Document:

EX-4.2

 Exhibit 4.2 

THE DOW CHEMICAL COMPANY AMENDED AND RESTATED 1988 AWARD AND OPTION PLAN 

As amended and restated on August 31, 2017, effective August 31, 2017. 

 

	1.	Establishment and Purpose of the Plan: The Dow Chemical Company 1988 Award and Option Plan is hereby established upon the following terms and conditions. The purpose of the Plan is to attract and retain in the
employ of the Company and its Subsidiaries and Affiliates people of ability, training and experience by providing such people, in consideration of services performed, an incentive for outstanding performance to the end of furthering the continued
growth and profitability of the Company, and to encourage ownership of the Company’s stock by such people. 

  

	2.	Definitions 

  

	2.01	Affiliate: Any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee. 

 

	2.02	Award: An award of Deferred Stock, Restricted Stock, Options or Stock Appreciation Rights under the Plan. 

  

	2.03	Awardee: An Employee to whom an Award is made. 

  

	2.04	Board of Directors: The Board of Directors of the Company. 

  

	2.05	Change in Control: A Change in Control shall be deemed to have occurred on (A) the date that there is a change in ownership of a corporation where one person, or more than one person acting as a group
acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation, or
(B) notwithstanding that there hasn’t been a change in ownership under (A), the date there is a change in the effective control of the corporation under which either: (1) any one person, or more than one person acting as a group
acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30% or more of the total voting power of the stock of the corporation;
or (2) a majority of members of the corporation’s board of directors is replaced during any 12 month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of
directors prior to the date of the appointment or election. This definition of “Change in Control” is intended to conform to the definition of a “change in ownership or effective control of a corporation, or a change in the ownership
of a substantial portion of the assets of a corporation” as defined under Code section 409A and any subsequent authority issued pursuant thereto, and no corporate event shall be considered a Change in Control unless it meets such requirements.

  

	2.06	Code: The Internal Revenue Code of 1986, as amended. 

  

	2.07	Common Stock: The Common Stock of the Company, par value $0.01 a share, or such other class or kind of shares or other securities as may be applicable under Section 10. 

 

	2.08	Company: DowDuPont Inc., a Delaware corporation, or any successor to substantially all its business. 

  

	2.09	Committee: The Compensation Committee of the Board of Directors, or such other committee designated by the Board of Directors to administer the Plan under Section 4, which committee shall have at least three
members, each of which shall be a Disinterested Person. 

  

	2.10	Deferred Stock: Common Stock awarded by the Compensation Committee under Section 6 of the Plan. 

  

	2.11	Disinterested Person: A person defined in Rule 16b-3(d)(3) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as amended, or any successor definition adopted by the
Commission. 

  

	2.12	Employee: An employee of the Company or a Subsidiary, including an officer or director who is such an employee, who at the time an Award is made has a work schedule of 50% or more of the standard hours defined as
full-time in such employee’s work location, but excluding any employee who has provided to the Company a written irrevocable election not to be eligible. 

  

	2.13	Fair Market Value: As applied to a specific date, the closing market price of Common Stock, as reported on the consolidated transaction reporting system for New York Stock Exchange issues on such date or, if
Common Stock was not traded on such date, on the next preceding day on which the Common Stock was traded. However, in the case of an Incentive Stock Option, if such method of determining Fair Market Value shall not be consistent with the then
current regulations of the U.S. Secretary of the Treasury, Fair Market Value shall be determined in accordance with those regulations. 

	2.14	Incentive Stock Option: Any Option intended to meet the requirements of an incentive stock option as defined in Section 422A of the U.S. Internal Revenue Code of 1986 as amended or any statutory provision
that may replace such Section. 

  

	2.15	Key Employee: Any employee of the Company or a Subsidiary who is a key employee within the meaning of Treas. Reg. 1.409A-1(i), as determined in accordance with the procedures adopted by the Company.

  

	2.16	Non-Qualified Option: Any Option not intended to be an Incentive Stock Option. 

  

	2.17	Options: Any option or options granted from time to time under the Plan, including both Non-Qualified Options and Incentive Stock Options. 

 

	2.18	Plan: The Dow Chemical Company 1988 Award and Option Plan herein set forth, as the same may from time to time be amended. 

  

	2.19	Restricted Stock: Common stock awarded by the Committee under Section 7 of the Plan. 

  

	2.20	Separation from Service or Separates from Service: A “separation from service” within the meaning of Code section 409A. 

 

	2.21	Stock Appreciation Rights: Rights awarded by the Committee under Section 9 of the Plan. 

  

	2.22	Subsidiary: Any business association (including a corporation or a partnership, other than the Company) in an unbroken chain of such associations beginning with the Company if each of the associations other than
the last association in the unbroken chain owns equity interests (including stock or partnership interests) possessing 50% or more of the total combined voting power of all classes of equity interests in one of the other associations in such chain.

  

	3.	Eligibility 

 Any Employee is eligible to receive an Award. 

 

	4.	Plan Administration 

  

	4.01	Administrator: The Plan shall be administered by the Committee. 

  

	4.02	Administrative Powers: The Committee shall have full power to interpret and administer the Plan and full authority to act in selecting the Employees to whom Awards will be granted, in determining the type and
amount of Award to be granted to each such Employee, the terms and conditions of Awards granted under the Plan, subject to the provisions of Section 409A of Internal Revenue Code of 1986, as amended and any subsequent authority promulgated
Section 409A and the terms of agreements which will be entered into with Awardees. The Committee shall have the power to make regulations for carrying out the Plan and to make changes in such regulations as they from time to time deem proper.
Any interpretation by the Committee of the terms and provisions of the Plan and the administration thereof, and all action taken by the Committee, shall be final, binding and conclusive on the Company, its stockholders, Subsidiaries, Affiliates, all
Employees, their respective legal representatives, successors and assigns and upon all other persons claiming under or through any of them. As to the selection of and grants of awards to Awardees who are not subject to Sections 16(a) and 16(b) of
the Securities Exchange Act of 1934, the Committee may delegate any or all of its responsibilities to members of the Company’s administration. 

  

	4.03	Limitation on Liability: Members of the Board of Directors and members of the Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no
liability except for gross negligence or willful misconduct in the performance of their duties. 

  

	5.	Shares Subject to the Plan 

  

	5.01	 Subject to adjustment as provided in Section 10, the total number of shares of Common Stock available for
grant under the Plan in each calendar year during any part of which the Plan is effective shall be one and one-half percent (1.5%) of the total outstanding shares of Common Stock as of the first day of such year for which the Plan is in effect;
provided that such number shall be increased in any year by fifty percent (50%) of the shares available for grant hereunder in each of the previous three years, but not covered by Awards granted hereunder in such years; and provided,
further that no more than thirty million (30,000,000) shares shall be cumulatively available for the grant of Incentive Stock Options under the Plan. Notwithstanding the foregoing, following May 9, 2012, no additional shares of Common
Stock are reserved for issuance under the Plan. Awards of Deferred Stock and Restricted Stock are limited to fifteen (15%) of the aggregate limit as provided in this Section, such percentage to be calculated as the annual average over any ten
year period of time. In addition, the Company may increase the shares available for Awards through an advance of up to fifty percent (50%) of the subsequent year’s allocation (determined by using fifty percent (50%) of the

	 	
current year’s allocation). In addition, any shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall not reduce the shares
available for grants under the Plan. Any shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares. If any shares subject to any Award granted hereunder are forfeited or such Award otherwise
terminates without the issuance of such shares or of other consideration in lieu of such shares, the shares subject to such Award, to the extent of any such forfeiture or termination, shall again be available for grant under the Plan.

  

	5.02	Individual Limits: Notwithstanding anything to the contrary elsewhere in this Plan, and subject to adjustment as provided in Section 10, in any calendar year, the maximum number of shares of common stock
covered by Awards of Options and Stock Appreciation Rights granted to any individual shall not exceed one million, two hundred thousand (1,200,000). In addition, any shares that remain ungranted under the foregoing limitation for the prior calendar
year for that individual may be carried forward to the current year, and any number of shares may be borrowed against that individual’s limit for the succeeding year. In no event, however, shall the total number of shares carried forward and
borrowed in any year for any individual pursuant to this Section 5.02 exceed the maximum number stated in the first sentence of this Section 5.02. For purposes of this Section 5.02, shares shall be counted first against the current
year, then against the prior year, and finally against the succeeding year. Aggregate awards of Deferred Stock and Restricted Stock to any individual shall not exceed nine hundred thousand (900,000) shares during any three-calendar-year period.

  

	6.	Deferred Stock Rules and Conditions 

 The grant of Deferred Stock shall be upon the
following rules and conditions: 
  

	6.01	Deferred Stock Grants: Deferred Stock shall be evidenced by Deferred Stock agreements. Such agreements shall conform to the requirements of the Plan, contain the time and form of payment, and may contain such
other provisions (including provisions for the protection of and/or the payment of Deferred Stock in the event of a Change in Control) as set forth in Section 15.07. 

 

	6.02	Crediting of Deferred Stock: Upon determination of the number of shares of Deferred Stock to be granted to an Awardee the Committee shall direct that the same be credited to the Awardee’s account on the
books of the Company but that issuance and delivery of shares shall be deferred until the date or dates provided in this Plan and the applicable Deferred Stock agreements. Prior to issuance and delivery hereunder the Awardee shall have no rights as
a stockholder with respect to any shares of Deferred Stock credited to his or her account. 

  

	6.03	Payment Equivalent to Dividends: During the period that shares of Deferred Stock remain credited to the account of an Awardee and before their issuance and delivery, the Company shall pay or accrue to the Awardee
on each date dividends on Common Stock are paid, a sum of money equal to what would have been received if the shares of Deferred Stock credited to the account had been owned (“Dividend Equivalents”), subject to such conditions as
the Committee may deem appropriate. The time and form of such payment of the Dividend Equivalents shall be specified in the Deferred Stock agreements. 

  

	6.04	Delivery: Subject to the terms and conditions described herein, the shares of Deferred Stock credited to the account of an Awardee shall be issued and delivered to the Awardee in one or more installments on such
date(s) as specified in the Deferred Stock agreements. 

  

	7.	Restricted Stock Rules and Conditions 

 The grant of Restricted Stock shall be upon the
following rules and conditions: 
  

	7.01	Restricted Stock Grants: Restricted Stock shall be evidenced by Restricted Stock agreements. Such agreements shall conform to the requirements of the Plan and may contain such other provisions (including
provision for the protection of Restricted Stock in the event of a Change in Control as set forth in Section 15.07). 

  

	7.02	Issuance of Restricted Stock: Upon determination of the number of shares of Restricted Stock to be granted to an Awardee the Committee shall direct that a certificate or book entry be made representing the number
of shares of Common Stock be issued to the Awardee with the Awardee as the registered owner. The certificate representing such shares shall either be legended as to sale, transfer, assignment, pledge or other encumbrances during the restricted
period or deposited by the Awardee, together with a stock power endorsed in blank, with the Company. 

  

	7.03	Dividends and Voting Rights: During the restricted period the Awardee shall have the right to receive dividends from and to vote the shares of Restricted Stock. 

	7.04	Delivery: The Restricted Stock agreement shall specify the duration of the restricted period and the performance and/or employment conditions under which the Restricted Stock may be forfeited to the Company. At
the end of the restricted period the restrictions imposed hereunder shall lapse with respect to the number of shares of Restricted Stock as determined by the Committee, and the legend shall be removed or the shares delivered, as the case may be,
with respect to such number. The Committee may, in its sole discretion, modify or accelerate the vesting of shares of Restricted Stock. 

  

	8.	Option Rules and Conditions 

 The grant of Options shall be upon the following rules and
conditions: 
  

	8.01	Option Grants: Options shall be evidenced by Option agreements. Such agreements shall conform to the requirements of the Plan, and may contain such other provisions (including restrictions upon the exercise of
the Option and provisions for the protection of Options in the event of a Change in Control). 

  

	8.02	Option Price: Except for adjustments permitted by Section 10, the price at which Common Stock may be purchased upon exercise of an Option shall be determined by the Committee, but shall be not less than the
greater of the Fair Market Value of such shares on the date the Option is granted or the par value of such Common Stock. 

  

	8.03	Terms of Options: The Option agreements shall specify when an Option may be exercisable and the terms and conditions applicable in the event of the Awardee’s Separation from Service during the Option’s
term. In the case of Separation from Service during the Option’s term, in no event shall an Option term be extended beyond the term for exercise originally specified in the Option agreement. In any case, the term of an Option shall in no event
be greater than ten years, and no Option may be exercisable less than one year from date of grant. 

  

	8.04	Incentive Stock Option: Each provision of the Plan and each Option agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be incentive stock option as defined
in Section 422A of the Internal Revenue Code of 1986 as amended or any statutory provision that may replace such Section, and any provisions thereof that can not be so construed shall be disregarded. In no event may an Awardee be granted
Incentive Stock Options which do not comply with such grant and vesting limitations as may be prescribed by Section 422A(b)(7) of the Internal Revenue Code of 1986 as amended, or any successor section or limitation and any implementing
regulations. 

  

	8.05	Payment of Option Price: The Option price of the shares of Common Stock for which an Option shall be exercised shall be paid in full in cash at the time of the exercise or, with the consent of the Committee, in
whole or in part in Common Stock valued at Fair Market Value. An Awardee shall have no rights of a stockholder with respect to any shares of Common Stock subject to an Option unless and until a stock certificate of such shares shall have been issued
to him or her. 

  

	9.	Stock Appreciation Rights 

 The grant of Stock Appreciation Rights
(“SARs”) shall be subject to the following rules and conditions: 
  

	9.01	Stock Appreciation Right Grants: Stock Appreciation Rights are rights to receive a payment in cash, Common Stock, Restricted Stock or Deferred Stock as selected by the Committee and shall be set forth in Stock
Appreciation Right agreements. Stock Appreciation Rights are determined by the appreciation in Common Stock. Such agreements shall conform to the requirements of the Plan. A SAR may be granted in tandem with all or a portion of a related stock
option under the Plan (“Tandem SAR”), or may be granted separately (“Freestanding SAR”). 

  

	9.02	SAR Price: The exercise price of a Tandem SAR shall be the option price under the related stock option. The exercise price of a Freestanding SAR shall be not less than 100% of the fair market value of the Common
Stock, as determined by the Committee on the date of grant of the Freestanding SAR. Notwithstanding the foregoing, the Committee may unilaterally limit the appreciation in value of the Common Stock attributable to the SAR at any time prior to its
exercise. 

  

	9.03	Exercise of SAR: A Tandem SAR and a Freestanding SAR shall entitle the recipient to receive a payment equal to the excess of the fair market value of the shares of Common Stock covered by the SAR on the date of
exercise over the exercise price of the SAR or such lesser amount as determined by the Committee. Such payment may be in cash, in shares of Common Stock, in shares of Deferred Stock, Restricted Stock or any combination, as the Committee shall
determine. Upon exercise of a Tandem SAR as to some or all of the shares covered by the grant, the related stock option shall be canceled automatically to the extent of the number of shares covered by such exercise, and such shares shall no longer
be available for grant under Section 8. Conversely, if the related stock option is exercised as to some or all of the shares covered by the grant, the related Tandem SAR, if any, shall be canceled automatically to the extent of the number of
shares covered by the stock option exercise. To the extent an SAR (or the related stock option) has not been exercised on its expiration, it will be exercised automatically and paid in the form determined by the Committee. 

	9.04	Terms of SAR: SARs shall be subject to the same terms and conditions applicable to options as stated in Section 8.03. SARs shall also be subject to such other terms and conditions not inconsistent with the
Plan as shall be determined by the Committee. 

  

	10.	Adjustments Upon Changes in Capitalization 

 In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or any other change in the corporate structure of the Company affecting Common Stock, or a sale by the Company of all or part of its assets, or any
distribution to stockholders other than a normal cash dividend, the Board of Directors shall make appropriate adjustment in the number and kind of shares authorized by the Plan. No fractional shares of Common Stock shall be issued pursuant to such
an adjustment, however, and the Fair Market Value of any fractional shares resulting from adjustments pursuant to this Section shall be paid in cash to the Awardee at the time of exercise of an Option or SAR, the delivery of deferred shares, or the
lifting of restrictions on restricted stock. Notwithstanding anything in this Section 10 to the contrary, an adjustment to an Option or SAR under this Section 10 shall be made in a manner that will not result in the grant of a new Option
or SAR under Code Section 409A. 
  

	11.	Effective Date, Termination and Amendment 

 The Plan originally became effective on
May 12, 1988, by approval of The Dow Chemical Company shareholders. This amendment and restatement of the Plan was adopted by the Board of Directors as of August 31, 2017. The Plan shall remain in full force and effect until terminated by
the Board of Directors, who shall have the power to amend, suspend or terminate the Plan at any time, provided that no such amendment shall be made without stockholder approval which shall: 

 

	11.01	Increase (except as provided in Section 10) the total number of shares available for issuance pursuant to the Plan. 

  

	11.02	Change the class of employees eligible to be Awardees. 

  

	11.04	Withdraw the administration of the Plan from the Committee. 

  

	11.05	Change the provisions of this Section 11. 

  

	12.	Forfeiture 

 Awards may be forfeited if the Awardee terminates his or her employment with
the Company, a Subsidiary or an Affiliate for any reason other than death, disability, retirement or a special separation situation as defined in the Terms and Conditions. Awards may furthermore be forfeited by an Awardee if the Committee determines
that the Awardee has at anytime engaged in any activity harmful to the interest of or in competition with the Company, its Subsidiaries or Affiliates or accepts employment with a competitor. 

 

	13.	Non-Assignability 

 Awards may not be pledged, assigned or transferred for any reason
during the Awardee’s lifetime, and any attempt to do so shall be void and the relevant Award shall be forfeited. 
  

	14.	Beneficiary upon Awardee’s death 

 An Awardee’s Award shall be transferable at
his or her death to the beneficiary designated by the Awardee on forms prescribed by and filed with the Committee. Upon the death of an Awardee, such beneficiary shall succeed to the rights of the Awardee. If no such designation of a beneficiary has
been made, the Awardee’s Awards shall succeed to his or her legal representative and shall be transferable by will or pursuant to the laws of descent and distribution. 
  

	15.	General Provisions 

  

	15.01	Nothing contained in the Plan, or in any Award granted pursuant to the Plan, shall confer upon any Employee any right with respect to continuance of employment by the Company, a Subsidiary or Affiliate, nor interfere in
any way with the right of the Company, a Subsidiary or Affiliate to terminate the employment of any Employee at any time with or without assigning any reason therefor. 

 

	15.02	For purposes of this Plan, transfer of employment between the Company and its Subsidiaries and Affiliates shall not be deemed termination of employment. 

 

	15.03	Appropriate provision may be made for all taxes required to be withheld in connection with any Award, the exercise thereof and the transfer of shares of Common Stock in respect of any federal, state or local withholding
taxes whether domestic or foreign. In the case of the payment of Awards in the form of Common Stock, the Company shall have the right to retain the number of shares of Common Stock whose fair market value equals the amount to be withheld.

	15.04	If any day on or before which action under the Plan must be taken falls on a Saturday, Sunday or legal holiday, such action may be taken on the next succeeding day not a Saturday, Sunday or legal holiday.

  

	15.05	Without amending the Plan, awards may be granted to Employees who are foreign nationals or employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in
the judgment of the Committee, be necessary or desirable to further the purpose of the Plan. 

  

	15.06	To the extent that federal laws (such as the Securities Exchange Act of 1934, the Internal Revenue Code of 1986 or the Employee Retirement Income Security Act of 1974) do not otherwise control, the Plan and all
determinations made and actions taken pursuant hereto shall be governed by the law of Delaware and construed accordingly. 

  

	15.07	Notwithstanding any other provision of the Plan to the contrary: 

  

	 	(i)	Deferred Stock: Upon the occurrence of a Change in Control, an Awardee’s right to receive the number of shares of Deferred Stock credited to the account of the Awardee shall not be forfeitable under any
circumstances. In the event an Awardee incurs an involuntary Separation from Service during the two-year period following the Change in Control, to the extent such Separation from Service occurs prior to the payment date set forth in the
Awardee’s applicable Deferred Stock agreement, then the Company shall deliver to the Awardee the number of shares of Deferred Stock credited to the account of the Awardee on the thirtieth day following such Separation from Service.

  

	 	(ii)	Restricted Stock: Upon the occurrence of a Change in Control, all of the restrictions on Restricted Stock shall lapse and be of no effect whatsoever and such shares shall not thereafter be forfeitable under any
circumstances. The Company shall deliver to the holder of shares of Restricted Stock certificates representing the number of shares and securities on which restrictions have so lapsed free of any restriction, legend or notation within 30 days
following the occurrence of a Change in Control. In the event legended shares were previously provided to the Awardee, the replacement shares will only be delivered upon tender by the holder of certificates representing shares of Restricted Stock in
form acceptable for transfer and free and clear of all liens, claims, options and encumbrances. Neither the Board of Directors nor the Compensation Committee shall have authority to alter or delay the delivery of Common Stock pursuant to the terms
of this Paragraph without the holder’s written consent. 

  

	 	(iii)	Management Objectives for Certain Awards of Deferred Stock and Restricted Stock: Any Award of Deferred Stock or Restricted Stock may specify management objectives which, if achieved, will result in the vesting of
Deferred Stock, or termination or early termination of the applicable restrictions in the case of Restricted Stock. Any Award that specifies management objectives shall specify a minimum acceptable level of achievement in respect of the specified
management objective below which no payment will be made in the case of Deferred Stock, or there will be a complete forfeiture of shares in the case of Restricted Stock. Management objectives may be described in terms of Company-wide objectives or
objectives that are related to the performance of the individual Employee or Subsidiary in which the Employee is employed. The management objectives may be relative to the performance of other companies or entities. If any individual is, or is
determined by the Committee to be likely to become, a covered employee within the meaning of Section 162(m) of the Internal Revenue Code, then Awards to that individual that specify management objectives shall be based on specified levels of,
or growth in, one or more of the following criteria: (i) earnings, (ii) earnings per share, (iii) share price, (iv) revenues, (v) total shareholder return, (vi) return on invested capital, equity, or assets,
(vii) operating margins, (viii) sales growth, (ix) productivity improvement, (x) market share, and (xi) economic profit. Except as may be permitted under Section 162(m) of the Internal Revenue Code of 1986 as amended,
or any successor provision, the Committee may not adjust management objectives after the grant of any Award that specifies management objectives. 

  

	 	(iv)	Key Employee Delay: To the extent any payment under this Plan is subject to the restrictions contained in Code section 409A, such payment may not be made to a Key Employee upon Separation from Service before the
date that is six months after the Key Employee’s Separation from Service (or, if earlier, the Key Employee’s death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the first day of the
seventh month following the Key Employee’s Separation from Service (or, if earlier, the first day of the month after the Key Employee’s death).crvl-ex101_7.htm

Exhibit 10.1

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this "Agreement") is entered into as of September 1, 2017, by and between CORVEL CORPORATION, a Delaware corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

RECITALS

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

SECTION 1.1.LINE OF CREDIT.

(a)Line of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including September 1, 2018, not to exceed at any time the aggregate principal amount of Ten Million Dollars ($10,000,000.00) ("Line of Credit"), the proceeds of which shall be used to finance Borrower's working capital requirements.  Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of September 1, 2017, as modified from time to time ("Line of Credit Note"), all terms of which are incorporated herein by this reference.

(b)Borrowing and Repayment.  Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth herein.

SECTION 1.2.STANDBY LETTER OF CREDIT.

(a)Standby Letter of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to issue or cause an affiliate to issue a standby letter of credit for the account of Borrower and for the benefit of TRAVELERS INSURANCE for financing in the event of non-payment (the “Standby Letter of Credit”) in the principal amount of Four Million Five Hundred Forty-Five Thousand Dollars ($4,545,000.00).  The form and substance of the Standby Letter of Credit shall be subject to approval by Bank, in its sole discretion.  The Standby Letter of Credit shall have an expiration date of May 26, 2019, or such other date agreed to by Bank in its sole discretion, and shall be subject to the additional terms of the Letter of Credit agreement, application and any related documents required by Bank in connection with the issuance thereof (the “Letter of Credit Agreement”).

(b)Repayment of Drafts.  Each drawing paid under the Standby Letter of Credit shall be repaid by Borrower in accordance with the provisions of the Letter of Credit Agreement.

SECTION 1.3.INTEREST/FEES.

(a)Interest.  The outstanding principal balance of each credit subject hereto shall bear interest, and the amount of each drawing paid under the Standby Letter of Credit shall bear interest from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.

(b)Computation and Payment.  Interest shall be computed on the basis set forth in each promissory note or other instrument or document required hereby.  Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

(c)Unused Commitment Fee.  Borrower shall pay to Bank a fee equal to eighty-five thousandths percent (0.085%) per annum (computed on the basis of a 360-day year, actual days elapsed) on the daily unused amount of the Line of Credit, which fee shall be calculated on a quarterly basis by Bank and shall be due and payable by Borrower in arrears within ten (10) days after each billing is sent by Bank. 

(d)Letter of Credit Fees.  Borrower shall pay to Bank (i) fees upon the issuance of each Letter of Credit equal to eight hundred fifty thousandths percent (0.850%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.

SECTION 1.4.COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by debiting Borrower’s deposit account number 4159624063 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof.  Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.

SECTION 2.1.LEGAL STATUS.  Borrower is: (a)  a corporation, duly organized and existing and in good standing under the laws of Delaware, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower; and (b) not the target of any trade or economic sanctions promulgated by the United Nations or the governments of the United States, the United Kingdom, the European Union, or any other jurisdiction in which the Borrower is located or operates (collectively, “Sanctions”).

SECTION 2.2.AUTHORIZATION AND VALIDITY.  This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

SECTION 2.3.NO VIOLATION.  The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the organizational and governing documents of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

SECTION 2.4.LITIGATION.  There are no pending, or to the best of Borrower's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5.CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial statement of Borrower dated December 31, 2016, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied.  Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing. 

SECTION 2.6.INCOME TAX RETURNS.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

SECTION 2.7.NO SUBORDINATION.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this Agreement to any other obligation of Borrower.

SECTION 2.8.PERMITS, FRANCHISES.  Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

SECTION 2.9.ERISA.  Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

SECTION 2.10.OTHER OBLIGATIONS.  Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

SECTION 2.11.ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time.  None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

ARTICLE III

CONDITIONS

SECTION 3.1.CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank's satisfaction of all of the following conditions:

 

(a)Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank's counsel.

(b)Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:

	
 
	
(i)
	
This Agreement and each promissory note or other instrument or document required hereby.

(ii)Corporate Resolutions and Certificate of Incumbency: Borrower.

	
 
	
(iii)
	
Such other documents as Bank may require under any other Section of this Agreement.

 

(c)Financial Condition.  There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such Third Party Obligor, if any.

(d)Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with lender loss payable endorsements in favor of Bank, including without limitation, policies of fire and extended coverage insurance covering all real property collateral required hereby, with replacement cost and mortgagee loss payable endorsements, and such policies of insurance against specific hazards affecting any such real property, including terrorism, as may be required by governmental regulation or Bank.

SECTION 3.2.CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

(a)Compliance.  The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.

(b)Documentation.  Bank shall have received all additional documents which may be required in connection with such extension of credit.

(c)Letter of Credit Documentation.  Prior to the issuance of any Letter of Credit, Bank shall have received a Letter of Credit Agreement and any other letter of credit documentation required by Bank, in each case completed and duly executed by Borrower.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

SECTION 4.1.PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

 

SECTION 4.2.ACCOUNTING RECORDS.  Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower.

SECTION 4.3.FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form and detail satisfactory to Bank:

(a)not later than 120 days after and as of the end of each fiscal year, a copy of the 10K report filed with the Securities Exchange Commission, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flows; and

(b)not later than 45 days after and as of the end of each quarter, a copy of the 10Q report filed with the Securities Exchange Commission, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flows; and

(c)from time to time such other information as Bank may reasonably request, including without limitation, copies of rent rolls and other information with respect to any real property collateral required hereby.

SECTION 4.4.COMPLIANCE.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business so long as the failure to comply could not have a material adverse effect on the Borrower in any respect.  

SECTION 4.5.INSURANCE.  Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, commercial general liability, flood, and, if required, hurricane, windstorm, seismic property damage and workers' compensation, with all such insurance carried in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect, together with a lender’s loss payee endorsement for all such insurance naming Bank as a lender loss payee.  Such insurance may be obtained from an insurer or through an insurance agent of Borrower’s choice, provided that any insurer chosen by Borrower is acceptable to Bank on such reasonable grounds as may be permitted under applicable law.

SECTION 4.6.FACILITIES.  Keep all properties useful or necessary to Borrower's business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

SECTION 4.7.TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank's satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 4.8.LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower with a claim in excess of $5,000,000.00 or in which an adverse judgment could reasonable be expected to have a material adverse effect upon Borrower.

SECTION 4.9.FINANCIAL CONDITION.  Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

 

(a)Current Ratio not less than 1.25 to 1.0 at each fiscal quarter end, with “Current Ratio” defined as total current assets divided by total current liabilities.

(b)Total Liabilities divided by Tangible Net Worth not greater than 1.25 to 1.0 at each fiscal quarter end, with “Total Liabilities” defined as the aggregate of current liabilities and non-current liabilities less subordinated debt, and with “Tangible Net Worth” defined as the aggregate of total stockholders equity plus subordinated debt less any intangible assets.

(c)Net income after taxes not less than $1.00 on an annual basis, determined as of each fiscal year end, and pre-tax profit not less than $1.00 on a rolling 4-quarter basis, determined as of each fiscal quarter end.

SECTION 4.10.NOTICE TO BANK.  Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower's property.

ARTICLE V

NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:

SECTION 5.1.USE OF FUNDS.  Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof, or directly or indirectly use any such proceeds for the purpose of (a) providing financing to, or otherwise funding, any targets of Sanctions; or (b) providing financing for, or otherwise funding, any transaction which would be prohibited by Sanctions or would otherwise cause Bank or any of Bank’s affiliates to be in breach of any Sanctions.  

SECTION 5.2.  MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or

consolidate with any other entity unless Borrower is the surviving entity and remains incompliance with all terms and conditions of the Loan Documents; engage in any material business not reasonably related to Borrower's business as the date of this Agreement; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower's assets except in the ordinary course of its business, provided that Borrower may self, lease, transfer or dispose of up to 15% of its assets in any fiscal year, provided that Borrower receive fair consideration therefor; nor acquire all or substantially all of the assets of any other person of entity, provided that, any Acquisition by Borrower shall be permitted which is either (i) consented to by Bank in writing prior thereto or (ii) where:

(a)the business, division or operating units acquired are for use, or the person acquired is engaged, in businesses reasonably related to the businesses conducted by Borrower at the time of such Acquisition;

(b)immediately before and after giving effect to such Acquisition, no Event of Default shall exist;

(c)the aggregate consideration to be paid by Borrower (including consideration consisting of equity in Borrower and/or any debt assumed or issued in connection therewith, the amount thereof to be calculated in accordance with generally accepted accounting principles) in connection with (i) such Acquisition (or any series of related Acquisitions) is less than $40,000,000 and (ii) all Acquisitions after the date of this Agreement is less than $100,000,000;

(d)in the case of the Acquisition of any person, the board of directors or similar governing body of such person has approved such Acquisition and such person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition will violate any applicable law; and

(e)If the Acquisition is structured as a merger, Borrower is the surviving entity.

For purposes of this provision the following terms have the meanings assigned to them: 

"Acquisition" means any transaction or series of related transactions for the

purpose of or resulting, directly or indirectly, in (i) the acquisition of all or substantially all of the assets of a person, or of all or substantially all of any business or division of a person (other than a person that is already a Subsidiary), (ii) the acquisition of the Capital Securities (including the acquisition of any rights, warrants or options to acquire the Capital Securities) of any person (other than a person that is already a Subsidiary), or any other combination with another person (other than a person that is already a Subsidiary).

''Capital Securities" means, with respect to any person, all shares, interest, participations or other equivalents (however designated, whether voting or non-voting) of such person's capital, whether now outstanding or issued or acquired after the date of this Agreement, including common shares, preferred shares, membership interest a limited liability company, limited or general partnership interest in a partnership, interests in trust, interests in joint ventures, Interests in other unincorporated organizations or any other equivalent of such ownership interest.

"Subsidiary" means, with respect to any person, a corporation, partnership limited liability company or other entity of which such person owns, directly or indirectly, such number of outstanding Capital Securities as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of Borrower.

SECTION 5.3. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a Lien (as hereinafter defined) upon, all or any portion of Borrower's assets now owned or hereafter acquired, except any of the following (each of the following, a "Permitted Lien"):

(a)inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which reasonable reserves have been established by Borrower;

(b)Liens in respect of property or assets of Borrower imposed by law which were incurred in the ordinary course of business, such as carriers', warehousemen's, and mechanics' Liens, statutory landlord's Liens, and other similar Liens arising In the ordinary course of business;

(c)Liens created in favor of the Bank;

(d)Liens existing on the date hereof to the extent listed, and the property subject thereto described, on Schedule 5.3 and any subsequent extensions or renewals thereof which does not include an increase in the principal amount secured thereby or in the property subject thereto;

(e)Liens arising from judgments, decrees or attachments (or securing of appeal bonds with respect thereto) in circumstances not constituting an Event of Default under Section 6.1 (f), so long as no cash or property (other than proceeds of insurance payable by reason of such judgments, decrees or attachments) is deposited or delivered to secure any such judgment(s) and award(s) and appeal bond(s) in respect thereof, the fair market value of which exceeds $5,000,000 in aggregate;

(f)Liens incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security, to the extent required by law, or (ii) to secure the performance of tenders, surety bonds, bids, leases, government contracts, performance and return-of-

money bonds and other similar obligations incurred in the ordinary course of business not involving in excess of $5,000,000 in aggregate amount, and any subsequent extensions or renewals thereof which does not include an increase in the principal amount secured thereby or in the property subject thereto;

(g)licenses, leases or subleases granted to other persons not interfering in any material respect with the business of Borrower;

(h)easements, rights-of-way, restrictions, minor defects or Irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of Borrower;

(i)banker's Liens, rights of setoff and similar Liens in respect of operational and payment risks (but not, in any event, indebtedness for borrowed money) under deposit accounts established and maintained by Borrower in the ordinary course of business;

(j)Liens arising from precautionary UCC financing statements regarding operating leases permitted by this Agreement;

(k)any interest or title of a lessor under any true lease;

(I)Liens upon assets of Borrower subject to capital leases in an amount not exceeding $10,000,000 at any time outstanding and any subsequent extensions or renewals thereof which does not include an increase in the principal amount secured thereby or in the property subject thereto, provided that (i) such Liens only serve to secure the payment of debt arising under such capital leases and (ii) the Liens encumbering the assets giving rise to such capital leases do not encumber any other assets of Borrower;

(m)purchase money Liens placed upon assets of Borrower used in the ordinary course of business of Borrower at the time of the acquisition thereof by the Borrower to secure the payment of debt Incurred to pay all or a portion of the purchase price thereof or to secure debt incurred solely for the purpose of financing the acquisition of any such assets or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (i) such Liens only serve to secure the payment of debt arising in connection with such acquisition of such assets and (ii) the Liens encumbering such assets do not encumber any other assets of Borrower;

(n)Liens on the assets of acquired in connection with an Acquisition permitted under Section 5.2 and any subsequent extensions or renewals thereof which does not include an increase in the principal amount secured thereby or in the property subject thereto, provided that such Liens existed at the time of such Acquisition, and provided further that such Lien does not encumber additional property after such acquisition is consummated or increase the principal amount secured thereby after such acquisition is consummated;

(o)Liens consisting of customary restrictions on transfers of assets contained in agreements related to the sale thereof pending consummation of the sale thereof, provided that such Liens apply only to the assets to be sold and the sale of such assets is otherwise permitted under the terms of this Agreement ;and

(p)Liens granted by Borrower on Non-Trading Assets, with "Non-Trading Assets• defined as property or assets of Borrower other than cash, cash equivalents, deposit accounts, accounts, accounts receivable and other rights to payment, provided, that subsection 5.3(i) above shall not be limited by this subsection 5.3(p).

For purposes of this Agreement, the term "Lien" has the following meaning:

"Any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of each lessor under any capital lease), in, of or on any assets or properties of Borrower, now owned or hereafter acquired, whether arising by agreement or operation of law."

 

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1.The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:

(a)Borrower shall fail to pay within five (5) days after the due date any principal, interest, fees or other amounts payable under any of the Loan Documents. 

(b)Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made. 

(c)Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of thirty (30) days from its occurrence. 

(d)Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a "Third Party Obligor") has incurred any debt or other liability to any person or entity, including Bank, and where, in the case of a creditor or creditors other than Bank, the aggregate amount of such obligations in default exceeds $5,000,000.00 and in the case of Bank, the aggregate amount of such obligations in default exceeds $50,000.00

(e)Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

(f)The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract or transcript of judgment against Borrower or any Third Party Obligor in any county or recording district in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor, provided that, the aggregate amounts subject to such action(s) pending at any time and not fully covered by third party insurance exceeds $5,000,000.00 and any action(s) which if so stayed or dismissed would result in an Event of Default not occurring under this Section 6.1 (f), is not stayed or dismissed within 30 days after it is commenced without expenditure of funds other than for legal expenses and from proceeds of insurance payable by reason of such judgment, levy or attachment.

 

(g)There shall exist or occur any event or condition that Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower, any Third Party Obligor, or the general partner of either if such entity is a partnership, of its obligations under any of the Loan Documents.

(h)The death or incapacity of Borrower or any Third Party Obligor if an individual.  The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any Third Party Obligor if a partnership.  The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor. 

(i)The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest).

SECTION 6.2.REMEDIES.  Upon the occurrence of any Event of Default:  (a) all principal, unpaid interest outstanding and other indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice (except as expressly provided in any mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on any real property collateral) become immediately due and payable without presentment, demand, protest or any notices of any kind, including without limitation, notice of nonperformance, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1. NO WAIVER.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.2.NOTICES.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

BORROWER:CORVEL CORPORATION

111 Southwest 5th Avenue, Suite 200

Portland, Oregon 97204

 

	

	
BANK:WELLS FARGO BANK, NATIONAL ASSOCIATION

MAC P6101-250

1300 Southwest 5th Avenue, 25th Floor

Portland, Oregon 97201-5667

 

or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

SECTION 7.3.COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel to the extent permissible), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, whether or not suit is brought, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity. Notwithstanding anything in this Agreement to the contrary, reasonable attorneys' fees shall not exceed the amount permitted by law.  

SECTION 7.4.SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank's prior written consent.  Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents.  In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, if any, or any collateral required hereunder.

SECTION 7.5.ENTIRE AGREEMENT; AMENDMENT.  To the full extent permitted by law, this Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof.  This Agreement may be amended or modified only in writing signed by each party hereto.

SECTION 7.6.NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

SECTION 7.7.TIME.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

SECTION 7.8.SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

SECTION 7.9.COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

SECTION 7.10.GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of Oregon (such State, Commonwealth or District is referred to herein as the “State”), but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.

SECTION 7.11.BUSINESS PURPOSE.  Borrower represents and warrants that each credit subject hereto is made for (a) a business, commercial, investment, agricultural or other similar purpose, (b) the purpose of acquiring or carrying on a business, professional or commercial activity, or (c) the purpose of acquiring any real or personal property as an investment and not primarily for a personal, family or household use.

SECTION 7.12.RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared any credit subject hereto to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower's obligations and liabilities under the Loan Documents (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect.  Bank may exercise this remedy regardless of the adequacy of any collateral for the obligations of Borrower to Bank and whether or not the Bank is otherwise fully secured.  Borrower hereby grants to Bank a security interest in all deposits and accounts maintained with Bank to secure the payment of all obligations and liabilities of Borrower to Bank under the Loan Documents.

SECTION 7.13.ARBITRATION.

(a)Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.  In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

(b)Governing Rules.  Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling 

arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

(c)No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

(d)Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

(e)Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

(f)Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity. 

(g)Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall 

control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

(i)Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be executed as of the day and year first written above.

 

  WELLS FARGO BANK,

CORVEL CORPORATION  NATIONAL ASSOCIATION

 

	
By:
	
 
	
/s/ Richard Schweppe
	
 
	
 
	
 
	
By:
	
 
	
/s/ DAWN MOORE

	
 

Name:
	
 
	
 

Richard Schweppe
	
 
	
 
	
 
	
 
	
 
	
DAWN MOORE,

SENIOR VICE PRESIDENT

	
 

Title:
	
 
	
 

Chief Financial Officer

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