Document:

Unassociated Document

Exhibit 10.9

 

Goldman, Sachs & Co.

200 West Street

New York, NY 10282

Telephone No: 212-902-1000

 

Confirmation of Additional OTC Warrant Transaction

 

	
Date: 

	
May 18, 2011

	 	 	 
	 	 	 	 	 
	To:	
Iconix Brand Group, Inc.

	 	 	 
	 	
Attention: Chief Executive Officer

	 	 	 
	 	
Telephone No.: 212-730-0030

	 	 	 
	 	
Facsimile No.: 212-391-0127

	 	 	 
	 	 	 	 	 
	From:	Goldman, Sachs & Co.	 	 	 
	 	 	 	 	 
	
Reference: 

	SDB4164996097	 	 	 

 

Dear Sir / Madam:

 

The purpose of this letter agreement (this “Confirmation”) is to set forth the terms and conditions of the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Iconix Brand Group, Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This Confirmation constitutes a “Confirmation” as referred to in the Master Agreement specified below.

 

The definitions and provisions contained in the 2006 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will govern, and in the event of any inconsistency between the Definitions and this Confirmation, this Confirmation will govern. References herein to the “Transaction” shall be deemed to be references to a “Share Option Transaction” for the purposes of the Equity Definitions and to a “Swap Transaction” for the purposes of the Swap Definitions. For purposes of the Transaction, “Warrant Style”, “Warrant Type”, “Number of Warrants” and “Warrant Entitlement” (each as defined below) shall be used herein as if such terms were referred to as “Option Style”, “Option Type”, “Number of Options” and “Option Entitlement”, respectively, in the Definitions.

 

This Confirmation, together with the Agreement (as defined below), evidences a complete and binding agreement between you and us as to the terms of the Transaction to which this Confirmation relates. This Confirmation, shall be subject to, and form part of, an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an agreement in such form (but without any Schedule and with elections specified in the “ISDA Master Agreement” Section of this Confirmation) on the Trade Date. In the event of any inconsistency between the provisions of that Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction. The parties hereby agree that the Transaction evidenced by this Confirmation shall be the only Transaction subject to and governed by the Agreement.

 

  

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The terms of the particular Transaction to which this Confirmation relates are as follows:

 

	
General Terms:

	 	 
	
Trade Date:

	 	
May 18, 2011

	 	 	 
	
Effective Date:

	 	
May 23, 2011, subject to cancellation of the OTC Warrant Transaction prior to 5:00 p.m. (New York City time) on such date by the Counterparty. In the event of such cancellation, any payments previously made hereunder, including the Premium, shall be returned to the person making such payment. In addition, Counterparty shall reimburse GS&Co. for any costs or expenses (including market losses) relating to the unwinding of its hedging activities in connection with the Transaction (including any loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position).

	 	 	 
	
Warrant Style:

	 	
European

	 	 	 
	
Warrant Type:

	 	
Call

	 	 	 
	
Seller:

	 	
Counterparty

	 	 	 
	
Buyer:

	 	
GS&Co.

	 	 	 
	
Shares:

	 	
Shares of common stock, $0.001 par value, of Counterparty (Security Symbol: “ICON”).

	 	 	 
	
Components:

	 	
The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Daily Number of Warrants and Expiration Date set forth in this Confirmation. The valuation and exercise of the Transaction and the payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.

	 	 	 
	
Number of Warrants:

	 	
365,815, in the aggregate for the Transaction

	 	 	 
	
Daily Number of Warrants:

	 	
For any Expiration Date, the unexercised Number of Warrants on such day divided by the remaining number of Expiration Dates (including such day) and rounded down to the nearest whole number, with the balance of the Number of Warrants exercised on the final Expiration Date.

 

  

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Warrant Entitlement:

	 	
One (1) Share per Warrant

	 	 	 
	
Strike Price:

	 	
$40.6175

	 	 	 
	
Premium:

	 	
$1,080,000

	 	 	 
	
Premium Payment Date:

	 	
The Effective Date; provided no cancellation of the Transaction has occurred prior to 5:00 p.m. (New York City time) on such date by the Counterparty.

	 	 	 
	
Exchange:

	 	
NASDAQ Global Market

	 	 	 
	
Related Exchange(s):

	 	
All Exchanges

	 	 	 
	
Full Exchange Business Day:

	 	
A Scheduled Trading Day that has a scheduled closing time for its regular trading session at 4:00 p.m. (New York City time) or the then standard closing time for regular trading on the Exchange and is not a Disrupted Day.

	
Procedures for Exercise:

	 	 
	
In respect of any Component

	 	 
	
Expiration Time:

	 	
11:59 p.m. (New York City time).

	 	 	 
	
Expiration Dates:

 

	 	
The 75 consecutive Full Exchange Business Days beginning on and including September 6, 2016, each shall be the Expiration Date for a number of Warrants equal to the Daily Number of Warrants on such date and shall relate to a separate Component; provided that if not all such 75 consecutive Full Exchange Business Days have occurred as of the Final Disruption Date, the Calculation Agent shall have the right to elect, in its reasonable discretion, that the Final Disruption Date shall be the final Expiration Date (irrespective of whether such date is a Disrupted Day or an Expiration Date in respect of any of the Warrants) and the Settlement Price for the Final Disruption Date shall be determined by the Calculation Agent in a commercially reasonable manner.  Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Scheduled Trading Day otherwise, (i) the Calculation Agent may determine that such day is a Disrupted Day only in part, in which case the Calculation Agent may make adjustments to the Daily Number of Warrants for the relevant Component for which such day shall be the Expiration Date and the Daily Number of Warrants for Expiration Dates that follow such day and (ii) the Settlement Price for such Disrupted Day may be adjusted by the Calculation Agent as appropriate on the basis of the nature and duration of the relevant Market Disruption Event.  Any day on which the Exchange is scheduled as of the Trade Date to close prior to its normal closing time shall be considered a Disrupted Day in whole.  Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date.

 

  

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Final Disruption Date:

	 	
The date that immediately follows the scheduled Expiration Date for the final Component by nine Scheduled Trading Days.

	 	 	 
	
Exercise Dates:

	 	
Each Expiration Date shall be an Exercise Date for a number of Warrants equal to the Daily Number of Warrants on such date.

	 	 	 
	
Automatic Exercise:

 

 

	 	
Applicable; provided that Section 3.4(a) of the Equity Definitions shall apply to Cash Settlement and Net Physical Settlement; and provided further that, unless all Warrants have been previously exercised hereunder, a number of Warrants for each Expiration Date equal to the Daily Number of Warrants for such Expiration Date shall be deemed to be automatically exercised.

	 	 	 
	
Market Disruption Event:

 

	 	
Section 6.3(a) of the Equity Definitions shall be amended by deleting the words “at any time during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and replacing them with the words “at any time during the regular trading session on the Exchange, without regard to after hours or any other trading outside of the regular trading session hours”, by amending and replacing clause (a)(ii) thereof in its entirety with “(ii) an Exchange Disruption that the Calculation Agent determines is material”, by amending and restating clause (a)(iii) thereof in its entirety to read as follows: “(iii) an Early Closure that the Calculation Agent determines is material” and by adding the words “, or (iv) a Regulatory Disruption” after clause (a)(iii) as restated above.

 

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.

	 	 	 
	
Regulatory Disruption:

 

	 	
A “Regulatory Disruption” shall occur if GS&Co.  determines in its reasonable good faith discretion and based on the advice of counsel that it is appropriate in light of legal, regulatory or self-regulatory requirements or related policies or procedures for GS&Co. to refrain from all or any part of the market activity in which it would otherwise engage in connection with the Transaction.  GS&Co. will notify Counterparty promptly of any determination that a Regulatory Disruption has occurred.

	 	 	 
	
Disrupted Day:

	 	
The definition of “Disrupted Day” in Section 6.4 of the Equity Definitions shall be amended by adding the following sentence after the first sentence: “A Scheduled Trading Day on which a Related Exchange fails to open during its regular trading session will not be a Disrupted Day if the Calculation Agent determines that such failure will not have a material impact on GS&Co.’s ability to unwind any hedging transactions related to the Transaction.”

 

	
Counterparty’s Telephone Number and Facsimile Number and Contact Details for purpose of Giving Notice:

	 	
Address:       1450 Broadway

                New York, NY  10018

 

Attention:             Chief Executive Officer

Facsimile:              +1-212-391-0127

Telephone:            +1-212-730-0030

 

  

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Valuation:

	 	 
	
In respect of any Component

	 	 
	
Valuation Dates:

	 	
Each Exercise Date

	
Settlement Terms:

	 	 
	
In respect of any Component

	 	 
	
Cash Settlement:

	 	
Applicable; provided that it shall be a condition of Counterparty’s right to elect Cash Settlement that Counterparty delivers to Buyer on the date of the Cash Settlement election a representation signed by Counterparty that Counterparty is not aware of, and is not in possession of, any material non-public information regarding itself or the Shares. “Material” information for these purposes is any information to which an investor would reasonably attach importance in reaching a decision to buy, sell or hold the Shares.

	 	 	 
	
Settlement Currency:

	 	
USD

	 	 	 
	
Settlement Price:

	 	
For each Valuation Date, the volume-weighted average price per Share (“VWAP”) calculated from 9:30 a.m. to 3:50 p.m., as observed under the heading Bloomberg “VWAP” on Bloomberg page “ICON <equity> AQR SEC” (or any successor thereto) (or if such volume-weighted average price is unavailable, the market value of one Share on such Valuation Date, as determined by the Calculation Agent); provided that if the scheduled weekday closing time of the Exchange for any Valuation Date is later than 4:00 p.m. (without regard to after hours or any other trading outside of the regular trading session hours) the VWAP shall be calculated for such Valuation Date from 9:45 a.m. until 15 minutes prior to such later closing time of the Exchange.

 

  

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Cash Settlement Payment Date:

	 	
With respect to each Valuation Date, three (3) Currency Business Days after the final Valuation Date.

	 	 	 
	
Settlement Method Election:

	 	
Applicable with respect to Cash Settlement or Net Physical Settlement only; provided that any election made pursuant to this Settlement Method Election provision shall be irrevocable and shall apply to every Component.

	 	 	 
	
Electing Party:

	 	
Counterparty

	 	 	 
	
Settlement Method Election Date:

	 	
Ten (10) Business Days prior to the Expiration Date for the Component with the earliest scheduled Expiration Date.

	 	 	 
	
Default Settlement Method:

	 	
Net Physical Settlement.

	 	 	 
	
Net Physical Settlement:

	 	
In the event that the Counterparty elects, or is deemed to elect, to settle the Transaction by Net Physical Settlement, subject to “Conditions to Net Physical Settlement” below, Counterparty shall deliver to GS&Co. on the Settlement Date a number of Shares (the “Delivered Shares”) equal to the Share Delivery Quantity, provided that in the event that the number of Shares calculated comprises any fractional Share, only whole Shares shall be delivered and an amount in cash equal to the value of such fractional share shall be payable by the Counterparty to GS&Co. in lieu of such fractional Share.

 

	
Share Delivery Quantity:

	 	
For each Exercise Date, a number of Shares, as calculated by the Calculation Agent, equal to the Net Physical Settlement Amount for such Exercise Date divided by the Settlement Price on the Valuation Date in respect of such Settlement Date plus an amount in cash in lieu of any fractional Shares (based on the applicable Settlement Price).

	 	 	 
	
Net Physical Settlement Amount:

	 	
For any Exercise Date, an amount equal to the product of (i) the Number of Warrants being exercised on the relevant Exercise Date, (ii) the Strike Price Differential for such Exercise Date and (iii) the Warrant Entitlement.

 

  

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Strike Price Differential:

	 	
For any Valuation Date, (i) if the Settlement Price is greater than the Strike Price, an amount equal to the excess of such Settlement Price over the Strike Price for such Valuation Date or (ii) if such Settlement Price is less than or equal to the Strike Price, zero.

	 	 	 
	
Settlement Date:

	 	
Settlement with respect to each Exercise Date shall occur on the third (3rd) Full Exchange Business Day following the final Valuation Date, provided that GS&Co. shall have the right to request by prior written notice to Counterparty a Settlement Date with respect to any Exercise Date and the related Share Delivery Quantity that is three (3) Full Exchange Business Days following such Exercise Date. Such request shall not unreasonably be denied.

	 	 	 
	
Other Provisions Applicable to Net Physical Settlement:

	 	
The provisions of Sections 9.1(c), 9.4 (except that “Settlement Date” shall be as defined above, unless a Settlement Disruption Event prevents delivery of such Shares on that date), 9.8, 9.9, 9.11(as modified herein), 9.12 and 10.5 of the Equity Definitions will be applicable, as if “Physical Settlement” applied to the Transaction. Notwithstanding Section 9.11 of the Equity Definitions, but subject to “Conditions to Net Physical Settlement” below, the parties acknowledge that any Shares delivered to GS&Co. may be, upon delivery, subject to restrictions and limitations arising from Counterparty’s status as issuer of the Shares under applicable securities laws as a result of the fact that Counterparty is the issuer of the Shares, and the parties agree that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws that exist as a result of the fact that Counterparty is the issuer of the Shares.

	 	 	 
	
Conditions to Net Physical Settlement:

	 	
If, in connection with, or within six months following, delivery of Shares hereunder, GS&Co. notifies the Counterparty that GS&Co. has reasonably determined after advice from counsel that there is a considered risk that such Shares are subject to restrictions on transfer in the hands of GS&Co. pursuant to the rules and regulations promulgated under the Securities Act of 1933, as amended (the “Securities Act”), then Counterparty shall either (i) deliver Shares that are covered by an effective registration statement of Counterparty for immediate resale by GS&Co. or (ii) agree to deliver additional Shares so that the value of such Shares as determined by the Calculation Agent to reflect an appropriate liquidity discount, equals the value of the number of Shares that would otherwise be deliverable if such Shares were freely tradable upon receipt by GS&Co.

 

  

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(A) If Counterparty elects to deliver Shares as described in above clause (i), then promptly following such notification from GS&Co.

	 	 	 
	  	 	
(a) Counterparty shall afford GS&Co. a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty that is customary in scope for underwritten offerings of equity securities that yields a result satisfactory to GS&Co.;

	 	 	 
	  	 	
(b) Counterparty shall as soon as practicable make available to GS&Co. an effective registration statement for immediate resale (the “Registration Statement”) in form and content reasonably satisfactory to GS&Co. and Counterparty and filed pursuant to Rule 415 under the Securities Act, and such prospectuses as GS&Co. may reasonably request to comply with the applicable prospectus delivery requirements (the “Prospectus”) for the resale by GS&Co. of such number of Shares as GS&Co. shall reasonably specify in accordance with this paragraph, such Registration Statement to be effective and Prospectus to be current until the earliest of the date on which (1) all Delivered Shares have been sold by GS&Co., (2) GS&Co. has advised Counterparty that it no longer requires that such Registration Statement be effective, (3) all remaining Delivered Shares could be sold by GS&Co. without registration pursuant to Rule 144 promulgated under the Securities Act (the “Registration Period”) or (4) Counterparty has provided a legal opinion in form and substance reasonably satisfactory to GS&Co. (with customary assumptions and exceptions) that the Shares issuable upon exercise of these Warrants will be freely tradable under the Securities Act upon delivery to GS&Co. and not subject to any legend restricting transferability. It is understood that the Registration Statement and Prospectus will cover a number of Shares equal to the aggregate number of Shares (if any) reasonably estimated by GS&Co. to be potentially deliverable by Counterparty in connection with Net Physical Settlement hereunder (not to exceed the Maximum Deliverable Share Amount) and shall be subject to the same suspension of sales during “blackout dates” as provided in the following paragraph; and

 

  

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(c) Counterparty will enter into a registration rights agreement with GS&Co. in form and substance reasonably acceptable to GS&Co. and Counterparty, which agreement will contain among other things, customary representations and warranties and indemnification, restrictions on sales during “blackout dates” as provided for in the registration rights agreement (the “Registration Rights Agreement”) entered into by Counterparty on or about the date hereof, provide for delivery of comfort letters and opinions of counsel and other rights relating to the registration of a number of Shares equal to the number of Delivered Shares and other Shares deliverable hereunder up to the Maximum Deliverable Share Amount.

	 	 	 
	  	 	
(B) If Counterparty elects to deliver Shares as described in above clause (ii), then promptly following such notification from GS&Co.

	 	 	 
	  	 	
(a) Counterparty shall afford GS&Co. and any potential institutional purchaser of any Shares identified by GS&Co. a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty that is customary in scope for private placements of equity securities subject to execution of any customary confidentiality agreements;

 

	  	 	
(b) Counterparty shall enter into an agreement (a “Private Placement  Agreement”) with GS&Co. on commercially reasonable mutually acceptable terms in connection with the private placement of such Shares by Counterparty to GS&Co. or an affiliate and the private resale of such shares by GS&Co. or such affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to GS&Co. and Counterparty, which Private Placement Agreement shall include provisions relating to the indemnification of, and contribution in connection with the liability of, GS&Co. and its affiliates, shall provide for the payment by Counterparty of all expenses in connection with such resale, including all reasonable and documented fees and expenses of counsel for GS&Co., shall contain representations, warranties and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use reasonable best efforts to provide for the delivery of accountants’ “comfort letters” to GS&Co. or such affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares;

 

  

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(c) GS&Co. shall sell the Delivered Shares in a commercially reasonable manner until the amount received by GS&Co. for the sale of the Shares (the “Proceeds Amount”) is equal to the Net Physical Settlement Amount. Any remaining Delivered Shares shall be returned to Counterparty. If the Proceeds Amount is less than the Net Physical Settlement Amount, Counterparty shall promptly deliver upon notice from GS&Co. additional Shares to GS&Co. until the U.S. dollar amount from the sale of such Shares by GS&Co. equals the difference between the Net Physical Settlement Amount and the Proceeds Amount. In no event shall Counterparty be required to deliver to GS&Co. a number of Shares greater than the Maximum Deliverable Share Amount.

	 	 	 
	  	 	
(C) Notwithstanding the foregoing: (I) if Counterparty has elected to deliver Shares as described in clause (i) above and either (a) Counterparty does not provide for the sale of the Shares under the Registration Statement as provided in the Registration Rights Agreement or (b) some Shares cannot be registered under the Registration Statement due to Rule 415(a)(4) under the Securities Act, then the provisions of sub-paragraph (B) shall apply to the extent Counterparty has not satisfied its obligations hereunder by the delivery of Shares pursuant to sub-paragraph (A). (II) If sub-paragraph (B) is applicable and Counterparty fails to satisfy its obligations under such sub-paragraph (B), then Counterparty may deliver unregistered Shares of equivalent value to the Net Physical Settlement Amount (or, if applicable, the unsatisfied portion thereof). The value of any unregistered Shares so delivered shall be discounted to reflect an appropriate liquidity discount (determined by GS&Co. in a commercially reasonable manner, taking into account GS&Co.’s policies and determinations with respect to any transfer restrictions that GS&Co. deems it advisable to observe in connection with sales of such Shares). (III) If some or all of the Delivered Shares cannot be used to close out stock loans in the shares of Counterparty entered into to establish or maintain short positions by GS&Co. in connection with the Transaction without a prospectus being required by applicable law to be delivered to such lender, then the value of any such Delivered Shares shall reflect the cost (determined by the Calculation Agent in good faith and in a commercially reasonable manner and taking into account the policies and determinations of GS&Co. with respect to compliance with applicable legal and regulatory requirements) to GS&Co. of trading Shares in order to close out its hedge position if any, in all cases for purposes of calculating the Delivered Shares. In no event shall Counterparty be required to top up the delivery in cash.

 

  

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Limitations on Net Physical Settlement by Counterparty:

	 	
Notwithstanding anything herein or in the Agreement to the contrary, the number of Shares that may be delivered at settlement of all Components by Counterparty shall not exceed 548,723 Shares at any time (the “Maximum Deliverable Share Amount”), as adjusted by Calculation Agent to account for any subdivision, stock-split, stock combination, reclassification or similar dilutive or anti-dilutive event with respect to the Shares.

	 	 	 
	  	 	
Counterparty represents and warrants that the number of Available Shares as of the Trade Date is greater than the Maximum Deliverable Share Amount. Counterparty covenants and agrees that (i) Counterparty shall not take any action of corporate governance or otherwise to reduce the number of Available Shares below the Maximum Deliverable Share and (ii) Counterparty shall use its reasonable efforts to cause the number of Available Shares at all times to be greater than the Maximum Deliverable Share Amount.

	 	 	 
	  	 	
For this purpose, “Available Shares” means the number of Shares Counterparty currently has authorized (but not issued and outstanding) less the maximum number of Shares that may be required to be issued by Counterparty in connection with stock options, convertibles, and other commitments of Counterparty that may require the issuance or delivery of Shares in connection therewith.

 

  

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Representations for Cash Settlement and Net Physical Settlement:

	 	
If Counterparty elects to settle the Transaction by Cash Settlement or Net Physical Settlement, Counterparty represents and agrees that:

	 	 	 
	 	 	
(i) Counterparty is not, on the date of the Cash Settlement or Net Physical Settlement election, and will not be, on any day during the period from and including the first Expiration Date to and including the final Expiration Date, engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M; and

	 	 	 
	 	 	
(ii) during the period from and including the first Expiration Date to and including the final Expiration Date, without the prior written consent of GS&Co., the Counterparty shall not, and shall cause its affiliates and affiliated purchasers (each as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for the Shares; provided, that such restrictions will not apply to the following: (A) purchases of Shares directly effected by the Issuer in privately negotiated off-market transactions that are not “Rule 10b-18 Purchases” as defined in Rule 10b-18, (B) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (C) the conversion or exchange by holders of any convertible or exchangeable securities of the Issuer issued prior to the Trade Date pursuant to the terms of such securities; or (D) purchases of Shares effected by or for an Issuer plan by an agent independent of the Issuer that satisfy the requirements of Rule 10b-18(a)(13)(ii) under the Exchange Act.

 

  

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Dividends:

	 	  
	
Extraordinary Dividends

	 	
Any and all dividends declared by the Issuer on the Shares for which the ex-dividend date occurs during the period from, and including, the Trade Date to, and including, the date on which the obligations of Counterparty under the Transaction have been satisfied in full.

	 	 	 
	
Adjustments:

	 	  
	
Method of Adjustment:

	 	
Calculation Agent Adjustment; provided that the Equity Definitions shall be amended by replacing the words “diluting or concentrative” in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word “material” and by adding the words “or the Transaction” after the words “theoretical value of the relevant Shares” in Section 11.2(a), 11.2(c) and 11.2(e)(vii); provided, further that adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares.

	 	 	 
	
Extraordinary Events:

	 	  
	
New Shares:

 

	 	
Section 12.1(i) of the Equity Definitions is hereby amended by deleting the text in clause (i) in its entirety and replacing it with the phrase “publicly quoted, traded or listed on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors)”.

	 	 	 
	
Share-for-Share:

	 	
The definition of “Share-for-Share” set forth in Section 12.1(f) of the Equity Definitions is hereby amended by the deletion of the parenthetical in clause (i) thereof.

	 	 	 
	
Consequences of Merger Events:

	 	  
	
Merger Event:

	 	
Applicable; provided that if an event occurs that constitutes both a Merger Event under Section 12.1(b) of the Equity Definitions and Additional Termination Event as defined below in this Confirmation, GS&Co. may elect, in its commercially reasonable judgment, whether the provisions of Section 12.2 of the Equity Definitions or the provisions regarding Additional Termination Events below will apply.

 

(a)           Share-for-Share: Modified Calculation Agent Adjustment

 

(b)           Share-for-Other: Cancellation and Payment (Calculation Agent Determination)

 

(c)           Share-for-Combined: Cancellation and Payment (Calculation Agent Determination); provided that GS&Co. may elect Component Adjustment.

 

  

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Consequences of Tender Offers:

	 	  
	
Tender Offer:

	 	
Applicable; provided that if an event occurs that constitutes both a Tender Offer under Section 12.1(d) of the Equity Definitions and Additional Termination Event as described below in this Confirmation, then (i) if such event does not result in Cancellation and Payment under Section 12.3 of the Equity Definitions, then GS&Co. may elect, in its commercially reasonable judgment, whether the provisions of Section 12.3 of the Equity Definitions or the provisions regarding Additional Termination Events below will apply, and (ii) otherwise, the provisions regarding Additional Termination Events below will apply.

 

(a) Share-for-Share: Modified Calculation Agent Adjustment

 

(b) Share-for-Other: Modified Calculation Agent Adjustment; provided that Cancellation and Payment (Calculation Agent Determination) shall apply with respect to such portion of the Other Consideration that consists of Cash

 

(c) Share-for-Combined: Modified Calculation Agent Adjustment; provided that Cancellation and Payment (Calculation Agent Determination) shall apply with respect to such portion of the Other Consideration that consists of Cash

	 	 	 
	
Modified Calculation Agent Adjustment:

 

	 	
For greater certainty, the definition of “Modified Calculation Agent Adjustment” of the Equity Definitions shall be amended (i) in Section 12.2(e) of the Equity Definitions by adding the following italicized language after the stipulated parenthetical provision: “(including adjustments to account for changes in volatility, expected dividends, stock loan rate or liquidity relevant to the Shares or to the Transaction) from the Announcement Date or the Determination Date, as applicable,  to the Merger Date.”, (ii) in Section 12.3(d) of the Equity Definitions by adding the following italicized language after the stipulated parenthetical provision: “(including adjustments to account for changes in volatility, expected dividends, stock loan rate or liquidity relevant to the Shares or to the Transaction) from the Announcement Date or the Determination Date, as applicable,  to the Tender Offer Date.”, and (iii) in both Section 12.2(e) and Section 12.3(d) of the Equity Definitions by deleting the phrase “expected dividends,” from such stipulated parenthetical provisions.

 

  

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Announcement Date:

 

	 	
The definition of “Announcement Date” in Section 12.1 of the Equity Definitions shall be amended by (i) replacing the word “leads to the” in the third and the fifth lines thereof with the words “, if completed, would lead to a”, and (ii) replacing the words “voting shares” in the fifth line thereof with the word “Shares”.

	 	 	 
	
Announcement Event:

	 	
If an Announcement Event has occurred, the Calculation Agent shall have the right to determine the economic effect of the Announcement Event on the theoretical value of the Transaction (including without limitation any change in volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction) (i) at a time that it deems appropriate, from the Announcement Date to the date of such determination (the “Determination Date”), and (ii) on the Valuation Date or on a date on which a payment amount is determined pursuant to Sections 12.7 or 12.8 of the Equity Definitions, from the Announcement Date or the Determination Date, as applicable, to the Valuation Date or the date on which a payment amount is determined pursuant to Sections 12.7 or 12.8 of the Equity Definitions. If any such economic effect is material, the Calculation Agent will either (i) adjust the terms of the Transaction to reflect such economic effect or (ii) terminate the Transaction, in which case the Determining Party will determine the Cancellation Amount payable by one party to the other; provided that the reference in Section 12.8(a) of the Equity Definitions to “Extraordinary Event” shall be replaced for this purpose with a reference to “Announcement Event.”  “Announcement Event” shall mean the occurrence of an Announcement Date.

	 	 	 
	
Settlement of Cancellation and Payment:

	 	
With respect to any Extraordinary Events hereunder, upon the occurrence of Cancellation and Payment in whole or in part, the parties agree that the amount to be paid, in accordance with the Equity Definitions, shall constitute a Transaction Early Termination Amount, subject to satisfaction by the payment or delivery of Shares or cash as set forth in the Early Termination section below.

 

  

15

  

 

	
Nationalization, Insolvency or Delisting:

	 	
Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the NASDAQ Global Market or the NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

	 	 	 
	
Determining Party:

	 	
GS&Co., acting in good faith and in a commercially reasonable manner

	 	 	 
	
Additional Disruption Events:

	 	  
	
Change in Law:

	 	
Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by replacing the phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal or informal interpretation” and (ii) by replacing the word “Shares” where it appears in clause (X) thereof with the words “Hedge Position”.

 

The parties agree that, for the avoidance of doubt, for purposes of Section 12.9(a)(ii) of the Equity Definitions, “any applicable law or regulation” shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation, and the consequences specified in Section 12.9(b)(i) of the Equity Definitions shall apply to any Change in Law arising from such act, rule or regulation.

	 	 	 
	
Failure to Deliver:

	 	
Not Applicable

	 	 	 
	
Insolvency Filing:

	 	
Applicable

	 	 	 
	
Hedging Disruption:

	 	
Applicable; provided that:

 

(i) Section 12.9(a)(v) of the Equity Definitions is hereby modified by inserting the following two phrases at the end of such Section:

 

“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”

 

(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof,  after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.

	 	 	 
	
Increased Cost of Hedging:

	 	
Not Applicable

 

  

16

  

 

	
Loss of Stock Borrow:

	 	
Applicable. Section 12.9(b)(iv) of the Equity Definitions is hereby amended by deleting the text from and including “(A)” to and including “(B)” and by deleting the words “in each case”.

	 	 	 
	
Maximum Stock Loan Rate:

	 	
2.00%

	 	 	 
	
Increased Cost of Stock Borrow:

	 	
Applicable; provided that it shall be a condition to Counterparty’s right to make the election described in clause (C) of Section 12.9(b)(v) of the Equity Definitions that on the date of such election, none of Counterparty, its directors, executive officers, or any person controlling, or exercising influence over, its decision to make such election is in possession of any material non-public information with respect to Counterparty or the Shares; and provided further that, if Counterparty timely makes the election described in clause (A) or (B) of Section 12.9(b)(v) of the Equity Definitions, Counterparty shall thereafter remain entitled, subject to the foregoing condition, to terminate the Transaction pursuant to Section 12.9(b)(v)(C) of the Equity Definitions upon ten Scheduled Trading Days’ notice to GS&Co. Section 12.9(b)(v) of the Equity Definitions is hereby amended by deleting the text from and including “(X)” to and including “(Y)”.

	 	 	 
	
Initial Stock Loan Rate:

	 	
0.25%

	 	 	 
	
Hedging Party:

	 	
GS&Co. or an affiliate of GS&Co. that is involved in the hedging of the Transaction for all applicable Additional Disruption Events

	 	 	 
	
Determining Party:

	 	
GS&Co. for all applicable Extraordinary Events

	 	 	 
	
Non-Reliance:

	 	
Applicable

	 	 	 
	
Agreements and Acknowledgments Regarding Hedging Activities:

	 	
Applicable

	 	 	 
	
Additional Acknowledgments:

	 	
Applicable

 

  

17

  

 

	
Other Provisions:

	 	 
	
Additional Agreements:

	 	
If Counterparty would be obligated to pay cash to GS&Co. pursuant to the terms of this Agreement for any reason without having had the right (other than pursuant to this paragraph) to elect to deliver Shares in satisfaction of such payment obligation, then Counterparty may elect to deliver to GS&Co. a number of Shares (whether registered or unregistered) having a cash value equal to the amount of such payment obligation. Such number of Shares to be delivered shall be the number of Shares, determined by the Calculation Agent, sufficient for GS&Co. to realize the cash equivalent of such payment obligation from proceeds of the sale of such number of Shares over a reasonable period of time taking into account any applicable discount (determined in a commercially reasonable manner) to reflect any restrictions on transfer as well as the market value of the Shares). Settlement relating to any delivery of Shares pursuant to this paragraph shall occur within a reasonable period of time. The number of Shares delivered pursuant to this paragraph shall not exceed the Maximum Deliverable Share Amount and shall be subject to the provisions under “Early Termination” hereof regarding Proceeds Amount and the provisions set forth in subsection (c) under “Additional Agreements, Representations and Covenants of Counterparty, Etc.” below.

	 	 	 
	
Early Termination:

	 	
Notwithstanding any provision to the contrary, upon the designation of an Early Termination Date or the occurrence of Cancellation and Payment in whole or in part hereunder, Counterparty’s payment obligation in respect of the Transaction (which shall, in the case of an Early Termination Date be determined in accordance with Second Method and Loss (which shall be determined using commercially reasonable procedures in order to produce a commercially reasonable result)) (the “Transaction Early Termination Amount”) may, at the option of Counterparty, be satisfied by the delivery of a number of Shares equal to the Transaction Early Termination Amount divided by the Termination Price (“Early Termination Stock Settlement”); provided, however, that Counterparty must notify GS&Co. of its election of Early Termination Stock Settlement by the close of business on the day that is two Exchange Business Days following the day that the notice designating the Early Termination Date, or notice that an Extraordinary Event has resulted in the cancellation or termination of the Transaction in whole or in part, is effective. “Termination Price” means the market value per Share on the Early Termination Date, as determined by the Calculation Agent in a commercially reasonable manner taking into account any applicable discount to reflect any restrictions on transfer.

 

  

18

  

 

	  	 	
A number of Shares calculated as being due in respect of any Early Termination Stock Settlement will be deliverable on the third Clearance System Business Day following the date that notice specifying the number of Shares deliverable is effective; provided that, if Counterparty is delivering Shares as a result of a Merger Event, the Settlement Date for such delivery will be immediately prior to the effective time of the Merger Event and the Shares will be deemed delivered at such time such that GS&Co. will be a holder of the Shares prior to such effective time. Section 6(d)(i) of the Agreement is hereby amended by adding the following words after the word “paid” in the fifth line thereof: “or any delivery is to be made, as applicable.”

	 	 	 
	  	 	
On or prior to the Early Termination Date or date on which notice that an Extraordinary Event has resulted in the cancellation or termination of the Transaction in whole or in part is effective, as applicable, if Early Termination Stock Settlement is elected and if so requested by GS&Co. upon advice of counsel, Counterparty shall (subject to its right to make the election described in the immediately succeeding paragraph) enter into a registration rights agreement with GS&Co. in form and substance reasonably acceptable to GS&Co. and Counterparty which agreement will contain among other things, customary representations and warranties and indemnification, restrictions on sales during “blackout dates” as provided for in the Registration Rights Agreement and shall satisfy the conditions contained therein and Counterparty shall file and diligently pursue to effectiveness a Registration Statement pursuant to Rule 415 under the Securities Act. If and when such Registration Statement shall have been declared effective by the Securities and Exchange Commission, Counterparty shall have made available to GS&Co. such Prospectuses as GS&Co. may reasonably request to comply with the applicable prospectus delivery requirements for the resale by GS&Co. of such number of Shares as GS&Co. shall specify (or, if greater, the number of Shares that Counterparty shall specify). Such Registration Statement shall be effective and Prospectus shall be current until the earliest of the date on which (i) all Shares delivered by Counterparty in connection with an Early Termination Date have been sold, (ii) GS&Co. has advised Counterparty that it no longer requires that such Registration Statement be effective or (iii) all remaining Shares could be sold by GS&Co. without registration pursuant to Rule 144 promulgated under the Securities Act (the “Termination Registration Period”). It is understood that the Registration Statement and Prospectus will cover a number of Shares equal to the number of Shares plus the aggregate number of Shares (if any) reasonably estimated by GS&Co. to be potentially deliverable by Counterparty in connection with Early Termination Stock Settlement hereunder, but in no event exceeding the Maximum Deliverable Share Amount. On each day during the Termination Registration Period, Counterparty shall represent that each of its filings under the Securities Act, the Exchange Act or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof and as of the date of this representation, they do not contain any untrue statement of a material fact or omission of a material fact required to be stated therein or necessary to make the statements made, in the light of the circumstances under which they were made, not misleading.

	 	 	 
	  	 	
If Counterparty elects not to deliver Shares subject to an effective Registration Statement (or if some or all of the Shares delivered cannot be used to close out stock loans in the shares of Counterparty entered into to establish or maintain short positions by GS&Co. in connection with the Transaction without a prospectus being required by applicable law to be delivered to such lender), the provisions of sub-paragraphs (B) and (C) set forth above under “Conditions to Net Physical Settlement” shall apply, mutatis mutandis, as if the Net Physical Settlement Amount were the Transaction Early Termination Amount. In no event shall Counterparty be required to deliver to GS&Co. a number of Shares greater than the Maximum Deliverable Share Amount.

 

  

19

  

 

	
Compliance With Securities Laws:

	 	
Counterparty represents and agrees that it has complied, and will comply, in connection with the Transaction and all related or contemporaneous sales and purchases of Shares, with the applicable provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder, including, without limitation, Rule 10b-5 and 13e and Regulation M under the Exchange Act.

	 	 	 
	  	 	
Each party acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof. Accordingly, each party represents and warrants to the other party that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act and (iii) the disposition of the Transaction is restricted under this Confirmation, the Securities Act and state securities laws.

	 	 	 
	  	 	
Counterparty further represents and warrants that:

	 	 	 
	  	 	
(a) Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares);

	 	 	 
	  	 	
(b) Counterparty represents and acknowledges that as of the date hereof and without limiting the generality of Section 13.1 of the Equity Definitions, GS&Co. is not making any representations or warranties with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project;

	 	 	 
	  	 	
(c) Counterparty is not, and after giving effect to the Transaction contemplated hereby, will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;

	 	 	 
	  	 	
(d) As of the Trade Date and each date on which a payment or delivery is made by Counterparty hereunder, (i) the assets of Counterparty at their fair valuation exceed the liabilities of Counterparty, including contingent liabilities; (ii) the capital of Counterparty is adequate to conduct its business; and (iii) Counterparty has the ability to pay its debts and other obligations as such obligations mature and does not intend to, or believe that it will, incur debt or other obligations beyond its ability to pay as such obligations mature.

 

  

20

  

 

	
Account Details:

	 	
Account for payments to Counterparty:

	 	 	
To be advised.

	 	 	 
	 	 	
Account for payments to GS&Co.:

	 	 	
Chase Manhattan Bank N.A., New York

	 	 	
ABA No. 021-000021

	 	 	
A/C Goldman, Sachs & Co. New York

	 	 	
A/C No. 930-1-011483

	 	 	
REF: Iconix Brand Group, Inc.

	 	 	
A/C at GS: 040703779

	 	 	 
	 	 	
Account for delivery of Shares to GS&Co.:

	 	 	
To be advised.

	 	 	 
	
Agreement Regarding Shares:

	 	
Counterparty agrees that, in respect of any Shares delivered to GS&Co., such Shares shall be, upon such delivery, duly and validly authorized, issued and outstanding, fully paid and non-assessable and subject to no adverse claims of any other party. The issuance of such Shares does not and will not require the consent, approval, authorization, registration or qualification of any government authority, except such as shall have been obtained on or before the delivery date of any Shares or as may be required in connection with any Registration Statement filed with respect to any Shares.

	 	 	 
	
Bankruptcy Rights:

	 	
In the event of Counterparty’s bankruptcy, GS&Co.’s rights in connection with the Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that GS&Co.’s rights with respect to any other claim arising from the Transaction prior to Counterparty’s bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith.

	 	 	 
	
Netting and Set-Off:

 

	 	
Obligations under the Transaction shall not be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, the Transaction any other agreement, applicable law or otherwise, and no other obligations of the parties shall be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations under the Transaction, whether arising under the Agreement, the Transaction any other agreement, applicable law or otherwise, and each party hereby waives any such right of setoff, netting or recoupment provided that both parties agree that subparagraph (ii) of Section 2(c) of the Agreement shall apply to the Transaction.

	 	 	 
	
Right to Extend:

	 	
GS&Co. may postpone any potential Expiration Date or postpone or extend any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Option Cash Settlement Amount or Net Physical Settlement Amount (as applicable) for such Expiration Date), if GS&Co. determines, in its reasonable discretion, that such postponement or extension is reasonably necessary or appropriate (i) to preserve GS&Co.’s or its affiliate’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market or stock loan market; provided that any extension or postponement resulting from such circumstances or conditions contemplated by this clause (i) shall not result in the final Exercise Date for the Transaction occurring more than seventy-five (75) Scheduled Trading Days following the final Exercise Date contemplated hereunder, or (ii) to enable GS&Co. or its affiliate to effect purchases or sale of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if GS&Co. or its affiliate were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to GS&Co. and/or such affiliate.

 

  

21

  

 

	
Transfer:

	 	
Neither party may transfer its rights or delegate its obligations under the Transaction without the prior written consent of the other party, except that GS&Co., after payment in full of the Premium, may assign its rights and delegate its obligations hereunder, in whole or in part, to any other person (an “Assignee”) without the prior consent of the Counterparty, effective (the “Transfer Effective Date”) upon delivery to Counterparty of an executed acceptance and assumption by the Assignee (an “Assumption”) of the transferred obligations of GS&Co. under the Transaction (the “Transferred  Obligations”).

	 	 	 
	
Beneficial Ownership:

	 	
Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall GS&Co. be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Goldman’s Beneficial Ownership would be equal to or greater than 9.0% of the outstanding Shares or (ii) GS&Co., Goldman Group (as defined below) or any person whose ownership position would be aggregated with that of GS&Co. or Goldman Group (GS&Co., Goldman Group or any such person, a “Goldman Person”) under Section 203 of the Delaware General Corporation Law (the “DGCL Takeover Statute”) or any federal, state or local laws, regulations or regulatory orders applicable to ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a state or federal regulator) of a Goldman Person under Applicable Laws (including, without limitation, “interested stockholder” or “acquiring person” status under the DGCL Takeover Statute) and with respect to which such requirements have not been met or the relevant approval has not been received, in each case minus (y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “Ownership Limitation”). If any delivery owed to GS&Co. hereunder is not made, in whole or in part, as a result of an Ownership Limitation, GS&Co.’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, GS&Co. gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached.

 

“Goldman’s Beneficial Ownership” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “Section 13”)) of Shares, without duplication, by GS&Co., together with any of its affiliates or other person subject to aggregation with GS&Co.  under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which GS&Co. is or may be deemed to be a part (GS&Co. and any such affiliates, persons and groups, collectively, “Goldman Group”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number).

 

Notwithstanding anything in the Agreement or this Confirmation to the contrary, GS&Co. shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that GS&Co. (or such affiliate) is not entitled to receive at any time pursuant to this paragraph, until such time as such Shares are delivered pursuant to this paragraph.

 

Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing GS&Co. to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, GS&Co. may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform GS&Co.’s obligations in respect of the Transaction and any such designee may assume such obligations.  GS&Co. shall be discharged of its obligations to Counterparty solely to the extent of any such performance, and not otherwise.

 

  

22

  

 

	
Repurchase Notices:

	 	
Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give GS&Co. a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the Warrant Equity Percentage as determined on such day is (i) equal to or greater than 9% or (ii) greater by 0.5% than the Warrant Equity Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Warrant Equity Percentage as of the Trade Date).  The “Warrant Equity Percentage” as of any day is the fraction (A) the numerator of which is the product of (x) the sum of the Number of Warrants in the aggregate and the number of Warrants in the aggregate underlying the OTC warrant transaction referencing the Shares entered into by GS&Co. and Counterparty on May 17, 2011 and (y) the Option Entitlement in respect of the Transaction and (B) the denominator of which is the number of Shares outstanding on such day.  Counterparty agrees to indemnify and hold harmless GS&Co. and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to GS&Co.’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide GS&Co. with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person in respect of the foregoing, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction. Notwithstanding anything in this paragraph, Counterparty will not be liable to an Indemnified Person under this provision, whether by indemnity or contribution, to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from that Indemnified Person’s gross negligence or willful misconduct.

	 	 	 
	
Regulation:

	 	
GS&Co. is a member of the Securities Investor Protection Corporation (“SIPC”).

 

  

23

  

 

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

 

	
(a)  

	
Counterparty hereby represents and warrants to GS&Co., as of and on the Trade Date, that:

 

	
       (1)  

	
it will not, and will not permit any person or entity subject to its control to, bid for or purchase Shares except pursuant to transactions or arrangements which have been approved by GS&Co. or an affiliate of GS&Co.;

 

	
       (2)  

	
each of Counterparty’s filings under the Securities Act, the Exchange Act, or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof and as of the date of this representation, such filings when considered as a whole (with the more recent such filings deemed to amend inconsistent statements contained in any earlier such filings) do not contain any misstatement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and

 

	
      (3)  

	
Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

	
(b)  

	
No collateral shall be required by either party for any reason in connection with the Transaction.

 

	
(c)  

	
The representations and warranties of Counterparty set forth in Section 1 of the Purchase Agreement, dated as of May 17, 2011 (the “Purchase Agreement”), between Counterparty, Barclays Capital Inc. and Goldman, Sachs & Co. (Barclays Capital Inc. and Goldman, Sachs & Co., the “Initial Purchasers”) relating to the issuance of USD 275,000,000 principal amount of 2.50% convertible senior subordinated notes due 2016 and the additional USD 25,000,000 principal amount of 2.50% convertible senior subordinated notes due 2016 issued pursuant to the over-allotment option exercised by the Initial Purchasers on the date hereof pursuant to Section 2(b) of the Purchase Agreement (together, the “Convertible Notes”), are true and correct and are hereby deemed to be repeated to GS&Co. as if set forth herein.

 

	
(d)  

	
Counterparty understands no obligations of GS&Co. to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any governmental agency.

	
(e)  

	
Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.

	
(f)  

	
Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.

ISDA Master Agreement:

 

With respect to the Agreement, GS&Co. and Counterparty each agree as follows:

 

“Specified Entity” means in relation to GS&Co. and in relation to Counterparty for purposes of the Transaction: Not applicable.

 

The definition of “Specified Transaction” in Section 14 of the Agreement is hereby amended by adding the text “commodity transaction, credit derivative transaction or futures transaction” after the words “foreign exchange transaction” in the sixth line thereof.  “Specified Transaction” shall exclude any default under a Specified Transaction if caused solely by the general unavailability of the currency in which payments under such Specified Transaction are denominated due to exchange controls or other governmental action.

 

  

24

  

 

The “Cross Default” provisions of Section 5(a)(vi) of the Agreement will not apply to GS&Co. and will not apply to Counterparty.

 

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement will not apply to GS&Co. and will not apply to Counterparty.

 

Additional Termination Event.

 

Without limiting the generality of the definition of any Extraordinary Event hereunder, the occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, GS&Co. may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

 

(i) within the period commencing on the Trade Date and ending on the first anniversary of the Premium Payment Date, Buyer reasonably determines that it is advisable to terminate a portion of the Transaction so that Buyer’s related hedging activities will comply with applicable securities laws, rules or regulations;

 

(ii) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties and assets of the Issuer and its subsidiaries taken as a whole to another person other than to one or more of the Issuer’s wholly-owned subsidiaries;

 

(iii) the adoption of a plan relating to the liquidation or dissolution of the Issuer;

 

(iv) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the beneficial owner, directly or indirectly, of more than 50% of the voting stock of the Issuer (measured by voting power rather than the number of Shares), except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition;

 

(v) the first day on which a majority of the members of the board of directors of the Issuer are not continuing directors; or

 

(vi) the Issuer consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Issuer, in any such event pursuant to a transaction in which any of the voting stock of the Issuer is converted into or exchanged for cash, securities or other property; provided, however that a transaction as a result of which the holders of the voting stock of the Issuer immediately prior to such transaction will own, directly or indirectly, more than 50% of all voting stock of the continuing or surviving corporation or limited liability company or transferee or a direct or indirect parent thereof immediately after such transaction shall not constitute an Additional Termination Event.

 

  

25

  

 

Notwithstanding anything to the contrary set forth herein, an event described in clauses (ii) through (v) above will not constitute an Additional Termination Event if 90% of the consideration for the Shares (excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) in the transaction or transactions otherwise constituting an Additional Termination Event consists of shares of common stock or American Depositary Shares representing shares of common stock, traded on a U.S. national securities exchange, or which will be so traded or quoted when issued or exchanged in connection with such event; provided that, with respect to an entity organized under the laws of a jurisdiction outside the United States, such entity has a worldwide total market capitalization of its equity securities of at least three times the market capitalization of the Issuer before giving effect to the consolidation or merger.

 

For purposes of the foregoing, “beneficial ownership” shall be determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act. The term “person” includes any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act. The term “continuing director” means, as of any date of determination, any member of the board of directors of the Issuer who (i) was a member of such board of directors on the date hereof or (ii) was nominated for election or elected to such board of directors with the approval of a majority of the continuing directors who were members of such board of directors at the time of such nomination or election. The term “voting stock” of a person means all shares of capital stock of such person entitled to vote in elections of the board of directors, managers or trustees of such person.

 

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to GS&Co. or to Counterparty.

 

Payments on Early Termination. For the purpose of Section 6(e) of the Agreement: (i) Loss (which shall be determined using commercially reasonable procedures in order to produce a commercially reasonable result) shall apply; and (ii) the Second Method shall apply.

 

“Termination Currency” means USD.

 

Tax Representations.

 

	
(I) 

	
Payer Representations. For the purpose of Section 3(e) of the Agreement, each party represents to the other party that it is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other party under the Agreement. In making this representation, each party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction of the agreement contained in Sections 4(a)(i) and 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Sections 4(a)(i) and 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement; provided that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or commercial position.  For purposes of this representation, “any Tax from any payment” shall not include any tax imposed by sections 1471 through 1474 of the United States Internal Revenue Code (the “Code”).

 

  

26

  

 

	
(II)  

	
Payee Representations. For the purpose of Section 3(f) of the Agreement, each party makes the following representations to the other party:

 

	
(i)  

	
GS&Co. represents that it is a New York limited partnership that is treated as a corporation for U.S. federal income tax purposes.

 

	
(ii)  

	
Counterparty represents that it is a corporation incorporated in Delaware.

 

Delivery Requirements. For the purpose of Sections 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents:

 

	
(a)  

	
Tax forms, documents or certificates to be delivered are:

 

GS&Co. agrees to complete (accurately and in a manner reasonably satisfactory to Counterparty), execute, and deliver to Counterparty, United States Internal Revenue Service Form W-9, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such form(s) previously provided by GS&Co. has become obsolete or incorrect.

 

Counterparty agrees to complete (accurately and in a manner reasonably satisfactory to GS&Co.), execute, and deliver to GS&Co., United States Internal Revenue Service Form W-9, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by GS&Co.; and (iii) promptly upon learning that any such form(s) previously provided by Counterparty has become obsolete or incorrect.

 

	
(b)  

	
Other documents to be delivered:

 

	
Party Required to Deliver Document

	 	
Document Required to be Delivered

	 	
When Required

	 	
Covered by

Section 3(d)

Representation

	
Counterparty

	 	
Evidence of the authority and true signatures of each official or representative signing this Confirmation

	 	
Upon or before execution and delivery of this Confirmation

	 	
Yes

	 	 	 	 	 	 	 
	
Counterparty

	 	
Certified copy of the resolution of the Board of Directors or equivalent document authorizing the execution and delivery of this Confirmation and such other certificate or certificates as GS&Co. shall reasonably request

	 	
Upon or before execution and delivery of this Confirmation

	 	
Yes

 

  

27

  

 

Addresses for Notices:

 

Address for notices or communications to GS&Co. for all purposes:

 

Goldman, Sachs & Co.

Attn: Michael Voris

Equity Capital Markets

200 West Street,

New York, NY 10282

Telephone No.: 212-902-4895

Facsimile No.:  212-291-5027

Email: vorism@am.ibd.gs.com

Address for notices or communications to Counterparty for all purposes:

 

	 	Address:  	1450 Broadway	 
	 	 	
New York, NY 10018

	 
	 	 	 	 
	 	Attention:  	
Chief Executive Officer

	 
	 	Facsimile No.:	
212-391-0127

	 
	 	Telephone No.:	
212-730-0030

	 

 

In addition, in the case of notices or communications relating to Section 5, 6, 11 or 13 of the Agreement, a second copy of any such notice or communication shall be addressed to the attention of Counterparty’ General Counsel as follows:

 

 

	 	Address:	1450 Broadway	 
	 	 	New York, NY 10018	 
	 	 	 	 
	 	Attention:	General Counsel	 
	 	Facsimile No.:	212-391-0127	 
	 	Telephone No.:	212-819-2089	 

                              

  

28

  

Process Agent: For the purpose of Section 13(c) of the Agreement: GS&Co. does not appoint a Process Agent.

 

Counterparty does not appoint a Process Agent.

 

Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither GS&Co. nor Counterparty is a Multibranch Party.

 

Calculation Agent. “Calculation Agent” means GS&Co.; provided that all calculations and determinations to be made hereunder or in connection herewith by the Calculation Agent shall be made in good faith and in a commercially reasonable manner.

 

Credit Support Document.

 

With respect to GS&Co.: The General Guarantee Agreement dated January 30, 2006 made by The Goldman Sachs Group, Inc. (“GS Group”) in favor of each person to whom GS&Co. may owe any Obligations (as defined in the General Guarantee Agreement) and filed as Exhibit 10.45 to GS Group’s Form 10-K for the fiscal year ended November 25, 2005 and any successor guarantee by GS Group in favor of each person to whom GS&Co. may owe any Obligations (as defined in the General Guarantee Agreement).

 

With respect to Counterparty: Not Applicable

 

Credit Support Provider.

 

With respect to GS&Co.: The Goldman Sachs Group, Inc.

 

With respect to Counterparty: Not Applicable.

 

Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws of the State of New York.

 

WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.

 

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not be applicable to the Transaction.

 

  

29

  

 

Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of “and” at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the end of Section 3(a)(v) and the addition of Section 3(a)(vi), as follows:

 

“Eligible Contract Participant; Line of Business. Each party agrees and represents that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”), this Agreement and the Transaction thereunder are subject to individual negotiation by the parties and have not been executed or traded on a “trading facility” as defined in Section 1a(34) of the CEA, and it has entered into this Confirmation and the Transaction in connection with its business or a line of business (including financial intermediation), or the financing of its business.”

 

Acknowledgements:

 

	
(a)  

	
The parties acknowledge and agree that there are no other representations, agreements or other undertakings of the parties in relation to the Transaction, except as set forth in this Confirmation.

 

	
(b)  

	
Each of Counterparty and GS&Co. agrees and acknowledges that GS&Co. is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”).  The parties hereto agree and acknowledge that they intend for (A) this Confirmation to be (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that GS&Co. is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

	
(c)  

	
The parties acknowledge and agree that in the event of an Early Termination Date as a result of an Event of Default that is within Counterparty’s control, the amount payable under the Agreement will be a cash amount calculated as described therein and that any delivery specified in the Transaction will no longer be required.

 

  

30

  

 

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting the words “on the day” in the second line thereof and substituting therefor “on the day that is three Local Business Days after the day”. Section 6(d)(ii) is further modified by deleting the words “two Local Business Days” in the fourth line thereof and substituting therefor “three Local Business Days.”

 

Amendment of Definition of Reference Market-Makers. The definition of “Reference Market-Makers” in Section 14 of the Agreement is hereby amended by adding in clause (a) after the word “credit” and before the word “and” the words “or to enter into transactions similar in nature to the Transactions.”

 

Consent to Recording. Each party consents to the recording of the telephone conversations of trading and marketing personnel of the parties and their Affiliates in connection with this Confirmation. To the extent that one party records telephone conversations (the “Recording Party”) and the other party does not (the “Non-Recording Party”), the Recording Party shall in the event of any dispute, make a complete and unedited copy of such party’s tape of the entire day’s conversations with the Non-Recording Party’s personnel available to the Non-Recording Party. The Recording Party’s tapes may be used by either party in any forum in which a dispute is sought to be resolved and the Recording Party will retain tapes for a consistent period of time in accordance with the Recording Party’s policy unless one party notifies the other that a particular transaction is under review and warrants further retention.

 

Disclosure. Each party hereby acknowledges and agrees that GS&Co. has authorized Counterparty to disclose the Transaction and any related hedging transaction between the parties if and to the extent that Counterparty reasonably determines (after consultation with GS&Co., to the extent permissible and practicable) that such disclosure is required by law or by the rules of the New York Stock Exchange or any securities exchange. Notwithstanding the foregoing, effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

 

Severability. If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to this Agreement; provided, however, that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.

 

Illegality. The parties agree that for the avoidance of doubt, for purposes of Section 5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and the consequences specified in the Agreement, including without limitation, the consequences specified in Section 6 of the Agreement, shall apply to any Illegality arising from any such act, rule or regulation.

 

  

31

  

 

Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be deemed to be an Affected Party in connection with Illegality and any Tax Event.

 

Indemnifiable Tax.  For purposes of this Agreement, “Indemnifiable Tax” shall not include any Tax imposed pursuant to sections 1471 through 1474 of the Code.

 

Counterparts.  This Confirmation may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute a single agreement.

 

[Signatures follow on separate page]

  

32

  

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

 

	 	
Very truly yours,

	 
	 	 	 
	 	
GOLDMAN, SACHS & CO.

	 
	 	 	 	 
	
 

	
By:   

	/s/ Jonathan Lipnick 	 
	 	 	
Name: Jonathan Lipnick

	 
	 	 	
Title: Vice President

	 
	 	 	 	 

 

Confirmed as of the date first above written:

 

	ICONIX BRAND GROUP, INC.	 	 	 	 
	 	 	 	 	 	 
	By: 	

/s/ Warren Clamen  

	 	 	
 

	 
	 	

Name: Warren Clamen

	 	 	
 

	 
	 	

Title: Executive Vice President and Chief Financial Officer

	 	 	
 

	 

 

  

33Unassociated Document

 

GENERAL SECURITY AGREEMENT

THIS SECURITY AGREEMENT is made as of the 17th day of November, 2008

BETWEEN:

Sinobiomed Inc., a body corporate, incorporated under the laws of the State of Delaware, having an address for purposes of this agreement of c/o Devlin Jensen, Suite 2550, 555 West Hastings Street, Vancouver, British Columbia, V6B 4N5, Canada

(the "Debtor")

AND:

R. Douglas Smith, Chartered Accountant, of 10571 Aintree Crescent, Richmond, British Columbia, V7A 3V2, Canada

(the "Secured Party")

1. SECURITY INTEREST

1.1 For valuable consideration and as continuing security for the payment and performance of the obligations referred to in Clause 3 hereof, the Debtor, subject to the exceptions set out in Clause 2, hereby mortgages, charges, assigns and transfers to the Secured Party, and grants to the Secured Party a continuing, specific and fixed security interest in all the Debtor's right, title and interest in and to all presently owned or held and after acquired or held personal property, assets, rights and undertakings of the Debtor (other than real property), of whatever nature or kind and wheresoever situate and all proceeds thereof and therefrom (all of which is hereinafter collectively called the "Collateral") including, without limiting the generality of the foregoing:

	
  

	
(a)

	
Equipment

	
  

	
All equipment, including, without limiting the generality of the foregoing, machinery, tools, fixtures, furniture, furnishings, chattels, motor vehicles, vessels and other tangible personal property that is not Inventory (as defined below), and all parts, components, attachments, accessories, accessions, replacements, substitutions, additions and  improvements to any of the foregoing (all of which is hereinafter collectively called the "Equipment"),

	
  

	
(b)

	
Inventory

All inventory, including, without limiting the generality of the foregoing, goods acquired or held for sale or lease or furnished or to be furnished under contracts of rental or service, all raw materials, goods in process, finished goods, returned goods, repossessed goods, and all packaging materials, supplies and containers relating to or used or consumed in connection with any of the foregoing (all of which is hereinafter collectively called the "Inventory"),

	
  

	
(c)

	
Accounts

	
  

	
All debts, accounts, demands, claims, monies and choses in action which now are, or which may at any time hereafter be, due or owing to or owned by the Debtor and all books, records, documents, papers and electronically recorded data recording, evidencing or relating to the said debts, accounts, claims, monies and choses in action or any part thereof (all of which is hereinafter collectively called the "Accounts"),

 

  

 

  

 

	
  

	
(d)

	
Intangibles

All contractual rights, licenses, goodwill, patents, trade-marks, trade names, copyrights and other intellectual property of the Debtor, all other choses in action of the Debtor of every kind which now are, or which may at any time hereafter be, due or owing to or owned by the Debtor, and all other intangible property of the Debtor that is not Accounts, chattel paper, instruments, documents of title, securities or money (all of which is hereinafter collectively called the "Intangibles"),

	
  

	
(e)

	
Other Personal Property

	
  

	
All documents of title, chattel paper, instruments, securities and money, and all other personal property of the Debtor that are not Equipment, Inventory, Accounts or Intangibles, and

	
  

	
(f)

	
Proceeds

All proceeds of the Accounts, Inventory, Equipment, Intangibles and the other personal property described in sub-clause 1.1(e) herein, present and future, including but not limited to all goods, intangibles, securities, documents of title, chattel paper, instruments, money, crops or licences, as the case may be, and all proceeds of proceeds (all of which is hereinafter collectively called the "Proceeds").

1.2 Notwithstanding the Debtor's right to deal with the Inventory in the ordinary course of business as provided herein, the security interests created hereby will operate as a fixed and specific charge of all of the Collateral presently existing, and with respect to all future Collateral, will operate as a fixed and specific charge of such future Collateral which will attach as of the moment the Debtor acquires any rights therein.  The security interests created hereby are not intended as and will not be interpreted or construed as a floating charge.

2. EXCEPTIONS

2.1 The last day of any term reserved by any lease, verbal or written, or any agreement therefor, now held or hereafter acquired by the Debtor is hereby excepted out of the charge hereby or by any other instrument created, but the Debtor will assign and dispose of the same in such manner as the Secured Party may from time to time direct in writing and, upon any sale of any such leasehold premises by the Secured Party as provided for herein, the Secured Party will, for the purpose of vesting the aforesaid residue of any such term in any purchaser or any other person, firm or partnership, be entitled by deed or other written instrument to assign to such purchaser or other person, firm or partnership the aforesaid residue of any such term in place of the Debtor and to vest the same freed and discharged from any obligation whatsoever respecting the same.

2.2 There will be excluded from the security interests hereby created any consumer goods of the Debtor.

 

  

2

  

3. OBLIGATIONS SECURED

3.1 This Security Agreement and the security interests hereby created are in addition to and not in substitution for any other security interest now or hereafter held by the Secured Party from the Debtor or from any other person whomsoever and will be general and continuing security for the payment of all indebtedness and liability of the Debtor to the Secured Party (including any interest, bonus or penalty thereon), present and future, absolute or contingent, joint or several, direct or indirect, matured or not, extended or renewed, wheresoever and howsoever incurred, and any ultimate balance thereof, including all future advances and re-advances, and for the performance of all obligations, agreements, warranties, representations, covenants and conditions of the Debtor made pursuant to this Security Agreement or any other agreement between the Debtor and the Secured Party all as now in effect or as hereinafter entered into or amended (all of which indebtedness, liability, and obligations are hereinafter collectively called the "Obligations").

3.2 The Debtor will and will be deemed to hold all proceeds separate and in trust for the benefit of the Secured Party until all amounts owing by the Debtor to the Secured Party have been paid in full to the Secured Party.

4. PROHIBITIONS

4.1 The Debtor Without the prior written consent of the Secured Party the Debtor will not have power to:

	
  

	
(a)

	
create or permit to exist any security interest in, charge, encumbrance or lien over, or claim against any of its property, assets, or undertakings, or

	
  

	
(a)

	
grant, sell, or otherwise assign its chattel paper.

5. ATTACHMENT

5.1 The Debtor agrees and acknowledges that the security interests hereby created attach upon the execution of this Security Agreement (or in the case of any after acquired property, upon the date of acquisition thereof), that value has been given, and that the Debtor has, or in the case of after acquired property will have, rights in the Collateral.

6. REPRESENTATIONS AND WARRANTIES

6.1 The Debtor, if a company or a partnership, represents and warrants that this Security Agreement is granted in accordance with resolutions of the directors (and of the shareholders as applicable)  or of the partners, as the case may be, of the Debtor and all other matters and things have been done and performed so as to authorize and make the execution and delivery of this Security Agreement, and the performance of the Obligations, legal, valid and binding.

6.2 The Debtor represents and warrants that the Debtor lawfully owns and possesses all presently held Collateral and has good title thereto, free from all security interests, charges, encumbrances, liens and claims, save only the charges or security interests, if any, shown on the Schedule hereto under "Other Charges and Security Interests" and those consented to in writing by the Secured Party, and the Debtor has good right and lawful authority to grant a security interest in the Collateral as provided by this Security Agreement.

6.3 The Debtor, if a corporation, is duly incorporated, properly organized and validly existing under the laws of Delaware and is duly registered and qualified to do business under the laws of each and every jurisdiction in which the character of the properties owned by it or the nature of the activities conducted by it make such registration or qualification advisable or necessary.

 

  

3

  

6.4 The following is the Debtor's chief office for service or delivery in British Columbia:

c/o Devlin Jensen, Suite 2550, 555 West Hastings Street, Vancouver, BC, V6B 4N5.

The Debtor will not change its chief executive office or the location(s) of any of the Collateral or the records in respect thereof without giving the Secured Party 10 days prior written notice.

6.5 The Debtor represents and warrants that there is no action or proceeding pending or to the knowledge of the Debtor threatened against the Debtor before any court, administrative agency, tribunal, arbitrator, government or governmental agency or any fact known to the Debtor and not disclosed to the Secured Party which might involve any material adverse change in the properties, business prospects or condition of the Debtor, or question the validity of this Security Agreement or any other material agreement to which the Debtor is a party (or the Debtor's ability to perform the Obligations under this Security Agreement) and there are no outstanding judgments, writs of execution, work orders, injunctions, or directives against the Debtor or its properties.

6.6 The Debtor represents and warrants that each debt, chattel paper and instrument constituting Collateral is genuine and enforceable in accordance with its terms against the party obligated to pay thereunder (the "Account Debtor").

6.7 The amount represented by the Debtor to the Secured Party from time to time as owing by each Account Debtor or by all Account Debtors will, to the best of the Debtor's knowledge, be the correct amount actually and unconditionally owed by such Account Debtor or Account Debtors, save and except for normal cash discounts where applicable and a reasonable reserve for bad debts.

7. COVENANTS OF THE DEBTOR

7.1 The Debtor covenants that at all times while this Security Agreement remains in effect the Debtor will:

	
  

	
(a)

	
defend, at the Debtor's expense, the title to the Collateral for the benefit of the Secured Party against the claims and demands of all persons (except those persons listed in the Schedule attached hereto under "Other Charges and Security Interests", to the extent of such charges and security interest in favour of such persons in the Collateral listed in the Schedule) and notify the Secured Party promptly of any claim, lien, charge, security interest or other encumbrance made or asserted against any of the Collateral and of any suit, action or proceeding affecting any of the Collateral,

	
  

	
(b)

	
fully and effectually maintain and keep maintained the security interests hereby created valid and effective,

	
  

	
(c)

	
maintain the Collateral in good order, condition and repair and will not use the Collateral in violation of this Security Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable statute, law, by-law, rule, regulation, court order or ordinance,

	
  

	
(d)

	
forthwith:

 

	
  

	
(i)

	
comply with all the Obligations referred to in clause 3,

 

	
  

	
(ii)

	
pay all amounts owing to the charge holders, if any, shown in the Schedule hereto under "Other Charges and Security Interests" and will otherwise comply with the terms, covenants and conditions of all such Other Charges and Security Interests,

 

  

4

  

 

	
  

	
(iii)

	
pay all taxes, assessments, rates, duties, levies, government fees, claims and dues lawfully levied, assessed or imposed upon the Debtor or the Collateral when due, unless the Debtor will in good faith contest the obligations so to pay and in such case the Debtor will furnish such additional security to the Secured Party as the Secured Party may require, and

	
  

	
(iv)

	
discharge and cause to be released all security interests, charges, encumbrances, liens and claims which rank or could rank in priority to any security interest created by this Security Agreement, other than the charges or security interests, if any, shown in the Schedule hereto under "Other Charges and Security Interests" or those consented to in writing by the Secured Party;

	
  

	
(e)

	
forthwith pay all actual costs, charges, expenses and legal fees and disbursements (on an indemnity basis) which may be incurred by the Secured Party in:

	
  

	
(i)

	
inspecting the Collateral,

	
  

	
(ii)

	
negotiating, preparing, perfecting and registering this Security Agreement and other documents, whether or not relating to this Security Agreement,

	
  

	
(iii)

	
investigating title to the Collateral,

	
  

	
(iv)

	
taking, recovering, keeping possession of and insuring the Collateral, and

	
  

	
(v)

	
all other actions and proceedings taken in connection with the preservation of the Collateral and the enforcement of this Security Agreement and of any other security interest held by the Secured Party as security for the Obligations,

	
  

	
(f)

	
at the Secured Party's request at any time and from time to time execute and deliver such further and other documents and instruments and do all acts and things as the Secured Party in its absolute discretion requires in order to confirm and perfect, and maintain perfection of, the security interests and charges hereby created in favour of the Secured Party upon any of the Collateral,

	
  

	
(g)

	
notify the Secured Party promptly and accurately of:

 

	
  

	
(i)

	
any change in the information contained herein relating to the Debtor, its name, address, business or the Collateral,

 

	
  

	
(ii)

	
the details of any material acquisition or disposition of the Collateral,

	
  

	
(iii)

	
any material default by any Account Debtor in payment or other performance of his, her or its obligations to the Debtor with respect to any Accounts, and

	
  

	
(iv)

	
the return to or repossession by the Debtor of Collateral,

	
  

	
(h)

	
prevent the Collateral, other than Inventory sold, leased, or otherwise disposed of as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement, or from being or becoming a fixture to real property,

 

  

5

  

 

	
  

	
(i)

	
the Secured Party or its agents will have the right to inspect the Collateral and review and copy any and all information and data relating to the Collateral or to any other transactions between the parties hereto wherever and however such information and data may be stored.  In the event that the use of a computer system is required to access such information and data, the Debtor will allow the Secured Party the use of its computer system for such purpose and will provide assistance in that regard.  If for any reason the said information and data cannot be accessed and retrieved at the Debtor's premises the Secured Party may remove the medium in which such information or data is stored from the Debtor's premises to any other place which has a computer system that will give the Secured Party the opportunity to retrieve, record or copy such information and data.  The Secured Party will be entitled to reproduce and retain a copy of any such information and data in any format whatsoever,

	
  

	
(j)

	
deliver to the Secured Party from time to time promptly upon request:

	
  

	
(i)

	
any documents of title, instruments, securities and chattel paper constituting, representing or relating to Collateral,

	
  

	
(ii)

	
all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to the Collateral for the purpose of inspecting, auditing or copying the same,

	
  

	
(iii)

	
all financial statements prepared by or for the Debtor regarding the Debtor's business,

	
  

	
(iv)

	
all policies and certificates of insurance relating to the Collateral, and

	
  

	
(v)

	
such information concerning the Collateral, the Debtor and the Debtor's business and affairs as the Secured Party may require,

	
  

	
(k)

	
keep the Collateral at its principal place(s) of business as set out in sub-clause 6.4 herein,

	
  

	
(l)

	
give immediate written notice to the Secured Party of all loss or damage to or loss of possession of the Collateral other than by sale in the ordinary course of the Debtor's business,

	
  

	
(m)

	
not carry on business under or use any name or style other than the name(s) specified in this Security Agreement, without first informing the Secured Party in writing, and

	
  

	
(n)

	
carry on and conduct business in a proper and efficient manner so as to protect and preserve the Collateral and at all times keep accurate and complete records of the Collateral as well as proper books of account for its business all in accordance with the generally accepted accounting principles, consistently applied.

7.2 The Debtor, if a company, covenants that at all times while this Security Agreement remains in effect, without the prior written consent of the Secured Party, it will not:

	
  

	
(a)

	
declare or pay any dividends,

	
  

	
(b)

	
purchase or redeem any of its shares or otherwise reduce its share capital,

	
  

	
(c)

	
guarantee any obligation, or

 

  

6

  

 

	
  

	
(d)

	
endorse any obligation or otherwise become liable upon any note or other obligation other than bills of exchange deposited to the bank account of the Debtor.

8. PERFORMANCE OF OBLIGATIONS

8.1 If the Debtor fails to perform any or all the Obligations hereunder, the Secured Party may, but will not be obliged to, perform any or all of such Obligations without prejudice to any other rights and remedies of the Secured Party hereunder, and any payments made and any costs, charges, expenses and legal fees and disbursements incurred in connection therewith will be payable by the Debtor on an indemnity basis to the Secured Party forthwith with interest until fully paid at the highest rate borne by any of the Obligations and such amounts will be a charge upon and security interest in the Collateral in favour of the Secured Party prior to all claims subsequent to this Security Agreement.

9. RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL

9.1 Except as herein provided, without the prior written consent of the Secured Party the Debtor will not:

	
  

	
(a)

	
sell, lease or otherwise dispose of Collateral,

	
  

	
(b)

	
release, surrender or abandon possession of Collateral, or

	
  

	
(c)

	
move or transfer the Collateral from any location.

9.2 Provided that the Debtor is not in default under this Security Agreement, at any time without the consent of the Secured Party the Debtor may lease, sell, license, consign or otherwise deal with items of Inventory in the ordinary course of its business and for the purposes of carrying on its business.

10. DEFAULT

10.1 The Debtor will be in default under this Security Agreement,  unless expressly and specifically waived in writing by the Secured Party, in any of the following events:

	
  

	
(a)

	
the Debtor makes default in payment when due of any indebtedness or liability of the Debtor to the Secured Party or defaults in performance of any of the Obligations whatsoever,

	
  

	
(b)

	
the Debtor is in breach of any term, condition, obligation or covenant to the Secured Party, or any representation or warranty to the Secured Party is untrue, whether or not contained in this Security Agreement,

	
  

	
(c)

	
the Debtor ceases or threatens to cease to carry on business,

	
  

	
(d)

	
the Debtor makes an assignment for the benefit of its creditors, is declared bankrupt, makes a proposal or otherwise takes advantage of provisions for relief under the Bankruptcy and Insolvency Act, any debtor assistance or insolvency or similar legislation in any jurisdiction or makes an assignment or commits or threatens to commit an act of bankruptcy,

	
  

	
(e)

	
a receiver, receiver and manager or receiver-manager of all or any part of the Collateral is appointed,

	
  

	
(f)

	
an order of execution against the Collateral remains unsatisfied for a period of 10 days,

 

  

7

  

 

	
  

	
(g)

	
without the prior written consent of the Secured Party, the Debtor creates or permits to exist any charge, encumbrance or lien on or claim against or any security interest in, any of the Collateral which ranks or could rank in priority to or pari passu with any security interest or charge created by this Security Agreement,

	
  

	
(h)

	
the holder of any other charge, encumbrance or lien on or claim against, or security interest in, any of the Collateral does anything to enforce or realize on such charge, encumbrance, lien, claim or security interest,

	
  

	
(i)

	
the Debtor makes or proposes to make a disposition of all or substantially all of its assets,

	
  

	
(j)

	
if the Debtor is a company or a partnership, an order is made or an effective resolution is passed for winding up the Debtor,

	
  

	
(k)

	
the Debtor, if a company, completes any reconstruction, reorganization, amalgamation, merger or other similar arrangement with any other person,

	
  

	
(l)

	
the Debtor, if an individual, dies, is declared incompetent or is the subject of the appointment of a Committee by a court of competent jurisdiction, or

	
  

	
(m)

	
the Secured Party in good faith believes and has commercially reasonable grounds to believe that the prospect of payment or performance of any or all of the Obligations is impaired or that any of the Collateral is or is about to be placed in jeopardy.

11. ENFORCEMENT

11.1 Upon any default under this Security Agreement the Secured Party may declare any or all of the Obligations not payable on demand to become immediately due and payable and the security hereby constituted will immediately become enforceable.  To enforce and realize on the security constituted by this Security Agreement the Secured Party may take any action permitted by law or in equity, as it may deem expedient, and in particular, without limiting the generality of the foregoing, the Secured Party may do any of the following:

	
  

	
(a)

	
appoint by instrument a receiver, receiver and manager or receiver-manager (the person so appointed is hereinafter called the "Receiver") of the Collateral, with or without bond as the Secured Party may determine, and from time to time in its absolute discretion remove such Receiver and  appoint another in its stead,

	
  

	
(b)

	
enter upon any premises of the Debtor and take possession of the Collateral with power to exclude the Debtor, its agents and its servants therefrom, without becoming liable as a mortgagee in possession,

	
  

	
(c)

	
preserve, protect and maintain the Collateral and make such replacements thereof and repairs and additions thereto as the Secured Party may deem advisable,

	
  

	
(d)

	
retain and administer the Collateral in the Secured Party's sole and unfettered discretion, which the Debtor hereby acknowledges is commercially reasonable,

	
  

	
(e)

	
sell, lease or otherwise dispose of all or any part of the Collateral, whether by public or private sale or lease or otherwise, in such manner, at such price as can be reasonably obtained therefor and on such terms as to credit and with such conditions of sale and stipulations as to title or conveyance or evidence of title or otherwise as to the Secured Party may seem reasonable, provided that if any sale is on credit the Debtor will not be entitled to be credited with the proceeds of any such sale, lease or other disposition until the monies therefor are actually received, and

 

  

8

  

 

	
  

	
(f)

	
exercise any or all of the rights and remedies of a secured party under the Act.

11.2 To assist the Secured Party in the implementation of such rights and remedies, the Debtor will, at its own risk and expense and at the Secured Party's request, assemble and prepare for removal of such items of the Collateral as are selected by the Secured Party and will, in the Secured Party's sole judgment, but without prejudice to the Secured Party's right to realize on further items of the Collateral, have a value sufficient to cover all the Obligations.

11.3 The Secured Party will not be liable or accountable for any failure to exercise its remedies, take possession of, seize, collect, realize, sell, lease or otherwise dispose of or obtain payment for the Collateral and will not be bound to institute proceedings for such purposes for the purpose of preserving any rights of the Secured Party, the Debtor or any other person, firm, or corporation in respect of same.

11.4 A Receiver appointed pursuant to this Security Agreement will be the agent of the Debtor and not of the Secured Party and, to the extent permitted by law or to such lesser extent permitted by its appointment, will have all the powers of the Secured Party hereunder, and in addition will have power to carry on the business of the Debtor and for such purpose from time to time to borrow money either secured or unsecured, and if secured, by granting a security interest on any of the Collateral; such security interest may rank before or pari passu with or behind any security interest created by this Security Agreement, and if it does not so specify such security interest will rank before the security interest created by this Security Agreement.

11.5 Subject to the claims, if any, of the creditors of the Debtor ranking in priority to this Security Agreement, all amounts realized from the disposition of Collateral pursuant to this Security Agreement will be applied as the Secured Party, in its absolute discretion, may direct as follows:

	
  

	
(a)

	
in payment of all actual costs, charges and expenses (including legal fees and disbursements on an indemnity basis) incurred by the Secured Party in connection with or incidental to:

	
  

	
(i)

	
the exercise by the Secured Party of all or any of the powers granted to it pursuant to this Security Agreement, and

	
  

	
(i)

	
the appointment of the Receiver and the exercise by the Receiver of all or any of the powers granted to it pursuant to this Security Agreement, including the Receiver's reasonable remuneration and all outgoings properly payable by the Receiver,

	
  

	
(b)

	
in or toward payment to the Secured Party of all principal and other monies (except interest) due in respect of the Obligations, and

	
  

	
(c)

	
in or toward payment to the Secured Party of all interest remaining unpaid in respect of the Obligations.

Subject to applicable law and the claims, if any, of other creditors of the Debtor, any surplus will be paid to the Debtor.

 

  

9

  

12. DEFICIENCY

12.1 If the amounts realized from the disposition of the Collateral are not sufficient to pay and discharge the Obligations in full the Debtor will immediately pay to the Secured Party the amount of such deficiency.

13. RIGHTS CUMULATIVE

13.1 All rights and remedies of the Secured Party set out in this Security Agreement, the Act or existing otherwise at law are cumulative and concurrent and no right or remedy contained herein or in the Act is intended to be exclusive but each will be in addition to every other right or remedy continued herein or in the Act or in any existing or future security agreement or now or hereafter existing at law, in equity or by statute, or pursuant to any other agreement between the Debtor and the Secured Party that may be in effect from time to time.

14. LIABILITY OF SECURED PARTY

14.1 The Secured Party will not be responsible or liable for any debts contracted by it, for damages to persons or property or for salaries or non-fulfilment of contracts during any period when the Secured Party will manage the Collateral upon entry, as herein provided, nor will the Secured Party be liable to account as mortgagee in possession or for anything except actual receipts or be liable for any loss on realization or for any default or omission for which a mortgagee in possession may be liable.  The Secured Party will not be bound to do, observe or perform or to see to the observance or performance by the Debtor of any of the Obligations or covenants imposed upon the Debtor nor will the Secured Party, in the case of securities, instruments or chattel paper, be obliged to preserve rights against other persons, nor will the Secured Party be obliged to keep any of the Collateral identifiable.  The Debtor hereby waives any applicable provision of law permitted to be waived by it which imposes higher or greater obligations upon the Secured Party than aforesaid.

15. APPOINTMENT OF ATTORNEY

15.1 The Debtor hereby irrevocably constitutes and appoints the Secured Party or the Receiver, as the case may be, with full power of substitution, the true and lawful attorney of the Debtor for and in the name of the Debtor to sign, endorse, or execute under seal or otherwise any deeds, documents, transfers, cheques, instruments, demands, assignments, assurances or consents that the Debtor is obliged to sign, endorse or execute and generally to use the name of the Debtor and to do all things as may be necessary or incidental to the exercise of all or any of the powers conferred on the Secured Party or the Receiver, as the case may be, pursuant to this Security Agreement.  The Debtor hereby declares that the irrevocable power of attorney granted hereby, being coupled with an interest, is given for valuable consideration.

16. ACCOUNTS

16.1 Notwithstanding any other provision of this Security Agreement, the Secured Party may collect, realize, sell or otherwise deal with the Accounts or any part thereof in such manner, upon such terms and  conditions and at such time or times, whether before or after default, as may seem to it advisable, and without notice to the Debtor, except in the case of disposition after default and then subject to the provisions of Part V of the Act.  All monies or other forms of payment received by the Debtor in payment of any or all of the Accounts will be received and held by the Debtor in trust for the Secured Party, and in such event, the Debtor, if in default under this Security Agreement, will immediately forward such payment to the Secured Party without the necessity of the Secured Party requesting or demanding same.

 

  

10

  

 

17. APPROPRIATION OF PAYMENTS

17.1 Any and all payments made in respect of the Obligations from time to time and monies realized from any security interests held therefor (including monies collected in accordance with or realized on any enforcement of this Security Agreement) may be applied to such part or parts of the Obligations as the Secured Party may see fit and the Secured Party may at all times and from time to time change any such appropriation as the Secured Party may see fit.

18. OBLIGATION TO ADVANCE

18.1 The preparation, execution, perfection or registration of this Security Agreement or the advance of any money will not bind the Secured Party to make any further advance or loan or further advance or loan, or extend any further credit or renew any note or extend any time for payment of any indebtedness or liability of the Debtor to the Secured Party.

19. WAIVER

19.1 The Secured Party may in writing from time to time and at any time waive in whole or in part any right, benefit or default under any clause of this Security Agreement but any such waiver of any right, benefit or default on any occasion will be deemed not to be a waiver of any such right, benefit or default thereafter, or of any other right, benefit or default, as the case may be, present or future.

20. NOTICE

20.1 Notice may be given to either the Debtor or the Secured Party by sending it through the post in prepaid mail or delivered to the party for whom it is intended, at the address of such party provided herein or at such other address as may be given in writing from time to time by such party to the other, and any notice if posted will be deemed to have been received at the expiration of three business days after posting, except in the case of a strike or lockout preventing the regular delivery of mail, in which case notices will be delivered personally or by courier, and if delivered, such notice will be deemed received on delivery.

21. EXTENSIONS

21.1 The Secured Party may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges, refrain from perfecting or maintaining perfection of security interests, and otherwise deal with the Debtor, account debtors of the Debtor, sureties and others and with the Collateral and other security interests as the Secured Party may see fit without prejudice to the liability of the Debtor or the Secured Party's right to hold and realize on the security constituted by this Security Agreement.

22. NO MERGER

22.1 This Security Agreement will not operate so as to create any merger or discharge of any of the Obligations, or any assignment,  transfer, guarantee, lien, contract, promissory note, bill of exchange or security interest of any form held or which may hereafter be held by the Secured Party from the Debtor or from any other person whomsoever.  The taking of a judgment with respect to any of the Obligations will not operate as a merger of any of the covenants contained in this Security Agreement.

 

  

11

  

23. ASSIGNMENT

23.1 The Secured Party may, without further notice to the Debtor, at any time assign, transfer or grant a security interest in this Security Agreement and the security interests granted hereby.  The Debtor expressly agrees that the assignee, transferee or secured party, as the case may be, will have all of the Secured Party's rights and remedies under this Security Agreement and the Debtor will not assert any defence, counterclaim, right of set-off or any other claim which it now has or hereafter acquires against the Secured Party in any action commenced by such assignee, transferee or secured party, as the case may be, and will pay any or all of the Obligations to the assignee, transferee or secured party, as the case may be, as such Obligations become due.

24. SATISFACTION AND DISCHARGE

24.1 Any partial payment or satisfaction of the Obligations, or the Debtor ceasing to be indebted to the Secured Party, will be deemed not to be redemption or discharge of this Security Agreement.  The Debtor will be entitled to a release and discharge of this Security Agreement upon full payment and satisfaction of all Obligations and upon written request by the Debtor and payment to the Secured Party of all costs, charges, expense and legal fees and disbursements (on a solicitor and his own client basis) incurred by the Secured Party in connection with the Obligations and such release and discharge.

25. RISK

25.1 The Debtor will bear the sole risk of any loss, damage, destruction or confiscation of or to the Collateral while in the Debtor's possession before or after default hereunder.

26. INDEMNITY

26.1 The Debtor will indemnify and save the Secured Party harmless from any and all costs, expenses, liabilities and damages which may be incurred by the Secured Party in connection with the Collateral and the enforcement of its rights hereunder, save only any costs, expenses, liabilities or damages resulting from any gross neglect or willful misconduct by the Secured Party or its servants or agents.

27. LIMITATION OF LIABILITY

27.1 The Secured Party will not be liable by reason of any entry into or taking possession of any or all of the Collateral hereby charged, to account as mortgagee in possession or for anything except actual receipts or to be liable for any loss and realization or any act or omission for which a Secured Party in possession might be liable.  The Debtor hereby releases and discharges the Secured Party and the Receiver from every claim of every nature, whether sounding in damages or not, which may arise on the part of or be caused by the Debtor or any person claiming through or under the Debtor by reason or as a result of anything done by the Secured Party or any successor or assign claiming through or under the Secured Party or the Receiver under the provisions of this Security Agreement unless such claim be the result of gross neglect or wilful misconduct.

28. SECURITY IN ADDITION AND NOT IN SUBSTITUTION

28.1 This Security Agreement and the security interests created hereby are in addition to and not in substitution for any other security or rights now or hereafter held by the Secured Party for the performance of any of the Obligations.

 

  

12

  

29. FURTHER ASSURANCES

29.1 The Debtor will sign further and other documents and will do and perform and cause to be done and performed such further and other acts and things as may be necessary or desirable in order to give full effect to this Security Agreement and every part hereof and to protect, preserve and perfect the security interests hereby created.

30. ENUREMENT

30.1 This Security Agreement will enure to the benefit of the Secured Party and its successors and assigns, and will be binding upon the respective heirs, executors, personal representatives, successors and permitted assigns of the Debtor.

31. INTERPRETATION

31.1 In this Security Agreement:

	
  

	
(a)

	
"Collateral" has the meaning set out in Clause 1 hereof and any reference to Collateral will, unless the context otherwise requires, be deemed a reference to Collateral as a whole or any part thereof,

	
  

	
(b)

	
"Debtor" and the personal pronoun "it" or "its" and any verb relating thereto and used therewith will be read and construed as required by and in accordance with the context in which such words are used depending upon whether the Debtor is one or more individuals, corporations or partnerships and if more than one, will apply and be binding upon each of them jointly and severally, and

	
  

	
(c)

	
"the Act" means the Personal Property Security Act of British Columbia and all regulations thereunder as amended from time to time.

31.2 Words, phrases and expressions used herein that have been defined in the Act will be interpreted in accordance with their respective meanings given in the Act unless otherwise defined herein or unless the context otherwise requires.

31.3 The invalidity or unenforceability of the whole or any part of any clause of this Security Agreement will not affect the validity or enforceability of any other clauses or the remainder of such clause and such invalid or unenforceable clause or part thereof will be ineffective only to the extent of such invalidity or unenforceability and will be severable without invalidating or otherwise affecting the remaining provisions hereof.

31.4 The headings of the clauses of this Security Agreement have been inserted for reference only and do not define, limit, alter or enlarge the meaning of any provision of this Security Agreement.

31.5 This Security Agreement will be governed by the laws of British Columbia.

32. COPY OF AGREEMENT AND FINANCING STATEMENT

32.1 The Debtor hereby:

	
  

	
(a)

	
acknowledges receiving a copy of this Security Agreement, and

	
  

	
(b)

	
waives all rights to receive from the Secured Party a copy of any financing statement, financing change statement or verification statement filed or received at any time in respect of this Security Agreement.

 

  

13

  

 

IN WITNESS WHEREOF the Debtor has executed this Security Agreement this 17th day of November, 2008.

	
Signed by the Authorized Signatory of Sinobiomed Inc. in the presence of:

	  	
Sinobiomed Inc. Per:

	
 

Witness Signature   /s/ Wong, Lai Yee

	
)

)

	  
	
 

 

Witness name and address:

 

Wong, Lai Yee

_______________________________________

_______________________________________

	
)

)

	
 

 

/s/ Lionel Choong

Lionel Choong, CFO

	 	 	 
	
Signed by the Authorized Signatory of Sinobiomed Inc. in the presence of:

	  	
Sinobiomed Inc. Per:

	
 

Witness Signature 

	
)

)

	  
	

 

Witness name and address:

_______________________________________

_______________________________________

_______________________________________

	
)

)

	
 

 

/s/ Philip Yu

Philip Yu, Director

	
Signed by the Secured Party

 

/s/ Doug Smith

R. Douglas Smith, Secured Party

	  	  

Principal Address of Debtor

c/o Devlin Jensen, Suite 2550,

555 West Hastings Street

Vancouver, British Columbia, V6B 4N5

Canada

  

14

  

SCHEDULE to GENERAL SECURITY AGREEMENT made by Debtor in favour of Secured Party as of the 17th day of November, 2008.

OTHER CHARGES AND SECURITY INTERESTS

attached print out from the B.C. Personal Property Security Registry

dated ...

____

initial

 

  

15

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