Document:

ex10-6.htm

 

Exhibit 10.5

 

 

May __, 2015

 

Landec Corporation

3603 Haven Avenue

	
Menlo Park, CA 94025
	
 CONFIDENTIAL

Attn.: Mr. Greg Skinner

 

Re: Conditional Credit Approval Notification

 

Dear Sir or Madam:

 

We are pleased to inform you that your company’s application for business credit/request for financing (the “Financing”) has been approved subject to the conditions set forth below.

 

SUMMARY OF CREDIT APPROVAL CONDITIONS

 

	
TRANSACTION TYPE:
	  	
Senior Secured Term Loans and a Real Property Loan 

	  	  	  
	
CUSTOMER(S):
	  	
Apio, Inc.

	  	  	  
	
GUARANTOR:
	  	
Landec Corporation

	  	  	  
	
LENDER:
	  	
General Electric Capital Corporation or its affiliates or assigns (“GE Capital”, “we,” “us”, or “our”).

	  	  	  
	
EQUIPMENT/REAL PROPERTY:
	  	
New Machinery & Equipment to be located in Hanover, PA

Real Property described as land, building & improvements in Hanover, PA 

	  	  	  
	
EQUIPMENT SUPPLIER:
	  	
Various 

	  	  	  
	
EQUIPMENT/REAL PROPERTY LOCATION:
	  	
Hanover, PA

	  	  	  
	
EQUIPMENT LOAN AMOUNT:
	  	
Not to exceed $14,714,092

	  	  	  
	TERM:	 	60 months; 84 month amortization
	 	 	 
	
REAL PROPERTY LOAN AMOUNT:
	  	
Approximately $7,686,000 (based on building cost of $10,248,000) to expand the existing Hanover, PA facility

	 	 	 
	TERM: 	 	Ten (10) years; Twenty (20) year amortization
	 	 	 
	
PERIODIC PAYMENTS/

INTEREST RATES:
	 	To be set forth in the Documents

 

Conditional Credit Approval Notification

Page of 1 of 5

 

 

 

 

 

	 	 	 
	
FEES:
	  	
Good Faith Deposit: $75,000.00, which shall be non-refundable, even if the Financing does not close, except in the event the Financing is not approved by Lender. In such case, the Deposit shall be returned promptly (less the cost of credit verification, investigation and any out-of-pocket expenses incurred such as appraisal fees, legal fees, etc.). Upon the closing of the Financing, the Good Faith Deposit shall be applied to reduce the initial payment(s) due.

 

Documentation and Underwriting Fee: Customer will pay Lender a documentation fee, which shall be in the amount of .1% of the total amount funded by Lender for the Equipment Loan, but in no event less than $500. Borrower shall pay an underwriting fee equal to .50% of the Real Property Loan Amount and .25% of the Equipment Loan Amount. The foregoing fees are not refundable and earned upon acceptance.

	  	  	  
	LAST FUNDING DATE:	 	To be set forth in the Documents but, notwithstanding anything to the contrary in Exhibit C of that certain preliminary proposal letter to Guarantor from Lender dated as of April 22, 2015 and executed by Guarantor as of May 8, 2015 (“Proposal Letter”), a copy of which is attached hereto as Exhibit A, in no event later than December 31, 2016. In addition, notwithstanding anything to the contrary in Exhibit A of the Proposal Letter, the last funding date for the Real Property Loan shall be March 31, 2016.
	 	 	 
	NET LOANS:	 	
The Loans will be “net loans” with Customer unconditionally, absolutely and irrevocably responsible for making payments under all circumstances. Customer is specifically responsible for all expenses, maintenance, insurance and taxes relating to the purchase, financing, possession and use of the Collateral excluding, however, taxes based solely on the net income of Lender. 

All maintenance and insurance (fire and theft, extended coverage and liability) are the responsibility of Customer. Customer will be responsible for maintaining in force, property and liability insurance with companies and in amounts satisfactory to Lender.

	 	 	 
	DOCUMENTATION:	 	Lender’s current standard loan documentation for this type of Collateral and Financing will be used. Lender and its legal counsel must approve any changes to this documentation. In the event that Lender needs to retain outside counsel to facilitate the Transaction, the cost would be the responsibility of Customer.
	 	 	 
	
TRANSACTION COSTS:
	  	
Customer will be responsible for (i) all of its closing costs, (ii) the cost of any external appraisal and external legal expenses, and (iii) with respect to the real property, the cost of any environmental investigation and reports, property condition assessment report, escrow, recording and transfer fees and taxes, title charges, survey costs, external legal expenses and all other out-of-pocket costs incurred by Lender. Lender will be responsible for all of its closing costs.

	 	 	 
	SECURITY INTEREST:	 	Lender will require a first priority perfected security interest in the equipment and Real Property. Prior to Lender’s payment of the final Real Property costs, Lender must be satisfied that there are no liens relating to the Real Property.
	 	 	 
	
CROSS COLLATERALIZATION:
	  	
This Financing will be cross collateralized and cross defaulted to the loans between Customer and Lender and its affiliates.

	 	 	 
	ELECTRONIC PAYMENTS:	 	Scheduled payments shall be set-up with the Electronic Payment System as the Standard form of payment; appropriate documentation will be provided. 
	  	  	  
	UPGRADE AND IMPROVEMENTS:	 	Lender will consider loan upgrades and improvements to the Collateral throughout the loan term, depending upon investment and credit approval requirements at that time. Loan terms and rates will be determined based upon the facts and circumstances in effect at the time of any additional financing.
	 	 	 
	OTHER TERMS AND CONDITIONS:	 	The terms and conditions of the Proposal Letter are incorporated by reference into this notification and deemed a part hereof.

 

Conditional Credit Approval Notification

Page of 2 of 5

 

 

 

 

 

ADDITIONAL APPROVAL CONDITIONS

 

	●	Execution and delivery of all transactional documents required by us in connection with our approval of the Financing in form and substance satisfactory to us in our sole discretion (“Documents”) and completion of any conditions set forth in those Documents on or before the Last Funding Date(s) set forth above (or such later date as we may otherwise agree to in writing).
	●	Customer will provide its financial statements to Lender in accordance with the terms set forth in that certain Master Security Agreement dated as of April 23, 2012 between Customer and Lender.
	●	Guarantor will provide its financial statements to Lender in accordance with the terms set forth in that certain Guaranty dated as of April 23, 2012 between Guarantor and Lender.
	
●
	
If requested by us, inspection of the Equipment at your location by us or our designee prior to closing the Financing.

	
●
	
Appraisal, ordered by Lender and prepared in such scope and form as Lender shall require.

	
●
	
Environmental site assessment(s), ordered by Lender and prepared in such scope and form as Lender shall require.

	
●
	
Real Property condition assessment, ordered by Lender and prepared in such scope and form as Lender shall require.

	
●
	
Seismic screening report and, if necessary, seismic study, ordered by Lender and prepared in such scope and form as Lender shall require.

	
●
	
Real Property information as Lender shall request.

	
●
	
Subordination of all leases affecting the Real Property.

	
●
	
A mortgagee’s extended coverage ALTA title policy, (or equivalent if unavailable), from an insurer acceptable to Lender, and with such endorsements as Lender may require.

	
●
	
ALTA as-built survey, certified to Lender and the title company, in form and content acceptable to Lender.

	
●
	
Verification that the Real Property and improvements are complete and not damaged by fire or other casualty, nor subject to any condemnation proceedings, pending or threatened.

	
●
	
An opinion of Customer’s outside legal counsel as to the enforceability of the Documents under the laws of the Real Property’s jurisdiction and such other matters as Lender shall reasonably require.

	
●
	
Proof of the Real Property’s compliance with parking, zoning, licensing and other applicable laws and regulations, including (without limitation) a permanent certificate(s) of occupancy.

	
●
	
Property, liability, rental loss (or business interruption, as appropriate), and other insurance in such amounts as Lender may from time to time require. If any portion of the Real Property is located in a special flood hazard area, Lender shall require flood insurance in accordance with federal regulations; for properties located in earthquake hazard areas Lender may require earthquake insurance. All insurance policies must be in accordance with Lender’s insurance requirements and shall include any endorsements which Lender may reasonably require.

	●	We shall not have determined (in our sole discretion) every six months (a) that there has been an adverse change in the business prospects or projections, operations, management, financial or other conditions of the Customer, Guarantor or any affiliate of Customer, any Guarantor or any other obligor, or in the industry in which Customer or Guarantor or such other party operates, or a change in control of any one of the aforesaid parties, (b) that there has been a disruption of, or adverse change in, the leasing or lending market, leasing or loan syndication, or financial, banking or capital markets conditions, or (c) that any of the information used by us in approving the financing was materially inaccurate or contained material omissions.
	●	Prior to our funding the Financing, Customer, Guarantor and other obligor under the Financing are not in breach or otherwise in default under (a) any agreement with us or our affiliates or (b) any other material debt obligations.
	●	This approval notification shall be governed by and construed in accordance with the internal laws of the State of Connecticut without reference to principles of conflict of laws. No rights hereunder shall be assigned by you without our prior written consent and our conditional approval hereunder will automatically terminate upon any such unauthorized assignment. The parties relating to the Financing each agree to waive all rights to a jury trial with respect to this notification and the Financing.

 

This notification is not intended to create a binding legal obligation by either of us; rather, it confirms that the Financing has been approved subject to the conditions set forth herein which may be modified, withdrawn, terminated, or made subject to additional terms and conditions not set forth herein as a result of our continuing due diligence, changes in market conditions and applicable laws, and changes to the business prospects or projections, operations, management, financial or other conditions of the Customer or any guarantor or any other obligor. The information contained in this notification is confidential and proprietary and may not be distributed to any person without our prior written consent.

 

We look forward to speaking to you soon to begin the documentation process.

 

Conditional Credit Approval Notification

Page 3 of 5

 

 

 

 

 

If our conditions of approval set forth in this notification are not substantially on the terms you requested and you do not accept and proceed with the Financing on the terms stated in this notification, then your application for business credit will be deemed denied.

 

If your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial.  To obtain the statement, please contact: RISK MANAGER, General Electric Capital Corporation, 500 West Monroe Street, Chicago, IL 60661 or call (312) 441-7957 within sixty (60) days from the date you are notified of our decision.  We will send you a written statement of reasons for the denial within thirty (30) days of receiving your request for the statement.

 

The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract), because all or part of the applicant's income derives from any public assistance program, or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.  The federal agency that administers compliance with this law concerning this creditor is the Federal Trade Commission, Equal Credit Opportunity, Washington, DC  20580.

 

 

By: __________________________________

CREDIT MANAGER

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

AGREED TO AND ACCEPTED:

 

this ____ day of May, 2015

 

APIO, INC.

 

 

By:__________________________________

Name:_______________________________

Title:_________________________________

 

Conditional Credit Approval Notification

Page 4 of 5 

 

 

 

 

 

Exhibit A

[Copy of Proposal Letter]

 

 

Conditional Credit Approval Notification

Page 5 of 5

 

 

 

 

 

April 22, 2015

 

 

Mr. Greg Skinner

VP Finance/CFO

Landec Corporation

3603 Haven Avenue

Menlo Park, CA 94025

 

Dear Greg:

 

On behalf of GE Capital, I am pleased to submit our preliminary proposal for your consideration. This proposal is presented as a $22,400,092.00 financing facility secured by real property and equipment. The structural options incorporated in this proposal are outlined in the attached exhibits. The highlights are outlined below.

 

Product Summary

 

(A)     $7,686,000.00

Fixed Rate Term Loan secured by real estate 

10 Year Term with a 20 year amortization

4.19% Fixed Rate 

 

  (B)    $10,443,692.00

Fixed Rate Term Loan secured by equipment

5 Year Term with a 7 year amortization

  2.98% Fixed Rate

 

  (C)   $4,270,400.00

 Fixed Rate Term Loan secured by equipment

  5 Year Term with a 7 year amortization

2.98% Fixed Rate

 

This proposal is expressly subject to the approval of a firm commitment by our Senior Management Committee and may be withdrawn by GECC at any time prior to a definitive written commitment by GECC to enter into this transaction. GE Capital has not yet completed a formal underwriting of the proposed term loan. This is not a commitment to lend, but a preliminary term sheet of the basic terms and conditions of a potential loan approval. 

 

Upon receipt of this signed proposal letter and good faith deposit, we shall begin our credit review process. We look forward to your early review and response.

 

 

	
 
	
Sincerely,

GE CAPITAL CORPORATION

 

 

 

Michael L. Dallape

Senior Vice President

 

 

 

 

 

Landec Corporation

April 22, 2015

Page 2 of 5                    

 

EXHIBIT A

 

 

 

	
TRANSACTION:
	
The transaction is structured as a senior secured term loan

 

	
BORROWER:
	
Apio, Inc.

 

	
GUARANTOR:
	
Landec Corporation

 

	
LENDER:
	
GE Capital Corporate Finance or one of its wholly-owned subsidiaries or nominees

 

	
COLLATERAL:
	
Real property described as land, building & improvements in Hanover, PA 

 

	
LOAN AMOUNT:
	
Approximately: $7,686,000.00 (based on building cost of $10,248,000)

 

	
FUNDING DATE:
	Between May 1, 2015 and December 30, 2015

 

	
TERM:
	
Ten (10) years

 

	
AMORTIZATION:
	
Twenty (20) year amortization

 

	
Real Estate Advance
	
The real estate advance amount will be 75% of the appraised value of 

	
Amount:
	
the Collateral based upon a MAI appraisal (the appraiser is subject to Lender’s approval and selection). In the event that the value is less than 75% of the cost to contruct GE will provide an additioanl loan advance on the existing real estate term loan collateral for the amount of the shortfall.

 

	
INTEREST RATE:
	4.19% Fixed

 

	
PAYMENTS:
	
Monthly payments in arrears

 

	
ADMINISTRATIVE FEE: 
	
Borrower will pay Lender a .50% fee for the underwriting of this transaction

 

	
PRE-PAYMENT:
	
(5%) during year 1, (4%) during year 2, (3%) during year 3, and 0% thereafter 

 

	
FINANCIAL COVENANTS:
	
No specific financial covenants will be part of this transaction 

 

	
INDEX:
	The terms and conditions of this proposal are based on various economic assumptions, including but not limited to the maintenance of the 10-Year Interest Rate SWAP, as published in the Federal Reserve Statistical Release Report H.15 (as of April 20, 2015). The rates set forth above are indicative of today's pricing only and therefore may be adjusted by Lender prior to funding should there be any changes in money rates prior to funding. Also, Lender has the right to make an adjustment prior to the closing date if the Corporate Index Spread Average(3) is more than 25 basis points different from the Corporate Index Spread(2) as of the initial Quote Date, which is 114 basis points.

 

(1) “Swap Rate” means the interest rate for swaps that most closely approximates the term of the Bond as published by the Federal Reserve Board in the Federal Reserve Statistical Release H.15

(2) “Corporate Index Spread” means the U.S. Aggregate Corporate AA-Rated Index as calculated by Barclays Capital on an Option Adjusted Spread (OAS) basis currently available online at http://online.wsj.com/mdc/public/page/2_3022-bondbnchmrk.html?mod=mdc_bnd_pglnk

(3) Corporate Index Spread Average means the average of the weekly Corporate Index Spreads over the period starting on the Initial Quote Date until the date of the last available Corporate Index Spread

as of the Closing Date.

 

 

 

 

 

Landec Corporation

April 22, 2015

Page 3 of 5                    

 

EXHIBIT B

 

 

	
TRANSACTION:
	
The transaction is structured as a senior secured term loan

 

	
BORROWER:
	
Apio, Inc.

 

	
GUARANTOR:
	
Landec Corporation

 

	
LENDER:
	
GE Capital Corporate Finance or one of its wholly-owned subsidiaries or nominees

 

	
COLLATERAL:
	
New machinery and equipment to be located in Hanover, PA

 

	
LOAN AMOUNT:
	
Approximately: $10,443,692.00 

 

	
FUNDING DATE:
	
Between May 1, 2015 and June 30, 2016

 

	
TERM:
	
Five (5) years

 

	
AMORTIZATION:
	
Seven (7) year amortization

 

	
Advance Rate:
	
100% of cost

 

	
INTEREST RATE:
	
2.98% Fixed       

 

	
PAYMENTS:
	
Monthly payments in arrears

 

	
ADMINISTRATIVE FEE: 
	
Borrower will pay Lender a .25% fee for the underwriting of this transaction.

 

	
PRE-PAYMENT:
	
(3%) during year 1, (2%) during year 2, and 0% thereafter. 

 

	
FINANCIAL COVENANTS:
	
No specific financial covenants will be part of this transaction 

 

	
INDEX:
	
The terms and conditions of this proposal are based on various economic assumptions, including but not limited to the maintenance of the 5-Year Interest Rate SWAP, as published in the Federal Reserve Statistical Release Report H.15 (as of April 20, 2015). The rates set forth above are indicative of today's pricing only and therefore may be adjusted by Lender prior to funding should there be any changes in money rates prior to funding. Also, Lender has the right to make an adjustment prior to the closing date if the Corporate Index Spread Average(3) is more than 25 basis points different from the Corporate Index Spread(2) as of the initial Quote Date, which is 114 basis points.

 

(1) “Swap Rate” means the interest rate for swaps that most closely approximates the term of the Bond as published by the Federal Reserve Board in the Federal Reserve Statistical Release H.15

(2) “Corporate Index Spread” means the U.S. Aggregate Corporate AA-Rated Index as calculated by Barclays Capital on an Option Adjusted Spread (OAS) basis currently available online at http://online.wsj.com/mdc/public/page/2_3022-bondbnchmrk.html?mod=mdc_bnd_pglnk

(3) Corporate Index Spread Average means the average of the weekly Corporate Index Spreads over the period starting on the Initial Quote Date until the date of the last available Corporate Index Spread as of the Closing Date.

 

 

 

 

 

Landec Corporation

March 25, 2015

Page 4 of 5                    

 

EXHIBIT C

 

 

	
TRANSACTION:
	
The transaction is structured as a senior secured term loan

 

	
BORROWER:
	
Apio, Inc.

 

	
GUARANTOR:
	
Landec Corporation

 

	
LENDER:
	
GE Capital Corporate Finance or one of its wholly-owned subsidiaries or nominees

 

	
COLLATERAL:
	
New machinery and equipment to be located in Hanover, PA

 

	
LOAN AMOUNT: 
	
Approximately: $4,645,100.00 

 

	
FUNDING DATE:
	
Between July 1, 2016 and June 30, 2017

 

	
TERM:
	
Five (5) years

 

	
AMORTIZATION:
	
Seven (7) year amortization

 

	
Advance Rate:
	
100% of cost

 

	
INTEREST RATE:
	
2.98% Fixed       

 

	
PAYMENTS:
	
Monthly payments in arrears

 

	
ADMINISTRATIVE FEE: 
	
Borrower will pay Lender a .25% fee for the underwriting of this transaction.

 

	
PRE-PAYMENT:
	
(3%) during year 1, (2%) during year 2, and 0% thereafter. 

 

	
FINANCIAL COVENANTS:
	
No specific financial covenants will be part of this transaction 

 

	
INDEX:
	
The terms and conditions of this proposal are based on various economic assumptions, including but not limited to the maintenance of the 5-Year Interest Rate SWAP, as published in the Federal Reserve Statistical Release Report H.15 (as of April 20, 2015). The rates set forth above are indicative of today's pricing only and therefore may be adjusted by Lender prior to funding should there be any changes in money rates prior to funding. Also, Lender has the right to make an adjustment prior to the closing date if the Corporate Index Spread Average(3) is more than 25 basis points different from the Corporate Index Spread(2) as of the initial Quote Date, which is 114 basis points.

 

(1) “Swap Rate” means the interest rate for swaps that most closely approximates the term of the Bond as published by the Federal Reserve Board in the Federal Reserve Statistical Release H.15

(2) “Corporate Index Spread” means the U.S. Aggregate Corporate AA-Rated Index as calculated by Barclays Capital on an Option Adjusted Spread (OAS) basis currently available online at http://online.wsj.com/mdc/public/page/2_3022-bondbnchmrk.html?mod=mdc_bnd_pglnk

(3) Corporate Index Spread Average means the average of the weekly Corporate Index Spreads over the period starting on the Initial Quote Date until the date of the last available Corporate Index Spread as of the Closing Date.

 

 

 

 

 

Landec Corporation

April 22, 2015

Page 5 of 5

 

 

Borrower acknowledges that Lender has not yet examined Borrower’s financial and credit status. To induce Lender to proceed with credit verification and investigation, borrower shall pay Lender a Good Faith Deposit equal to $75,000.00. If Lender does enter into a transaction with borrower pursuant to this proposal letter, the Good Faith Deposit shall be applied to reduce the initial payment(s) due except for a documentation charge and Administrative Fee. This fee is not refundable except in the event that the transaction representated by this proposal letter or any amendment to it is not approved by the Lender.

 

Borrower further acknowledges that a pending change of control is being contemplated with the Lender. This change of control will have no impact to the terms and conditions of the this financing proposal so long as the change of control is to a major commercial bank or financial institution with an equivalent LACE bank rating of B+ or higher (“Qualified Entity). In the event that that change of control is announced and it is not to such a Qualified Entity, borrower will have the option to prepay this note within 90 days of this announcement without penalty. In the event that the rate has been locked borrower will be soley responsible for money cost breakage associated with such rate lock and will not be subject to a pre-payment penalty as outlined in the exhibts noted above.

 

We look forward to being able to reach a mutually satisfactory arrangement. We must advise you, however, that except for the provisions concerning the Good Faith Deposit (set forth above), this letter is not intended to and does not create any binding legal obligation on the part of either party. Neither GECC nor its subsidiary will be obligated to provide any financing until the satisfactory completion of its investment review and analysis and a field audit, the receipt of all requisite approvals by GECC management, and the prior execution and delivery of final legal documentation acceptable to all parties and their counsel.

 

Please acknowledge your consent to the terms outlined above by signing a copy of this letter and returning it with your check for the Good Faith Deposit. We look forward to your early review and response. Please feel free to contact me at (415) 277-7472. 

 

 

	
 
	
Sincerely,

GE Captial Corporate Finance

 

 

 

Michael L, Dallape 

Senior Vice President

 

 

 

Agreed To by:

Landec Corporation

 

_____________________________

By:

 

_____________________________

Title:

 

_____________________________

Date:EX-4.11

 Exhibit 4.11 

Isabel Hudson 
 c/o ppA9F 

BT Centre 
 81 Newgate Street 

London 
 EC1A 7AJ 

September 3 2014 
 Dear Isabel, 

The Board of BT Group plc (the Company) has agreed your appointment as a non-executive director and a member of the BT Pensions Committee. You will also be
appointed to such other Board Committees as may from time to time be agreed with you. This letter sets out the terms of your appointment. 
 Appointment

 Your appointment is for an initial period of three years from 1 November 2014. During that period either you or the Board can give the other at
least three months’ written notice to terminate the appointment at any time. If for any reason the Board does not give you such notice, you will not be entitled to any compensation in respect of your notice period or otherwise. 

Your appointment is subject to the Company’s Articles of Association. Nothing in this letter is intended to exclude or vary the terms of the Articles of
Association as they apply to you as a director of the Company. 
 In accordance with the relevant corporate governance provisions, you will be required to
stand for election at the Company’s next Annual General Meeting and then for re-election at the Company’s Annual General Meeting each year. 

Subject to your annual re-election as a director and satisfactory performance by you of your duties as a non-executive director, the appointment may be
continued at the end of the initial three year period if you and the Board agree. 
 If you are not re-elected by the shareholders at the Annual General
Meeting, or your directorship is terminated under the Company’s Articles of Association, the Companies Act 2006 or in accordance with the Termination provision below, your appointment will terminate automatically, with immediate effect and
without any compensation in respect of your notice period or otherwise. 

 Time commitment 

You are expected to attend all meetings of the Board, including a minimum of six meetings in person, and all meetings of those Board Committees to which you
are appointed, the Annual General Meeting (in person) and any Board away days. If you cannot attend any meeting you should advise the Secretary in advance. In addition, you will be expected to devote appropriate preparation time ahead of each Board
and Board Committee meeting and to take part in at least one visit each year to one of BT’s offices or other sites. It is difficult to be precise about the amount of time you should expect to spend on this work, but we estimate that you should
allow a minimum of 22 days each year, subject to Board Committee commitments. You should allow a slightly higher commitment in the first year of your appointment whilst you familiarise yourself with the BT group and go through our induction
programme for new directors. Additional time commitment may also be required if the Company is undergoing a period of particularly increased activity (such as a major acquisition or capital transaction). 

By accepting this appointment, you confirm that you are able to allocate sufficient time to meet what is expected of you in your role as a non-executive
director. You should obtain the agreement of the Chairman before accepting any additional commitments that might affect the time you are able to devote to your role as a non-executive director of the Company. 

Role 
 Non-executive directors have the same general legal
responsibilities to the Company as any other director. The Board’s principal focus is the strategy, development, growing shareholder value, oversight and control and governance of the group. In support of this it approves the group’s
strategic plans, annual and investment budgets and capital expenditure. It sets the direction for the group’s values, ethics and business policies and practices. It also has oversight of the group’s operating and financial performance,
risk management and internal controls, and compliance and major public policy issues. Board members are expected to constructively challenge and help develop proposals on strategy. These responsibilities are set out in the formal statement of the
Board’s role, included in your directors’ briefing pack and are in accordance with the UK Corporate Governance Code. 
 Fees and expenses

 You will receive fees for your services as a director, and as a Board Committee member or Chair, of £75,000 a year. 

 Your fees will be paid monthly in arrears subject to such deductions for income tax and social security
contributions as the Company may be required by law to deduct. 
 You will have no entitlement to any bonus and no entitlement to participate in any
employee share scheme or pension scheme operated by the Company. 
 The Company will either pay or reimburse you for all reasonable and properly documented
travelling, hotel and other expenses incurred on the Company’s business. 
 Any obligation of the Company or any group companies under this letter and
any other arrangement relating to remuneration from which you benefit or enter into after becoming a director of the Company shall be subject to and conditional on the approval by the Company’s shareholders in a general meeting of a policy on
directors’ remuneration in accordance with the relevant legislation. If that approval is not obtained, you will not be entitled to compensation or damages in respect of any loss or damage suffered as a result. 

Independence 
 You are considered to be an independent
non-executive director and will be identified as such in the Company’s annual report and other documentation. If circumstances change, and you believe that your independence may be in doubt, you should discuss this with the Chairman or the
Secretary as soon as practicable. 
 Outside interests 

It is accepted and acknowledged that you have business interests other than those of the Company. You are required to disclose to the Board, via the Secretary,
any interests you have at the date of your appointment. Advice on notifiable interests is enclosed in your briefing pack. You will be asked to review the interests notified, on an annual basis. However, any new interests or potential conflicts of
interests which arise during your period of appointment should be notified to the Secretary as soon as they become apparent. 
 Confidentiality and share
dealings 
 You must apply the highest standards of confidentiality and not disclose to any person, firm or company (whether during the course of the
appointment or at any time after its termination) any confidential information concerning the Company or any group companies with which you come into contact by virtue of your 

 
position as a non-executive director of the Company. For these purposes, confidential information shall include, but not be limited to, information (whether or not recorded in documentary form,
or stored on any magnetic or optical disk or memory) relating to the business, products, affairs and finances of the Company and/or any group companies, which is treated as confidential to the Company and/or any group companies or which you are told
or ought reasonably to know is confidential or which has been given to the Company and/or any group companies in confidence by customers, suppliers or other persons, and any trade secrets including, without limitation, technical data and know-how
relating to the business of the Company and/or any group companies or any of its or their business contacts. 
 Your attention is also drawn to the
requirements under both legislation and regulation as to the handling and disclosure of inside information. You should avoid making any statements that might breach these requirements without prior clearance from the Secretary. 

You will be bound by the Company’s Articles of Association, any rules and regulations that may apply to the Company, including any rules issued by the
United Kingdom Listing Authority, including its Model Code on directors’ dealings in securities and by the Company’s share dealing code and such other requirements as the Board may from time to time specify. 

For a period of six years after the termination of your appointment, you may retain documents and papers made available to you by the Company provided that
(i) you comply strictly with the confidentiality obligations set out above, and (ii) you return to the Company all documents, papers and other property of or relating to the business of the Company or any group company which are in your
possession, custody or power by virtue of your position as a non-executive director of the Company at the end of that period, and you do not retain copies (other than where the Company permits this). The Company is able to arrange the disposal of
papers which you no longer require. 
 Induction and briefings 

The Company has in place arrangements to complement the briefing material you have already received about the BT group through an on-going programme to keep
you informed about the Company’s businesses, activities and developments, the communications industry and the regulatory environment. This can include meetings with the Company’s executive management, major shareholders and other
stakeholders and the external auditors. We will also arrange a tailored package of visits to business locations so you can see BT and its people at work. 

 Review 
 The
performance of the Board and its committees is evaluated annually. If, in the interim, there are any matters which cause you concern about your role you should discuss them with the Chairman or the Secretary as soon as is appropriate. 

Individual training and development needs will be regularly reviewed and agreed with each director as part of the Board evaluation process. 

Insurance 
 You are covered by the Company’s
directors’ and officers’ liability insurance. We intend to continue to arrange this insurance cover. In the event that we do not, run-off cover will be arranged for six years commencing from the date that cover under the latest insurance
policy lapsed. The current limit in respect of any one claim or all claims in aggregate during the period of the insurance policy is £195 million. 

Independent professional advice 
 The Company has a
procedure for its directors, in furtherance of their duties, to take independent advice if necessary, at the Company’s expense. If you feel it necessary to seek such advice, please contact the Secretary first. A copy of the procedure is
included in your briefing pack. 
 Termination 
 The
Company may immediately terminate your appointment if you: 
  

	a)	are in material breach of any of the terms of this letter; 

  

	b)	are guilty of gross misconduct and/or any serious or persistent negligence or misconduct in respect of your obligations under this letter; 

 

	c)	have engaged in any conduct which has or may have the effect of materially prejudicing the reputation of the Company or any other group company; or 

 

	d)	fail or refuse to carry out the duties reasonably and properly required of you under this letter. 

 Upon
termination of your appointment for any reason you will, at the Company’s request, promptly resign in writing as a director of BT Group plc. The Secretary is irrevocably authorised by this letter to sign a letter of resignation on your behalf
if you fail to do so. 

 After your appointment is terminated, you will not represent yourself as being in any way concerned with or
interested in the business of the Company or any group companies. 
 Data protection 

By signing this letter you consent to the Company holding and processing information about you (including sensitive personal data (as defined in the Data
Protection Act 1998)) for legal, personnel, administrative and management purposes. You consent to the Company making the information available to any of its group companies, those who provide products or services to the Company or any of its group
companies (such as advisers and payroll administrators), regulatory authorities, potential or future employers, governmental or quasi-governmental organisations and potential purchasers of the Company. You also consent to the transfer of the
information to the Company’s business contacts outside the European Economic Area in order to further its business interests. 
 Miscellaneous

 You confirm that you will not by reason of your appointment or your performance of any duties under this letter be in breach of any legal obligation
binding on you. 
 This letter (and any document referred to in it) constitutes the entire agreement between the parties and supersedes all other agreements
(both oral and in writing) between you and the Company. 
 The terms of this letter are governed by English law and the parties submit to the exclusive
jurisdiction of the English courts. 

 Acceptance 

Please confirm your acceptance of these terms by signing the attached copy of this letter as a deed and returning it. For convenience, this letter may be
executed in counterparts. Once executed, the counterparts will constitute an original, and both counterparts together will constitute one instrument. 

Yours sincerely 
 /s/ Dan Fitz 

DAN FITZ 
  

	To:	Dan Fitz 

 Company Secretary 

I confirm acceptance of my appointment on the above terms. 
  

							
	SIGNED as a DEED and		)				
	DELIVERED by		)		/s/ Isabel Hudson		
			)				

					
			
	in the presence of:				

					
			
	 Witness’s
 Signature:
		/s/ Anna Watch

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