Document:

Exhibit 4.1

 

EXECUTION VERSION

 

 

NORTHSTAR REALTY FINANCE CORP.

 

as the Company

 

to

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

 

as the Trustee

 

 

Indenture

 

Dated as of March 31, 2014

 

 

$481,118,000

 

3.00% Senior Notes due September 30, 2014

 

 

 

CROSS REFERENCE TABLE(1)

 

	
Trust
   Indenture
   Act Section
    	
 
    	
Indenture
   Section
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
310(a)(1)
    	
 
    	
 
    	
6.09
    	
 
    
	
310(a)(2)
    	
 
    	
 
    	
6.09
    	
 
    
	
310(a)(3)
    	
 
    	
 
    	
N.A.(2)
    	
 
    
	
310(a)(4)
    	
 
    	
 
    	
N.A.
    	
 
    
	
310(a)(5)
    	
 
    	
 
    	
N.A.
    	
 
    
	
310(b)
    	
 
    	
 
    	
6.08;   6.10
    	
 
    
	
310(c)
    	
 
    	
 
    	
N.A.
    	
 
    
	
311(a)
    	
 
    	
 
    	
6.13
    	
 
    
	
311(b)
    	
 
    	
 
    	
6.13
    	
 
    
	
311(c)
    	
 
    	
 
    	
N.A.
    	
 
    
	
312(a)
    	
 
    	
 
    	
7.01;   7.02
    	
 
    
	
312(b)
    	
 
    	
 
    	
7.02
    	
 
    
	
312(c)
    	
 
    	
 
    	
7.02
    	
 
    
	
313(a)
    	
 
    	
 
    	
7.03
    	
 
    
	
313(b)
    	
 
    	
 
    	
7.03
    	
 
    
	
313(c)
    	
 
    	
 
    	
1.06;   7.03
    	
 
    
	
313(d)
    	
 
    	
 
    	
7.03
    	
 
    
	
314(a)
    	
 
    	
 
    	
10.05
    	
 
    
	
314(a)(4)
    	
 
    	
 
    	
1.03;   10.04
    	
 
    
	
314(b)
    	
 
    	
 
    	
N.A.
    	
 
    
	
314(c)(1)
    	
 
    	
 
    	
1.03
    	
 
    
	
314(c)(2)
    	
 
    	
 
    	
1.03
    	
 
    
	
314(c)(3)
    	
 
    	
 
    	
N.A.
    	
 
    
	
314(d)
    	
 
    	
 
    	
N.A.
    	
 
    
	
314(e)
    	
 
    	
 
    	
1.03
    	
 
    
	
314(f)
    	
 
    	
 
    	
N.A.
    	
 
    
	
315(a)
    	
 
    	
 
    	
6.01
    	
 
    
	
315(b)
    	
 
    	
 
    	
6.02
    	
 
    
	
315(c)
    	
 
    	
 
    	
6.01
    	
 
    
	
315(d)
    	
 
    	
 
    	
6.01
    	
 
    
	
315(e)
    	
 
    	
 
    	
5.14
    	
 
    
	
316(a)(1)(A)
    	
 
    	
 
    	
5.12
    	
 
    
	
316(a)(1)(B)
    	
 
    	
 
    	
5.13
    	
 
    
	
316(a)(2)
    	
 
    	
 
    	
N.A.
    	
 
    
	
316(a)(last   sentence)
    	
 
    	
 
    	
1.01(3)
    	
 
    
	
316(b)
    	
 
    	
 
    	
5.07;   5.08
    	
 
    
	
316(c)
    	
 
    	
 
    	
1.04
    	
 
    
	
317(a)(1)
    	
 
    	
 
    	
5.03
    	
 
    
	
317(a)(2)
    	
 
    	
 
    	
5.03;   5.04
    	
 
    
	
317(b)
    	
 
    	
 
    	
10.03
    	
 
    
	
318(a)
    	
 
    	
 
    	
1.07
    	
 
    

 

(1)         Note: This Cross Reference Table shall not, for any purpose, be deemed part of this Indenture.

(2)         Not Applicable.

(3)         Definition of “Outstanding.”

 

i

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE I
    
	
 
    
	
DEFINITIONS   AND OTHER PROVISIONS OF GENERAL APPLICATION
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
Section 1.02
    	
Compliance Certificates and Opinions
    	
7
    
	
Section 1.03
    	
Form of Documents Delivered to Trustee
    	
8
    
	
Section 1.04
    	
Acts of Holders; Record Dates
    	
8
    
	
Section 1.05
    	
Notices to Trustee or the Company
    	
10
    
	
Section 1.06
    	
Notice to Holders; Waiver
    	
10
    
	
Section 1.07
    	
Conflict with Trust Indenture Act
    	
10
    
	
Section 1.08
    	
Effect of Headings and Table of Contents
    	
10
    
	
Section 1.09
    	
Successors and Assigns
    	
10
    
	
Section 1.10
    	
Separability Clause
    	
10
    
	
Section 1.11
    	
Benefits of Indenture
    	
11
    
	
Section 1.12
    	
GOVERNING LAW
    	
11
    
	
Section 1.13
    	
Legal Holidays
    	
11
    
	
Section 1.14
    	
Waiver of Jury Trial
    	
11
    
	
Section 1.15
    	
Force Majeure
    	
11
    
	
Section 1.16
    	
Counterparts
    	
11
    
	
Section 1.17
    	
USA PATRIOT Act
    	
11
    
	
 
    
	
ARTICLE   II
    
	
 
    
	
SECURITY   FORMS
    
	
 
    	
 
    	
 
    
	
Section 2.01 
    	
Form and Dating
    	
11
    
	
Section 2.02
    	
Authentication
    	
12
    
	
Section 2.03
    	
Transfer and Exchange
    	
12
    
	
Section 2.04
    	
Definitive Securities
    	
15
    
	
 
    
	
ARTICLE   III
    
	
 
    
	
THE SECURITIES
    
	
 
    	
 
    	
 
    
	
Section 3.01 
    	
Title and Terms
    	
15
    
	
Section 3.02
    	
Denominations
    	
16
    
	
Section 3.03
    	
Execution and Authentication
    	
16
    
	
Section 3.04
    	
Temporary Securities
    	
16
    
	
Section 3.05
    	
Registration, Registration of Transfer and Exchange
    	
17
    
	
Section 3.06
    	
Mutilated, Destroyed, Lost and Stolen Securities
    	
17
    

 

ii

 

	
Section 3.07
    	
Payment of Interest; Rights Preserved
    	
18
    
	
Section 3.08
    	
Persons Deemed Owners
    	
18
    
	
Section 3.09
    	
Cancellation
    	
19
    
	
Section 3.10
    	
Computation of Interest
    	
19
    
	
Section 3.11
    	
CUSIP Numbers
    	
19
    
	
Section 3.12
    	
Deposits of Monies
    	
19
    
	
Section 3.13
    	
Issuance of Additional Securities
    	
19
    
	
 
    
	
ARTICLE   IV
    
	
 
    
	
SATISFACTION   AND DISCHARGE
    
	
 
    
	
Section 4.01 
    	
Satisfaction and Discharge of Indenture
    	
20
    
	
Section 4.02
    	
Application of Trust Money
    	
20
    
	
Section 4.03
    	
Paying Agent to Repay Monies Held
    	
20
    
	
Section 4.04
    	
Reinstatement
    	
20
    
	
 
    
	
ARTICLE V
    
	
 
    
	
REMEDIES
    
	
 
    
	
Section 5.01 
    	
Events of Default
    	
21
    
	
Section 5.02
    	
Acceleration of Maturity; Rescission and Annulment
    	
22
    
	
Section 5.03
    	
Collection of Indebtedness and Suits for Enforcement by   Trustee
    	
23
    
	
Section 5.04
    	
Trustee May File Proofs of Claim
    	
23
    
	
Section 5.05
    	
Trustee May Enforce Claims Without Possession of   Securities
    	
23
    
	
Section 5.06
    	
Application of Money Collected
    	
24
    
	
Section 5.07
    	
Limitation on Suits
    	
24
    
	
Section 5.08
    	
Unconditional Right of Holders to Receive Principal and   Interest
    	
24
    
	
Section 5.09
    	
Restoration of Rights and Remedies
    	
24
    
	
Section 5.10
    	
Rights and Remedies Cumulative
    	
25
    
	
Section 5.11
    	
Delay or Omission Not Waiver
    	
25
    
	
Section 5.12
    	
Control by Holders
    	
25
    
	
Section 5.13
    	
Waiver of Past Defaults
    	
25
    
	
Section 5.14
    	
Undertaking for Costs
    	
25
    
	
Section 5.15
    	
Waiver of Stay or Extension Laws
    	
25
    
	
 
    
	
ARTICLE   VI
    
	
 
    
	
THE   TRUSTEE
    
	
 
    
	
Section 6.01 
    	
Certain Duties and Responsibilities
    	
26
    
	
Section 6.02
    	
Notice of Defaults
    	
26
    
	
Section 6.03
    	
Certain Rights of Trustee
    	
26
    

 

iii

 

	
Section 6.04
    	
Not Responsible for Recitals or Issuance of Securities
    	
28
    
	
Section 6.05
    	
May Hold Securities
    	
28
    
	
Section 6.06
    	
Money Held in Trust
    	
28
    
	
Section 6.07
    	
Compensation and Reimbursement
    	
28
    
	
Section 6.08
    	
Conflicting Interests
    	
28
    
	
Section 6.09
    	
Corporate Trustee Required; Eligibility
    	
28
    
	
Section 6.10
    	
Resignation and Removal; Appointment of Successor
    	
29
    
	
Section 6.11
    	
Acceptance of Appointment by Successor
    	
30
    
	
Section 6.12
    	
Merger, Conversion, Consolidation or Succession to Business
    	
30
    
	
Section 6.13
    	
Preferential Collection of Claims Against the Company
    	
30
    
	
Section 6.14
    	
Appointment of Authenticating Agent
    	
30
    
	
 
    
	
ARTICLE   VII
    
	
 
    
	
HOLDERS’   LISTS AND REPORTS BY TRUSTEE
    
	
 
    
	
Section 7.01 
    	
Company to Furnish Trustee Names and Addresses of Holders
    	
31
    
	
Section 7.02
    	
Preservation of Information; Communications to Holders
    	
31
    
	
Section 7.03
    	
Reports by Trustee
    	
32
    
	
 
    
	
ARTICLE   VIII
    
	
 
    
	
CONSOLIDATION,   MERGER, CONVEYANCE, TRANSFER OR LEASE
    
	
 
    
	
Section 8.01 
    	
Company May Consolidate, Etc., Only on Certain   Terms
    	
32
    
	
Section 8.02
    	
Successor Substituted
    	
32
    
	
 
    
	
ARTICLE   IX
    
	
 
    
	
MODIFICATIONS;   AMENDMENTS; WAIVERS; SUPPLEMENTAL INDENTURES
    
	
 
    
	
Section 9.01 
    	
Modifications and Amendments Without Consent of Holders
    	
32
    
	
Section 9.02
    	
Modifications and Amendments With Consent of Holders
    	
33
    
	
Section 9.03
    	
Execution of Supplemental Indentures
    	
34
    
	
Section 9.04
    	
Effect of Supplemental Indentures
    	
34
    
	
Section 9.05
    	
Conformity with Trust Indenture Act
    	
34
    
	
Section 9.06
    	
Reference in Securities to Supplemental Indentures
    	
34
    
	
Section 9.07
    	
Reserved
    	
35
    
	
Section 9.08
    	
No Liability for Certain Persons
    	
35
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    
	
 
    
	
COVENANTS
    
	
 
    	
 
    	
 
    
	
Section 10.01 
    	
Payment of Principal and Interest
    	
35
    
	
Section 10.02
    	
Maintenance of Office or Agency
    	
35
    

 

iv

 

	
Section 10.03
    	
Money for Security Payments to be Held in Trust
    	
35
    
	
Section 10.04
    	
Statement by Officers as to Default; Compliance   Certificates
    	
36
    
	
Section 10.05
    	
Provision of Financial Information
    	
36
    
	
 
    
	
ARTICLE   XI
    
	
 
    
	
REDEMPTION   OF SECURITIES AND PURCHASES THEREUPON
    
	
 
    
	
Section 11.01 
    	
Right of Redemption
    	
37
    
	
Section 11.02
    	
Securities Purchased in Whole or in Part
    	
38
    
	
Section 11.03
    	
Covenant to Comply With Applicable Laws Upon Purchase of   Securities
    	
38
    
	
Section 11.04
    	
Sinking Fund
    	
38
    
	
 
    
	
ARTICLE   XII
    
	
 
    
	
SHARE   SETTLEMENT
    
	
 
    
	
Section 12.01 
    	
Right to Settle in Shares
    	
38
    
	
Section 12.02
    	
Share Settlement Procedures
    	
38
    
	
Section 12.03
    	
Determination of Share Settlement Amount
    	
39
    
	
Section 12.04
    	
Adjustment of Share Settlement Rate
    	
40
    
	
Section 12.05
    	
Certain Other Adjustments
    	
45
    
	
Section 12.06
    	
Taxes on Shares Issued
    	
45
    
	
Section 12.07
    	
Responsibility of Trustee
    	
45
    
	
Section 12.08
    	
Ownership Limit
    	
46
    
	
 
    
	
ARTICLE   XIII
    
	
 
    
	
REPURCHASE
    
	
 
    
	
Section 13.01 
    	
Repurchase at Option of Holders upon a Change in Control
    	
46
    
	
Section 13.02
    	
Securities Purchased in Part
    	
48
    
	
Section 13.03
    	
Purchase of Securities in Open Market
    	
48
    

 

v

 

INDENTURE, dated as of March 31, 2014, between NORTHSTAR REALTY FINANCE CORP., a corporation duly organized and existing under the laws of the State of Maryland (herein called the “Company”), having its principal office at 399 Park Avenue, 18th Floor, New York, New York 10022, and Wilmington Trust, National Association, a national banking association having its principal corporate trust office at 50 South Sixth Street, Suite 1290, Minneapolis, Minnesota 55402, as trustee (herein called the “Trustee”).

 

RECITALS OF THE COMPANY

 

The Company has duly authorized the creation of an issue of 3.00% Senior Notes due September 30, 2014 of substantially the tenor and amount hereinafter set forth, and to provide therefor, the Company has duly authorized the execution and delivery of this Indenture.

 

All things necessary to make the Securities, when executed by the Company, authenticated and delivered hereunder and duly issued by the Company, the valid and legally binding obligations of the Company, and to make this Indenture a valid and legally binding agreement of the Company, in accordance with its terms, have been done.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

 

ARTICLE I

 

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

SECTION 1.01              Definitions.  For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)                                 the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

 

(b)                                 all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

 

(c)                                  all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with U.S. generally accepted accounting principles as in effect on the Issue Date (whether or not such is indicated herein);

 

(d)                                 unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or Section, as the case may be, of this Indenture;

 

(e)                                  the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

 

(f)                                   each reference herein to a rule or form of the Commission shall mean such rule or form and any rule or form successor thereto, in each case as amended from time to time;

 

(g)                                  “or” is not exclusive;

 

(h)                                 “including” means including without limitation; and

 

(i)                                     all references to the date the Securities were originally issued shall refer to the Issue Date, except as otherwise specified.

 

 

Except as may be otherwise specified herein, the Company will be responsible for making all calculations called for under this Indenture and the Securities.  These calculations include, but are not limited to, determinations of the market prices of the Securities and of the Company Common Shares, any accrued interest payable on the Securities, redemption prices and the Share Settlement Rate of the Securities.  The Company will make all these calculations in good faith and, absent manifest error, its calculations will be final and binding on holders of the Securities.  The Company will provide a schedule of its calculations to the Trustee and the Trustee is entitled to rely upon the accuracy of its calculations without independent verification.

 

“Act” when used with respect to any Holder, has the meaning specified in Section 1.04.

 

“Additional Securities” means 3.00% Senior Notes due 2014 issued from time to time after the Issue Date under the terms of this Indenture (other than pursuant to Section 3.04, 3.05 and 3.06)

 

“Affiliate” means, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, (ii) any other Person that owns, directly or indirectly, 10% or more of such specified Person’s Capital Stock or (iii) any officer or director of (A) any such specified Person, (B) any Subsidiary of such specified Person or (C) any Person described in clauses (i) or (ii) above.

 

“Agent Member” has the meaning specified in Section 2.01(c).

 

“Applicable Procedures” has the meaning specified in Section 11.01(e).

 

“Applicable Share Settlement Rate” has the meaning specified in Section 12.03(a).

 

“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.14 hereof to act on behalf of the Trustee to authenticate Securities.

 

“Board of Directors” or “Board” means the board of directors of a company or its equivalent, including managers of a limited liability company, general partners of a partnership or trustees of a business trust, or any duly authorized committee thereof.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of a company to have been duly adopted by the Board of Directors of such company and to be in full force and effect on the date of such certification, and delivered to the Trustee.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on the Federal Reserve Bank of New York or the place of payment is authorized or required by law or executive order to close or be closed.

 

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock or equity participations, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock and, including, without limitation, with respect to partnerships, limited liability companies or business trusts, ownership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnerships, limited liability companies or business trusts.

 

“Change in Control” will be deemed to have occurred if any of the following occurs after the Issue Date:

 

(i)                                     consummation of any transaction or event (whether by means of a liquidation, share exchange, tender offer, consolidation, recapitalization, reclassification, combination, merger of us or any sale, lease or other transfer of all or substantially all of the consolidated assets of the Company and its consolidated subsidiaries) or a series of related transactions or events pursuant to which all of the Company Common Shares are exchanged for, converted into or constitute solely the right to receive cash, securities

 

2

 

or other property more than 10% of which consists of cash, securities or other property that are not, or upon issuance will not be, traded on a national securities exchange;

 

(ii)                                  any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than the Company, the Operating Partnership, Sub-REIT or any majority-owned subsidiary of the Company, the Operating Partnership or Sub-REIT, is or becomes the “beneficial owner” (as such term is defined for purposes of Section 13(d)(3) under the Exchange Act), directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of the Capital Stock of the Company then outstanding entitled to vote generally in elections of directors;

 

(iii)                               the Company Common Shares (or other Capital Stock or securities into which the Securities are then exchangeable) cease to be listed on a U.S. national securities exchange for 30 consecutive days;

 

(iv)                              the Company (or any successor thereto permitted pursuant to the terms of the indenture) ceases to directly or indirectly control the Operating Partnership; or

 

(v)                                 the stockholders of the Company approve any plan or proposal for the liquidation of the Company, the Operating Partnership or Sub-REIT.

 

However, a Change in Control will not be deemed to have occurred and the Company will not be required to deliver a Change in Control Notice incidental thereto if at least 90% of the consideration (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in a merger, consolidation or other transaction otherwise constituting a Change in Control consists of Company Common Shares, depositary receipts or other certificates representing common equity interests traded on a national securities exchange in the United States (or will be so traded or quoted immediately following the merger, consolidation, or other transaction) and as a result of the merger, consolidation or other transaction the Securities can be settled for such Company Common Shares, depositary receipts or other certificates representing common equity interests.

 

For the avoidance of doubt, neither the spin-off of the Company’s asset management business that is proposed on the Issue Date or the consolidation or merger of the Company, the Operating Partnership and Sub-REIT into a single entity, regardless of which entity is the survivor thereof, shall constitute a Change in Control for purposes hereof.

 

For purposes of these provisions “person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

 

“Change in Control Offer” has the meaning specified in Section 13.01(a).

 

“Change in Control Notice” has the meaning specified in Section 13.01(b).

 

“Change in Control Purchase Date” has the meaning specified in Section 13.01(b).

 

“Change in Control Purchase Notice” has the meaning specified in Section 13.01(c).

 

“Change in Control Purchase Price” means a purchase price equal to 100% of the principal amount of the Securities a Holder requires the Company to repurchase, plus accrued and unpaid interest on Securities to, but excluding, the Change in Control Purchase Date.

 

“Close of Business” means 5:00 p.m. (New York City time).

 

“Closing Sale Price” has the meaning specified in Section 12.03(f).

 

“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not

 

3

 

existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

 

“Company Common Shares” means the shares of common stock, par value $0.01 per share, of the Company authorized at the date of this instrument as originally executed or as such stock may be constituted from time to time.  Company Common Shares issuable upon the Company’s election to provide Company Common Shares in lieu of cash at the Stated Maturity Date of the Securities shall include only Company Common Shares or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.  For the avoidance of doubt, the term Company Common Shares does not include any securities issued in connection with the proposed spin-off of the Company’s asset management business insofar as that spin-off takes place prior to the Share Settlement Measurement Period.

 

“Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

 

“Company Order” or “Company Request” means a written order or request signed in the name of the Company by its Chairman of the Board of Directors, its Chief Executive Officer, its Chief Financial Officer, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee or Paying Agent, as applicable.

 

“control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be administered, which address as of the date of this Indenture is located at 50 South Sixth Street, Suite 1290, Minneapolis, MN 55402, Attention: Northstar Realty Finance Corp. Administrator or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company).

 

“corporation” means (except in the definition of “Subsidiary”) a corporation, association, company, joint stock company or business trust.

 

“Daily VWAP” has the meaning specified in Section 12.03(d).

 

“Default” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.

 

“Defaulted Interest” has the meaning specified in Section 3.07

 

“Definitive Security” means a certificated Security that does not include the Global Securities Legend.

 

“Depositary” means The Depository Trust Company, a New York corporation, or its successor.

 

“Event of Default” has the meaning specified in Section 5.01.

 

“Exchange Act” means the Securities Exchange Act of 1934 and any successor statute thereto, in each case as amended.

 

4

 

“Ex-Dividend Date” means, in respect of any dividend or distribution, the first date upon which the Company Common Shares trade on the applicable exchange or in the applicable market (used to determine the Closing Sale Price), regular way, without the right to receive such dividend or distribution.

 

“Expiration Time” has the meaning in Section 12.04(e).

 

“Federal Bankruptcy Code” means Title 11, U.S. Code.

 

“Global Security” has the meaning specified in Section 2.01(b).

 

“Global Securities Legend” means the legend set forth under that caption in Exhibit A to this Indenture.

 

“Holder” means a Person in whose name a Security is registered in the Security Register.

 

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively.

 

“Issue Date” means March 31, 2014.

 

“legal holiday” means, with respect to the Securities, a Saturday, Sunday, or a day on which federally chartered banking institutions in The City of New York or the place of payment are authorized or obligated to close.

 

“Market Disruption Event” means the occurrence or existence for more than a one-half hour period in the aggregate on any scheduled trading day for the Company Common Shares of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the securities exchange or otherwise) in the Company Common Shares or in any options, contracts or futures contracts relating to the Company Common Shares, and such suspension or limitation occurs or exists at any time before 1:00 p.m. (New York City time) on such day.

 

“Notice of Default” means a written notice of the kind specified in Section 5.02.

 

“Officers’ Certificate” means a certificate signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President or a Vice President, the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee.  One of the officers signing an Officers’ Certificate given pursuant to Section 10.04 shall be the principal executive, financial or accounting officer of the Company.

 

“open of business” means 9:00 a.m. (New York City time).

 

“Operating Partnership” means NorthStar Realty Finance Limited Partnership, a Delaware limited partnership.

 

“Opinion of Counsel” means a written opinion of counsel reasonably acceptable to the Trustee, who may be counsel for the Company.

 

“Outstanding” when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

 

(i)                                     Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

 

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(ii)                                  Securities for whose payment or purchase money or securities in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; and

 

(iii)                               Securities which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

 

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding (it being understood that Securities to be acquired by the Company pursuant to an offer to purchase shall not be deemed to be owned by the Company until legal title to such Securities passes to the Company), except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

 

“Paying Agent” means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company.  The Company has initially appointed the Trustee as its Paying Agent pursuant to Section 10.02 hereof.

 

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“principal” of a Security means the principal of the Security plus the premium, if any, payable on that Security which is due or overdue or is to become due at the relevant time.

 

“Record Expiration Date” has the meaning specified in Section 1.04.

 

“Responsible Officer” when used with respect to the Trustee, means any officer within the Corporate Trust Office, including, any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

 

“scheduled trading day” means a day that is scheduled to be a trading day on the principal U.S. securities exchange on which the Company Common Shares are listed or admitted for trading.

 

“Securities” means the 3.00% Senior Notes due September 30, 2014 issued on the Issue Date and any Additional Securities.

 

“Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each case, as amended from time to time.

 

“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depositary) or any successor person thereto, who shall initially be the Trustee.

 

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“Security Register” or “Registrar” has the meaning specified in Section 3.05.

 

“Share Settlement” has the meaning specified in Section 12.01.

 

“Share Settlement Election Date” has the meaning specified in Section 12.02(a)

 

“Share Settlement Election Notice” has the meaning specified in Section 12.02(a).

 

“Share Settlement Measurement Period” has the meaning specified in Section 12.03(b).

 

“Share Settlement Rate” has the meaning specified in Section 12.03(a).

 

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Company pursuant to Section 3.07.

 

“Spin-Off” has the meaning specified in Section 12.04(c).

 

“Stated Maturity Date” means, when used with respect to any Security and the payment of principal and interest thereon, September 30, 2014.

 

“Subsidiary” means, with respect to any Person, (i) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof and (ii) any other Person (other than a corporation), including, without limitation, a partnership, limited liability company, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has at least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Person performing similar functions).  For purposes of this definition, any directors’ qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary.

 

“Sub-REIT” means NRFC Sub-REIT, a Maryland corporation.

 

“trading day” has the meaning specified in Section 12.03(c).

 

“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

 

“Vice President” when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.”

 

“Voting Stock” means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).

 

SECTION 1.02              Compliance Certificates and Opinions.  Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act.  Each such certificate or opinion shall be given in the form of an Officers’ Certificate, if to be given by an officer of the Company, or an

 

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Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture.

 

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(a)                                 a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

 

(b)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(d)                                 a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

 

SECTION 1.03              Form of Documents Delivered to Trustee.  In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

SECTION 1.04              Acts of Holders; Record Dates.  Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

 

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.  The fact and date of the

 

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execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

 

The ownership of Securities shall be proved exclusively by the Security Register for all purposes.

 

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company in reliance thereon, whether or not notation of such action is made upon such Security.

 

The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders of Securities, provided, however, that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, however, that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken pursuant to or in accordance with any other provision of this Indenture by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken.  Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Record Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.06.

 

The Trustee may but need not set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.02, (iii) any request to institute proceedings referred to in Section 5.07(ii) or (iv) any direction referred to in Section 5.12.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, however, that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action (whereupon the record date previously set shall automatically and without any action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken pursuant to or in accordance with any other provision of this Indenture by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken.  Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the matter(s) to be submitted for potential action by Holders and the applicable Record Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.06.

 

With respect to any record date set pursuant to this Section, the party hereto that sets such record date may designate any day as the “Record Expiration Date” and from time to time may change the Record Expiration Date to any earlier or later day, provided, however, that no such change shall be effective unless notice of the proposed new Record Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.06, on or before the existing Record Expiration Date.  If a Record Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Record Expiration Date with respect thereto, subject to its right to change the Record Expiration Date as provided in this paragraph.  Notwithstanding the foregoing, no Record Expiration Date shall be later than the 180th day after the applicable record date.

 

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Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

 

SECTION 1.05              Notices to Trustee or the Company.  Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

 

(a)                                 the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing and mailed, first-class postage prepaid, to or with the Trustee at its Corporate Trust Office,

 

(b)                                 the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of the Company’s principal office specified in the first paragraph of this instrument, or at any other address previously furnished in writing to the Trustee by the Company.

 

SECTION 1.06              Notice to Holders; Waiver.  Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail or receive such notice, nor any defect in any such notice, to any particular Holder shall affect the sufficiency or validity of such notice.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

 

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

 

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption) to a Noteholder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee) pursuant to the applicable procedures of the Depositary.

 

SECTION 1.07              Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern this Indenture, such provision of the Trust Indenture Act shall control.  If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision shall be deemed to be so modified or excluded, as the case may be.

 

SECTION 1.08              Effect of Headings and Table of Contents.  The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

SECTION 1.09              Successors and Assigns.  Without limiting Article VIII hereof, all covenants and agreements in this Indenture by the Company shall bind its respective successors and assigns, whether so expressed or not.

 

SECTION 1.10              Separability Clause.  In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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SECTION 1.11              Benefits of Indenture.  Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

SECTION 1.12              GOVERNING LAW.  THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

 

SECTION 1.13              Legal Holidays.  If the Stated Maturity Date or redemption date of a Security would fall on a day that is a legal holiday, then (notwithstanding any other provision of this Indenture or of the Securities) the required payment of interest, if any, and principal will be made on the next succeeding day that is not a legal holiday and no interest on such payment will accrue for the period from and after the Stated Maturity Date or redemption date to such next succeeding day that is not a legal holiday.

 

SECTION 1.14              Waiver of Jury Trial.  EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

SECTION 1.15              Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

SECTION 1.16              Counterparts.  This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

SECTION 1.17              USA PATRIOT Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

 

ARTICLE II

 

SECURITY FORMS

 

SECTION 2.01              Form and Dating.  The Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company).  Each Security shall be dated the date of its authentication.

 

(a)                                 Securities and Additional Securities.  The Securities issued on the date hereof will be offered and sold by the Company pursuant to the Company’s exchange offer for the outstanding 7.50% Exchangeable Senior Notes of the Operating Partnership settled on the date hereof.  Additional Securities offered after the date hereof may be offered and sold by the Company from time to time in accordance with applicable law.

 

(b)                                 Global Securities.  The Securities shall be issued initially in the form of one or more global Securities in definitive, fully registered form (each, a “Global Security”) without interest coupons and bearing

 

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the Global Securities Legend, which shall be deposited on behalf of the Holders of the Securities represented thereby with the Securities Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture.  The aggregate principal amount of any Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee and on the schedules thereto as hereinafter provided.  Notwithstanding the foregoing, the Company may, at any time and its sole discretion, determine not to have the Securities represented by a Global Security and, in such event, will issue the Securities in definitive form in exchange for the entire Global Security relating to the Securities.

 

(c)                                  Book-Entry Provisions.  This Section 2.01(c) shall apply only to a Global Security deposited with or on behalf of the Depositary.

 

The Company shall execute and the Trustee shall, in accordance with this Section 2.01(c) and Section 2.02 and pursuant to an order of the Company signed by one officer of the Company, authenticate and deliver initially one or more Global Securities that (i) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary’s instructions or held by the Trustee as Securities Custodian.

 

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as Securities Custodian or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security.

 

(d)                                 Definitive Securities. Except as provided in Section 2.03 or 2.04, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities.

 

SECTION 2.02              Authentication. The Trustee shall authenticate and make available for delivery upon a written order of the Company signed by an officer of the Company (a) Securities for original issue on the date hereof in an aggregate principal amount of $481,118,000 and (b) subject to the terms of this Indenture, Additional Securities in an unlimited aggregate principal amount.  Such order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 3.13 of this Indenture after the Issue Date, shall certify that such issuance is in compliance with this Indenture.

 

SECTION 2.03              Transfer and Exchange.  (a) Transfer and Exchange of Definitive Securities.  When Definitive Securities are presented to the Security Registrar with a request:

 

(i)                                     register the transfer of such Definitive Securities; or

 

(ii)                                  exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations,

 

the Security Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.

 

(b)                                 Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security.  A Definitive Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below.  Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Security

 

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Registrar, together with written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect the applicable Global Security to reflect an increase in the aggregate principal amount of the Securities represented by such Global Security, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount of Securities represented by such Global Security to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in such Global Security equal to the principal amount of the Definitive Security so canceled.  If no applicable Global Securities are then outstanding and the applicable Global Security has not been previously exchanged for certificated securities pursuant to Section 2.04, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers’ Certificate, a new applicable Global Security in the appropriate principal amount.

 

(c)                                  Transfer and Exchange of Global Securities.

 

(i)                                     The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor.  A transferor of a beneficial interest in a Global Security shall deliver a written order given in accordance with the Depositary’s procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Security or another Global Security and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Security and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Security being transferred.

 

(ii)                                  If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Security Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of Global Security from which such interest is being transferred.

 

(iii)                               Notwithstanding any of the foregoing provisions (other than the provisions set forth in Section 2.04), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary

 

or any such nominee to a successor Depositary or a nominee of such successor Depositary.

 

(d)                                 Cancelation or Adjustment of Global Security.  At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, transferred, redeemed, repurchased or canceled, such Global Security shall be returned by the Depositary to the Trustee for cancelation or retained and canceled by the Trustee.  At any time prior to such cancelation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, transferred in exchange for an interest in another Global Security, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.

 

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(e)                                  Obligations with Respect to Transfers and Exchanges of Securities.

 

(i)                                     To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate, Definitive Securities and Global Securities at the Security Registrar’s request.

 

(ii)                                  No service charge shall be made for any registration of transfer or exchange of Securities except as provided in Section 3.06 of this Indenture, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.04 or 9.06 of this Indenture, and in any such case not involving any transfer.

 

(iii)                               Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent or the Security Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent or the Security Registrar shall be affected by notice to the contrary.

 

(iv)                              Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.

 

(f)                                   No Obligation of the Trustee.

 

(i)                                     The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice or the payment of any amount, under or with respect to such Securities.  All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security).  The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary.  The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

 

(ii)                                  The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

(iii)                               Notwithstanding anything contained herein to the contrary, neither the Trustee nor the Security Registrar shall be responsible for ascertaining whether any transfer complies with the registration provisions of or exemptions from the Securities Act, applicable state securities laws, ERISA (or, in the case of a governmental plan or a church plan (as described in ERISA Sections 3(32) and 3(33), respectively) any substantially similar federal, state or local law), the Code or the Investment Company Act.

 

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SECTION 2.04              Definitive Securities. (a) A Global Security deposited with the Depositary or with the Trustee as Securities Custodian pursuant to Section 2.01 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.03 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security or if at any time the Depositary ceases to be a “clearing agency” registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days of such notice or after the Company becomes aware of such cessation or (ii) an Event of Default has occurred and is continuing.

 

(b)                                 Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.04 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations.  Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct.

 

(c)                                  Subject to the provisions of Section 2.04(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

 

(d)                                 In the event of the occurrence of any of the events specified in Section 2.04(a)(i) or (ii), the Company will promptly make available to the Trustee a reasonable supply of Definitive Securities in fully registered form without interest coupons.

 

ARTICLE III

 

THE SECURITIES

 

SECTION 3.01              Title and Terms.  The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture on the Issue Date is limited to $481,118,000 principal amount.  Additional Securities may be issued, authenticated and delivered pursuant to Section 3.13, and Securities may be authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Securities pursuant to Sections 3.04, 3.05, 3.06 or 9.06.

 

The Securities shall be known and designated as the “3.00% Senior Notes due 2014” of the Company.  The Stated Maturity Date for payment of principal and interest shall be September 30, 2014.  Interest on the Securities shall accrue at the rate of 3.00% per annum and shall be payable on the Stated Maturity Date. Payment of interest will include interest accrued for the period, commencing on and including the date of original issuance of the Securities to but excluding the Stated Maturity Date.  Interest on the Securities will be computed on the basis of a 360-day year comprised of twelve 30-day months. Accrued and unpaid interest on the Securities will be payable in cash.

 

The Company shall pay the principal of and interest on any Global Security in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Global Security.  The Company has initially designated the Trustee as its Paying Agent and Security Registrar in respect of the Securities. The Company may, however, change the Paying Agent or Security Registrar for the Securities without prior notice to the Holders thereof and the Company may act as Paying Agent or Security Registrar for the Securities.

 

The Company may, at its option, on not less than 25 scheduled trading days’ notice prior to the Stated Maturity Date, elect to satisfy its obligation to repay, in whole but not in part, the principal amount of the Securities at the Stated Maturity Date by delivering Company Common Shares to Holders of the Securities in lieu of cash in accordance with Article XII hereof, unless (i) an Event of Default (as hereinafter defined) has occurred and is continuing or (ii) the Company Common Shares (including, for the avoidance of doubt, any security either issued

 

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in exchange for Company Common Shares or received by holders of Company Common Shares in a merger or consolidation involving the Company) have ceased to be listed on the New York Stock Exchange or another U.S. national securities exchange.

 

SECTION 3.02              Denominations.  The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple of $1,000 thereof.

 

SECTION 3.03              Execution and Authentication.  The terms and provisions contained in the Form of Securities annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  The Securities shall be executed on behalf of the Company by its Chief Executive Officer, Chief Financial Officer, General Counsel, Treasurer or any Executive or Senior Vice President.  The signature of any of these officers on the Securities may be manual or facsimile (including electronic).

 

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

 

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, which shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 3.13 after the Issue Date, shall certify that such issuance is in compliance with this Indenture; and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as provided in this Indenture and not otherwise.

 

Each Security shall be dated the date of its authentication.

 

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.

 

Authentication by counterpart shall satisfy the requirements of this Section 3.03 and the requirements of the Securities.

 

SECTION 3.04              Temporary Securities.  Pending the preparation of Definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

 

If temporary Securities are issued, the Company will cause Definitive Securities to be prepared without unreasonable delay.  After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 10.02, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of authorized denominations and of a like tenor.  Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities.

 

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SECTION 3.05              Registration, Registration of Transfer and Exchange.  The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.02 being herein sometimes collectively referred to as the “Security Register”) in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities.  The Trustee is hereby appointed (a) the initial “Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided and (b) the Securities Custodian with respect to the Global Securities.

 

The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with Article II.  When a Security is presented to the Security Registrar with a request to register a transfer, the Security Registrar shall register the transfer as requested if its requirements therefor are met.  When Securities are presented to the Security Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Security Registrar shall make the exchange as requested if the same requirements are met.  To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Security Registrar’s request.

 

All Securities issued upon any registration of transfer or exchange pursuant to the terms of this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

 

No service charge shall be made for any registration of transfer or exchange of Securities except as provided in Section 3.06, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Sections 3.04 and 9.06, and in any such case not involving any transfer.

 

Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, and the Security Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, or the Security Registrar shall be affected by notice to the contrary.

 

Any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interest in such Global Security may be effected only through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry.

 

SECTION 3.06              Mutilated, Destroyed, Lost and Stolen Securities.  If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

 

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

 

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Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

 

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

 

SECTION 3.07              Payment of Interest; Rights Preserved.  Interest on any Security which is payable, and is punctually paid or duly provided for, on the Stated Maturity Date shall be paid to the Person in whose name that Security (or one or more predecessor securities) is registered at the Close of Business on the Stated Maturity Date.

 

Any interest on any Security which is payable, but is not punctually paid or duly provided for, on the Stated Maturity Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (a) or (b) below:

 

(a)                                 the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the Close of Business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner:  the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.  Thereupon the Company shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 15 days after the receipt by the Trustee of the notice of the proposed payment.  The Company shall promptly notify the Trustee of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder in the manner specified in Section 1.06, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the Close of Business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

 

(b)                                 the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (b), such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section and Section 3.05, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

 

The Company is permitted to withhold from interest payments otherwise payable to a Holder for any amounts the Company is required to withhold by law.

 

SECTION 3.08              Persons Deemed Owners.  Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.07) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

 

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SECTION 3.09              Cancellation.  All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it.  The Company shall promptly deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee.  No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture.  All cancelled Securities held by the Trustee shall be disposed of by the Trustee in its customary manner.

 

SECTION 3.10              Computation of Interest.  Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

SECTION 3.11              CUSIP Numbers.  The Company in issuing the Securities may use “CUSIP” and the Trustee shall use the CUSIP numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Company shall promptly notify the Trustee of any change in the CUSIP numbers.

 

SECTION 3.12              Deposits of Monies.  Except to the extent payment is made by the Company’s check or wire transfer pursuant to the terms of the Securities, prior to 11:00 a.m., New York City time, on the Stated Maturity Date, the Company shall deposit with the Paying Agent in immediately available funds money sufficient to make cash payments due on the Stated Maturity Date in a timely manner which permits the Paying Agent to remit payment to the Holders on such Stated Maturity Date.

 

SECTION 3.13              Issuance of Additional Securities.  The Company shall be entitled, subject to its compliance with this Indenture, to issue Additional Securities under this Indenture which shall have identical terms as the Securities issued on the Issue Date, other than with respect to the date of issuance and issue price provided, however, that no Additional Securities shall be issued that are not fungible for U.S.  Federal income tax purposes, with any other securities issued under this Indenture.  The Securities issued on the Issue Date and any Additional Securities shall be treated as a single class for all purposes under this Indenture.

 

With respect to any Additional Securities, the Company shall set forth in a resolution of its Board of Directors and an Officers’ Certificate, a copy of each which shall be delivered to the Trustee, the following information:

 

(a)                                 whether such Additional Securities shall be issued as part of a new or existing series of Securities and the title of such Additional Securities (which shall distinguish the Additional Securities of the series from Securities of any other series);

 

(b)                                 the aggregate principal amount of such Additional Securities which may be authenticated and delivered under this Indenture, which may be in an unlimited aggregate principal amount;

 

(c)                                  the issue price and issuance date of such Additional Securities, including the date from which interest on such Additional Securities shall accrue; and

 

(d)                                 if applicable, that such Additional Securities shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective depositaries for such Global Securities, the form of any legend or legends which shall be borne by such Global Securities in addition to or in lieu of those set forth in Exhibit A hereto and any circumstances in addition to or in lieu of those set forth in Section 2.04 in which any such Global Security may be exchanged in whole or in part for Additional Securities registered, or any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the depositary for such Global Security or a nominee thereof.

 

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ARTICLE IV

 

SATISFACTION AND DISCHARGE

 

SECTION 4.01              Satisfaction and Discharge of Indenture.  This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

 

(i)                                     the Company shall deliver to the Security Registrar for cancellation all Securities theretofore authenticated (other than any Securities that have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore canceled; or

 

(ii)                                  all Securities not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable at the Stated Maturity Date for the payment of the principal amount thereof or on any Change in Control Purchase Date,

 

and the Company shall deposit with the Trustee, in trust, or deliver to the Holders cash funds or Company Common Shares, as applicable, sufficient to pay all amounts due on all of such Securities (other than any Securities that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, including principal and interest due, accompanied, except in the event the Securities are due and payable solely in cash or Company Common Shares at the Stated Maturity Date or upon an earlier Change in Control Purchase Date, by a verification report as to the sufficiency of the deposited amount from an independent certified accountant or other financial professional reasonably satisfactory to the Trustee, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (A) rights hereunder of Holders of the Securities to receive all amounts owing upon the Securities and the other rights, duties and obligations of Holders of the Securities, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and (B) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on written demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture.

 

Notwithstanding the satisfaction and discharge of this Indenture pursuant to this Article IV, the obligations of the Company to the Trustee under Section 6.07, the obligations of the Company to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to the preceding paragraph of this Section 4.01, the obligations of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall survive such satisfaction and discharge.

 

SECTION 4.02              Application of Trust Money.  Subject to the provisions of the last paragraph of Section 10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee.

 

SECTION 4.03              Paying Agent to Repay Monies Held.  Upon the satisfaction and discharge of this Indenture, all monies then held by any Paying Agent (if other than the Trustee) shall, upon written request of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such monies.

 

SECTION 4.04              Reinstatement.  If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 4.02 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under the Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.01 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 4.02;

 

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provided, however, that if the Company makes any payment of interest on or principal of any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.01              Events of Default. “Event of Default,” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

 

(a)                                 default in the payment of the principal of the Securities (at Stated Maturity Date or otherwise) or, if the Company has elected Share Settlement pursuant to Article XII, the Company does not deliver Company Common Shares, in accordance with the terms of Article XII; or

 

(b)                                 default in the payment of interest on any of the Securities, when due and payable, for 30 days; or

 

(c)                                  default in the performance, or breach, of any covenant or agreement of the Company under this Indenture and such default or breach shall continue for a period of 60 days after written notice has been given, by registered or certified mail:

 

(x)                                 to the Company by the Trustee; or

 

(y)                                 to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Securities;

 

Such written notice shall specify such default or breach and require it to be remedied, stating that such notice is a “Notice of Default” hereunder.

 

(d)                                 default by the Company, the Operating Partnership or Sub-REIT, as the case may be, under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, the Operating Partnership or Sub-REIT, as the case may be, having an aggregate principal amount outstanding of at least $50,000,000, or under any mortgage, indenture or instrument (including this Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, the Operating Partnership or Sub-REIT, as the case may be, having an aggregate principal amount outstanding of at least $50,000,000, whether such indebtedness now exists or shall hereafter be created, which default, after the expiration of any grace period, (A) shall constitute a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto or (B) shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without, in the case of Clause (A), such indebtedness having been discharged or without, in the case of Clause (B), such indebtedness having been discharged or such acceleration having been rescinded or annulled, in each such case after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Securities a written notice specifying such default and requiring the Company, the Operating Partnership or Sub-REIT, as the case may be, to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled, as the case may be, and stating that such notice is a “Notice of Default” hereunder; provided, that, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or

 

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(e)           the Company, the Operating Partnership or Sub-REIT, as the case may be, shall fail to pay a final, non-appealable judgment entered by a court of competent jurisdiction against the Company, the Operating Partnership or Sub-REIT, as the case may be, in excess of $50,000,000, which judgment is not paid, discharged or stayed within 60 days after such judgment becomes final and non-appealable; or

 

(f)            the institution by the Company, the Operating Partnership or Sub-REIT of a voluntary case or proceeding under the Federal Bankruptcy Code or any other similar federal, state or foreign law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company, the Operating Partnership or Sub-REIT to the entry of a decree or order for relief in respect of the Company, the Operating Partnership or Sub-REIT in any involuntary case or proceeding under the Federal Bankruptcy Code or any other similar federal, state or foreign law or to the institution of bankruptcy or insolvency proceedings against the Company, the Operating Partnership or Sub-REIT, or the filing by the Company, the Operating Partnership or Sub-REIT of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar federal, state or foreign law, or the consent by it to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company, the Operating Partnership or Sub-REIT or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due or the taking of corporate action by the Company, the Operating Partnership or Sub-REIT in furtherance of any such action.

 

SECTION 5.02     Acceleration of Maturity; Rescission and Annulment.  If an Event of Default (other than those covered by clause (f) of Section 5.01 with respect to the Company) shall occur and be continuing, the Trustee, by written notice to the Company (and to the Trustee if given by the Holders), or the Holders of at least 25% in aggregate principal amount of the Securities then Outstanding, by notice to the Trustee and the Company, may declare the principal of and accrued and unpaid interest, if any, on all of the Outstanding Securities due and payable immediately, upon which declaration, all amounts payable in respect of the Securities shall be due and payable as of the date which is five Business Days after the giving of such notice.  If an Event of Default specified in clause (f) of Section 5.01 with respect to the Company occurs and is continuing, then the principal of and accrued and unpaid interest, if any, on all the Outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Securities.

 

After a declaration of acceleration under this Indenture, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind such declaration if:

 

(a)           the Company has paid or deposited with the Trustee a sum sufficient to pay:

 

(i)            all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;

 

(ii)           all overdue interest on all Securities;

 

(iii)          the principal of any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities; and

 

(iv)          the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate set forth in the Securities which has become due otherwise than by such declaration of acceleration;

 

(b)           the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and

 

(c)           all Events of Default, other than the non-payment of principal of and interest on the Securities that have become due solely by such declaration of acceleration, have been cured or waived.

 

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No such rescission shall affect any subsequent default or impair any right consequent thereto.

 

SECTION 5.03     Collection of Indebtedness and Suits for Enforcement by Trustee.  The Company covenants that if:

 

(a)           default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

 

(b)           default is made in the payment of the principal of any Security on the due date for payment thereof, including with respect to any Security required to have been purchased pursuant to a Change in Control Offer, on the Change in Control Purchase Date the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and on any overdue interest, at the rate provided by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

In addition to the rights and powers set forth in Section 317(a) of the Trust Indenture Act, the Trustee shall be entitled to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of the Securities allowed in any judicial proceeding relative to the Company or any other obligor upon the Securities, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for compensation and expenses, including counsel fees incurred by it up to the date of such distribution.

 

If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

 

SECTION 5.04     Trustee May File Proofs of Claim.  In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), any of its property or any of its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding.  In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.07.

 

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.

 

SECTION 5.05     Trustee May Enforce Claims Without Possession of Securities.  All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, distributions and

 

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advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

 

SECTION 5.06     Application of Money Collected.  Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST: To the payment of all amounts due the Trustee hereunder;

 

SECOND: To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively;

 

THIRD: To the payment of any and all other amounts due under this Indenture or the Securities; and

 

FOURTH: To the Company (or such other Person as a court of competent jurisdiction may direct).

 

SECTION 5.07     Limitation on Suits.  Subject to Section 5.08, no Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default;

 

(b)           the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

 

(c)           such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

 

(d)           the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

 

(e)           no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders.

 

SECTION 5.08     Unconditional Right of Holders to Receive Principal and Interest.  Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and (subject to Section 3.07) interest on such Security on the Stated Maturity Date expressed in such Security and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

 

SECTION 5.09     Restoration of Rights and Remedies.  If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee

 

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and the Holders shall continue as though no such proceeding had been instituted, subject to the determination in such proceeding.

 

SECTION 5.10     Rights and Remedies Cumulative.  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

SECTION 5.11     Delay or Omission Not Waiver.  No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

SECTION 5.12     Control by Holders.  The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

 

(a)           such direction shall not be in conflict with any rule of law or with this Indenture, and

 

(b)           the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

 

SECTION 5.13     Waiver of Past Defaults.  The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default:

 

(a)           in the payment of the principal of or interest on any Security (including any Security required to have been purchased pursuant to a Change in Control Offer) or

 

(b)           in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security affected.

 

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

 

SECTION 5.14     Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit (including reasonable counsel fees and expenses), and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company, in any suit instituted by the Trustee, in any suit instituted by any Holder or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or in any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Stated Maturity Date expressed in such Security (or, in the case of a Change in Control Offer, on or after the Change in Control Purchase Date).

 

SECTION 5.15     Waiver of Stay or Extension Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force,

 

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which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

ARTICLE VI

 

THE TRUSTEE

 

SECTION 6.01     Certain Duties and Responsibilities.  (a)  Except during the continuance of an Event of Default,

 

(i)            the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by the provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

(b)           In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

 

(c)           No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent misconduct, except that no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers under this Indenture, unless the Trustee has received security and indemnity satisfactory to it against any loss, liability or expense.  The Trustee shall not be liable for any error of judgment unless it is proved that the Trustee was negligent in the performance of its duties hereunder.

 

(d)           Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01.

 

SECTION 6.02     Notice of Defaults.  If a Default or an Event of Default occurs and is known to the Trustee, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, notice of such Default or Event of Default hereunder known to the Trustee within 90 days after a Default or Event of Default, or, if later, within 15 days after it becomes known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default or an Event of Default in the payment of the principal of or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders.

 

SECTION 6.03     Certain Rights of Trustee.  Subject to the provisions of Section 6.01:

 

(a)           may conclusively rely as to the truth of the statements and correctness of the opinions expressed therein and shall be fully protected in acting or refraining from acting upon any resolution, Officers’ Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

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(b)           any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution of the Company;

 

(c)           whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;

 

(d)           the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

 

(e)           the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

 

(f)            the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled (subject to reasonable confidentiality arrangements as may be proposed by the Company) to make reasonable examination (upon prior notice and during regular business hours) of the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;

 

(g)           the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or custodians or nominees and the Trustee shall not be responsible for the supervision of, or any misconduct or negligence on the part of, any agent or attorney appointed with due care by it hereunder;

 

(h)           the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

 

(i)            in the event that the Trustee is also acting as Authenticating Agent, Paying Agent, Security Registrar or Securities Custodian hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI, including its right to be indemnified, shall also be afforded to such Authenticating Agent, Paying Agent, Security Registrar and Securities Custodian;

 

(j)            the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default and stating such notice is a “Notice of Default” is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture;

 

(k)           in no event shall the Trustee be responsible or liable for punitive, special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action; and

 

(l)            the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

 

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SECTION 6.04     Not Responsible for Recitals or Issuance of Securities.  The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.  The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.

 

SECTION 6.05     May Hold Securities.  The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar, any Securities Custodian or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar, Securities Custodian or such other agent.

 

SECTION 6.06     Money Held in Trust.  Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.

 

SECTION 6.07     Compensation and Reimbursement.  The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to promptly reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may have been caused by its negligence or willful misconduct; and (3) to indemnify the Trustee, its directors, officers, agents and employees for, and to hold them harmless against, any and all loss, damage, claim, liability or expense incurred without negligence or bad faith on its part, including taxes (other than taxes based upon, measured by or determined by the revenue or income of the Trustee), arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company, a Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder.

 

The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing to it pursuant to this Section 6.07, except with respect to funds held in trust for the benefit of the Holders of particular Securities.

 

When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(f), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

 

Notwithstanding any provisions of this Indenture, the provisions of this Section shall survive the resignation or removal of the Trustee and any satisfaction and discharge of this Indenture.

 

SECTION 6.08     Conflicting Interests.  If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

 

SECTION 6.09     Corporate Trustee Required; Eligibility.  There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has, or is a wholly owned subsidiary of a bank holding company that has, a combined capital and surplus of at least $50,000,000 and a Corporate Trust Office in the United States.  If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a Federal or State supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

 

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SECTION 6.10     Resignation and Removal; Appointment of Successor.  No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.

 

(a)           The Trustee may resign at any time by giving written notice thereof to the Company.  If an instrument of acceptance by a successor Trustee in accordance with the applicable requirements of Section 6.11 shall not have been delivered to the Company and the resigning Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

 

(b)           The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.  If an instrument of acceptance by a successor Trustee in accordance with the applicable requirements of Section 6.11 shall not have been delivered to the Company and the Trustee being removed within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

 

(c)           If at any time:

 

(i)            the Trustee shall fail to comply with Section 6.08 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

 

(ii)           the Trustee shall cease to be eligible under Section 6.09 and shall fail to resign after written request therefor by the Company or by any such Holder, or

 

(iii)          the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any such case, (A) the Company, by a Board Resolution, may remove the Trustee, or (B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(d)           If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee.  If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee and supersede the successor Trustee appointed by the Company.  If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in accordance with the applicable requirements of Section 6.11, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

(e)           The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.06.  Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

 

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(f)            The resignation or removal of the Trustee pursuant to this Section 6.10 shall not affect the obligation of the Company to indemnify the Trustee pursuant to Section 6.07(3) in connection with the exercise or performance by the Trustee prior to its resignation or removal of any of its powers or duties hereunder.

 

(g)           No Trustee under this Indenture shall be liable for any action or omission of any successor Trustee.

 

SECTION 6.11     Acceptance of Appointment by Successor.  Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.  Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

 

SECTION 6.12     Merger, Conversion, Consolidation or Succession to Business.  Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided, however, that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto.  In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

 

SECTION 6.13     Preferential Collection of Claims Against the Company.  If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

 

SECTION 6.14     Appointment of Authenticating Agent.  The Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange or registration of transfer or partial purchase or pursuant to Section 3.06, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority.  If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

 

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such

 

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Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided that such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

 

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.06, to all Holders as their names and addresses appear in the Security Register.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.  No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

 

The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.

 

If an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

 

This is one of the Securities described in the within-mentioned Indenture.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Wilmington   Trust, National Association, as Trustee
    
	
 
    	
By
    
	
 
    	
As   Authentication Agent
    
	
 
    	
 
    
	
 
    	
By
    
	
 
    	
Authorized   Signatory
    

 

ARTICLE VII

 

HOLDERS’ LISTS AND REPORTS BY TRUSTEE

 

SECTION 7.01     Company to Furnish Trustee Names and Addresses of Holders.  The Company will furnish or cause to be furnished to the Trustee a list of the names and addresses of the Holders in such form as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.

 

SECTION 7.02     Preservation of Information; Communications to Holders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar, if so acting.

 

(a)           The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.

 

(b)           Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of any of them shall be held accountable by

 

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reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act.

 

SECTION 7.03     Reports by Trustee.  Within 60 days after March 15, 2015, if the Securities remain Outstanding, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture to the extent required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto.

 

(a)           A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed (if any), with the Commission and with the Company.  The Company will promptly notify the Trustee when the Securities are listed on any stock exchange and of any delisting thereof.

 

ARTICLE VIII

 

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

SECTION 8.01     Company May Consolidate, Etc., Only on Certain Terms. The Company shall not (1) consolidate with or merge with or into any other Person or sell, convey, lease or transfer the Company’s properties and assets substantially as an entirety to any other Person in any one transaction or series of related transactions, or (2) permit any Person to consolidate with or merge into the Company unless:

 

(a)           in the case of a merger or consolidation, the Company is the surviving person or if the Company is not the surviving person, the surviving person formed by such consolidation or into which the Company is merged or the person to which the Company’s properties and assets are so transferred shall be an entity organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall execute and deliver to the Trustee a supplemental indenture expressly assuming, in the case of a transaction involving the Company, the payment when due of the principal of and interest on the Securities and the performance of the Company’s other covenants under this Indenture; and

 

(b)           in either case, (i) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing, and (ii) an Officers’ Certificate and legal opinion concerning the conditions precedent shall have been delivered to the Trustee.

 

In the event that the Company is not the continuing entity, then, for purposes of above, the references to the Company shall be deemed to refer to the successor entity.

 

SECTION 8.02     Successor Substituted.  Upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with Section 8.01, the successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under the Securities and this Indenture, as applicable, with the same effect as if such successor had been named as the Company in the Securities and this Indenture, as the case may be, and, except in the case of a lease, the Company shall be released and discharged from its obligations thereunder, except for obligations that the predecessor Person may have under the supplemental indenture that evidences the assignment of rights and obligations under the Indenture upon such consolidation, merger, sale, assignment, conveyance, transfer, lease or disposition.

 

ARTICLE IX

 

MODIFICATIONS; AMENDMENTS; WAIVERS; SUPPLEMENTAL INDENTURES

 

SECTION 9.01     Modifications and Amendments Without Consent of Holders.  Without the consent of any Holders, when authorized by a Board Resolution, the Company and the Trustee, at any time and from

 

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time to time, may together amend, waive or supplement this Indenture or the Securities, for any of the following purposes:

 

(a)           to evidence the succession of another Person as obligor pursuant to this Indenture and the assumption by any such successor of the covenants of the Company herein and in the Securities and to evidence the assumption of obligations under this Indenture;

 

(b)           to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company;

 

(c)           to add any additional Events of Default for the benefit of the Holders of all the Securities;

 

(d)           to amend or supplement any provisions of this Indenture; provided that no amendment or supplement shall adversely affect the interests of the Holders of any Securities then Outstanding in any material respect;

 

(e)           to permit or facilitate the issuance of the Securities in uncertificated form; provided that such action shall not adversely affect the interests of the Holders of the Securities in any material respect;

 

(f)            to secure the Securities or to add guarantees;

 

(g)           to comply with any requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;

 

(h)           to evidence and provide for the acceptance of appointment by a successor Trustee and to or change any of the provisions of this Indenture as is necessary to provide for or facilitate the administration of the trusts under this Indenture by more than one Trustee;

 

(i)            to provide for rights of Holders if any reclassification or change of Company Common Shares or any consolidation, merger or sale of substantially all of the property or assets of the Company occurs;

 

(j)            to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture; provided that this action shall not adversely affect the interests of Holders of the Securities in any material respect;

 

(k)           to supplement any of the provisions of this Indenture to the extent necessary to defease and/or discharge the Securities under this Indenture; provided that the action shall not adversely affect the interests of the Holders of the Securities in any material respect;

 

(l)            to modify this Indenture and the Securities to increase the Share Settlement Rate; provided that the increase is in accordance with the terms of the Securities or will not adversely affect the interests of the Holders of the Securities; or

 

(m)          the text of this Indenture or the Securities to any corresponding provision of the “Description of Notes” section of the prospectus dated March 17, 2014, as part of the Company’s Registration Statement on Form S-4 (File No. 333-194245), pursuant to which the Securities were offered;

 

provided, however, that the Company shall have delivered to the Trustee an Opinion of Counsel and Officers’ Certificate stating that such action pursuant to clauses (a) to (m) above is permitted by this Indenture.  The Trustee shall not be obligated to enter into any such amendment, waiver or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise.

 

SECTION 9.02     Modifications and Amendments With Consent of Holders.  With the written consent of the Holders of not less than a majority in principal amount of the Outstanding Securities affected by such

 

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modification or amendment (voting together as a single class), modification or amendment of the Indenture may be made; provided, however, that no such modification or amendment may, without the written consent of the Holder of each Security affected thereby:

 

(a)           change the Stated Maturity Date for any principal or interest payment on the Securities;

 

(b)           reduce the principal amount or the interest rate payable upon the redemption of the Securities;

 

(c)           change the timing for, or reduce any amount (including accrued interest) payable upon, the redemption of the Securities;

 

(d)           change the currency of any payment on the Securities;

 

(e)           change the place of payment on the Securities;

 

(f)            impair a Holder’s right to sue for the enforcement of any payment on or with respect to Securities as required by this Indenture;

 

(g)           reduce the percentage of principal amount of outstanding Securities necessary to modify or amend this Indenture or waive compliance with certain provisions or certain defaults and consequences under the Indenture; or

 

(h)           modify any of the foregoing provisions or any of the provisions relating to the waiver of certain past defaults or certain covenants, except to increase the required percentage to effect the action or to provide that certain other provisions may not be modified or waived without the consent of the Holders of the Securities.

 

provided, however, that the Company shall have delivered to the Trustee an Opinion of Counsel and Officers’ Certificate stating that such action pursuant to clauses (a) to (m) above is permitted by this Indenture.  The Trustee shall not be obligated to enter into any such amendment, waiver or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise.

 

SECTION 9.03     Execution of Supplemental Indentures.  In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be given, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel and an Officers’ Certificate stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that all conditions precedent thereto are satisfied.  The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise; provided that the Trustee shall enter into and execute all other supplemental indentures which satisfy all applicable conditions under this Article IX.

 

SECTION 9.04     Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

 

SECTION 9.05     Conformity with Trust Indenture Act.  Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.

 

SECTION 9.06     Reference in Securities to Supplemental Indentures.  Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture, provided that any failure by the Trustee to make such notation shall not affect the validity of the matter provided for in such supplemental indenture or any Security hereunder. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental

 

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indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

 

SECTION 9.07     Reserved.

 

SECTION 9.08     No Liability for Certain Persons.  No director, officer, employee, or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Securities or this Indenture based on or by reason of such obligations or their creation.  Each Holder by accepting a Security waives and releases all such liability.  The foregoing waiver and release are an integral part of the consideration for the issuance of the Securities.

 

ARTICLE X

 

COVENANTS

 

SECTION 10.01  Payment of Principal and Interest.  The Company shall duly and punctually pay the principal of and interest on the Securities in accordance with the terms of the Securities and this Indenture.  The Company will deposit or cause to be deposited with the Trustee or its nominee, no later than the opening of business on the Stated Maturity Date of all payments so due, which payments shall be in immediately available funds on the Stated Maturity Date.

 

SECTION 10.02  Maintenance of Office or Agency.  The Company shall maintain an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders may be made at a Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.  In the event any such notice or demands are so made or served on the Trustee, the Trustee shall promptly forward copies thereof to the Company.

 

The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes.  The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

The Company hereby initially designates the Trustee as Paying Agent and Security Registrar, and the Corporate Trust Office of the Trustee as one such office or agency of the Company for each of the aforesaid purposes.

 

SECTION 10.03  Money for Security Payments to be Held in Trust.  If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

 

Whenever the Company shall have one or more Paying Agents, the Company will, prior to 11:00 a.m., New York City time, on each due date of the principal of or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

 

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The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:  (i) comply with the provisions of the Trust Indenture Act applicable to it as Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent as such.

 

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent (other than the Company) to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest on any Security and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

 

SECTION 10.04  Statement by Officers as to Default; Compliance Certificates.  The Company shall deliver to the Trustee, prior to March 31 in each year commencing with the year beginning on January 1, 2015 (if the Securities remain Outstanding), an Officers’ Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which he may have knowledge.

 

(a)           shall deliver to the Trustee, as soon as possible and in any event within five days after the Company becomes aware of the occurrence of a Default or an Event of Default, an Officers’ Certificate setting forth the details of such Default or Event of Default, and the action which the Company proposes to take with respect thereto.

 

SECTION 10.05  Provision of Financial Information. The Company shall provide the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and information, documents and other reports (or copies of such portions any of the foregoing as the Commission may prescribe) which the Company is required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act. If the Company is not required to file information, documents or reports pursuant to either of those sections, then the Company shall provide to the Trustee and to the Commission such reports as may be prescribed to be filed by the Company by the Commission at such time. To the extent that the Company has filed such information with the Commission through the Commission’s EDGAR system, or any successor system employed by the Commission, the Company shall be deemed to have complied with the requirement of this Section 10.05.

 

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

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ARTICLE XI

 

REDEMPTION OF SECURITIES AND PURCHASES THEREUPON

 

SECTION 11.01  Right of Redemption.  The Securities are redeemable at the election of the Company prior to the Stated Maturity Date.

 

(a)           The Company shall have the right, at any time or from time to time, prior to the Stated Maturity Date, upon not less than 10 nor more than 60 days’ prior written notice delivered to the Holders (with a copy to the Trustee), to redeem any or all of the Securities for cash at a redemption price equal to the sum of (x) 100% of the principal amount of the Securities to be redeemed; plus (y) the present value of the scheduled interest payment on the Securities that would be due on the Stated Maturity Date, discounted to the date of redemption (assuming a 360-day year consisting of twelve 30-day months) at a rate of 1% per annum.

 

(b)           In the event that the Company shall redeem fewer than all Securities then Outstanding, the Trustee will select the Securities redeemed on a pro rata basis, by lot, or by such other method the Trustee considers fair and appropriate or is required by the Depositary for the Securities.  The Trustee shall make the selection at least 15 days before the redemption date from Outstanding Securities not previously called for redemption.  Securities and portions of the principal amount thereof selected for redemption shall be in integral multiples of $1,000.  The Trustee shall notify the Company promptly of the Securities or portions of the principal amount thereof to be redeemed.

 

(c)           In the event of any redemption in part, the Company shall not be required to:  (i) issue or register the transfer or exchange of any Security during a period beginning at the opening of business five days before any selection of Securities for redemption and ending at the Close of Business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of Securities to be so redeemed, or (ii) register the transfer or exchange of any Security so selected for redemption, in whole or in part, except the unredeemed portion of any Security being redeemed in part.

 

(d)           A notice of redemption sent to the Holders of Securities to be redeemed in accordance with the provisions of this Section 11.01 shall state:

 

(i)            and address of the Paying Agent;

 

(ii)           Paying Agent holds funds sufficient to pay the redemption price of the Securities on the redemption date, then on and after such date:

 

(A)          such Securities will cease to be Outstanding;

 

(B)          interest on such Securities will cease to accrue; and

 

(C)          all rights of Holders of such Securities will terminate except the right to receive the redemption price.

 

(e)           Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.  Upon redemption, interests in Global Securities shall be reduced in accordance with the applicable procedures of the Depositary (the “Applicable Procedures”).

 

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SECTION 11.02  Securities Purchased in Whole or in Part.  Any Security that is to be purchased, whether in whole or in part, shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires in the case of Definitive Securities, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased.

 

SECTION 11.03  Covenant to Comply With Applicable Laws Upon Purchase of Securities.  In connection with any offer to purchase Securities under Section 11.02 hereof, the Company shall, in each case if required, (i) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable, (ii) file a Schedule TO or any other required schedule under the Exchange Act and (iii) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under Section 11.02 to be exercised in the time and in the manner specified in Section 11.02.

 

SECTION 11.04  Sinking Fund.  No sinking fund is provided for the Securities.

 

ARTICLE XII

 

SHARE SETTLEMENT

 

SECTION 12.01  Right to Settle in Shares.  Subject to and upon compliance with the provisions of this Indenture, the Company, at its election, may satisfy its obligation to repay the principal amount of the Securities at the Stated Maturity Date, in whole and not in part, by delivering Company Common Shares in lieu of cash (such shares, the “Share Settlement”). Notwithstanding the foregoing sentence, if any calculation required in order to determine the number of Company Common Shares that must be delivered in respect of the Securities is based on data that will not be available to the Company on the Stated Maturity Date, the Company will delay delivery of Company Common Shares until the first business day after such data becomes available; provided that, if the Company cannot complete such delivery within ten Business Days following the Stated Maturity Date, each Holder will have the right, at its option, to require the Company to deliver the principal amount of such Securities in cash, rather than Company Common Shares, in an amount equal to 100% of the principal amount of Securities held by such Holder. If the Company fails to deliver the Share Settlement Amount within seven business days after the Stated Maturity Date, the Company will provide the Trustee a notice with an election form attached thereto to be delivered by Holders who elect to receive cash in such circumstances, which the Trustee shall transmit to Holders in accordance with the notice provisions of this Indenture no later than the tenth business day after the Stated Maturity Date.  Any Holder making such an election shall, in addition to complying with the Applicable Procedures, deliver such completed election form to the Company and the Trustee.  Promptly after such completed election form is received, the Company shall make a cash payment to such electing Holder to the account specified in such completed election form, and direct the Trustee to cancel the related notes held by such Holder.   For the avoidance of doubt, the Company is not permitted to pay interest by delivering Company Common Shares in lieu of cash.  Subject to Section 3.07, interest shall cease to accrue on the Securities following the Stated Maturity Date, unless the Company defaults in making payment of the principal amount of the Securities either in cash or via Share Settlement, as the case may be.

 

SECTION 12.02  Share Settlement Procedures.

 

(a)           Company Common Shares may be delivered in lieu of cash in accordance with the provisions of this Article XII and, if applicable, in accordance with the procedures of the Depositary.

 

In order to deliver Company Common Shares with respect to any interest in a Global Security, the Company shall (i) deliver written notice of its election to (1) the Trustee not less than 30 scheduled trading days prior to the Stated Maturity Date and (2) the Depositary not less than 25 scheduled trading days prior to the Stated Maturity Date (in each case, the “Share Settlement Election Notice”), (ii) comply with the Applicable Procedures, and (iii) pay any taxes or duties if required pursuant to Section 12.06. In order to deliver Company Common Shares in lieu of cash at the Stated Maturity Date with respect to any Definitive Securities, the Company shall (i) deliver a

 

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Share Settlement Election Notice to (1) the Trustee not less than 30 scheduled trading days prior to the Stated Maturity Date and (2) Holders of Definitive Securities not less than 25 scheduled trading days prior to the Stated Maturity Date, (ii) if required, furnish appropriate endorsements and transfer documents, and (iii) if required, pay all transfer or similar taxes as set forth in Section 12.06.

 

The date on which the Company satisfies all of the applicable requirements set forth above is the Share Settlement Election Date (the “Share Settlement Election Date”).  The Trustee shall, as promptly as practicable, in any event no later than five Business Days of the receipt thereof, provide Holders of the Securities with the Company’s Share Settlement Election Notice. As promptly as practicable, such Holders shall provide to the Trustee in writing the name or names (with corresponding address or addresses) in which any certificate or certificates for Company Common Shares shall be issued. All corresponding Securities shall, unless the Company Common Shares issuable on the Stated Maturity Date are to be issued in the same name as the registration of such Securities, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly elected by, the Holder or his duly authorized attorney.

 

SECTION 12.03  Determination of Share Settlement Amount.  If the Company makes a Share Settlement election, for each of the 20 consecutive trading days during the Share Settlement Measurement Period (as defined below), the Company will deliver a number of Company Common Shares equal to the Applicable Share Settlement Rate (as defined below) divided by 20.

 

(a)           The “Applicable Share Settlement Rate” or the “Share Settlement Rate”, as of any trading day (as defined below), means the amount determined by dividing $1,000 principal amount of the Securities by the Daily VWAP (as defined below) of the Company Common Shares on such trading day.  With respect to each day in the Share Settlement Measurement Period (as defined below), if an event happens that would give rise to an adjustment provided for pursuant to Section 12.04, then the Applicable Share Settlement Rate for each trading day during the Share Settlement Measurement Period that is prior to the trading day on which such adjustment is made shall be retroactively adjusted to give effect to such adjustment with respect to each such prior trading day.

 

(b)           The “Share Settlement Measurement Period” means the 20 consecutive trading-day period beginning on the 23rd scheduled trading day prior to the Stated Maturity Date.

 

(c)           A “trading day” means a day during which: (i) trading in securities generally occurs on the New York Stock Exchange or, if the subject securities are not then listed on the New York Stock Exchange, on the principal national securities exchange on which such securities are then listed and (ii) there is no Market Disruption Event.

 

(d)           “Daily VWAP” for the Company Common Shares means, for each trading day, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg (or any successor service) page NRF UN <equity>AQR (or its equivalent successor if such page is not available or the equivalent page, as determined by the Company, for each other security for which Daily VWAP must be determined) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such trading day (or if such volume-weighted average price is unavailable, the market value of one Company Common Share on such trading day as determined by the Company’s Board in good faith using a volume-weighted method or by a nationally recognized independent investment banking firm retained by the Company for this purpose).

 

(e)           If the Company makes a Share Settlement election, the Company will not deliver fractional Company Common Shares.  The number of full shares of Company Common Shares that shall be issuable pursuant to Share Settlement shall be computed on the basis of the aggregate principal amount of the Securities outstanding on the Scheduled Maturity Date.  In determining whether any fractional Company Common Shares are required to be issued, the beneficial ownership of Securities by Agent Members (or, if such information is made available by the Agent Members in their discretion, the beneficial owners of the Securities beneficially owned by such Agent Members) shall be taken into account to the extent commercially reasonable and then permitted by, or possible under, the Applicable Procedures.  If any fractional Company Common Shares would be issuable upon settlement of the Securities, the Company shall made an adjustment and payment

 

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therefor and deliver to the Holder (or such Agent Members, as applicable) cash in lieu of any fractional Company Common Shares issuable in connection with payment of the shares based upon the Closing Sale Price (as defined below) of the Company Common Shares on the last day of the applicable Share Settlement Measurement Period.

 

(f)            “Closing Sale Price” of the Company Common Shares or other Capital Stock or similar equity interests or other publicly traded securities on any date means the Closing Sale Price per share (or, if no Closing Sale Price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the principal U.S. securities exchange on which such securities are listed or, if such securities are not listed on a United States securities exchange by OTC Markets Group Inc. or another established over-the-counter trading market in the United States.  The Closing Sale Price will be determined without regard to after-hours trading or extended market making.  In the absence of the foregoing, the Company will determine the Closing Sale Price on such basis as it considers appropriate.

 

SECTION 12.04  Adjustment of Share Settlement Rate.  If the Company makes a Share Settlement election, then with respect to any trading day that falls between the first day of the Share Settlement Measurement Period and the settlement date on which the Company delivers Company Common Shares to Holders, if any event that would give rise to a Share Settlement Rate adjustment pursuant to the following provisions occurs, then for each prior trading day in the Share Settlement Measurement Period (or, if such adjustment occurs after the end of the Share Settlement Measurement Period, for each day in such period), the Share Settlement Rate for such prior trading day(s) shall be adjusted by the Company as follows:

 

(a)           If the Company issues Company Common Shares as a dividend or other distribution on Company Common Shares to all holders of Company Common Shares, or if the Company effects a share split or share combination of Company Common Shares, the Share Settlement Rate will be adjusted based on the following formula:

 

ER1  =    ER0 x OS1/OS0

 

where

 

ER0 =                          the Share Settlement Rate in effect immediately prior to the Ex-Dividend Date for such dividend or other distribution or the effective date of such share split or share combination, as applicable;

 

ER1  =                       the Share Settlement Rate in effect on and immediately after the Ex-Dividend Date for such dividend or other distribution or the effective date of such share split or share combination, as applicable;

 

OS0 =                           the number of Company Common Shares outstanding on the Ex-Dividend Date for such dividend or other distribution or the effective date of such share split or share combination, as applicable; and

 

OS1 =                           the number of Company Common Shares outstanding on the Ex-Dividend Date for such dividend or other distribution or the effective date of such share split or share combination, as applicable, as if such dividend, distribution, split or combination occurred at that time.

 

If any dividend or other distribution described in this paragraph (a) is declared but not so paid or made, the Share Settlement Rate shall be readjusted to the Share Settlement Rate that would then be in effect if such dividend or other distribution had not been declared.

 

(b)           Company issues to all holders of Company Common Shares any rights, warrants, options or other securities entitling them for a period of not more than 45 days after the date of issuance thereof to subscribe for or purchase Company Common Shares or securities convertible into Company Common Shares within 45 days

 

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after the issuance thereof, in either case at an exercise price per share or a conversion price per share less than the Closing Sale Price of Company Common Shares on the business day immediately preceding the time of announcement of such issuance, the Share Settlement Rate will be adjusted based on the following formula (provided that the Share Settlement Rate will be readjusted to the extent that such rights, warrants, options, or other securities or convertible securities are not exercised or converted prior to the expiration of the exercisability or convertibility thereof):

 

ER1 =                          ER0 x (OS0+X)/(OS0+Y)

 

where

 

ER0 =                          the Share Settlement Rate in effect immediately prior to the Ex-Dividend Date for such issuance;

 

ER1=                             the Share Settlement Rate in effect on and immediately after the Ex-Dividend Date for such issuance;

 

OS0 =                           the number of Company Common Shares outstanding immediately prior to the Ex-Dividend Date for such issuance;

 

X =                                       the number of Company Common Shares issuable pursuant to such rights, warrants, options, other securities or convertible securities; and

 

Y =                                       the number of Company Common Shares equal to the quotient of (A) the aggregate price payable to exercise such rights, warrants, options, other securities or convertible securities and (B) the average of the Closing Sale Prices of the Company Common Shares for the 10 consecutive trading days prior to the business day immediately preceding the date of announcement for the issuance of such rights, warrants, options, other securities or convertible securities.

 

For purposes of this paragraph (b), in determining whether any rights, warrants, options, other securities or convertible securities entitle the holders to subscribe for or purchase or exercise a conversion right for Company Common Shares at less than the average Closing Sale Price of Company Common Shares, and in determining the aggregate exercise or conversion price payable for such Company Common Shares, there shall be taken into account any consideration received by the Company for such rights, warrants, options, other securities or convertible securities and any amount payable on exercise or conversion thereof, with the value of such consideration, if other than cash, to be determined by the Company’s Board of Directors.

 

If any right, warrant, option, other security or convertible security described in this paragraph (b) is not exercised or converted prior to the expiration of the exercisability or convertibility thereof, the new Share Settlement Rate shall be readjusted to the Share Settlement Rate that would then be in effect if such right, warrant, option, other security or convertible security had not been so issued.

 

(c)           If the Company distributes shares of Capital Stock, evidences of indebtedness or other assets or property of the Company to all holders of Company Common Shares, excluding:

 

(i)            dividends or other distributions, rights, warrants, options, other securities or convertible securities referred to in paragraphs (a) or (b) above;

 

(ii)           dividends or other distributions paid exclusively in cash; and

 

(iii)          spin-offs described below in this paragraph (c);

 

41

 

then the Share Settlement Rate will be adjusted based on the following formula:

 

ER1  =                       ER0 x SP0/(SP0-FMV)

 

where

 

ER0 =                          the Share Settlement Rate in effect immediately prior to the Ex-Dividend Date for such distribution;

 

ER1 =                          the Share Settlement Rate in effect on and immediately after the Ex-Dividend Date for such distribution;

 

SP0 =                             the average of the Closing Sale Prices of the Company Common Shares for the ten consecutive trading days prior to the business day immediately preceding the Ex-Dividend Date for such distribution; and

 

FMV=                       the fair market value (as determined in good faith by the Company’s Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding Company Common Share on the Ex-Dividend Date for such distribution.

 

With respect to an adjustment pursuant to this paragraph (c) where there has been a payment of a dividend or other distribution on Company Common Shares or shares of Capital Stock of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit of the Company (such transaction, a “Spin-Off”), the Share Settlement Rate will be adjusted based on the following formula:

 

ER1 =                          ER0 x (FMV0+MP0)/MP0 where

 

ER0 =                          the Share Settlement Rate in effect immediately prior to the effective date of the Spin-Off;

 

ER1 =                          the Share Settlement Rate in effect on and immediately after the effective date of the Spin-Off;

 

FMV0 =               the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of Company Common Shares applicable to one share of Company Common Share over the first 10 consecutive trading days after the effective date of the Spin-Off; and

 

MP0 =                        the average of the Closing Sale Prices of Company Common Shares over the first 10 consecutive trading days after the effective date of the Spin-Off.

 

If any such dividend or other distribution described in paragraph (c) is declared but not paid or made, the Share Settlement Rate shall be readjusted to be the Share Settlement Rate that would then be in effect if such dividend or other distribution had not been declared.

 

(d)           If the Company makes any cash dividend or other distribution to all holders of Company Common Shares, the Share Settlement Rate will be adjusted based on the following formula:

 

ER1  =                       ER0 x (SP0)/(SP0-C)

 

42

 

where

 

ER0 =                          the Share Settlement Rate in effect immediately prior to the Ex-Dividend Date for such distribution;

 

ER1  =                       the Share Settlement Rate in effect on and immediately after the Ex-Dividend Date for such distribution;

 

SP0 =                             the average of the Closing Sale Prices of the Company Common Shares over the period of the five consecutive trading days ending on the business day immediately preceding the Ex-Dividend Date for such distribution; and

 

C =                                       the amount in cash per share that the Company distributes to holders of the Company Common Shares.

 

If any dividend or other distribution described in this paragraph (d) is declared but not so paid or made, the Share Settlement Rate shall be readjusted to the Share Settlement Rate that would then be in effect if such dividend or distribution had not been declared.

 

(e)           If the Company or any of its subsidiaries makes a payment in respect of a tender offer or exchange offer for Company Common Shares to the extent that the cash and value of any other consideration included in the payment per share exceeds the Closing Sale Price of a Company Common Share on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender offer or exchange offer (the “Expiration Time”), the Share Settlement Rate will be adjusted based on the following formula:

 

ER1 =                          ER0 x (AC + (SP1 x OS1))/(SP1 x OS0)

 

where

 

ER0 =                          the Share Settlement Rate in effect on the date such tender offer or exchange offer expires;

 

ER1 =                          the Share Settlement Rate in effect on the day next succeeding the date such tender offer or exchange offer expires;

 

AC =                              the aggregate value of all cash and any other consideration (as determined by the Company’s Board of Directors) paid or payable for shares purchased in such tender offer or exchange offer;

 

OS0 =                           the number of Company Common Shares outstanding immediately prior to the date such tender offer or exchange offer expires;

 

OS1 =                           the number of Company Common Shares outstanding immediately after such tender offer or exchange offer expires (after giving effect to the purchase or exchange of Company Common Shares pursuant to such tender offer or exchange offer); and

 

SP1 =                             the average of the Closing Sale Prices of the Company Common Shares for the five consecutive trading days commencing on the trading day next succeeding the date such tender offer or exchange offer expires.

 

If the application of the foregoing formula would result in a decrease in the Share Settlement Rate, no adjustment to the Share Settlement Rate will be made.

 

43

 

If the Company or one of its subsidiaries is obligated to purchase Company Common Shares pursuant to any such tender offer or exchange offer, but it or such subsidiary is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Share Settlement Rate shall be readjusted to be the Share Settlement Rate that would be in effect if such tender or exchange offer had not been made.

 

(f)            If the Company adopts a stockholder rights plan while any Securities remain Outstanding, Holders of Securities will receive, upon delivery of Company Common Shares upon settlement of the Securities, in addition to Company Common Shares, rights under such stockholder rights plan unless, prior to settlement, the rights have expired, terminated or been redeemed or unless the rights have separated from the Company Common Shares.  If the rights provided for in the rights plan adopted by the Company have separated from the Company Common Shares in accordance with the provisions of the applicable stockholder rights agreement so that Holders of Securities would not be entitled to receive any rights in respect of Company Common Shares issuable upon settlement of the Securities, the Share Settlement Rate will be adjusted at the time of separation as if the Company had distributed, to all holders of Company Common Shares, shares of Capital Stock, evidences of indebtedness or other assets or property pursuant to paragraph (c) above, subject to readjustment upon the subsequent expiration, termination or redemption of the rights.  In lieu of any such adjustment, the Company may amend such applicable stockholder rights agreement to provide that upon settlement of the Securities for Company Common Shares, the holders will receive, in addition to the Company Common Shares issuable upon such settlement, the rights which would have attached to such Company Common Shares if the rights had not become separated from the Company Common Shares under such shareholder rights plan.

 

(g)           In addition to the adjustments pursuant to paragraphs (a) through (f) above, the Company may increase the Share Settlement Rate in order to avoid or diminish any income tax to holders of the Company Capital Stock resulting from any dividend or other distribution of Capital Stock (or rights to acquire Company Common Shares) or from any event treated as such for income tax purposes.  The Company may also, from time-to-time, to the extent permitted by applicable law, increase the Share Settlement Rate by any amount for any period if the Company has determined that such increase would be in its best interests.  If the Company makes such determination, it will be conclusive and the Company will mail to Holders a notice of the increase at least five days prior to the date the increased Share Settlement Rate takes effect in accordance with applicable law and such notice shall state the increased Share Settlement Rate and the period during which it will be in effect.

 

(h)           All calculations under this Article XII shall be made by the Company and shall be made to the nearest one ten-thousandth of a share (including, in the case of any adjustment to the Share Settlement Rate, the resulting adjustment to the Share Settlement).

 

(i)            Notwithstanding anything to the contrary in this Article XII, no adjustment to the Share Settlement Rate shall be made:

 

(i)            if Holders are permitted to participate in the dividend, distribution or transaction, as applicable, on an as settled basis, in the transactions set forth above in this Section 12.04;

 

(ii)           the issuance of any Company Common Shares pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the securities of the Company or any of its subsidiaries and the investment of additional optional amounts in Company Common Shares under any plan;

 

(iii)          the issuance of any Company Common Shares or units of the Operating Partnership or options or rights to purchase those shares or units pursuant to any present or future employee, directors trustee or consultant benefit plan, employee agreement or arrangement or program of the Company or any of its subsidiaries;

 

(iv)          issuance of any Company Common Shares or units of the Operating Partnership pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Securities were first issued;

 

44

 

(v)           a change in the par value of the Company Common Shares;

 

(vi)          and unpaid dividends or other distributions;

 

(vii)         result of a tender offer solely to holders of less than 100 Company Common Shares; and

 

(viii)        avoidance of doubt, except as specifically described above, the issuance of Company Common Shares, limited partnership units by the Operating Partnership or equity interests in any subsidiary or by the Company or the Operating Partnership or, in any case, the payment of cash upon redemption thereof.

 

Except as specifically described above, the Share Settlement Rate shall not be subject to adjustment in the case of the issuance of any Company Common Shares or shares of preferred stock of the Company or securities exchangeable for or convertible into Company Common Shares or shares of preferred stock of the Company.

 

SECTION 12.05  Certain Other Adjustments. Whenever a provision of this Indenture requires the calculation of Closing Sale Prices, Daily VWAPs, Share Settlement Rates or other amounts over a span of multiple days, the Board of Directors will make appropriate adjustments consistent with the provisions described in Section 12.04 to account for any adjustment to the Share Settlement Rate that becomes effective, or any event requiring an adjustment to the Share Settlement Rate where the Record Date or Ex-Dividend Date of the event occurs, at any time during the period from which such Closing Sale Prices, Daily VWAPs, Share Settlement Rates or other amounts are to be calculated.

 

For purposes hereof, the number of Company Common Shares at any time outstanding shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares.

 

For purposes hereof, “Record Date” shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Company Common Shares have the right to receive any cash, securities or other property or into which the Company Common Shares (or other applicable security) is exchanged or converted into any combination of cash, securities or other property, the date fixed for determination or stockholders entitled to receive such cash, security or other property.

 

SECTION 12.06  Taxes on Shares Issued. The Company will pay any documentary, stamp or similar issue or transfer tax due on the issue or delivery of Company Common Shares pursuant hereto; provided, however, that if such documentary, stamp or similar issue or transfer tax is due because the Holder of such Securities has requested that Company Common Shares be issued in a name other than that of the Holder of the Securities converted, then such taxes will be paid by the Holder, and the Company shall not be required to issue or deliver any stock certificate evidencing such shares unless and until the Holder shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

 

SECTION 12.07  Responsibility of Trustee. The Trustee shall not at any time be under any duty or responsibility to any Holder of Securities to determine or calculate the Share Settlement Rate, to determine whether any facts exist which may require any adjustment of the Share Settlement Rate, or to confirm the accuracy of any such adjustment when made or the appropriateness of the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Company Common Shares delivered in lieu of cash at the Stated Maturity Date; and the Trustee makes no representations with respect thereto. The Trustee shall not be responsible for any failure of the Company to issue, transfer or deliver any Company Common Shares or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article XII. The rights, privileges, protections, immunities and benefits given to the Trustee, including without limitation its right to be compensated, reimbursed, and indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder.

 

45

 

SECTION 12.08  Ownership Limit. Notwithstanding any other provision of the Securities, the Company shall not deliver Company Common Shares to a Holder of Securities if receipt of such shares would cause such Holder (together with such Holder’s Affiliates) to exceed the ownership limit contained in the Company’s charter, unless such Person has been exempted from such limits in the Company’s Board’s sole discretion in accordance with its charter. In any such instance, and notwithstanding any election the Company has made to deliver Company Common Shares at the Stated Maturity Date in lieu of cash, the Company shall deliver to such Holder (i) the maximum number of shares that it may deliver to such Holder in compliance with such ownership limit, and (ii) an amount of cash equal to (1) the principal amount of Securities held by such Holder, minus (2) the number of Company Common Shares to be delivered to such Holder multiplied by the Closing Sale Price of the Company Common Shares on the business day prior to the day on which the shares are delivered to such Holder.

 

ARTICLE XIII

 

REPURCHASE

 

SECTION 13.01  Repurchase at Option of Holders upon a Change in Control.

 

(a)           If a Change in Control occurs at any time prior to the Stated Maturity Date, a Holder of Securities shall have the right, at its option, to require the Company to repurchase all of such Holder’s Securities not previously called for redemption, in whole or in part (in principal amounts of $1,000 or an integral multiple thereof) for cash equal to the Change in Control Purchase Price (such repurchase, the “Change in Control Offer”), subject to satisfaction by or on behalf of the Holder of the requirements set forth below.

 

(b)           Within 15 days after the occurrence of a Change in Control, the Company shall provide written notification to the Holders of the Change in Control and of the repurchase right arising as a result of the Change in Control (the “Change in Control Notice”).  The Change in Control Notice shall also be delivered to the Trustee. The Company is required to repurchase the Securities on the date that is neither less than 30 nor more than 60 business days after the date of the Change in Control Notice (such date, the “Change in Control Purchase Date”). The Change in Control Notice shall include a form of Change in Control Purchase Notice to be completed by the Holder containing the information contemplated by Section 13.01(c) and shall state:

 

(i)            the date of such Change in Control;

 

(ii)           the date by which the Change in Control Purchase Notice must be delivered to the Paying Agent;

 

(iii)          the Change in Control Purchase Date;

 

(iv)          Change in Control Purchase Price;

 

(v)           the name and address of the Trustee and the Paying Agent;

 

(vi)          that Securities must be surrendered to the Paying Agent (which surrender may, if applicable, be effected through the facilities of the Depositary) to collect payment of the Change in Control Purchase Price;

 

(vii)         that the Change in Control Purchase Price for any Security as to which a Change in Control Purchase Notice has been duly given will be paid within five Business Days after the later of the Change in Control Purchase Date or the time at which such Securities are surrendered for repurchase;

 

(viii)        that, unless the Company defaults in making payment of the Change in Control Purchase Price, such Securities shall cease to be Outstanding and interest on such Securities shall cease to accrue and all rights of the Holders of such Securities shall terminate on and after the Change in Control Purchase Date; and

 

46

 

(ix)          the CUSIP number of the Securities.

 

(c)           A Holder may exercise its rights specified in this Section 13.01 upon delivery of a written notice of such Holder’s exercise of its repurchase right (a “Change in Control Purchase Notice”) to any Paying Agent or depositary specified in the Change in Control Purchase Notice at any time prior to the Close of Business on the second Business Day prior to the Change in Control Purchase Date, stating:

 

(i)            if such Securities are in certificated form, the certificate number(s) of the Securities which the Holder will deliver to be repurchased (if such Securities are Global Securities, the Change in Control Purchase Notice shall comply with Applicable Procedures);

 

(ii)           the portion of the principal amount of the Securities to be repurchased, in multiples of $1,000, provided that the remaining principal amount of Securities is in an authorized denomination; and

 

(iii)          that such Security shall be repurchased pursuant to the applicable provisions hereof and of the Securities.

 

The Trustee (or any Paying Agent) shall promptly notify the Company in writing of the receipt by it of any Change in Control Purchase Notice.

 

Transfers of interests in a Global Security in compliance with the Applicable Procedures or delivery of Securities in certificated form (together with all necessary endorsements) to the Paying Agent at the offices of the Paying Agent and delivery of such Security shall be conditions to the receipt by the Holder of the Change in Control Purchase Price therefor.  Holders electing to require the Company to repurchase Securities must effect such transfer or delivery to the Paying Agent prior to the Change in Control Purchase Date to receive payment of the Change in Control Purchase Price.

 

(d)           A Change in Control Purchase Notice is irrevocable and may not be withdrawn.

 

(e)           On or before 11:59 a.m. (New York City time) on the Change in Control Purchase Date, the Company shall deposit with the Paying Agent money sufficient to pay the aggregate Change in Control Purchase Price of the Securities to be purchased pursuant to this Section 13.01.  If the Paying Agent holds, in accordance with the terms of the Indenture, money sufficient to pay the Change in Control Purchase Price of such Securities on the Change in Control Purchase Date or the Business Day following the Change in Control Purchase Date, then, on and after such date, such Securities shall cease to be Outstanding and interest on such Securities shall cease to accrue and all rights of the Holders of such Securities shall terminate (other than the right to receive the Change in Control Purchase Price after delivery or transfer of the Securities).  Such will be the case whether or not book entry transfer of the Securities in book entry form is made and whether or not Securities in certificated form, together with the necessary endorsements, are delivered to the Paying Agent.

 

(f)            Notwithstanding the foregoing, no Securities may be repurchased by the Company in accordance with the provisions of this Section 13.01 if there has occurred and is continuing an Event of Default with respect to the Securities and the principal amount of the Securities has been accelerated and such acceleration has not been rescinded on or prior to such dates.

 

(g)           The Paying Agent will promptly return to the respective Holders thereof any Securities with respect to which a Change in Control Purchase Notice has been withdrawn in compliance with this Indenture.

 

To the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.01 exceeds the aggregate Change in Control Purchase Price or portions thereof that the Company is obligated to purchase, then promptly after the Change in Control Purchase Date, the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Company.

 

47

 

SECTION 13.02  Securities Purchased in Part. Any Global Security that is to be purchased only in part shall be adjusted to reflect the amount of any decrease in the amount of Securities then Outstanding represented thereby by the Trustee in accordance with instructions given by a Company Order and shall be made on the records of the Trustee and the Depositary.  Any Security issued in certificated form that is to be purchased only in part shall be surrendered at the office of a Paying Agent, and promptly after the Change in Control Purchase Date, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of such authorized denomination or denominations as may be requested by such Holder (which must be equal to $1,000 principal amount or any integral thereof), in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased.

 

SECTION 13.03  Purchase of Securities in Open Market. The Company may from time to time repurchase the Securities in open market purchases or negotiated transactions at varying prices without prior notice to Holders.  Any Security that the Company purchases or a third party purchases may, to the extent permitted by applicable law, be reissued or resold or may, at the Company’s or such third party’s option, be surrendered to the Trustee for cancellation. Any Securities surrendered for cancellation may not be reissued or resold and will be canceled promptly in accordance with Section 3.09.

 

48

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

 

	
 
    	
 
    	
NORTHSTAR   REALTY FINANCE CORP.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ronald J. Lieberman
    
	
 
    	
 
    	
 
    	
Name:
    	
Ronald   J. Lieberman
    
	
 
    	
 
    	
 
    	
Title:
    	
Executive   Vice President, General Counsel, and Secretary
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
WILMINGTON   TRUST, NATIONAL ASSOCIATION, as Trustee,
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jane Y. Schweiger
    
	
 
    	
 
    	
 
    	
Name:
    	
Jane   Y. Schweiger
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice   President
    

 

49

 

EXHIBIT A

 

[FORM OF SECURITY]

 

[Global Securities Legend]

 

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

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

NorthStar Realty Finance Corp.

 

3.00% Senior Notes due 2014

 

	
No.
    	
$                               
    
	
ISIN US66704RAA86
    	
CUSIP 66704RAA8
    

 

NorthStar Realty Finance Corp., a corporation duly organized and existing under the laws of the State of Maryland (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, $                           (                               DOLLARS) on September 30, 2014 (the “Stated Maturity Date”) and to pay interest on the Stated Maturity Date. Interest shall accrue from, and including, the Issue Date to, but excluding, the Stated Maturity Date and shall be paid on the Stated Maturity Date. Interest shall accrue at the rate of 3.00% per annum, until the principal hereof is paid or duly provided for, provided, however, that any principal and any interest, which is overdue shall bear interest at the rate of 3.00% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or duly provided for.  The interest so payable and punctually paid or duly provided for, on the Stated Maturity Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the Close of Business on the Stated Maturity Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on the Stated Maturity Date and may either be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the Close of Business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Company, notice whereof shall be given to Holders of securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

 

The Company shall pay the principal of and interest on any Global Security in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Global Security.  The Company shall pay the principal of any Definitive Security at the office or agency designated by the Company for that purpose.  The Company has initially designated the Trustee as its Paying Agent and Security Registrar in respect of the Securities as a place where Securities may be presented for payment or for registration of transfer.  The Company may, however, change the Paying Agent or Security Registrar for the Securities without prior notice to the Holders thereof and the Company may act as Paying Agent or Security Registrar for the Securities.  Payments on any Definitive Securities may be made, at the Company’s option (i) to Holders of

 

A-1

 

Definitive Securities having an aggregate principal amount of Securities of $5,000,000 or less, by check mailed to the Holders of such Securities as their address in the Security Register and (ii) to Holders having an aggregate principal amount of Definitive Securities in excess of $5,000,000, by either check mailed to each Holder at its address in the Security Register or, upon application by a Holder to the Registrar not later than 10 Business Days prior to the Stated Maturity Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until that Holder notifies, in writing, the Registrar to the contrary.

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

A-2

 

IN WITNESS WHEREOF, the Company has caused this Security to be duly executed.

 

	
 
    	
 
    	
NORTHSTAR   REALTY FINANCE CORP.,
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
 
    	
Title:
    	
[·]
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attest:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
 
    	
Title:
    	
[·]
    

 

A-3

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

Dated:

 

	
 
    	
 
    	
WILMINGTON   TRUST, NATIONAL ASSOCIATION, AS TRUSTEE
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

A-4

 

FORM OF REVERSE OF SECURITY

 

This Security is one of a duly authorized issue of Securities of the Company designated as 3.00%  Senior Notes due 2014 (herein called the “Securities”), limited in aggregate principal amount on the Issue Date to $481,118,000 issued and to be issued under an Indenture, dated as of March 31, 2014 (herein called the “Indenture,” which term shall have the meaning assigned to it in such instrument), between the Company and Wilmington Trust, National Association, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.  The Company shall be entitled, subject to its compliance with the terms of the Indenture, to issue Additional Securities pursuant to Section 3.13 of the Indenture.  The Securities include the Securities issued on the Issue Date and any Additional Securities.  The Securities issued on the Issue Date and any Additional Securities are treated as a single class of securities under the Indenture.  In the event there is any conflict between the terms of this Note and of the Indenture, the Indenture shall govern.

 

The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 7aaa-77bbbb (the “TIA”), as in effect on the date of the Indenture.  Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of such terms.

 

This Security is redeemable at the election of the Company prior to the Stated Maturity Date subject to the provisions of the Indenture.

 

Upon the occurrence of a Change in Control, the Holder has the right, at such Holder’s option, to require the Company to repurchase all of the Holder’s Securities or any portions thereof (in principal amounts of $1,000 or integral multiples in excess thereof) on the Change in Control Purchase Date at a price equal to the Change in Control Purchase Price.

 

As provided in and subject to the provisions of the Indenture, the Company, upon providing notice not less than 25 scheduled trading days prior to the Stated Maturity Date, has the right, at its election, to deliver to Holders of the Securities Company Common Shares in lieu of cash for the principal amount of this Security at the Stated Maturity Date of the Securities.

 

If an Event of Default shall occur and be continuing, there may be declared due and payable the principal of and accrued and unpaid interest, if any, on all of the outstanding Securities, in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities, the Holders of not less than 25% in principal amount of the Securities at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee and the Trustee shall not have received from the Holders of a majority in principal amount of Securities at the time

 

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Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity.  The foregoing shall not apply to certain suits described in the Indenture, including any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any interest hereon on or after the respective due dates expressed herein.

 

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

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

This Security is issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

Interest on this Security shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

The Indenture and this Security shall be governed by the laws of the State of New York, without regard to the principle of the conflicts of laws.

 

A-6

 

ASSIGNMENT FORM

 

To assign this Security, fill in the form below:

 

I or we assign and transfer this Security to

 

	
 
    
	
(Print or type assignee’s name, address and zip code)
    
	
 
    
	
 
    
	
(Insert assignee’s soc. sec. or tax I.D. No.)
    

 

and irrevocably appoint             agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Sign exactly as your name appears on the other   side of this Security.
    

 

A-7

 

TO BE ATTACHED TO GLOBAL SECURITIES SCHEDULE 
 OF INCREASES OR DECREASES IN GLOBAL SECURITY

 

The initial principal amount of this Global Security is $481,118,000.  The following increases or decreases in this Global Security have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   of this Global
   Security
    	
 
    	
Amount of increase
   in Principal
   Amount of this
   Global Security
    	
 
    	
Principal amount
   of this Global
   Security following
   such decrease or
   increase
    	
 
    	
Signature of
   authorized
   signatory of
   Trustee or
   Securities
   Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-8Exhibit 10.1

 

EXECUTION VERSION

 

ZAZA ENERGY CORPORATION

 

Common Stock
 (par value $0.01 per share)

 

At-the-Market Issuance Sales Agreement

 

March 31, 2014

 

MLV & Co. LLC

1251 Avenue of the Americas
 41st Floor

New York, New York 10020

 

Ladies and Gentlemen:

 

ZaZa Energy Corporation, a Delaware corporation (the “Company”), confirms its agreement (this “Agreement”), with MLV & Co. LLC (“MLV”), as follows:

 

1.                                           Issuance and Sale of Shares.  The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through MLV shares (the “Placement Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”); provided, however, that in no event shall the Company issue or sell through MLV such number or dollar amount of Placement Shares that (a) would cause the Company or the offering of the Placement Shares to fail to satisfy the eligibility and transaction requirements for use of Form S-3 (including, if applicable, Instruction I.B.6 thereof), (b) exceeds the number or dollar amount of shares of Common Stock registered on the effective Registration Statement (as defined below) pursuant to which the offering is being made, (c) exceeds the number of authorized but unissued shares of the Company’s Common Stock under its charter, or (d) exceeds the number or dollar amount of shares of Common Stock for which the Company has filed a Prospectus Supplement (as defined below) (the least of (a), (b), and (c), the “Maximum Amount”).  Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitations set forth in this Section 1 on the number or dollar amount of Placement Shares issued and sold under this Agreement shall be the sole responsibility of the Company and that MLV shall have no obligation in connection with such compliance.  The issuance and sale of Placement Shares through MLV will be effected pursuant to the Registration Statement (as defined below) filed by the Company and declared effective by the Securities and Exchange Commission (the “Commission”) on February 14, 2014 although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to issue any Placement Shares or other shares of Common Stock.  MLV and the Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

The Company has filed with the Commission, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), a registration statement on Form S-3 (File No. 333-192257), including a base prospectus (the “Base Prospectus”), relating to certain securities of the Company, including the Placement Shares, to be issued from time to time by the Company pursuant to Rule 415 under

 

 

the Securities Act, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”).  The Company has prepared a prospectus supplement specifically relating to the Placement Shares (the “Prospectus Supplement”) to the Base Prospectus.  The Company will furnish to MLV, for use by MLV, copies of the Base Prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement, relating to the Placement Shares.  Except where the context otherwise requires, such registration statement, including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B of the Securities Act, is herein called the “Registration Statement.”  The Base Prospectus, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement is filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act is herein called the “Prospectus.”  Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated or deemed incorporated by reference therein (the “Incorporated Documents”), and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein.

 

For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto, or any Issuer Free Writing Prospectus (as defined below) (other than any Issuer Free Writing Prospectus that, pursuant to Rule 433, is not required to be filed with the Commission) shall be deemed to include the most recent copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System, or if applicable, the Interactive Data Electronic Application system when used by the Commission (collectively, “EDGAR”).

 

2.                                           Placements.  Each time that the Company wishes to issue and sell Placement Shares hereunder (each, a “Placement”), it will notify MLV by email notice (or other method mutually agreed to in writing by the Parties) of the number of Placement Shares to be sold, the time period during which sales are requested to be made, any limitation on the number of Placement Shares that may be sold in any one day or in any one transaction and any minimum price below which sales may not be made (a “Placement Notice”), the form of which is attached hereto as Schedule 1. The Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 3 (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from MLV set forth on Schedule 3, as such Schedule 3 may be amended from time to time. Provided that the Company is otherwise in compliance with the terms of this Agreement, the Placement Notice shall be effective immediately upon receipt by MLV unless and until (i) MLV declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares thereunder have been sold, (iii) the Company suspends or terminates the Placement Notice or (iv) this Agreement has been terminated under the provisions of Section 13. The amount of any discount, commission or other compensation to be paid by the Company to MLV in connection with the sale of the

 

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Placement Shares shall be calculated in accordance with the terms set forth in Schedule 2. It is expressly acknowledged and agreed that neither the Company nor MLV will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to MLV and MLV does not decline such Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein. In the event of a conflict among the terms of Sections 2, 3 and 4 of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.

 

3.                                           Sale of Placement Shares by MLV.

 

a.                                      Subject to the terms and conditions of this Agreement, MLV, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the NASDAQ Capital Market (the “Exchange”), to sell the Placement Shares up to the amount specified in, and otherwise in accordance with the terms of, such Placement Notice.  MLV will provide written confirmation to the Company no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to MLV pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by MLV (as set forth in Section 5(a)) from the gross proceeds that it receives from such sales.  Subject to the terms of the Placement Notice, MLV may sell Placement Shares by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made directly on the Exchange, on any other existing trading market for the Common Stock or to or through a market maker.  Subject to the terms of a Placement Notice, MLV may also sell Placement Shares by any other method permitted by law, including but not limited to negotiated transactions, with the Company’s consent.  The Company acknowledges and agrees that (i) there can be no assurance that MLV will be successful in selling Placement Shares, (ii) MLV will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by MLV to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Placement Shares as required under this Agreement and (iii) MLV shall be under no obligation to purchase Placement Shares on a principal basis pursuant to this Agreement, except as otherwise agreed by MLV and the Company. “Trading Day” means any day on which Common Stock is purchased and sold on the Exchange.

 

b.                                      During the term of this Agreement, neither MLV nor any of its affiliates or subsidiaries shall engage in (i) any short sale of any security of the Company or (ii) any sale of any security of the Company that MLV does not own or any sale that is consummated by the delivery of a security of the Company borrowed by, or for the account of, MLV. Neither MLV nor any of its affiliates or subsidiaries shall engage in any proprietary trading or trading for MLV’s (or its affiliates’ or subsidiaries’) own account.

 

4.                                           Suspension of Sales.  The Company or MLV may, upon notice to the other Party in writing (including by email correspondence to each of the individuals of the other

 

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Party set forth on Schedule 3, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Schedule 3), suspend this offering and any sale of Placement Shares; provided, however, that such suspension shall not affect or impair any Party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. Each of the Parties agrees that no such notice under this Section 4 shall be effective against any other Party unless it is made to one of the individuals named on Schedule 3 hereto, as such Schedule may be amended from time to time.

 

5.                                           Settlement.

 

a.                                      Settlement of Placement Shares.  Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such respective sales are made (each, a “Settlement Date”). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by MLV for such Placement Shares, after deduction for (i) MLV’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, and (ii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales.

 

b.                                      Delivery of Placement Shares.  On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting MLV’s or its designee’s account (provided MLV shall have given the Company written notice of such designee at least one Trading Day prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, MLV will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date through no fault of MLV, then in addition to and in no way limiting the rights and obligations set forth in Section 11(a) hereto, the Company will (i) hold MLV harmless against any loss, claim, damage, or reasonable, documented expense (including reasonable and documented legal fees and expenses), as incurred, arising out of or in connection with such default by the Company or its transfer agent (if applicable) and (ii) pay to MLV (without duplication) any commission, discount, or other compensation to which it would otherwise have been entitled absent such default.

 

c.                                       Limitations on Offering Size.  Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares if, after giving effect to the sale of such Placement Shares, the aggregate number of Placement Shares sold pursuant to this Agreement would exceed the lesser of (i) together with all sales of Placement Shares under this Agreement, the Maximum Amount and (ii) the amount authorized from time to time to be

 

4

 

issued and sold under this Agreement by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee.  Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares pursuant to this Agreement at a price lower than the minimum price authorized from time to time by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notice of such minimum price shall have been delivered MLV in writing.

 

6.                                           Representations and Warranties of the Company.  Except as disclosed in the Registration Statement, Prospectus or a disclosure schedule delivered in connection herewith, the Company represents and warrants to, and agrees with MLV that as of the date of this Agreement and as of each Applicable Time (as defined below), unless such representation, warranty or agreement specifies a different date or time:

 

a.                                      Registration Statement and Prospectus.  The Company and, assuming no act or omission on the part of MLV that would make such statement untrue, the transactions contemplated by this Agreement meet the requirements for and comply with the conditions for the use of Form S-3 under the Securities Act. The Registration Statement has been filed with the Commission and has been declared effective under the Securities Act by the Commission. The Prospectus Supplement will name MLV as an underwriter acting as the agent of the Company in the section entitled “Plan of Distribution.” The Company has not received, and has no notice of, any order of the Commission preventing or suspending the use of the Registration Statement, or threatening or instituting proceedings for that purpose. The Registration Statement and the offer and sale of Placement Shares as contemplated hereby meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said Rule. Any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been so described or filed. Copies of the Registration Statement, the Prospectus, and any such amendments or supplements and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to MLV and its counsel. The Company has not distributed and, prior to the later to occur of each Settlement Date and completion of the distribution of the Placement Shares, will not distribute any offering material in connection with the offering or sale of the Placement Shares other than the Registration Statement and the Prospectus and any Issuer Free Writing Prospectus (as defined below) to which MLV has consented (and such consent shall not be unreasonably withheld, delayed or conditioned). The Common Stock is currently listed on the Exchange. Except as disclosed in the Registration Statement, including the Incorporated Documents, the Company has not, in the 12 months preceding the date hereof, received notice from the Exchange to the effect that the Company is not in compliance with the Exchange’s listing or maintenance requirements.

 

b.                                      No Misstatement or Omission.  The Registration Statement, when it became effective, and the Prospectus, and any amendment or supplement thereto, on the date of such Prospectus or amendment or supplement, conformed and will conform in all material respects with the requirements of the Securities Act. At each Settlement Date, the Registration Statement and the Prospectus, as of such date, will conform in all material respects with the requirements of the Securities Act. The Registration Statement, when it became or becomes effective, did not, and will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus and any

 

5

 

amendment and supplement thereto, on the date thereof and at each Applicable Time (defined below), did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference in the Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the Commission, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by MLV specifically for use in the preparation thereof.

 

c.                                       Conformity with Securities Act and Exchange Act.  The Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement thereto, and the Incorporated Documents, when such documents were or are filed with the Commission under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.

 

d.                                      Financial Information.  The consolidated financial statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus, together with the related notes and schedules, complied as to form in all material respects with applicable requirements of the Securities Act and the Exchange Act, as in effect as of the time of filing.  Such financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), consistently applied, during the periods covered thereby (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim financial statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries (as defined below) as of the dates indicated and the consolidated results of operations and cash flows and changes in stockholders’ equity of the Company and its Subsidiaries for the periods specified (subject, in the case of unaudited statements, to normal year-end audit adjustments that will not be material, either individually or in the aggregate); the other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the Registration Statement and the Prospectus are in all material respects accurately and fairly presented; there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the Registration Statement or the Prospectus that are not included or incorporated by reference as required; the Company and its Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Registration Statement (including the exhibits thereto), or the Prospectus which such liabilities or obligations are required to be described in the Registration Statement or the Prospectus (including Exhibits thereto and Incorporated Documents); and all disclosures contained or incorporated by reference in the Registration Statement and the Prospectus, if any, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable.

 

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e.                                       Conformity with EDGAR Filing.  The Prospectus delivered to MLV for use in connection with the sale of the Placement Shares pursuant to this Agreement will be identical to the versions of the Prospectus created to be transmitted to the Commission for filing via EDGAR, except to the extent permitted by Regulation S-T.

 

f.                                        Organization.  Each of the Company and its Subsidiaries (as defined below) is, and will be, duly organized, validly existing as a corporation, limited partnership, limited liability company or other legal entity and in good standing under the laws of its respective jurisdictions of organization.  Each of the Company and each of its Subsidiaries is, and will be, duly qualified as a foreign corporation or other legal entity and in good standing under the laws of each other jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification, and has all corporate power and authority necessary to own or hold its properties and to conduct its businesses as described in the Registration Statement and the Prospectus, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect or would reasonably be expected to have a material adverse effect on the assets, business, operations, earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity or results of operations of the Company and the Subsidiaries taken as a whole, or prevent the consummation of the transactions contemplated hereby (a “Material Adverse Effect”).

 

g.                                       Subsidiaries.  The subsidiaries set forth on Schedule 4, as may be updated from time to time (collectively, the “Subsidiaries”), are the Company’s only significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated by the Commission) as of the date hereof.  Except as set forth in the Registration Statement and in the Prospectus, the Company owns, directly or indirectly, all of the equity interests of the Subsidiaries free and clear of any lien, charge, security interest, encumbrance, right of first refusal or other restriction, and all the equity interests of the Subsidiaries are validly issued and, to the extent applicable, are fully paid, nonassessable and free of preemptive and similar rights.

 

h.                                      No Violation or Default.  Neither the Company nor any of its Subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries are subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of each of clauses (ii) and (iii) above, for any such violation or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Except as described in the Prospectus or the Incorporated Documents, to the Company’s knowledge, no other party under any material contract or other agreement to which it or any of its Subsidiaries is a party is in default in any respect thereunder where such default would reasonably be expected to have a Material Adverse Effect.

 

i.                                          No Material Adverse Effect.  Since the date of the most recent financial

 

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statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus, there has not been (i) any Material Adverse Effect, or any development involving a prospective Material Adverse Effect, in or affecting the business, properties, management, condition (financial or otherwise), results of operations, or prospects of the Company and the Subsidiaries taken as a whole, (ii) any transaction which is material to the Company and the Subsidiaries taken as a whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by the Company or the Subsidiaries, which is material to the Company and the Subsidiaries taken as a whole, (iv) any material change in the capital stock (other than (A) the grant of additional options under the Company’s existing stock option plans, (B) changes in the number of outstanding shares of Common Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, Common Stock outstanding on the date hereof, (C) as a result of the issuance of Placement Shares, (D) any repurchases of capital stock of the Company, (E) as described in a proxy statement filed on Schedule 14A or a Registration Statement on Form S-4, or (F) otherwise publicly announced) or outstanding long-term indebtedness of the Company or of its Subsidiaries, or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any Subsidiary, other than in each case above in the ordinary course of business or as otherwise disclosed in the Registration Statement or Prospectus.

 

j.                                         Capitalization.  The issued and outstanding shares of capital stock of the Company have been validly issued, are fully paid and non-assessable and are not subject to any preemptive rights, rights of first refusal or similar rights. The Company has an authorized, issued and outstanding capitalization as set forth in the Registration Statement and the Prospectus as of the dates referred to therein (other than the grant of additional options under the Company’s existing stock option plans, or changes in the number of outstanding shares of Common Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, shares of Common Stock outstanding on the date hereof as a result of the issuance of Placement Shares) and such authorized capital stock conforms to the description thereof set forth in the Registration Statement and the Prospectus. The description of the Common Stock in the Registration Statement and the Prospectus is complete and accurate in all material respects. As of the date referred to therein, the Company did not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or exchangeable for, or any contracts or commitments to issue or sell, any shares of capital stock or other securities.

 

k.                                      S-3 Eligibility.  (i) At the time of filing the Registration Statement and (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), the Company met the then applicable requirements for use of Form S-3 under the Securities Act, including compliance with General Instruction I.B.6 of Form S-3, as applicable.

 

l.                                          Authorization; Enforceability.  The Company has full legal right, power and authority to enter into this Agreement and perform the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding agreement of the Company enforceable in accordance with its terms, except to the extent that (i) enforceability may be limited by bankruptcy, insolvency, reorganization,

 

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moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and (ii) the indemnification and contribution provisions of Section 11 hereof may be limited by federal or state securities laws and public policy considerations in respect thereof.

 

m.                                  Authorization of Placement Shares.  The Placement Shares, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, will be duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim (other than any pledge, lien, encumbrance, security interest or other claim arising from an act or omission of MLV or a purchaser), including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and will be registered pursuant to Section 12 of the Exchange Act. The Placement Shares, when issued, will conform in all material respects to the description thereof set forth in or incorporated into the Prospectus.

 

n.                                      No Consents Required.  No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or any governmental or regulatory authority is required for the execution, delivery and performance by the Company of this Agreement, and the issuance and sale by the Company of the Placement Shares as contemplated hereby, except for the registration of the offering of the Placement Shares under the Securities Act, the filing of the Prospectus with the Commission and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws or by the by-laws and rules of the Financial Industry Regulatory Authority (“FINRA”) or the Exchange in connection with the sale of the Placement Shares by MLV.

 

o.                                      No Preferential Rights.  (i) No person, as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”), has the right, contractual or otherwise, to cause the Company to issue or sell to such Person any shares of Common Stock or shares of any other capital stock or other securities of the Company (other than upon the exercise of options or warrants to purchase Common Stock or upon the exercise of options that may be granted from time to time under the Company’s stock option plans), (ii) no Person has any preemptive rights, rights of first refusal, or any other rights (whether pursuant to a “poison pill” provision or otherwise) to purchase any shares of Common Stock or shares of any other capital stock or other securities of the Company from the Company which have not been duly waived with respect to the offering contemplated hereby, (iii) no Person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Placement Shares, and (iv) no Person has the right, contractual or otherwise, to require the Company to register under the Securities Act any shares of Common Stock or shares of any other capital stock or other securities of the Company, or to include any such shares or other securities in the Registration Statement or the offering contemplated thereby, whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Placement Shares as contemplated thereby or otherwise, except for such rights as have been waived on or prior to the date hereof.

 

p.                                      Independent Public Accountant.  Ernst & Young LLP (the “Accountant”), whose report on the consolidated financial statements of the Company is filed with the Commission as part of the Company’s most recent Annual Report on Form 10-K and

 

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incorporated into the Registration Statement, are and, during the periods covered by their report, were independent public accountants within the meaning of the Securities Act and the Public Company Accounting Oversight Board (United States).  To the Company’s knowledge, the Accountant is not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company.

 

q.                                      Enforceability of Agreements.  All agreements between the Company and third parties expressly referenced in the Prospectus, other than such agreements that have expired by their terms or whose termination is disclosed in documents filed by the Company with the Commission, are legal, valid and binding obligations of the Company enforceable in accordance with their respective terms, except to the extent that (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and (ii) the indemnification provisions of certain agreements may be limited by federal or state securities laws or public policy considerations in respect thereof, except for any unenforceability that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

r.                                         No Litigation.  There are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any legal, governmental or regulatory investigations, to which the Company or a Subsidiary is a party or to which any property of the Company or any Subsidiary is the subject that, individually or in the aggregate, if determined adversely to the Company or any Subsidiary, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement; and to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others that, individually or in the aggregate, if determined adversely to the Company or any Subsidiary, would reasonably be expected to have a Material Adverse Effect; and there are no current or pending legal, governmental or regulatory actions, suits, proceedings or, to the Company’s knowledge, investigations that are required under the Securities Act to be described in the Prospectus that are not described in the Prospectus.

 

s.                                        Licenses and Permits.  The Company and the Subsidiaries possess or have obtained, all licenses, certificates, consents, orders, approvals, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Registration Statement and the Prospectus (the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed in the Registration Statement or the Prospectus, neither the Company nor any Subsidiary has received written notice of any proceeding relating to revocation or modification of any such Permit or has any reason to believe that such Permit will not be renewed in the ordinary course, except where the failure to obtain any such renewal would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

t.                                         No Material Defaults.  Neither the Company nor any Subsidiary

 

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has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. The Company has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its last Annual Report on Form 10-K, indicating that it (i) has failed to pay any dividend or sinking fund installment on preferred stock or (ii) has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

u.                                      Certain Market Activities.  Neither the Company nor any Subsidiary, nor any of their respective directors, officers or controlling persons has taken, directly or indirectly, any action designed, or that has constituted or would reasonably be expected to cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares.

 

v.                                      Broker/Dealer Relationships.  Neither the Company nor any Subsidiary (i) is required to register as a “broker” or “dealer” in accordance with the provisions of the Exchange Act or (ii) directly or indirectly through one or more intermediaries, controls or is a “person associated with a member” or “associated person of a member” (within the meaning set forth in the FINRA Manual).

 

w.                                    No Reliance.  The Company has not relied upon MLV or legal counsel for MLV for any legal, tax or accounting advice in connection with the offering and sale of the Placement Shares.

 

x.                                      Taxes.  Each of the Company and its Subsidiaries has filed all federal, state, local and foreign tax returns that have been required to be filed and paid all taxes shown thereon through the date hereof, to the extent that such taxes have become due and are not being contested in good faith, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.  Except as otherwise disclosed in or contemplated by the Registration Statement or the Prospectus, no tax deficiency has been determined adversely to the Company or any of its Subsidiaries which has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty or assessment which has been or might be asserted or threatened against it which would have a Material Adverse Effect.

 

y.                                      Title to Real and Personal Property.  Each of the Company and its Subsidiaries has (i) good and defensible title to all of its oil, gas and mineral leases or mineral interests (including oil and gas wells, producing leasehold interests and appurtenant personal property), and title investigations having been carried out by the Company or each of its Subsidiaries consistent with the reasonable practice in the oil and gas industry in the areas in which each of the Company and its Subsidiaries operate and (ii) good title to all other items of real property and to all personal property described in the Registration Statement or Prospectus as being owned by them that are material to the businesses of the Company or such Subsidiary, in each case free and clear of all liens, encumbrances and claims, except (A) those that do not materially interfere with the use made and proposed to be made of such property by the

 

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Company and any of its Subsidiaries or would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (B) royalties, overriding royalties and other similar burdens under oil and gas leases, (C) easements, restrictions, rights-of-way and other matters that commonly affect property, (D) those securing taxes and other governmental charges, or claims of materialmen, mechanics and similar persons, not yet due and payable and (E) those under oil or gas sales contracts, geophysical exploration agreements, operating agreements, farmout agreements, participation agreements, joint venture agreements, development agreements, unitization, pooling and commutation agreements, declarations and orders and gas sales contracts securing payment of amounts not yet due and payable and of a scope and nature customary in the oil and gas industry.  All of the leases, subleases and concessions under which the Company or any of its Subsidiaries holds or uses its properties described in the Registration Statement and Prospectus are in full force and effect, with such exceptions as would not reasonably be expected to have a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or its Subsidiaries under any of the leases, subleases and concessions mentioned above, or affecting or questioning the rights of the Company or any Subsidiary thereof to the continued possession or use of the leased or subleased premises or the premises granted by concessions.  Any real property described in the Registration Statement or Prospectus as being leased by the Company and any of its Subsidiaries is held by them under valid, existing and enforceable leases, free and clear of all liens, encumbrances and claims, except those that (1) do not materially interfere with the use made or proposed to be made of such property by the Company or any of its Subsidiaries or (2) would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.

 

z.                                       Reserve Reports.  The information underlying the estimates of the Company’s reserves that was supplied to Ryder Scott Company, L.P. (the “Reserve Engineers”), for the purposes of preparing the reserve reports and estimates of the proved reserves of the Company disclosed in the Registration Statement and the Prospectus, including production and costs of operation, was true and correct in all material respects on the dates such estimates were made, and such information was supplied and was prepared in accordance with customary industry practices.  Other than normal production of the reserves, the impact of changes in prices and costs, and fluctuations in demand for oil and natural gas, the Company is not aware of any facts or circumstances that would in the aggregate result in a material adverse change in the aggregate net proved reserves, or the aggregate present value or the standardized measure of the future net cash flows therefrom, as described in the Registration Statement and the Prospectus and as reflected in the reports the Reserve Engineers prepared with regard to the proved reserves that the Company and each of its Subsidiaries, considered as one enterprise, own.  The estimates of such proved reserves and standardized measure as described in the Registration Statement and the Prospectus and reflected in the reports referenced therein have been prepared in a manner that complies in all material respects with the applicable requirements of the rules under the Securities Act with respect to such estimates.

 

aa.                               Intellectual Property.  Except as set forth in the Registration Statement or the Prospectus, to the Company’s knowledge, each of the Company and its Subsidiaries own or possess adequate enforceable rights to use all patents, patent applications, trademarks (both registered and unregistered), service marks, trade names, trademark registrations, service mark

 

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registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the “Intellectual Property”), necessary for the conduct of their respective businesses as conducted as of the date hereof, except to the extent that the failure to own or possess adequate rights to use such Intellectual Property would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; none of the Company nor any of its Subsidiaries have received any written notice of any claim of infringement or conflict that asserted Intellectual Property rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect; there are no pending, or to the Company’s knowledge, threatened judicial proceedings or interference proceedings against the Company or its Subsidiaries challenging the Company’s or any of its Subsidiary’s rights in or to or the validity of the scope of any of the Company’s or any Subsidiary’s patents, patent applications or proprietary information; to the Company’s knowledge, no other entity or individual has any right or claim in any of the Company’s or any of its Subsidiary’s owned, material patents, patent applications or any patent to be issued therefrom by virtue of any contract, license or other agreement entered into between such entity or individual and the Company or a Subsidiary or by any non-contractual obligation of the Company or a Subsidiary, other than by written licenses granted by the Company or a Subsidiary; the Company and the Subsidiaries have not received any written notice of any claim challenging the rights of the Company or its Subsidiaries in or to any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary which claim, if the subject of an unfavorable decision, would result in a Material Adverse Effect.

 

bb.                               Environmental Laws.  The Company and its Subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as described in the Registration Statement and the Prospectus; and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), (ii) or (iii) above, for any such failure to comply or failure to receive required permits, licenses, other approvals or liability as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

cc.                                 Disclosure Controls.  The Company maintains systems of internal accounting controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  From the end of the Company’s most recent audited fiscal year to the end of the most recent fiscal quarter for which the Company has filed a Form 10-Q, there has been (i) no material weakness in the Company’s internal control over financial reporting and

 

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(ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company and the Subsidiaries is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, is being prepared.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the most recent periodic report filed by the Company with the Commission (such date, the “Evaluation Date”).  The Company presented in such periodic report the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.

 

dd.                               Sarbanes-Oxley Act.  There is, and has been, no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder. Each of the principal executive officer and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and other documents required to be filed by it or furnished by it to the Commission during the past 12 months. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Exchange Act Rules 13a-15 and 15d-15.

 

ee.                                 Finder’s Fees.  Neither the Company nor any Subsidiary has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated, except as may otherwise exist with respect to MLV pursuant to this Agreement.

 

ff.                                   Labor Disputes.  No labor disturbance by or dispute with employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is threatened which would reasonably be expected to result in a Material Adverse Effect.

 

gg.                                 Investment Company Act.  Neither the Company nor any Subsidiary is or, after giving effect to the offering and sale of the Placement Shares, will be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

hh.                               Operations.  The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions to which the Company or the Subsidiaries are subject, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency having jurisdiction over the Company (collectively, the “Money Laundering Laws”), except as would not reasonably be expected to result in a Material Adverse Effect; and no action, suit or

 

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proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

ii.                                       Off-Balance Sheet Arrangements.         There are no transactions, arrangements and other relationships between and/or among the Company, and/or, to the knowledge of the Company, any of its affiliates and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity (each, an “Off Balance Sheet Transaction”) that could reasonably be expected to affect materially the Company’s liquidity or the availability of or requirements for its capital resources, including those Off Balance Sheet Transactions described in the Commission’s Statement about Management’s Discussion and Analysis of Financial Conditions and Results of Operations (Release Nos. 33-8056; 34-45321; FR-61), required to be described in the Prospectus which have not been described as required.

 

jj.                                     Underwriter Agreements.  The Company is not a party to any agreement with an agent or underwriter for any other “at-the-market” or continuous equity transaction.

 

kk.                               ERISA.  To the knowledge of the Company, (i) each material employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained, administered or contributed to by the Company or any of its Subsidiaries (other than a Multiemployer Plan, within the meaning of Section 3(37) of ERISA) for employees or former employees of the Company and any of its Subsidiaries has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any such plan (excluding transactions effected pursuant to a statutory or administrative exemption); and (iii) for each such plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid contributions) equals or exceeds the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions, other than, in the case of (i), (ii) and (iii) above, as would not reasonably be expected to have a Material Adverse Effect.

 

ll.                                       Forward-Looking Statements.  No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) (a “Forward-Looking Statement”) contained in the Registration Statement and the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. The Forward-Looking Statements incorporated by reference in the Registration Statement and the Prospectus from the Company’s Annual Report on Form 10-K for the fiscal year most recently ended (i) except for any Forward-Looking Statement included in any financial statements and notes thereto, are within the coverage of the safe harbor for forward looking statements set forth in Section 27A of the Securities Act, Rule 175(b) under the Securities Act or Rule 3b-6 under the Exchange Act, as applicable, (ii) were made by the Company with a reasonable basis and in good faith and reflect the Company’s good faith commercially reasonable best estimate of the matters described therein as of

 

15

 

the respective dates on which such statements were made, and (iii) have been prepared in accordance with Item 10 of Regulation S-K under the Securities Act.

 

mm.                       Insurance.  The Company and the Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company and the Subsidiaries reasonably believe are adequate for the conduct of their business and as is customary for companies of similar size engaged in similar businesses in similar industries.

 

nn.                               No Improper Practices.  Neither the Company nor any of its Subsidiaries or controlled affiliates, nor any director or officer, nor, to the Company’s knowledge, any employee, agent or representative of the Company or of any of its Subsidiaries or controlled affiliates acting on behalf of the Company or any of its Subsidiaries or controlled affiliates, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to improperly influence official action or secure an improper advantage for the Company; and the Company and its Subsidiaries or controlled affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

 

oo.                               Status Under the Securities Act.  The Company was not and is not an ineligible issuer as defined in Rule 405 under the Securities Act at the times specified in Rules 164 and 433 under the Securities Act in connection with the offering of the Placement Shares.

 

pp.                               No Misstatement or Omission in an Issuer Free Writing Prospectus.  Each Issuer Free Writing Prospectus, as of its issue date and as of each Applicable Time (as defined in Section 25 below), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any incorporated document deemed to be a part thereof that has not been superseded or modified. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by MLV specifically for use therein.

 

qq.                               No Conflicts.  Neither the execution of this Agreement, nor the issuance, offering or sale of the Placement Shares, nor the consummation of any of the transactions contemplated herein and therein, nor the compliance by the Company with the terms and provisions hereof and thereof will conflict with, or will result in a breach of, any of the terms and provisions of, or has constituted or will constitute a default under, or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any contract or other agreement to which the Company may be bound or to which any of the property or assets of the Company is subject, except (i) such conflicts, breaches or defaults as may have been

 

16

 

waived and (ii) such conflicts, breaches and defaults that would not reasonably be expected to have a Material Adverse Effect; nor will such action result (x) in any violation of the provisions of the organizational or governing documents of the Company, or (y) in any material violation of the provisions of any statute or any order, rule or regulation applicable to the Company or of any court or of any federal, state or other regulatory authority or other government body having jurisdiction over the Company, except where such violation would not reasonably be expected to have a Material Adverse Effect.

 

rr.                                     OFAC.

 

(i)             The Company represents that, neither the Company nor any Subsidiary (collectively, the “Entity”) or any director, officer, employee or agent of the Entity, is a government, individual, or entity (in this paragraph (ss), “Person”) that is, or is owned or controlled by a Person that is:

 

(a)                            the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council (“UNSC”), the European Union (“EU”) or Her Majesty’s Treasury (“HMT”) (collectively, “Sanctions”), nor

 

(b)              located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).

 

(ii) The Entity represents and covenants that it will not, directly or indirectly, knowingly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:

 

(a)                            to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

 

(b)              in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

 

(iii) The Entity represents and covenants that, except as detailed in the Prospectus, for the past 5 years, it has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

ss.                                   Stock Transfer Taxes.  On each Settlement Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Placement Shares to be sold hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with in all material respects.

 

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Any certificate signed by an officer of the Company and delivered to MLV or to counsel for MLV pursuant to or in connection with this Agreement shall be deemed to be a representation and warranty by the Company, as applicable, to MLV as to the matters set forth therein.

 

7.                                           Covenants of the Company.  The Company covenants and agrees with MLV that:

 

a.                                      Registration Statement Amendments.  After the date of this Agreement and during any period in which a Prospectus relating to any Placement Shares is required to be delivered by MLV under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act) (the “Prospectus Delivery Period”), (i) the Company will notify MLV promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference or amendments not related to any Placement, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus related to the Placement or for additional information related to the Placement, (ii) the Company will prepare and file with the Commission, promptly upon MLV’s request, any amendments or supplements to the Registration Statement or Prospectus that, in MLV’s reasonable opinion, may be necessary in connection with the distribution of the Placement Shares by MLV (provided, however, that the failure of MLV to make such request shall not relieve the Company of any obligation or liability hereunder, or affect MLV’s right to rely on the representations and warranties made by the Company in this Agreement and provided, further, that the only remedy MLV shall have with respect to the failure to make such filing shall be to cease making sales under this Agreement until such amendment or supplement is filed); (iii) the Company will not file any amendment or supplement to the Registration Statement or Prospectus relating to the Placement Shares or a security convertible into the Placement Shares unless a copy thereof has been submitted to MLV within a reasonable period of time before the filing and MLV has not reasonably objected thereto (provided, however, that (A) the failure of MLV to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect MLV’s right to rely on the representations and warranties made by the Company in this Agreement and (B) the Company has no obligation to provide MLV any advance copy of such filing or to provide MLV an opportunity to object to such filing if the filing does not name MLV or does not relate to the transaction herein provided; and provided, further, that the only remedy MLV shall have with respect to the failure by the Company to provide MLV with such copy shall be to cease making sales under this Agreement) and the Company will furnish to MLV at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available via EDGAR; and (iv) the Company will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any document to be incorporated therein by reference, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed (the determination to file or not file any amendment or supplement with the Commission under this Section 7(a), based on the Company’s reasonable opinion or

 

18

 

reasonable objections, shall be made exclusively by the Company).

 

b.                                      Notice of Commission Stop Orders.  The Company will advise MLV, promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. The Company will advise MLV promptly after it receives any request by the Commission for any amendments to the Registration Statement or any amendment or supplements to the Prospectus or any Issuer Free Writing Prospectus or for additional information related to the offering of the Placement Shares or for additional information related to the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus.

 

c.                                       Delivery of Prospectus; Subsequent Changes.  During the Prospectus Delivery Period, the Company will comply with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If the Company has omitted any information from the Registration Statement pursuant to Rule 430A under the Securities Act, it will use its commercially reasonable efforts to comply with the provisions of and make all requisite filings with the Commission pursuant to said Rule 430A and to notify MLV promptly of all such filings. If during the Prospectus Delivery Period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during the Prospectus Delivery Period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify MLV to suspend the offering of Placement Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance; provided, however, that the Company may delay the filing of any amendment or supplement, if in the judgment of the Company, it is in the best interest of the Company.

 

d.                                      Listing of Placement Shares.  During the Prospectus Delivery Period, the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on the Exchange and to qualify the Placement Shares for sale under the securities laws of such jurisdictions in the United States as MLV reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign corporation or dealer in securities or file a general consent to service of process in any jurisdiction.

 

e.                                       Delivery of Registration Statement and Prospectus.  The Company will furnish to MLV and its counsel (at the reasonable expense of the Company) copies of the

 

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Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during the Prospectus Delivery Period (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as MLV may from time to time reasonably request and, at MLV’s request, will also furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus, exclusive of any document incorporated by reference therein) to MLV to the extent such document is available on EDGAR.

 

f.                                        Earnings Statement.  The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a) and Rule 158 of the Securities Act.

 

g.                                       Use of Proceeds.  The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”

 

h.                                      Notice of Other Sales.  Without the prior written consent of MLV, the Company will not, directly or indirectly, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any Common Stock (other than the Placement Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire, Common Stock during the period beginning on the date on which any Placement Notice is delivered to MLV hereunder and ending on the third (3rd) Trading Day immediately following the final Settlement Date with respect to Placement Shares sold pursuant to such Placement Notice (or, if the Placement Notice has been terminated or suspended prior to the sale of all Placement Shares covered by a Placement Notice, ending on the date of such suspension or termination); and will not directly or indirectly in any other “at-the-market,” equity line of credit or other similar transaction pursuant to which securities are offered at a future determined price, offer to sell, contract to sell, grant any option to sell or otherwise dispose of any shares of Common Stock (other than the Placement Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire, Common Stock prior to the termination of this Agreement; provided, however, that such restrictions will not be required in connection with the Company’s issuance or sale of (i) Common Stock, options to purchase shares of Common Stock or Common Stock issuable upon the exercise of options, or other equity awards, pursuant to any employee or director stock option, incentive or benefits plan, stock ownership plan or dividend reinvestment plan (but not Common Stock subject to a waiver to exceed plan limits in its dividend reinvestment plan) of the Company whether now in effect or hereafter implemented; (ii) Common Stock issuable upon conversion of securities or the exercise of warrants, options or other rights in effect or outstanding, and disclosed in filings by the Company available on EDGAR or otherwise in writing to MLV; (iii) Common Stock, or securities convertible into or exercisable for Common Stock, or warrants or any rights to purchase or acquire Common Stock offered and sold in a privately negotiated transaction to vendors, customers, strategic partners or potential strategic partners or other investors conducted in a manner so as not to be integrated with the offering of Common Stock hereby, and Common Stock issuable upon conversion or

 

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exercise of such securities, warrants or rights.

 

i.                                          Change of Circumstances.  The Company will, at any time during the pendency of a Placement Notice, advise MLV promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document required to be provided to MLV pursuant to this Agreement.

 

j.                                         Due Diligence Cooperation.  During the term of this Agreement, the Company will cooperate with any reasonable due diligence review conducted by MLV or its representatives in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices as MLV may reasonably request.

 

k.                                      Required Filings Relating to Placement of Placement Shares.  The Company agrees that on such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act (each and every filing under Rule 424(b), a “Filing Date”), which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares sold through MLV, the Net Proceeds to the Company and the compensation payable by the Company to MLV with respect to such Placement Shares, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market.

 

l.                                          Representation Dates; Certificate.  Each time during the term of this Agreement that the Company:

 

(i)             amends or supplements (other than a prospectus supplement relating solely to an offering of securities other than the Placement Shares) the Registration Statement or the Prospectus relating to the Placement Shares (other than a prospectus supplement filed in accordance with Section 7(k) of this Agreement) by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of documents by reference into the Registration Statement or the Prospectus relating to the Placement Shares;

 

(ii)          files an annual report on Form 10-K under the Exchange Act (including any Form 10-K/A containing amended financial information or a material amendment to the previously filed Form 10-K);

 

(iii)       files its quarterly reports on Form 10-Q under the Exchange Act; or

 

(iv)      files a current report on Form 8-K containing amended financial statements (other than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) under the Exchange Act;

 

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(Each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date.”)

 

the Company shall furnish MLV (but in the case of clause (iv) above only if MLV reasonably determines that the information contained in such Form 8-K is material) with a certificate, in the form attached hereto as Exhibit 7(1). The requirement to provide a certificate under this Section 7(1) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, (i) upon the delivery of the first Placement Notice hereunder and (ii) if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide MLV with a certificate under this Section 7(1), then before MLV sells any Placement Shares, the Company shall provide MLV with a certificate, in the form attached hereto as Exhibit 7(1), dated the date of the Placement Notice.

 

m.                                  Legal Opinion.  (i) On or prior to the date of the first Placement Notice given hereunder and (ii) within seven (7) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(l) for which no waiver is applicable, the Company shall cause to be furnished to MLV the written opinion of Sidley Austin LLP (“Company Counsel”), or other counsel reasonably satisfactory to MLV, in form and substance reasonably satisfactory to MLV and Company Counsel; provided, however, the Company shall be required to furnish to MLV no more than one opinion hereunder per calendar quarter; provided further that in lieu of such negative assurance for subsequent periodic filings under the Exchange Act, counsel may furnish MLV with a letter (a “Reliance Letter”) to the effect that MLV may rely on the negative assurance letter previously delivered under this Section 7(m) to the same extent as if it were dated the date of such letter (except that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented as of the date of the Reliance Letter).

 

n.                                      Comfort Letter.  (1) On or prior to the date of the first Placement Notice and (2) within seven (7) Trading Days following each subsequent date the Company files an annual report on Form 10-K under the Exchange Act, during the Prospectus Delivery Period and with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(l) for which no waiver is applicable, the Company shall cause its independent registered public accounting firm to furnish MLV a letter (the “Comfort Letter”). The Comfort Letter from the Company’s independent registered public accounting firm shall be in a form and substance reasonably satisfactory to MLV, (i) confirming that they are an independent public accounting firm within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the

 

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Prospectus, as amended and supplemented to the date of such letter.

 

o.                                      Market Activities.  The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or would reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares or (ii) sell, bid for, or purchase the Placement Shares in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Placement Shares other than MLV.

 

p.                                      Investment Company Act.  The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor the Subsidiaries will be or become, at any time prior to the termination of this Agreement, an “investment company,” as such term is defined in the Investment Company Act.

 

q.                                      No Offer to Sell.  Other than an Issuer Free Writing Prospectus approved in advance by the Company and MLV in its capacity as agent hereunder pursuant to Section 23, neither MLV nor the Company (including its agents and representatives, other than MLV in their capacity as such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Securities Act), required to be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder.

 

r.                                         Sarbanes-Oxley Act.  The Company will maintain and keep accurate books and records reflecting its assets and maintain internal accounting controls in a manner designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and including those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Company’s consolidated financial statements in accordance with GAAP, (iii) ensure that receipts and expenditures of the Company are being made only in accordance with management’s and the Company’s directors’ authorization, and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. The Company will maintain such controls and other procedures, including, without limitation, those required by Sections 302 and 906 of the Sarbanes-Oxley Act, and the applicable regulations thereunder that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure and to ensure that material information relating to the Company or the Subsidiaries is made known to them by others within those entities, particularly during

 

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the period in which such periodic reports are being prepared.

 

8.                                            Representations and Covenants of MLV.  MLV represents and warrants that it is duly registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the Placement Shares will be offered and sold, except such states in which MLV is exempt from registration or such registration is not otherwise required. MLV shall continue, for the term of this Agreement, to be duly registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the Placement Shares will be offered and sold, except such states in which MLV is exempt from registration or such registration is not otherwise required, during the term of this Agreement.  MLV shall comply with all applicable law and regulations, including but not limited to Regulation M, in connection with the transactions contemplated by this Agreement, including the issuance and sale through MLV of the Placement Shares.

 

9.                                            Payment of Expenses.  Except as otherwise provided in this Section 9, the Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, filing, including any fees required by the Commission, and printing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment and supplement thereto and each Free Writing Prospectus, in such number as MLV shall deem reasonably necessary, (ii) the printing and delivery to MLV of this Agreement and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Placement Shares, (iii) the preparation, issuance and delivery of the certificates, if any, for the Placement Shares to MLV, including any stock or other transfer taxes and any capital duties, stamp duties or other duties or taxes payable upon the sale, issuance or delivery of the Placement Shares to MLV, (iv) the fees and disbursements of the counsel, accountants and other advisors to the Company, (v) the fees and disbursements of counsel to MLV up to $35,000; (vi) the fees and expenses of the transfer agent and registrar for the Common Stock, (vii) the filing fees incident to any review by FINRA of the terms of the sale of the Placement Shares, and (viii) the fees and expenses incurred in connection with the listing of the Placement Shares on the Exchange.

 

10.                                     Conditions to MLV’s Obligations.  The obligations of MLV hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, to the due performance by the Company of its obligations hereunder, to the completion by MLV of a due diligence review satisfactory to it in its reasonable judgment, and to the continuing satisfaction (or waiver by MLV in its sole discretion) of the following additional conditions:

 

a.                                      Registration Statement Effective.  The Registration Statement shall have become effective and shall be available for the sale of all Placement Shares contemplated to be issued by any Placement Notice.

 

b.                                      No Material Notices.  None of the following events shall have occurred and be continuing: (i) receipt by the Company of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement the response to which

 

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would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, the Prospectus or documents so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

c.                                       No Misstatement or Material Omission.  MLV shall not have advised the Company that the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in MLV’s reasonable opinion based on advice of counsel is material, or omits to state a fact that in MLV’s reasonable opinion based on advice of counsel is material and is required to be stated therein or is necessary to make the statements therein not misleading.

 

d.                                      Material Changes.  Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been any Material Adverse Effect, or any development that would reasonably be expected to cause a Material Adverse Effect, or a downgrading in or withdrawal of the rating assigned to any of the Company’s securities (other than asset backed securities) by any rating organization or a public announcement by any rating organization that it has under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such action by a rating organization described above, in the reasonable judgment of MLV (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and in the manner contemplated in the Prospectus.

 

e.                                       Legal Opinion.  MLV shall have received the opinions of Company Counsel required to be delivered pursuant Section 7(m) on or before the date on which such delivery of such opinions are required pursuant to Section 7(m).

 

f.                                        Comfort Letter.  MLV shall have received the Comfort Letter required to be delivered pursuant Section 7(n) on or before the date on which such delivery of such letter is required pursuant to Section 7(n).

 

g.                                       Representation Certificate.  MLV shall have received the certificate required to be delivered pursuant to Section 7(1) on or before the date on which delivery of such

 

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certificate is required pursuant to Section 7(1).

 

h.                                      No Suspension.  Trading in the Common Stock shall not have been suspended on the Exchange and the Common Stock shall not have been delisted from the Exchange.

 

i.                                          Other Materials.  On each date on which the Company is required to deliver a certificate pursuant to Section 7(1), the Company shall have furnished to MLV such appropriate further information, certificates and documents as MLV may reasonably request and which are usually and customarily furnished by an issuer of securities in connection with a securities offering.

 

j.                                         Securities Act Filings Made.  All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.

 

k.                                      Approval for Listing.  The Placement Shares shall either have been approved for listing on the Exchange, subject only to notice of issuance, or the Company shall have filed an application for listing of the Placement Shares on the Exchange at, or prior to, the issuance of any Placement Notice.

 

l.                                          No Termination Event.  There shall not have occurred any event that would permit MLV to terminate this Agreement pursuant to Section 13(a).

 

11.                                    Indemnification and Contribution.

 

(a)                                 Company Indemnification.  The Company agrees to indemnify and hold harmless MLV, its partners, members, directors, officers, employees and agents and each person, if any, who controls MLV within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:

 

(i)                                          against any and all loss, liability, claim and damage whatsoever and any reasonable and documented expense, as incurred, joint or several, to the extent arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact included in any related Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)                                       against any and all loss, liability, claim, damage whatsoever, and any reasonable and documented expense, as incurred, joint or several, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or

 

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omission; provided that (subject to Section 11(d) below) any such settlement is effected with the written consent of the Company, which consent shall not unreasonably be delayed or withheld; and

 

(iii)                                    against any and all documented expense whatsoever, as incurred (including the reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above,

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made solely in reliance upon and in conformity with written information furnished to the Company by MLV expressly for use in the Registration Statement (or any amendment thereto), or in any related Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto).

 

(b)                                 MLV Indemnification.  MLV agrees to indemnify and hold harmless the Company and its directors and each officer of the Company who signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under common control with the Company against any and all loss, liability, claim, damage and reasonable and documented expense described in the indemnity contained in Section 11(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto), the Prospectus (or any amendment or supplement thereto) or any Free Writing Prospectus in reliance upon and in conformity with information relating to MLV and furnished to the Company in writing by MLV expressly for use therein.

 

(c)                                  Procedure.  Any party that proposes to assert the right to be indemnified under this Section 11 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 11, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 11 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 11 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party a reasonable time, but in no event more than ten (10) days after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and after notice from the

 

27

 

indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly after the indemnifying party receives a written invoice relating to fees, disbursements and other charges in reasonable detail. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 11 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent (1) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (2) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)                                 Contribution.  In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 11 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or MLV, the Company and MLV will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than MLV, such as persons who control the Company within the meaning of the Securities Act or the Exchange Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and MLV may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and MLV on the other hand. The relative benefits received by the Company

 

28

 

on the one hand and MLV on the other hand shall be deemed to be in the same proportion as the total net proceeds from the sale of the Placement Shares (before deducting expenses) received by the Company bear to the total compensation received by MLV (before deducting expenses) from the sale of Placement Shares on behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and MLV, on the other hand, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering.  Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or MLV, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and MLV agree that it would not be just and equitable if contributions pursuant to this Section 11(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 11(d) shall be deemed to include, for the purpose of this Section 11(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 11(c) hereof. Notwithstanding the foregoing provisions of this Section 11(d), MLV shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11(d), any person who controls a party to this Agreement within the meaning of the Securities Act or the Exchange Act, and any officers, directors, partners, employees or agents of MLV, will have the same rights to contribution as that party, and each officer and director of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 11(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 11(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 11(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 11(c) hereof.

 

12.                                    Representations and Agreements to Survive Delivery.  The indemnity and contribution agreements contained in Section 11 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as

 

29

 

of their respective dates, regardless of (i) any investigation made by or on behalf of MLV, any controlling persons, or the Company (or any of their respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.

 

13.                                    Termination.

 

a.                                      MLV may terminate this Agreement, by notice to the Company, as hereinafter specified at any time (1) if there has been, since the time of execution of this Agreement or since the date as of which information is given in the Prospectus, any Material Adverse Effect, or any development that is reasonably likely to have a Material Adverse Effect or, in the sole judgment of MLV, is material and adverse and makes it impractical or inadvisable to market the Placement Shares or to enforce contracts for the sale of the Placement Shares, (2) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of MLV, impracticable or inadvisable to market the Placement Shares or to enforce contracts for the sale of the Placement Shares, (3) if trading in the Common Stock has been suspended or limited by the Commission or the Exchange, or if trading generally on the Exchange has been suspended or limited, or minimum prices for trading have been fixed on the Exchange, (4) if any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market shall have occurred and be continuing, (5) if a major disruption of securities settlements or clearance services in the United States shall have occurred and be continuing, or (6) if a banking moratorium has been declared by either U.S. Federal or New York authorities. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination. If MLV elects to terminate this Agreement as provided in this Section 13(a), MLV shall provide the required notice as specified in Section 14 (Notices).

 

b.                                      The Company shall have the right, by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.

 

c.                                       MLV shall have the right, by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11

 

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(Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.

 

d.                                      Unless earlier terminated pursuant to this Section 13, this Agreement shall automatically terminate upon the issuance and sale of all of the Placement Shares through MLV on the terms and subject to the conditions set forth herein except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.

 

e.                                       This Agreement shall remain in full force and effect unless terminated pursuant to Sections 13(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) shall remain in full force and effect. Upon termination of this Agreement, the Company shall not have any liability to MLV for any discount, commission or other compensation with respect to any Placement Shares not otherwise sold by MLV under this Agreement.

 

f.                                        Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date of receipt of such notice by MLV or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.

 

14.                         Notices.  All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified, and if sent to MLV, shall be delivered to:

 

MLV & Co. LLC

1251 Avenue of the Americas, 41st Floor

New York, New York 10020

Attention:  General Counsel

Telephone:  (212) 542-5870

Email:  dcolucci@mlvco.com

 

with a copy to:

 

Reed Smith LLP

599 Lexington Avenue

New York, New York 10022

 

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Attention:  Daniel I. Goldberg

Telephone:  (212) 549-0380

Email:  dgoldberg@reedsmith.com

 

and if to the Company, shall be delivered to:

 

ZaZa Energy Corporation

1301 McKinney Street, Suite 2850

Houston, Texas 77010

Attention:  Scott Gaille, Chief Compliance Officer & General Counsel

Telephone: (713) 595-1900

Email: scott.gaille@zazaenergy.com

 

with a copy to:

 

Sidley Austin LLP
 1000 Louisiana, Suite 6000
 Houston, Texas  77002
 Attention:  J. Mark Metts
 Telephone:  (713) 495-4501
 Email:  mmetts@sidley.com

 

Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally, by email, or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New York are open for business.

 

An electronic communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section 14 if sent to the electronic mail address specified by the receiving party under separate cover. Electronic Notice shall be deemed received at the time the party sending Electronic Notice receives confirmation of receipt by the receiving party. Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper, in a nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice.

 

15.                         Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and MLV and their respective successors and the affiliates, controlling persons, partners, members, officers, directors, employees and

 

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agents referred to in Section 11 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party.

 

16.                         Adjustments for Stock Splits.  The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any share consolidation, stock split, stock dividend, corporate domestication or similar event effected with respect to the Placement Shares.

 

17.                         Entire Agreement; Amendment; Severability.  This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereof and thereof and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof and thereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and MLV. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.

 

18.                         GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. THE COMPANY AND MLV EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

19.                         CONSENT TO JURISDICTION.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR

 

33

 

THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF (CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

 

20.                         Use of Information.  MLV may not use any information gained in connection with this Agreement and the transactions contemplated by this Agreement, including due diligence, to advise any party with respect to transactions not expressly approved by the Company.

 

21.                         Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile transmission, email or pdf.

 

22.                         Effect of Headings.  The section and Exhibit headings herein are for convenience only and shall not affect the construction hereof.

 

23.                         Permitted Free Writing Prospectuses.  The Company represents, warrants and agrees that, unless it obtains the prior consent of MLV, and MLV represents, warrants and agrees that, unless it obtains the prior consent of the Company, it has not made and will not make any offer relating to the Placement Shares that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by MLV or by the Company, as the case may be, is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents and warrants that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping. For the purposes of clarity, the parties hereto agree that all free writing prospectuses, if any, listed in Exhibit 23 hereto are Permitted Free Writing Prospectuses.

 

24.                         Absence of Fiduciary Relationship.  The Company acknowledges and agrees that:

 

a.                                      MLV is acting solely as agent in connection with the public offering of the Placement Shares and in connection with each transaction contemplated by this Agreement and the process leading to such transactions, and no fiduciary or advisory relationship between the Company or any of its respective affiliates, stockholders (or other equity holders), creditors or employees or any other party, on the one hand, and MLV, on the other hand, has been or will be created in respect of any of the transactions contemplated by this Agreement, irrespective of whether or not MLV has advised or is advising the Company on

 

34

 

other matters, and MLV has no obligation to the Company with respect to the transactions contemplated by this Agreement except the obligations expressly set forth in this Agreement;

 

b.                                      it is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement;

 

c.                                       MLV has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated by this Agreement and it has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate;

 

d.                                      it is aware that MLV and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and MLV has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship or otherwise; and

 

e.                                       it waives, to the fullest extent permitted by law, any claims it may have against MLV for breach of fiduciary duty or alleged breach of fiduciary duty in connection with the sale of Placement Shares under this Agreement and agrees that MLV shall not have any liability (whether direct or indirect, in contract, tort or otherwise) to it in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on its behalf or in right of it or the Company, employees or creditors of Company, other than in respect of MLV’s obligations under this Agreement and to keep information provided by the Company to MLV and MLV’s counsel confidential to the extent not otherwise publicly-available.

 

25.                         Definitions.

 

As used in this Agreement, the following terms have the respective meanings set forth below:

 

“Applicable Time” means (i) each Representation Date and (ii) the time of each sale of any Placement Shares pursuant to this Agreement.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Placement Shares that (1) is required to be filed with the Commission by the Company, (2) is a “road show” that is a “written communication” within the meaning of Rule 433(d)(8)(i) whether or not required to be filed with the Commission, or (3) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Placement Shares or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.

 

“Rule 164,” “Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,” “Rule 424(b),” “Rule 430A, “Rule 430B,” and “Rule 433” refer to such rules under the Securities Act.

 

All references in this Agreement to financial statements and schedules and other information that is “contained,” “included” or “stated” in the Registration

 

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Statement or the Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that is incorporated by reference in the Registration Statement or the Prospectus, as the case may be.

 

All references in this Agreement to the Registration Statement, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to EDGAR; all references in this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free Writing Prospectuses that, pursuant to Rule 433, are not required to be filed with the Commission) shall be deemed to include the copy thereof filed with the Commission pursuant to EDGAR; and all references in this Agreement to “supplements” to the Prospectus shall include, without limitation, any supplements, “wrappers” or similar materials prepared in connection with any offering, sale or private placement of any Placement Shares by MLV outside of the United States.

 

[Remainder of the page intentionally left blank]

 

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If the foregoing correctly sets forth the understanding between the Company and MLV, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and MLV.

 

	
 
    	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ZAZA ENERGY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd A. Brooks
    
	
 
    	
 
    	
Todd A. Brooks
    
	
 
    	
 
    	
President & Chief Executive Officer
    

 

[Signature Page to ZaZa Energy Corporation At-the-Market Issuance Sales Agreement]

 

 

	
 
    	
ACCEPTED as of the date first-above written:
    
	
 
    	
 
    
	
 
    	
MLV & CO. LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dean Colucci
    
	
 
    	
 
    	
Dean Colucci
    
	
 
    	
 
    	
President & Chief Operating Officer
    

 

[Signature Page to ZaZa Energy Corporation At-the-Market Issuance Sales Agreement]

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