Document:

Exhibit 10.24

 

GUARANTEE AGREEMENT

 

GUARANTEE AGREEMENT, dated as of April      , 2012 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guarantee”), made by ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland corporation (“Guarantor”) having its principal place of business c/o Ares Management LLC, 2 North LaSalle Street, 9th Floor, Chicago, IL  60602, in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Buyer”) and any of its parent, subsidiary or affiliated companies (collectively, “Beneficiary”).

 

RECITALS

 

Pursuant to that certain Master Repurchase and Securities Contract, dated as of December 14, 2011 (the “Original Repurchase Agreement”) between Wells Fargo Bank, National Association (as “Buyer”) and ACRC Lender W LLC (“Seller”), as amended pursuant to Amendment No. 1 to Master Repurchase and Securities Contract between Buyer and Seller dated April      , 2012 (as further amended, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), Seller agreed to sell, from time to time, to Buyer certain Whole Loans and Senior Interests, each as defined in the Repurchase Agreement (collectively, the “Purchased Assets”), upon the terms and subject to the conditions as set forth therein.

 

Pursuant to the terms of that certain Custodial Agreement, dated as of December 14, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Custodial Agreement”), by and between Wells Fargo Bank, National Association (“Custodian”), Buyer and Seller, Custodian is required to take possession of the Purchased Assets, along with certain other documents specified in the Custodial Agreement, as Custodian of Buyer and any future purchaser, on several delivery dates, in accordance with the terms and conditions of the Custodial Agreement.  The Repurchase Agreement, the Custodial Agreement, this Guarantee and any other agreements executed in connection with the Repurchase Agreement and the Custodial Agreement shall be referred to herein as the “Repurchase Documents”.

 

In connection with the execution and delivery by the parties thereto of the Original Repurchase Agreement, ACRC Holdings LLC, a Delaware limited liability company, (“Original Guarantor”) executed and delivered to Buyer a Guarantee Agreement dated as of December 14, 2011 (the “Original Guarantee”).

 

As a condition precedent to the Buyer’s entering into the amended Repurchase Agreement, (i) Beneficiary is releasing all claims against Original Guarantor under the Original Guarantee, and (ii) Guarantor is executing and delivering this Guarantee to Buyer.

 

In addition thereto, it is a condition to Buyer purchasing the Purchased Assets that Guarantor shall have executed and delivered this Guarantee in favor of Beneficiary with respect to the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following: (a) all payment obligations owing by Seller to Buyer under or in connection with the Repurchase Agreement and any other Repurchase Documents; (b) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all expenses, including, without limitation, reasonable attorneys’ fees and

 

 

disbursements, that are incurred by Buyer in the enforcement of any of the foregoing or any obligation of Guarantor hereunder; (d) any other obligations of Seller with respect to Buyer under each of the Repurchase Documents; and (e) if Interim Servicer is an Affiliate of either Seller or Guarantor, the timely delivery by Interim Servicer of Income into the Waterfall Account in accordance with the applicable provisions of the Repurchase Agreement including, without limitation, Section 5.01 thereof (collectively, the “Obligations”).

 

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Repurchase Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer as follows:

 

1.            Defined Terms.  Unless otherwise defined herein, terms which are defined in the Repurchase Agreement and used herein are so used as so defined.

 

“Cash or Cash Equivalents”:  All unencumbered cash, together with any and all of the following, in each case to the extent owned by Guarantor or any of its Subsidiaries free and clear of all Liens and having a maturity of not greater than ninety (90) days from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States, (b) certificates of deposit of or time deposits with Buyer or a member of the Federal Reserve System that issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United states or any State thereof and has combined capital and surplus of at least $500,000,000, (c) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P, (d) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (e) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A2 by Moody’s, (f) securities with maturities of ninety (90) days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.

 

“Debt Service”:  For any Test Period, the sum, determined on a consolidated basis, of (a) Interest Expense for Guarantor for such period, and (b) all regularly scheduled principal payments made with respect to Indebtedness of Guarantor and its Subsidiaries during such period, other than any voluntary prepayment or prepayment occasioned by the repayment of an underlying asset, or any balloon, bullet, margin or similar principal payment which repays such Indebtedness in full.

 

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“Fixed Charge Coverage Ratio”:  With respect to Guarantor at any time, the EBITDA (as determined in accordance with GAAP) for the related Test Period, divided by the Fixed Charges for such Test Period.

 

“Fixed Charges”:  With respect to Guarantor at any time, the sum, determined on a consolidated basis, of (a) Debt Service, (b) all preferred dividends that Guarantor is required, pursuant to the terms of the certificate of designation or other similar document governing the rights of preferred shareholders, to pay and is not permitted to defer, (c) Capital Lease Obligations paid or accrued during such period, (d) capital expenditures (if any), and (e) any amounts payable under any Ground Lease.

 

“Investment Securities”:  Any of the following, but only to the extent approved by Buyer in its sole discretion:

 

(a)          negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of less than one year;

 

(b)          negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of one to ten years; and

 

(c)          negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of more than ten years.

 

“Liquidity”:  With respect to Guarantor and any date, the total amount of (a) Cash or Cash Equivalents held by Guarantor, plus (b) the aggregate Market Value of all unencumbered Investment Securities of Guarantor, determined on a consolidated basis.

 

“Tangible Net Worth”:  With respect to Guarantor at any time, determined on a consolidated basis, all amounts that would be included under capital or shareholder’s equity (or any like caption) on the balance sheet of Guarantor, minus (a) amounts owing to Guarantor from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b) intangible assets, and (c) prepaid taxes and/or expenses, plus deferred origination fees, net of deferred origination costs, all on or as of such date.

 

“Test Period”:  The time period from the first day of each calendar quarter, through and including the last day of such calendar quarter.

 

“Total Assets”:  With respect to Guarantor and any date, an amount, determined on a consolidated basis, equal to the aggregate book value of all assets owned by Guarantor on a consolidated basis and the proportionate share of assets owned by all non-consolidated Subsidiaries of Guarantor, less (a) amounts owing to Guarantor from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with Guarantor or any Affiliate thereof, (b) intangible assets (other than Interest Rate Protection Agreements specifically related to the Purchased Assets), and (c) prepaid taxes and expenses, plus deferred origination fees, net of deferred origination costs, all on or as of such date.

 

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“Total Indebtedness”:  With respect to Guarantor and any date, all amounts of Indebtedness and Non-Recourse Indebtedness of Guarantor, on or as of such date, determined on a consolidated basis.

 

2.            Guarantee.  (a)  Guarantor hereby unconditionally and irrevocably guarantees to Beneficiary the prompt and complete payment and performance by Seller when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

 

(b)             Notwithstanding anything herein to the contrary, but subject to clause (c) below, the maximum liability of Guarantor hereunder and under the Repurchase Documents shall in no event exceed the sum of (x) twenty-five percent (25%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets consisting of Core Assets, (y) one-hundred percent (100%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets consisting of Flex Assets, and (z) one hundred percent (100%) of all of the Obligations described in clause (e) of the definition thereof.

 

(c)          Notwithstanding the foregoing, the limitation on recourse liability as set forth in both of clauses (x) and (y) of subsection (b) above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Obligations shall be fully recourse to Seller and Guarantor, jointly and severally, upon the occurrence of any of the following:

 

(i)            a voluntary bankruptcy or insolvency proceeding is commenced by Seller under the U.S. Bankruptcy Code or any similar federal or state law;

 

(ii)           an involuntary bankruptcy or insolvency proceeding is commenced against Seller, or Guarantor in connection with which Seller, Guarantor or any Affiliate of any of the foregoing has or have colluded in any way with the creditors commencing or filing such proceeding; or

 

(iii)          fraud or intentional misrepresentation by Seller, Guarantor,  or any other Affiliate of Seller or Guarantor in connection with the execution and the delivery of this Guarantee, the Repurchase Agreement, or any of the other Repurchase Documents, or any certificate, report, financial statement or other instrument or document furnished to Buyer at the time of the closing of the Repurchase Agreement or during the term of the Repurchase Agreement.

 

(d)          In addition to the foregoing and notwithstanding the limitation on recourse liability set forth in both of clauses (x) and (y) of subsection (b) above, Guarantor shall be liable for any losses, costs, claims, expenses or other liabilities incurred by Buyer arising out of or attributable to the following items:

 

(i)            any material breach of the separateness covenants set forth in Article 9 of the Repurchase Agreement; and

 

(ii)           any material breach of any representations and warranties by Guarantor contained in any Repurchase Document and any material breach by Seller or Guarantor, or any of their respective Affiliates, of any representations and warranties relating to Environmental Laws, or any indemnity for costs incurred in connection with

 

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the violation of any Environmental Law, the correction of any environmental condition, or the removal of any Materials of Environmental Concern, in each case in any way affecting Seller’s or Guarantor’s properties or any of the Purchased Assets.

 

(e)          Nothing herein shall be deemed to be a waiver of any right which Buyer may have under Section 506(a), 506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness secured by the Repurchase Agreement or to require that all collateral shall continue to secure all of the indebtedness owing to the Buyer in accordance with the Repurchase Agreement or any other Repurchase Documents.

 

(f)           Guarantor further agrees to pay any and all reasonable expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by Beneficiary in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee.  This Guarantee shall remain in full force and effect until the Obligations are satisfied or paid in full, notwithstanding that from time to time prior thereto Seller may be free from any Obligations.

 

(g)          No payment or payments made by Seller or any other Person or received or collected by Beneficiary from Seller or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder which shall, notwithstanding any such payment or payments, remain liable for the amount of the Obligations until the Obligations are paid in full.

 

(h)          Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to Beneficiary on account of Guarantor’s liability hereunder, Guarantor will notify Buyer in writing that such payment is made under this Guarantee for such purpose.

 

3.            Subrogation.  Upon making any payment hereunder, Guarantor shall be subrogated to the rights of Buyer against Seller and any collateral for any Obligations with respect to such payment; provided that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation until all amounts due and payable by Seller to Buyer under the Repurchase Documents or any related documents have been paid in full; and further provided that such subrogation rights shall be subordinate in all respects to all amounts owing to the Buyer under the Repurchase Documents.

 

4.            Amendments, etc. with Respect to the Obligations.  Until the Obligations shall have been paid or performed in full, and subject to the provisions of Section 11 of this Guarantee, Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by Buyer may be rescinded by Buyer and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Buyer, and any Repurchase

 

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Document and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.  Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto.  When making any demand hereunder against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on Seller or any other guarantor, and any failure by Buyer to make any such demand or to collect any payments from Seller or any such other guarantor or any release of Seller or such other guarantor shall not relieve Guarantor of its Obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

5.            Guarantee Absolute and Unconditional.  (a)  Guarantor hereby agrees that its obligations under this Guarantee constitute a guarantee of payment when due and not of collection.  Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee; and all dealings between Seller or Guarantor, on the one hand, and Beneficiary, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee.  Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or Guarantor with respect to the Obligations.  This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Agreement, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Beneficiary, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against Beneficiary, (iii) any requirement that Beneficiary exhaust any right to take any action against Seller or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guarantee or (iv) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Obligations or of Guarantor under this Guarantee, in bankruptcy or in any other instance.  When pursuing its rights and remedies hereunder against Guarantor, Beneficiary may, but shall be under no obligation, to pursue such rights and remedies that Beneficiary may have against Seller or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Beneficiary to pursue such other rights or remedies or to collect any payments from Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Beneficiary against Guarantor.  This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns thereof, and shall inure to the benefit of Beneficiary, and its successors, endorsees, transferees and assigns,

 

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until all of the Obligations shall have been satisfied in full, notwithstanding any sale by Buyer of any Purchased Asset as set forth in Article 10 of the Repurchase Agreement or the exercise by Buyer of any of the other rights and remedies set forth in any of the Repurchase Documents.

 

(b)        Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Beneficiary as follows:

 

(i)     Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Beneficiary which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against Seller, or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to proceed against Seller against any other guarantor, or against any other person or security.

 

(ii)    Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.  Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about each of Seller’s financial condition, the status of other guarantors, if any, of circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Beneficiary or any Beneficiary for any such information.  Absent a written request for such information by Guarantor to Beneficiary, Guarantor hereby waives the right, if any, to require Beneficiary to disclose to Guarantor any information which Beneficiary may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.

 

(iii)   Guarantor has independently reviewed the Repurchase Documents and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guarantee to Beneficiary, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any liens or security interests of any kind or nature granted by Seller or any other guarantor to Buyer or any Buyer, now or at any time and from time to time in the future.

 

6.               Reinstatement.  This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of Seller or any substantial part of Seller’s property, or otherwise, all as though such payments had not been made.

 

7.               Payments.  Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars at the address specified in writing by Buyer.

 

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8.         Representations and Warranties.  Guarantor represents and warrants that:

 

(a)        Guarantor has the legal capacity and the legal right to execute and deliver this Guarantee and to perform Guarantor’s obligations hereunder;

 

(b)        no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other Person (including, without limitation, any creditor of Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee;

 

(c)        this Guarantee has been duly executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law);

 

(d)        the execution, delivery and performance of this Guarantee will not violate any law, treaty, rule or regulation or determination of an arbitrator, a court or other governmental authority, applicable to or binding upon Guarantor or any of its property or to which Guarantor or any of its property is subject (“Requirement of Law”), or any provision of any security issued by Guarantor or of any agreement, instrument or other undertaking to which Guarantor is a party or by which it or any of its property is bound (“Contractual Obligation”), and will not result in or require the creation or imposition of any lien on any of the properties or revenues of Guarantor pursuant to any Requirement of Law or Contractual Obligation of Guarantor;

 

(e)        no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the Knowledge of Guarantor, threatened by or against Guarantor or against any of Guarantor’s properties or revenues with respect to this Guarantee or any of the transactions contemplated hereby; and

 

(f)         except as disclosed in writing to Buyer prior to the date hereof, Guarantor has filed or caused to be filed all tax returns which, to the Knowledge of Guarantor, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against him or any of Guarantor’s property and all other taxes, fees or other charges imposed on him or any of Guarantor’s property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings); no tax lien has been filed, and, to the Knowledge of Guarantor, no claim is being asserted, with respect to any such tax, fee or other charge.

 

Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date of each Transaction under the Repurchase Agreement, on and as of such date of the Transaction, as though made hereunder on and as of such date.

 

9.         Covenants.

 

(a)        Total Indebtedness to Total Assets Ratio.  Guarantor shall not permit the ratio of its Total Indebtedness (excluding all Contingent Liabilities) to its Total Assets for any

 

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Test Period (calculated on a consolidated basis) to be greater than 0.75 (seventy-five percent, 75%), with compliance to be tested as of the end of each Test Period.

 

(b)        Minimum Liquidity.  Guarantor shall not at any time permit its Liquidity to be less than the greater of (i) $20,000,000, or (ii) five percent (5%) of the Tangible Net Worth of Guarantor.

 

(c)        Fixed Charge Coverage Ratio.  Commencing with the calendar quarter ending on June 30, 2012, Guarantor shall not permit its Fixed Charge Coverage Ratio for any Test Period to be less than 1.50 to 1.00, with compliance to be tested as of the end of each Test Period.

 

(d)        Tangible Net Worth.  Guarantor shall not permit its Tangible Net Worth to be less than the sum of (i) $24,000,000, plus (ii) eighty percent (80%) of the total amount of all equity capital raised by Guarantor in connection with its initial public offering as a REIT within thirty (30) calendar days from the launch date of such initial public offering, plus (iii) eighty percent (80%) of the net proceeds (after the deduction of all related transaction costs) of all subsequent issuances of equity by Guarantor, with compliance to be tested as of the end of each Test Period.  Seller shall confirm the amount of Guarantor’s Tangible Net Worth as of the date of this Guarantee, in writing in a Compliance Certificate executed and delivered to Buyer on April     , 2012.

 

10.       Severability.  Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

11.       Paragraph Headings.  The paragraph headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

12.       No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by Buyer of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Buyer would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

 

13.       Waivers and Amendments; Successors and Assigns; Governing Law.  None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer, provided

 

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that, subject to any limitations set forth in the Repurchase Agreement, any provision of this Guarantee may be waived by Buyer in a letter or agreement executed by Buyer or by telex or facsimile transmission from Buyer.  This Guarantee shall be binding upon the heirs, personal representatives, successors and assigns of Guarantor and shall inure to the benefit of Buyer, and their respective successors and assigns.  THIS GUARANTEE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS GUARANTEE, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

14.       Notices.  Notices by Buyer to Guarantor may be given by mail, or by telecopy transmission, addressed to Guarantor at the address or transmission number set forth under its signature below and shall be effective (a) in the case of mail, five days after deposit in the postal system, first class certified mail and postage pre-paid, (b) one Business Day following timely delivery to a nationally recognized overnight courier service for next Business Day delivery and (c) in the case of telecopy transmissions, when sent, transmission electronically confirmed if prior to 5:00 p.m. local recipient time on a Business Day, and otherwise on the next succeeding Business Day.  Notices to Buyer by Guarantor may be given in the manner set forth in the Repurchase Agreement.

 

15.       SUBMISSION TO JURISDICTION; WAIVERS.  EACH OF GUARANTOR AND BENEFICIARY HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(A)       SUBMITS FOR GUARANTOR AND GUARANTOR’S PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND THE OTHER REPURCHASE DOCUMENTS TO WHICH GUARANTOR IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

 

(B)       CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

(C)       AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING UNDER THIS GUARANTEE MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT SUCH PARTY’S ADDRESS, AS SET FORTH UNDER GUARANTOR’S SIGNATURE BELOW, WITH

 

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RESPECT TO DELIVERIES SENT TO GUARANTOR, OR, WITH RESPECT TO DELIVERIES SENT TO BUYER, AT THE ADDRESS SET FORTH IN THE REPURCHASE AGREEMENT, OR, IN EITHER CASE, AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND

 

(D)       AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

16.       Integration.  This Guarantee represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer or any Buyer relative to the subject matter hereof not reflected herein.

 

17.       Acknowledgments.  Guarantor hereby acknowledges that:

 

(a)        Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the related documents;

 

(b)        neither Buyer nor any Beneficiary has any fiduciary relationship to Guarantor, and the relationship between Beneficiary and Guarantor is solely that of surety and creditor; and

 

(c)        no joint venture exists between or among any of Buyer, the Beneficiary, Guarantor and Seller.

 

18.       WAIVERS OF JURY TRIAL.  EACH OF GUARANTOR AND BENEFICIARY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

 

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the undersigned has caused this Guarantee Agreement to be duly executed and delivered as of the date first above written.

 

 

	
 
    	
ARES COMMERCIAL REAL ESTATE 
   CORPORATION, a Maryland
   corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

Address for Notices:

 

Ares Commercial Real Estate Corporation

c/o Ares Management LLC

2 North LaSalle Street, 9th Floor

Chicago, IL 60602

Attention:  Sharon L. Ephraim

 

Ares Commercial Real Estate Corporation

c/o Ares Management LLC

2 North LaSalle Street, 9th Floor

Chicago, IL 60602

Attention:  Legal Department

 

With a copy to:

 

David M. Stewart, Esq. (030205-0128)

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022eBay 033112_Q1 10Q Ex10.02

 Exhibit 10.02
 
 

 

GSI Commerce, Inc.
2010 Equity Incentive Plan 
Amended and Restated Performance Award Agreement 
	
						
	 
	 

	PARTICIPANT:
	Christopher Saridakis

	 
	 

	GRANT DATE:
	June 16, 2011

	 
	 

	MAXIMUM PERFORMANCE AWARD:
	$30 million

	 
	 

	PERFORMANCE PERIODS:
	Four consecutive annual Performance Periods, beginning with the 2012 calendar year and ending with the 2015 calendar year

	 
	 

	THIS AGREEMENT, effective as of the Grant Date set forth above, and amended and restated on March 28, 2012, is between GSI Commerce, Inc., a Delaware corporation (the “Company”, “we”, “our” or “us”), and the Participant named above (“you” or “yours”), pursuant to the provisions of the Company's 2010 Equity Incentive Plan (the “Plan”) with respect to the award (the “Award”) specified above.  Capitalized terms used and not defined in this Amended and Restated Performance Award Agreement (this “Agreement”) shall have the meanings given to them in the Plan.

	 
	 

	By accepting this Agreement, you irrevocably agree, on your own behalf and on behalf of your heirs and any other person claiming rights under this Agreement, to all of the terms and conditions of the Award as set forth in or pursuant to this Agreement and the Plan (as such may be amended from time to time).  
You and the Company agree that the Award is being granted in full satisfaction of the Company's obligations to you pursuant to Section 3.5 of the Employment Agreement between you and the Company, dated March 23, 2010 (the “Employment Agreement”); provided that the performance period and performance conditions are modified herein to reflect the acquisition of the Company by eBay Inc., a Delaware corporation (“eBay”), pursuant to the merger of Gibralter Acquisition Corp, a Delaware corporation and a wholly owned subsidiary of eBay (“Merger Sub”), with and into the Company (the “Merger”), pursuant to the terms of the Agreement and Plan of Merger among eBay, Merger Sub and the Company, dated as of March 27, 2011 (the “Merger Agreement”).    
You and the Company agree as follows: 

	 
	 

	1
	Application of Plan; Administration
	 
	This Agreement and your rights under this Agreement are subject to all the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Compensation Committee of the Board of Directors of the Company (the “Board”) may adopt.  It is expressly understood that the Compensation Committee of the Board is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon you to the extent permitted by the Plan.

	 
	 
	 
	 

	
						
	2
	Performance Goal and Award Amount
	 
	The Award shall be earned over four separate annual Performance Periods (each a “Performance Period”), beginning with the 2012 calendar year and ending with the 2015 calendar year.  The amount of the Award (the “Award Amount”) payable to you hereunder with respect to each Performance Period shall be equal to $7,500,000 multiplied by the total number of NGOI Thresholds, defined below, that are attained by the Business Unit, defined below, during such Performance Period.  An NGOI Threshold is attained if the NGOI of the Business Unit during a Performance Period equals or exceeds any of the following amounts (the “NGOI Thresholds”):

	 
	 
	 
	 

	 
	 
	 
	$230,000,000;

	 
	 
	 
	 

	 
	 
	 
	$290,000,000;

	 
	 
	 
	 

	 
	 
	 
	$330,000,000; and

	 
	 
	 
	 

	 
	 
	 
	$370,000,000

	 
	 
	 
	 

	 
	 
	 
	For purposes of this Agreement:

“Business Unit” shall mean the business unit of eBay that includes the business conducted by the Company and its majority-owned subsidiaries as of the date the Compensation Committee of the Board approves this Amended and Restated Performance Award Agreement.

“NGOI” shall mean eBay's non-GAAP Business Unit Operating Income calculated in accordance with eBay Inc.'s internal management reporting conventions, adjusted (i) to exclude the deferred acquisition payments recorded as compensation expense related to the acquisition of Fetchback, Inc., and (ii) to include reasonable estimates of annual expenses for long-term incentive compensation granted to you and other employees of the Business Unit, to the extent not otherwise included.

	 
	 
	 
	Whether an NGOI Threshold is attained during a Performance Period shall be determined as of the last day of such Performance Period and shall be based on the NGOI for such Performance Period as certified by the Compensation Committee of the Board.  More than one NGOI Threshold may be attained in any one Performance Period; provided that the attainment of an NGOI Threshold in any Performance Period shall not be considered to have been attained again in any subsequent Performance Period for purposes of determining the Award Amount in such subsequent Performance Period.  If an NGOI Threshold is attained, then the corresponding portion of the Award Amount is considered earned, regardless of the Business Unit's performance in a subsequent Performance Period, subject to the vesting conditions described in Section 3 of this Agreement.  The maximum Award Amount under this Agreement with respect to all Performance Periods shall be $30,000,000 (i.e., $7,500,000 multiplied by each of the four NGOI Thresholds attained). 

	
						
	 
	 
	 
	

The Compensation Committee of the Board may take reasonable action to adjust either the NGOI Thresholds or the manner in which NGOI is determined with respect to any current or future Performance Period to reflect one or more of the following, if material: (i) items related to a change in accounting principles or internal management reporting conventions; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under GAAP; (ix) items attributable to any stock dividend, stock split, combination or exchange of shares; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company's core, on-going Business Unit activities; (xiv) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions; or (xv) items relating to any change in the payment or allocation of general and administrative expenses or other intercompany transactions among the business units of the Company and its Affiliates.  If such adjustment occurs later than 90 days after the commencement of a Performance Period, such adjustment shall apply to such Performance Period only to the extent that the adjustment is necessary to reflect objectively determinable changes in the NGOI of the Business Unit, as reflected in the financial statements of the Company, and shall be made  in compliance with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

	 
	 
	 
	 

	3
	

	Award Vesting
	 
	No Award Amount will be payable to you hereunder unless the Award is vested.  The Award will vest in the following circumstances:

	 
	 
	 
	 

	 
	 
	(a)
	Employment Continues Through First Business Day After January 1, 2016.  The Award will vest if you are continuously employed by the Company through the first business day after January 1, 2016. All references in this Agreement to employment by the Company shall include employment by any parent or subsidiary of the Company.

	 
	 
	 
	 

	 
	 
	(b)
	Termination of Employment Due to Death.  The Award will vest if your employment terminates due to your death on or before the first business day after January 1, 2016.  Upon such a termination of your employment, the Award Amount will be based on the NGOI Thresholds attained through the last day of the Performance Period ending on or prior to your termination of employment.

	
						
	 
	 
	(c)
	Termination of Employment by the Company without Cause.  The Award will vest if your employment is terminated by the Company without Cause on or before the first business day after January 1, 2016.  “Cause” will exist if the Board (or an appropriate committee thereof) in good faith determines that (i) you are grossly negligent or engaged in willful misconduct in the performance of your duties, (ii) you are convicted of, or enter a plea of guilty or nolo contendere to, a crime constituting a felony or any criminal offense involving fraud, dishonesty or moral turpitude under the laws of the United States or any state  thereof other than an automobile offense, or (iii) you breach, in a material respect, any written material agreement between you and the Company or violate, in a material respect, the Company's Code of Business Conduct or any of the Company's material policy statements.  Notwithstanding the foregoing, Cause shall only exist after (a) the Company delivers written notice to you of its intention to terminate for Cause within thirty (30) days after the Company has actual knowledge of the facts and circumstances upon which it seeks to rely as a basis for its right to terminate for Cause, (b) such notice sets forth in reasonable detail such facts and circumstances and (c) in the case of clauses (i) or (iii), you have failed to correct the acts, omissions or events set forth in the Company's notice, if such acts, omissions or events are reasonably capable of being corrected, within thirty (30) days following delivery of the Company's written notice of its intention to terminate for Cause.  Upon a termination of your employment by the Company without Cause, the Award Amount will be based on the NGOI Thresholds attained through the last day of the Performance Period ending on or prior to your termination of employment.

	 
	 
	 
	 

	 
	 
	 
	In the event that your employment with the Company terminates on or before the first business day after January 1, 2016 for any reason other than your death or a termination by the Company without Cause, the Award will not vest and no Award Amount will be payable to you hereunder.

	 
	 
	 
	 

	4
	Settlement of Vested Performance Award
	 
	The Award will be settled after the completion of the applicable Performance Periods and the satisfaction of the applicable vesting conditions set forth in Section 3 by the payment of the Award Amount to you or, in the event of your death, to your designated beneficiary.  If you are continuously employed through the first business day after January 1, 2016, such payment will be made in two equal installments.  The first installment shall be paid prior to March 15, 2016, and the second installment payment shall be paid on the first anniversary of the first installment, but in all events prior to March 15, 2017.  If your employment is terminated on or prior to the first business day after January 1, 2016 due to your death or a termination by the Company without Cause, such payment shall be made in one installment prior to March 15th of the year following your termination of employment or death.
The Award may be settled by the delivery of (i) cash, (ii) shares of Common Stock (“Shares”) or (iii) any combination thereof as determined in the sole discretion of the Compensation Committee of the Board.  To the extent all or a portion of the Award is settled in Shares, the number of Shares delivered to you shall be equal to the cash equivalent value of the portion of the Award that is payable in Shares, divided by the average closing price of a Share as reported on the NASDAQ Global Select Market for the period of 30 consecutive trading days ending on (and including) the last trading day prior to the date the Award becomes vested, and rounding down to the nearest whole number of Shares.

	 
	 
	 
	 

	
						
	 
	 
	 
	Notwithstanding any other provision of this Agreement or the Plan to the contrary, the parties acknowledge (x) that time is of the essence with respect to the issuance or delivery of any cash or Shares pursuant to this Agreement and (y) that the Company will not be obligated to issue or deliver any cash or Shares pursuant to this Agreement (i) until all conditions to this Agreement have been satisfied or removed, (ii) if the outstanding Common Stock is at the time listed on any stock exchange or included for quotation on an inter-dealer system, until the Shares have been listed or included or authorized to be listed or included on such exchange or system upon official notice of issuance, (iii) until the issuance or delivery of the Shares would not cause the Company to issue or sell more shares of Common Stock than the Company is then legally entitled to issue or sell, and (iv) until all other legal matters in connection with the issuance and delivery of such Shares have been approved by internal legal counsel to the Company.
You hereby authorize any brokerage service provider acceptable to the Company to open a securities account for you to be used for the settlement of the Award settled in Shares.  The date on which Shares are issued may include a delay in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters.

	5
	Rights as Stockholder
	 
	Except as otherwise provided in this Agreement, you will not be entitled to any privileges of ownership of the Shares underlying the Award, if any, including voting, receipt of dividends or any other rights as a stockholder of the Company, unless and until Shares are actually delivered to you under this Agreement.

	 
	 
	 
	 

	6
	Transferability
	 
	Except as provided in Section 9(k) hereof, your right to receive payment under this Agreement is not transferable, whether voluntarily or involuntarily, by operation of law or otherwise, other than by will or the laws of descent and distribution.  Any voluntary or involuntary assignment, pledge, transfer, or other disposition of, or any attachment, execution, garnishment, or lien issued against or placed upon your right to receive payments under this Agreement, in violation of the terms of this Agreement shall be void.  Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, will thereafter be entitled to receive any distribution of cash or Shares pursuant to this Agreement.

	 
	 
	 
	 

	7
	Taxes
	(a)
	General.  You are ultimately liable and responsible for all taxes owed by you in connection with the Award.  The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting or settlement of the Award, and the subsequent sale of any of the Shares underlying the Award.  The Company does not commit and is under no obligation to structure this Agreement to reduce or eliminate your tax liability.

	 
	 
	 
	 

	 
	 
	(b)
	Withholding.  On or before the date upon which the Award is settled and any other date upon which tax withholding obligations of the Company may arise, or at any time thereafter as requested by the Company, you hereby authorize withholding from, at the Company's election, Shares, payroll and any other amounts payable to you and you otherwise agree to make adequate provision for, as determined by the Company, any sums required to satisfy the Federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with any of the above events or otherwise.  Unless the tax withholding obligations of the Company or any Affiliate are satisfied, the Company will have no obligation to make any payments under this Agreement.

	 
	 
	 
	 

	
						
	8
	Clawback
	 
	In the event that the Board (or an appropriate committee thereof) determines in good faith that the earlier determination of the NGOI of the Business Unit was based on materially incorrect data, and that in fact such NGOI had not been achieved or had been achieved to a lesser extent than originally determined and any amount paid (or portion thereof) under this Agreement would not have been paid, given the correct data, then in each such instance, you shall, at the request of the Board (or appropriate committee thereof), return or forfeit, as applicable, all or a portion (but no more than one-hundred percent (100%) of such payment to you based on such incorrect data.  The amount to be recovered from you shall be the amount determined by the Board or appropriate committee thereof, by which the payment to you exceeded the amount that would have been paid to you based on the correct data.  However, if you have disposed of Shares issued to you in connection with this Agreement, the cash equivalent value of such Shares on the date the Company calculated the number shares owed shall be paid by you to the Company upon notice from the Company as provided by the Board (or appropriate committee thereof).  The right of the Company and/or Board with respect to this right of return and/or recapture from the Participant set out above in this paragraph shall be limited to twelve (12) months from the payment of the Award Amount.

	 
	 
	 
	 

	 
	 
	 
	In the event that the Board (or appropriate committee thereof) determines that you have, prior to payment of the Award Amount, committed an act or omission that would have constituted Cause, the Board (or appropriate committee thereof), whether or not you were terminated because of such act or omission, may require you to return or forfeit, as applicable, any amount paid to you under this Agreement.  If you have disposed of Shares issued to you in connection with this Agreement, the cash equivalent value of such Shares on the date the Company calculated the number shares owed shall be paid by you to the Company upon notice from the Company as provided by the Board (or appropriate committee thereof).  The right of the Company and/or Board with respect to this right of return and/or recapture from the Participant set out above in this paragraph shall be limited to twelve (12) months from the payment of the Award Amount.

	 
	 
	 
	 

	9
	Miscellaneous
	(a)
	YOU ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR, OR CONSULTANT OF THE COMPANY FOR THE VESTING PERIOD, FOR THE PERFORMANCE PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH YOUR RIGHT OR THE COMPANY'S RIGHT TO TERMINATE YOUR RELATIONSHIP (I) AS AN EMPLOYEE AT ANY TIME, FOR ANY REASON OR NO REASON, WITH OR WITHOUT CAUSE; (II) AS A CONSULTANT PURSUANT TO THE TERMS OF THIS AGREEMENT WITH THE COMPANY OR AN AFFILIATE; OR (III) AS A DIRECTOR PURSUANT TO THE BYLAWS OF THE COMPANY AND ANY APPLICABLE PROVISIONS OF THE CORPORATE LAW OF THE STATE OR OTHER JURISDICTION IN WHICH THE COMPANY IS DOMICILED, AS THE CASE MAY BE.

	 
	 
	 
	 

	 
	 
	(b)
	The Award is unfunded and as a holder of the Award you will be considered an unsecured creditor of the Company with respect to the Company's obligation, if any, to pay cash or issue Shares pursuant to this Agreement.  Upon issuance of Shares, if applicable, you will obtain full voting and other rights as a stockholder of the Company.  Nothing contained in this Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

	 
	 
	 
	 

	
						
	 
	 
	(c)
	This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges as may be required.  The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by you or other subsequent transfers by you of any Shares issued as a result of or under this Agreement, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the absence of an effective registration statement under the Securities Act of 1933, as amended, covering the Award and (iii) restrictions as to the use of a specified brokerage firm or other agent for such resales or other transfers.  Any sale of Shares issued pursuant to this Agreement must also comply with other applicable laws and regulations governing the sale of such Shares.

	 
	 
	 
	 

	 
	 
	(d)
	The payments provided under this Agreement are intended to be exempt from Section 409A of the Code as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for this purpose each payment shall be considered a separate payment.  In the event the terms of this Agreement would subject you to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and you shall cooperate diligently to amend the terms of this Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement.  To the extent any amount under this Agreement is payable by reference to your termination of employment, such term shall be deemed to refer to your “separation from service,” within the meaning of Section 409A of the Code.  Notwithstanding any other provision in this Agreement, if you are a “specified employee,” as defined in Section 409A of the Code, as of the date of your separation from service, then to the extent the Company determines that, notwithstanding the intent of the Company, an amount payable to you (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon your separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of your separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service and (b) the date of your death.

	 
	 
	 
	 

	 
	 
	(e)
	The interpretation, performance and enforcement of this Agreement will be governed by the law of the state of Delaware without regard to such state's conflicts of laws rules.

	 
	 
	 
	 

	 
	 
	(f)
	Any question concerning the interpretation of this Agreement or the Plan, any adjustments required to be made under the Plan and any controversy that may arise under the Plan or this Agreement shall be determined by the Compensation Committee of the Board (including any person(s) to whom the Board has delegated its authority) in its sole and absolute discretion.  Such decision by the Compensation Committee shall be final and binding.

	 
	 
	 
	 

	 
	 
	(g)
	This Agreement and the Plan represent the entire agreement between the parties with respect to the Award, and supersede and preempt any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter of the Award, including without limitation Section 3.5 and Exhibit B of the Employment Agreement.  In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.

	 
	 
	 
	 

	
						
	 
	 
	(h)
	If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.  Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner which will give effect to the terms of such Section or part of such Section to the fullest extent possible while remaining lawful and valid.

	 
	 
	 
	 

	 
	 
	(i)
	Either party's failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, nor prevent that party from thereafter enforcing any other provision of this Agreement.  The rights granted both parties hereunder are cumulative and shall not constitute a waiver of either party's right to assert any other legal remedy available to it.

	 
	 
	 
	 

	 
	 
	(j)
	This Agreement may be amended only by a writing executed by you and the Company which specifically states that it is amending this Agreement.  Notwithstanding the foregoing and subject to Section 13(e) of the Plan, this Agreement may be amended solely by the Board (or an appropriate committee thereof) by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you.  Without limiting the foregoing, the Board (or an appropriate committee thereof) reserves the right to change, by written notice to you, the provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling or judicial decision, provided that any such change will be applicable only to rights relating to that portion of the Award which is then subject to restrictions as provided herein.

	 
	 
	 
	 

	 
	 
	(k)
	The rights and obligations of the Company under this Agreement will be transferable by the Company to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company's successors and assigns.  Without limiting the foregoing, the Award and the Performance Award Agreement dated June 16, 2011 was assumed by eBay upon the consummation of the Merger, following which all references herein to the Board and the Compensation Committee mean the Board of Directors and Compensation Committee, respectively, of eBay, and all references to Shares or Common Stock mean shares of common stock of eBay; provided that NGOI continues to be determined solely with respect to the Business Unit. You may not assign, transfer or pledge the Award or any right or interest therein or thereunder to anyone other than by will or the laws of descent and distribution except with the prior written consent of the Company.  Upon ten (10) days written notice to you with the opportunity to cure, the Company may cancel your rights hereunder if you attempt to assign or transfer them in a manner inconsistent with this Agreement.

	 
	 
	 
	 

	 
	 
	(l)
	All notices with respect to this Agreement shall be in writing and shall be hand delivered or sent by first class mail or reputable overnight delivery service, expenses prepaid.  Notice may also be given by electronic mail or facsimile and shall be effective on the date transmitted if confirmed within 24 hours thereafter by a signed original sent in a manner provided in the preceding sentence.  Notices to the Company or the Board (or an appropriate committee thereof) shall be delivered or sent to eBay's headquarters, 2065 Hamilton Ave., San Jose, CA 95125, to the attention of its General Counsel.  Notices to you shall be sufficient if delivered or sent to your address as it appears in the regular records of the Company or its transfer agent.

	 
	 
	 
	 

	 
	 
	(m)
	The headings of the Sections in this Agreement are inserted for convenience only and will not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.

	 
	 
	 
	 

	
						
	 
	 
	(n)
	You agree upon request to execute any further documents or instruments necessary or desirable in the reasonable determination of the Company to effect the terms of this Agreement.

	 
	 
	 
	 

	 
	 
	(o)
	You agree to reasonably assist and cooperate with the Company and its affiliates and/or their agents, officers, directors and employees in connection with any disputes, litigation or investigations of any nature brought by, against, or otherwise involving the Company or its affiliates during the period of your employment by the Company and thereafter.  The Company agrees it will reimburse expenses incurred by you and pay compensation to you for the two aforementioned periods in the manner as follows:  (x) the Company will reimburse you for reasonable out of pocket expenses incurred in connection therewith, in accordance with Company policy during the period in which you are employed by the Company and (y) the Company also agrees it will reimburse you for reasonable out of pocket expenses submitted to the Company and reasonable compensation, as mutually agreed between you and the Company and such agreement by the Company shall not be unreasonably withheld, delayed or conditioned, in connection with the required activities outlined above in this section during the period after termination of your employment with the Company.  Notwithstanding anything to the contrary contained herein or in the Company policy, as applicable, (i) any and all compensation payable to you in accordance with this paragraph shall be paid by the Company to you by no later than March 15 following the calendar year in which you rendered services giving rise to the compensation; and (ii) any and all expense incurred by you that are eligible for reimbursement in accordance with this paragraph shall be paid by the Company to you by no later than March 15 following the calendar year in which you incurred the expense, provided that you submit proof to the Company of the expense incurred in accordance with the submittal procedures contained in the Company's expense reimbursement policy.

	 
	 
	 
	 

	 
	 
	 
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The Award is hereby amended and restated as set forth herein, and by your signature below you acknowledge your agreement to the terms of this Amended and Restated Performance Award Agreement.
	
				
	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	EBAY INC.
	 
	 

	 
	 
	 

	/s/ Robert H. Swan
	3/29/2012
	 

	By
	 
	Date
	 

	 
	 
	 

	Robert H. Swan
	 
	 

	Name
	 
	 

	 
	 
	 

	CFO
	 
	 

	Title
	 
	 

	 
	 
	 

Acknowledged and Accepted by:
	
				
	/s/ Christopher Saridakis
	3/31/2012
	 

	Christopher Saridakis
	 
	Date

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