprietary interest in the Company’s growth and performance, to generate
an increased incentive to contribute to the Company’s future success and to enhance the ability of the Company and its Affiliates
to attract and retain qualified individuals.

 

2.                 
Definitions

 

As used herein, the following terms shall
have the meanings set forth below:

 

		(a)	“Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls or is under common
control with, the Company and/or (b) any entity in which the Company has a significant equity interest, in either case, as determined
by the Committee.

 

		(b)	“Award” means any award that is permitted under Section 6 of the Plan and granted under the Plan.

 

		(c)	“Award Agreement” means any written or electronic agreement, contract or other instrument or document evidencing
any Award, which may, but need not, require execution or acknowledgment by a Participant.

 

		(d)	“Board” means the Board of Directors of the Company.

 

		(e)	“Cause” shall (i) have the meaning set forth in the applicable Award Agreement or (ii) if not defined in
an applicable Award Agreement, shall have the meaning set forth in any employment or service agreement between the Participant
and the Company or any of its Affiliates or (iii) if not defined in an Award Agreement, employment or service agreement pursuant
to this Section 2(e), shall mean (A) the Participant’s conviction of, or the entering of a guilty plea or plea of no contest
with respect to, a felony; (B) the wilful and continued failure by the Participant to substantially perform any material duties
set forth in any employment or service agreement between the Participant and the Company or one of its Affiliates or as otherwise
reasonably assigned to the Participant from time to time (other than any such failure resulting from Participant’s Disability),
in each case, after written demand for substantial performance is delivered by the Company (or Affiliate) to the Participant that
identifies the manner in which the Company (or Affiliate) believes the Participant has not substantially performed such duties;
(C) the commission of an act by the Participant involving moral turpitude, which could be reasonably expected to have an adverse
effect on the Company or any of its Affiliates; (D) fraud, misappropriation, embezzlement or intentional breach of fiduciary duty
by the Participant with respect to the Company or any of its Affiliates; (E) the Participant’s wilful malfeasance in connection
with such Participant’s employment or service that has, in the Company’s (or Affiliate’s) determination, adversely
affected the Company or any of its Affiliates; or (F) a material violation of any policy of the Company or any of its Affiliates,
or a material breach of any agreement between the Participant and the Company or any of its Affiliates, that could, in each case,
be reasonably expected to have an adverse effect on the Company or any of its Affiliates.

 

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		(f)	“Cash Incentive Award” means an Award (i) that is granted under Section 6(g) of the Plan, (ii) that is settled
in cash and (iii) the value of which is set by the Committee and is not calculated by reference to the Fair Market Value of Shares.

 

		(g)	“Change in Control” (i) shall have the meaning set forth in an Award Agreement; provided, however,
that except in the case of a transaction described in subparagraph (C) below, any definition of Change in Control set forth in
an Award Agreement shall provide that a Change in Control shall not occur until consummation or effectiveness of a change in control
of the Company, rather than upon the announcement, commencement, shareholder approval or other potential occurrence of any event
or transaction that, if completed, would result in a change in control of the Company or (ii) if there is no definition set forth
in an Award Agreement, shall mean the first of the following events to occur:

 

		(A)	the consummation of (i) a merger, amalgamation, consolidation, scheme of arrangement, statutory share exchange or similar form
of corporate transaction involving (I) the Company or (II) any of its Subsidiaries, but in the case of this clause (i) only if
Company Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (i) being hereinafter
referred to as a “Reorganization”) or (ii) the sale or other disposition of all or substantially all the assets
of the Company to an entity that is not an Affiliate (a “Sale”), in each case, if such Reorganization or Sale
requires the approval of the Company’s shareholders under the law of the Company’s jurisdiction of organization (whether
such approval is required for such Reorganization or Sale or for the issuance of securities of the Company in such Reorganization
or Sale), unless, immediately following such Reorganization or Sale, (1) individuals and entities who were the “beneficial
owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities
eligible to vote for the election of the Board (“Company Voting Securities”) outstanding immediately prior to
the consummation of such Reorganization or Sale continue to beneficially own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities of the corporation or other entity resulting from such Reorganization or
Sale (including a corporation that, as a result of such transaction, owns the Company or all or substantially all the assets of
the Company either directly or through one or more Subsidiaries) (the “Continuing Company”) (excluding, for
such purposes, any outstanding voting securities of the Continuing Company that such beneficial owners hold immediately following
the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of
any corporation or other entity involved in or forming part of such Reorganization or Sale other than the Company), (2) no Person
(excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Company or any corporation
controlled by the Continuing Company and (y) Montpelier Re Holdings Ltd.) beneficially owns, directly or indirectly, 35% or more
of the combined voting power of the then outstanding voting securities of the Continuing Company and (3) at least a majority of
the members of the board of directors of the Continuing Company (or equivalent body) were Continuing Directors at the time of the
execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the
time at which approval of the Board was obtained for such Reorganization or Sale;

 

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		(B)	direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, as amended) of securities of
the Company representing in the aggregate 35% or more of the total combined voting power of the Company’s then issued and
outstanding securities is acquired by any Person or entity, or group of associated Persons or entities acting in concert; provided,
however, that for purposes hereof, the following acquisitions shall not constitute a Change in Control: (1) any acquisition
by the Company or any of its Subsidiaries, (2) any acquisition by any employee benefit plan (or related trust or fiduciary) sponsored
or maintained by the Company or any corporation controlled by the Company, (3) any acquisition by an underwriter temporarily holding
securities pursuant to an offering of such securities, (4) any acquisition by a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their ownership of shares of the Company, (5) any acquisition
in connection with a merger, amalgamation, consolidation or scheme of arrangement which, pursuant to subparagraph (A) above, does
not constitute a Change in Control, (6) any acquisition by Montpelier Re Holdings Ltd. and (7) any acquisition directly from the
Company;

 

		(C)	the shareholders of the Company approve any plan or proposal for the liquidation of the Company; or

 

		(D)	the occurrence within any 24-month or shorter period of a change in the composition of the Board such that the “Continuing
Directors” cease for any reason to constitute at least a majority of the Board. For purposes of this subparagraph, “Continuing
Directors” means (1) those members of the Board who were directors on the Effective Date and (2) those members of the
Board (other than a director whose initial assumption of office was pursuant to an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of directors of the Company) who were elected or appointed
by, or on the nomination or recommendation of, at least a majority of the then-existing directors who either were directors on
the Effective Date or were previously so elected or appointed.

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		(h)	“Clawback Policy” means any policy adopted by the Company or any of its Affiliates relating to the recovery
of compensation granted, paid, delivered, awarded or otherwise provided to any Participant by the Company or any of its Affiliates
as such policy is in effect on the date of grant of the applicable Award or, to the extent necessary to address the requirements
of applicable law (including, without limitation, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010, as codified in Section 10D of the Exchange Act, Section 304 of the Sarbanes-Oxley Act of 2002 or any other applicable
law), as may be amended from time to time.

 

		(i)	“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor statute
thereto, and the regulations promulgated thereunder.

 

		(j)	“Committee” means the Compensation and Nominating Committee of the Board, or such other committee of the
Board having responsibility for executive compensation by whatever name, or such other committee designated by the Board to administer
the Plan.

 

		(k)	“Company” shall have the meaning set forth in Section 1 of the Plan.

 

		(l)	“Constructive Termination” (i) shall have the meaning, and shall be determined in accordance with the procedures,
set forth in the applicable Award Agreement or (ii) if not defined in an applicable Award Agreement, shall have the meaning, and
shall be determined in accordance with the procedures, set forth in any employment or service agreement between the Participant
and the Company or any of its Affiliates or (iii) if not defined in an Award Agreement, employment or service agreement pursuant
to this Section 2(l), shall mean a termination of employment by a Participant for Good Reason; provided that the Participant must
provide written notice to the Company or an Affiliate, as applicable, stating the circumstances believed to constitute Good Reason
within 60 days of the initial existence of such circumstances, and, if such circumstance may reasonably be remedied, the Company
or an Affiliate shall have 30 days to effect that remedy; provided, however, that if such circumstance is not remedied within that
30-day period, the Participant may terminate employment by submitting a notice of termination to the Company or an Affiliate,
as applicable; provided, that the notice of termination invoking the Participant’s right to a Constructive Termination pursuant
to this clause (iii) must provide that the Participant’s termination of employment will be effective no later than 45 days
after the later of (A) the initial occurrence of the circumstances constituting Good Reason and (B) the end of such 30-day
cure period, if applicable (otherwise, the Participant is deemed to have consented to the circumstances that may have otherwise
given rise to the existence of Good Reason).

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		(m)	“Deferred Share Unit” means a deferred share unit Award that represents an unfunded and unsecured promise
to deliver Shares in accordance with the terms of the applicable Award Agreement.

 

		(n)	“Disability” means disability of a Participant such as would entitle the Participant to receive disability
income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no
such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning
of Section 22(e)(3) of the Code; provided, however, if an amount payable pursuant to an Award constitutes deferred compensation
(within the meaning of Section 409A of the Code) and payment of such amount is intended to be triggered pursuant to Section 409A(a)(ii)
of the Code by a Participant’s disability, such term shall mean that the Participant is considered “disabled”
within the meaning of Section 409A of the Code.

 

		(o)	“Effective Date” means September 27, 2013, the date of the adoption of this Plan by the Board and the Board
of Directors of Montpelier Re Holdings Ltd.

 

		(p)	“Exchange” means the New York Stock Exchange.

 

		(q)	“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor
statute thereto, and the regulations promulgated thereunder.

 

		(r)	“Exercise Price” means (i) in the case of Options, the price specified in the applicable Award Agreement
as the price-per-Share at which Shares may be purchased pursuant to such Option or (ii) in the case of SARs, the price specified
in the applicable Award Agreement as the reference price-per-Share used to calculate the amount payable to the applicable Participant
pursuant to such SAR.

 

		(s)	“Fair Market Value” means, except as otherwise provided in the applicable Award Agreement, (i) with respect
to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be
established from time to time by the Committee and (ii) with respect to Shares, as of any date, (A) in the event that there is
a public market for the Shares on such date, (x) for purposes of determining the Exercise Price of any Option or SAR that is granted
under the Plan, the closing sales price of one Share (1) as reported by the Exchange for such date or (2) if the Shares are listed
on any other national stock exchange, as reported on the stock exchange composite tape for securities traded on such stock exchange
for such date or, with respect to each of clauses (1) and (2), if there were no sales on such date, on the closest preceding date
on which there were sales of Shares, or (y) for all other purposes, the five-day average of the daily closing prices of one Share
for the five consecutive trading days previous to and including as the last day such date as reported (1) by the Exchange or (2)
if the Shares are listed on any other national stock exchange, on the stock exchange composite tape for securities traded on such
stock exchange or, with respect to each of clauses (1) and (2), if there were no sales on such date, on the closest preceding date
on which there were sales of Shares or (B) in the event there is no public market for the Shares on such date, the fair market
value of one Share as determined in good faith by the Committee.

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		(t)	“Good Reason” (i) shall have the meaning set forth in the applicable Award Agreement or (ii) if not defined
in an applicable Award Agreement, shall have the meaning set forth in any employment or service agreement between the Participant
and the Company or any of its Affiliates or (iii) if not defined in an Award Agreement, employment or service agreement pursuant
to this Section 2(t), shall mean (A) a material decrease in a Participant’s salary or bonus opportunity or (B) a relocation
of such Participant’s principal place of employment by more than fifty miles from the location at which such Participant
is then principally employed, in each case, without the consent of the Participant.

 

		(u)	“Incentive Share Option” means an option to purchase Shares from the Company that (i) is granted under Section
6(b) of the Plan and (ii) is intended to qualify for special U.S. Federal income tax treatment pursuant to Sections 421 and 422
of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated
in the applicable Award Agreement.

 

		(v)	“Independent Director” means a member of the Board (i) who is neither an employee of the Company nor an
employee of any Affiliate, and (ii) who, at the time of acting, is a “Non-Employee Director” under Rule 16b-3.

 

		(w)	“IRS” means the U.S. Internal Revenue Service or any successor thereto and includes the staff thereof.

 

		(x)	“Nonqualified Share Option” means an option to purchase Shares from the Company that (i) is granted under
Section 6(b) of the Plan and (ii) is not an Incentive Share Option.

 

		(y)	“Option” means an Incentive Share Option or a Nonqualified Share Option or both, as the context requires.

 

		(z)	“Participant” means any employee, non-employee director or consultant (including any prospective employee,
non-employee director or consultant) of the Company or any of its Affiliates, who in each case is eligible for an Award under Section
5 of the Plan and who is selected by the Committee to receive an Award under the Plan or who receives a Rollover Award pursuant
to Section 4(c) of the Plan.

 

		(aa)	“Performance Compensation Award” means an Award (other than an Option or SAR) that (i) is intended to qualify
as “qualified performance-based compensation” under Section 162(m) of the Code, (ii) is designated as a Performance
Compensation Award by the Committee and (iii) is granted to a Participant pursuant to Section 6(e) of the Plan.

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		(bb)	“Performance Criteria” means the criterion or criteria that the Committee shall select for purposes of establishing
the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award, Performance Unit or, if applicable,
Cash Incentive Award under the Plan.

 

		(cc)	“Performance Formula” means, for a Performance Period, the one or more objective formulas applied against
the relevant Performance Goal to determine, with regard to the Performance Compensation Award, Performance Unit or, if applicable,
Cash Incentive Award of a particular Participant, whether all, some portion but less than all, or none of such Award has been earned
for the Performance Period.

 

		(dd)	“Performance Goal” means, for a Performance Period, the one or more goals established by the Committee for
the Performance Period based upon the Performance Criteria.

 

		(ee)	“Performance Period” means the one or more periods of time as the Committee may select over which the attainment
of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment
of a Performance Compensation Award, Performance Unit or, if applicable, Cash Incentive Award.

 

		(ff)	“Performance Unit” means an Award under Section 6(f) of the Plan that has a value set by the Committee (or
that is determined by reference to a valuation formula specified by the Committee or the Fair Market Value of Shares), which value
may be paid to the Participant by delivery of such property as the Committee shall determine, including without limitation, cash
or Shares, or any combination thereof, upon achievement of such Performance Goals during the relevant Performance Period as the
Committee shall establish at the time of such Award or thereafter.

 

		(gg)	“Person” means a “person” as such term is used in Section 13(d) of the Exchange Act.

 

		(hh)	“Plan” shall have the meaning specified in Section 1 of the Plan.

 

		(ii)	“Restricted Share” means a Share that is granted under Section 6(d) of the Plan that is subject to certain
transfer restrictions, forfeiture provisions and/or other terms and conditions specified herein and in the applicable Award Agreement.

 

		(jj)	“Rollover Awards” shall have the meaning specified in Section 4(c) of the Plan.

 

		(kk)	“RSU” means a restricted share unit Award that is granted under Section 6(d) of the Plan and is designated
as such in the applicable Award Agreement and that represents an unfunded and unsecured promise to deliver Shares, cash, other
securities, other Awards or other property in accordance with the terms of the applicable Award Agreement.

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		(ll)	“Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act or
any successor rule or regulation thereto as in effect from time to time.

 

		(mm)	“SAR” means a share appreciation right Award that is granted under Section 6(c) of the Plan and that represents
an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property equal in value to the
excess, if any, of the Fair Market Value over the Exercise Price per Share of the SAR, subject to the terms of the applicable Award
Agreement.

 

		(nn)	“SEC” means the U.S. Securities and Exchange Commission or any successor thereto and shall include the staff
thereof.

 

		(oo)	“Shares” means common shares of the Company, par value $1.00 per share, or such other securities of the
Company (i) into which such shares shall be changed by reason of a recapitalization, merger, amalgamation, consolidation, scheme
of arrangement, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee
pursuant to Section 4(b) of the Plan.

 

		(pp)	“Subsidiary” means any entity in which the Company, directly or indirectly, possesses 50% or more of the
total combined voting power of all classes of its shares.

 

		(qq)	“Substituted Options” shall have the meaning specified in Section 6(c)(v) of the Plan.

 

		(rr)	“Substitution SARs” shall have the meaning specified in Section 6(c)(v) of the Plan.

 

		(ss)	“Termination of Employment” means a termination of an employee’s active employment with the Company
and any of its Affiliates for any reason; provided, however, that if an amount payable pursuant to an Award constitutes
deferred compensation (within the meaning of Section 409A of the Code) and payment of such amount is intended to be triggered pursuant
to Section 409A(a)(i) of the Code by a Participant’s separation from service, such term shall mean that the Participant has
experienced a “separation from service” within the meaning of Section 409A of the Code.

 

		(tt)	“Treasury Regulations” means all proposed, temporary and final regulations promulgated under the Code, as
such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

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3.                 
Administration

 

		(a)	Composition of the Committee. The Plan shall be administered by the Committee, which shall be composed of one or more
directors, as determined by the Board; provided that to the extent necessary to comply with the rules of the Exchange and
Rule 16b-3 and to satisfy any applicable requirements of Section 162(m) of the Code and any other applicable laws or rules,
the Committee shall be composed of two or more directors, all of whom shall be Independent Directors and all of whom shall (i)
qualify as “outside directors” under Section 162(m) of the Code, (ii) meet the independence requirements of the Exchange
or any other share exchange as appropriate, including the Bermuda Stock Exchange and (iii) meet the independence requirements of
the Bermuda Monetary Authority and any other similar body with enforceable jurisdiction. Notwithstanding the foregoing, in no event
shall any action taken by the Committee be considered void or be considered an act in contravention of the terms of the Plan solely
as a result of the failure by one or more members of the Committee to satisfy the requirements set forth in clause (i), (ii) or
(iii) of the immediately preceding sentence.

 

		(b)	Authority of the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the Committee shall have sole and plenary authority to administer the
Plan, including, but not limited to, the authority to (i) designate Participants, (ii) determine the type or types of Awards to
be granted to a Participant, (iii) determine the number of Shares to be covered by, or with respect to which payments, rights or
other matters are to be calculated in connection with, Awards, (iv) determine the terms and conditions of any Awards and prescribe
the form of instruments embodying the Awards, (v) determine the vesting schedules of Awards and, if certain performance criteria
must be attained in order for an Award to vest or be settled or paid, establish such performance criteria and certify whether,
and to what extent, such performance criteria have been attained, (vi) determine whether, to what extent and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or
suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended, (vii) determine
whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts
payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee,
(viii) interpret, administer, reconcile any inconsistency in, correct any default in and/or supply any omission in, the Plan and
any instrument or agreement relating to, or Award made under, the Plan, (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan, (x) accelerate the
vesting or exercisability of, payment for or lapse of restrictions on, Awards, (xi) amend an outstanding Award or grant a replacement
Award for an Award previously granted under the Plan if, in its sole discretion, the Committee determines that (A) the tax consequences
of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award
was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that
have more favorable tax consequences than initially anticipated; provided, however, that in no event may any Award
be amended or any replacement Award be granted in a manner that would violate the prohibitions on repricing of Options and SARs,
as set forth in clauses (i), (ii) and (iii) of Section 7(b) of the Plan, (xii) make any determination including, but not limited
to the certification of facts actionable under the Clawback Policy, or take any action that the Committee deems necessary or desirable
pursuant to the Clawback Policy, including but not limited to the rescission, modification or recovery of any Award granted, paid,
delivered, awarded or otherwise provided to any Participant pursuant to the Plan and (xiii) make any other determination and take
any other action that the Committee deems necessary or desirable for the administration of the Plan. The Committee may act only
by a majority of its members in office, except that the members of the Committee may authorize any one or more of their members
or any officer of the Company to execute and deliver documents on behalf of the Committee.

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		(c)	Committee Decisions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations
and other decisions under or with respect to the Plan or any Award shall be within the sole and plenary discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award and any shareholder.

 

		(d)	Indemnification. No member of the Board, the Committee or any employee of the Company (each such person, a “Covered
Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect
to the Plan or any Award hereunder. Each Covered Person shall be indemnified and held harmless by the Company from and against
(i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered
Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which
such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement
and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by
such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided
that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding, and, once
the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel
of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent
that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal,
determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered
Person’s bad faith, fraud, dishonesty or wilful criminal act or omission or that such right of indemnification is otherwise
prohibited by law or by the Company’s Memorandum of Association or Bye-Laws. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Memorandum
of Association or Bye-Laws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons
or hold them harmless.

 

		(e)	Awards to Independent Directors. Notwithstanding anything to the contrary contained herein, the Board or the Committee
may, in their respective discretion, at any time and from time to time, grant Awards to Independent Directors or administer the
Plan with respect to such Awards. In any such case, the Board may exercise all the authority, and may undertake any responsibility,
granted to the Committee herein.

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4.                 
Shares Available for Awards; Cash Payable Pursuant to Awards

 

		(a)	Shares and Cash Available. Subject to adjustment as provided in Section 4(b) of the Plan, Awards relating to Shares
may be granted under the Plan if, at the time of the grant of each Award, the aggregate number of Shares subject to outstanding
Awards under the Plan plus the number of Shares subject to the Award being granted under the Plan do not exceed 1% of the aggregate
number of then-outstanding Shares. For purposes of this Section 4(a), (i) an award will be considered to be an “outstanding”
Award in the fiscal year in which it is granted, (ii) an Option or SAR will be considered to be an “outstanding” Award
thereafter until it is exercised and (iii) any Award, other than Options and SARs, will be considered to be an “outstanding”
Award thereafter until it is no longer subject to vesting conditions requiring continued service of the participant; provided,
however, that, in the case of clause (iii) of this sentence, solely for purposes of this Section 4(a), the vesting conditions
referred to will be deemed to have lapsed on the first day of the fiscal quarter of the Company in which they are scheduled to
lapse. The maximum aggregate number of Shares that may be delivered pursuant to Incentive Share Options granted under the Plan
shall be 25,000. Subject to adjustment as provided in Section 4(b) of the Plan, (A) in the case of Awards that are settled in Shares,
the maximum aggregate number of Shares with respect to which Awards may be granted to any Participant in any fiscal year of the
Company under the Plan shall be 10,000, and (B) in the case of Awards that are settled in cash based on the Fair Market Value of
a Share, the maximum aggregate amount of cash that may be paid pursuant to Awards granted to any Participant in any fiscal year
of the Company shall be equal to the Fair Market Value (determined in accordance with the applicable Award Agreement) as of the
relevant vesting, payment, or settlement date multiplied by the number of Shares described in the preceding clause (A). In the
case of all Awards other than those described in the preceding sentence, the maximum aggregate amount of cash and other property
(valued at its Fair Market Value) other than Shares that may be paid or delivered pursuant to Awards under the Plan to any Participant
in any fiscal year of the Company shall be equal to $200,000.

 

		(b)	Adjustments for Changes in Capitalization and Similar Events.

 

		(i)	In the event of any extraordinary dividend or other extraordinary distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, rights offering, share split, reverse share split, split-up or spin-off or any
other event that constitutes an “equity restructuring” within the meaning of Accounting Standards Codification No.
718 with respect to Shares, the Committee shall, in the manner determined by the Committee to be appropriate or desirable, adjust
any or all of (A) the number of Shares or other securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted, including (1) the maximum aggregate number of Shares that may be delivered pursuant
to Awards granted under the Plan (including pursuant to Incentive Share Options) and (2) the maximum number of Shares or other
securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted to any
Participant in any fiscal year of the Company, in each case, as provided in Section 4(a) of the Plan, and (B) the terms of any
outstanding Award, including (1) the number of Shares or other securities of the Company (or number and kind of other securities
or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price, if applicable, with
respect to any Award.

 

		(ii)	In the event that the Committee determines that any reorganization, merger, amalgamation, consolidation, scheme of arrangement,
combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares (including any Change
in Control) such that an adjustment is determined by the Committee in its discretion to be appropriate or desirable, then the Committee
may (A) in such manner as it may deem appropriate or desirable, adjust any or all of (1) the number of Shares or other securities
of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, including (X)
the maximum aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan and (Y) the maximum number
of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards
may be granted to any Participant in any fiscal year of the Company, in each case, as provided in Section 4(a) of the Plan, and
(2) the terms of any outstanding Award, including (X) the number of Shares or other securities of the Company (or number and kind
of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (Y) the Exercise Price,
if applicable, with respect to any Award, (B) if deemed appropriate or desirable by the Committee, make provision for a cash payment
to the holder of an outstanding Award in consideration for the cancelation of such Award, including, in the case of an outstanding
Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancelation of such Option or SAR in
an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject
to such Option or SAR over the aggregate Exercise Price of such Option or SAR and (C) if deemed appropriate or desirable by the
Committee, cancel and terminate any Option or SAR having an Exercise Price equal to, or in excess of, the Fair Market Value of
a Share subject to such Option or SAR without any payment or consideration therefor.

 

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		(c)	Rollover Awards. Awards may, in the discretion of the Committee, be granted under the Plan in assumption of, or in substitution
for, outstanding awards previously granted by the Company or any of its Affiliates or a company acquired by the Company or any
of its Affiliates or with which the Company or any of its Affiliates combines (“Rollover Awards”); provided,
however, that in no event may any Rollover Award be granted in a manner that would violate the prohibitions on repricing
of Options and SARs, as set forth in clauses (i), (ii) and (iii) of Section 7(b) of the Plan. Any Rollover Awards shall be considered
outstanding Awards for purposes of Section 4(a); provided, however, that Rollover Awards issued in connection with
the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by the Company or
any of its Affiliates or with which the Company or any of its Affiliates combines shall not be considered outstanding Awards for
purposes of Section 4(a); provided further, however, that Rollover Awards issued in connection with the assumption
of, or in substitution for, outstanding share options intended to qualify for special tax treatment under Sections 421 and 422
of the Code that were previously granted by an entity that is acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines shall be counted against the maximum aggregate number of Shares available for Incentive
Share Options under the Plan.

 

		(d)	Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part,
of authorized and unissued Shares or of treasury Shares.

 

5.                 
Eligibility and Participation. Any employee, non-employee director or consultant (including any prospective
employee, director or consultant) of the Company or any of its Affiliates (including any entities that become Affiliates of the
Company after the Effective Date) shall be eligible to be designated a Participant.

 

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6.                 
Awards.

 

		(a)	Types of Awards. Awards may be made under the Plan in the form of (i) Options, (ii) SARs, (iii) Restricted Common Shares,
(iv) RSUs, (v) Deferred Share Units, (vi) Performance Compensation Awards, (vii) Performance Units, (viii) Cash Incentive Awards,
and (ix) other equity-based or equity-related Awards that the Committee determines are consistent with the purpose of the Plan
and the interests of the Company. Awards may be granted in tandem with other Awards. No Incentive Share Option (other than an Incentive
Share Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code
applies) may be granted to a person who is ineligible to receive an Incentive Share Option under the Code.

 

		(b)	Options.

 

		(i)	Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine (A) the
Participants to whom Options shall be granted, (B) subject to Section 4(a) of the Plan, the number of Shares subject to Options
to be granted to each Participant, (C) whether each Option will be an Incentive Share Option or a Nonqualified Share Option and
(D) the conditions and limitations applicable to the vesting and exercise of each Option. In the case of Incentive Share Options,
the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the
Code and any regulations related thereto, as may be amended from time to time. All Options granted under the Plan shall be Nonqualified
Share Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Share Option.
If an Option is intended to be an Incentive Share Option, and if, for any reason, such Option (or any portion thereof) shall not
qualify as an Incentive Share Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded
as a Nonqualified Share Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise
complies with the Plan’s requirements relating to Nonqualified Share Options.

 

		(ii)	Exercise Price. The Exercise Price of each Share covered by an Option shall be not less than 100% of the Fair Market
Value of such Share, determined as of the date the Option is granted; provided, however, in the case of an Incentive
Share Option granted to an employee who, at the time of the grant of such Option, owns shares representing more than 10% of the
voting power of all classes of shares of the Company or any Affiliate, the Exercise Price shall be no less than 110% of the Fair
Market Value on the date of the grant.

 

		(iii)	Vesting and Exercise. Each Option shall be vested and exercisable at such times, in such manner and subject to such
terms and conditions as the Committee may, in its sole and plenary discretion, specify in the applicable Award Agreement or thereafter.
Except as otherwise specified by the Committee in the applicable Award Agreement, an Option may only be exercised to the extent
that it has already vested at the time of exercise. An Option shall be deemed to be exercised when written or electronic notice
of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the
Award and full payment pursuant to Section 6(b)(v) of the Plan for the Shares with respect to which the Award is exercised has
been received by the Company. Exercise of an Option in any manner shall result in a decrease in the number of Shares that thereafter
may be available for sale under the Option and, except as expressly set forth in Sections 4(a) and 4(c) of the Plan, in the number
of Shares that may be available for purposes of the Plan, by the number of Shares as to which the Option is exercised. The maximum
aggregate Fair Market Value (determined on the date of grant) of the Shares in respect of which an Incentive Share Option held
by a Participant may become vested and exercisable during any calendar year shall not exceed $100,000. The Committee may impose
such conditions with respect to the exercise of Options, including, without limitation, any conditions relating to the application
of U.S. Federal or state securities laws, as it may deem necessary or advisable.

 

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		(iv)	Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the vesting criteria, term,
methods of exercise, methods and form of settlement and any other terms and conditions of any Option; provided, however,
that in no event may any Option be exercisable after the 10th anniversary of the date the Option is granted; and further provided
that in no event may any acceleration of any awarded but unvested Options occur due to a termination of employment or service for
Cause. Any determination by the Committee set forth in an applicable Award Agreement or otherwise under this Section 6(b)(iv) may
be changed by the Committee from time to time and may govern the exercise of Options granted or exercised thereafter.

 

		(v)	Payment.

 

		(A)	No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate Exercise Price therefor
is received by the Company, and the Participant has paid to the Company (or the Company has withheld in accordance with Section
9(e) of the Plan) an amount equal to any U.S. Federal, state, local and foreign income and employment taxes and social security
(or similar) liabilities required to be withheld. Such payments may be made in cash (or its equivalent) or, in the Committee’s
sole and plenary discretion, (1) by exchanging Shares owned by the Participant (which are not the subject of any pledge or other
security interest), (2) if there shall be a public market for the Shares at such time, subject to such rules as may be established
by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise
of the Option and to deliver promptly to the Company an amount equal to the aggregate Exercise Price, (3) by having the Company
withhold Shares from the Shares otherwise issuable pursuant to the exercise of the Option or (4) through any other method (or combination
of methods) as approved by the Committee; provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to, or withheld by, the Company, as of the date of such tender or withholding is at
least equal to such aggregate Exercise Price and the amount of any U.S. Federal, state, local or foreign income or employment tax
and social security (or similar) liability required to be withheld, if applicable.

 

		(B)	Wherever in the Plan or any Award Agreement a Participant is permitted to pay the Exercise Price of an Option by delivering
Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting
proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment
and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

 

		(vi)	Expiration. Provisions relating to exercisability of Options following Termination of Employment will be determined
pursuant to the applicable Award Agreement. In no event may an Option be exercisable after the 10th anniversary of the date the
Option is granted.

 

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		(c)	SARs.

 

		(i)	Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine (A) the
Participants to whom SARs shall be granted, (B) subject to Section 4(a) of the Plan, the number of SARs to be granted to each Participant,
(C) the Exercise Price thereof and (D) the conditions and limitations applicable to the exercise thereof.

 

		(ii)	Exercise Price. The Exercise Price of each Share covered by a SAR shall be not less than 100% of the Fair Market Value
of such Share, determined as of the date the SAR is granted.

 

		(iii)	Exercise. A SAR shall entitle the Participant to receive an amount upon exercise equal to the excess, if any, of the
Fair Market Value of a Share on the date of exercise of the SAR over the Exercise Price thereof. The Committee shall determine,
in its sole and plenary discretion, whether a SAR shall be settled in cash, Shares, other securities, other Awards, other property
or a combination of any of the foregoing. Each SAR shall be vested and exercisable at such times, in such manner and subject to
such terms and conditions as the Committee may, in its discretion, specify in the applicable Award Agreement or thereafter.

 

		(iv)	Award Agreement. Each grant of SARs shall be evidenced by an Award Agreement that shall specify the vesting criteria,
term, methods of exercise, methods and form of settlement and any other terms and conditions of any SAR; provided, however,
that in no event may any SAR be exercisable after the 10th anniversary of the date the SAR is granted; and further provided that
in no event may any acceleration of any awarded but unvested SARs occur due to a termination of employment or service for Cause.
Any determination by the Committee set forth in an applicable Award Agreement or otherwise under this Section 6(c)(iv) may be changed
by the Committee from time to time and may govern the exercise of SARs granted or exercised thereafter.

 

		(v)	Substitution SARs. The Committee shall have the ability to substitute, without the consent of the affected Participant
or any holder or beneficiary of SARs, SARs settled in Shares (or SARs settled in Shares or cash in the Committee’s discretion)
(“Substitution SARs”) for outstanding Nonqualified Share Options (“Substituted Options”);
provided that (A) the substitution shall not otherwise result in a modification of the terms of any Substituted Option,
(B) the number of Shares underlying the Substitution SARs shall be the same as the number of Shares underlying the Substituted
Options, and (C) the Exercise Price of the Substitution SARs shall be equal to the Exercise Price of the Substituted Options. If,
in the opinion of the Company’s auditors, this provision creates adverse accounting consequences for the Company, it shall
be considered null and void.

 

		(vi)	Expiration. Except as otherwise set forth in the applicable Award Agreement, each SAR shall expire immediately, without
any payment, upon the 10th anniversary of the date the SAR is granted. In no event may a SAR be exercisable after the 10th anniversary
of the date the SAR is granted.

 

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		(d)	Restricted Common Shares and RSUs.

 

		(i)	Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine (A) the
Participants to whom Restricted Common Shares and RSUs shall be granted, (B) subject to Section 4(a) of the Plan, the number of
Restricted Common Shares and RSUs to be granted to each Participant, (C) the duration of the period during which, and the conditions,
if any, under which, the Restricted Common Shares and RSUs may vest or may be forfeited to the Company, and (D) the other terms
and conditions of such Awards.

 

		(ii)	Transfer Restrictions. Restricted Common Shares and RSUs may not be sold, assigned, transferred, pledged or otherwise
encumbered except as provided in the Plan or as may be provided in the applicable Award Agreement; provided, however,
that the Committee may, in its discretion, determine that Restricted Common Shares and RSUs may be transferred by the Participant
for no consideration.

 

		(iii)	Issuance of Restricted Common Shares. Restricted Common Shares may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Common Shares are registered in the name of the applicable Participant, such
certificates must bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted
Common Shares, and the Company may, at its discretion, retain physical possession of such certificates until such time as all applicable
restrictions lapse.

 

		(iv)	Award Agreement. Each grant of RSUs and Restricted Common Shares, as applicable, shall be evidenced by an Award Agreement
that shall specify the number of Shares to which the Award relates, the period of restriction, the vesting conditions, the settlement
date and such other provisions as the Committee may determine; provided, however, that in no event may any acceleration
of any awarded but unvested RSUs or Restricted Common Shares occur due to a termination of employment or service for Cause.

 

		(v)	Payment/Lapse of Restrictions. Each RSU shall be granted with respect to one Share or shall have a value equal to the
Fair Market Value of one Share. RSUs shall be paid in cash, Shares, other securities, other Awards or other property, as determined
in the sole and plenary discretion of the Committee, upon the lapse of restrictions applicable thereto, or otherwise in accordance
with the applicable Award Agreement. If a Restricted Share or an RSU is intended to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code, unless the grant of such Restricted Share or RSU is contingent on satisfaction
of the requirements for the payment of “qualified performance-based compensation” under Section 162(m) of the Code,
all requirements set forth in Section 6(e) of the Plan must be satisfied in order for the restrictions applicable thereto to lapse.

 

    	16

    	 

    

		(e)	Performance Compensation Awards.

 

		(i)	General. The Committee shall have the authority, at the time of grant of any Award, to designate such Award (other than
an Option or SAR) as a Performance Compensation Award in order for such Award to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code. Options and SARs granted under the Plan shall not be included among Awards
that are designated as Performance Compensation Awards under this Section 6(e).

 

		(ii)	Eligibility. The Committee shall, in its sole discretion, designate within the first 90 days of a Performance Period
(or, if shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive
Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant as eligible to receive
an Award hereunder for a Performance Period shall not in any manner entitle such Participant to receive payment in respect of any
Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled
to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section
6(e). Moreover, designation of a Participant as eligible to receive an Award hereunder for a particular Performance Period shall
not require designation of such Participant as eligible to receive an Award hereunder in any subsequent Performance Period and
designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person
as a Participant eligible to receive an Award hereunder in such period or in any other period.

 

		(iii)	Discretion of the Committee with Respect to Performance Compensation Awards. With regard to a particular Performance
Period, the Committee shall have full discretion to select (A) the length of such Performance Period, (B) the type(s) of Performance
Compensation Awards to be issued, (C) the Performance Criteria that will be used to establish the Performance Goal(s), (D) the
kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply to the Company or any of its Subsidiaries, Affiliates,
divisions or operational units, or any combination of the foregoing, and (E) the Performance Formula; provided that any
such Performance Formula shall be objective and non-discretionary. Within the first 90 days of a Performance Period (or, if shorter,
within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation
Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the
immediately preceding sentence and record the same in writing.

 

		(iv)	Performance Criteria. Notwithstanding the foregoing, the Performance Criteria that will be used to establish the Performance
Goal(s) with respect to Performance Compensation Awards shall be based on the attainment of specific levels of performance of the
Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and shall
be limited to the following: (i) net income or net income per Common Share; (ii) operating income or operating income per Common
Share; (iii) growth in book value per share; (iv) growth in fully converted book value per share; (v) growth in fully converted
tangible book value per share; (vi) return on equity; price performance of Common Shares; (vii) cash flow; (viii) underwriting income;
and (ix) loss ratio or combined ratio. Such performance criteria may be applied on an absolute basis and/or be relative to one or
more peer companies of the Company or indices or any combination thereof or, if applicable, be computed on an accrual or cash accounting
basis. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of the applicable
Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective
manner the method of calculating the Performance Criteria it selects to use for such Performance Period.

 

    	17

    	 

    

		(v)	Modification of Performance Goals. The Committee is authorized at any time during the first 90 days of a Performance
Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to
the extent the exercise of such authority after such 90-day period (or such shorter period, if applicable) would not cause
the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code), in its sole and plenary discretion, to adjust or modify
the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code (A)
in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting
the Company, or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance
Goal) or (B) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of
its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or the financial
statements of the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such
Performance Goal), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities
exchange, accounting principles, law or business conditions.

 

		(vi)	Payment of Performance Compensation Awards.

 

		(A)	Condition to Receipt of Payment. A Participant must be employed by the Company or one of its Affiliates on the last
day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.
Notwithstanding the foregoing and to the extent permitted by Section 162(m) of the Code, in the discretion of the Committee, Performance
Compensation Awards may be paid to Participants who have retired or whose employment has terminated prior to the last day of the
Performance Period for which a Performance Compensation Award is made, or to the designee or estate of a Participant who died prior
to the last day of a Performance Period.

 

		(B)	Limitation. Except as otherwise permitted by Section 162(m) of the Code, a Participant shall be eligible to receive
payments in respect of a Performance Compensation Award only to the extent that (1) the Performance Goal (s) for the relevant Performance
Period are achieved, and certified by the Committee in accordance with Section 6(e)(vi)(C) of the Plan and (2) the Performance
Formula as applied against such Performance Goal(s) determines that all or some portion of such Participant’s Performance
Compensation Award has been earned for such Performance Period.

 

		(C)	Certification. Following the completion of a Performance Period, the Committee shall meet to review and certify in writing
whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify
in writing that amount of the Performance Compensation Awards earned for the period based upon the objective Performance Formula.
The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance
Period and, in so doing, may apply negative discretion as authorized by Section 6(e)(vi)(D) of the Plan.

 

		(D)	Negative Discretion. In determining the actual size of an individual Performance Compensation Award for a Performance
Period, the Committee may, in its sole and plenary discretion, reduce or eliminate the amount of the Award earned in the Performance
Period, even if applicable Performance Goals have been attained and without regard to any employment agreement between the Company
and a Participant.

 

		(E)	Discretion. Except as otherwise permitted by Section 162(m) of the Code, in no event shall any discretionary authority
granted to the Committee by the Plan be used to (1) grant or provide payment in respect of Performance Compensation Awards for
a Performance Period if the Performance Goals for such Performance Period have not been attained, (2) increase a Performance Compensation
Award for any Participant at any time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed
under Section 162(m) of the Code) or (3) increase the amount of a Performance Compensation Award above the maximum amount
payable under Section 4(a) of the Plan.

 

    	18

    	 

    

		(F)	Form of Payment. In the case of any Performance Compensation Award other than a Restricted Share, RSU or other equity-based
Award that is subject to performance-based vesting conditions, such Performance Compensation Award shall be payable, in the discretion
of the Committee, in cash, Restricted Common Shares, RSUs or fully vested Shares of equivalent value and shall be paid on such
terms as determined by the Committee in its discretion. Any Restricted Common Shares and RSUs shall be subject to the terms of
this Plan (or any successor equity-compensation plan) and any applicable Award Agreement. The number of Restricted Common Shares,
RSUs or Shares that is equivalent in value to a dollar amount shall be determined in accordance with a methodology specified by
the Committee within the first 90 days of the relevant Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code).

 

		(f)	Performance Units.

 

		(i)	Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants
to whom Performance Units shall be granted.

 

		(ii)	Value of Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at
the time of grant. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are
met during a Performance Period, will determine in accordance with Section 4(a) of the Plan the number and/or value of Performance
Units that will be paid out to the Participant.

 

		(iii)	Earning of Performance Units. Subject to the provisions of the Plan, after the applicable Performance Period has ended,
the holder of Performance Units shall be entitled to receive a payout of the number and value of Performance Units earned by the
Participant over the Performance Period, to be determined by the Committee, in its sole and plenary discretion, as a function of
the extent to which the corresponding Performance Goals have been achieved.

 

		(iv)	Form and Timing of Payment of Performance Units. Subject to the provisions of the Plan, the Committee, in its sole and
plenary discretion, may pay earned Performance Units in the form of cash or in Shares (or in a combination thereof) that have an
aggregate Fair Market Value equal to the value of the earned Performance Units on the settlement date or such other valuation formula
set forth in the applicable Award Agreement. Such Shares may be granted subject to any restrictions in the applicable Award Agreement
deemed appropriate by the Committee. The determination of the Committee with respect to the form and timing of payout of such Awards
shall be set forth in the applicable Award Agreement. If a Performance Unit is intended to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(e) of the Plan must be satisfied
in order for a Participant to be entitled to payment.

 

		(g)	Cash Incentive Awards.

 

		(i)	Grant. Subject to the provisions of the Plan, the Committee, in its sole and plenary discretion, shall have the authority
to determine (A) the Participants to whom Cash Incentive Awards shall be granted, (B) subject to Section 4(a) of the Plan, the
number of Cash Incentive Awards to be granted to each Participant, (C) the duration of the period during which, and the conditions,
if any, under which, the Cash Incentive Awards may vest or may be forfeited to the Company and (D) the other terms and conditions
of the Cash Incentive Awards. Each Cash Incentive Award shall have an initial value that is established by the Committee at the
time of grant. The Committee shall set performance goals or other payment conditions in its discretion, which, depending on the
extent to which they are met during a specified performance period, shall determine the number and/or value of Cash Incentive Awards
that shall be paid to the Participant.

 

    	19

    	 

    

		(ii)	Earning of Cash Incentive Awards. Subject to the provisions of the Plan, after the applicable vesting period has ended,
the holder of Cash Incentive Awards shall be entitled to receive a payout of the number and value of Cash Incentive Awards earned
by the Participant over the specified performance period, to be determined by the Committee, in its sole and plenary discretion,
as a function of the extent to which the corresponding performance goals or other conditions to payment have been achieved.

 

		(iii)	Payment. If a Cash Incentive Award is intended to qualify as “qualified performance-based compensation”
under Section 162(m) of the Code, all requirements set forth in Section 6(e) of the Plan must be satisfied in order for a Participant
to be entitled to payment.

 

		(h)	Other Share-Based Awards. Subject to the provisions of the Plan, the Committee shall have the sole and plenary authority
to grant to Participants other equity-based or equity-related Awards (including, but not limited to, Deferred Share Units and fully
vested Shares), whether payable in cash, equity or otherwise, in such amounts and subject to such terms and conditions as the Committee
shall determine, provided that any such Awards must comply, to the extent deemed desirable by the Committee, with Rule 16b-3
and applicable law.

 

		(i)	Dividends and Dividend Equivalents. In the sole and plenary discretion of the Committee, an Award, other than an Option
or SAR or a Cash Incentive Award, may provide the Participant, or if permitted by the Committee in its sole discretion, the Participant’s
assignee, with dividends or dividend equivalents, payable in cash, Shares, other securities, other Awards or other property, on
a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole and plenary discretion,
including, without limitation, (A) payment directly to the Participant, (B) withholding of such amounts by the Company subject
to vesting of the Award or (C) reinvestment in additional Shares, Restricted Common Shares, RSUs or other Awards.

 

7.                 
Amendment and Termination

 

		(a)	Amendments to the Plan. Subject to any applicable law or government regulation, to any requirement that must be satisfied
if the Plan is intended to be a shareholder approved plan for purposes of Section 162(m) of the Code, and to the rules of the Exchange
or any successor exchange or quotation system on which the Shares may be listed or quoted, the Plan may be amended, modified or
terminated by the Board without the approval of the shareholders of the Company, except that shareholder approval shall be required
for any amendment that would (i) increase the maximum number of Shares for which Awards may be granted under the Plan or increase
the maximum number of Shares that may be delivered pursuant to Incentive Share Options granted under the Plan; provided,
however, that any adjustment under Section 4(b) of the Plan shall not constitute an increase for purposes of this Section
7(a), or (ii) change the class of individuals eligible to participate in the Plan. No amendment, modification or termination of
the Plan may, without the consent of the Participant (or his or her transferee) to whom any Award shall theretofor have been granted,
materially and adversely affect the rights of such Participant (or his or her transferee) under such Award, unless otherwise provided
by the Committee in the applicable Award Agreement; provided, however, that the Board may amend, modify or terminate
the Plan without the consent of such Participant (or his or her transferee) if it deems such action necessary to comply with applicable
law, tax rules, stock exchange rules or accounting rules, provided such action affects the rights of all similarly situated
Participants (or their transferees).

 

    	20

    	 

    

		(b)	Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate any Award theretofor granted, prospectively or retroactively; provided, however,
that except as set forth in the Plan, unless (i) otherwise provided by the Committee in the applicable Award Agreement or (ii)
deemed necessary by the Committee in order to comply with applicable law, tax rules, stock exchange rules or accounting rules,
any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely
impair the rights of any Participant or any holder or beneficiary of any Award theretofor granted shall not, to that extent, be
effective without the consent of the applicable Participant, holder or beneficiary. Notwithstanding the preceding sentence or any
other provision of the Plan, in no event may any Option or SAR (i) be amended to decrease the Exercise Price thereof, (ii) be canceled
at a time when its Exercise Price exceeds the Fair Market Value of the underlying Shares in exchange for another Option or SAR
or any Restricted Share, RSU, other equity-based Award, award under any other equity-compensation plan or any cash payment or (iii)
be subject to any action that would be treated, for accounting purposes, as a “repricing” of such Option or SAR, unless
such amendment, cancelation, or action is approved by the Company’s shareholders, it being understood that an adjustment
to the Exercise Price of an Option or SAR that is made in accordance with Section 4(b) of the Plan or Section 8(b) of the Plan
shall not be considered a reduction in Exercise Price or “repricing” of such Option or SAR.

 

		(c)	Adjustment of Awards in Connection With Regulatory Changes. Subject to Section 6(e)(v) of the Plan and the final sentence
of Section 7(b) of the Plan, the Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section
4(b) of the Plan or the occurrence of a Change in Control) affecting the Company, any Affiliate, or the financial statements of
the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental
body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole and plenary discretion, determines
that such adjustments are appropriate or desirable, including, without limitation, providing for a substitution or assumption of
Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time
for exercise prior to the occurrence of such event, (ii) if deemed appropriate or desirable by the Committee, in its sole and plenary
discretion, by providing for a cash payment to the holder of an Award in consideration for the cancelation of such Award, including,
in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancelation
of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee)
of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR and (iii) if deemed appropriate
or desirable by the Committee, in its sole and plenary discretion, by canceling and terminating any Option or SAR having an Exercise
Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR without any payment or consideration
therefor.

 

    	21

    	 

    

8.                 
Change in Control

 

		(a)	Except as otherwise provided in the applicable Award Agreement, and subject to Section 8(b) of the Plan, all Awards that are
outstanding and unvested as of immediately prior to a Change in Control shall remain outstanding and unvested immediately thereafter;
provided, however, that if within 24 months following the occurrence of a Change in Control, there is a Termination
of Employment by the Company or an Affiliate, as applicable, without Cause or a Constructive Termination of a Participant, then
(i) all outstanding Options or SARs then held by Participants that are unexercisable or otherwise unvested shall automatically
be deemed exercisable or otherwise vested, as the case may be, as of the date of such termination, (ii) all Performance Units,
Cash Incentive Awards, Awards designated as Performance Compensation Awards, RSUs and other Awards subject to performance-based
vesting criteria shall be paid out as if the date of such termination was the last day of the applicable performance period and
“target” performance levels had been fully attained and (iii) all other outstanding Awards (i.e., other than Options,
SARs, Performance Units, Cash Incentive Awards, Awards designated as Performance Compensation Awards, RSUs and other Awards subject
to performance-based vesting criteria) then held by Participants that are unvested or still subject to restrictions or forfeiture
shall automatically be deemed vested and all restrictions and forfeiture provisions related thereto shall lapse as of the date
of such termination.

 

		(b)	Notwithstanding Section 8(a) and except as otherwise provided in the applicable Award Agreement, in the event of a Change in
Control after the Effective Date, unless provision is made in connection with the Change in Control for assumption or continuation
of Awards previously granted or substitution of such Awards for new awards covering shares of a successor corporation or its “parent
corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f)
of the Code) with appropriate adjustments as to the number and kinds of shares and Exercise Prices, if applicable, (i) all outstanding
Options or SARs then held by Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable
or otherwise vested, as the case may be, as of immediately prior to such Change in Control, (ii) all Performance Units, Cash Incentive
Awards, Awards designated as Performance Compensation Awards, RSUs and other Awards subject to performance-based vesting criteria
shall be paid out as if the date of the Change in Control were the last day of the applicable performance period and “target”
performance levels had been fully attained and (iii) all other outstanding Awards (i.e., other than Options, SARs, Performance
Units, Cash Incentive Awards, Awards designated as Performance Compensation Awards, RSUs and other Awards subject to performance-based
vesting criteria) then held by Participants that are unvested or still subject to restrictions or forfeiture shall automatically
be deemed vested and all restrictions and forfeiture provisions related thereto shall lapse as of immediately prior to such Change
in Control.

 

		(c)	Notwithstanding any provision of Section 8(b) of the Plan, unless otherwise provided in the applicable Award Agreement, if
any amount payable pursuant to an Award constitutes deferred compensation that is subject to Section 409A of the Code, in the event
of a Change in Control, any unvested but outstanding Awards shall automatically vest as of the date of such Change in Control and
shall not be subject to the forfeiture restrictions following such Change in Control to the extent provided in Section 8(b) of
the Plan; provided that in the event that such Change in Control does not qualify as an event described in Section 409A(a)(2)(A)(v)
of the Code, such Awards (and any other Awards that constitute deferred compensation that vested prior to the date of such Change
in Control but are outstanding as of such date) shall not be settled until the earliest permissible payment event under Section
409A of the Code following such Change in Control.

 

		(d)	In the event that an Affiliate of the Company ceases to be an Affiliate of the Company, the Committee shall determine, in its
sole and plenary discretion, the treatment of any outstanding Awards held by any Participants whose eligibility under the Plan
would be affected by such cessation of the Affiliate.

 

    	22

    	 

    

9.                 
General Provisions

 

		(a)	Nontransferability. Except as otherwise provided in the applicable Award Agreement or Section 6(d)(ii) of the Plan,
no Award (other than Restricted Common Shares with respect to which all applicable restrictions imposed under the terms of the
applicable Award Agreement have expired, lapsed, been waived or satisfied, for purposes of this Section 9(a), “Released
Securities”) or right thereunder shall be assignable or transferable by a Participant, other than by will or the laws
of descent and distribution (or, in the case of an Award of Restricted Common Shares, to the Company), except that, subject to
approval by the Committee, (i) an Option may be transferred by gift to any member of the holder’s immediate family or to
a trust for the benefit of one or more of such immediate family members, if permitted in the applicable Award Agreement and (ii)
the Committee may, in its sole discretion, permit any Participant who is a non-employee director to assign any Award to such director’s
employer or an Affiliate of such employer; provided, however, that if so determined by the Committee, a Participant
may, in the manner established by the Committee, designate a beneficiary or beneficiaries with respect to any Award to exercise
the rights of the Participant, and to receive any property distributable, upon the death of the Participant. Subject to this Section
9(a), each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant
or, if permissible under applicable law by the Participant’s guardian or legal representative unless it has been transferred
to a member of the holder’s immediate family or to a trust for the benefit of one or more of such immediate family members,
in which case it shall be exercisable only by such transferee. For the purposes of this provision, a holder’s “immediate
family” shall mean the holder’s spouse, children and grandchildren. Notwithstanding the foregoing, in no event shall
any Incentive Share Options granted under the Plan be transferable in any way that would violate Section 1.422-2(a)(2) of the Treasury
Regulations nor may any Award (or any rights and obligations thereunder) be transferred to a third party in exchange for value
unless such transfer is specifically approved by the Company’s shareholders. All terms and conditions of the Plan and all
Award Agreements, including but not limited to any applicable vesting conditions, shall be binding upon any permitted successors
and assigns. Except as otherwise set forth in this Section 9(a), no Award (other than Released Securities), and no right under
any such Award, may be pledged, attached or otherwise encumbered other than in favor of the Company, and any purported pledge,
attachment, or encumbrance thereof other than in favor of the Company shall be void and unenforceable against the Company or any
Affiliate.

 

		(b)	No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s
determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively
among Participants, whether or not such Participants are similarly situated. Awards and amounts received thereunder shall not be
considered to be wages or compensation for purposes of determining entitlements under any pension, severance or other arrangement
of the Company.

 

    	23

    	 

    

		(c)	Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under
the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements
of the SEC, the Exchange or any other stock exchange or quotation system upon which such Shares or other securities are then listed
or reported and any applicable U.S. Federal or state laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

 

		(d)	Expenses. The expenses of the Plan shall be borne by the Company. However, if an Award is made to a Participant in the
service of an Affiliate and if such Award results in payment of cash to the Participant, such Affiliate shall pay to the Company
an amount equal to such cash payment.

 

		(e)	Withholding.

 

		(i)	Authority to Withhold. A Participant may be required to pay to the Company or any Affiliate, and the Company or any
Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under
any Award or under the Plan or from any compensation or other amount owing to a Participant, the amount (in cash, securities or
Awards other than Shares or other property) of any applicable withholding taxes and social security (or similar) liabilities in
respect of an Award, its exercise or any payment or transfer under an Award or under the Plan and to take such other action as
may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such taxes and social
security (or similar) liabilities.

 

		(ii)	Alternative Ways to Satisfy Withholding Liability. Without limiting the generality of clause (i) above, subject to the
Committee’s discretion, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of
Shares owned by the Participant (which are not subject to any pledge or other security interest) having an aggregate Fair Market
Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant
to the exercise of the Option or SAR, or the lapse of the restrictions on the RSU or any other Award (in the case of SARs, RSUs
and other Awards, if such SARs, RSUs and other Awards are settled in Shares), a number of Shares having an aggregate Fair Market
Value equal to such withholding liability.

 

    	24

    	 

    

		(f)	Section 409A of the Code.

 

		(i)	It is intended that the provisions of the Plan comply with Section 409A of the Code, and all provisions of the Plan shall be
construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the
Code.

 

		(ii)	No Participant or the creditors or beneficiaries of a Participant shall have the right to subject any deferred compensation
(within the meaning of Section 409A of the Code) payable under the Plan to any anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within
the meaning of Section 409A of the Code) payable to any Participant or for the benefit of any Participant under the Plan may not
be reduced by, or offset against, any amount owing by any such Participant to the Company or any of its Affiliates.

 

		(iii)	If, at the time of a Participant’s “separation from service” (within the meaning of Section 409A of the Code),
(A) such Participant shall be a “specified employee” (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Company from time to time) and (B) the Company shall make a good faith determination
that an amount payable pursuant to an Award constitutes deferred compensation (within the meaning of Section 409A of the Code)
the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order
to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled
payment date but shall instead pay it on the first business day after such six-month period. Such amount shall be paid without
interest, unless otherwise determined from time to time by the Committee, in its sole discretion, or as otherwise provided in any
applicable individual agreement between the Company and the relevant Participant.

 

		(iv)	Notwithstanding any provision of the Plan to the contrary, in light of the uncertainty with respect to the proper application
of Section 409A of the Code, the Company reserves the right to make amendments to any Award as the Company deems necessary or desirable
to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant shall be solely responsible
and liable for the satisfaction of all taxes and penalties that may be imposed on such Participant or for such Participant’s
account in connection with an Award (including any taxes and penalties under Section 409A of the Code), and neither the Company
nor any of its Affiliates shall have any obligation to indemnify or otherwise hold such Participant harmless from any or all of
such taxes or penalties.

 

    	25

    	 

    

		(g)	Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement, which shall be delivered to the Participant
and shall specify the terms and conditions of the Award and any rules applicable thereto, including the effect on such Award of
the death, Disability or termination of employment or service of a Participant and the effect, if any, of such other events as
may be determined by the Committee.

 

		(h)	No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate
from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options,
restricted common shares, shares, other types of equity-based awards (subject to shareholder approval if such approval is required)
and Cash Incentive Awards, and such arrangements may be either generally applicable or applicable only in specific cases.

 

		(i)	No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained
as an employee, director or consultant, nor shall it be construed as giving a Participant any rights to continued service on the
Board. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any directorship
or consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement.

 

		(j)	No Rights as Shareholder. No Participant or holder or beneficiary of any Award shall have any rights as a shareholder
with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. In connection
with each grant of Restricted Common Shares, except as provided in the applicable Award Agreement, the Participant shall be entitled
to the rights of a shareholder (including the right to vote and receive dividends) in respect of such Restricted Common Shares.
Except as otherwise provided in Section 4(b) of the Plan, Section 7(c) of the Plan or the applicable Award Agreement, no adjustments
shall be made for dividends or distributions on (whether ordinary or extraordinary, and whether in cash, Shares, other securities
or other property), or other events relating to, Shares subject to an Award for which the record date is prior to the date such
Shares are delivered.

 

		(k)	Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan
and any Award Agreement shall be determined in accordance with the laws of Bermuda, without giving effect to the conflict of laws
provisions thereof.

 

		(l)	Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable
in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such
provision shall be construed or deemed stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

    	26

    	 

    

		(m)	Other Laws; Restrictions on Transfer of Shares. The Committee may refuse to issue or transfer any Shares or other consideration
under an Award if, acting in its sole and plenary discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b)
of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality
of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer
shall be outstanding, unless and until the Committee in its sole and plenary discretion has determined that (i) any such offer,
if made, would be in compliance with all applicable requirements of the U.S. Federal and any other applicable securities laws and
(ii) all licenses, permissions and authorizations required to be granted under the laws of Bermuda, or by any authority or agency
thereof, shall have been duly received.

 

		(n)	No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or any other
Person, on the other. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant
to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or such Affiliate.

 

		(o)	Clawback Policy. Each Award shall be subject to the Clawback Policy, to the extent provided by such policy. The Committee
may take all actions with respect to any Award, whether vested or unvested, consistent with the Clawback Policy, including but
not limited to the rescission, modification or cancelation of any Award and recovery of amounts previously paid or awarded pursuant
to an Award. By accepting any Award or other benefit under the Plan, each Participant and each Person claiming under or through
him or her shall be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, the Clawback
Policy. This Section 9(o) shall not be the Company’s exclusive remedy with respect to such matters.

 

		(p)	No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine whether (i) any fractional Shares shall be rounded up to the next whole number of Shares, (ii) cash, other securities
or other property shall be paid or transferred in lieu of any fractional Shares or (iii) such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.

 

    	27

    	 

    

		(q)	Requirement of Consent and Notification of Election Under Section 83(b) of the Code or Similar Provision. No election
under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the
Code) or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement
or by action of the Committee in writing prior to the making of such election. If an Award recipient, in connection with the acquisition
of Shares under the Plan or otherwise, is expressly permitted under the terms of the applicable Award Agreement or by such Committee
action to make such an election and the Participant makes the election, the Participant shall notify the Committee of such election
within ten days of filing notice of the election with the IRS or other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Section 83(b) of the Code or any other applicable provision.

 

		(r)	Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code. If any Participant shall
make any disposition of Shares delivered pursuant to the exercise of an Incentive Share Option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such Participant
shall notify the Company of such disposition within ten days of such disposition.

 

		(s)	Successors. The Plan, and all obligations of the Company under the Plan with respect to Awards granted hereunder, shall
be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase,
merger, amalgamation, consolidation, scheme of arrangement or otherwise, of all or substantially all of the assets and/or business
of the Company.

 

		(t)	Consent to Authority of Committee. By accepting any Award or other benefit under the Plan, each Participant and each
Person claiming under or through him or her shall be conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under the Plan by the Company, the Board or the Committee.

 

		(u)	Headings and Construction. Headings are given to the Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof. Whenever the words “include”, “includes” or “including”
are used in this Plan, they shall be deemed to be followed by the words “but not limited to”.

 

		(v)	International Considerations. The Committee may grant Awards to Participants on terms and conditions that differ from
those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to (i) foster and promote achievement
of the purposes of the Plan and (ii) comply with the applicable legal, tax or regulatory requirements of the jurisdiction in which
such Participants reside or are subject to taxation or regulation (such compliance including, without limitation, the avoidance
of triggering a public offering in the applicable jurisdiction or the maximization of tax efficiency), and, in furtherance of such
purposes, the Committee may make such modifications, amendments, procedures, or sub-plans as may be necessary or advisable to comply
with such legal, tax or regulatory requirements.

 

    	28

    	 

    

10.             
Term of the Plan.

 

		(a)	Effective Date. The Plan shall be effective as of the Effective Date.

 

		(b)	Expiration Date. No Award shall be granted under the Plan after the 10th anniversary of the Effective Date. Unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights
under any such Award, shall nevertheless continue thereafter.

 

    	29ex101.htm

EXHIBIT 10.1

 

  

 

 

	 	 	 
	 	 	 
	 	THIRD AMENDED AND RESTATED CREDIT AGREEMENT	 
	 	 	 
	 	among	 
	 	 	 
	 	 	 
	 	 CHAMPION INDUSTRIES, INC., a West Virginia corporation, as Borrower	 
	 	 	 
	 	 	 
	 	  VARIOUS BORROWER SUBSIDIARIES, as Guarantors	 
	 	 	 
	 	
MARSHALL T. REYNOLDS, as Shareholder

	 
	 	 	 
	 	BIG 4 INVESTMENTS, LLC, Lender 	 
	 	 	 
	 	 and	 
	 	 	 
	 	 BIG 4 INVESTMENTS, LLC, as Administrative Agent	 
	 	 	 
	 	 	 
	 	
Dated as of October 7, 2013

	 
	 	 	 

 

	 	 	 
	 	 	 
	 	 	 

 

  

  

  

 

	 	 TABLE OF CONTENTS	 

 

	
Section

	
Heading

	
Page

	  	  	  
	
Section 1.

	
Definitions; Interpretation

	
2

	  	  	  
	
Section 1.1.

	
Definitions

	
2

	
Section 1.2.

	
Interpretation

	
11

	
Section 1.3.

	
Change in Accounting Principles

	
11

	  	  	  
	
Section 2.

	
The Credit Facility

	
12

	  	  	  
	
Section 2.1.

	
Term Loan

	
12

	
Section 2.2.

	
Applicable Interest Rate

	
12

	
Section 2.3.

	
Maturity of Loans

	
12

	
Section 2.4.

	
Prepayments

	
12

	
Section 2.9.

	
Place and Application of Payments

	
12

	  	  	  
	
Section 3.

	
Conditions Precedent

	
12

	  	  	  
	
Section 3.1.

	
Initial Credit Event

	
13

	  	  	  
	
Section 4.

	
The Collateral and Guaranties

	
13

	  	  	  
	
Section 4.1.

	
Collateral

	
13

	
Section 4.2.

	
Liens on Real Property

	
14

	
Section 4.3.

	
Guaranties

	
14

	
Section 4.4.

	
Further Assurances

	
14

	
Section 4.5.

	
Continuing Security Interests

	
15

	  	  	  
	
Section 5.

	
Representations and Warranties

	
15

	  	  	  
	
Section 5.1.

	
Organization and Qualification

	
15

	
Section 5.2.

	
Authority and Enforceability

	
15

	
Section 5.3.

	
Financial Reports

	
16

	
Section 5.4.

	
Litigation and Other Controversies

	
16

	
Section 5.5.

	
True and Complete Disclosure

	
16

	
Section 5.6.

	
Use of Proceeds; Margin Stock

	
16

	
Section 5.7.

	
Taxes

	
16

	
Section 5.8.

	
ERISA

	
17

	
Section 5.9.

	
Subsidiaries

	
17

	
Section 5.10.

	
Compliance with Laws

	
17

	
Section 5.11.

	
Environmental Matters

	
17

	
Section 5.12.

	
Investment Company

	
18

	
Section 5.13.

	
Intellectual Property

	
18

	
Section 5.14.

	
Good Title

	
18

	
Section 5.15.

	
Labor Relations

	
18

	
Section 5.16.

	
Capitalization

	
18

	
Section 5.17.

	
Other Agreements

	
18

  

i  

  

	
Section 5.18.

	
Governmental Authority and Licensing

	
18

	
Section 5.19.

	
Approvals

	
19

	
Section 5.20.

	
Affiliate Transactions

	
19

	
Section 5.21.

	
Foreign Assets Control Regulations and Anti‐Money Laundering

	
19

	  	  	  
	
Section 6.

	
Covenants

	
19

	  	  	  
	
Section 6.1.

	
Information Covenants

	
19

	
Section 6.2.

	
Inspections

	
21

	
Section 6.3.

	
Maintenance of Property, Insurance, Environmental Matters, etc

	
21

	
Section 6.4.

	
Preservation of Existence

	
22

	
Section 6.5.

	
Compliance with Laws

	
22

	
Section 6.6.

	
ERISA

	
22

	
Section 6.7.

	
Payment of Taxes

	
23

	
Section 6.8.

	
Contracts with Affiliates

	
23

	
Section 6.9.

	
No Changes in Fiscal Year

	
23

	
Section 6.10.

	
Change in the Nature of Business

	
23

	
Section 6.11.

	
Indebtedness

	
23

	
Section 6.12.

	
Liens

	
24

	
Section 6.13.

	
Consolidation, Merger, Sale of Assets, etc

	
24

	
Section 6.14.

	
Advances, Investments and Loans

	
25

	
Section 6.15.

	
Dividends and certain other Restricted Payments

	
26

	
Section 6.16.

	
Limitation on Restrictions

	
26

	
Section 6.17.

	
Limitation on the Creation of Subsidiaries

	
26

	
Section 6.18.

	
OFAC

	
26

	
Section 6.19.

	
Financial Covenants

	
27

	
Section 6.20.

	
Tax Returns

	
27

	
Section 6.21.

	
Subordinated Indebtedness

	
27

	  	  	  
	
Section 7.

	
Events of Default and Remedies

	
27

	  	  	  
	
Section 7.1.

	
Events of Default

	
27

	
Section 7.2.

	
Non‐Bankruptcy Defaults

	
29

	
Section 7.3.

	
Bankruptcy Defaults

	
29

	
Section 7.4.

	
Notice of Default

	
30

	
Section 7.5.

	
Expenses

	
30

	  	  	  
	
Section 8.

	
Change in Circumstances and Contingencies - Intentionally Omitted.

	
30

	  	  	  
	
Section 9.

	
The Administrative Agent

	
30

	  	  	  
	
Section 9.1.

	
Appointment and Authorization of Administrative Agent

	
30

	
Section 9.2.

	
Administrative Agent and its Affiliates

	
30

	
Section 9.3.

	
Action by Administrative Agent

	
30

  

  ii

  

	
Section 9.4.

	
Consultation with Experts

	
31

	
Section 9.5.

	
Liability of Administrative Agent; Credit Decision

	
31

	
Section 9.6.

	
Resignation of Administrative Agent and Successor Administrative Agent

	
32

	
Section 9.7.

	
Authorization to Enter into, and Enforcement of, the Collateral Documents

	
32

	
Section 9.8.

	
Authorization to Release Liens and Limit Amount of Certain Claims

	
33

	  	  	  
	
Section 10.

	
Miscellaneous

	
33

	  	  	  
	
Section 10.1.

	
Withholding Taxes

	
33

	
Section 10.2.

	
No Waiver, Cumulative Remedies

	
33

	
Section 10.3.

	
Non‐Business Days

	
33

	
Section 10.4.

	
Documentary Taxes

	
34

	
Section 10.5.

	
Survival of Representations

	
34

	
Section 10.6.

	
Notices

	
34

	
Section 10.7.

	
Counterparts

	
35

	
Section 10.8.

	
Successors and Assigns; Assignments and Participations

	
35

	
Section 10.9.

	
Amendments

	
37

	
Section 10.10.

	
Heading

	
37

	
Section 10.11.

	
Costs and Expenses; Indemnification

	
37

	
Section 10.12.

	
Set‐off

	
38

	
Section 10.13.

	
Entire Agreement

	
39

	
Section 10.14.

	
Governing Law

	
39

	
Section 10.15.

	
Severability of Provisions

	
39

	
Section 10.16.

	
Excess Interest

	
39

	
Section 10.17.

	
Construction

	
40

	
Section 10.18.

	
USA Patriot Act

	
40

	
Section 10.19.

	
Submission to Jurisdiction; Waiver of Jury Trial

	
40

	
Section 10.20.

	
Treatment of Certain Information; Confidentiality

	
40

	
Section 10.21.

	
Amendment and Restatement

	
41

	
Section 10.22.

	
Affirmation of Guarantors

	
41

	  	  	  
	  	  	  
	
Siganure Page

	  	
S-1

	  	  	  
	
Exhibit A

	
Term Note A

	  
	
Schedule 5.9

	
Subsidaiaries

	  
	
Schedule A

	
Locations

	  
	
Schedule B

	
Other Names

	  
	
Schedule D

	
Real Estate Legal Descriptions

	  
	
Schedule E

	
Investment Property and Deposit Accounts

	  

  

iii  

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

This Third Amended and Restated Credit Agreement is entered into as of October 7, 2013, by and among CHAMPION INDUSTRIES, INC., a West Virginia corporation (the “Borrower”), the various Borrower subsidiaries party hereto (“Guarantors”), BIG 4 INVESTMENTS, LLC, a Louisiana limited liability company, as “Lender”, MARSHALL T. REYNOLDS (“Shareholder”), and BIG 4 INVESTMENTS, LLC, a Louisiana limited liability company, as “Administrative Agent”.

WHEREAS, Borrower is party to a Credit Agreement among Champion as Borrower, various Lenders from time to time party thereto (the “Lenders”) and Fifth Third Bank, as Administrative Agent (the “Administrative Agent”), Lender and L/C Issuer dated as of September 14, 2007, as previously supplemented and amended (the "Original Credit Agreement"); and

WHEREAS, Champion, the Administrative Agent and the Lenders have amended and restated the Original Credit Agreement on the terms and conditions set forth in (1) the First Amended and Restated Credit Agreement dated October 19, 2012 (the “First Amended and Restated Credit Agreement”) among Champion, the Lenders party thereto, the Administrative Agent and the L/C Issuer, (2) the First Limited Forbearance and Waiver Agreement and First Amendment to Amended and Restated Credit Agreement dated May 31, 2013 among Champion, Marshall Reynolds, as Shareholder, the Guarantors, the Lenders, Administrative Agent and the L/C Issuer (the “First Limited Forbearance Agreement”) and a related Letter Agreement dated May 31, 2013 among such parties (the “Letter Agreement”) and (3) First Amendment to First Limited Forbearance and Waiver Agreement and Second Amendment to Amended and Restated Credit Agreement dated August 28, 2013 (the “First Amendment to First Limited Forbearance Agreement”) (collectively, the “Credit Agreement”); and

WHEREAS, pursuant to Loan Purchase and Assumption Agreement dated October 7, 2013 among the various Lenders party to the Credit Agreement and Fifth Third Bank as Administrative Agent, all as Seller Parties, and Big 4 Investments, LLC as Buyer, Buyer (a) has purchased the Purchased Loans and thereby become the sole Lender, (b) has become the Administrative Agent under the Credit Agreement and (c) has been assigned the Loan Documents; and

WHEREAS, in substitution for all Loans and Notes heretofore outstanding, Borrower has delivered to Lender its Term Note A in principal amount of $10,000,000 in the form set forth in Exhibit A hereto; and

 

WHEREAS, the Borrower has requested that the Lender make certain further amendments to the Credit Agreement and, for the sake of convenience and clarity, to restate the Credit Agreement in its entirety as so amended.  Accordingly, upon satisfaction of the conditions precedent to effectiveness contained in Section 3.2 hereof, the Credit Agreement and all Exhibits and Schedules thereto shall be amended and as so amended shall be restated in their entirety to read as follows:

 

  

  

 

	
  

	
Section 1.Definitions; Interpretation.

 

Section 1.1. Definitions.  The following terms when used herein shall have the following meanings:

 

“Account Debtor” means any Person obligated to make payment on any Receivable.

 

“Acquired Business” means the entity or assets acquired by the Borrower or a Subsidiary in an Acquisition, whether before or after the date hereof.

 

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary), provided that the Borrower or the Subsidiary is the surviving entity.

 

“Administrative Agent” means Big 4 Investments, LLC, a Louisiana limited liability company, as contractual representative for itself and any other Lenders and any successor pursuant to Section 9.7 hereof.

 

 “Affiliate” means any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person.  A Person shall be deemed to control another Person for the purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 5% or more of the securities having the ordinary voting power for the election of directors or governing body of a corporation or 5% or more of the partnership or other ownership interest of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.  

 

“Agreement” means this Third Amended and Restated Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time pursuant to the terms hereof.

 

 “Borrower” is defined in the introductory paragraph of this Agreement.

 

“Borrowing” means the total of the Loan.

 

 “Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Cincinnati, Ohio.

 

“Capital Expenditures” means, with respect to any Person for any period, the aggregate amount of all expenditures (whether paid in cash or accrued as a liability) by such Person during 

 

  

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that period for the acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets or additions to property, plant, or equipment (including replacements, capitalized repairs, and improvements) which should be capitalized on the balance sheet of such Person in accordance with GAAP.

 

“Capital Lease” means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the liability shown on the balance sheet of such Person in respect of a Capital Lease determined in accordance with GAAP.

 

“Cash Equivalents” shall mean, as to any Person:  (a) investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one year of the date of issuance thereof; (b) investments in commercial paper rated at least P-1 by Moody’s and at least A-1 by S&P maturing within one year of the date of issuance thereof; (c) investments in certificates of deposit issued by any Lender or by any United States commercial bank; (d) investments in repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System; and (e) investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c), and (d) above.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future amendments.

 

“Change of Control” means any of (a) the acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of 50% or more of the outstanding equity interests of the Borrower on a fully-diluted basis, other than acquisitions of such interests by Marshall Reynolds, any estate planning trust established for the benefit of Marshall Reynolds and his family, and any partnership, limited liability company, corporation or other legal entity established for estate planning purposes for the benefit of Marshall Reynolds, and his family (collectively, the “Existing Shareholders”) (provided that, notwithstanding anything in this definition to the contrary, “group” shall not include any group that includes the Existing Shareholders if such Existing Shareholders have beneficial ownership of more than 50% of all outstanding equity interests of the Borrower on a fully-diluted basis), or (b) the failure of natural persons who are members of the board of directors (or similar governing body) of the Borrower on the Closing Date (together with any new or replacement directors whose initial nomination for election was approved by a majority of the directors who were either directors on the Closing

 

  

3

 Date or previously so approved) to constitute a majority of the board of directors (or similar governing body) of the Borrower. 

 

“Closing Date” means the date of this Agreement or such later Business Day upon which each condition described in Section 3.2 shall be satisfied or waived in a manner acceptable to the Administrative Agent in its discretion.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

 

“Collateral” means all properties, rights, interests, and privileges from time to time subject to the Liens granted to the Administrative Agent, or any security trustee therefor, by the Collateral Documents.

 

“Collateral Account” is defined in Section 7.4 hereof.

 

“Collateral Documents” means the Mortgages, the Leasehold Mortgages, the Security Agreement, and all other mortgages, deeds of trust, security agreements, pledge agreements, account control agreements, assignments, financing statements and other documents as shall from time to time secure or relate to the Obligations, or any part thereof.  

 

 “Contingent Obligation” shall mean as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

“Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

 

“Credit” means the Term Credit A. 

 

  

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 “Damages” means all damages including, without limitation, punitive damages, liabilities, costs, expenses, losses, judgments, diminutions in value, fines, penalties, demands, claims, cost recovery actions, lawsuits, administrative proceedings, orders, response action, removal and remedial costs, compliance costs, investigation expenses, consultant fees, attorneys’ and paralegals’ fees and litigation expenses.

 

“Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default.

 

 “Disposition” means the sale, lease, conveyance or other disposition of Property, other than sales or other dispositions expressly permitted under Sections 6.13(a), 6.13(b) or 6.13(c) hereof.

 

“Dollars” and “$” each means the lawful currency of the United States of America.

 

 “Environmental Claim” means any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, pro­ceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, cor­rective or response action in connection with a Hazardous Material, Environmental Law or order of a Governmental Authority or (d) from any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

 

“Environmental Law” means any current or future Legal Requirement pertaining to (a) the protection of health, safety and the indoor or outdoor environment, (b) the conservation, management or use of natural resources and wildlife, (c) the protection or use of surface water or groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material or (e) pollution (including any Release to air, land, surface water or groundwater), and any amendment, rule, regulation, order or directive issued thereunder.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.

 

“Event of Default” means any event or condition identified as such in Section 7.1 hereof.

 

“Event of Loss” means, with respect to any Property, any of the following:  (a) any loss, destruction or damage of such Property or (b) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property.

 

 “GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting 

 

  

5

Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, count, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 

 

“Guaranty” and “Guaranties” each is defined in Section 4.3 hereof.

 

“Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law.

 

 “Hostile Acquisition” means the acquisition of the capital stock or other equity interests of a Person through a tender offer or similar solicitation of the owners of such capital stock or other equity interests which has not been approved (prior to such acquisition) by resolutions of the Board of Directors of such Person or by similar action if such Person is not a corporation, and, if such acquisition has been so approved, as to which such approval has not been withdrawn.

 

“Indebtedness” means for any Person (without duplication) (a) all indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured, (b) all indebtedness for the deferred purchase price of Property or services, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of a default are limited to repossession or sale of such Property), (d) all indebtedness secured by a purchase money mortgage or other Lien to secure all or part of the purchase price of Property subject to such mortgage or Lien, (e) all obligations under leases which shall have been or must be, in accordance with GAAP, recorded as Capital Leases in respect of which such Person is liable as lessee, (f) any liability in respect of banker’s acceptances or letters of credit, (g) any indebtedness, whether or not assumed, secured by Liens on Property acquired by such Person at the time of acquisition thereof, (h) all obligations under any so-called “synthetic lease” transaction entered into by such Person, (i) all obligations under any so-called “asset securitization” transaction entered into by such Person, and (j) all Contingent Obligations, it being understood that the term “Indebtedness” shall not include trade payables, accrued payroll and commissions, taxes accrued and withheld, accrued and deferred income taxes, negative book cash balances and deferred revenue and other accrued expenses arising in the ordinary course of business.

 

“Interest Expense” means, with reference to any period, the sum of all interest charges (including imputed interest charges with respect to Capitalized Lease Obligations and all 

  

6

amortization of debt discount and expense) as well as deferred financing costs or charges and various period costs associated with the applicable Indebtedness, of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.  

 

 “Inventory” means all raw materials, finished goods and work-in-process (other than packaging, crating, and supplies inventory; provided that this exclusion shall apply only to such items that are not held for sale in the ordinary course of business of the Borrower and its Subsidiaries and shall not include office supplies inventory that is held for sale in the ordinary course of business of the Borrower and its Subsidiaries) held for sale in which the Borrower or the relevant Subsidiary now has or hereafter acquires title to.

 

 “Landlord’s Agreement” shall mean any agreement relating to the real property of the Borrower and its Subsidiaries that is subject to a Leasehold Mortgage, between the Administrative Agent and the owner/lessor of such property, such agreement to provide, among other things, that such owner/lessor consents to the Leasehold Mortgage and recognizes the Administrative Agent’s rights under the Leasehold Mortgage for such property.

 

“Leasehold Mortgages” means, collectively, each Credit Line Leasehold Deed of Trust and Security Agreement with Assignment of Rents, Leasehold Mortgage and Security Agreement with Assignment of Rents and Open-End Leasehold Mortgage and Security Agreement with Assignment of Rents between the Borrower or any of its Subsidiaries and the Administrative Agent relating to the Borrower’s or such Subsidiary’s real property, fixtures and interests in real property leased and commonly known as (i) 2450 1st Avenue, Huntington, West Virginia, (ii) 405 Ann Street, Parkersburg, West Virginia and (iii) 120 Hills Plaza, Charleston, West Virginia, and any other leasehold mortgages delivered to the Administrative Agent pursuant to Section 4.2 hereof, as the same may be amended, modified, supplemented or restated from time to time. 

 

“Legal Requirement” means any treaty, convention, statute, law, regulation, ordinance, license, permit, governmental approval, injunction, judgment, order, consent decree or other requirement of any Governmental Authority.

 

“Lenders” means and includes Big 4 Investments, LLC, a Louisiana limited liability company and any other lenders from time to time party to this Agreement, including each assignee Lender pursuant to Section 10.10 hereof.

 

 “Lien” means any deed of trust, mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement.

 

“Loan” means the Term Loan A in the form of Exhibit A attached hereto.

 

“Loan Documents” means this Agreement, the Notes, the Collateral Documents, the Guaranties, and each other agreement, instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith.

 

  

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“Material Adverse Effect” means (a) a material adverse change in, or material adverse effect upon, the operations, business, Property, or condition (financial or otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries taken as a whole, (b) a material impairment of the ability of the Borrower or any Subsidiary to perform its material obligations under any Loan Document or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability against the Borrower or any Subsidiary of any Loan Document or the rights and remedies of the Administrative Agent and the Lenders thereunder or (ii) the perfection or priority of any Lien granted under any Collateral Document.

 

“Material Transaction” means any potential, planned or incurred restructuring of operations, combination or reorganization of any business divisions, elimination or dissolution of any business division or Subsidiary, sale of assets not in the ordinary course of business, sale of any Subsidiary, refinancing of Indebtedness, receipt of cash equity contributions or other similar transaction.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” means, collectively, each Credit Line Deed of Trust and Security Agreement with Assignment of Rents, Deed of Trust and Security Agreement with Assignment of Rents, Mortgage and Security Agreement with Assignment of Rents and Open-End Mortgage and Security Agreement with Assignment of Rents between the Borrower or any of its Subsidiaries and the Administrative Agent relating to the Borrower’s and each Subsidiary’s real property, fixtures and interests in real property commonly known as  (i) 1563 Hansford Street, Charleston, West Virginia, (ii) 10848 Airline Highway, Baton Rouge, Louisiana, (iii) 13112 South Choctaw, Baton Rouge, Louisiana, (iv) 700 N. Fourth St., Clarksburg, West Virginia and (v) 711 Indiana Avenue, Charleston, West Virginia, and any other mortgages or deeds of trust delivered to the Administrative Agent pursuant to Section 4.2 hereof, as the same may be amended, modified, supplemented or restated from time to time.

 

“Net Income” means, with reference to any period, the net income (or net loss) of the Borrower and its Subsidiaries for such period computed on a consolidated basis in accordance with GAAP; provided that, there shall be excluded from Net Income (a) the net income (or net loss) of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated with, the Borrower or another Subsidiary, except to the extent that the Borrower has delivered the financial statements of the Acquired Business for such period, which financial statements shall have been audited by an independent accounting firm reasonably satisfactory to the Administrative Agent, and the Administrative Agent agrees to the inclusion of such net income (or net loss) of such Person and (b) the net income (or net loss) of any Person (other than a Subsidiary) in which the Borrower or any of its Subsidiaries has an equity interest in, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries during such period.  

 

“Note” means and includes the Term Note A.

 

“Obligations” means all obligations of the Borrower to pay principal and interest on the Loan, all fees and charges payable hereunder, and all other payment obligations of the Borrower

  

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or any of its Subsidiaries arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

 

 “Patriot Act” is defined in Section 5.24(b) hereof.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA.

 

 “Permitted Lien” is defined in Section 6.12 hereof.

 

“Person” means any natural person, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that either (a) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group or (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

 

“Premises” means the real property owned or leased by the Borrower or any Subsidiary, including, without limitation, the real property and improvements thereon owned by the Borrower or any Subsidiary subject to the Lien of the Mortgages or any other Collateral Documents.

 

“Property” means, as to any Person, all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included in the most recent balance sheet of such Person and its Subsidiaries under GAAP.

 

“Purchased Loans” shall mean all Loans acquired by Lender pursuant to the Loan Purchase and Assumption Agreement dated October 7, 2013 among the various Lenders party thereto and Fifth Third Bank as prior Administrative Agent (“Seller Parties”) and Lender as Buyer.

 

“RCRA” means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

 

“Receivables” means all rights to the payment of a monetary obligation now or hereafter owing to the Borrower or any Subsidiary, evidenced by accounts, instruments, chattel paper or general intangibles.

  

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 “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, financial advisors and consultants of such Person and of such Person’s Affiliates.

 

“Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment.

 

 “SEC” is defined in Section 6.1(g) hereof.

 

“Security Agreement” means that certain Security Agreement dated as of September 14, 2007, by and among the Borrower and its Subsidiaries and the Administrative Agent, as the same may be amended, modified, supplemented or restated from time to time.

 

“Shareholder” means Marshall T. Reynolds.

 

“Shareholder Guaranty” means the Guaranty Agreement of even date herewith executed and delivered by Shareholder.

 

“Shareholder Pledge” means the Stock Pledge and Security Agreement of even date herewith executed delivered to Lender by Shareholder securing the Shareholder Guaranty.

 

“Subordinated Indebtedness” means any Indebtedness of the Borrower and its Subsidiaries that is subordinated to the Obligations in a manner acceptable to the Administrative Agent in its sole discretion, including, without limitation, the Indebtedness evidenced by the Subordinated Note.

 

“Subordinated Note” means, collectively, the Subordinated Promissory Note dated as of April 5, 2010, made by the Borrower in favor of Marshall T. Reynolds in the principal amount of up to $2,500,000.

 

“Subordination Agreement” means the Debt Subordination Agreement dated as of December 29, 2009, by and between Mr. Marshall T. Reynolds and the Administrative Agent, as amended, modified, supplemented or restated from time to time. 

 

“Subsidiary” means, as to any particular parent corporation or organization, any other corporation or organization more than 50% of the outstanding Voting Stock of which is at the time directly or indirectly owned by such parent corporation or organization or by any one or more other entities which are themselves subsidiaries of such parent corporation or organization.  Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries; provided that, notwithstanding the foregoing, U.S. Tag & Ticket Company, Inc. shall not be considered a Subsidiary of the Borrower.

 

 “Tax Refunds”  means all state and federal income tax refunds and proceeds thereof, including, without limitation, interest thereon, in respect of taxes of the Borrower and its Subsidiaries.

  

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“Term Credit A” means the credit facility for the Term Loan A described in Section 2.1(a) hereof.

 

 “Term Loan A” is defined in Section 2.1(a) hereof.

 

 “Term Note A” is defined in Section 2.1 hereof and attached hereto as Exhibit A.  

 

 “Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if any) by which the present value of all vested nonforfeitable accrued benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA.

 

 “Voting Stock” of any Person means capital stock or other equity interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency.

 

 “Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Wholly-owned Subsidiary” means, at any time, any Subsidiary of which all of the issued and outstanding shares of capital stock (other than directors’ qualifying shares as required by law) or other equity interests are owned by any one or more of the Borrower and the Borrower’s other Wholly-owned Subsidiaries at such time.

 

Section 1.2. Interpretation.  The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined.  The words “hereof”, “herein”, and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All references to time of day herein are references to Cincinnati, Ohio, time unless otherwise specifically provided.  Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement.  All terms that are used in this Agreement which are defined in the Uniform Commercial Code of the State of Ohio as in effect from time to time (“UCC”) shall have the same meanings herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide.

 

Section 1.3. Change in Accounting Principles.  If, after the date of this Agreement, there shall occur any change in GAAP from those used in the preparation of the financial statements referred to in Section 5.3 hereof and such change shall result in a change in the method of calculation of any financial covenant, standard or term found in this Agreement, either the Borrower or the Lender may by notice to the Lender and the Borrower, respectively, require that the Lender and the Borrower negotiate in good faith to amend such covenants, standards, and term so as equitably to reflect such change in accounting principles, with the desired result being that the criteria for evaluating the financial condition of the Borrower and its Subsidiaries shall

  

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 be the same as if such change had not been made.  No delay by the Borrower or the Lender in requiring such negotiation shall limit their right to so require such a negotiation at any time after such a change in accounting principles.  Until any such covenant, standard, or term is amended in accordance with this Section 1.3, financial covenants shall be computed and determined in accordance with GAAP in effect prior to such change in accounting principles.  Without limiting the generality of the foregoing, the Borrower shall neither be deemed to be in compliance with any financial covenant hereunder nor out of compliance with any financial covenant hereunder if such state of compliance or noncompliance, as the case may be, would not exist but for the occurrence of a change in accounting principles after the date hereof.

 

	
  

	
Section 2.The Credit Facility.

 

Section 2.1. Term Loan.  (a) On the Closing Date all of the Purchased Loans shall be consolidated into the Note attached hereto as Exhibit A in the principal amount of $10,000,000 (the “Term Note A”).

 

Section 2.2. Applicable Interest Rate.  (a) Interest on the Loan.  Subject to Section 2.2(b) hereof, the Loan shall bear interest (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced until maturity (whether by acceleration or otherwise) as set forth in Term Note A.

 

(b)Default Rate.  Upon the occurrence of any Default or Event of Default or after acceleration, the Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of Term Loan A as set forth therein. 

 

Section 2.3. Maturity of Loans.  (a) Scheduled Payment of Term Loan A.  The Borrower shall make principal payments on the Term Loan A as set forth in Term Note A.

 

Section 2.4. Prepayments.  The Borrower may prepay the Term Loan A as set forth in the Term Loan Note.

 

Section 2.4. Place and Application of Payments.  All payments of principal of and interest on the Loan, and of all other Obligations payable by the Borrower under this Agreement and the other Loan Documents, shall be made by the Borrower to the Administrative Agent by no later than 12:00 Noon (Louisiana time) on the due date thereof at the office of the Administrative Agent in Louisiana (or such other location as the Administrative Agent may designate to the Borrower) for the benefit of the Lender entitled thereto.  Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day.  All such payments shall be made in Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim.  

 

	
  

	
Section 3.Conditions Precedent.

 

The obligation of Lender to advance the Loan, shall be subject to the following conditions precedent:

  

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Section 3.1. Initial Credit Event.  Before or concurrently with the initial Credit Event:

 

(a) the Administrative Agent shall have received (i) copies of resolutions of the Borrower’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on the Borrower’s behalf, all certified in each instance by its Secretary, Assistant Secretary or Chief Financial Officer and (ii) copies of resolutions of each Subsidiary’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Agreement and the ratification of the Guaranty and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on each Subsidiary’s behalf, all certified in each instance by its Secretary, Assistant Secretary or Chief Financial Officer;

 

(b) the Administrative Agent shall have received the Shareholder Guaranty and the Shareholder Pledge duly executed by the parties thereto;

 

(c) the Administrative Agent shall have received physical delivery of the property subject to the Shareholder Pledge; and

 

(d)the Administrative Agent shall have received such other agreements, instruments, documents, certificates, and opinions as the Administrative Agent may reasonably request.

 

	
  

	
Section 4.The Collateral and Guaranties.

 

Section 4.1. Collateral.  The Obligation shall be secured by (a) valid, perfected, and enforceable Liens on all right, title, and interest of the Borrower and each Subsidiary in all capital stock and other equity interests held by such Person in each of its Subsidiaries, whether now owned or hereafter formed or acquired, and all proceeds thereof, and (b) valid, perfected, and enforceable Liens on all right, title, and interest of the Borrower and each Subsidiary in all personal property, fixtures, and real estate, whether now owned or hereafter acquired or arising, and all proceeds thereof; provided, however, that:  (i) the Lien of the Administrative Agent on Property subject to a Capital Lease or conditional sale agreement or subject to a purchase money lien, in each instance to the extent permitted hereby, shall be subject to the rights of the lessor or lender thereunder, (ii) until a Default or Event of Default has occurred and is continuing and thereafter until otherwise required by the Administrative Agent or the Lender, Liens on local petty cash deposit accounts maintained by the Borrower and its Subsidiaries in proximity to their operations need not be perfected provided the total amount on deposit at any one time not so perfected shall not exceed $100,000 in the aggregate and Liens on payroll accounts maintained by the Borrower and its Subsidiaries need not be perfected provided the total amount on deposit at any time does not exceed the current amount of their payroll obligation, and, and (iii) until a Default or Event of Default has occurred and is continuing and thereafter until otherwise required by the Administrative Agent or the Lender, Liens on vehicles which are subject to a 

  

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certificate of title law need not be perfected provided that the total value of such property at any one time not so perfected shall not exceed $2,000,000 in the aggregate.  

 

Section 4.2. Liens on Real Property.  In the event that the Borrower or any Subsidiary owns or hereafter acquires any real property, the Borrower shall, or shall cause such Subsidiary to, execute and deliver to the Administrative Agent (or a security trustee therefor) a mortgage or deed of trust acceptable in form and substance to the Administrative Agent for the purpose of granting to the Administrative Agent a Lien on such real property to secure the Obligation, shall pay all taxes, costs, and expenses incurred by the Administrative Agent in recording such mortgage or deed of trust, and shall supply to the Administrative Agent at the Borrower’s cost and expense a survey, environmental report, hazard insurance policy, appraisal report, and a mortgagee’s policy of title insurance from a title insurer acceptable to the Administrative Agent insuring the validity of such mortgage or deed of trust and its status as a first Lien (subject to Permitted Liens) on the real property encumbered thereby and such other instrument, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.  In the event that the Borrower or any Subsidiary presently leases or hereafter leases real property, the Borrower shall, or shall cause such Subsidiary, to the extent requested by the Administrative Agent:  (i) to execute and deliver to the Administrative Agent (or a security trustee therefor) a leasehold mortgage or leasehold deed of trust acceptable in form and substance to the Administrative Agent for the purpose of granting to the Administrative Agent a Lien on such real property to secure the Obligation, (ii) to pay all taxes, costs, and expenses incurred by the Administrative Agent in recording such leasehold mortgage or leasehold deed of trust, (iii) to deliver to the Administrative Agent such lessor and mortgagor consent, waivers, and other agreements as required by the Administrative Agent to ensure its access to the Collateral and its rights under such leasehold mortgage or leasehold deed of trust for such property, (iv) and to deliver to the Administrative Agent such other instrument, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.

 

Section 4.3. Guaranties.  The payment and performance of the Obligation shall at all times be jointly and severally guaranteed by each direct and indirect Subsidiary of the Borrower pursuant to one or more guaranty agreements in form and substance acceptable to the Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties”) and by the Shareholder Guaranty.

 

Section 4.4. Further Assurances.  The Borrower agrees that it shall, and shall cause each Subsidiary to, from time to time at the request of the Administrative Agent or the Lender, execute and deliver such documents and do such acts and things as the Administrative Agent or the Lender may reasonably request in order to provide for or perfect or protect such Liens on the Collateral.  In the event the Borrower or any Subsidiary forms or acquires any other Subsidiary after the date hereof, the Borrower shall promptly upon such formation or acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty and such Collateral Documents as the Administrative Agent may then require, and the Borrower shall also deliver to the Administrative Agent, or cause such Subsidiary to deliver to the Administrative Agent, at the Borrower’s cost and expense, such other instruments, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.

  

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Section 4.5. Continuing Security Interests.  The Borrower hereby acknowledges and agrees that the Liens created and provided for by the Collateral Documents continue to secure, among other things, the Obligations arising under the Credit Agreement as amended and restated hereby; and the Collateral Documents and the rights and remedies of the Administrative Agent and the Lender thereunder, the obligations of the Borrower thereunder, and the Liens created and provided for thereunder remain in full force and effect and shall not be affected, impaired or discharged hereby.  Nothing herein contained shall in any manner affect or impair the priority of the Liens and security interests created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect to this Agreement.

 

	
  

	
Section 5.Representations and Warranties.

 

The Borrower represents and warrants to each Lender and the Administrative Agent, and agrees, that:

 

Section 5.1. Organization and Qualification.  The Borrower and each of its Subsidiaries (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the power and authority to own its property and to transact the business in which it is engaged and proposes to engage and (iii) is duly qualified and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

Section 5.2. Authority and Enforceability.  The Borrower has full right and authority to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings herein provided for, to issue its Note, to grant to the Administrative Agent the Liens described in the Collateral Documents executed by the Borrower, and to perform all of its obligations hereunder and under the other Loan Documents executed by it.  Each Subsidiary, if any, has full right and authority to enter into the Loan Documents executed by it, to guarantee the Obligation, to grant to the Administrative Agent the Liens described in the Collateral Documents executed by such Person, and to perform all of its obligations under the Loan Documents executed by it.  The Loan Documents delivered by the Borrower and by each Subsidiary, if any, have been duly authorized, executed, and delivered by such Person and constitute valid and binding obligations of such Person enforceable against it in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this Agreement and the other Loan Documents do not, nor does the performance or observance by the Borrower or any Subsidiary, if any, of any of the matters and things herein or therein provided for, (a) contravene or constitute a default under any provision of law or any judgment, injunction, order or decree binding upon the Borrower or any Subsidiary, if any, or any provision of the organizational documents (e.g., charter, articles of incorporation, by-laws, articles of association, operating agreement, partnership agreement or other similar document) of the Borrower or any Subsidiary, (b) contravene or constitute a default under any covenant, indenture or agreement of or affecting the Borrower or any Subsidiary or any of its Property, in each case where such contravention or

  

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default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (c) result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary other than the Liens granted in favor of the Administrative Agent pursuant to the Collateral Documents.

 

Section 5.3. Financial Reports.  The audited consolidated financial statements of Borrower and its Subsidiaries as at October 31, 2012, and the unaudited interim consolidated financial statements of Borrower and its Subsidiaries as at July 31, 2013 for the nine months then ended, heretofore available to the Administrative Agent at www.sec.gov, fairly and adequately present the consolidated financial condition of Borrower and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis.  Neither the Borrower nor any Subsidiary has contingent liabilities or judgments, orders or injunctions against it that are material to it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 6.1 hereof.

 

Section 5.4. Litigation and Other Controversies.  There is no litigation, arbitration or governmental proceeding pending or, to the knowledge of the Borrower and its Subsidiaries, threatened against the Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, except as previously disclosed to the Lenders in writing.

 

Section 5.5. True and Complete Disclosure.  All information furnished by or on behalf of the Borrower or any of its Subsidiaries in writing to the Administrative Agent or any Lender for purposes of or in connection with this Agreement, or any transaction contemplated herein, is true and accurate in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in light of the circumstances under which such information was provided; provided that, with respect to projected financial information furnished by or on behalf of the Borrower or any of its Subsidiaries, the Borrower only represents and warrants that such information is prepared in good faith based upon assumptions believed to be reasonable at the time.

 

Section 5.6. Use of Proceeds; Margin Stock.  All proceeds of the Loan shall be used by the Borrower to refinance existing Indebtedness.  No part of the proceeds of any Loan or other extension of credit hereunder will be used by the Borrower or any Subsidiary thereof to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any margin stock.  Neither the making of any Loan or other extension of credit hereunder nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System and any successor to all or any portion of such regulations.  Margin stock (as defined above) constitutes less than 25% of the value of those assets of the Borrower and its Subsidiaries that are subject to any limitation on sale, pledge or other restriction hereunder.

 

Section 5.7. Taxes.  The Borrower and each of its Subsidiaries has timely filed or caused to be timely filed all tax returns required to be filed by the Borrower and/or any of its Subsidiaries, except where failure to so file could not be reasonably expected to have, either 

  

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individually or in the aggregate, a Material Adverse Effect.  The Borrower and each of its Subsidiaries has paid all taxes, assessments and other governmental charges payable by them other than taxes, assessments and other governmental charges which are not delinquent, except those that are being contested in good faith and by proper legal proceedings and as to which appropriate reserves have been provided for in accordance with GAAP and no Lien resulting therefrom attaches to any of its Property. 

 

Section 5.8. ERISA.  The Borrower and each other member of its Controlled Group has fulfilled its obligations under the minimum funding standards of, and is in compliance in all material respects with, ERISA and the Code to the extent applicable to it and, other than a liability for premiums under Section 4007 of ERISA, has not incurred any liability to the PBGC or a Plan under Title IV of ERISA.  The Borrower and its Subsidiaries have no contingent liabilities with respect to any post-retirement benefits under a welfare plan, as defined in Section 3(1) of ERISA, other than liability for continuation coverage described in article 6 of Title 1 of ERISA.

 

Section 5.9. Subsidiaries.  Schedule 5.9 correctly sets forth, as of the Closing Date, each Subsidiary of the Borrower, its respective jurisdiction of organization and the percentage ownership (direct and indirect) of the Borrower in each class of capital stock or other equity interests of each of its Subsidiaries and also identifies the direct owner thereof.

 

Section 5.10. Compliance with Laws.  The Borrower and each of its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authority in respect of the conduct of their businesses and the ownership of their property, except such noncompliances as could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

Section 5.11. Environmental Matters.  The Borrower and each of its Subsidiaries is in compliance with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws, except to the extent that the aggregate effect of all noncompliances could not reasonably be expected to have a Material Adverse Effect.  There are no pending or, to the best knowledge of the Borrower and its Subsidiaries after due inquiry, threatened Environmental Claims, including any such claims (regardless of materiality) for liabilities under CERCLA relating to the disposal of Hazardous Materials, against the Borrower or any of its Subsidiaries or any real property, including leaseholds, owned or operated by the Borrower or any of its Subsidiaries, except such claims as could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  Except as could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, there are no facts, circumstances, conditions or occurrences on any real property, including leaseholds, owned or operated by the Borrower or any of its Subsidiaries that, to the best knowledge of the Borrower and its Subsidiaries after due inquiry, could reasonably be expected (i) to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such real property, or (ii) to cause any such real property to be subject to any restrictions on the ownership, occupancy, use or transferability of such real property by the Borrower or any of its Subsidiaries under any applicable Environmental Law.  Hazardous Materials have not been Released on or from any real property, including leaseholds, owned or 

  

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operated by the Borrower or any of its Subsidiaries where such Release, individually, or when combined with other Releases, in the aggregate, may reasonably be expected to have a Material Adverse Effect.

 

Section 5.12. Investment Company.  Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 5.13. Intellectual Property.  The Borrower and each of its Subsidiaries owns all the patents, trademarks, permits, service marks, trade names, copyrights, franchises and formulas, or rights with respect to the foregoing, or each has obtained licenses of all other rights of whatever nature necessary for the present conduct of its businesses, in each case without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, could reasonably be expected to result in a Material Adverse Effect.

 

Section 5.14. Good Title.  The Borrower and its Subsidiaries have good and marketable title, or valid leasehold interests, to their assets as reflected on the Borrower’s most recent consolidated balance sheet provided to the Administrative Agent (except for sales of assets in the ordinary course of business, and such defects in title that could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect) and is subject to no Liens, other than Permitted Liens.

 

Section 5.15. Labor Relations.  Neither the Borrower nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect.  There is (i) no strike, labor dispute, slowdown or stoppage pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, threatened against the Borrower or any of its Subsidiaries and (ii) to the best knowledge of the Borrower and its Subsidiaries, no union representation proceeding is pending with respect to the employees of the Borrower or any of its Subsidiaries and no union organizing activities are taking place, except (with respect to any matter specified in clause (i) or (ii) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.16. Capitalization.  All outstanding equity interests of the Borrower and the Subsidiaries have been duly authorized and validly issued, and are fully paid and nonassessable, and there are no outstanding commitments or other obligations of the Borrower or any Subsidiary to issue, and no rights of any Person to acquire, any equity interests in the Borrower or any Subsidiary, except for the Warrants when issued.

 

Section 5.17. Other Agreements.  Neither the Borrower nor any Subsidiary is in default under the terms of any covenant, indenture or agreement of or affecting the Borrower, any Subsidiary or any of their Property, which default if uncured could reasonably be expected to have a Material Adverse Effect.

 

Section 5.18. Governmental Authority and Licensing.  The Borrower and its Subsidiaries have received all licenses, permits, and approvals of each Governmental Authority necessary to 

  

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conduct their businesses, in each case where the failure to obtain or maintain the same could reasonably be expected to have a Material Adverse Effect.  No investigation or proceeding that, if adversely determined, could reasonably be expected to result in revocation or denial of any license, permit or approval is pending or, to the knowledge of the Borrower, threatened, except where such revocation or denial could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. 

 

Section 5.19. Approvals.  No authorization, consent, license or exemption from, or filing or registration with, any Governmental Authority, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or performance by the Borrower or any Subsidiary of any Loan Document, except for such approvals which have been obtained prior to the date of this Agreement and remain in full force and effect.

 

Section 5.20. Affiliate Transactions.  Neither the Borrower nor any Subsidiary is a party to any contracts or agreements with any of its Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions which are less favorable to the Borrower or such Subsidiary than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other.

 

Section 5.21. Foreign Assets Control Regulations and Anti-Money Laundering.  (a) OFAC.  Neither Borrower nor any of its Subsidiaries is (i) a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Party and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) a person who engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such person in any manner violative of Section 2, or (iii) a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order. 

 

(b)Patriot Act.  The Borrower and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”).  No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. 

 

	
  

	
Section 6.Covenants. 

 

The Borrower covenants and agrees that, so long as any Credit is available to the Borrower hereunder and until all Obligations are paid in full:

 

Section 6.1. Information Covenants.  The Borrower will furnish to the Administrative Agent, with sufficient copies for each Lender:

 

  

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(a)Quarterly Reports.  Within 45 days after the end of each fiscal quarter and in accordance with applicable SEC financial reporting requirements of the Borrower, the Borrower shall provide its full Form 10-Q for such quarter.

 

(b)Annual Statements.  Within 120 days after the close of each fiscal year of the Borrower, a copy of the Borrower’s consolidated and consolidating balance sheet as of the last day of the fiscal year then ended and the Borrower’s consolidated and consolidating statements of income, retained earnings, and cash flows for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion of Arnett & Foster, P.L.L.C. or a different firm of independent public accountants of recognized national standing, selected by the Borrower and acceptable to the Administrative Agent, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards. 

 

(c)Notice of Default and Litigation.  Promptly, and in any event within two Business Days after any officer of the Borrower obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default or any other event which could reasonably be expected to have a Material Adverse Effect, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto, and (ii) the commencement of, or threat of, or any significant development in, any litigation, labor controversy, arbitration or governmental proceeding pending against the Borrower or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. 

 

(d)Management Letters.  Promptly after the Borrower’s receipt thereof, a copy of each report or any “management letter” submitted to the Borrower or any of its Subsidiaries by its certified public accountants and the management’s responses thereto. 

 

(e)Other Reports and Filings.  Promptly, copies of all financial information, proxy materials and other material information, certificates, reports, statements and completed forms, if any, which the Borrower or any of its Subsidiaries (x) has filed with the United States Securities and Exchange Commission or any governmental agencies substituted therefor (the “SEC”) furnished to the shareholders of the Borrower, or (y) has delivered to holders of, or to any agent or trustee with respect to, Indebtedness of the Borrower or any of its Subsidiaries in their capacity as such a holder, agent or trustee to the extent that the aggregate principal amount of such Indebtedness exceeds (or upon the utilization of any unused commitments may exceed) $1,000,000. 

 

(f)Environmental Matters.  Promptly upon, and in any event within five Business Days after any officer of the Borrower obtains knowledge thereof, notice of one

  

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or more of the following environmental matters which individually, or in the aggregate, may reasonably be expected to have a Material Adverse Effect:  (i) any notice of Environmental Claim against the Borrower or any of its Subsidiaries or any real property owned or operated by the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any real property owned or operated by the Borrower or any of its Subsidiaries that (a) results in noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such real property; (iii) any condition or occurrence on any real property owned or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to cause such real property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such real property under any Environmental Law; and (iv) any removal or remedial actions to be taken in response to the actual or alleged presence of any Hazardous Material on any real property owned or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any Governmental Authority.  All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Borrower’s or such Subsidiary’s response thereto.  In addition, the Borrower agrees to provide the Lender with copies of all material written communications by the Borrower or any of its Subsidiaries with any Person or Governmental Authority relating to any of the matters set forth in clauses (i)-(iv) above, and such detailed reports relating to any of the matters set forth in clauses (i)-(iv) above as may reasonably be requested by the Administrative Agent or the Lender. 

 

(g)Other Information.  From time to time, such other information or documents (financial or otherwise) as the Administrative Agent or Lender may reasonably request.

 

Section 6.2. Inspections.  The Borrower will, and will cause each Subsidiary to, permit officers, representatives and agents of the Administrative Agent or Lender, to visit and inspect any Property of the Borrower or such Subsidiary, and to examine the books of account of the Borrower or such Subsidiary and discuss the affairs, finances and accounts of the Borrower or such Subsidiary with its and their officers and independent accountants, all at such reasonable times as the Administrative Agent or Lender may request. 

 

Section 6.3. Maintenance of Property, Insurance, Environmental Matters, etc.  (a) The Borrower will, and will cause each of its Subsidiaries to, (i) keep its property, plant and equipment in good repair, working order and condition, normal wear and tear excepted, and shall from time to time make all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto so that at all times such property, plant and equipment are reasonably preserved and maintained and (ii) maintain in full force and effect with financially sound and reputable insurance companies insurance which provides substantially the same (or greater) coverage and against at least such risks as is in accordance with industry practice, and shall furnish to the Administrative Agent upon request full information as to the 

  

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insurance so carried.  In any event, the Borrower shall, and shall cause each of its Subsidiaries to, maintain insurance on the Collateral to the extent required by the Collateral Documents. 

 

        (b)Without limiting the generality of Section 6.3(a), the Borrower and its Subsidiaries: (i) shall comply with, and maintain all real property in compliance with, any applicable Environmental Laws, except to the extent that the aggregate effect of all noncompliance could not reasonably be expected to have a Material Adverse Effect; (ii) shall obtain and maintain in full force and effect all governmental approvals required for its operations at or on its properties by any applicable Environmental Laws; (iii) shall cure as soon as reasonably practicable any violation of applicable Environmental Laws with respect to any of its properties which individually or in the aggregate may reasonably be expected to have a Material Adverse Effect; (iv) shall not, and shall not permit any other Person to, own or operate on any of its properties any landfill or dump or hazardous waste treatment, storage or disposal facility as defined pursuant to the RCRA, or any comparable state law; and (v) shall not use, generate, treat, store, release or dispose of Hazardous Materials at or on any of the real property except in the ordinary course of its business and in compliance with all Environmental Laws.  With respect to any Release of Hazardous Materials, the Borrower and its Subsidiaries shall conduct any necessary or required investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other response action necessary to remove, cleanup or abate any material quantity of Hazardous Materials released at or on any of its properties as required by any applicable Environmental Law. 

 

Section 6.4. Preservation of Existence.  The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, its franchises, authority to do business, licenses, patents, trademarks, copyrights and other proprietary rights; provided, however, that nothing in this Section 6.4 shall prevent, to the extent permitted by Section 6.13, sales of assets by the Borrower or any of its Subsidiaries, the dissolution or liquidation of any Subsidiary of the Borrower, or the merger or consolidation between or among the Subsidiaries of the Borrower.

 

Section 6.5. Compliance with Laws.  The Borrower shall, and shall cause each Subsidiary to, comply in all respects with the requirements of all laws, rules, regulations, ordinances and orders applicable to its property or business operations of any Governmental Authority, where any such non-compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property.

 

Section 6.6. ERISA.  The Borrower shall, and shall cause each Subsidiary to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property.  The Borrower shall, and shall cause each Subsidiary to, promptly notify the Administrative Agent and each Lender of:  (a) the occurrence of any reportable event (as defined in ERISA) with respect to a Plan, (b) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (c) its intention to terminate or withdraw from any Plan, and (d) the occurrence of any event with respect to any Plan which would result in the incurrence by the Borrower or any Subsidiary of 

  

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any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement Welfare Plan benefit.

 

Section 6.7. Payment of Taxes.  The Borrower will, and will cause each of its Subsidiaries to, pay and discharge, all taxes, assessments, fees and other governmental charges imposed upon it or any of its Property, before becoming delinquent and before any penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by proper proceedings and as to which appropriate reserves are provided therefor, unless and until any Lien resulting therefrom attaches to any of its Property.

 

Section 6.8. Contracts with Affiliates.  The Borrower shall not, nor shall it permit any Subsidiary to, enter into any contract, agreement or business arrangement with any of its Affiliates (other than Wholly-owned Subsidiaries) on terms and conditions which are less favorable to the Borrower or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other.

 

Section 6.9. No Changes in Fiscal Year.  The Borrower shall not, nor shall it permit any Subsidiary to, change its fiscal year from its present basis.

 

Section 6.10. Change in the Nature of Business. The Borrower shall not, nor shall it permit any Subsidiary to, engage in any business or activity if as a result the general nature of the business of the Borrower or any Subsidiary would be changed in any material respect from the general nature of the business engaged in by it as of the Closing Date.

 

Section 6.11. Indebtedness.  The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except;

 

(a)the Obligation owing to the Administrative Agent and the Lender (and their Affiliates);

 

(b)intercompany Indebtedness among the Borrower and its Subsidiaries to the extent permitted by Section 6.14;

 

(c)purchase money Indebtedness and Capitalized Lease Obligations of the Borrower and its Subsidiaries in an amount not to exceed $2,500,000 in the aggregate outstanding at any time;

 

(d)unsecured Indebtedness of the Borrower and its Subsidiaries not otherwise permitted by this Section in an amount not to exceed $1,500,000 in the aggregate at any one time outstanding; and

 

(e)Subordinated Indebtedness owed to Marshall T. Reynolds in a principal amount not to exceed $2,500,000, as reduced by permitted payments thereon.

  

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Section 6.12. Liens.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur or suffer to exist any Lien on any of its Property; provided that the foregoing shall not prevent the following (the Liens described below, the “Permitted Liens”):

 

(a)inchoate Liens for the payment of taxes which are not yet due and payable or the payment of which is not required by Section 6.7;

 

(b)Liens arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, statutory obligations or other similar charges (other than Liens arising under ERISA), good faith cash deposits in connection with tenders, contracts or leases to which the Borrower or any Subsidiary is a party or other cash deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves have been established therefor;

 

(c)mechanics’, workmen’s, materialmen’s, landlords’, carriers’ or other similar Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest;

 

(d)Liens created by or pursuant to this Agreement and the Collateral Documents;

 

(e)Liens on property of the Borrower or any Subsidiary created solely for the purpose of securing indebtedness permitted by Section 6.11(d) hereof, representing or incurred to finance the purchase price of Property, provided that no such Lien shall extend to or cover other Property of the Borrower or such Subsidiary other than the respective Property so acquired, and the principal amount of indebtedness secured by any such Lien shall at no time exceed the purchase price of such Property, as reduced by repayments of principal thereon; and

 

(f)easements, rights-of-way, restrictions, and other similar encumbrances against real property incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any Subsidiary.

 

Section 6.13. Consolidation, Merger, Sale of Assets, etc.  The Borrower will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or agree to any merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property, including any disposition as part of any sale-leaseback transactions except that this Section shall not prevent:

 

(a)the sale and lease of inventory in the ordinary course of business;

  

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(b)the sale, transfer or other disposition of any tangible personal property that, in the reasonable judgment of the Borrower or its Subsidiaries, has become uneconomic, obsolete or worn out;

 

(c)the sale, transfer, lease, or other disposition of Property of the Borrower and its Subsidiaries to one another; 

 

(d)the merger of any Subsidiary with and into the Borrower or any other Subsidiary, provided that, in the case of any merger involving the Borrower, the Borrower is the legal entity surviving the merger; 

 

(e)the disposition or sale of Cash Equivalents on consideration for cash; and

 

(f)the sale, transfer, lease, or other disposition of Property of the Borrower or any Subsidiary (including any disposition of Property as part of a sale and leaseback transaction) aggregating for the Borrower and its Subsidiaries not more than $500,000 during any fiscal year of the Borrower.

 

So long as no Default or Event of Default has occurred and is continuing or would arise as a result thereof, upon the written request of the Borrower, the Administrative Agent shall release its Lien on any Property sold pursuant to the foregoing provisions.

 

Section 6.14. Advances, Investments and Loans.  The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, make loans or advances to or make, retain or have outstanding any investments (whether through purchase of equity interests or obligations or otherwise) in, any Person or enter into any partnerships or joint ventures, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, except that this Section shall not prevent:

 

(a)receivables created in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

 

(b)investments in Cash Equivalents;

 

(c)investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

 

(d)the Borrower’s investments existing on the date of this Agreement in its Subsidiaries and described on Schedule E to the Security Agreement;

 

(e)intercompany advances made from time to time from the Borrower to any one or more of its Subsidiaries in the ordinary course of business; 

  

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(f)Permitted Acquisitions; and

 

(g)other investments, loans and advances in addition to those otherwise permitted by this Section in an amount not to exceed $250,000 in the aggregate at any one time outstanding.

 

Section 6.15. Dividends and Certain Other Restricted Payments.  The Borrower shall not, nor shall it permit any of its Subsidiaries to, (i) declare or pay any dividends on or make any other distributions in respect of any class or series of its capital stock or other equity interests, (ii) directly or indirectly purchase, redeem, or otherwise acquire or retire any of its capital stock or other equity interests or any warrants, options, or similar instruments to acquire the same (collectively, referred to herein as “Restricted Payments”); provided, however, that the foregoing shall not operate to prevent the making of dividends or distributions by any Wholly-owned Subsidiary of the Borrower to its parent corporation.

 

Section 6.16. Limitation on Restrictions.  The Borrower will not, and it will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or other equity interests owned by the Borrower or any other Subsidiary, (b) pay or repay any Indebtedness owed to the Borrower or any other Subsidiary, (c) make loans or advances to the Borrower or any other Subsidiary, (d) transfer any of its Property to the Borrower or any other Subsidiary, (e) encumber or pledge any of its assets to or for the benefit of the Administrative Agent or (f) guaranty the Obligation.

 

Section 6.17. Limitation on the Creation of Subsidiaries.  Notwithstanding anything to the contrary contained in this Agreement, the Borrower will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Closing Date any Subsidiary; provided that the Borrower and its Wholly-owned Subsidiaries shall be permitted to establish or create Wholly-owned Subsidiaries so long as at least 30 days prior written notice thereof is given to the Administrative Agent, and the Borrower and its Subsidiaries timely comply with the requirements of Section 4 (at which time Section 5.10 shall be deemed to include a reference to such Subsidiary).

 

Section 6.18. OFAC.  The Borrower will not, and will not permit any of its Subsidiaries to, (i) become a person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Party and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001)), (ii) engage in any dealings or transactions prohibited by Section 2 of such executive order, or be otherwise associated with any such person in any manner violative of Section 2, and (iii) become a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order. 

  

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Section 6.19. Financial Covenants.

 

(a)Maximum Capital Expenditures.  During any fiscal year of the Borrower commencing after October 31, 2012, the Borrower shall not, nor shall it permit any Subsidiary to, expend or become obligated for Capital Expenditures in an aggregate amount in excess of $3,000,000.

 

Section 6.20.  Tax Returns.  Prior to or simultaneously with submission thereof to any federal or state tax authority, the Borrower shall deliver to the Administrative Agent copies of the Borrower’s federal and state income tax returns.

 

Section 6.21. Subordinated Indebtedness.  Except to the extent permitted by the Subordinated Note, the Contribution Agreement and the Subordination Agreement, the Borrower shall not (a) amend or modify any of the terms or conditions relating to Subordinated Indebtedness, (b) make any voluntary prepayment of Subordinated Indebtedness or effect any voluntary redemption thereof, or (c) make any other payment or redemption on account of Subordinated Indebtedness that is prohibited under the terms the Subordinated Note, the Subordination Agreement or of any other instrument or agreement subordinating the same to the Obligation.  Notwithstanding the foregoing, the Borrower may agree to a decrease in the interest rate applicable thereto or to a deferral of repayment of any of the principal of or interest on the Subordinated Indebtedness beyond the current due dates therefor.

 

	
  

	
Section 7.Events of Default and Remedies.

 

Section 7.1. Events of Default.  Any one or more of the following shall constitute an “Event of Default” hereunder:  

 

(a)default in the payment when due (whether at the stated maturity thereof or at any other time provided for in this Agreement) of all or any part of the principal of or interest on any Loan or any other Obligation payable hereunder or under any other Loan Document;

 

(b)default in the observance or performance of any covenant set forth in Sections 6.4, 6.11, 6.12, 6.13, 6.14, 6.15, 6.20 or 6.21 hereof or of any provision in any Loan Document dealing with the use, disposition or remittance of the proceeds of Collateral or requiring the maintenance of insurance thereon;

 

(c)default in the observance or performance of any other provision hereof or of any other Loan Document which is not remedied within 30 days after the earlier of (i) the date on which such default shall first become known to any officer of the Borrower or (ii) written notice of such default is given to the Borrower by the Administrative Agent; 

 

(d)any representation or warranty made herein or in any other Loan Document or in any certificate delivered to the Administrative Agent or the Lenders pursuant hereto or thereto or in connection with any transaction contemplated hereby or 

  

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thereby proves untrue in any material respect as of the date of the issuance or making or deemed making thereof; 

 

(e)any event occurs or condition exists (other than those described in subsections (a) through (d) above) which is specified as an event of default under any of the other Loan Documents, or any of the Loan Documents shall for any reason not be or shall cease to be in full force and effect or is declared to be null and void, or any of the Collateral Documents shall for any reason fail to create a valid and perfected first priority Lien in favor of the Administrative Agent in any Collateral purported to be covered thereby except as expressly permitted by the terms thereof, or any Subsidiary takes any action for the purpose of terminating, repudiating or rescinding any Loan Document executed by it or any of its obligations thereunder;

 

(f)default shall occur under any (i) Indebtedness of the Borrower or any of its Subsidiaries aggregating in excess of $2,500,000, or under any indenture, agreement or other instrument under which the same may be issued, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such Indebtedness (whether or not such maturity is in fact accelerated), or any such Indebtedness shall not be paid when due (whether by demand, lapse of time, acceleration or otherwise) after giving effect to applicable grace or cure periods, if any, or (ii) any Hedge Agreement of the Borrower or any of its Subsidiaries with any Lender or any Affiliate of a Lender;

 

(g)any final judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, shall be entered or filed against the Borrower or any of its Subsidiaries, or against any of its Property, in an aggregate amount in excess of $1,000,000 (except to the extent fully and unconditionally covered by insurance pursuant to which the insurer has accepted liability therefor in writing and except to the extent fully and unconditionally covered by an appeal bond, for which the Borrower or such Subsidiary has established in accordance with GAAP a cash or Cash Equivalent reserve in the amount of such judgment, writ or warrant), and which remains undischarged, unvacated, unbonded or unstayed for a period of 30 days; 

 

(h)the Borrower or any of its Subsidiaries, or any member of its Controlled Group, shall fail to pay when due an amount or amounts aggregating in excess of $500,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $500,000 (collectively, a “Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any of its Subsidiaries, or any other member of its Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any of its Subsidiaries, or any member of its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days 

  

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thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; 

 

(i)any Change of Control shall occur;

 

(j)the Borrower or any of its Subsidiaries shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 7.1(k) hereof;

 

(k)a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries, or any substantial part of any of its Property, or a proceeding described in Section 7.1(j)(v) shall be instituted against the Borrower or any Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 days; or

 

(l)any default or event of default shall occur and be continuing under the Contribution Agreement or the Subordination Agreement.

 

Section 7.2. Non-Bankruptcy Defaults.  When any Event of Default other than those described in subsection (j) or (k) of Section 7.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower:  (a) if so directed by the Lender, terminate all obligations of the Lender hereunder on the date stated in such notice (which may be the date thereof); and (b) if so directed by the Lender, declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Loan Documents without further demand, presentment, protest or notice of any kind.  The Administrative Agent, after giving notice to the Borrower pursuant to Section 7.1(c) or this Section 7.2, shall also promptly send a copy of such notice to the Lender, but the failure to do so shall not impair or annul the effect of such notice.

 

Section 7.3. Bankruptcy Defaults.  When any Event of Default described in subsections (j) or (k) of Section 7.1 hereof has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Loan Documents without presentment, demand, protest or notice of any kind.

  

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Section 7.4. Notice of Default.  The Administrative Agent shall give notice to the Borrower under Section 7.1(c) hereof promptly upon being requested to do so by the Lender shall at such time also notify the Lender thereof.

 

Section 7.5. Expenses.  The Borrower agrees to pay to the Administrative Agent and the Lender, and any other holder of any Note outstanding hereunder, all costs and expenses reasonably incurred or paid by the Administrative Agent and such Lender or any such holder, including reasonable attorneys’ fees and court costs, in connection with any Default or Event of Default by the Borrower hereunder or in connection with the enforcement of any of the Loan Documents (including all such costs and expenses incurred in connection with any proceeding under the United States Bankruptcy Code involving the Borrower or any of its Subsidiaries as a debtor thereunder).

 

	
  

	
Section 8.Change in Circumstances and Contingencies. 

 

 

	
  

	
Section 9.The Administrative Agent.

 

Section 9.1. Appointment and Authorization of Administrative Agent.  Lender hereby appoints Big 4 Investments, LLC, a Louisiana limited liability company, as the Administrative Agent under the Loan Documents and hereby authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto.  Notwithstanding the use of the word “Administrative Agent” as a defined term, the Lender expressly agrees that the Administrative Agent is not acting as a fiduciary of Lender in respect of the Loan Documents, the Borrower or otherwise, and nothing herein or in any of the other Loan Documents shall result in any duties or obligations on the Administrative Agent or the Lender except as expressly set forth herein.  

 

Section 9.2. Administrative Agent and its Affiliates.  The Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as Lender and may exercise or refrain from exercising such rights and power as though it were not the Administrative Agent, and the Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Affiliate of the Borrower as if it were not the Administrative Agent under the Loan Documents.  The term “Lender” as used herein and in all other Loan Documents, unless the context otherwise clearly requires, includes the Administrative Agent in its individual capacity as a Lender.  References in Section 2 hereof to the Administrative Agent’s Loans, or to the amount owing to the Administrative Agent for which an interest rate is being determined, refer to the Administrative Agent in its individual capacity as a Lender.

 

Section 9.3. Action by Administrative Agent.  If the Administrative Agent receives from the Borrower a written notice of an Event of Default pursuant to Section 6.1 hereof, the Administrative Agent shall promptly give the Lender written notice thereof.  Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action 

  

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hereunder with respect to any Default or Event of Default, except as expressly provided in the Loan Documents.  Upon the occurrence of an Event of Default, the Administrative Agent shall take such action to enforce its Lien on the Collateral and to preserve and protect the Collateral as may be directed by the Lender.  Unless and until the Lender gives such direction, the Administrative Agent may (but shall not be obligated to) take or refrain from taking such actions as it deems appropriate and in the best interest of all the Lenders.  In no event, however, shall the Administrative Agent be required to take any action in violation of applicable law or of any provision of any Loan Document, and the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Loan Document unless it first receives any further assurances of its indemnification from the Lender that it may require, including prepayment of any related expenses and any other protection it requires against any and all costs, expense, and liability which may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall be entitled to assume that no Default or Event of Default exists unless notified in writing to the contrary by Lender or the Borrower.  In all cases in which the Loan Documents do not require the Administrative Agent to take specific action, the Administrative Agent shall be fully justified in using its discretion in failing to take or in taking any action thereunder.  Any instructions of the Lender, or of any other group of Lenders called for under the specific provisions of the Loan Documents, shall be binding upon all the Lenders and the holders of the Obligations.  

 

Section 9.4. Consultation with Experts.  The Administrative Agent may consult with legal counsel, independent public accountants, and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

 

Section 9.5. Liability of Administrative Agent; Credit Decision.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with the Loan Documents:  (i) with the consent or at the request of the Lender or (ii) in the absence of its own bad faith, gross negligence or willful misconduct.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify:  (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document or any Credit Event; (ii) the performance or observance of any of the covenants or agreements of the Borrower or any Subsidiary contained herein or in any other Loan Document; (iii) the satisfaction of any condition specified in Section 3 hereof, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectibility hereof or of any other Loan Document or of any other documents or writing furnished in connection with any Loan Document or of any Collateral; and the Administrative Agent makes no representation of any kind or character with respect to any such matter mentioned in this sentence.  The Administrative Agent may execute any of its duties under any of the Loan Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lender, the Borrower, or any other Person for the default or misconduct of any such agents or attorneys-in-fact selected with reasonable care.  The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) believed by it to be genuine or to be sent by the proper party or parties.  In particular and without 

  

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limiting any of the foregoing, the Administrative Agent shall have no responsibility for confirming the accuracy of any compliance certificate or other document or instrument received by it under the Loan Documents.  The Administrative Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with the Administrative Agent signed by such payee in form satisfactory to the Administrative Agent.  Each Lender acknowledges that it has independently and without reliance on the Administrative Agent or any other Lender, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to the Borrower in the manner set forth in the Loan Documents.  It shall be the responsibility of each Lender to keep itself informed as to the creditworthiness of the Borrower and its Subsidiaries, and the Administrative Agent shall have no liability to any Lender with respect thereto.

 

Section 9.6. Resignation of Administrative Agent and Successor Administrative Agent.  The Administrative Agent may resign at any time by giving written notice thereof to the Lender and the Borrower.  Upon any such resignation of the Administrative Agent, the Lender shall have the right to appoint a successor Administrative Agent.  If no successor Administrative Agent shall have been so appointed by the Lender, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation then the retiring Administrative Agent may, on behalf of the Lender, appoint a successor Administrative Agent, which may be any Lender hereunder or any commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $200,000,000.  Upon the acceptance of its appointment as the Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent under the Loan Documents, and the retiring Administrative Agent shall be discharged from its duties and obligations thereunder.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 9 and all protective provisions of the other Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent, but no successor Administrative Agent shall in any event be liable or responsible for any actions of its predecessor.  

 

Section 9.7. Authorization to Enter into, and Enforcement of, the Collateral Documents.  The Administrative Agent is hereby irrevocably authorized by the Lender to execute and deliver the Collateral Documents on behalf of the Lender and their Affiliates and to take such action and exercise such powers under the Collateral Documents as the Administrative Agent considers appropriate, provided the Administrative Agent shall not amend the Collateral Documents unless such amendment is agreed to in writing by the Lender.  Lender acknowledges and agrees that it will be bound by the terms and conditions of the Collateral Documents upon the execution and delivery thereof by the Administrative Agent.  Except as otherwise specifically provided for herein, no Lender (or its Affiliates) other than the Administrative Agent shall have the right to institute any suit, action or proceeding in equity or at law for the foreclosure or other realization upon any Collateral or for the execution of any trust or power in respect of the Collateral or for the appointment of a receiver or for the enforcement of any other remedy under the Collateral Documents; it being understood and intended that no Lender (or their Affiliates) shall have any right in any manner whatsoever to affect, disturb or prejudice the Lien of the Administrative Agent (or any security trustee therefor) under the Collateral Documents by its or their action or 

  

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to enforce any right thereunder, and that all proceedings at law or in equity shall be instituted, had, and maintained by the Administrative Agent (or its security trustee) in the manner provided for in the relevant Collateral Documents for the benefit of the Lenders and their Affiliates.

 

Section 9.8. Authorization to Release Liens and Limit Amount of Certain Claims.  The Administrative Agent is hereby irrevocably authorized by the Lender to release any Lien covering any Property of the Borrower or its Subsidiaries that is the subject of a disposition that is permitted by this Agreement or that has been consented to in accordance with Section 10.11. 

 

	
  

	
Section 10.Miscellaneous.

 

Section 10.1. Withholding Taxes.  (a) Payments Free of Withholding.  Except as otherwise required by law and subject to Section 10.1(b) hereof, each payment by the Borrower under this Agreement or the other Loan Documents shall be made without withholding or deduction for or on account of any present or future taxes (other than overall net income taxes on the recipient imposed by the jurisdiction in which its principal executive office or Lending Office is located) imposed by or within the jurisdiction in which the Borrower is domiciled, any jurisdiction from which the Borrower or any other Person on behalf of the Borrower makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein.  If any such withholding is so required, the Borrower shall make the withholding or deduction, pay the amount withheld to the appropriate Governmental Authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by Lender and the Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which Lender or the Administrative Agent (as the case may be) would have received had such withholding not been made.  If the Administrative Agent or Lender pays any amount in respect of any such taxes, penalties or interest, the Borrower shall reimburse the Administrative Agent or Lender for that payment on demand in the currency in which such payment was made.  If the Borrower pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Lender or Administrative Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment.

 

Section 10.2. No Waiver, Cumulative Remedies.  No delay or failure on the part of the Administrative Agent or Lender or on the part of the holder or holders of any of the Obligations in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.  The rights and remedies hereunder of the Administrative Agent, the Lender and of the holder or holders of any of the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have.

 

Section 10.3. Non-Business Days.  If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall be due and payable.  In the case of any payment of principal falling due on a day which is not a Business Day, interest on such

  

33

  

 principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall be due and payable on the next scheduled date for the payment of interest.

 

Section 10.4. Documentary Taxes.  The Borrower agrees to pay on demand any documentary, stamp or similar taxes payable in respect of this Agreement or any other Loan Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder.

 

Section 10.5. Survival of Representations.  All representations and warranties made herein or in any other Loan Document or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any Lender or the L/C Issuer has any Commitment hereunder or any Obligations remain unpaid hereunder.

 

Section 10.6. Notices.  Except as otherwise specified herein, all notices hereunder and under the other Loan Documents shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or telecopier number set forth below, or such other address or telecopier number as such party may hereafter specify by notice to the Administrative Agent and the Borrower given by courier, by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt.  Notices under the Loan Documents to Lender shall be addressed to its address or telecopier number set forth on its Administrative Questionnaire; and notices under the Loans Documents to the Borrower or the Administrative Agent shall be addressed to their respective addresses or telecopier numbers set forth below:

	
 

to the Borrower:

 

Champion Industries, Inc.

2450 First Avenue

Huntington, West Virginia  25728

Attention:Chief Financial Officer/Todd Fry

Telephone:(304) 528-5492

Telecopy:(304) 528-6765

	
 

to the Lender and Administrative Agent:

 

Big 4 Investments, LLC

63399 Highway 51

Roseland, LA 70456

Attention:______________

Telephone:______________

Telecopy:______________

	
 

 

With a copy of any notice of any Default or Event of Default (which shall not constitute notice to the Borrower) to:

Huddleston Bolen LLP

611 Third Avenue

P.O. Box 2185

Huntington, West Virginia  25722-2185

Attention:Tom Murray

Telephone:(304) 691-8398

Telecopy:(304) 522-4312

	  

 

  

34

  

Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section or in the relevant Administrative Questionnaire and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, 5 days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section or in the relevant Administrative Questionnaire; provided that any notice given pursuant to Section 2 hereof shall be effective only upon receipt.

 

(b)Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

 

Section 10.7. Counterparts.  This Agreement may be executed in any number of counterparts, and by the different parties hereto on separate counterpart signature pages, and all such counterparts taken together shall be deemed to constitute one and the same instrument.

 

Section 10.8. Successors and Assigns; Assignments and Participations.  (a)  Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations under any Loan Document without the prior written consent of the Administrative Agent and Lender, and Lender may not assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)Assignments by Lender.  Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Loan at the time owing to it); provided that

 

(i)except in the case of an assignment of the entire remaining amount of the assigning Lender’s Loan at the time owing to it or in the case of an assignment to Lender or an Affiliate of Lender with respect to Lender, the principal outstanding balance of the Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and 

  

35

  

Assumption, as of the Trade Date) shall not be less than $1,000,000, in the case of any assignment in respect of the Term Credit, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed);

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 10.8 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

 

(c)Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lender, and the Commitment(s) of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lender may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)Participations.  Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loan owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and Lender shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment or waiver described in Section 10.11(i) and (ii) that affects such Participant.  

  

36

  

 

(e)Certain Pledges.  Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(f)Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 10.9. Amendments.  Any provision of this Agreement or the other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Lender, and (c) if the rights or duties of the Administrative Agent are affected thereby, the Administrative Agent; provided that:

 

  (i)no amendment or waiver pursuant to this Section 10.11 shall (A) reduce the amount of or postpone the date for any scheduled payment of any principal of or interest on any Loan or of any fee payable hereunder without the consent of the Lender to which such payment is owing hereunder or (B) change the application of payments set forth in Section 2.9 hereof without the consent of Lender adversely affected thereby; and 

 

Section 10.10. Heading. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

 

Section 10.11. Costs and Expenses; Indemnification.  (a) The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation, negotiation, syndication, and administration of the Loan Documents, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, in connection with the preparation and execution of the Loan Documents, and any amendment, waiver or consent related thereto, whether or not the transactions contemplated herein are consummated, together with any fees and charges suffered or incurred by the Administrative Agent in connection with periodic environmental audits, fixed asset appraisals, title insurance policies, collateral filing fees and lien searches.  The Borrower further agrees to indemnify the Administrative Agent, Lender, and their respective directors, officers, employees, agents, financial advisors, and consultants against all Damages (including, without limitation, all reasonable attorney’s fees and other expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto, or any settlement arrangement arising from or relating to any such litigation) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan, other than those which arise from the gross negligence, willful misconduct or bad faith of the party claiming indemnification.  The 

  

37

  

Borrower, upon demand by the Administrative Agent or Lender at any time, shall reimburse the Administrative Agent or such Lender for any reasonable legal or other expenses incurred in connection with investigating or defending against any of the foregoing (including any settlement costs relating to the foregoing) or in connection with any work-out, restructuring, or negotiation relating to the Loan or this Agreement, except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. The obligations of the Borrower under this Section shall survive the termination of this Agreement.

 

(b)The Borrower unconditionally agrees to forever indemnify, defend and hold harmless, and covenants not to sue for any claim for contribution against, the Administrative Agent and the Lender for any Damages, costs, loss or expense, including without limitation, response, remedial or removal costs, arising out of any of the following:  (i) any presence, release, threatened release or disposal of any hazardous or toxic substance or petroleum by the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (ii) the operation or violation of any Environmental Law, whether federal, state, or local, and any regulations promulgated thereunder, by the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (iii) any claim for personal injury or property damage in connection with the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), and (iv) the inaccuracy or breach of any environmental representation, warranty or covenant by the Borrower or any Subsidiary made herein or in any other Loan Document evidencing or securing any Obligations or setting forth terms and conditions applicable thereto or otherwise relating thereto, except for Damages arising from the willful misconduct or gross negligence of the party claiming indemnification.  This indemnification shall survive the payment and satisfaction of all Obligations and the termination of this Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim under this indemnification.  This indemnification shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of Administrative Agent and the Lenders directors, officers, employees, agents, and collateral trustees, and their successors and assigns.

 

Section 10.12. Set-off.  In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, Lender and each subsequent holder of any Obligation is hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts, and in whatever currency denominated) and any other indebtedness at any time held or owing by Lender or that subsequent holder to or for the credit or the account of the Borrower, whether or not matured, against and on account of the Obligations of the Borrower to that Lender or that subsequent holder under the Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Loan Documents, irrespective of whether or not (a) Lender or that subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans and other amounts due hereunder shall have become due and 

  

38

  

payable pursuant to Section 7 and although said obligations and liabilities, or any of them, may be contingent or unmatured.

 

Section 10.13. Entire Agreement.  The Loan Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby.

 

Section 10.14. Governing Law.  This Agreement and the other Loan Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Ohio.

 

Section 10.15. Severability of Provisions.  Any provision of any Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.  All rights, remedies and powers provided in this Agreement and the other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Agreement and other Loan Documents are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement or the other Loan Documents invalid or unenforceable.

 

Section 10.16. Excess Interest.  Notwithstanding any provision to the contrary contained herein or in any other Loan Document, no such provision shall require the payment or permit the collection of any amount of interest in excess of the maximum amount of interest permitted by applicable law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the Loans or other obligations outstanding under this Agreement or any other Loan Document (“Excess Interest”).  If any Excess Interest is provided for, or is adjudicated to be provided for, herein or in any other Loan Document, then in such event (a) the provisions of this Section shall govern and control, (b) neither the Borrower nor any guarantor or endorser shall be obligated to pay any Excess Interest, (c) any Excess Interest that the Administrative Agent or Lender may have received hereunder shall, at the option of the Administrative Agent, be (i) applied as a credit against the then outstanding principal amount of Obligations hereunder and accrued and unpaid interest thereon (not to exceed the maximum amount permitted by applicable law), (ii) refunded to the Borrower, or (iii) any combination of the foregoing, (d) the interest rate payable hereunder or under any other Loan Document shall be automatically subject to reduction to the maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in the relevant interest rate, and (e) neither the Borrower nor any guarantor or endorser shall have any action against the Administrative Agent or Lender for any Damages whatsoever arising out of the payment or collection of any Excess Interest.  Notwithstanding the foregoing, if for any period of time interest on any of Borrower’s Obligations is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on the Borrower’s Obligations shall remain at the Maximum Rate until the Lender has received the amount of interest which such Lender would 

  

39

  

have received during such period on the Borrower’s Obligations had the rate of interest not been limited to the Maximum Rate during such period.

 

Section 10.17. Construction.  The parties acknowledge and agree that the Loan Documents shall not be construed more favorably in favor of any party hereto based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of the Loan Documents.  The provisions of this Agreement relating to Subsidiaries shall apply only during such times as the Borrower has one or more Subsidiaries.  Nothing contained herein shall be deemed or construed to permit any act or omission which is prohibited by the terms of any Collateral Document, the covenants and agreements contained herein being in addition to and not in substitution for the covenants and agreements contained in the Collateral Documents.

 

Section 10.18. USA Patriot Act.   Lender hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

 

Section 10.19. Submission to Jurisdiction; Waiver of Jury Trial.  The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of Ohio and of any Ohio State court sitting in the City of Cincinnati for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby.  The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  The Borrower, the Administrative Agent  and the Lender hereby irrevocably waive any and all right to trial by jury in any legal proceeding arising out of or relating to any Loan Document or the transactions contemplated thereby.

 

Section 10.20. Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lender and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or 

  

40

  

(ii) any actual or prospective counterparty (or its advisors) to any Hedge Agreement relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.  For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries, provided that, in the case of information received from the Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Section 10.21. Amendment and Restatement.  This Agreement amends and restates the Original Credit Agreement and is not intended to be or operate as a novation or an accord and satisfaction of the Original Credit Agreement or the Obligations evidenced or provided for thereunder.  Without limiting the generality of the foregoing, the Borrower agrees that notwithstanding the execution and delivery of this Agreement and the Security Agreement, the Liens previously granted to the Administrative Agent pursuant to the Collateral Documents shall be and remain in full force and effect and that any rights and remedies of the Administrative Agent thereunder and obligations of the Borrower thereunder shall be and remain in full force and effect, shall not be affected, impaired or discharged thereby and shall secure all of the Borrower’s indebtedness, obligations and liabilities to the Administrative Agent and the Lender under the Original Credit Agreement as amended and restated hereby.  Nothing herein contained shall in any manner affect or impair the priority of the Liens created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect hereto. 

 

Section 10.22. Affirmation of Guarantors.  Each Guarantor (as defined in the Guaranty) hereby acknowledges that it has reviewed the terms and provisions of this Agreement and consents to the terms and conditions of this Agreement and any modification of the Loan Documents effected pursuant to this Agreement. Each Guarantor hereby confirms to the Lender that, after giving effect to this Agreement, the Guaranty of such Guarantor and each other Loan Document to which such Guarantor is a party continues in full force and effect and is the legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability. Each Guarantor further acknowledges, confirms and agrees that Administrative Agent and the Lender have and shall continue to have a valid, enforceable and perfected first-priority lien (subject only to Permitted Liens) upon and security interest in the Collateral granted to Administrative Agent and the Lender pursuant to the Loan Documents or otherwise granted to or held by Administrative Agent and the Lender.

  

41

  

 

[Signature Pages to Follow]

  

42

  

 

This Agreement is entered into between us for the uses and purposes hereinabove set forth as of the date first above written.

 

	
  

	
“Borrower”

 

	
  

	
Champion Industries, Inc.

 

 

 

	 	By /s/ Marshall T. Reynolds
	 	Name: Marshall T. Reynolds
	 	Title: Chairman of the Board

 

  

S-1  

  

“Guarantors”

The Chapman Printing Company,   Inc., a West Virginia corporation

Stationers, Inc., a West Virginia corporation

Bourque Printing, Inc., a Louisiana corporation

Dallas Printing of MS, Inc., a Mississippi corporation

Carolina Cut Sheets, Inc., a West Virginia corporation

Donihe Graphics, Inc., a Tennessee corporation 

Smith & Butterfield Co., Inc., an Indiana corporation

The Merten Company, an Ohio corporation

Interform Corporation, a Pennsylvania corporation

CHMP Leasing, Inc., a West Virginia corporation 

Blue Ridge DISPOSITION Co., Inc., a North Carolina corporation

Capitol Business Equipment , Inc., a West Virginia corporation

Thompson’s of Morgantown, Inc., a West Virginia corporation

Independent Printing Service, Inc., an Indiana corporation 

Diez Business Machines, Inc., a Louisiana corporation 

Transdata Systems, Inc., a Louisiana corporation 

Syscan Corporation, a West Virginia corporation

Champion Publishing, Inc., a West Virginia corporation

  

	 	By /s/ Todd R. Fry
	 	Name: Todd R. Fry
	 	Title: Vice-President

 

  

  

 S-2 

	 	
“SHAREHOLDER”

 

	
  

	
 

 

 

 

	 	 /s/ Marshall T. Reynolds
	 	 Marshall  T. Reynolds
	 	 

 

 

 

  

  

	
  

	
“Lender”

 

	
  

	
BIG 4 INVESTMENTS, LLC, as a Lender, and as Administrative Agent

 

 

	 	By /s/ Edgar Ray Smith, III
	 	Name: Edgar Ray Smith, III
	 	Title: Member

  

S-3  

  

Exhibit A

 

term note a

  

  

  

 

Schedule 5.9

 

 

Subsidiaries

 

	
Name

	
Jurisdiction of Organization

	
Percentage Ownership

	
Owner

	
The Chapman Printing Company, Inc.

	
West Virginia (qualified in Kentucky)

	
100%

	
Champion Industries, Inc.

	
Stationers, Inc.

	
West Virginia

	
100%

	
Champion Industries, Inc.

	
Bourque Printing, Inc.

	
Louisiana

	
100%

	
Champion Industries, Inc.

	
Dallas Printing of MS, Inc.

	
Mississippi

	
100%

	
Champion Industries, Inc.

	
Carolina Cut Sheets, Inc.

	
West Virginia

	
100%

	
Champion Industries, Inc.

	
Donihe Graphics, Inc.

	
Tennessee

	
100%

	
Champion Industries, Inc.

	
Smith & Butterfield Co., Inc.

	
Indiana

	
100%

	
Champion Industries, Inc.

	
The Merten Company

	
Ohio

	
100%

	
Champion Industries, Inc.

	
Interform Corporation

	
Pennsylvania

	
100%

	
Champion Industries, Inc.

	
CHMP Leasing, Inc.

	
West Virginia

	
100%

	
Champion Industries, Inc.

	
Blue Ridge Disposition, Inc.

	
North Carolina

	
100%

	
Champion Industries, Inc.

	
Capitol Business Equipment, Inc.

	
West Virginia

	
100%

	
Stationers, Inc.

	
Thompson’s of Morgantown, Inc.

	
West Virginia

	
100%

	
Stationers, Inc.

	
Independent Printing Service, Inc.

	
Indiana

	
100%

	
Smith & Butterfield Co., Inc.

	
Diez Business Machines, Inc.

	
Louisiana

	
100%

	
Stationers, Inc.

	
Transdata Systems, Inc.

	
Louisiana

	
100%

	
Bourque Printing, Inc.

	
Syscan Corporation

	
West Virginia

	
100%

	
Champion Industries, Inc.

	
Champion Publishing, Inc.

	
West Virginia

	
100%

	
Champion Industries, Inc.

 

Schedule A

 

Locations

	
Column 1

	
Column 2

	
Column 3

	
Name of Debtor  (and State of Organization and Organizational Registration Number)

	
Chief Executive Office (and name of record owner of such Location)

	
Additional Places of Business and Collateral Locations (and name of record owner of such Locations)

	
Champion Industries, Inc., a West Virginia corporation (None)

	
2450 1st Avenue

Huntington, WV  25703

(ADJ Corp.)

	
405 Ann Street

Parkersburg, WV

(Printing Property Corp.)

	  	  	
3000 Washington St.

Charleston, WV

(ADJ Corp.)

	  	  	
951 Point Marion Rd.

Morgantown, WV

(Sans LLC)

	  	  	
120 Hills Plaza

Charleston, WV

(White Properties No. II LLC)

	  	  	
1563 Hansford St.

Charleston, WV

(Champion Industries, Inc.)

	  	  	
700 North Fourth St. 

Clarksburg, WV

(Champion Industries, Inc.)

	
The Chapman Printing Company, Inc., a West Virginia corporation

(None)

	
2450 1st Avenue

Huntington, WV  25703

(ADJ Corp)

	
None

	  	  	
None

	
Stationers, Inc., a West Virginia corporation

(None)

	
1945 5th Avenue

Huntington, WV  25703

(The Harrahs and Reynolds Corporation)

	
700 North Fourth Street

Clarksburg, WV  

(Champion Industries, Inc.)

	  	  	
615 Fourth Avenue

Huntington, WV  

(The Harrah and Reynolds Corporation)

	  	  	
617-619 Fourth Avenue

Huntington, WV

(ADJ Corp.)

	
Bourque Printing, Inc., a Louisiana corporation

(29814230D)

	
10848 Airline Highway

Baton Rouge, LA  70816

(Bourque Printing, Inc.)

	
13112 South Choctaw Drive

Baton Rouge, LA

(Bourque Printing, Inc.)

	  	  	
1593 River Oaks Drive

Harahan, LA

(Blessey Enterprises, Inc.)

	
Dallas Printing of MS, Inc., a Mississippi corporation

(406362)

	
10848 Airline Highway

Baton Rouge, LA  70816

(Bourque Printing, Inc.)

	
None

	
Carolina Cut Sheets, Inc., a West Virginia corporation (None)

	
2450 1st Avenue

Huntington, WV  25703

(ADJ Corp.)

	
None

	
Donihe Graphics, Inc., a Tennessee corporation (0302141)

	  	
None

	
Smith & Butterfield Co., Inc., an Indiana corporation

(198010-815)

	
2800 Lynch Road

Evansville, IN  47711

(Randall M. Schulz, Trustee U/A dated July 31, 1976, executed by Ruth Lane Butterfield, as Trustee, creating “The Butterfield Family Trust No. 2”)

	
None

	
The Merten Company, an Ohio corporation

(945374)

	  	
None

	
Interform Corporation, a Pennsylvania corporation (117194)

	
c/o Champion Industries, Inc.

2450 1st Avenue

Huntington, WV  25703

	
None

	
CHMP Leasing, Inc., a West Virginia corporation

(None)

	
2450 1st Avenue

Huntington, WV  25703

(ADJ Corp.)

	
None

	
Blue Ridge Disposition, Inc., a North Carolina corporation

(0014339)

	  	
None

	
Capitol Business Equipment, Inc., a West Virginia corporation 

(None)

	
711 Indiana Avenue

Charleston, WV  25302

(Capitol Business Equipment, Inc.)

	
1214 Main Street

Wheeling, WV  26003

(Contract Development, Inc.)

	
Thompson’s of Morgantown, Inc., a West Virginia corporation

(None)

	
1945 5th Avenue

Huntington, WV  25703

(The Harrah and Reynolds Corporation)

	
None

	
Independent Printing Service, Inc., an Indiana corporation

(1990090099)

	
2800 Lynch Road

Evansville, IN  47711

(Randall M. Schulz, Trustee U/A dated July 31, 1976, executed by Ruth Lane Butterfield, as Trustee, creating “The Butterfield Family Trust No. 2”

	
None

	
Diez Business Machines, Inc., a Louisiana corporation (32421590D)

	
10848 Airline Highway

Baton Rouge, LA  70816

(Bourque Printing, Inc.)

	
None

	
Transdata Systems, Inc., a Louisiana corporation (34374117D)

	
10848 Airline Highway

Baton Rouge, LA  70816

(Bourque Printing, Inc.)

	
None

	
Syscan Corporation, a West Virginia corporation

(None)

	
3000 Washington Street

Charleston, WV  25312

(Williams Land Corporation)

	  
	
Champion Publishing, Inc., a West Virginia corporation (94781)

	
2450 1st Avenue

Huntington, WV  25703

(ADJ Corp.)

	  
	  	  	  
	  	  	  

  

  

  

Schedule B

 

Other Names

 

	
  

	
A.Prior Legal Names

	
Name of Debtor

	
Prior Legal Name

	
Champion Industries, Inc.

	
None

	
The Chapman Printing Company, Inc.

	
None

	
Stationers, Inc.

	
None

	
Bourque Printing, Inc.

	
None

	
Dallas Printing of MS, Inc.

	
Dallas Printing Company, Inc.

	
Carolina Cut Sheets, Inc.

	
None

	
Donihe Graphics, Inc.

	
None

	
Smith & Butterfield Co., Inc.

	
None

	
The Merten Company

	
None

	
Interform Corporation

	
None

	
CHMP Leasing, Inc.

	
None

	
Blue Ridge Disposition, Inc.

	
Blue Ridge Printing Co., Inc.

	
Capitol Business Equipment, Inc.

	
None

	
Thompson’s of Morgantown, Inc.

	
None

	
Independent Printing Service, Inc.

	
None

	
Diez Business Machines, Inc.

	
None

	
Transdata Systems, Inc.

	
Docutec of Louisiana, Inc. (3/1/1994)

	
Syscan Corporation

	
None

	
Champion Publishing, Inc.

	
None

 

	
  

	
B.Trade Names

	
Name of Debtor

	
Tradename

	
Champion Industries, Inc.

	
Chapman Printing Company

	  	
Champion Output Solutions

	  	
U.S. Tag & Ticket

	
The Chapman Printing Company, Inc.

	
None

	
Stationers, Inc.

	
None

	
Bourque Printing, Inc.

	
Champion Graphic Communications

	
Dallas Printing of MS, Inc.

	
None

	
Carolina Cut Sheets, Inc.

	
None

	
Donihe Graphics, Inc.

	
None

	
Smith & Butterfield Co., Inc.

	
None

	
The Merten Company

	
None

	
Interform Corporation

	
Interform Solutions

	  	
Consolidated Graphic Communications

	
CHMP Leasing, Inc.

	
None

	
Blue Ridge Disposition, Inc.

	
None

	
Capitol Business Equipment, Inc.

	
Capitol Business Interiors

	
Thompson’s of Morgantown, Inc.

	
None

	
Independent Printing Service, Inc.

	
None

	
Diez Business Machines, Inc.

	
None

	
Transdata Systems, Inc.

	
None

	
Syscan Corporation

	
None

	
Champion Publishing, Inc.

	
The Huntington Herald-Dispatch

	  	
River Cities Printing

	  	
The Lawrence Herald

	  	
Putnam Herald

 

 

  

  

  

Schedule D

 

Real Estate Legal Descriptions

 

	
  

	
1.1563 Hansford Street, Charleston, WV - Champion Industries, Inc.

(See Schedule D-1 attached hereto)

 

	
  

	
2.711 Indiana Avenue, Charleston, WV - Capitol Business Equipment, Inc.

(See Schedule D-3 attached hereto)

 

	
  

	
3.700 N. Fourth Street, Clarksburg, WV - Champion Industries, Inc.

(See Schedule D-4 attached hereto)

 

	
  

	
4.INTENTIONALLY OMITTED

 

	
  

	
5.INTENTIONALLY OMITTED

 

	
  

	
6.INTENTIONALLY OMITTED

 

	
  

	
7.10848 Airline Highway, Baton Rouge, LA - Bourque Printing, Inc.

(See Schedule D-9 attached hereto)

 

	
  

	
8.13112 South Choctaw, Baton Rouge, LA - Bourque Printing, Inc.

(See Schedule D-10 attached hereto)

 

	
  

	
9.2450 1st Avenue, Huntington, WV - Champion Industries, Inc.

(See Schedule D-11 attached hereto)

 

	
  

	
10.405 Ann Street, Parkersburg, WV - Champion Industries, Inc.

(See Schedule D-12 attached hereto)

 

	
  

	
11.120 Hills Plaza, Charleston, WV - Champion Industries, Inc.

(See Schedule D-13 attached hereto)

 

	
  

	
12.INTENTIONALLY OMITTED

 

	
  

	
13.INTENTIONALLY OMITTED

 

 

	
  

	
14.INTENTIONALLY OMITTED

 

No Debtor owns fixtures at any location other than those listed above

  

  

  

Schedule E

 

Investment Property and Deposit Accounts

 

 

	
  

	
A.Investment Property (including Subsidiary Interests)

 

	
  

	
1.Subsidiary Interests:

	
Debtor

	
Issuer

	
Shares

(Certificate No.)

	
% Ownership

	
Champion Industries, Inc.

	
The Chapman Printing Company, Inc.

	
100 shares (A-2)

	
100%

	
Champion Industries, Inc.

	
Stationers, Inc.

	
584 shares (5)

	
100%

	
Champion Industries, Inc.

	
Bourque Printing, Inc.

	
3 shares (7)

	
100%

	
Champion Industries, Inc.

	
Dallas Printing of MS, Inc.

	
40,000 shares (5)

	
100%

	
Champion Industries, Inc.

	
Carolina Cut Sheets, Inc.

	
100 shares (1)

	
100%

	
Champion Industries, Inc.

	
Donihe Graphics, Inc.

	
641 shares (2)

	
100%

	
Champion Industries, Inc.

	
Smith & Butterfield Co., Inc.

	
500 shares (6)

	
100%

	
Champion Industries, Inc.

	
The Merten Company

	
100 shares (2) 

	
100%

	
Champion Industries, Inc.

	
Interform Corporation

	
10,000 shares (15)

	
100%

	
Champion Industries, Inc.

	
CHMP Leasing, Inc.

	
100 shares (1)

	
100%

	
Champion Industries, Inc.

	
Blue Ridge Printing Co., Inc.

	
550 shares (12)

	
100%

	
Stationers, Inc.

	
Capitol Business Equipment, Inc.

	
1,275 shares (76)

	
100%

	
Stationers, Inc.

	
Thompson’s of Morgantown, Inc.

	
200 shares (5)

	
100%

	
Smith & Butterfield Co., Inc.

	
Independent Printing Service, Inc.

	
100 shares (4)

	
100%

	
Stationers, Inc.

	
Diez Business Machines, Inc.

	
100 shares (9)

	
100%

	
Bourque Printing, Inc.

	
Transdata Systems, Inc.

	
600 shares (4)

	
100%

	
Champion Industries, Inc.

	
Syscan Corporation

	
51.55 shares (2)

	
100%

	
Champion Industries, Inc.

	
Champion Publishing, Inc.

	
1,000 shares (1)

	
100%

 

2.Other Investment Property:

 

None

 

	
  

	
B.Deposit Accounts

	
Debtor

	
Depository Institution

	
Account Number

	
Champion Industries, Inc.

	
United Bank

	
---------

	
Champion Industries, Inc.

	
Regions Bank

	
----------

	
Champion Industries, Inc.

	
First Tennessee Bank

	
-------

 

All deposit accounts of each Debtor held at Fifth Third Bank

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