Document:

ex10-1.htm

 

Exhibit 10.1

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT, dated as of January _________, 201 6 , is between RICH UNCLES NNN REIT, INC., a real estate investment trust organized under the laws of the State of Maryland (the “Company”) and RICH UNCLES NNN REIT OPERATOR, LLC (the “Advisor”).

WITNESSETH

 

WHEREAS, the Company intends to qualify as a REIT (as defined below), and to invest its funds in investments permitted by the terms of the Prospectus, Articles of Incorporation and Bylaws of the Company and Sections 856 through 860 of the Code (as defined below);

 

WHEREAS, the Company desires to avail itself of the experience, knowledge, sources of information, advice, assistance and contacts available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision, of the Board of Directors of the Company all as provided herein; and

 

WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

1.  Definitions.  As used in this Advisory Agreement (the “Agreement”), the following terms have the definitions hereinafter indicated:

 

Acquisition Expenses.  Any and all expenses incurred by the Company, the Advisor, or any Affiliate of either in connection with the selection, acquisition or making of any investment, including any Property or other Permitted Investment, whether or not acquired, including, without limitation, legal fees and expenses, travel and communication expenses, costs of appraisals, nonrefundable option payments on property not acquired or made, accounting fees and expenses, and title insurance.

 

Acquisition Fees.  Any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person or entity to any other Person or entity (including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with making an investment including making or investing in Properties or the purchase, development or construction of a Property, including, without limitation, real estate commissions, acquisition fees, finder's fees, selection fees, development fees, construction fees, nonrecurring management fees, consulting fees, loan fees, points, or any other fees or commissions of a similar nature.  Excluded shall be development fees and construction fees paid to any Person or entity not Affiliated with the Advisor in connection with the actual development and construction of any Property. Further, Acquisition Fees will not be paid in connection with temporary short-term investments acquired for purposes of cash management.

 

Advisor.  Rich Uncles NNN REIT Operator, LLC, a Delaware limited liability company, any successor Advisor to the Company, or any Person or entity to which Rich Uncles NNN REIT Operator, LLC, or any successor advisor subcontracts substantially all of its functions.  The Advisor will have responsibility for the day-to-day operations of the Company.

 

  

 

  

 

Affiliate or Affiliated (or any derivation thereof).  An affiliate of another Person, which is defined as: (i) any Person directly or indirectly owning, controlling, or holding, with power to vote 10% or more of the outstanding voting securities of such other Person; (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

 

Articles of Incorporation.  The Articles of Incorporation of the Company as filed with the Secretary of State of Maryland, as amended from time to time.

 

Asset Management Fee.  The fee payable to the Advisor for day-to-day professional management services in connection with the Company and its investments in Properties pursuant to this Agreement.

 

Assets.  The Company’s investments in Properties plus cash and cash equivalents. 

 

Average Invested Assets.  For a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in equity interests in Properties, before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.

 

Board of Directors or Board.  The Board of Directors of the Company.

 

Bylaws.  The bylaws of the Company, as the same are in effect and may be amended from time to time.

 

Cause.  With respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or grossly negligent breach of fiduciary duty by the Advisor, breach of this Agreement, or the bankruptcy of the Sponsor.

 

Code.  Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.  Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

 

Company.  Rich Uncles NNN REIT, Inc., a real estate investment trust organized under the laws of the State of Maryland.

 

Company Property.  Any and all property, real, personal or otherwise, tangible or intangible, including Properties, which is transferred or conveyed to the Company (including all rents, income, profits and gains therefrom), and which is owned or held by, or for the account of, the Company. 

 

 

 

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Competitive Real Estate Commission.  A real estate or brokerage commission for the purchase or sale of property, which is reasonable, customary, and competitive in light of the size, type, and location of the property.  The total of all real estate commissions paid by the Company to all Persons (not including the Subordinated Participation Fee payable to the Advisor) in connection with any Sale of one or more of the Company’s Properties shall not exceed the lesser of (i) a Competitive Real Estate Commission or (ii) six percent of the gross sales price of the Property or Properties.

 

Contract Purchase Price.  The amount actually paid or allocated (as of the date of purchase) to the purchase, development, construction or improvement of property, exclusive of Acquisition Fees and Acquisition Expenses.

 

Contract Sales Price.  The total consideration received by the Company for the sale of Company Property.

 

Distributions.  Any distribution of money or other property by the Company to owners of Securities, including distributions that may constitute a return of capital for federal income tax purposes.

 

Independent Director.  A Director who is not and within the last two years has not been directly or indirectly associated with the Advisor by virtue of (i) ownership of an interest in the Advisor or its Affiliates, (ii) employment by the Advisor or its Affiliates, (iii) service as an officer or director of the Advisor or its Affiliates, (iv) performance of services, other than as a Director, for the Company, (v) service as a director or trustee of more than three real estate investment trusts advised by the Advisor, or (vi) maintenance of a material business or professional relationship with the Advisor or any of its Affiliates.  A business or professional relationship is considered material if the gross revenue derived by the Director from the Advisor and Affiliates exceeds 5% of either the Director's annual gross revenue during either of the last two years or the Director's net worth on a fair market value basis.  An indirect relationship shall include circumstances in which a Director's spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law, or brothers- or sisters-in-law are or have been associated with the Advisor, any of its Affiliates, or the Company.

 

Independent Expert.  A Person or entity with no material current or prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company.

 

Invested Capital.   With respect to any particular Share held by a Stockholder, the amount paid by such Stockholder for such Share which constitutes a return of principal investment via property sales and/or mortgage financings.     

 

Joint Ventures.  The joint venture or general partnership arrangements in which the Company is a co-venturer or general partner which are established to acquire Properties.

 

 

 

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Net Asset Value or NAV.  The total value of all Assets minus the total value of all  l iabilities.  For the purposes of determining Net Asset Value, the Properties shall be valued as of the date specified by the Board of Directors   for the Valuation by an Independent Expert selected by the Board of Directors. 

 

NAV Per Share.   As of any date, the NAV as established by our Board of Directors divided by the number of Shares outstanding as of the date of such determination.      

 

Offering.  The initial offering of Shares pursuant to a registration statement filed with the Securities and Exchange Commission on Form S-11.

 

Organizational and Offering Expenses.  Any and all costs and expenses incurred by the Company, the Advisor or any Affiliate of either in connection with the formation, qualification and registration of the Company and the marketing and distribution of Shares, including, without limitation, the following: legal, accounting fees; printing, amending, supplementing, mailing and distributing costs; filing, registration and qualification fees and taxes; telegraph and telephone costs; and all advertising and marketing expenses. 

 

Original Invested Capital.  The amount calculated by multiplying the total number of Shares issued and outstanding by the offering price for each such share , without deduction for Organizational and Offering Expenses.

 

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Person.  An individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof.

 

Property or Properties.  Interests in (i) the real properties, including the buildings and equipment located thereon: or (ii) the real properties only; or (iii) the buildings only, including equipment located therein; any of which are acquired by the Company, either directly or indirectly through joint ventures, or other partnerships, or other legal entities.

 

Prospectus.   Any document by whatever name known, utilized for the purpose of offering and selling securities to the public.

 

Real Estate Asset Value.  The amount actually paid or allocated to the purchase, development, construction or improvement of a Property, exclusive of Acquisition Fees and Acquisition Expenses.

 

REIT.  A “real estate investment trust” as defined pursuant to Sections 856 through 860 of the Code.

 

Sale or Sales.  (i)  Any transaction or series of transactions whereby: (A) the Company sells, grants, transfers, conveys or relinquishes its ownership of any Property or portion thereof, including the lease of any Property or other Permitted Investment consisting of the building only, and including any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company sells, grants, transfers, conveys or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture in which the Company as a co-venturer or partner sells, grants, transfers, conveys or relinquishes its ownership of any Property or other Permitted Investment or portion thereof, including any event with respect to any Property or other Permitted Investment which gives rise to insurance claims or condemnation awards; or (D) the Company sells, grants, conveys or relinquishes its interest in any Property or other Permitted Investment, or portion thereof, including any event with respect to any Property or other Permitted Investment, which gives rise to a significant amount of insurance proceeds or similar awards.

 

Securities.  Any common shares or preferred shares, as such terms are defined in the Company’s Articles of Incorporation, any other Company stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.

 

 

 

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Shares.  The up to 100,000,000 shares of common stock, par value $.001 per share, of the Company to be sold in the Company’s initial public offering of Securities.

 

Sponsor.  Any Person directly or indirectly instrumental in organizing, wholly or in part, the Company or any Person who will control, manage or participate in the management of the Company, and any Affiliate of such Person.  Not included is any Person whose only relationship with the Company is that of an independent property manager of the Company’s Properties and whose only compensation is as such.  Sponsor does not include independent third parties such as attorneys, accountants, and underwriters whose only compensation is for professional services.  A Person may also be deemed a Sponsor of the Company by:

 

(a)           taking the initiative, directly or indirectly, in founding or organizing the business or enterprise of the Company, either alone or in conjunction with one or more other Persons;

 

(b)           receiving a material participation in the Company in connection with the founding or organizing of the business of the Company, in consideration of services or property, or both services and property;

 

(c)           having a substantial number of relationships and contacts with the Company;

 

(d)           possessing significant rights to control the Company’s Properties;

 

(e)           receiving fees for providing services to the Company which are paid on a basis that is not customary in the industry; or

 

(f)           providing goods or services to the Company on a basis which was not negotiated at arms length with the Company.

 

Stockholders.  The registered holders of the Company’s Securities.

 

Stockholders’ 6.5% Return.  As of each date, an aggregate amount equal to a 6.5% cumulative, non-compounded, annual return on Invested Capital.

 

Subordinated Participation Fee.  The Subordinated Participation Fee as defined in Paragraph 9(g).

 

Termination Date.  The date of termination of this Agreement whether pursuant to (i) the non-renewal of this Agreement under Paragraph 14 below or (ii) written notice of termination under Paragraph 15 below.

 

 

 

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Total Property Cost.  With regard to any Company Property, an amount equal to the sum of the Real Estate Asset Value of such Property plus the Acquisition Expenses and the Acquisition Fees paid in connection with such Property.

 

Director.  A member of the Board of Directors of the Company.

 

Valuation.  An estimate of value of the Assets of the Company as determined by an Independent Expert.

 

2. Appointment.  The Company hereby appoints the Advisor to serve as its advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

 

3. Duties of the Advisor.  The Advisor undertakes to use its best efforts to present to the Company potential investment opportunities and to provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Directors.  In performance of this undertaking, subject to the supervision of the Directors and consistent with the provisions of the Prospectus, Articles of Incorporation and Bylaws of the Company, the Advisor shall, either directly or by engaging an Affiliate:

 

(a) serve as the Company’s investment and financial advisor and provide research and economic and statistical data in connection with the Company’s assets and investment policies;

 

(b) provide the daily management of the Company and perform and supervise the various administrative functions reasonably necessary for the management of the Company;

 

(c) investigate, select, and, on behalf of the Company, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the services herein, including but not limited to entering into contracts in the name of the Company with any of the foregoing;

 

(d) consult with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Directors with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company; subject to the provisions of Paragraphs 3(g) and 4 hereof, (i) locate, analyze and select potential investments in Properties, (ii) structure and negotiate the terms and conditions of transactions pursuant to which investment in Properties; (iii) make investments in Properties in compliance with the investment objectives and policies of the Company; (iv) arrange for financing and refinancing and make other changes in the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with the investments in, Properties; and (v) enter into leases and service contracts for Company Property and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Company Property; 

 

 

 

 

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(e) provide the Directors with periodic reports regarding prospective investments in Properties; 

 

(f) obtain the prior approval of the Directors (including a majority of all Independent Directors) for any and all investments in Properties; 

 

(g) negotiate on behalf of the Company with banks or lenders for loans to be made to the Company and negotiate on behalf of the Company with investment banking firms and broker-dealers or obtain loans for the Company, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company; 

 

(h) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of investments or contemplated investments of the Company;

 

(i) from time to time, or at any time reasonably requested by the Directors, make reports to the Directors of its performance of services to the Company under this Agreement;

 

(j) provide the Company with all necessary cash management services;

 

(k) do all things necessary to assure its ability to render the services described in this Agreement;

 

(l) deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the investments in Properties; and 

 

(m) notify the Board of all proposed material transactions before they are completed.

 

4. Authority of Advisor.

 

(a) Pursuant to the terms of this Agreement (including the restrictions included in this Paragraph 4 and in Paragraph 7), and subject to the continuing and exclusive authority of the Directors over the management of the Company, the Directors hereby delegate to the Advisor the authority to (1) locate, analyze and select investment opportunities, (2) structure the terms and conditions of transactions pursuant to which investments will be made or acquired for the Company, (3) acquire Properties in compliance with the investment objectives and policies of the Company, (4) arrange for financing or refinancing with respect to Properties, (5) enter into leases and service contracts for the Company’s Property, and perform other property management services, (6) oversee non-affiliated property managers and other non-affiliated Persons who perform services for the Company; and (7) undertake accounting and other record-keeping functions at the Property level. 

 

 

 

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(b) Notwithstanding the foregoing, any investment in Properties, including any acquisition of Property by the Company (as well as any financing acquired by the Company in connection with such acquisition), will require the prior approval of the Directors (including a majority of the Independent Directors), provided, that a majority of the Directors, including a majority of the Independent Directors, may establish de minimis acquisition standards not requiring approval of the Directors for transactions other than transactions with a Director, the Sponsor, the Advisor or their Affiliates.

 

(c) If a transaction requires approval by the Independent Directors, the Advisor will deliver to the Independent Directors all documents required by them to properly evaluate the proposed investment in the Property. 

 

(d) The prior approval of a majority of the Independent Directors and a majority of the Directors not otherwise interested in the transaction will be required for each transaction with the Advisor or its Affiliates.

 

(e) The Directors may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Paragraph 4.  If and to the extent the Directors so modify or revoke the authority contained herein, the Advisor shall henceforth submit to the Directors for prior approval such proposed transactions involving investments which thereafter require prior approval, provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of receipt by the Advisor of such notification.

 

5. Bank Accounts.  The Advisor may establish and maintain one or more bank accounts in its own name for the account of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Directors may approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Directors and to the auditors of the Company.

 

6. Records; Access.  The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours.  The Advisor shall at all reasonable times have access to the books and records of the Company.

 

7. Limitations on Activities.  Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act of 1940, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company or its Securities, or otherwise not be permitted by the Articles of Incorporation or Bylaws of the Company, except if such action shall be ordered by the Directors, in which case the Advisor shall notify promptly the Directors of the Advisor's judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Directors.  In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Directors so given. Notwithstanding the foregoing, the Advisor, its Directors, officers, employees and stockholders, and stockholders, Directors and officers of the Advisor’s Affiliates shall not be liable to the Company or to the Directors or Stockholders for any act or omission by the Advisor, its Directors, officers or employees, or stockholders, Directors or officers of the Advisor’s Affiliates except as provided in Paragraphs 19 and 20 of this Agreement.

 

 

 

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8. Relationship with Directors.  Directors, officers and employees of the Advisor or an Affiliate of the Advisor or any corporate parents of an Affiliate, or Directors, officers or stockholders of any director, officer or corporate parent of an Affiliate may serve as a Director and as officers of the Company, except that no director, officer or employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the Company for serving as a Director or officer of the Company other than reasonable reimbursement for travel and related expenses incurred in attending meetings of the Directors of the Company.

 

9. Fees.

 

(a) Asset Management Fee.  The Company shall pay to the Advisor as compensation for the advisory services rendered to the Company under Paragraph 3 above, a monthly fee in an amount equal to 0.1% of the Company’s Average Invested Assets (the “Asset Management Fee”), as of the end of the preceding month.  The Asset Management Fee shall be payable monthly on the last day of such month, or the first business day following the last day of such month.  The Asset Management Fee, which must be reasonable in the determination of the Company’s Independent Directors at least annually, may or may not be taken, in whole or in part as to any year, in the sole discretion of the Advisor.  All or any portion of the Asset Management Fee not taken as to any fiscal year shall be deferred without interest and may be taken in such other fiscal year as the Advisor shall determine.

 

(b) Acquisition Fees.  The Company shall pay the Advisor a fee in the amount equal 3.0% of Company’s Total Property Cost of its Properties, as Acquisition Fees.  The total of all acquisition fees and acquisition expenses shall be reasonable, and shall not exceed 6.0% of the contract price of the property.  However, a majority of the directors (including a majority of the independent directors) not otherwise interested in the transaction may approve fees in excess of these limits if they determine the transaction to be commercially competitive, fair and reasonable to the Company.

 

(c) Financing Coordination Fee.   Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if an Advisor or an Affiliate provides a substantial amount of the services (as determined by a majority of the Independent Directors) in connection with the post-acquisition financing or refinancing of any debt that the Company obtains relative to a Property, then the Company shall pay to the Advisor or such Affiliate a financing coordination fee equal to 1.0% of the amount of such financing. 

 

 

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(d) Property Management Fee.   If an Advisor or an Affiliate provides a substantial amount of the property management services (as determined by a majority of the Independent Directors) for the Company’s Properties, then Company shall pay to the Advisor or such Affiliate a property management fee equal to 1.5% of gross revenues from the properties managed.  

 

(e) Leasing Commissions.   If an Advisor or an Affiliate provides a substantial amount of the services (as determined by a majority of the Independent Directors) in connection with the Company’s leasing of a Property or Properties to unaffiliated third parties, then the Company shall pay to the Advisor or such Affiliate leasing commissions equal to 6.0% of the rents due pursuant to such lease for the first ten years of the lease term; provided, however (i) if the term of the lease is less than ten years, such commission percentage will apply to the full term of the lease and (ii) any rents due under a renewal of a lease of an existing tenant upon expiration of the initial lease agreement (including any extensions provided for thereunder) shall accrue a commission of 3.0% in lieu of the aforementioned 6.0% commission. 

 

(f) Disposition Fee.   For substantial assistance in connection with the sale of Properties, the Company shall pay to its Advisor or one of its Affiliates 3.0% of the Contract Sales Price of each Property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with our advisor or its affiliates, the disposition fees paid to our advisor, our sponsors, their affiliates and unaffiliated third parties may not exceed the lesser of the Competitive Real Estate Commission or 6% of the Contract Sales Price.  

 

(g) Subordinated Participation Fee.

 

(i) Upon Annual NAV Increase.   The Company shall pay to the Advisor or one of its Affiliates 40.0% of the annual increase in NAV Per Share, if any, as of each December 31, multiplied by the number of outstanding shares as of such December 31, paid by January 31 of the subsequent year and payable in the form of Shares at the price then being paid by the public to purchase Shares (the most recently published NAV Per Share after giving effect to any accrual of the Subordinated Participation Fee due under this Section 9(g), subordinated to payment to Stockholders of the Stockholders’ 6.5% Return preceding the January 31 payment date.  For the purpose of calculating the Subordinated Participation Fee, only increases over the highest previous price per Share paid by the public  shall be included, reduced by any prior return of capital. 

 

(ii)  Upon Distributions in Excess of the Stockholders’ 6.5% Return, the Company shall pay to the Advisor or one of its Affiliates 40.0% of the amount, if any, by which Distributions to Stockholder in any given year exceeds the Stockholders’ 6.5% Return, paid by January 31 of the subsequent year and payable in the form of Shares at the price then being paid by the public to purchase Shares.   

 (h)  Liquidation Fee. 

 (i)  A Liquidation Fee calculated from the value per share resulting from a liquidation event, including but not limited to a sale of all of the properties, a public listing, or a merger with a public or non-public company, equal to 40.0% of the increase in the resultant value per share as compared to the highest previously calculated NAV Per Share, if any, reduced by any prior return of capital, multiplied by the number of outstanding shares as of the liquidation date, subordinated to payment Stockholders of the Stockholders’ 6.5% Return from all sources including operating cash flow, reduced by any prior return of capital. 

 (ii)  Upon termination of the advisory agreement by the Company without cause or by the Advisor at a time when no cause for termination exists, the Advisor may be entitled to a termination fee if (based upon an independent NAV Per Share calculation) it would have been entitled to a Liquidation Fee had the portfolio been liquidated on the termination date, if our Independent Directors do not terminate this agreement for cause.   

 

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(h) Loans from Affiliates.  The Company may not borrow money from the Advisor or any Affiliate of the Advisor, unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction approve the transaction as being fair, competitive, and commercially reasonable and no less favorable to the Company than loans between unaffiliated parties under the same circumstances.

 

10. Expenses.

 

(a) In addition to the compensation paid to the Advisor pursuant to Paragraph 9 hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor in connection with the services it provides to the Company pursuant to this Agreement, including, but not limited to:

 

(i) the Company’s Organizational and Offering Expenses or (together with any Organizational and Offering Expenses reimbursed to the Sponsor) not to exceed 3.0% of the proceeds raised from the Offering,;

 

(ii) the Acquisition Expenses incurred in connection with the selection and acquisition of Properties; 

 

(iii) the actual cost of goods and materials used by the Company and obtained from entities not affiliated with the Advisor, other than Acquisition Expenses, including brokerage fees paid in connection with the purchase and sale of securities;

 

(iv) interest and other costs for borrowed money, including discounts, points and other similar fees;

 

(v) taxes and assessments on income or Property and taxes as an expense of doing business;

 

(vi) costs associated with insurance required or deemed necessary by the Directors in connection with the business of the Company or by the Directors;

 

(vii) expenses of managing and operating Properties owned by the Company, whether payable to an Affiliate of the Company or a non-affiliated Person;

 

(viii) all expenses in connection with payments to the Directors and meetings of the Directors and Stockholders;

 

(ix) expenses associated with listing or with the issuance and distribution of Shares and Securities, such as selling commissions and fees, advertising expenses, taxes, legal and accounting fees, and listing and registration fees;

 

 

 

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(x) expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Directors to the Stockholders;

 

(xi) expenses of organizing, revising, amending, converting, modifying, or terminating the Company or the Articles of Incorporation;

 

(xii) expenses of maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;

 

(xiii) expenses related to negotiating and servicing loans;

 

(xiv) administrative service expenses (including personnel costs; provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Advisor receives a separate fee at the lesser of actual cost or 90% of the competitive rate charged by unaffiliated persons providing similar goods and services in the same geographic location); and

 

(xv) audit, accounting and legal fees.

 

(b) Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Paragraph 10 shall be reimbursed no less often than monthly to the Advisor.  The Advisor shall prepare a statement documenting the expenses of the Company during each quarter, and shall deliver such statement to the Company within 45 days after the end of each quarter.

 

11. Other Services.  Should the Directors request that the Advisor or any director, officer or employee thereof render services for the Company other than set forth in Paragraph 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Independent Directors of the Company, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.

 

12. Other Activities of the Advisor.

 

(a) Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, employee, or stockholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association.  The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein.  The Advisor shall report to the Directors the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor's obligations to the Company and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association.  The Advisor or its Affiliates shall promptly disclose to the Directors knowledge of such condition or circumstance.  If the Sponsor, Advisor, Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, it shall be the duty of the Directors (including the Independent Directors) to adopt the method, if any, set forth in the Prospectus or another reasonable method by which properties are to be allocated to the competing investment entities and to use their best efforts to apply such method fairly to the Company.

 

 

 

	ADVISORY AGREEMENT	Page 13

  

 

  

 

(b) The Advisor shall be required to use its best efforts to present a continuing and suitable investment program to the Company which is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of character which, if presented to the Company, could be taken by the Company.

 

(c) In the event that the Advisor or its Affiliates is presented with a potential investment which might be made by the Company and by another investment entity which the Advisor or its Affiliates advises or manages, the Advisor and its Affiliates shall consider the investment portfolio of each entity, cash flow of each entity, the effect of the acquisition on the diversification of each entity’s portfolio, rental payments during any renewal period, the estimated income tax effects of the purchase on each entity, the policies of each entity relating to leverage, the funds of each entity available for investment and the length of time such funds have been available for investment.  In the event that an investment opportunity becomes available which is suitable for both the Company and a public or private entity which the Advisor or its Affiliates are Affiliated, then the entity which has had the longest period of time elapse since it was offered an investment opportunity will first be offered the investment opportunity.  For purposes of this conflict resolution procedure, an investment opportunity will be considered “offered” to the Company when an opportunity is presented to the Board of Directors for its consideration.

 

13. Relationship of Advisor and Company.  The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.

 

14. Term; Termination of Agreement.  This Agreement shall continue in force for one year from the date of this Agreement, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties.  It is the duty of the Directors to evaluate the performance of the Advisor annually before renewing the Agreement, and each such agreement shall have a term of no more than one year.

 

15.Termination by Either Party.  This Agreement shall be terminable by a majority of the Independent Directors, or the Advisor, in either case on 60 days’ written notice and with or without Cause; provided, however, that if this Agreement is terminated by the Independent Directors for Cause or by the Advisor at a time when Cause for termination exists, then the Advisor shall not be entitled to the value of its  Liquidation  Fee as provided under Paragraph 9( h ) above.  In the event of the termination of this Agreement, the Advisor will cooperate with the Company and take all reasonable steps requested to assist the Directors in making an orderly transition of the advisory function.

 

 

 

	ADVISORY AGREEMENT	Page 14

  

 

  

 

16. Assignment to an Affiliate.  This Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Directors (including a majority of the Independent Directors).  The Advisor may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Directors.  This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization which is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company is bound by this Agreement.

 

17. Subcontracts with Affiliates.  The Advisor may subcontract with an Affiliate for a portion of the services and duties to be performed under this Agreement without obtaining the approval of the Directors to the extent such services or duties are primarily administrative in nature.  The Advisor may further subcontract any rights to receive fees or other payments for such services or duties under this Agreement without obtaining the approval of the Directors.

 

18. Payments to and Duties of Advisor Upon Termination.

 

(a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, exclusive of disputed items arising out of possible unauthorized transactions.

 

(b) Upon termination, the Advisor shall be entitled to payment of the  Liquidation  Fee on the basis as described above in Paragraph 9( h ).  The Advisor shall be entitled to receive all accrued but unpaid compensation and expense reimbursements in cash within 30 days of the Termination Date.

 

(c) The Advisor shall promptly upon termination:

 

(i) pay over to the Company all money collected and held for the account of the Company pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

 

(ii) deliver to the Directors a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Directors;

 

(iii) deliver to the Directors all assets, including Properties, and documents of the Company then in the custody of the Advisor; and 

 

(iv) cooperate with the Company to provide an orderly management transition.

 

 

 

	ADVISORY AGREEMENT	Page 15

  

 

  

 

19. Indemnification by the Company.  The Company shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys' fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the laws of the State of Maryland or the Articles of Incorporation of the Company.  Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Paragraph 19 for any activity for which the Advisor shall be required to indemnify or hold harmless the Company pursuant to Paragraph 20.  Any indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders.

 

20. Indemnification by Advisor.  The Advisor shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys' fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor's bad faith, fraud, misconduct, or gross negligence, but the Advisor shall not be held responsible for any action of the Board of Directors in following or declining to follow any advice or recommendation given by the Advisor.

 

21. Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

 

	
To the Directors and to the Company:

	
Rich Uncles NNN REIT, Inc.

3080 Bristol Street, Suite 550

Costa Mesa, CA 92626

Attn:   Harold Hofer

 

	
To the Advisor:

	
Rich Uncles NNN REIT Operator, LLC

3080 Bristol Street, Suite 550

Costa Mesa, CA 92626

Attn:    Harold Hofer

 

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Paragraph 21.

 

22. Modification.  This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees.

 

23. Severability.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

 

 

 

	ADVISORY AGREEMENT	Page 16

  

 

  

 

24. Construction.  The provisions of this Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of Maryland applicable to contracts to be made and performed entirely in said state.

 

25. Entire Agreement.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

 

26. Indulgences, Not Waivers.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

27. Gender. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

 

28. Headings Not to Affect Interpretation.  The headings of paragraphs and subparagraphs contained in this Agreement are for convenience only and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

 

29. Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

 

	 	
Rich Uncles NNN REIT, Inc.

	 
	 	 	 	 
	
 

	
By: 

	_______________________________	 
	 	Name:	_____, Independent  Director	 

 

 

	 	
Rich Uncles NNN REIT Operator, LLC

	 
	 	 	 	 
	
 

	
By: 

	_______________________________	 
	 	Name:	Harold Hofer, Manager	 
	 	 	 	 
	 	 	 	 

 

	ADVISORY AGREEMENT	Page 17cy-ex101_33.htm

 

EXHIBIT 10.1

EXECUTION VERSION

JOINDER AGREEMENT

THIS JOINDER AGREEMENT, dated as of December 22, 2015 (this “Agreement”), by and among Cypress Semiconductor Corporation (the “Borrower”), the lenders set forth on Schedule I attached hereto (each an “Initial Incremental Term Loan Lender” and collectively the “Initial Incremental Term Loan Lenders” and, together with any financial institution that becomes a lender of the Incremental Term Loan (as defined below) pursuant to Section 11.06 of the Credit Agreement (as defined below), the “Incremental Term Loan Lenders”) and Morgan Stanley Senior Funding, Inc., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”).

RECITALS:

WHEREAS, reference is hereby made to the Amended and Restated Credit and Guaranty Agreement, dated as of March 12, 2015 (as it may be further amended, supplemented or otherwise modified, including by that certain Amendment No. 1 to Amended and Restated Credit and Guaranty Agreement, dated as of October 20, 2015, by and among the Borrower, the Administrative Agent, the Guarantors party thereto and the Lenders party thereto, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent, as collateral agent and as swing line lender and Morgan Stanley Bank, N.A., as issuing bank;

WHEREAS, subject to the terms and conditions of the Credit Agreement, the Borrower may request a New Term Loan Commitment by entering into a Joinder Agreement with a New Term Loan Lender; and

WHEREAS, each Initial Incremental Term Loan Lender will become a New Term Loan Lender in respect of the Incremental Term Loan (as defined below) and the Incremental Term Loan Commitment (as defined below) will become a New Term Loan Commitment in respect of the Incremental Term Loan.

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Each Initial Incremental Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to the Administrative Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto (and the Administrative Agent hereby accepts such appointment); (iv) appoints and authorizes the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to the Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto (and the Collateral Agent hereby accepts such appointment) and (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

 

 

Each Initial Incremental Term Loan Lender hereby commits to provide its Incremental Term Loan Commitment to the Borrower (the Term Loan borrowed by the Borrower pursuant to this Agreement shall be referred to as the “Incremental Term Loan”) on the following terms and conditions:

1. Appointment of Lead Arrangers and Agents.   Credit Suisse Securities (USA) LLC (“CS”) is hereby appointed (and CS hereby accepts such appointment) Lead Arranger, Bookrunner, and Syndication Agent hereunder and under the other Credit Documents and each Initial Incremental Term Loan Lender (including in its capacities as a potential counterparty under a Secured Hedge Agreement or Secured Treasury Services Agreement) and the Borrower hereby authorize CS (and CS hereby accepts such appointment) to act as Lead Arranger, Bookrunner and Syndication Agent in accordance with the terms hereof and the other Credit Documents.  Fifth Third Bank (“FTB”) is hereby appointed Lead Arranger and Bookrunner hereunder and under the other Credit Documents and each Initial Incremental Term Loan Lender (including in its capacities as a potential counterparty under a Secured Hedge Agreement or Secured Treasury Services Agreement) and the Borrower hereby authorize FTB to act as Lead Arranger and Bookrunner in accordance with the terms hereof and the other Credit Documents. BMO Harris Bank, N.A. (“BMO”) is hereby appointed Co-Manager hereunder and under the other Credit Documents and each Initial Incremental Term Loan Lender (including in its capacities as a potential counterparty under a Secured Hedge Agreement or Secured Treasury Services Agreement) and the Borrower hereby authorize BMO to act as Co-Manager in accordance with the terms hereof and the other Credit Documents. Each bank serving as a Lead Arranger, Bookrunner, Co-Manager or Syndication Agent hereunder shall have the same rights and powers as though it were not a Lead Arranger, Bookrunner, Co-Manager or Syndication Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not a Lead Arranger, Bookrunner, Co-Manager or Syndication Agent hereunder. Each Initial Incremental Term Loan Lender acknowledges that it has, independently and without reliance upon any Lead Arranger, Bookrunner, Co-Manager or Syndication Agent and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Initial Incremental Term Loan Lender also acknowledges that it will, independently and without reliance upon any Lead Arranger, Bookrunner, Co- Manager or Syndication Agent and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. No Lead Arranger, Bookrunner, Co-Manager or Syndication Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of the Initial Incremental Term Loan Lenders or to provide any Initial Incremental Term Loan Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Incremental Term Loan or at any time or times thereafter, and no Lead Arranger, Bookrunner, Co- Manager or Syndication Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to the Initial Incremental Term Loan Lenders.

2. Applicable Margin. The Applicable Margin for the Incremental Term Loan shall mean, as of any date of determination, (a) with respect to any Incremental Term Loan that is a Eurodollar Rate Loan, 3.25% per annum; and (b) with respect to any Incremental Term Loan that is a Base Rate Loan, 2.25% per annum.

3. Maturity. March 12, 2020 (the “Incremental Term Loan Maturity Date”).

4. Upfront Fee/OID. The Borrower shall pay to the Lead Arrangers for the account of each Initial Incremental Term Loan Lender upfront fees (“Upfront Fees”), at a rate equal to 1.0% of the aggregate Incremental Term Loan funded on the Closing Date (as defined below).  Upfront Fees shall be due and payable on the Closing Date to each Initial Incremental Term Loan Lender lending the Incremental Term Loan on the Closing Date.  At the option of the Lead Arrangers, the Upfront Fees may be structured as original issue discount.

2

 

5. Incremental Term Loan Commitment.

(a) The New Term Loan Commitment of the Initial Incremental Term Loan Lenders to make the Incremental Term Loan (such commitment, the “Incremental Term Loan Commitment”) is $100,000,000.  Each Initial Incremental Term Loan Lender severally agrees to make an Incremental Term Loan to the Borrower on the Closing Date in an aggregate amount up to but not exceeding the amount set opposite such Initial Incremental Term Loan Lender’s name on Schedule I attached hereto, subject to the terms hereof.

(b) On the date hereof, subject to the terms and conditions hereof, the Borrower may draw the Incremental Term Loan in the aggregate amount of $100,000,000 in one drawing (the date of such drawing, the “Closing Date”); provided the Incremental Term Loan Commitment shall be permanently reduced to zero after the making of the Incremental Term Loan. Any amount of the Incremental Term Loan borrowed and subsequently repaid or prepaid may not be reborrowed.

6. Borrowing Mechanics for the Incremental Term Loan.

(a) Subject to Section 2.24 of the Credit Agreement, the Borrower shall deliver to the Administrative Agent a fully executed Funding Notice no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the Closing Date.  Except as otherwise provided herein, the Funding Notice to the extent it requests a funding of Eurodollar Rate Loans shall be irrevocable on and after the related Interest Rate Determination Date, and the Borrower shall be bound to make a borrowing in accordance therewith. Notwithstanding the foregoing, the Administrative Agent may agree to shorter time periods with respect to the delivery of any Funding Notice.

(b) Notice of receipt of the Funding Notice shall be provided by the Administrative Agent to each Initial Incremental Term Loan Lender by telefacsimile with reasonable promptness, but (provided the Administrative Agent shall have received such Funding Notice by 11:00 a.m. (New York City time)) not later than 1:00 p.m. (New York City time) on the same day as the Administrative Agent’s receipt of the Funding Notice from the Borrower.

(c) The Initial Incremental Term Loan Lenders shall make the requested Incremental Term Loan available to the Administrative Agent not later than 2:00 p.m. (New York City time) on the Closing Date by wire transfer of same day funds in Dollars, at the Principal Office of the Administrative Agent.  Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of the Incremental Term Loan available to the Borrower on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of the Incremental Term Loan received by the Administrative Agent from the Initial Incremental Term Loan Lenders to be credited to the account of the Borrower at the Principal Office designated by the Administrative Agent or such other account as may be designated in writing to the Administrative Agent by the Borrower (it being understood and agreed that the Administrative Agent shall have no obligation to make the proceeds of any Incremental Term Loan requested pursuant to any Funding Notice available to the Borrower on the Closing Date unless it has received the Incremental Term Loan from the Initial Incremental Term Loan Lenders).

3

 

7. Conditions Precedent.

(a) The effectiveness of this Agreement and the obligations of each Initial Incremental Term Loan Lender to make a Credit Extension of the Incremental Term Loan on the Closing Date shall be subject to the satisfaction, or waiver in accordance with Section 11.05 of the Credit Agreement, of the following conditions on or before the Closing Date:

	
 
	
(i)
	
as of the Closing Date, the representations and warranties contained in the Credit Agreement and in the other Credit Documents shall be true and correct in all material respects on and as of the Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof;

	
 
	
(ii)
	
as of the Closing Date, no event shall have occurred and be continuing or would result from the consummation of the Credit Extension on the Closing Date that would constitute an Event of Default or a Default;

	
 
	
(iii)
	
the Administrative Agent and each Lead Arranger shall have received (A) a customary solvency certificate from the chief financial officer of the Borrower, (B) customary opinions of counsel to the Borrower and the Guarantors, (C) customary corporate resolutions and closing certificates and (D) if requested by any Initial Incremental Term Loan Lender, a Term Loan Note executed by the Borrower in favor of such Initial Incremental Term Loan Lender;

	
 
	
(iv)
	
all fees due to the Administrative Agent, the Lead Arrangers and the Initial Incremental Term Loan Lenders pursuant to Section 4 above, under the Engagement Letter and as otherwise may be agreed to be paid on the Closing Date, and all expenses to be paid or reimbursed under the Engagement Letter or any Credit Document to the Administrative Agent, the Lead Arrangers and the Initial Incremental Term Loan Lenders that have been invoiced at least two Business Days prior to the Closing Date, shall have been paid;

	
 
	
(v)
	
so long as requested at least ten Business Days prior to the Closing Date, each Initial Incremental Term Loan Lender shall have received at least three Business Days prior to the Closing Date, all documentation and other information with respect to the Borrower and the Guarantors that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act;

	
 
	
(vi)
	
the Administrative Agent, each Lead Arranger shall have received: (A) the audited consolidated balance sheets and related consolidated statements of operations, cash flows and shareholders’ equity of the Borrower for the three most recently completed Fiscal Years of the Borrower ended at least 90 days before the Closing Date, accompanied by an unqualified report thereon by their respective independent registered public accountants; (B) the unaudited consolidated balance sheets and related statements of operations and cash flows of each of the Borrower for each subsequent Fiscal Quarter of the Borrower ended at least 45 days before the Closing Date; and (C) pro forma balance sheet and related statement of operations of the Borrower and its Subsidiaries as of and for the most recent Fiscal Year for which audited financial statements are 

4

 

	
 
		
required and any interim period and as of and for the period ending with the latest annual or quarterly period of the Borrower covered by clauses (A) and (B) above, in each case after giving effect to the Credit Extension under this Agreement (the “Pro Forma Financial Statements”), all of which financial statements shall be prepared in accordance with generally accepted accounting principles in the United States and comply with in all material respects the requirements of Regulation S-X under the Securities Act and all other accounting rules and regulations of the Securities and Exchange Commission promulgated thereunder applicable to a registration statement under the Securities Act on Form S-1 (except that it is understood and agreed that the Pro Forma Financial Statements for any last 12-month period which does not correspond with a Fiscal Year end may not comply with Regulation S-X only insofar that Regulation S-X contemplates Fiscal Year and interim period pro forma financial statements rather than “last 12-month” pro forma financial statements); 

	
 
	
(vii)
	
as of the Closing Date, (x) the Borrower and its Restricted Subsidiaries shall be in pro forma compliance with each of the covenants set forth in Article 7 of the Credit Agreement as of the last day of the most recently ended Fiscal Quarter or Fiscal Year for which financial statements have been delivered pursuant to Section 5.01(a) or (b) of the Credit Agreement after giving effect to such New Term Loan Commitments and (y) the pro forma Total Leverage Ratio as of the last day of the most recently ended Fiscal Quarter or Fiscal Year for which financial statements have been delivered pursuant to Section 5.01(a) or (b) of the Credit Agreement (after giving effect to the Incremental Term Loan Commitment) shall be less than 3.25 to 1.00; and

	
 
	
(viii)
	
the Administrative Agent shall have received a Funding Notice in accordance with Section 6(a) hereof.

8. Principal Payments. The Borrower shall repay to the Administrative Agent for the ratable account of the applicable Incremental Term Loan Lenders (i) the principal amount of the Incremental Term Loan in consecutive quarterly installments, equal to (A) 1.25% per quarter of the original aggregate principal amount of the Incremental Term Loan due and payable on the last Business Day of each Fiscal Quarter of 2016, (B) 1.875% per quarter of the original aggregate principal amount of the Incremental Term Loan due and payable on the last day of each Fiscal Quarter of each of 2017 and 2018 and (C) 2.50% per quarter of the original aggregate principal amount of the Incremental Term Loan due and payable on the last day of each Fiscal Quarter thereafter until the Incremental Term Loan Maturity Date and (ii) the principal amount of the Incremental Term Loan outstanding as of the Incremental Term Loan Maturity Date.

5

 

9. Prepayments.

(a) Optional.

All voluntary prepayments of the Incremental Term Loan shall be made in accordance with Section 2.13 of the Credit Agreement and shall be applied to the remaining amortization payments as directed by the Borrower (or, if the Borrower has not made such designation, in direct order of maturity); and each such prepayment shall be paid to the Incremental Term Loan Lenders on a pro rata basis.

(b) Mandatory.

	
 
	
(i)
	
Within ten Business Days after a Compliance Certificate has been delivered pursuant to Section 5.01(d) of the Credit Agreement in connection with the delivery of annual financials pursuant to Section 5.01(b) of the Credit Agreement, the Borrower shall prepay, subject to Section 2.18(c) of the Credit Agreement, an aggregate principal amount of the Incremental Term Loan in an amount equal to (A) 50% (as may be adjusted pursuant to the proviso below) of Excess Cash Flow for the Fiscal Year covered by such financial statements commencing with the Fiscal Year ending on December 31, 2016, minus (B) the sum of the aggregate amount of voluntary principal prepayments of the Incremental Term Loan (except prepayments of (x) Swing Line Loans and (y) Revolving Loans that are not accompanied by a corresponding permanent reduction of the Revolving Commitment), in each case other than to the extent that any such prepayment is funded with the proceeds of long-term Indebtedness; provided that such percentage in respect of any Fiscal Year shall be reduced to 25% or 0% if the Total Leverage Ratio as of the last day of such Fiscal Year was less than 2.00:1.00 or 1.50:1.00, respectively.

	
 
	
(ii)
	
If the Borrower or any Restricted Subsidiary disposes of any property or assets (other than (A) any Asset Sale of the equity of Cypress Semiconductor (Minnesota) Inc. or the assets owned by Cypress Semiconductor (Minnesota) Inc. as of the Closing Date or (B) any Asset Sale (x) to a Credit Party or (y) by a Restricted Subsidiary that is not a Credit Party to another Restricted Subsidiary that is not a Credit Party) pursuant to an Asset Sale, (1) the Borrower shall give written notice to the Administrative Agent thereof promptly after the date of receipt of Net Cash Proceeds from such Asset Sale and (2) except to the extent the Borrower elects in such notice to reinvest all or a portion of such Net Cash Proceeds in accordance with Section 9(b)(iii) below), the Borrower shall prepay, subject to Section 2.18(c) of the Credit Agreement an aggregate principal amount of the Incremental Term Loan in an amount equal to 100% of all Net Cash Proceeds received from such Asset Sale within ten Business Days of receipt thereof by the Borrower or such Restricted Subsidiary; provided that the Borrower may use a portion of the Net Cash Proceeds received from such Asset Sale to prepay or repurchase any other Indebtedness that is secured by the Collateral on a first lien “equal and ratable” basis with Liens securing the Obligations to the extent such other Indebtedness and the Liens securing the same are permitted under the Credit Agreement and the documentation governing such other Indebtedness requires such a prepayment or repurchase thereof with the proceeds of such Asset Sale, to the extent not deducted in the calculation of Net Cash Proceeds, in each case in an amount not to exceed the product of (1) the amount of such Net Cash Proceeds and (2) a fraction, the numerator of which is the outstanding principal amount of such other Indebtedness (or to the extent such amount is not in Dollars, such equivalent amount of such Indebtedness converted into Dollars) and the 

6

 

	
 
		
denominator of which is the aggregate outstanding principal amount of the Incremental Term Loan and such other Indebtedness (or to the extent such amount is not in Dollars, such equivalent amount of such Indebtedness converted into Dollars). 

	
 
	
(iii)
	
With respect to any Net Cash Proceeds realized or received with respect to any Asset Sale at the option of the Borrower, the Borrower may reinvest all or any portion of such Net Cash Proceeds in the business within 365 days following receipt of such Net Cash Proceeds (or, if the Borrower or the relevant Restricted Subsidiary, as applicable, has contractually committed within 365 days following receipt of such Net Cash Proceeds to reinvest such Net Cash Proceeds, then within 545 days following receipt of such Net Cash Proceeds); provided, however, that if any of such Net Cash Proceeds are no longer intended to be so reinvested at any time after the occurrence of the relevant Asset Sale (or are not reinvested within such 365 days or 545 days, as applicable), an amount equal to any such Net Cash Proceeds shall be promptly applied to the prepayment of the Incremental Term Loan as set forth in Section 9(b)(ii) above.

	
 
	
(iv)
	
Upon the incurrence or issuance by the Borrower or any Restricted Subsidiary of any Indebtedness not expressly permitted to be incurred or issued pursuant to Section 6.01 of the Credit Agreement (a “Debt Issuance”), the Borrower shall prepay, subject to Section 2.18(c) of the Credit Agreement, an aggregate principal amount of the Incremental Term Loan in an amount equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by the Borrower or such Restricted Subsidiary.

	
 
	
(v)
	
Amounts to be applied to the Incremental Term Loan in connection with prepayments made pursuant to this Section 9(b) shall be applied to the remaining scheduled installments with respect to the Incremental Term Loan in direct order of maturity. Each prepayment of the Incremental Term Loan pursuant to this Section 9(b) shall be applied on a pro rata basis to the then outstanding Base Rate Loans and Eurodollar Rate Loans; provided that, if there are no Declining Lenders with respect to such prepayment, then the amount thereof shall be applied first to Base Rate Loans under such Facility to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner that minimizes the amount payable by the Borrower in respect of such prepayment pursuant to Section 2.18(c) of the Credit Agreement.

7

 

	
 
	
(vi)
	
All prepayments under this Section 9 shall be made together with, in the case of any such prepayment of a Eurodollar Rate Loan on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Eurodollar Rate Loan pursuant to Section 2.18(c) of the Credit Agreement.  Notwithstanding any of the other provisions of this Section 9, so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurodollar Rate Loans is required to be made under this Section 9, other than on the last day of the Interest Period therefor, either the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made thereunder into a cash collateral account until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Credit Party) to apply such amount to the prepayment of such Loans in accordance with this Section 9(b). Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Credit Party) to apply such amount to the prepayment of the outstanding amount of the Incremental Term Loan in accordance with this Section 9(b). 

	
 
	
(vii)
	
Notwithstanding any other provisions of this Section 9, mandatory prepayments as a result of Section 9(b)(i) and (ii) of, or in respect of, a Foreign Subsidiary (i) may be retained by the applicable Foreign Subsidiary to the extent the making of any such mandatory prepayment from the Net Cash Proceeds of any Asset Sale received by any Foreign Subsidiary or Excess Cash Flow in respect of a Foreign Subsidiary would give rise to a materially adverse tax consequence as reasonably determined in good faith by the Borrower (taking into account any foreign tax credit or benefit received in connection with such repatriation and after the Borrower and the applicable Foreign Subsidiary have used commercially reasonable efforts to mitigate such materially adverse tax consequence in order to make such prepayments) and may be retained by the applicable Foreign Subsidiary so long as such material adverse tax consequence continues to exist; provided that (x) on or before the date on which such amounts so retained would otherwise have been required to be applied to reinvestments or prepayments, the Borrower shall apply an amount equal to such Net Cash Proceeds of any such Asset Sale or Excess Cash Flow as if such Net Cash Proceeds of any such Asset Sale or Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, less the amount of additional Taxes that would have been payable or reserved against if such Net Cash Proceeds of any such Asset Sale or Excess Cash Flow had been repatriated (or, if less, the Net Cash Proceeds of any such Asset Sale or Excess Cash Flow that would have been payable if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds of any such Asset Sale or any such Excess Cash Flow shall be applied to prepay any Indebtedness of a Foreign Subsidiary permitted to be prepaid by the Credit Agreement or reinvested in the business of the Borrower or any of the other subsidiaries; provided further that if an Event of Default is then continuing, no prepayment of any such Indebtedness (other than any prepayment required by the terms of such Indebtedness) or reinvestments shall be permitted and (iii) may be retained if prohibited under applicable local law (as reasonably determined by the Borrower); provided that such amounts may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States (the Borrower hereby agreeing to cause the applicable Foreign Subsidiary to use commercially reasonable efforts to take such actions required by the applicable local law to permit such repatriation), and once such repatriation is permitted under the applicable local law, such repatriation shall be promptly effected.

8

 

(c) Term Lender Opt-Out. With respect to any prepayment of the Incremental Term Loan pursuant to Section 9(b)(i) or (ii), any Incremental Term Loan Lender, at its option (but solely to the extent the Borrower elects for this clause (c) to be applicable to a given prepayment), may elect not to accept such prepayment as provided below.  The Borrower may notify the Administrative Agent of any event giving rise to a prepayment under Section 9(b)(i) or (ii) at least ten Business Days prior to the date of such prepayment.   Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment that is required to be made under Section 9(b)(i) or (ii) (the “Prepayment Amount”).  The Administrative Agent will promptly notify each Incremental Term Loan Lender of the contents of any such prepayment notice so received from the Borrower, including the date on which such prepayment is to be made (the “Prepayment Date”).  Any Incremental Term Loan Lender may (but solely to the extent the Borrower elects for this clause (c) to be applicable to a given prepayment) decline to accept all (but not less than all) of its share of any such prepayment (any such Lender, a “Declining Lender”) by providing written notice to the Administrative Agent no later than five Business Days after the date of such Incremental Term Loan Lender’s receipt of notice from the Administrative Agent regarding such prepayment.  If any Incremental Term Loan Lender does not give a notice to the Administrative Agent on or prior to such fifth Business Day informing the Administrative Agent that it declines to accept the applicable prepayment, then such Incremental Term Loan Lender will be deemed to have accepted such prepayment.  On any Prepayment Date, an amount equal to the Prepayment Amount minus the portion thereof allocable to Declining Lenders, in each case for such Prepayment Date, shall be paid to the Administrative Agent by the Borrower and applied by the Administrative Agent ratably to prepay the Incremental Term Loan owing to the Incremental Term Loan Lenders (other than Declining Lenders) in the manner described in Section 9(b) for such prepayment.  Any amounts that would otherwise have been applied to prepay the Incremental Term Loan owing to Declining Lenders shall be retained by the Borrower.

10. Post-Closing Obligations. Each applicable Credit Party shall deliver to Administrative Agent the following with respect to each Closing Date Mortgaged Property within 90 days of the Closing Date:

(a) fully executed and notarized amendments to the existing Mortgages securing each Closing Date Mortgaged Property reasonably satisfactory to the Collateral Agent (the “Mortgage Amendments”), in proper form for recording in all appropriate places in all applicable jurisdictions;

(b) with respect to each Closing Date Mortgaged Property (other than the Closing Date Mortgaged Property located in Austin, Texas (the “Texas Property”)), a Mortgage modification endorsement ALTA 11-06 (or such similar mortgage modification endorsement reasonably satisfactory to the Collateral Agent) to the existing ALTA mortgagee title insurance policies insuring the Collateral Agent with respect to each such Closing Date Mortgaged Property, and evidence satisfactory to the Collateral Agent that such Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each Title Policy Update and all recording and stamp taxes (including mortgage recording and intangible taxes, if any) payable in connection with recording the Mortgage Amendments for each such Closing Date Property in the appropriate real estate records; and

(c) with respect to the Texas Property, (A) an ALTA mortgagee title insurance policy or unconditional commitment therefor issued by a title company reasonably satisfactory to the Collateral Agent with respect to the Mortgage Amendment for the Texas Property, in an amount not less than the fair market value of the Texas Property, in form and substance reasonably satisfactory to the Collateral Agent and (B) evidence satisfactory to the Collateral Agent that the applicable Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of such ALTA mortgagee title insurance policy and all recording and stamp taxes (including mortgage recording and intangible taxes, if any) payable in connection with recording the Mortgage Amendment for the Texas Property in the appropriate real estate records.

9

 

11. Definitions. The following terms used herein have the following meanings: “Engagement Letter” means that certain Term Loan A Facility Amended and Restated Engagement Letter, dated as of December 7, 2015, among the Borrower, CS, Credit Suisse AG, Cayman Islands Branch and FTB.

“Excess Cash Flow” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period, 

minus (without duplication and without duplication of deductions or additions in any prior or future period):

(a) repayments, prepayments and other cash payments made with respect to the principal of any Indebtedness or the principal component of any Capital Lease Obligations of such Person or any of its Restricted Subsidiaries during such period (excluding voluntary and mandatory prepayments of Term Loans, but including all premium, make-whole or penalty payments paid in cash (to the extent such payments are not expensed during such period or are not deducted in calculating Consolidated Net Income and such payments are not otherwise prohibited under the Credit Agreement) and all repayments with respect to revolving Indebtedness to the extent accompanied by a corresponding reduction in commitments); provided that, with respect to any mandatory prepayment of Indebtedness (other than, for the avoidance of doubt, Term Loans), such prepayments shall only be deducted pursuant to this clause (a) to the extent not deducted in the computation of net proceeds in respect of the asset disposition or condemnation giving rise thereto; minus

(b) (i) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of capital expenditures, acquisitions of intellectual property, acquisitions, Investments and Restricted Payments (but only to the extent limited to ordinary course dividends based on historic practice), and (ii) cash payments that such Person or any of its Restricted Subsidiaries is required to make in respect of capital expenditures, acquisitions of intellectual property, acquisitions and Investments within 365 days after the end of such period pursuant to binding obligations entered into prior to or during such period; provided that amounts described in this clause (ii) will not reduce Excess Cash Flow in subsequent periods, and, to the extent not paid, will increase Excess Cash Flow in the subsequent period; minus

(c) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of (i) long-term liabilities other than Indebtedness or (ii) items for which an accrual or reserve was established in a prior period, in each case to the extent such payments are not expensed during such period or are not deducted in calculating Consolidated Net Income; minus

(d) (i) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of Taxes, to the extent such payments exceed the amount of tax expense deducted in calculating such Consolidated Net Income, and (ii) cash payments that such Person or any of its Restricted Subsidiaries will be required to make in respect of Taxes within 180 days after the end of such period; provided that amounts described in this clause (ii) will not reduce Excess Cash Flow in subsequent periods; minus

(e) all cash payments and other cash expenditures made by such Person or any of its Restricted Subsidiaries during such period that were not expensed during such period in accordance with GAAP; minus

(f) all non-cash credits included in calculating such Consolidated Net Income; minus

(g) an amount equal to the sum of (i) the increase in the working capital of such Person during such period, if any, plus (ii) the increase in long-term accounts receivable of such Person and its Restricted Subsidiaries, if any;

10

 

plus (without duplication and without duplication of deductions or additions in any prior or future period):

(a) all non-cash charges, losses and expenses (including, without limitation, Taxes) of such Person or any of its Restricted Subsidiaries that were deducted in calculating such Consolidated Net Income; plus

(b) all cash payments received by such Person or any of its Restricted Subsidiaries during such period with respect to swap contracts that were not treated as revenue or net income under GAAP; plus

(c) an amount equal to the sum of (i) the decrease in working capital of such Person during such period, if any, plus (ii) the decrease in long-term accounts receivable of such Person and its Restricted Subsidiaries, if any (other than any such increases contemplated by clauses (i) and (ii) of this clause (c) that are directly attributable to acquisitions of a Person or business unit by the Borrower and its Restricted Subsidiaries during such period); plus

(d) all amounts referred to in clauses (a) and (b) above to the extent funded with the proceeds of the issuance or the incurrence of Indebtedness (other than proceeds of revolving loans), the sale or issuance of Equity Interests, the proceeds of any Asset Sales outside the ordinary course of business or other proceeds not included in Consolidated Net Income.

“Lead Arrangers” means each of CS and FTB, in their capacity as joint lead arrangers and joint bookrunners for the Incremental Term Loan.

“Net Cash Proceeds” means:

(a) with respect to any Asset Sale, the aggregate amount of all cash (which term, for the purpose of this paragraph, shall include cash equivalents) proceeds (including any cash proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or otherwise, but only as and when received) actually received in respect of such Asset Sale, including property insurance or condemnation proceeds paid on account of any loss of or damage to, or any condemnation or other taking of, any property, net of (i) all reasonable attorneys’ fees, accountants’ fees, investment banking fees, brokerage, consultant and other customary fees and survey costs, title insurance premiums, and related search and recording charges, commissions, title and recording tax expenses and other reasonable fees and expenses incurred in connection therewith, (ii) all Taxes paid or reasonably estimated to be payable as a result thereof, (iii) all payments made, and all installment payments required to be made, with respect to any obligation (A) that is secured by any assets subject to such Asset Sale, in accordance with the terms of any Lien upon such assets, or (B) that must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale, (iv) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such Asset Sale, or to any other Person (other than the Borrower or any of its Restricted Subsidiaries) owning a beneficial interest in the assets disposed of in such Asset Sale, and (v) the amount of any reserves established by the Borrower or any of its Restricted Subsidiaries in accordance with GAAP to fund purchase price or similar adjustments, indemnities or liabilities, contingent or otherwise, reasonably estimated to be payable in connection with such Asset Sale (provided that to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); and

(b) with respect to any Debt Issuance, the aggregate amount of all cash proceeds received (including in escrow) in respect of such Debt Issuance, net of all reasonable attorneys’ fees, accountants’ fees, investment banking fees, brokerage, consultant and other customary fees and other reasonable fees, expenses, costs, underwriting discounts and commissions incurred in connection therewith and net of Taxes paid or reasonably estimated to be payable as a result thereof.

12. Indemnity. Each Lead Arranger in its capacity as an arranger of the Incremental Term Loan shall be deemed to be an “Indemnitee” under Section 11.03 of the Credit Agreement and shall have all the rights with respect thereto as if it were an “Indemnitee” thereunder.

11

 

13. Rights as Lender. Each Lead Arranger in its capacity as an arranger of the Incremental Term Loan shall be deemed to be a “Lender” under Section 11.23 of the Credit Agreement and shall have all the rights with respect thereto as if it were a “Lender” thereunder.

14. Assignments. The Administrative Agent hereby acknowledges and agrees that the registration and processing fee of $3,500 shall not be payable with respect to assignments of the Incremental Term Loan (x) in connection with the primary syndication thereof and (y) to or by any Initial Incremental Term Loan Lender or its Affiliates.

15. Eligible Assignee. By its execution of this Agreement, each Initial Incremental Term Loan Lender represents and warrants that it is an Eligible Assignee.

16. Notice. For purposes of the Credit Agreement, the initial notice address of each Initial Incremental Term Loan Lender shall be the address set forth opposite such Initial Incremental Term Loan Lender on Schedule I attached hereto.

17. Use of Proceeds. The proceeds of the Incremental Term Loan shall be applied by the Borrower solely for the purpose of (i) repurchasing a portion of the Borrower’s outstanding Equity Interests and/or reimbursing the Borrower’s use of cash on the balance sheet to repurchase a portion of the Borrower’s outstanding Equity Interests, (ii) refinancing a portion of the Borrower’s Revolving Loans outstanding under the Credit Agreement and (iii) paying any fees and expenses in connection therewith. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or could reasonably be expected to cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Exchange Act.

18. Non-US Lenders. Each Initial Incremental Term Loan Lender shall have delivered herewith to the Administrative Agent such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such Initial Incremental Term Loan Lender may be required to deliver to the Administrative Agent pursuant to Section 2.20 of the Credit Agreement.

19. Recordation of the Incremental Term Loan. Upon execution and delivery hereof, the Administrative Agent will record the Incremental Term Loan made by each Initial Incremental Term Loan Lender in the Register.

20. Amendment, Modification and Waiver. This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

21. Credit Agreement Governs. Except as set forth in this Agreement, Incremental Term Loan shall otherwise be subject to the provisions of the Credit Agreement and the other Credit Documents.

22. Entire Agreement. This Agreement, the Credit Agreement and the other Credit Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.

23. Reaffirmation by the Credit Parties. Without limiting its obligations under or the provisions of the Credit Agreement and the Collateral Documents, each Credit Party hereby (a) acknowledges that the terms “Obligations”, “Guaranteed Obligations” and “Secured Obligations” (and terms of similar import used in the Credit Documents) shall include the unpaid principal of, and accrued and unpaid interest on (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Incremental Term Loan, (b) affirms and confirms its guaranty obligations under Article 8 of the Credit Agreement and its pledges, grants, indemnification obligations and other commitments and obligations under the Credit Agreement and each Collateral Document to which it is a party, in each case after giving effect to this Agreement and the incurrence of the Incremental Term Loan and the 

12

 

effectiveness of the Incremental Term Loan Commitment contemplated hereby, (c) agrees that each Collateral Document to which it is a party and all guarantees, pledges, grants and other commitments and obligations thereunder and under the Credit Agreement shall continue to be in full force and effect following the effectiveness of this Agreement (and shall apply in all respects to the obligations of the Borrower in respect of the Incremental Term Loan) and (d) confirms that all of the Liens and security interests created and arising under the Collateral Documents remain in full force and effect, and are not released or reduced, as collateral security for the Secured Obligations (including any such Secured Obligations in respect of the Incremental Term Loan).

24. Effect of this Agreement. This Agreement shall constitute a “Joinder Agreement” for all purposes of the Credit Agreement and the other Credit Documents.

25. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST- JUDGMENT INTEREST) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

26. CONSENT TO JURISDICTION. THE TERMS AND PROVISIONS OF SECTION 11.15 OF THE CREDIT AGREEMENT ARE INCORPORATED BY REFERENCE HEREIN AS IF FULLY SET FORTH HEREIN.

27. Severability. In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

28. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

[Remainder of page intentionally left blank]

 

 

 

 

 

 

13

 

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first written above.

 

	
 
	
 
	
CYPRESS SEMICONDUCTOR CORPORATION
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer, Executive Vice President, Finance & Administration and Assistant Secretary
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
CYPRESS SEMICONDUCTOR (MINNESOTA) INC.
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer and Vice President
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
SPANSION INC.
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Secretary
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
SPANSION LLC
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer, President and Secretary
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
SPANSION TECHNOLOGY LLC
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer, President and Secretary
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
SPANSION INTERNATIONAL AM, INC.
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thad Trent
	
 

	
 
	
 
	
Name:
	
Thad Trent
	
 

	
 
	
 
	
Title:
	
Chief Executive Officer
	
 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
SPANSION INTERNATIONAL TRADING, INC.
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Thomas Geren
	
 

	
 
	
 
	
Name:
	
Thomas Geren
	
 

	
 
	
 
	
Title:
	
President
	
 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
BMO HARRIS BANK, N.A., as an Initial Incremental Revolving Loan Lender
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Michael Kus
	
 

	
 
	
 
	
Name:
	
Michael Kus
	
 

	
 
	
 
	
Title:
	
Managing Director
	
 

 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
CIT BANK, N.A., as an Initial Incremental Term Loan Lender
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Terence Sullivan
	
 

	
 
	
 
	
Name:
	
Terence Sullivan
	
 

	
 
	
 
	
Title:
	
Managing Director
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
[FIRSTBANK PUERTO RICO D/B/A FIRSTBANK FLORIDA], as an Initial Incremental Term Loan Lender
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Jose M. Lacasa
	
 

	
 
	
 
	
Name:
	
Jose M. Lacasa
	
 

	
 
	
 
	
Title:
	
Senior Vice President
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ James Neira
	
 

	
 
	
 
	
Name:
	
James Neira
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
JPMORGAN CHASE BANK, N.A., as an Initial Incremental Term Loan Leader
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Caitlin Stewart
	
 

	
 
	
 
	
Name:
	
Caitlin Stewart
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

 

 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
SUNTRUST BANK, as an Initial Incremental Term Loan Lender
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Min Park
	
 

	
 
	
 
	
Name:
	
Min Park
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

 

	
 
	
 
	
MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent and Collateral Agent
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Stephen B. King
	
 

	
 
	
 
	
Name:
	
Stephen B. King
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

 

 

 

 

 

 

 

 

 

Signature Page Joinder

 

SCHEDULE I

Incremental Term Loan Commitments

 

							
	
 

Lender
	
 
	
Incremental Term

Loan Commitment
	
 
	
Pro Rata

Share
	
 
	
Initial

Notice Address

	
BMO Harris Bank, N.A.
	
 
	
$40,000,000
	
 
	
40%
	
 
	
115 S. LaSalle Street

25th Floor West

Chicago, IL 60603

	
CIT Bank, N.A.
	
 
	
$15,000,000
	
 
	
15%
	
 
	
888 East Walnut Street

Pasadena, CA 91101

	
FirstBank  Puerto  Rico d/b/a First Bank Florida
	
 
	
$10,000,000
	
 
	
10%
	
 
	
701 Waterford Way, Suite #800

Miami, FL 33126

	
JPMorgan Chase Bank, N.A.
	
 
	
$25,000,000
	
 
	
25%
	
 
	
560 Mission

San Francisco, CA 94105

	
SunTrust Bank
	
 
	
$10,000,000
	
 
	
10%
	
 
	
303 Peachtree Street

Suite 3600

Atlanta, GA 30308

	
Total..................................... 
	
 
	
$100,000,000
	
 
	
100%

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