Document:

ex10-3.htm

Corporate Capital Trust, Inc. 8-K

Exhibit 10.3

 

CONTROL AGREEMENT

This Control Agreement (this “Agreement”), dated September 4, 2013 is by and among Corporate Capital Trust, Inc. (the “Borrower”), JPMorgan Chase Bank, N.A., as collateral agent for the Lenders (as defined below) and certain other secured parties (in such capacity, including any successor in such capacity, the “Agent”), and State Street Bank and Trust Company, a Massachusetts trust company (“Custodian”).

 

WHEREAS, the Borrower and the Custodian are parties to that certain Custodian Agreement, dated as of March 24, 2011 (as amended, restated, modified, or supplemented from time to time, the “Custodian Agreement”), pursuant to which the Borrower has appointed Custodian to act as custodian for its securities and other assets;

 

WHEREAS, the Borrower has entered into the Senior Secured Revolving Credit Agreement, dated as of the date hereof, among the Borrower, the lenders party thereto (the “Lenders”), the Agent, as administrative agent for the Lenders and as Agent (the “Loan Agreement”) pursuant to which such Lenders have agreed, subject to the terms and conditions therein specified, to extend credit to the Borrower.  In addition, the Borrower and the Agent, among others, have entered into a Guaranty and Security Agreement dated as of the date hereof (the “Security Agreement”) pursuant to which the Borrower, among other things, has agreed to pledge and grant a security interest in all right, title and interest of the Borrower in, to and under certain of its property, including the Collateral Account (as defined below) and any cash, securities or other assets therein or otherwise held by the Custodian (collectively, the “Collateral”), in favor of the Agent for the benefit of the Agent, the Lenders, and certain other secured parties, as collateral security for the obligations of the Borrower under the Loan Agreement and certain other Secured Obligations (as such term is defined in the Security Agreement); and

 

WHEREAS, in connection with the Loan Agreement and the Security Agreement, the Borrower intends to grant control (as defined in the Uniform Commercial Code, as in effect from time to time in The State of New York (the “UCC”)) over the Collateral Account and possession of other Collateral to the Agent and the Agent, the Borrower and the Custodian are entering into this Agreement to perfect the security interest of the Agent in the Collateral Account and provide for the control of the Collateral Account and possession of other Collateral.

 

NOW THEREFORE, for valuable consideration, the parties hereto agree as follows:

 

1.           Establishment of Collateral Account. The Custodian has established and will maintain  on its books and records the Borrower’s (i) custodial account, Account No. CNIA, which account and the assets credited thereto are pledged in favor of the Agent (the “Securities Account”), and (ii) deposit account, Account No. 10076909, which account and the assets credited thereto are pledged in favor of the Agent (the “Deposit Account” and together with the Securities Account, the “Collateral Account”).  The Custodian will credit to the Collateral Account any assets delivered to it by the Borrower pursuant to the Custodian Agreement except that Loan Documents and Identified Securities (as each such term is defined below) delivered to the Custodian shall be held by the Custodian upon the terms of Section 5.  The Custodian shall have no responsibility for determining the adequacy of any Collateral required hereunder or under the Loan Agreement, nor will it assume responsibility for any calculations related to any Collateral requirements under the Loan Agreement.

 

  

  

  

2              Account Control.

 

2.1           Agent Security Interest.  This Agreement is intended by the Borrower and the Agent to grant “control” of the Collateral Account and possession of other Collateral to the Agent for purposes of perfection of the Agent’s security interest in the Collateral Account and other Collateral pursuant to Article 8 and Article 9 of the UCC and the Custodian hereby acknowledges that it has been advised of the Borrower’s grant to Agent of a security interest in the Collateral and Collateral Account.  Notwithstanding the foregoing, the Custodian makes no representation or warranty with respect to the creation, attachment, perfection, priority or enforceability of any security interest in the Collateral or Collateral Account.

 

2.2           Borrower Control.  Unless and until the Custodian receives written notice from the Agent pursuant to Section 2.3(ii) below instructing the Custodian that the Agent is exercising its right to exclusive control over the Collateral Account, which notice is substantially in the form attached hereto as Exhibit A (a “Notice of Exclusive Control”) and the Custodian has a reasonable time to act thereon, or if all previous Notices of Exclusive Control have been revoked or rescinded in writing by the Agent:  (i) the Borrower shall be entitled to exercise all rights with respect to, and to direct the Custodian with respect to, the Collateral Account, provided that the Borrower may not terminate the Collateral Account without the prior written consent of the Agent, and (ii) the Custodian shall have no responsibility or liability to the Agent or any Lender for settling trades of financial assets and cash carried in the Collateral Account at the direction of and in accordance with the instructions of the Borrower given in accordance with the Custodian Agreement, or for complying with entitlement orders from the Borrower concerning the Collateral Account.

 

2.3            Control by Agent.

 

(i) The Borrower irrevocably authorizes and directs the Custodian, and the Custodian agrees, to comply with any entitlement order or instructions (within the meaning of Sections 8-102, 9-104 and 9-106 of the UCC) received from the Agent with respect to the Collateral Account, without further consent of the Borrower.

 

(ii) Upon receipt by the Custodian of a Notice of Exclusive Control and the Custodian having a reasonable time to act thereon, the Custodian shall thereafter follow only the instruction of the Agent with respect to the Collateral Account, and shall comply only with any entitlement order or instructions received from the Agent, without further consent of the Borrower, and shall be entitled to deal with the Agent as though the Agent were the sole and absolute owner of the Collateral Account.  Without limiting the Custodian’s obligations under Section 2.3(i) and (ii), Agent agrees that it shall deliver a Notice of Exclusive Control prior to or simultaneously with any entitlement order or instruction.  For the avoidance of doubt, from and after delivery of a Notice of Exclusive Control and the Custodian having a reasonable time to act thereon, the Borrower (whether directly or through its investment manager) shall have no right or ability to access or receive or withdraw or transfer financial assets from, or to give other instructions concerning the Collateral Account until such time as the Agent shall have notified the Custodian in writing of the withdrawal of the Notice of Exclusive Control and instructed the Custodian to resume honoring instructions which the Borrower is entitled to give under the Custodian Agreement.

 

(iii) As between the Borrower and the Agent, the Agent agrees with the Borrower that it shall not issue a Notice of Exclusive Control or any entitlement order or instructions with respect to the Collateral Account pursuant to Section 2.3(i) or (ii) unless an Event of Default (as defined in the Security Agreement) or a Trigger Event (as defined in the Security Agreement) shall have occurred and be continuing.

 

  

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(iv) The Custodian shall have no responsibility or liability to the Borrower for complying with a Notice of Exclusive Control or complying with entitlement orders or other instructions originated by the Agent concerning any Collateral or the Collateral Account.  The Custodian shall have no duty to investigate or make any determination as to whether an event of default or other like event exists under the Loan Agreement, and the Custodian shall be fully protected in complying with a Notice of Exclusive Control whether or not the Borrower may allege that no such event of default or other like event exists. Delivery of a Notice of Exclusive Control by the Agent to the Custodian shall be effective whether or not a copy of the same is delivered to the Borrower.

 

(v)  As between the Agent and the Custodian, notwithstanding any provision contained herein or in any other document or instrument to the contrary, the Custodian shall not be liable for any action taken or omitted to be taken at the instruction of the Agent, or any action taken or omitted to be taken under or in connection with this Agreement, except for the Custodian’s own bad faith, gross negligence or willful misconduct in carrying out such instructions.

 

3.             Distributions.  The Custodian shall, without further action by Borrower or Agent, credit to the Collateral Account all interest, dividends and other income received by the Custodian on the Collateral, unless and until the Custodian has received a Notice of Exclusive Control and has been directed otherwise by the Agent, in which event all such receipts shall be credited to such account as directed by the Agent.

 

4.             Duties and Services of Custodian.

 

(i)            Custodian agrees that it is acting as a “securities intermediary,” as defined in Section 8-102 of the UCC with respect to the Securities Account, and as a “bank” as defined in Section 9-102 of the UCC with respect to the Deposit Account.  The parties hereto further agree that the securities intermediary’s jurisdiction, within the meaning of Section 8-110(e) of the UCC, and the bank’s jurisdiction, within the meaning of Section 9-304(b) of the UCC, is the State of New York and agree that none of them has or will enter into any agreement to the contrary except that the parties acknowledge that the Custodian Agreement is otherwise governed by Massachusetts law.

 

(ii)           The Custodian shall have no duties, obligations, responsibilities or liabilities with respect to the Collateral or the Collateral Account except as and to the extent expressly set forth in this Agreement and the Custodian Agreement, and no implied duties of any kind shall be read into this Agreement against the Custodian including, without limitation, the duty to preserve, exercise or enforce rights in the Collateral and Collateral Account.  The Custodian shall not be liable or responsible for anything done or omitted to be done by it in the absence of gross negligence or willful misconduct and may rely and shall be protected in acting upon any notice, instruction or other communication which it reasonably believes to be genuine and authorized.

 

(iii)           As between the Borrower and the Custodian, except for the rights of control and possession in favor of the Agent agreed to herein, nothing herein shall be deemed to modify, limit, restrict, amend or supercede the terms of the Custodian Agreement, and the Custodian shall be and remain entitled to all of the rights, indemnities, powers, and protections in its favor under the Custodian Agreement, which shall apply fully to the Custodian’s actions and omissions hereunder.  If a provision of this Agreement in favor of the Agent conflicts with a provision of the Custodian Agreement, this Agreement shall control.  Instructions under this Agreement from a Borrower’s authorized representative given in accordance with the terms of the Custodian Agreement shall also constitute Proper Instructions (as defined in the Custodian Agreement) under the Custodian Agreement.

 

  

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(iv)           The Agent agrees to provide to Custodian, in the form of Exhibit B attached hereto, the names and signatures of authorized parties who may give written notices, instructions or entitlement orders concerning the Collateral or the Collateral Account.  Other means of notice or instruction may be used, provided that the Agent and Custodian agree to appropriate security procedures.  As between the Custodian and Agent, the Agent shall indemnify and hold the Custodian harmless with regard to any losses or liabilities of the Custodian (including reasonable attorneys’ fees) imposed on or incurred by the Custodian arising out of any action or omission of the Custodian in accordance with any notice or any entitlement order or other instruction of Agent under this Agreement.

 

(v)           The parties hereto acknowledge that no “security entitlement” under the UCC shall exist with respect to (A) cash (which shall be credited to the Deposit Account), (B) any Loan Document (as defined below), or the Borrower’s interest in a direct or participation or subparticipation interest in or by assignment or novation of a loan or other extension of credit evidenced, governed or represented by the Loan Document, or (C) any other asset which is registered in the name of the Borrower, payable to the order of the Borrower or specially indorsed to the Borrower or any third party (each such other asset an “Identified Security”), except to the extent such Identified Security has been specially indorsed by the Borrower to the Custodian or in blank.

 

(vi)           For avoidance of doubt, the Agent hereby acknowledges that any Collateral issued outside the United States (“Foreign Security System Assets”) which may be held by the Custodian, a sub-custodian within the Custodian’s network of sub-custodians (each a “Sub-Custodian”) or a depository or book-entry system for the central handling of securities and other financial assets in which the Custodian or the Sub-Custodian are participants may not permit the Borrower to have a security entitlement under the UCC with respect to such Foreign Security System Assets (and such property shall be deemed for purposes of this Agreement not to be a financial asset held within the Collateral Account).  The parties hereby further acknowledge that the Custodian gives no assurance that a security entitlement is created under the UCC with respect to Borrower’s assets held in Euroclear or Clearstream or their successors.  Solely as between the Borrower and Agent, the Borrower hereby acknowledges that the foregoing shall not be deemed a waiver by the Agent of any of the obligations of the Obligors to Deliver such Collateral or any other obligations of the Obligors under the Loan Documents or the Debt Documents (as such terms are defined in the Security Agreement).

 

5.             Bailment of Loan Documents and Identified Securities; Loan Document Inspection Rights.

 

(i)           If the Borrower delivers or causes a third party to deliver to the Custodian an instrument, document, certificate or other agreement evidencing, governing or representing the Borrower's ownership in or the Borrower’s interest in a direct or participation or subparticipation interest in or by assignment or novation of a loan or other extension of credit that is not a “security” as defined in Section 8-102 of the UCC (“Loan Document”) or an Identified Security, the Custodian agrees to hold the Loan Document or Identified Security as bailee for the Agent (and not, for the avoidance of doubt, as “securities intermediary”).

(ii)           Until the Custodian receives a Notice of Exclusive Control or if all previous Notices of Exclusive Control have been revoked in writing by the Agent, the Custodian shall comply with the instructions of the Borrower in respect of any Loan Document or Identified Security.  The Custodian agrees that following its receipt from the Agent of a Notice of Exclusive Control and the Custodian having a reasonable time to act thereon, the Custodian shall thereafter follow only the instruction of the Agent with respect to all Loan Documents and Identified Securities, without the further consent of the Borrower and shall be entitled to deal with the Agent as though the Agent were the sole and absolute owner of such Collateral.  For the avoidance of doubt, from and after delivery of a Notice of Exclusive Control and the Custodian having a reasonable time to act thereon, the Borrower (whether directly or through its investment manager) shall have no right or ability to give any instructions concerning such Collateral until such time as the Agent shall have notified the Custodian in writing of the withdrawal of the Notice of Exclusive Control and instructed the Custodian to resume honoring instructions which the Borrower is entitled to give under the Custodian Agreement.

  

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(iii)           Upon the Agent’s reasonable request (which shall include reasonable advance written notice), copies of the Loan Documents and Identified Securities shall be subject to the Agent’s inspection. The Custodian reserves the right to impose reasonable restrictions on the number, frequency, timing and scope of any such inspection so as to prevent or minimize any potential impairment or disruption of its operations, distraction of its personnel or breaches of security or confidentiality.  In addition, the Custodian shall be entitled to impose a commercially reasonable per person hourly charge for the cooperation and assistance of its personnel reasonably requested by the Agent in connection with any such inspection (the “Custodian Inspection Expenses”). Nothing contained in this section shall obligate the Custodian to provide access to or otherwise disclose any documents or information that the Custodian is obligated to maintain in confidence as a matter of law or regulation (and, to the extent that any such obligation is waivable by the Borrower, the Borrower hereby waives such obligation to the extent necessary to permit the Agent to have reasonable access to such documents or information).

(iv)           The Custodian shall have no responsibilities or duties whatsoever with respect to a Loan Document or Identified Security, except for such responsibilities as are expressly set forth herein or the Custodian Agreement.  The Custodian shall be entitled to all exculpations, indemnities and other benefits under this Agreement when acting as bailee for the Agent.

(v)           For the avoidance of doubt, as between the Borrower and the Agent, the Borrower agrees that the fees and expenses of representatives retained by the Agent in connection with any inspection requested by the Agent pursuant to Section 5(iii) (each, an “Agent Inspection”) will be covered by Section 5.06 of the Credit Agreement subject to the limitations set forth in such Section 5.06.

(vi)           The Borrower agrees to bear the cost of the Custodian Inspection Expenses for (a) the first three Agent Inspections requested in each calendar year and (b) any Agent Inspection requested or conducted while an Event of Default has occurred and is continuing.  The Agent agrees to bear the cost of any Custodian Inspection Expenses that are not required to be borne by the Borrower in accordance with the preceding sentence.

6.             Force Majeure; Special Damages.  The Custodian shall not be liable for delays, errors or losses occurring by reason of circumstances beyond its control, including, without limitation, acts of God, market disorder, terrorism, insurrection, war, riots, failure of transportation or equipment, or failure of vendors, communication or power supply.  In no event shall the Custodian be liable to any person or entity for consequential or special damages, even if the Custodian has been advised of the possibility or likelihood of such damages.

 

7.             Compliance with Legal Process and Judicial Orders.  The Custodian shall have no responsibility or liability to the Borrower or to the Agent or to any other person or entity for acting in accordance with any judicial or arbitral process, order, writ, judgment, decree or claim of lien relating to the Collateral or Collateral Account subject to this Agreement notwithstanding that such order or process is subsequently modified, vacated or otherwise determined to have been without legal force or effect.

 

  

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8.             Custodian Representations.

 

8.1           The Custodian agrees and confirms, as of the date hereof, and at all times until the termination of this Agreement that it has not entered into, and until the termination of this Agreement will not enter into, any agreement (other than the Custodian Agreement) with any other person or entity relating to the Collateral or the Collateral Account under which it has agreed to comply with entitlement orders (as defined in Section 8-102 of the UCC) or other instructions of such other person or entity.

 

8.2           The Collateral Account will be maintained in the manner set forth in the Custodian Agreement subject to the provisions hereof until termination of this Agreement, and the Custodian will not change the name or account number of the Collateral Account without prior notice to the Agent.

 

8.3           The Custodian has no knowledge of any claim to or interest in the Collateral Account, other than the interests therein of the Custodian, the Agent and the Borrower.  If the Custodian is notified by any person or entity that such person or entity asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Collateral Account, the Custodian will notify the Agent and the Borrower promptly thereof.

 

9.             Access To Reports.  Upon any pledge, release or substitution of Collateral in the Collateral Account, and upon any release of other Collateral otherwise in the possession of the Custodian, Custodian shall notify Agent within one business day of such change.  The Custodian will provide to the Agent a copy of a statement of the Collateral Account and other Collateral in the possession of the Custodian within fifteen (15) business days of the end of the calendar month (or more frequently as the Agent may reasonably request); provided, however, that the Custodian’s failure to forward a copy of such statement to the Agent shall not give rise to any liability hereunder.  Upon the Agent’s request, the Borrower hereby authorizes the Custodian to, and based on such authorization the Custodian hereby agrees to use commercially reasonable efforts to, provide to the Agent such other information concerning the Collateral Account and/or the Collateral as the Agent may reasonably request, provided that nothing contained herein shall obligate the Custodian to provide the Agent such information if it is not obligated to provide such information to the Borrower under the Custodian Agreement, and provided, further, that the Custodian’s failure to forward such information to the Agent shall not give rise to any liability hereunder

 

10.           Fees and Expenses, Etc. of Custodian.

 

10.1           Reimbursement For Costs; Indemnity.  In addition to the terms of the Custodian Agreement, the Borrower hereby agrees (a) to pay and reimburse the Custodian for any advances, costs, expenses (including, without limitation, reasonable attorney’s fees and costs) and disbursements that may be paid or incurred by the Custodian in connection with this Agreement or the arrangement contemplated hereby, including any that may be incurred in performing its duties or responsibilities pursuant to the terms of this Agreement and (b) to indemnify and hold the Custodian harmless from and against any other loss, cost or expense sustained or incurred by the Custodian in connection with this Agreement or the arrangement contemplated hereby, including any that may be incurred in performing its duties or responsibilities pursuant to the terms of this Agreement.

 

10.2           Liens.  Any fees, expenses or other amounts that may be owing to the Custodian from time to time pursuant to the terms hereof or of the Custodian Agreement shall be secured by any lien, encumbrance and other rights that the Custodian may have under the Custodian Agreement or applicable law; and (subject to Section 10.4) the Custodian shall be entitled to exercise such rights and interests against the Collateral and Collateral Account in accordance with the terms of the Custodian Agreement.

 

10.3           Advances.  It is hereby expressly acknowledged and agreed by the parties that the Custodian (including its affiliates, subsidiaries and agents) shall not be obligated to advance cash or investments to, for or on behalf of the Borrower in the Collateral Account; provided, however, that if the Custodian does advance cash or investments to the Collateral Account for any purpose (including but not limited to securities settlements, foreign exchange contracts, assumed settlement or account overdraft) for the benefit of the Borrower, any property at any time held pursuant to this Agreement and the Custodian Agreement shall be security therefor and, should the Borrower fail to repay the Custodian promptly, the Custodian shall (subject to Section 10.4) be entitled to utilize available cash and to dispose of Collateral to the extent necessary to obtain reimbursement.

  

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10.4           Subordination.  The Custodian subordinates any security interest or right of recoupment or setoff that it may have in or against the Collateral or the Collateral Account to the security interest in favor of the Agent.  However, the subordination will not apply to the extent that the Custodian’s security interest or right of recoupment or setoff secures or may reduce obligations of the Borrower to pay, reimburse or indemnify the Custodian for (i) the Custodian’s losses, fees, costs, or expenses incurred under Section 10.1 of this Agreement or Section 14 or 15 of the Custodian Agreement as in effect on the date of this Agreement (other than any advances or investments except to the extent provided in clause (iv) of this Section 10.4), (ii) returned or charged-back items, (iii) reversals or cancellations of payment orders and other electronic fund transfers, or (iv) payments owed to the Custodian for advances or investments made by the Custodian for the purposes of clearing and settling purchases and sales of securities or other financial assets credited to the Securities Account, provided that the Custodian’s rights with respect to this clause (iv) arising from any security or financial asset shall be limited to such security or financial asset.

 

11.           Notices.  Any notice, instruction or other instrument required to be given hereunder, or any requests and demands to or upon the respective parties hereto shall be in writing and may be sent by hand, or by facsimile transmission, telex, or overnight delivery by any recognized delivery service, prepaid or, for termination of this Agreement only, by certified or registered mail, and addressed as follows, or to such other address as any party may hereafter notify the other respective parties hereto in writing:

 

	(a)	 	If to the Custodian, then:	State Street Bank and Trust Company	  	  
	  	 	  	
John Hancock Tower

	  	  
	  	 	  	
200 Clarendon Street

	  	  
	  	 	  	
Boston, Massachusetts 02116

	  	  
	  	 	  	
Attention: Paul Woods, Senior Vice President

	  	  
	  	 	  	
Telephone: 617-662-9289

	  	  
	  	 	  	
Telecopy: 617-

	  	  
	  	 	  	  	  	  
	
 

	 	 	  	  	  
	(b)	 	If to the Agent, then: 	JPMorgan Chase Bank, N.A.	  	  
	  	 	  	
500 Stanton Christiana 

Road, Ops 2, Floor 03

	  	
 

	  	 	  	
Newark, DE, 19713-2107

	  	  
	  	 	  	
Attention: HeshanWanigasekera

	  	
 

	  	 	  	
Telephone Number:  (302) 634-4166

	  	  
	  	 	  	
Fax Number:  (302) 634-8459

	  	  

 

  

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(c)

	 	If to the Borrower, then:	
Corporate Capital Trust, Inc.

	  	  
	  	 	  	
450 South Orange Avenue

	  	  
	  	 	  	
Orlando, FL 32801

	  	  
	
 

	 	  	
Attention:  Chief Financial Officer

	  	  
	  	 	  	
Telephone: (407) 540-2599

	  	  
	  	 	  	
Telecopy: (407) 540-7653

	  	  

 

12.           Amendment.  No amendment or modification of this Agreement will be effective unless it is in writing and signed by each of the parties hereto.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but such counterparts together shall constitute one and the same instrument.

 

13.           Termination.  This Agreement shall continue in effect until the Agent has notified the Custodian in writing that this Agreement is to be terminated.  Upon receipt of such notice, the Agent shall have no further right to originate instructions with respect to the Collateral or Collateral Account.  This Agreement may not be terminated by the Borrower without the prior written consent of the Agent (which consent shall be given pursuant to Section 10.11 of the Security Agreement).  This Agreement may be terminated by the Custodian, and shall terminate in the event of termination of the Custodian Agreement, in each case following not less than thirty (30) days’ prior written notice to each of the other parties hereto.  Upon termination of this Agreement by any party, any Collateral that has not been released by the Agent at or prior to the time of termination shall be transferred to a successor custodian or bank designated by the Borrower and reasonably acceptable to the Agent (or, from and after receipt by the Custodian of a Notice of Exclusive Control, designated by the Agent).  In the event no successor is agreed upon, the Custodian shall be entitled to petition a court of competent jurisdiction to appoint a successor custodian and shall be indemnified by the Borrower for any costs and expenses (including, without limitation, attorney’s fees) relating thereto.

 

14.           Severability.  In the event any provision of this Agreement is held illegal, void or unenforceable, the remainder of this Agreement shall remain in effect

 

15.           Successors; Assignment.  This Agreement shall be binding upon the parties hereto and their respective successors and assigns.  No party may assign or transfer any of its rights or obligations hereunder without the prior written consent of the other parties hereto.

 

16.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of The State of New York, without giving effect to the conflict of law provisions thereof.

 

17.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but such counterparts together shall constitute one and the same instrument.

 

18.           Headings.  Any headings appearing on this Agreement are for convenience only and shall not affect the interpretation of any of the terms of this Agreement.

19.           Confidentiality.  Each of the Custodian, the Borrower and the Agent agrees that it shall use commercially reasonable efforts to maintain, and to cause its agents, attorneys and accountants to maintain, the confidentiality of the specific terms of this Agreement, and to not discuss or disclose, nor authorize such agents, attorneys or accountants to discuss or disclose, such terms, directly or indirectly, to any person, other than: (1) to such agents, attorneys or accountants, subject to the terms hereof; (2) as may be legally required by applicable law or regulation or by any subpoena or similar legal process, or as may be requested by a regulator having jurisdiction over such party; (3) in connection with litigation to which such party is a party; (4) to the extent such terms become publicly available other than as a result of a breach of this Agreement; or (5) in the case of the Agent any other person to whom the Agent is permitted to disclose confidential information of the Borrower in accordance with Section 9.13(b) of the Credit Agreement (as defined in the Security Agreement).

  

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IN WITNESS WHEREOF, the undersigned have executed this Agreement under their respective seals as of the date first written above.

 

	 	 
	 	 	STATE STREET BANK AND TRUST COMPANY
	
 

	
By: 

	/s/ Michael F. Rogers
	 	 	Name: Michael F. Rogers
	 	 	Title: Executive Vice President

 

	 	
JPMORGAN CHASE BANK, N.A., as Collateral Agent

	 	 	 
	
 

	
By: 

	/s/ Lauren Gubkin
	 	 	Name: Lauren Gubkin
	 	 	Title: Vice President

 

	 	CORPORATE CAPITAL TRUST, INC.
	 	 	 
	
 

	
By: 

	/s/ Paul S. Saint-Pierre
	 	 	Name: Paul S. Saint-Pierre
	 	 	Title: Chief Financial Officer

  

  

  

 

Exhibit A

[Agent letterhead]

 

State Street Bank and Trust Company

John Hancock Tower

200 Clarendon Street

Boston, Massachusetts 02116

Attention: Paul Woods, Senior Vice President

 

NOTICE OF EXCLUSIVE CONTROL

 

We hereby instruct you, pursuant to the terms of that certain Control Agreement dated as of September 4, 2013 (as from time to time amended and supplemented, the “Control Agreement”) among the undersigned, Corporate Capital Trust, Inc. (together with its successors and assigns, the “Borrower”) and you, as Custodian, that you (i) shall not follow any instructions or entitlement orders of the Borrower in respect of the Collateral Account or the Collateral (as each such capitalized term is defined in the Control Agreement) held by you for the Borrower, and (ii) unless and until otherwise expressly instructed by the undersigned, shall exclusively follow the entitlement orders and instructions of the undersigned in respect of the Collateral Account and the Collateral.

	 	  

Very truly yours,

JPMorgan Chase Bank, N.A., as Collateral Agent

By:________________________________

Authorized Signatory

	 	 

 

cc:           Corporate Capital Trust, Inc.

  

A-1

  

Exhibit B

to

Control Agreement

among Corporate Capital Trust, Inc.,

JPMorgan Chase Bank, N.A., and State Street Bank and Trust Company

dated:  August __, 2013

AUTHORIZED PERSONS FOR AGENT

State Street Bank and Trust Company is directed to accept and act upon written instructions or entitlement orders received from any one of the following persons at Agent:

	
Name

 

	
Telephone/Fax Number

	
Signature

	
1.

	
1.     Telephone:

Facsimile:

	
1.  _____________________

	
2.

	
2.     Telephone:

Facsimile:

	
2.  _____________________

	
3.

	
3.     Telephone:

Facsimile:

	
3.  _____________________

	
4.

	
4.     Telephone:

Facsimile:

	
4.  _____________________

	
5.

	
5.     Telephone:

Facsimile:

	
5.  _____________________

 

	
Authorized by:________________________________

	
                                   as authorized agent of Agent

	
                                Name:___________________________

	                                   Title:____________________________
	                                   Date:____________________________
	  	  	  

 

B-1ex10-1.htm

Exhibit 10.1

METASTAT, INC.

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made and entered into on September 3, 2013 (the “Effective Date”) by and between MetaStat, Inc. (the “Company”) and Elizabeth Buck (“Executive”).  The Company and Executive are hereinafter collectively referred to as the “Parties”, and individually referred to as a “Party”.

 

Recitals

 

A.           The Company desires assurance of the association and services of Executive in order to retain Executive’s experience, skills, abilities, background and knowledge, and is willing to engage Executive’s services on the terms and conditions set forth in this Agreement.

 

B.           Executive desires to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

Agreement

 

In consideration of the foregoing Recitals and the mutual promises and covenants herein contained, and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows:

 

1. Employment.

 

1.1 Title.  Effective as of the Effective Date, Executive’s position shall be Chief Scientific Officer for Therapeutics, subject to the terms and conditions set forth in this Agreement.

 

1.2 Term.  The term of this Agreement shall begin on the Effective Date and shall continue until it is terminated pursuant to Section 4 herein (the “Term”).

 

1.3 Duties.  Executive shall do and perform all services, acts or things necessary or advisable to manage and conduct the business of the Company and that are normally associated with the position of Chief Scientific Officer for Therapeutics.  Executive shall report to the Company’s Chief Executive Officer.

 

1.4 Policies and Practices.  The employment relationship between the Parties shall be governed by this Agreement and by the policies and practices established by the Company and/or the Board of Directors (“Board”), or any designated committee thereof.  In the event that the terms of this Agreement differ from or are in conflict with the Company’s policies or practices or the Company’s Employee Handbook, this Agreement shall control.

 

1.5 Location.  Unless the Parties otherwise agree in writing, during the Term Executive shall perform the services that she is required to perform pursuant to this Agreement from the Company’s offices in Montclair, New Jersey, or such other location as the Parties may mutually agree; provided, however, that the Company may from time to time require her to travel temporarily for short-term visits to other locations in connection with the Company’s business. 

  

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2. Loyalty; Noncompetition; Nonsolicitation.

 

2.1 Loyalty.  During Executive’s employment by the Company, Executive shall devote Executive’s full business energies, interest, abilities and productive time to the performance of Executive’s duties under this Agreement. Notwithstanding the foregoing, except as otherwise agreed to in writing, Executive shall have the right to perform such incidental services as are necessary in connection with (a) her private passive investments, (b) her charitable or community activities, (c) her participation in trade or professional organizations, and (d) her service on the board of directors (or comparable body) of any third-party corporate entity that is not a Competitive Entity (as defined in Section 2.3), so long as these activities do not interfere with Executive’s duties hereunder and, with respect to (d), Executive obtains prior Company consent, which consent will not be unreasonably withheld.

 

2.2 Agreement not to Participate in Company’s Competitors.  During the Term, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by Executive to be adverse or antagonistic to the Company, its business, or prospects, financial or otherwise, or in any company, person, or entity that is, directly or indirectly, in competition with the business of the Company or any of its Affiliates (as defined below).  Ownership by Executive, in professionally managed funds over which the Executive does not have control or discretion in investment decisions, or as a passive investment, of less than two percent (2%) of the outstanding shares of capital stock of any corporation with one or more classes of its capital stock listed on a national securities exchange or publicly traded on a national securities exchange or in the over-the-counter market shall not constitute a breach of this Section. For purposes of this Agreement, “Affiliate,” means, with respect to any specific entity, any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified entity.

 

2.3 Covenant not to Compete.  During the Term and for a period of six (6) months thereafter, or in the event the Executive is terminated or resigns pursuant to the terms of Section 4.5.4 hereof, for a period of twelve (12) months thereafter (the “Restricted Period”), Executive shall not engage in competition with the Company and/or any of its Affiliates, either directly or indirectly, in any manner or capacity, as adviser, principal, agent, affiliate, promoter, partner, officer, director, employee, stockholder, owner, co-owner, consultant, or member of any association or otherwise, in any phase of the area of Mena biology or any proprietary targets of the Company discovered during Executive’s employment (a “Competitive Entity”), except with the prior written consent of the Board.

 

2.4 Nonsolicitation.  During the Restricted Period, Executive shall not:  (i) solicit or induce, or attempt to solicit or induce, any employee of the Company or its Affiliates to leave the employ of the Company or such Affiliate; or (ii) solicit or attempt to solicit the business of any client or customer of the Company or its Affiliates with respect to products, services, or investments similar to those provided or supplied by the Company or its Affiliates.

 

2.5 Acknowledgements.  Executive acknowledges and agrees that her services to the Company pursuant to this Agreement are unique and extraordinary and that in the course of performing such services Executive shall have access to and knowledge of significant confidential, proprietary, and trade secret information belonging to the Company.  Executive agrees that the covenant not to compete and the nonsolicitation obligations imposed by this Section 2 are reasonable in duration, geographic area, and scope and are necessary to protect the Company’s legitimate business interests in its goodwill, its confidential, proprietary, and trade secret information, and its investment in the unique and extraordinary services to be provided by Executive pursuant to this Agreement.  If, at the time of enforcement of this Section 2, a court holds that the covenant not to compete and/or the nonsolicitation obligations described herein are unreasonable or unenforceable under the circumstances then existing, then the Parties agree that the maximum duration, scope, and/or geographic area legally permissible under such circumstances will be substituted for the duration, scope and/or area stated herein.

 

3. Compensation of the Executive.

 

3.1 Base Salary.  The Company shall pay Executive a base salary (the “Base Salary”) at the annualized rate of One Hundred Seventy Five Thousand Dollars ($175,000), less payroll deductions and all required withholdings, payable in regular periodic payments in accordance with the Company’s normal payroll practices.  The Base Salary shall be prorated for any partial year of employment on the basis of a 365-day fiscal year.

  

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3.2 Annual Milestone Bonus.  At the sole discretion of the Board or the compensation committee of the Board (the “Compensation Committee”), following each calendar year of employment, Executive shall be eligible to receive an additional cash bonus (the “Annual Milestone Bonus”), based (in whole or in part) on Executive’s attainment of certain financial, clinical development, and/or business milestones (the “Milestones”) to be established annually by the Board or the Compensation Committee. The determination of whether Executive has met the Milestones, and if so, the bonus amount (if any) that will be paid, shall be determined by the Board or the Compensation Committee in its sole and absolute discretion.  Any Annual Milestone Bonuses shall be paid in cash as either single lump-sum payments or in installments, as determined by the Board or the Compensation Committee.  Executive shall also be entitled to any other bonuses at the sole discretion of the Board.

 

3.3 Stock Options.  Promptly following the Effective Date and subject to the terms of the Company’s 2012 Amended and Restated Omnibus Securities and Incentive Plan (the “Plan”), the Company shall issue to the Executive 160,000 stock options (the “Stock Options”).  The Stock Options or any other securities will be governed by the Plan and the exercise price per share of the Stock Options or any other stock options will be equal to the fair market value of a single share of common stock of the Company on the issuance date in accordance with the Plan.  The Stock Options shall vest upon achieving the milestones set forth on Exhibit B attached hereto.  In addition, at the sole discretion of the Board or the Compensation Committee and subject to the terms of the Plan, Executive shall be entitled to receive additional stock options or other securities pursuant to the Plan.

 

3.4 Expense Reimbursements. The Company will reimburse Executive for all reasonable business expenses Executive incurs in conducting her duties hereunder, pursuant to the Company’s usual expense reimbursement policies, but in no event later than ninety days after the end of the calendar month following the month in which such expenses were incurred by Executive; provided that Executive supplies the appropriate substantiation for such expenses no later than the end of the calendar month following the month in which such expenses were incurred by Executive.

 

3.5 Changes to Compensation.  Executive’s compensation will be reviewed at least on an annual basis and the Base Salary may be increased from time to time in the Company’s sole discretion.  Executive’s Base Salary also may be reduced in connection with any Company-wide decrease in executive compensation provided the Base Salary does not fall below the annualized rate of One Hundred Seventy Five Thousand Dollars ($175,000).

 

3.6 Employment Taxes.  All of Executive’s compensation shall be subject to customary withholding taxes and any other employment taxes as are commonly required to be collected or withheld by the Company.

 

3.7 Benefits. The Executive shall, in accordance with Company policy and the applicable plan documents, be eligible to participate in benefits under any benefit plan or arrangement, including medical, dental, vision, disability and life insurance programs, that may be in effect from time to time and made available to the Company’s senior management employees, subject to the terms and conditions of those benefit plans.  Notwithstanding the foregoing to the contrary, the Parties agree that in lieu of any medical benefits to be received by the Executive, the Executive may elect to have the Company pay to the Executive an amount in cash equal to the amount saved by the Company as a result of the Executive not participating in the Company’s medical plan.

 

3.8 Holidays; Vacation; Personal and Sick Days.  Executive shall receive no less than four (4) weeks of paid vacation per year, which cannot be taken in one four (4) week increment, but which shall accrue if not used in any year and be paid to Executive or carried forward to subsequent years consistent with Company policy and will receive paid Company holidays in accordance with Company policy.  The Executive shall also be entitled to an unlimited number of sick and/or personal days.

 

4. Termination.

 

4.1 Termination by the Company.  Executive’s employment with the Company is at will and may be terminated by the Company at any time and for any reason, or for no reason, including, but not limited to, under the following conditions:

  

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4.1.1 Termination by the Company for Cause.  The Company may terminate Executive’s employment under this Agreement for “Cause” (as defined below) by delivery of written notice to Executive.  Any notice of termination given pursuant to this Section 4.1.1 shall effect termination as of the date of the notice, or as of such other date as specified in the notice.

 

4.1.2 Termination by the Company without Cause.  The Company may terminate Executive’s employment under this Agreement without Cause at any time and for any reason, or for no reason.  Such termination shall be effective on the date Executive is so informed, or as otherwise specified by the Company.

 

4.2 Termination by Resignation of Executive.  Executive’s employment with the Company is at will and may be terminated by Executive at any time and for any reason, or for no reason, including via a resignation for Good Reason in accordance with the procedures set forth in Section 4.6.3 below.

 

4.3 Termination for Death or Complete Disability.  Executive’s employment with the Company shall automatically terminate effective upon the date of Executive’s death or Complete Disability (as defined below).

 

4.4 Termination by Mutual Agreement of the Parties.  Executive’s employment with the Company may be terminated at any time upon a mutual agreement in writing of the Parties.  Any such termination of employment shall have the consequences specified in such agreement.

 

4.5 Compensation Upon Termination.

 

4.5.1 Death or Complete Disability.  If, during the Term of this Agreement, Executive’s employment shall be terminated by death or Complete Disability, the Company shall pay to Executive, her estate, or her heirs, as applicable, any Base Salary owed to Executive, expenses reimbursement amounts owed to Executive, all unpaid amounts of any Annual Milestone Bonus(es) Executive earned prior to the termination date, and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  In addition, subject to Executive (or her estate or heirs, as applicable) furnishing to the Company an executed waiver and release of claims in the form attached hereto as Exhibit A (or in such other form as may later be specified by the Company) (the “Release”) within the time period specified therein, and allowing the Release to become effective in accordance with its terms, then Executive, her estate, or her heirs, as applicable, shall also be entitled to: (1) continuation of Executive’s salary (at the Base Salary rate in effect at the time of termination) and benefits for a period of ninety (90) days following the termination date; and (2) partial accelerated vesting of each of Executive’s outstanding stock options such that, on the effective date of the Release (as defined therein), Executive shall receive immediate accelerated vesting of each option with respect to the same number of shares that would have vested if Executive had continued in employment with the Company through the next anniversary of the grant date for such option, in accordance with the vesting schedule applicable to such option, provided, however, that if the termination date falls on an anniversary of the grant date of any stock option, no accelerated vesting will be provided for such stock option.  All stock options that have vested in connection with Executive’s termination under this Section 4.5.1 shall remain exercisable for ninety (90) days following such termination.  The Base Salary payments will be subject to standard payroll deductions and withholdings and will be made on the Company’s regular payroll cycle, provided, however, that any payments otherwise scheduled to be made prior to the effective date of the Release shall accrue and be paid in the first payroll period that follows such effective date.

 

4.5.2 Termination For Cause or Resignation without Good Reason.  If, during the Term of this Agreement, Executive’s employment is terminated by the Company for Cause, or Executive resigns her employment hereunder without Good Reason, the Company shall pay Executive any Base Salary owed to Executive, expenses reimbursement amounts owed to Executive, all unpaid amounts of any Annual Milestone Bonus(es) Executive earned prior to the termination date by meeting the conditions set forth in Section 3.2, and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  The Company shall thereafter have no further obligations to Executive under this Agreement, except as otherwise provided by law.

  

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4.5.3 Termination Without Cause or Resignation For Good Reason Not In Connection with a Change of Control.  If the Company terminates Executive’s employment without Cause, or if Executive resigns for Good Reason, at any time other than upon the occurrence of, or within the six (6) months following, the effective date of a Change of Control (as defined below), the Company shall pay Executive any Base Salary owed to Executive, expenses reimbursement amounts owed to Executive, all unpaid amounts of any Annual Milestone Bonus(es) Executive earned prior to the termination date, and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  In addition, subject to Executive furnishing to the Company an executed Release within the time period specified therein, and allowing the Release to become effective in accordance with its terms, Executive shall be entitled to: (1) severance in the form of continuation of her salary (at the Base Salary rate in effect at the time of termination) and benefits for a period of six (6) months following the termination date; and (2) accelerated vesting of each of Executive’s outstanding stock options such that, on the effective date of the Release, Executive shall receive immediate accelerated vesting of each option with respect to the same number of shares that would have vested if Executive had continued in employment with the Company through the next anniversary of the grant date for such option, in accordance with the vesting schedule applicable to such option, provided, however, that if the termination date falls on an anniversary of the grant date of any stock option, no accelerated vesting will be provided for such stock option. All stock options that have vested in connection with Executive’s termination under this Section 4.5.3 shall remain exercisable for ninety (90) days following such termination.  These payments will be subject to standard payroll deductions and withholdings and will be made on the Company’s regular payroll cycle, provided, however, that any payments otherwise scheduled to be made prior to the effective date of the Release shall accrue and be paid in the first payroll period that follows such effective date.

 

4.5.4 Termination Without Cause or Resignation For Good Reason In Connection with a Change of Control.  If the Company terminates Executive’s employment without Cause, or if Executive resigns for Good Reason, upon the occurrence of, or within the six (6) months following, the effective date of a Change of Control, the Company shall pay Executive any Base Salary owed to Executive, expenses reimbursement amounts owed to Executive, all unpaid amounts of any Annual Milestone Bonus(es) Executive earned prior to the termination date, and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  In addition, subject to Executive furnishing to the Company an executed Release within the time period specified therein, and allowing the Release to become effective in accordance with its terms, then Executive shall be entitled to: (1) severance in the form of continuation of her salary (at the Base Salary rate in effect at the time of termination) and benefits for a period of twelve (12) months following the termination date; and (2) immediate accelerated vesting of any unvested shares subject to any outstanding stock option(s), such that, on the effective date of the Release, the Executive shall be vested in one hundred percent (100%) of the shares subject to such option(s).  All stock options that have vested in connection with Executive’s termination under this Section 4.5.4 shall remain exercisable for ninety (90) days following such termination. The Base Salary payments will be subject to standard payroll deductions and withholdings and will be made on the Company’s regular payroll cycle, provided, however, that any payments otherwise scheduled to be made prior to the effective date of the Release shall accrue and be paid in the first payroll period that follows such effective date.

 

4.6 Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

 

4.6.1 Complete Disability.  A termination for “Complete Disability” shall occur:  (i) when the Board has provided a written termination notice to Executive supported by a written statement from a reputable independent physician to the effect that Executive is or shall have become so physically or mentally incapacitated as to be unable to resume, within the ensuing six (6) months, her employment under this Agreement by reason of such physical or mental illness or injury; or (ii) upon rendering of a written termination notice by the Board after the Board determines, in its sole and complete discretion, that Executive has been unable to substantially perform her job duties hereunder for sixty (60) or more consecutive days, or more than one hundred and twenty (120) days in any consecutive twelve (12) month period, by reason of any physical or mental illness or injury.  For purposes of this Section, at the Company’s request Executive agrees to make herself available and to cooperate in a reasonable examination by a reputable independent physician retained by the Company.

  

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4.6.2 Cause.  “Cause” for the Company to terminate Executive’s employment hereunder shall mean the occurrence of any of the following events, as determined by the Company and/or the Board in its and/or their sole and absolute discretion:

 

(i) The willful failure, disregard or refusal by Executive to perform her material duties or obligations under this Agreement which, to the extent it is curable by the Executive, is not cured within thirty (30) days after written notice thereof is given to Executive by the Company;

 

(ii) Any willful, intentional or grossly negligent act by Executive having the effect of materially injuring (whether financially or otherwise) the business or reputation of the Company or any of its Affiliates, including but not limited to, any senior officer, director or executive of the Company or any of its Affiliates;

 

(iii) Willful misconduct by Executive with respect to any of the material duties or obligations of Executive under this Agreement, including, without limitation, willful insubordination with respect to lawful directions received by Executive from the Board which, to the extent it is curable by the Executive, is not cured within thirty (30) days after written notice thereof is given to Executive by the Company;

 

(iv) Executive’s indictment of any felony involving moral turpitude (including entry of a nolo contendere plea);

 

(v) The determination, after a reasonable and good-faith investigation by the Company, that the Executive engaged in some form of harassment or discrimination prohibited by law (including, without limitation, age, sex or race harassment or discrimination);

 

(vi) Executive’s material misappropriation or embezzlement of the property of the Company or its Affiliates (whether or not a misdemeanor or felony); or

 

(vii) Material breach by Executive of any of the provisions of this Agreement, of any Company policy, and/or of her Proprietary Information and Inventions Agreement.

 

For purposes of this definition, the Parties agree that any breach of Sections 2 or 5 of this Agreement shall be deemed a material breach that is not capable of cure by Executive.

 

4.6.3 Good Reason.  For purposes of this Agreement, and subject to the caveat at the end of this Section, “Good Reason” for Executive to terminate her employment hereunder shall mean the occurrence of any of the following events without Executive’s consent:

 

(i) a material reduction by the Company of Executive’s Base Salary as initially set forth herein or as the same may be increased from time to time, provided, however, that if such reduction occurs in connection with a Company-wide decrease in Executive compensation, such reduction shall not constitute Good Reason for Executive to terminate her employment;

 

(ii) a material breach of this Agreement by the Company; or

 

(iii) a material adverse change in Executive’s title, duties, authority, responsibilities or reporting chain relative to Executive’s duties, authority, or responsibilities in effect immediately prior to such reduction; or

 

(iv) the Company requiring the Executive to be based more than thirty-five (35) miles from the Company’s location in Long Island where the Executive is performing her duties.

  

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Provided, however, that, any such termination by Executive shall only be deemed for Good Reason pursuant to this definition if: (1) Executive gives the Company written notice of her intent to terminate for Good Reason within thirty (30) days following the first occurrence of the condition(s) that she believes constitute(s) Good Reason, which notice shall describe such condition(s); (2) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice (the “Cure Period”); and (3) Executive voluntarily terminates her employment within thirty (30) days following the end of the Cure Period.

 

4.6.4 Change of Control.  For purposes of this Agreement, “Change of Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events (excluding in any case transactions in which the Company or its successors issues securities to investors primarily for capital raising purposes):

 

(i) the acquisition by a third party of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction;

 

(ii) a merger, consolidation or similar transaction following which the stockholders of the Company immediately prior thereto do not own at least fifty percent (50%) of the combined outstanding voting power of the surviving entity (or that entity’s parent) in such merger, consolidation or similar transaction;

 

(iii) the dissolution or liquidation of the Company; or

 

(iv) the sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company.

 

4.7 Survival of Certain Sections.  Sections 2, 4, 5, 6, 7, 8, 9, 12, 13, 16, 17 and 19 of this Agreement will survive the termination of this Agreement.

 

4.8 Parachute Payment.  If any payment or benefit the Executive would receive pursuant to this Agreement (“Payment”) would (i) constitute a “Parachute Payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion of the Payment, which such amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting Parachute Payments is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards other than stock options; (iii) cancellation of accelerated vesting of stock options; and (iv) reduction of other benefits paid to Executive.  Within any such category of payments and benefits (that is, (i), (ii), (iii) or (iv)), a reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A (as defined in Section 4.9 below) and then with respect to amounts that are.  In the event that acceleration of compensation from Executive’s equity awards is to be reduced, such acceleration of vesting shall be canceled, subject to the immediately preceding sentence, in the reverse order of the date of grant.

 

In the event it is subsequently determined by the Internal Revenue Service that some portion of the Reduced Amount (as determined pursuant to clause (x) in the preceding paragraph) is subject to the Excise Tax, Executive agrees to promptly return to the Company a sufficient amount of the Payment so that no portion of the Reduced Amount is subject to the Excise Tax.  For the avoidance of doubt, if the Reduced Amount is determined in accordance with clause (y) in the preceding paragraph, Executive will have no obligation to return any portion of the Payment pursuant to the preceding sentence.

  

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Unless Executive and the Company agree on an alternative accounting, law or consulting firm, the accounting firm then engaged by the Company for general tax compliance purposes shall perform the foregoing calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized accounting, law or consulting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting, law or consulting firm required to be made hereunder.

 

The Company shall use commercially reasonable efforts such that the accounting, law or consulting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to Executive and the Company within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Executive or the Company) or such other time as requested by the Executive or the Company.

 

4.9 Application of Internal Revenue Code Section 409A.  Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement (the “Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive to incur the additional 20% tax under Section 409A.

 

It is intended that each installment of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits constitute “deferred compensation” under Section 409A and Executive is, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s Separation From Service, or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”), the Company (or the successor entity thereto, as applicable) shall (A) pay to Executive a lump sum amount equal to the sum of the Severance Benefit payments that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Severance Benefits in accordance with the applicable payment schedules set forth in this Agreement.

 

Notwithstanding anything to the contrary set forth herein, Executive shall receive the Severance Benefits described above, if and only if Executive duly executes and returns to the Company within the applicable time period set forth therein, but in no event more than forty-five days following Separation From Service, a separation agreement containing the Company’s standard form of release of claims in favor of the Company (attached to this Agreement as Exhibit A) and other standard provisions, including without limitation, those relating to non-disparagement and confidentiality (the “Separation Agreement”), and permits the release of claims contained therein to become effective in accordance with its terms.  Notwithstanding any other payment schedule set forth in this Agreement, none of the Severance Benefits will be paid or otherwise delivered prior to the effective date of the Separation Agreement.  Except to the extent that payments may be delayed until the Specified Employee Initial Payment Date pursuant to the preceding paragraph, on the first regular payroll pay day following the effective date of the Separation Agreement, the Company will pay Executive the Severance Benefits Executive would otherwise have received under the Agreement on or prior to such date but for the delay in payment related to the effectiveness of the Separation Agreement, with the balance of the Severance Benefits being paid as originally scheduled.  All amounts payable under the Agreement will be subject to standard payroll taxes and deductions.

  

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5. Confidential And Proprietary Information.

 

As a condition of employment Executive agrees to execute and abide by the Company’s Proprietary Information and Inventions Agreement (“PIIA”).

 

6. Assignment and Binding Effect.

 

This Agreement shall be binding upon and inure to the benefit of Executive and Executive’s heirs, executors, personal representatives, assigns, administrators and legal representatives.  Because of the unique and personal nature of Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Executive.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.  Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose, “successor” means any person, firm, corporation or other business entity which at any tie, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.

 

7. Notices.

 

All notices or demands of any kind required or permitted to be given by the Company or Executive under this Agreement shall be given in writing and shall be personally delivered (and receipted for) or faxed during normal business hours or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Company:

 

MetaStat, Inc.

8 Hillside Avenue, Suite 207

Montclair, NJ 07042

Attn: CEO

 

If to Executive:

 

Elizabeth Buck

[______________]

[______________]

 

Any such written notice shall be deemed given on the earlier of the date on which such notice is personally delivered or three (3) days after its deposit in the United States mail as specified above.  Either Party may change its address for notices by giving notice to the other Party in the manner specified in this Section.

 

8. Choice of Law.

 

This Agreement shall be construed and interpreted in accordance with the internal laws of the State of New York without regard to its conflict of laws principles.

 

9. Integration.

 

This Agreement, including Exhibit A and the PIIA, contains the complete, final and exclusive agreement of the Parties relating to the terms and conditions of Executive’s employment and the termination of Executive’s employment, and supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Parties.

  

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10. Amendment.

 

This Agreement cannot be amended or modified except by a written agreement signed by Executive and the Company.

 

11. Waiver.

 

No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived, except with the written consent of the Party against whom the wavier is claimed, and any waiver or any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach.

 

12. Severability.

 

The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable, invalid or illegal.  Such court shall have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision, which most accurately represents the Parties’ intention with respect to the invalid or unenforceable term, or provision.

 

13. Interpretation; Construction.

 

The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement.  This Agreement has been drafted by legal counsel representing the Company, but the Executive has been encouraged to consult with, and has consulted with, Executive’s own independent counsel and tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

14. Representations and Warranties.

 

Executive represents and warrants that Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that Executive’s execution and performance of this Agreement will not violate or breach any other agreements between the Executive and any other person or entity.

 

15. Counterparts.

 

This Agreement may be executed in two counterparts, each of which shall be deemed an original, all of which together shall contribute one and the same instrument. Signatures to this Agreement transmitted by fax, by email in “portable document format” (“.pdf”) or by any other electronic means intended to preserve the original graphic and pictorial appearance of this Agreement shall have the same effect as physical delivery of the paper document bearing original signature.

  

-10-

  

 

16. Arbitration.

 

To ensure the rapid and economical resolution of disputes that may arise in connection with the Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to Executive’s employment, or the termination of that employment, will be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration pursuant to the Federal Arbitration Act in New York, New York conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successors, under the then current rules of JAMS for employment disputes; provided that the arbitrator shall:  (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award.  Accordingly, Executive and the Company hereby waive any right to a jury trial.  Both Executive and the Company shall be entitled to all rights and remedies that either Executive or the Company would be entitled to pursue in a court of law.  The Company shall pay any JAMS filing fee and shall pay the arbitrator’s fee.  The arbitrator shall have the discretion to award attorneys fees to the party the arbitrator determines is the prevailing party in the arbitration.  Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute involving confidential, proprietary or trade secret information, or intellectual property rights, by Court action instead of arbitration.

 

17. Indemnification.

 

The Company shall defend and indemnify Executive in her capacity as Chief Scientific Officer for Therapeutics of the Company to the fullest extent permitted under the Nevada Private Corporations Law.  The Company shall also maintain a policy for indemnifying its officers and directors, including but not limited to the Executive, for all actions permitted under the Nevada Private  Corporations Law taken in good faith pursuit of their duties for the Company, including but not limited to maintaining an appropriate level of Directors and Officers Liability coverage and maintaining the inclusion of such provisions in the Company’s by-laws or articles of incorporation, as applicable and customary.  The rights to indemnification shall survive any termination of this Agreement.

 

18. Trade Secrets Of Others.

 

It is the understanding of both the Company and Executive that Executive shall not divulge to the Company and/or its subsidiaries any confidential information or trade secrets belonging to others, including Executive’s former employers, nor shall the Company and/or its Affiliates seek to elicit from Executive any such information.  Consistent with the foregoing, Executive shall not provide to the Company and/or its Affiliates, and the Company and/or its Affiliates shall not request, any documents or copies of documents containing such information.

 

19. Advertising Waiver.

 

Executive agrees to permit the Company, and persons or other organizations authorized by the Company, to use, publish and distribute advertising or sales promotional literature concerning the products and/or services of the Company, or the machinery and equipment used in the provision thereof, in which Executive’s name and/or pictures of Executive taken in the course of Executive’s provision of services to the Company appear.  Executive hereby waives and releases any claim or right Executive may otherwise have arising out of such use, publication or distribution.

  

-11-

  

 

In Witness Whereof, the Parties have executed this Agreement as of the date first above written.

 

MetaStat, Inc.

 

By: /s/ Oscar L. Bronsther

Name: Oscar L. Bronsther

Its:       Chief Executive Officer

 

Dated:                                                                          

 

Executive:

 

/s/ Elizabeth Buck

Elizabeth Buck

 

Dated:                                         

  

  

  

  

-12-

  

 

EXHIBIT A

 

RELEASE AND WAIVER OF CLAIMS

 

TO BE SIGNED ON OR FOLLOWING THE SEPARATION DATE ONLY

 

In consideration of the payments and other benefits set forth in the Employment Agreement effective as of September 3, 2013, to which this form is attached, I, Elizabeth Buck, hereby furnish MetaStat, Inc. (the “Company”), with the following release and waiver (“Release and Waiver”).

 

In exchange for the consideration provided to me by the Employment Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its current and former directors, officers, employees, stockholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date that I sign this Agreement (collectively, the “Released Claims”).  The Released Claims include, but are not limited to:  (a) all claims arising out of or in any way related to my employment with the Company, or the termination of that employment; (b) all claims related to my compensation or benefits from the Company including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, misclassification, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the fair employment practices statutes of the state or states in which I have provided services to the Company and/or any other federal, state or local law, regulation or other requirement.  Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party, the charter, bylaws, or operating agreements of the Company, or under applicable law; (b) any rights or claims to unemployment compensation, funds accrued in my 401k account, or any vested equity incentives; (c) any rights that are not waivable as a matter of law; or (d) any claims arising from the breach of this Agreement.  I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

 

I expressly waive and relinquish any and all rights and benefits under any applicable law or statute providing, in substance, that a general release does not extend to claims which a party does not know or suspect to exist in her or her favor at the time of executing the release, which if known by her would have materially affected the terms of such release.

 

I acknowledge that, among other rights, I am waiving and releasing any rights I may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for this Release and Waiver is in addition to anything of value to which I was already entitled as an executive of the Company.  If I am 40 years of age or older upon execution of this Release and Waiver, I further acknowledge that I have been advised, as required by the Older Workers Benefit Protection Act, that: (a) the release and waiver granted herein does not relate to claims under the ADEA which may arise after this Release and Waiver is executed; (b) I should consult with an attorney prior to executing this Release and Waiver; and (c) I have twenty-one (21) days from the date of termination of my employment with the Company in which to consider this Release and Waiver (although I may choose voluntarily to execute this Release and Waiver earlier); (d) I have seven (7) days following the execution of this Release and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waiver shall not be effective until the seven (7) day revocation period has expired without my having previously revoked this Release and Waiver.

  

-13-

  

 

I acknowledge my continuing obligations under my Proprietary Information and Inventions Agreement.  Pursuant to the Proprietary Information and Inventions Agreement I understand that among other things, I must not use or disclose any confidential or proprietary information of the Company and I must immediately return all Company property and documents (including all embodiments of proprietary information) and all copies thereof in my possession or control.  I understand and agree that my right to the severance pay I am receiving in exchange for my agreement to the terms of this Release and Waiver is contingent upon my continued compliance with my Proprietary Information and Inventions Agreement.

 

This Release and Waiver constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated herein.  This Release and Waiver may only be modified by a writing signed by both me and a duly authorized officer of the Company.

 

Date: __________________                    By:    _____________        ____                                                            

                                                                                 Elizabeth Buck

  

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EXHIBIT B

 

MILESTONES

	
  

	
Vesting of Stock Options:

	
·  

	
One-fourth to vest upon reaching milestone #1 below.

	
·  

	
One-fourth to vest upon reaching milestone #2 below.

	
·  

	
One-fourth to vest upon reaching milestone #3 below.

	
·  

	
One-fourth to vest upon reaching milestone #4 below.

Milestone #1:

Completion of drafting of research plan and investor presentation for therapeutics program

Milestone #2:

Completion of logistical planning for research, including laboratory setup and essential hires.

Milestone #3:

Completion of screening for new alternatively spliced targets using in silico databases and completion of validation studies for first tier of alternatively spliced targets.

Milestone #4:

Completion of screening for new alternatively spliced targets using acquired resistance models and completion of validation studies for second tier of targets.  

-15-

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