Document:

Exhibit 10.2

 

EXECUTION VERSION

 

This SECOND AMENDED AND RESTATED NON-RECOURSE CARVEOUT GUARANTY AGREEMENT (this “Agreement”) dated as of April 29, 2019, by Owl Rock Capital Corporation II, a Maryland corporation (the “Guarantor”), in favor of (a) State Street Bank and Trust Company, a Massachusetts trust company, as Collateral Agent (together with its successors and assigns in such capacity, the “Collateral Agent”) for and on behalf of the Secured Parties (as defined in the Credit Agreement referred to below), and (b) Goldman Sachs Bank USA and its affiliates that are successors and assigns (“GS”), amends and restates in its entirety the Amended and Restated Non-Recourse Carveout Guaranty Agreement by the Guarantor in favor of the Collateral Agent and GS dated as of March 11, 2019.

 

Pursuant to the Sale and Contribution Agreement (the “ORCC II Financing Asset Transfer Agreement”) dated as of December 4, 2017 between the Guarantor, as seller (in such capacity, “Seller”), and ORCC II Financing LLC, a Delaware limited liability company (“ORCC II Financing” and a “Borrower”), as purchaser, the Seller sold and/or contributed and will sell and/or contribute to ORCC II Financing certain loans, debt securities and other obligations and assets in accordance with the terms of the ORCC II Financing Asset Transfer Agreement.

 

Pursuant to the Credit Agreement (as defined below) OR Lending II LLC, a Delaware limited liability company (“OR Lending II” and a “Borrower”) may originate certain loans, debt securities and other obligations and assets with proceeds of Loans (as defined below) under the Credit Agreement and subsequently transfer such assets to ORCC II Financing.

 

Pursuant to the Second Amended and Restated Credit Agreement dated as of April 29, 2019 (as amended, modified, supplemented, restated, amended and restated, refinanced or replaced from time to time, the “Credit Agreement”) among ORCC II Financing and OR Lending II, as Borrowers (the “Borrowers”), the Lenders party thereto from time to time, GS, as Administrative Agent (in such capacity, the “Administrative Agent”), the Collateral Agent and the other parties thereto, the Lenders have made a credit facility available to the Borrowers in an initial aggregate principal amount not exceeding (x) in the case of the Class A Loans, U.S.$500,000,000 and (y) in the case of the Class B Loans, U.S.$250,000,000 (such credit facility, as may be increased pursuant to Section 2.1(f) thereof, the “Credit Facility”, and the loans thereunder, the “Loans”).

 

The Guarantor and the Borrowers are under common ownership and control.  The Guarantor will receive significant benefits by virtue of the transactions under the Credit Agreement and the other Transaction Documents.

 

It is a condition precedent to the extension of the Credit Facility (and it is a material inducement to the Lenders to make the Loans and for the Administrative Agent and Collateral Agent to enter into the Credit Agreement) that the Guarantor unconditionally guarantee the “Guaranteed Obligations” as hereinafter defined.

 

Accordingly, for good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 

SECTION 1. NATURE AND SCOPE OF UNDERTAKING

 

1.1.                            Undertaking of Obligation.

 

The Guarantor hereby irrevocably and unconditionally guarantees to the Guaranteed Parties (as hereinafter defined) the payment and performance of the Guaranteed Obligations (as herein defined) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  The Guarantor hereby irrevocably and unconditionally covenants and agrees that it is fully and personally liable for the Guaranteed Obligations as a primary obligor.

 

 

1.2.                            Definitions.

 

Terms used herein but not otherwise defined have the meanings given to them in the Credit Agreement.  In addition, as used herein:

 

“Guaranteed Obligations” means, at any time:

 

(a)                                 all losses, damages, costs, expenses, liabilities, claims and other obligations incurred by the Guaranteed Parties (including reasonable and documented fees of outside counsel and costs reasonably incurred by the Guaranteed Parties in connection with enforcing their rights under this Agreement, but excluding punitive damages), arising out of or in connection with the following:

 

(1)                                 fraud or bad faith misrepresentation by any of the Sponsor Entities under or in connection with the Transaction Documents or the transactions contemplated thereby;

 

(2)                                 any Sponsor Entity’s agreement to a material encumbrance being imposed on any or all of the Collateral in violation of the Transaction Documents;

 

(3)                                 any misappropriation by, or on behalf of, any of the Sponsor Entities of funds, including (x) the bad faith or willful remittance of any Interest Proceeds, Principal Proceeds, Sale Proceeds or other amounts in respect of the Collateral Obligations to an account other than the appropriate Transaction Accounts or (y) the use of any funds by, or for the benefit of, any of the Sponsor Entities other than as permitted pursuant to the terms of the Transaction Documents;

 

(4)                                 except to the extent permitted under the Transaction Documents, any transfer of any assets from a Borrower Entity to or for benefit of (directly or indirectly) any Sponsor Entity, in each case for less than for reasonably equivalent value; or

 

(5)                                 any bad faith or willful breach of Section 6.7(e), (f) or (g) of the Credit Agreement or of Section 8.5 of the Credit Agreement; and

 

(b)                                 the entire amount of the Secured Obligations outstanding at such time, in the event of the following:

 

(1)                                 any Borrower Entity or the Guarantor (each, a “Covered Entity”) voluntarily commences a bankruptcy or other insolvency proceeding or similar proceeding under any Debtor Relief Law; or

 

(2)                                 an involuntary bankruptcy or other involuntary insolvency or similar proceeding under any Debtor Relief Law is commenced against a Covered Entity:

 

(x)                                 by a Sponsor Entity; or

 

(y)                                 by any other Person (other than a Guaranteed Party), but only if (in the case of this clause (y)) the Sponsor Entities fail to use commercially reasonable efforts to dismiss such proceeding or a Sponsor Entity colluded with any party to cause the filing of such proceeding; or

 

(3)                                 any bad faith or willful breach (in any material respect) of Section 9(c) or 10 of ORCC II Financing’s constitutive document and Section 9(c) or 10 of OR Lending II’s constitutive document, as amended from time to time, or of Section 5.3 of the Credit Agreement, in each case that results in the substantive consolidation of the assets and liabilities of a Covered Entity with another Covered Entity or with any other Person.

 

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Notwithstanding anything to the contrary in this Agreement or any of the other Transaction Documents, the Guaranteed Parties shall not be deemed to have waived any right which any of them may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code (or under any other analogous provisions of any Debtor Relief Law) to file a claim against any Covered Entity (other than the Guarantor) in a case under any Debtor Relief Law for the full amount of the amounts due in respect of the Secured Obligations or to require that all collateral shall continue to secure all of the amounts due in respect of the Secured Obligations in accordance with the Transaction Documents.

 

“Guaranteed Parties” means the Collateral Agent (on behalf of and for the benefit of the Secured Parties), the Secured Parties and GS.

 

“Sponsor Entities” means, collectively:

 

(a)                                 the Borrowers;

 

(b)                                 the Guarantor;

 

(c)                                  the Services Provider;

 

(d)                                 the Sponsor; and

 

(e)                                  each affiliate, director, officer or employee of any of the entities referred to in clauses (a) through (d) above.

 

1.3.                            Nature of Undertaking.

 

This Agreement is an irrevocable, absolute, continuing agreement by the Guarantor to indemnify, save and hold the Guaranteed Parties harmless in respect of the Guaranteed Obligations and not a guaranty of collection.  This Agreement may not be revoked by the Guarantor and shall continue to be effective with respect to all Guaranteed Obligations arising or created after any attempted revocation by the Guarantor.  The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of the Guarantor to the Guaranteed Parties with respect to the Guaranteed Obligations.  This Agreement may be enforced by the Collateral Agent (acting upon the written direction of the Requisite Lenders), GS and the other Guaranteed Parties and shall not be discharged by the assignment or negotiation of all or part of the Loans or any of the other Secured Obligations.  This Agreement shall be deemed discharged and the Guarantor shall be released from any and all liability hereunder upon the payment in full of the Obligations in accordance with the terms of the Credit Agreement.

 

1.4.                            Guaranteed Obligations Not Reduced by Offset.

 

The parties hereto agree that the Guaranteed Obligations and the liabilities and obligations of the Guarantor to the Guaranteed Parties hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of the Borrowers or any other party, against the Collateral Agent, GS or any other Guaranteed Party, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

 

1.5.                            Payment By the Guarantor.

 

If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, within five days of demand by the Collateral Agent (acting upon the written direction of the Requisite Lenders), and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the

 

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maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to the Collateral Agent at the applicable Corporate Trust Office or GS at GS’s address as set forth herein.  Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

 

1.6.                            No Duty To Pursue Others.

 

It shall not be necessary for the Collateral Agent, GS, or any other Guaranteed Party (and the Guarantor hereby waives any rights which the Guarantor may have to require the Collateral Agent, GS and each other Guaranteed Party), in order to enforce the obligations of the Guarantor hereunder, first to (i) institute suit or exhaust its remedies against the Borrowers or others liable on the Loans or on the other Guaranteed Obligations or any other Person, (ii) enforce the Collateral Agent’s or GS’s rights (or any other collateral agent’s rights) against any Collateral, as applicable, which shall ever have been given to secure the Guaranteed Obligations, (iii) join the Borrowers or any others liable on the Guaranteed Obligations in any action seeking to enforce this Agreement, (iv) exhaust any remedies available to the Collateral Agent, GS, any such other collateral agent or any other Guaranteed Party against any Collateral, as applicable, which shall ever have been given to secure the Guaranteed Obligations, or (v) resort to any other means of obtaining payment of the Guaranteed Obligations.  No Guaranteed Party shall be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

 

1.7.                            Waivers.

 

The Guarantor waives any objection to the provisions of the Transaction Documents and hereby waives notice of (i) acceptance of this Agreement, (ii) any amendment, extension or restructuring of the Transaction Documents, (iii) the execution and delivery by the Borrower Entities and the Collateral Agent of any documents arising under Credit Agreement or any other Transaction Documents, as applicable, (iv)  the Collateral Agent’s or GS’s transfer or disposition of the Guaranteed Obligations, or any part thereof, (v) sale or foreclosure (or posting or advertising for sale or foreclosure) of any Collateral for the Guaranteed Obligations, (vi) protest, proof of non-payment or default by the Borrowers, the Guarantor or any other obligor or guarantor, or (vii) any other action at any time taken or omitted by the Collateral Agent or GS and, generally, all demands and notices of every kind in connection with this Agreement, the Transaction Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed.

 

1.8.                            Payment of Expenses.

 

In the event that the Guarantor should breach or fail to timely perform any provisions of this Agreement, the Guarantor shall, immediately upon demand by the Collateral Agent or GS, pay the Collateral Agent or GS, as applicable, all costs and expenses (including court costs and reasonable attorneys’ fees and disbursements) incurred and documented by the Collateral Agent or GS in the enforcement hereof or the preservation of the Collateral Agent’s or GS’s rights hereunder.  In no event shall the Collateral Agent or GS be required to pay any of the Guarantor’s costs and expenses in connection with such action or otherwise.

 

1.9.                            Effect of Bankruptcy.

 

In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other Debtor Relief Law, or any judgment, order or decision thereunder, or any agreement, stipulation or settlement, the Collateral Agent, GS or any other Guaranteed Party must rescind or restore any payment, or any part thereof, received by the Collateral Agent, GS or such other Guaranteed Party in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Agreement given to the Guarantor by the Collateral Agent, GS or any other Guaranteed Party, as

 

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applicable, shall be without effect, and this Agreement shall remain in full force and effect.  It is the intention of the Borrowers and the Guarantor that the Guarantor’s obligations hereunder shall not be discharged except by performance of such obligations and then only to the extent of such performance.

 

1.10.                     Waiver of Subrogation, Reimbursement and Contribution.

 

Notwithstanding anything to the contrary contained in this Agreement, the Guarantor hereby unconditionally and irrevocably waives any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of the Collateral Agent (on behalf of the Secured Parties) or GS), to assert any claim against or seek subrogation, contribution, indemnification or any other form of reimbursement from the Borrowers or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by the Guarantor under or in connection with this Agreement or otherwise, in each case until the Secured Obligations have been indefeasibly paid in full.

 

1.11.                     The Borrowers, Etc.

 

The term “Borrowers” as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of either Borrower or any interest in either Borrower; and reference to any other “Covered Entity” or “Sponsor Entity” will include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of such other Covered Entity or Sponsor Entity.

 

SECTION 2. EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTOR’S OBLIGATIONS

 

The Guarantor hereby consents and agrees to each of the following, and agrees that its obligations under this Agreement shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which the Guarantor might otherwise have as a result of or in connection with any of the following:

 

2.1.                            Modifications.

 

Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Transaction Documents or any other document, instrument, contract or understanding between the Borrowers and the Guaranteed Parties, or any other parties, pertaining to the Guaranteed Obligations or any failure of the Collateral Agent, GS or any other Person to notify the Guarantor of any such action.

 

2.2.                            Adjustment.

 

Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Guaranteed Parties to the Credit Parties or the Guarantor.

 

2.3.                            Condition of the Borrower Entities or Guarantor.

 

The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of any Covered Entity or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of any Covered Entity; or any sale, lease or transfer of any or all of the assets of any Covered Entity or any changes in the shareholders, partners or members of any Covered Entity; or any reorganization of any Covered Entity.

 

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2.4.                            Invalidity of Guaranteed Obligations.

 

The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Transaction Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) any Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from such Borrower or (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Transaction Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that the Guarantor shall remain liable hereon regardless of whether the Borrowers or any other person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

 

2.5.                            Release of Obligors.

 

Any full or partial release of the liability of any Borrower Entity in respect of the Guaranteed Obligations, or any part thereof, or any other person or entity now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and the Guarantor has not been induced to enter into this Agreement on the basis of a contemplation, belief, understanding or agreement that other parties will be liable to pay or perform the Guaranteed Obligations, or that the Collateral Agent, GS or any other Guaranteed Party will look to other parties to pay or perform the Guaranteed Obligations.

 

2.6.                            Other Collateral.

 

The taking or accepting of any other security, collateral, guaranty or other assurance of payment for all or any part of the Guaranteed Obligations.

 

2.7.                            Release of Collateral.

 

Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

 

2.8.                            Care and Diligence.

 

The failure of the Collateral Agent or GS any other party to exercise diligence in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security, including but not limited to any neglect, delay, omission, failure or refusal of the Collateral Agent, GS or any other party (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

 

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2.9.                            Unenforceability.

 

The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by the Guarantor that it is not entering into this Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.

 

2.10.                     Offset.

 

The Loans, the other Guaranteed Obligations and the liabilities and obligations of the Guarantor hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of the Borrowers or any other party against the Collateral Agent or any other Guaranteed Party, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

 

2.11.                     Merger.

 

The reorganization, merger or consolidation of any Covered Entity into or with any other corporation or entity.

 

2.12.                     Preference.

 

Any payment by the Borrowers or any other Credit Party to any of the Lenders, the Administrative Agent or any other Guaranteed Party is held to constitute a preference under any Debtor Relief Laws, or for any reason to any of the Lenders, the Administrative Agent or any other Guaranteed Party is required to refund such payment or pay such amount to the Borrowers or someone else.

 

2.13.                     Other Actions Taken or Omitted.

 

Any other action taken or omitted to be taken with respect to the Transaction Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof.  It is the unambiguous and unequivocal intention of the Guarantor that it shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

 

SECTION 3. REPRESENTATIONS AND WARRANTIES

 

The Guarantor represents and warrants to the Guaranteed Parties as follows:

 

3.1.                            Benefit.

 

It is under common ownership and control with the Borrowers, and has received, or will receive, direct and indirect benefit from the making of this Agreement with respect to the Guaranteed Obligations.  The entry into this Agreement is in its best interests.

 

3.2.                            Familiarity and Reliance.

 

It is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrower Entities and is familiar with the value of any and all Collateral or collateral intended to be created as security for the payment of the Loans or Guaranteed Obligations; however, it is not relying on such financial condition or the Collateral as an inducement to enter into this Agreement.

 

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3.3.                            No Representation By Collateral Agent, Etc.

 

No representation or warranty has been made by the Collateral Agent, GS or any other party to it in order to induce it to execute this Agreement.

 

3.4.                            Guarantor’s Financial Condition.

 

As of the date hereof, and after giving effect to this Agreement and the contingent obligation evidenced hereby, it is, and will be, solvent, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities (including contingent liabilities).

 

3.5.                            Legality.

 

The execution, delivery and performance by the Guarantor of this Agreement and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which the Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, or any contract, agreement or other instrument to which the Guarantor is a party or which may be applicable to the Guarantor.  This Agreement is a legal and binding obligation of the Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

 

3.6.                            Survival.

 

All representations and warranties made by the Guarantor herein shall survive the termination hereof.

 

3.7.                            Execution and Delivery.

 

This Agreement has been duly executed and delivered by the Guarantor.

 

SECTION 4. LIEN SUBORDINATION

 

4.1.                            Liens Subordinate.

 

The Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon the Borrower Entities’ respective assets securing payment of any amounts at any time owing to the Guarantor shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon the Borrower Entities’ respective assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of the Guarantor, the Collateral Agent or GS (or any other Person) presently exist or are hereafter created or attach.  Without the prior written consent of the Collateral Agent (acting at the direction of the Requisite Lenders), the Guarantor shall not (a) exercise or enforce any creditor’s right it may have against the Borrower Entities, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of the Borrower Entities (if any) held by the Guarantor.

 

SECTION 5. MISCELLANEOUS

 

5.1.                            Waiver.

 

No failure to exercise, and no delay in exercising, on the part of the Collateral Agent, GS or any other Person, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right.  The

 

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rights of the Collateral Agent, GS and the other Guaranteed Parties hereunder shall be in addition to all other rights provided by law.  No modification or waiver of any provision of this Agreement, nor consent to departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved.  No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

 

5.2.                            Notices.

 

Any notice, demand, statement, request or consent made hereunder shall be in writing and shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed by first class mail return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery or by electronic delivery in legible form at the addresses set forth below or to such other address as either party shall in like manner designate in writing.  The addresses of the parties hereto are as follows:

 

if to the Guarantor:

 

c/o Owl Rock Capital Corporation II

399 Park Ave 38th Floor

New York, NY 10022

Telephone:                                   (212) 419-3004

E-mail:                                                        alan@owlrock.com

Attention:                                         Alan Kirshenbaum

 

if to the Collateral Agent:

 

State Street Bank and Trust Company, as Collateral Agent

State Street Bank and Trust Company, as Collateral Agent

1 Iron Street

Boston, MA 02210

E-mail:                                                        StateStreetSPV@StateStreet.com

Attention:                                         Structured Trust & Analytics

Ref:                                                                        ORCC II Financing LLC

 

if to GS:

 

Goldman Sachs Bank USA

Email:                                                            GS-PFI-Servicing@gs.com; GS-SFL-DESK@gs.com

Attention:                                         Operations

 

With a copy to:

 

c/o Goldman, Sachs & Co.

30 Hudson Street, 4th Floor

Jersey City, NJ 07302

 

5.3.                            Invalid Provisions.

 

If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement, unless such continued effectiveness of this Agreement, as

 

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modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

 

5.4.                            Amendments.

 

This Agreement may be amended only by an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.

 

5.5.                            Parties Bound; Assignment; Joint and Several.

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided that the Guarantor may not, without the prior written consent of the Collateral Agent (acting at the direction of the Requisite Lenders) and GS, assign any of its rights, powers, duties or obligations hereunder.

 

5.6.                            Headings.

 

Section headings are for convenience of reference only and shall in no way affect the interpretation of this Agreement.

 

5.7.                            Recitals.

 

The recital and introductory paragraphs hereof are a part hereof, form a basis for this Agreement and shall be considered prima facie evidence of the facts and documents referred to therein.

 

5.8.                            Counterparts.

 

To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.  Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

 

5.9.                            Rights and Remedies.

 

If the Guarantor becomes liable for any indebtedness owing by any of the Borrower Entities to the Collateral Agent or any other Guaranteed Party, by endorsement or otherwise, other than under this Agreement, such liability shall not be in any manner impaired or affected hereby and the rights of the Collateral Agent, GS or such other Guaranteed Party hereunder shall be cumulative of any and all other rights that the Collateral Agent, GS and such other Guaranteed Parties may have against the Guarantor.  The exercise by the Collateral Agent, GS or any other Guaranteed Party of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

 

5.10.                     Governing Law/Venue.

 

(a)                                 THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

(b)                                 THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF

 

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MANHATTAN IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND THE GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH FEDERAL OR NEW YORK STATE COURT.  THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY LEGALLY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.  THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY ACTION OR PROCEEDING BY THE MAILING OR DELIVERY OF COPIES OF SUCH PROCESS TO IT AT THE ADDRESS SET FORTH IN SECTION 5.2 HEREOF.  THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

(c)                                  Without limiting clause (b) above, the Guarantor hereby appoints and consents to CT Corporation (the “Process Agent”) as its agent upon whom process or demands may be served in any action arising out of or based on this Agreement or the transactions contemplated hereby.  The Guarantor may at any time and from time to time vary or terminated the appointment of such Process Agent or appoint an additional process agent; provided that the Guarantor will maintain in the Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Guarantor in respect of this Agreement may be served.

 

5.11.                     Waiver of Right To Trial By Jury.

 

THE GUARANTOR, THE COLLATERAL AGENT AND GS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO.  EACH OF THE GUARANTOR, THE COLLATERAL AGENT AND GS ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR SUCH PARTIES ENTERING INTO THIS AGREEMENT.

 

5.12.                     Reinstatement in Certain Circumstances.

 

If at any time any payment of the principal of or interest on the Loans or any other amount payable by the Borrowers under the Transaction Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of a Borrower, or otherwise, the Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

 

5.13.                     Third-party Beneficiary.

 

Each of the Lenders is an express third-party beneficiary of this Agreement and can enforce rights hereunder.

 

5.14.                     The Collateral Agent.

 

It is acknowledged and agreed that, in connection with the Collateral Agent’s acceptance of this Agreement and the exercise of its rights hereunder, the Collateral Agent shall be entitled to all of its rights, benefits, protections and immunities set forth in the Credit Agreement.

 

[remainder of page intentionally blank]

 

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IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be executed and delivered as of the date set forth above.

 

	
 
    	
GUARANTOR:
    
	
 
    	
 
    
	
 
    	
OWL ROCK CAPITAL   CORPORATION II
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
ACCEPTED:
    	
 
    
	
 
    	
 
    
	
STATE   STREET BANK AND TRUST COMPANY, as Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
GOLDMAN SACHS BANK USA
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Second A&R Non-Recourse Carveout Guaranty Agreement]frpt-ex1017_152.htm

Exhibit 10.17

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

THIS AGREEMENT by and between Freshpet, Inc., a Delaware corporation (the “Company”), and Richard Kassar (the “Executive”), is dated as of October __, 2014, but shall be effective only upon the earlier to occur of January 1, 2015 and the effective date of the initial public offering of equity securities of the Company pursuant to an offering registered under the Securities Act of 1933 (such earlier date, the “Effective Date”).

In consideration of the mutual covenants herein contained and of the mutual benefits herein provided, the Company and the Executive agree as follows:

	
1.
	
Representations and Warranties.  The Executive represents and warrants to the Company that Executive is not bound by any restrictive covenants and has no prior or other obligations or commitments of any kind that would in any way prevent, restrict, hinder or interfere with Executive’s acceptance of continued employment or the performance of all duties and services hereunder to the fullest extent of the Executive’s ability and knowledge.  The Executive agrees to indemnify and hold harmless the Company for any liability the Company may incur as the result of the existence of any such covenants, obligations or commitments.

	
2.
	
Term of Employment.  The Company will continue to employ the Executive and the Executive accepts continued employment by the Company on the terms and conditions herein contained for a period (the “Employment Period”) provided in Section 5.

	
3.
	
Duties and Functions.

	

	
(a)(1)The Executive shall be employed as the Chief Financial Officer of the Company.  The Executive shall report directly to the Chief Executive Officer of the Company.

	

	
(2)The Executive agrees to undertake the duties and responsibilities commensurate with the position of Chief Financial Officer, which may encompass different or additional duties as may, from time to time, be reasonably assigned by the Chief Executive Officer, and the duties and responsibilities undertaken by the Executive may be reasonably altered or modified from time to time by the Chief Executive Officer, so long as that Executive’s responsibilities as Chief Financial Officer are not materially reduced, and Executive’s reporting relationship is not materially altered or modified in an adverse way. 

	

	
(b)During the Employment Period, the Executive will devote the Executive’s full time and efforts to the business of the Company.  The Executive may engage in non-competitive business or charitable activities for reasonable periods of time each month so long as such activities do not interfere with the Executive’s responsibilities under this Employment Agreement.

SLC-7350458-2

 

	
4.
	
Compensation.

	

	
(a)Base Salary:  As compensation for the Executive’s services hereunder, during the Executive’s employment as Chief Financial Officer, the Company agrees to pay the Executive a base salary at the rate of $275,000 per annum, payable in accordance with the Company’s normal payroll schedule (which will be no less frequently than one-twelfth of the annual salary amount during each calendar month, which normal payroll schedule shall be the “Normal Payment Schedule”).  The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.  In no event shall the Executive’s salary be reduced below the Executive’s current salary (or, subsequent to any increases, below the Executive’s then current salary). 

The Executive’s salary shall be subject to annual review, based on corporate policy and contributions made by Executive to the Company. 

(b)Participation in Stock Option Program:  The Executive shall be eligible to participate in the Company’s equity incentive programs, as such programs may exist on the date hereof or from time to time hereafter. 

(c)Other Expenses:  In addition to the compensation provided for above, the Company agrees to pay or to reimburse the Executive during the Executive’s employment for all reasonable, ordinary, and necessary, properly vouchered, client-related business or entertainment expenses incurred in the performance of the Executive’s services hereunder in accordance with Company policy in effect from time to time.  The Executive shall submit vouchers and receipts for all expenses for which reimbursement is sought.  

Any reimbursements or in-kind benefits to be provided pursuant to this Agreement that are taxable to the Executive shall be subject to the following restrictions:  (a) each reimbursement must be paid no later than the last day of the calendar year following the Executive’s tax year during which the expense was incurred; (b) the amount of expenses or in-kind benefits provided during a tax year of the Executive may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other tax year of the Executive; and (c) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(d)Vacation:  During each calendar year, the Executive shall be entitled to four (4) weeks of vacation to be accrued and taken in accordance with Company policy as in effect from time to time. 

(e)Fringe Benefits:  In addition to the Executive’s compensation provided by the foregoing, the Executive shall be entitled to the benefits available generally to Company employees pursuant to, and subject to the terms of, Company programs, including, by way of illustration, personal leave, paid holidays, sick leave, profit-sharing, retirement, disability, dental, vision, group sickness, accident or health insurance programs of the Company which may now or, if not terminated, shall hereafter be in effect, or in any other or additional such programs 

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which may be established by the Company, as and to the extent any such programs are or may from time to time be in effect, as determined by the Company. 

(f)Annual Bonus:  The Executive shall be eligible to participate in any annual cash bonus plan as established by the Board of the Directors (the “Board”) (or a committee thereof) in its sole discretion with an annual target bonus opportunity of at least 50% of Executive’s base salary based on the achievement of preestablished performance goals established by the Board (or a committee thereof) in its sole discretion.  Any annual bonus payable hereunder shall be paid in the calendar year following the calendar year to which such bonus relates at the same time annual bonuses are paid to other senior executives of the Company, subject to the Executive’s continued employment with the Company through the date of payment (except as otherwise provided in Section 5 hereof). 

	
5.
	
Employment Period; Termination.

	

	
(a)The Executive’s employment under this Agreement shall continue unabated until terminated by either party pursuant to the terms of this Agreement.

(b)The Employment Period shall continue until terminated upon the earlier to occur of the following events:  (i) the close of business on the first anniversary of the Effective Date (the initial one (1) year term of this Agreement shall be referred to herein as the “Initial Term”) or (ii) the death or Permanent Disability (as defined in Section 5(f)) of the Executive or other termination event described in this Section 5, provided, however, that, on the first anniversary of the Effective Date, and on every subsequent annual anniversary, and unless either party has given the other party written notice at least ninety (90) days prior to the such anniversary date, the term of this Agreement and the Employment Period shall be renewed for a term ending one (1) year subsequent to such date (each such one-year term shall be referred to herein as a “Renewal Term”), unless sooner terminated as provided herein.  For the purposes of this Agreement, the Initial Term and each Renewal Term shall collectively be referred to as the “Employment Period.”

(c)Notwithstanding the provisions of Sections 5(a) and (b) above, the Executive may terminate the employment relationship at any time for any reason by giving the Company written notice at least thirty (30) days prior to the effective date of termination.  Unless otherwise provided by this Section, all compensation and benefits paid by the Company to the Executive shall cease upon the Executive’s last day of employment; provided, however, that if the Executive terminates the Executive’s employment for “Good Reason” pursuant to the terms and conditions set forth below, (i) the Company will continue to pay the Executive’s base salary pursuant to the Normal Payment Schedule for a period of twelve (12) months from the effective date of termination (the “Severance Period”), (ii) in the event that the Executive’s employment is terminated after June 30th, the Company shall pay the Executive the bonus described in Section 4(c), notwithstanding that the Executive will not be employed with the Company through the date of payment, in the amount determined based on the actual level of achievement of the applicable performance goals pursuant to Section 4(f) multiplied by a fraction, the numerator is the number of days through the effective date of termination of the Executive’s employment in the year of such termination, and the denominator of which is 365, and (iii)  and the Company 

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SLC-7350458-2

 

will pay the premiums for the Executive’s continuation of group health coverage under the Company’s plans under COBRA at the active employee rates and subject to the Executive’s timely election of COBRA beginning on the date of the Executive’s Separation from Service (as defined in Internal Revenue Code Section 409A) for the Severance Period.  The Company may include the premiums for continued health insurance coverage during the Severance Period in the Executive’s taxable income.  Notwithstanding the foregoing, in the event that providing the foregoing coverage would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), the parties hereby agree to negotiate in good faith to modify the foregoing provision in such manner as to avoid the imposition of such excise taxes while also maintaining, to the maximum extent reasonably possible, the original intent and economic benefits to the Executive and the Company under this Section 5(c).  The Executive shall also be entitled to receive any accrued but unpaid salary and bonuses, and to be reimbursed for any reimbursable expenses that have not been reimbursed prior to such termination.  The Executive acknowledges and agrees that the non-competition and non-solicitation restrictions set forth in Section 7 of this Employment Agreement will remain in full force and effect for the twelve (12) month period after the termination of the Executive’s employment under this section, and the confidentiality and rights to inventions obligations established in Sections 8 and 9 of this Agreement will survive the termination of this Agreement pursuant to this section.

For purposes of this Agreement, “Good Reason” is defined as any one of the following: (i) Company’s material breach of any provision of this Agreement; (ii) any material adverse change in the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company made without the Executive’s permission (other than a change due to the Executive’s Permanent Disability or as an accommodation under the Americans With Disabilities Act) which results in: (A) a diminution in any material respect in Executive’s position, authority, duties, responsibilities  or compensation, which diminution continues in time over at least thirty (30) days, such that it constitutes an effective demotion (provided, however, that no diminution of title, position, duties or responsibilities shall be deemed to occur solely because the Company becomes a subsidiary of another corporation or entity); or (B) a material diversion from Executive’s performance of the functions of Executive’s position (including but not necessarily limited to Executive’s authority to hire, direct, and/or fire employees, Executive’s authority to oversee the general direction and focus of the Company), excluding for this purpose material adverse changes made with Executive’s written consent or due to Executive’s termination For Cause or termination by Executive without Good Reason; or (iii) relocation of the Company’s headquarters to a location which requires Executive to travel more than thirty (30) additional miles from Executive’s residence than Executive must already travel to arrive at the Company’s headquarters without Executive’s written consent; provided, however, that it shall not constitute Good Reason unless Executive shall have provided the Company with written notice of its alleged actions constituting Good Reason (which notice shall specify in reasonable detail the particulars of such Good Reason) within ninety (90) days following the first occurrence of such event and Company has not cured any such alleged Good Reason within thirty (30) days of Company’s receipt of such written notice.  The Executive must actually terminate employment within thirty (30) days 

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following the expiration of the Company’s cure period set forth above.  For the avoidance of doubt, a termination of the Executive’s employment as a result of a non-renewal of this Agreement by the Executive pursuant to Section 5(b)) shall be deemed a voluntary resignation without Good Reason for all purposes hereunder. 

 

(d)If the Executive’s employment is terminated for “Cause,” the Executive shall not be entitled to receive severance pay.  As used in this Agreement, the term “Cause” shall include a termination for (i) fraud (including but not limited to any acts of embezzlement or misappropriation of funds); (ii) breach of fiduciary obligation; (iii) conviction of a felony, plea of guilty or nolo contendere to a felony charge or any criminal act involving moral turpitude (which, through lapse of time or otherwise, is not subject to appeal); (iv) repeatedly being under the influence of drugs or alcohol (other than prescription medicine or other medically-related drugs to the extent that they are taken in accordance with their directions) during the performance of Executive’s duties under this Agreement, or, while under the influence of such drugs or alcohol, engaging in grossly inappropriate conduct during the performance of Executive’s duties under this Agreement; (v) a refusal to substantially perform the Executive’s duties hereunder, (vi) willful misconduct or gross negligence, or (vii) material breach of this Agreement, except in the event of the Executive’s Permanent Disability as set forth in Section 5(f).  Anything herein to the contrary notwithstanding, the Company shall give the Executive written notice prior to terminating this Agreement of the Executive’s employment based upon a serious dereliction of fiduciary obligation or refusal to perform ((ii) or (v) above), setting forth the exact nature of any such alleged serious dereliction of duty or refusal to perform and the conduct required to cure such breach.  The Executive shall have thirty (30) days from the giving of such notice within which to cure.  The Executive acknowledges and agrees that the non-competition and non-solicitation restrictions set forth in Section 7 of this Employment Agreement will remain in full force and effect for the twelve (12) month period after the termination of Executive’s employment under this section, and the confidentiality and rights to inventions obligations established in Sections 8 and 9 of this Agreement will survive the termination of this Agreement pursuant to this section.

 

(e)Upon sixty (60) days written notice, the Company shall retain the right to terminate the Executive without Cause (which, for the avoidance of doubt, shall include a non-renewal of this Agreement by the Company pursuant to Section 5(b)).  If the Executive’s employment is terminated by the Company without Cause, (i) the Executive shall continue to receive Executive’s base salary pursuant to the Normal Payment Schedule for the Severance Period, (ii) in the event that the Executive’s employment is terminated after June 30th, the Company shall pay the Executive the bonus described in Section 4(c), notwithstanding that the Executive will not be employed with the Company through the date of payment, in the amount determined based on the actual level of achievement of the applicable performance goals pursuant to Section 4(f) multiplied by a fraction, the numerator is the number of days through the effective date of termination of the Executive’s employment in the year of such termination, and the denominator of which is 365, and (iii) the Company will pay the premiums for the Executive’s continuation of group health coverage under the Company’s plans under COBRA at the active employee rates and subject to the Executive’s timely election of COBRA beginning on the date of Executive’s Separation from Service (as defined in Internal Revenue Code Section 

5

SLC-7350458-2

 

409A) for the Severance Period.  The Company may include the premiums for continued health insurance coverage during the Severance Period in the Executive’s taxable income.  Notwithstanding the foregoing, in the event that providing the foregoing coverage would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), the parties hereby agree to negotiate in good faith to modify the foregoing provision in such manner as to avoid the imposition of such excise taxes while also maintaining, to the maximum extent reasonably possible, the original intent and economic benefits to the Executive and the Company under this Section 5(e).  The non-competition and non-solicitation restrictions set forth in Section 7 of this Employment Agreement will remain in full force and effect for the twelve (12) month period after the termination of Executive’s employment under this section.  The confidentiality and rights to inventions obligations established in Sections 8 and 9 of this Agreement will survive the termination of this Agreement pursuant to this section.  

 

(f)In the event of the Executive’s Permanent Disability during employment with the Company, the Company may terminate this Agreement by giving thirty (30) days notice to the Executive of its intent to terminate, and unless the Executive resumes performance of the duties set forth in Section 3 within five (5) days of the date of the notice and continues performance for the remainder of the notice period, this Agreement shall terminate at the end of the thirty (30) day period.  If the Executive is terminated pursuant to this Section 5(f), the Executive shall be entitled to receive severance pay in an amount equal to the salary that the Executive would have received for a period equal to the Severance Period, less all applicable withholding and deductions.  The Company will pay the premiums for the Executive’s continuation of group health coverage under the Company’s plans under COBRA at the active employee rates and subject to the Executive’s timely election of COBRA for a period equal to the Severance Period.  The Company may include the premiums for continued health insurance coverage in the Executive’s taxable income.  Notwithstanding the foregoing, in the event that providing the foregoing coverage would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), the parties hereby agree to negotiate in good faith to modify the foregoing provision in such manner as to avoid the imposition of such excise taxes while also maintaining, to the maximum extent reasonably possible, the original intent and economic benefits to the Executive and the Company under this Section 5(f).  The severance pay shall be payable beginning on the date of the Executive’s Separation from Service (as defined in Internal Revenue Code Section 409A) in accordance with the Company’s Normal Payroll Schedule, as if Executive’s employment had continued during the applicable severance period.  “Permanent Disability” for the purposes of this Agreement means the inability, due to physical or mental ill health, to perform the Executive’s duties for one hundred twenty (120) days during any one employment year, irrespective of whether such days are consecutive.  In the event of any dispute under this Section, the Executive shall submit to a physical examination by a licensed physician mutually satisfactory to the Company and the Executive, the cost of such examination to be paid by the Company, and the determination of such physician shall be determinative.  The Executive acknowledges and agrees that the non-competition and non-solicitation restrictions set 

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forth in Section 7 of this Employment Agreement will remain in full force and effect for the twelve (12) month period after the termination of Executive’s employment under this section, and the confidentiality and rights to inventions obligations established in Sections 8 and 9 of this Agreement will survive the termination of this Agreement pursuant to this section.

 

(g)This Agreement will terminate immediately upon the Executive’s death and the Company shall not have any further liability or obligation to the Executive, the Executive’s executors, heirs, assigns or any other person claiming under or through the Executive’s estate, except that Executive’s estate shall receive any accrued but unpaid salary or bonuses.

 

(h)The severance benefits under Section 5(c), 5(e) and 5(f) shall only be payable if the Executive delivers to the Company and does not revoke a general release of claims in favor of the Company in a form reasonably satisfactory to the Company, except if the Executive is incapable of signing a release due to a Permanent Disability, in which case the Executive shall not be required to deliver such a general release of claims.  Such release shall be executed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following termination.  Notwithstanding the provisions of Section 5(c), 5(e) and 5(f), to the extent that the payment of any severance amount subject to the release requirement under this Section 5(h) constitutes “nonqualified deferred compensation” for purposes of 409A (as defined in Section 17(d)), any such payment scheduled to occur during the first sixty (60) days following termination of employment shall not be paid until the sixtieth (60th) day following such termination and shall include payment of any amount that was otherwise scheduled to be paid prior thereto.

 

(i)If it is determined that any payment or distribution in the nature of compensation (as defined in Internal Revenue Code Section 280G(b)(2)) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Parachute Payment”), would constitute an “excess parachute payment” as defined in Internal Revenue Code Section 280G, then the Company shall pay to the Executive whichever of the following gives the Executive the highest net after-tax amount (after taking into account all applicable federal, state, local and social security taxes):  (i) the Parachute Payment, or (ii) the amount that would not result in the imposition of excise tax on the Executive under Internal Revenue Code Section 4999.  Any required reduction in the Parachute Payment pursuant to the foregoing shall be accomplished solely by reducing the amount of severance payment payable pursuant to Section 5 of this Agreement.  All determinations to be made under this Section 5(i) shall be made by an independent public accounting firm selected by the Company immediately prior to an event giving rise to a potential Parachute Payment (the “Accounting Firm”), which shall provide its determinations and any supporting calculations to both the Company and the Executive within thirty (30) days after such event.  Any such determination by the Accounting Firm shall be binding upon the Company and the Executive.  All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this paragraph 5(i) shall be borne solely by the Company.

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SLC-7350458-2

 

6.Company Property.  All correspondence, records, documents, software, promotional materials, and other Company property, including all copies, which come into the Executive’s possession by, through or in the course of Executive’s employment, regardless of the source and whether created by the Executive, are the sole and exclusive property of the Company, and immediately upon the termination of the Executive’s employment, or any time at the Company’s request, the Executive shall return to the Company all such property of the Company.

 

7.Non-Competition; Non-Solicitation.

(a)The Executive agrees that, in consideration of Executive’s employment with the Company pursuant to this Agreement, and other good and valuable consideration, the receipt of which is hereby acknowledged, during Executive’s employment with the Company and for twelve (12) months after termination thereof, the Executive will not either on the Executive’s own behalf or on behalf of any third party, except on behalf of the Company, directly or indirectly (other than through Executive’s ownership of equity interest in the Company), as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender, or in any other capacity whatsoever (other than as the holder of not more than five percent (5%) of the total outstanding stock of a publicly-held company), (i) engage in the manufacture, sale or distribution of either (A) fresh, refrigerated, frozen or raw pet food; or (B) dry pet food with more than 30% meat content; (ii) divert, take away, or attempt to divert or take away, the business or patronage (with respect to products or services of the kind or type developed, produced, marketed, furnished or sold by the Company) of any of the Company’s clients, customers, vendors, business or strategic partners, or accounts, or prospective clients, customers, vendors, business or strategic partners, or accounts, that were contacted, solicited, or served by the Executive while employed by the Company, or (iii) persuade any client, customer, vendor, strategic or business partner, or account of the Company to cease to do business, invest in, participate with, or otherwise work with the Company, or to reduce the amount of business, investment, participation or work that any such client, customer, vendor, or strategic or business partner has customarily done or actively contemplates doing with the Company.

(b)During the Executive’s employment with the Company and for twelve (12) months after termination thereof, the Executive agrees that the Executive shall not, except in the furtherance of the Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any employee, representative or agent of the Company or any of its affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent.  An employee, representative or agent shall be deemed covered by this Section 7(b) while so employed or retained and for a period of six (6) months thereafter.

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(c)If any restriction set forth in Section 7 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or geographic area, it shall be interpreted to extend over the maximum period of time, range of activities or geographic areas as to which it may be enforceable.

(d)The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 7 or Section 8 would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages.  In the event of a violation by the Executive of Section 7 or Section 8, any severance being paid to the Executive pursuant to this Agreement or otherwise shall immediately cease.

(e)The provisions of Section 7 and Section 8 shall survive termination of this Agreement.

8.Protection of Confidential Information.  The Executive agrees that all information, whether or not in writing, relating to the business, technical, or financial affairs of the Company and that is generally understood in the pet food industry (and any other related or relevant industry) as being confidential and/or proprietary information, is the exclusive property of the Company.  The Executive agrees to hold in a fiduciary capacity for the sole benefit of the Company all secret, confidential or proprietary information, knowledge, data, or trade secret (“Confidential Information”) relating to the Company or any of its affiliates or their respective clients, which Confidential Information shall have been obtained during Executive’s employment with the Company.  By way of illustration, but not limitation, Confidential Information includes information regarding the Company’s projects, methodologies, business or vendor relationships, relationships with strategic or business partners,  and all information and know-how (whether or not patentable, copyrightable or otherwise able to be registered or protected under laws governing intellectual property) owned, possessed, or used by the Company, including, without limitation, any invention, existing or future product, formula, method, manufacturing techniques and procedures, composition, compound, project, development, plan, market research, vendor information, supplier information, customer lists or information, apparatus, equipment, trade secret, process, research, reports, clinical data, financial data, technical data, test data, know-how, computer program, software, software documentation, source code, hardware design, technology, marketing or business plan, forecast, unpublished financial statement, budget, license, patent applications, contracts, joint ventures, price, cost and personnel data, any trade names, trademarks or slogans, but shall not include information that (i) is or becomes public knowledge through legal means without fault by the Executive, (ii) is already public knowledge prior to the signing of this Agreement, (iii) was available to the Executive on a non-confidential basis prior to its disclosure by the Company, (iv) was disclosed by the Executive in the performance of the Executive’s duties hereunder, or (v) must be disclosed pursuant to applicable law or court order.  

 

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The Executive agrees that the Executive will not at any time, either during the Term of this Agreement or after its termination, except as reasonably necessary in the scope and course of Executive’s duties, disclose to anyone any Confidential Information, or utilize such Confidential Information for Executive’s own benefit, or for the benefit of third parties without written approval by an officer of the Company.  Executive further agrees that all memoranda, notes, records, data, schematics, sketches, computer programs, prototypes, or written, photographic, magnetic or other documents or tangible objects compiled by Executive or made available to Executive during the Term of Executive’s employment concerning the business of the Company and/or its clients, including any copies of such materials, shall be the property of the Company and shall be delivered to the Company on the termination of the Executive’s employment, or at any other time upon request of the Company.

 

9.Publicity.  Neither party shall issue, without consent of the other party, any press release or make any public announcement with respect to this Agreement or the employment relationship between them.  Following the Effective Date and regardless of any dispute that may arise in the future, the Executive and the Company jointly and mutually agree that they will not disparage, criticize or make statements which are negative, detrimental or injurious to the other to any individual, company or client, including within the Company.

 

	
10.
	
Binding Agreement.  This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, personal representatives, successors and assigns.  In the event the Company is acquired, is a non surviving party in a merger, or transfers substantially all of its assets, this Agreement shall not be terminated and the transferee or surviving company shall be bound by the provisions of this Agreement.  The parties understand that the obligations of the Executive are personal and may not be assigned by the Executive.

	
11.
	
Entire Agreement.  This Agreement contains the entire understanding of the Executive and the Company with respect to employment of the Executive and supersedes any and all prior understandings, written or oral.  This Agreement may not be amended, waived, discharged or terminated orally, but only by an instrument in writing, specifically identified as an amendment to this Agreement, and signed by all parties.  By entering into this Agreement, the Executive certifies and acknowledges that the Executive has carefully read all of the provisions of this Agreement and that the Executive voluntarily and knowingly enters into said Agreement.  

	
12.
	
Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed severable from the remainder of this Agreement, and the remaining provisions contained in this Agreement shall be construed to preserve to the maximum permissible extent the intent and purposes of this Agreement.  Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

	
13.
	
Governing Law and Submission to Jurisdiction.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New Jersey, without giving effect to the principles of conflicts of law thereof.

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14.Notices.  Any notice provided for in this Agreement shall be provided in writing.  Notices shall be effective from the date of service, if served personally on the party to whom notice is to be given, or on the second day after mailing, if mailed by first class mail, postage prepaid.  Notices shall be properly addressed to the parties at their respective addresses or to such other address as either party may later specify by notice to the other.

15.ARBITRATION.  THE PARTIES AGREE THAT ANY CONTROVERSY, CLAIM OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH THEREOF, EXCEPT AS DISCUSSED HEREIN OR ARISING OUT OF OR RELATING TO THE EMPLOYMENT OF THE EXECUTIVE, OR THE TERMINATION THEREOF, INCLUDING ANY STATUTORY OR COMMON LAW CLAIMS UNDER FEDERAL, STATE, OR LOCAL LAW, INCLUDING ALL LAWS PROHIBITING DISCRIMINATION IN THE WORKPLACE, SHALL BE RESOLVED BY ARBITRATION IN NEW JERSEY IN ACCORDANCE WITH THE EMPLOYMENT DISPUTE RESOLUTION RULES OF JAMS/ENDISPUTE.  THE PARTIES AGREE THAT ANY AWARD RENDERED BY THE ARBITRATOR SHALL BE FINAL AND BINDING, AND THAT JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.  THE PARTIES FURTHER ACKNOWLEDGE AND AGREE THAT, DUE TO THE NATURE OF THE CONFIDENTIAL INFORMATION, TRADE SECRETS, AND INTELLECTUAL PROPERTY BELONGING TO THE COMPANY TO WHICH THE EXECUTIVE HAS OR WILL BE GIVEN ACCESS, AND THE LIKELIHOOD OF SIGNIFICANT HARM THAT THE COMPANY WOULD SUFFER IN THE EVENT THAT SUCH INFORMATION WAS DISCLOSED TO THIRD PARTIES, NOTHING IN THIS SECTION SHALL PRECLUDE THE COMPANY FROM GOING TO COURT TO SEEK INJUNCTIVE RELIEF TO PREVENT THE EXECUTIVE FROM VIOLATING THE OBLIGATIONS ESTABLISHED IN SECTIONS 7 THROUGH 9 OF THIS AGREEMENT.

16.Indemnification.  In the Executive’s capacity as a director, manager, officer, or employee of the Company or serving or having served any other entity as a director, manager, officer, or the Executive at the Company’s request, the Executive shall be indemnified and held harmless by the Company to the fullest extent allowed by law, the Company’s charter and by-laws, from and against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Executive may be involved, or threatened to be involved, as a party or otherwise by reason of the Executive’s status, which relate to or arise out of the Company, their assets, business or affairs, unless in each of the foregoing cases, a court of competent jurisdiction has finally determined that (i) the Executive did not act in good faith and in a manner the Executive believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal proceeding, had  reasonable cause to believe the Executive’s conduct was unlawful, and (ii) the Executive’s conduct constituted gross negligence or willful or wanton misconduct (and the Company shall also advance expenses as incurred to the fullest extent permitted under applicable law, provided the Executive provides an undertaking to repay advances if it is 

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ultimately determined that the Executive is not entitled to indemnification). The Company shall advance all expenses incurred by the Executive in connection with the investigation, defense, settlement or appeal of any civil or criminal action or proceeding referenced in this Section, including but not necessarily limited to legal counsel, expert witnesses or other litigation-related expenses.  The Executive shall be entitled to coverage under the Company’s directors and officers liability insurance policy in effect at any time in the future to no lesser extent than any other officers or directors of the Company.  After the Executive is no longer employed by the Company, the Company shall keep in effect the provisions of this Section 16, which provision shall not be amended except as required by applicable law or except to make changes permitted by law that would enlarge the right of indemnification of the Executive.  Notwithstanding anything herein to the contrary, the provisions of this Section shall survive the termination of this Agreement and the termination of the Employment Period for any reason.

17.Miscellaneous.

(a)No delay or omission by either party in exercising any right under this Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by one party on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

(b)The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

	
(c)
	
Any rights of the Executive hereunder shall be in addition to any rights the Executive may otherwise have under written benefit plans or agreements of the Company to which the Executive is a party or in which the Executive is a participant, including, but not limited to, any Company sponsored written employee benefit plans, stock option plans, grants and agreements.

18.Tax Matters.

(a)Section 409A Compliance:

	

	
(1)The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

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(2)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  Notwithstanding anything to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death, to the extent required under Code Section 409A.  Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 18(a)(2) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

	

	
(3)For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

	

	
(4)Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered under seal, by its authorized officers or individually, on the date first identified above.

 

FRESHPET, INC.:

 

 

 

/s/ Richard Thompson

 

By:Richard Thompson

 

Title:CEO

 

 

RICHARD KASSAR:

 

 

 

/s/ Richard Kassar

 

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