Document:

ex_100612.htm

Exhibit 4.1

	Conformed Version

 

 

 

 

Otter Tail Power Company

 

 

 

 

$100,000,000 4.07% Series 2018A Senior Unsecured Notes due February 7, 2048

 

 

______________

 

 

 

Note Purchase Agreement

 

 

 

______________

 

 

 

 

 

Dated as of November 14, 2017

 

 

 

 

 

	 

 

 

 

 

TABLE OF CONTENTS

 

 

	Section	 	Page
	 	 	 
	
			Section 1.   Authorization of Notes

				
			1

			
	 	 	 
	
			Section 2.   Sale and Purchase of Notes

				
			1

			
	 	 	 
	
			Section 3.   Closing; Funding

				
			1

			
	 	 	 
	
			Section 4.   Conditions to Closing

				
			2

			
	 	 	 
	
			Section 4.1.

				
			Representations and Warranties

				
			2

			
	 	 	 
	
			Section 4.2.

				
			Performance; No Default

				
			2

			
	 	 	 
	
			Section 4.3.

				
			Compliance Certificates

				
			2

			
	 	 	 
	
			Section 4.4.

				
			Opinions of Counsel

				
			2

			
	 	 	 
	
			Section 4.5.

				
			Payment of Special Counsel Fees

				
			3

			
	 	 	 
	
			Section 4.6.

				
			Changes in Corporate Structure

				
			3

			
	 	 	 
	
			Section 4.7.

				
			Proceedings and Documents

				
			3

			
	 	 	 
	
			Section 5.   Conditions to Funding

				
			3

			
	 	 	 
	
			Section 5.1.

				
			Representations and Warranties

				
			3

			
	 	 	 
	
			Section 5.2.

				
			Performance; No Default

				
			3

			
	 	 	 
	
			Section 5.3.

				
			Compliance Certificates

				
			4

			
	 	 	 
	
			Section 5.4.

				
			Opinions of Counsel

				
			4

			
	 	 	 
	
			Section 5.5.

				
			Purchase Permitted by Applicable Law, Etc.

				
			4

			
	 	 	 
	
			Section 5.6.

				
			Sale of Other Notes

				
			4

			
	 	 	 
	
			Section 5.7.

				
			Payment of Special Counsel Fees

				
			4

			
	 	 	 
	
			Section 5.8.

				
			Private Placement Number

				
			5

			
	 	 	 
	
			Section 5.9.

				
			Changes in Corporate Structure

				
			5

			
	 	 	 
	
			Section 5.10.

				
			Funding Instructions

				
			5

			
	 	 	 
	
			Section 5.11.

				
			Proceedings and Documents

				
			5

			
	 	 	 
	
			Section 6.   Representations and Warranties of the Company

				
			5

			
	 	 	 
	
			Section 6.1.

				
			Organization; Power and Authority

				
			5

			
	 	 	 
	
			Section 6.2.

				
			Authorization, Etc.

				
			5

			
	 	 	 
	
			Section 6.3.

				
			Disclosure

				
			6

			
	 	 	 
	
			Section 6.4.

				
			Organization and Ownership of Shares of Subsidiaries; Affiliates

				
			6

			
	 	 	 
	
			Section 6.5.

				
			Financial Statements; Material Liabilities

				
			7

			

 

-i-

 

 

	
			Section 6.6.

				
			Compliance with Laws, Other Instruments, Etc.

				
			7

			
	 	 	 
	
			Section 6.7.

				
			Governmental Authorizations, Etc.

				
			7

			
	 	 	 
	
			Section 6.8.

				
			Litigation; Observance of Agreements, Statutes and Orders

				
			8

			
	 	 	 
	
			Section 6.9.

				
			Taxes

				
			8

			
	 	 	 
	
			Section 6.10.

				
			Title to Property; Leases

				
			8

			
	 	 	 
	
			Section 6.11.

				
			Licenses, Permits, Etc.

				
			9

			
	 	 	 
	
			Section 6.12.

				
			Compliance with ERISA

				
			9

			
	 	 	 
	
			Section 6.13.

				
			Private Offering by the Company

				
			10

			
	 	 	 
	
			Section 6.14.

				
			Use of Proceeds; Margin Regulations

				
			10

			
	 	 	 
	
			Section 6.15.

				
			Existing Indebtedness; Future Liens

				
			11

			
	 	 	 
	
			Section 6.16.

				
			Foreign Assets Control Regulations, Etc.

				
			11

			
	 	 	 
	
			Section 6.17.

				
			Status under Certain Statutes

				
			12

			
	 	 	 
	
			Section 6.18.

				
			Environmental Matters

				
			12

			
	 	 	 
	
			Section 6.19.

				
			Partnerships and Joint Ventures

				
			13

			
	 	 	 
	
			Section 6.20.

				
			Ranking of Obligations

				
			13

			
	 	 	 
	
			Section 7.   Representations of the Purchasers

				
			13

			
	 	 	 
	
			Section 7.1.

				
			Purchase for Investment

				
			13

			
	 	 	 
	
			Section 7.2.

				
			Source of Funds

				
			13

			
	 	 	 
	
			Section 7.3.

				
			Accredited Investor Status

				
			15

			
	 	 	 
	
			Section 8.   Information as to Company

				
			15

			
	 	 	 
	
			Section 8.1.

				
			Financial and Business Information

				
			15

			
	 	 	 
	
			Section 8.2.

				
			Officer’s Certificate

				
			18

			
	 	 	 
	
			Section 8.3.

				
			Visitation

				
			18

			
	 	 	 
	
			Section 8.4.

				
			Electronic Delivery

				
			19

			
	 	 	 
	
			Section 9.   Payment and Prepayment of the Notes

				
			20

			
	 	 	 
	
			Section 9.1.

				
			Maturity; Required Prepayment at Holder Option

				
			20

			
	 	 	 
	
			Section 9.2.

				
			Optional Prepayments with Make-Whole Amount

				
			21

			
	 	 	 
	
			Section 9.3.

				
			Allocation of Partial Prepayments

				
			21

			
	 	 	 
	
			Section 9.4.

				
			Maturity; Surrender, Etc.

				
			21

			
	 	 	 
	
			Section 9.5.

				
			Purchase of Notes

				
			22

			
	 	 	 
	
			Section 9.6.

				
			Make-Whole Amount

				
			22

			
	 	 	 
	
			Section 10.   Affirmative Covenants

				
			23

			
	 	 	 
	
			Section 10.1.

				
			Compliance with Law

				
			23

			

 

-ii-

 

 

	
			Section 10.2.

				
			Insurance

				
			24

			
	 	 	 
	
			Section 10.3.

				
			Maintenance of Properties

				
			24

			
	 	 	 
	
			Section 10.4.

				
			Payment of Taxes

				
			24

			
	 	 	 
	
			Section 10.5.

				
			Corporate Existence, Etc.

				
			24

			
	 	 	 
	
			Section 10.6.

				
			Environmental Matters

				
			25

			
	 	 	 
	
			Section 10.7.

				
			Ranking of Obligations

				
			25

			
	 	 	 
	
			Section 10.8.

				
			Books and Records

				
			25

			
	 	 	 
	
			Section 10.9.

				
			Most Favored Lender

				
			25

			
	 	 	 
	
			Section 10.10.

				
			Filing with the Minnesota Public Utilities Commission

				
			26

			
	 	 	 
	
			Section 11.   Negative Covenants

				
			26

			
	 	 	 
	
			Section 11.1.

				
			Limitation on Interest-bearing Debt

				
			26

			
	 	 	 
	
			Section 11.2.

				
			Limitation on Priority Indebtedness

				
			26

			
	 	 	 
	
			Section 11.3.

				
			Transactions with Affiliates

				
			27

			
	 	 	 
	
			Section 11.4.

				
			Merger, Consolidation, Etc

				
			27

			
	 	 	 
	
			Section 11.5.

				
			Line of Business

				
			28

			
	 	 	 
	
			Section 11.6.

				
			Economic Sanctions Regulations, Etc

				
			28

			
	 	 	 
	
			Section 11.7.

				
			Liens

				
			28

			
	 	 	 
	
			Section 11.8.

				
			Sale of Assets, Etc

				
			31

			
	 	 	 
	
			Section 11.9.

				
			Contingent Liabilities

				
			32

			
	 	 	 
	
			Section 12.   Events of Default.

				
			32

			
	 	 	 
	
			Section 13.   Remedies on Default, Etc.

				
			35

			
	 	 	 
	
			Section 13.1.

				
			Acceleration

				
			35

			
	 	 	 
	
			Section 13.2.

				
			Other Remedies

				
			35

			
	 	 	 
	
			Section 13.3.

				
			Rescission

				
			36

			
	 	 	 
	
			Section 13.4.

				
			No Waivers or Election of Remedies, Expenses, Etc

				
			36

			
	 	 	 
	
			Section 14.   Registration; Exchange; Substitution of Notes

				
			36

			
	 	 	 
	
			Section 14.1.

				
			Registration of Notes

				
			36

			
	 	 	 
	
			Section 14.2.

				
			Transfer and Exchange of Notes

				
			37

			
	 	 	 
	
			Section 14.3.

				
			Replacement of Notes

				
			37

			
	 	 	 
	
			Section 15.   Payments on Notes

				
			37

			
	 	 	 
	
			Section 15.1. 

				
			Place of Payment

				
			37

			
	 	 	 
	
			Section 15.2.

				
			Home Office Payment

				
			38

			
	 	 	 
	
			Section 15.3.

				
			FATCA Information

				
			38

			

 

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			Section 16.   Expenses, Etc.

				
			38

			
	 	 	 
	
			Section 16.1.

				
			Transaction Expenses

				
			38

			
	 	 	 
	
			Section 16.2.

				
			Certain Taxes

				
			39

			
	 	 	 
	
			Section 17.   Survival of Representations and Warranties; Entire Agreement

				
			40

			
	 	 	 
	
			Section 18.   Amendment and Waiver

				
			40

			
	 	 	 
	
			Section 18.1.

				
			Requirements

				
			40

			
	 	 	 
	
			Section 18.2.

				
			Solicitation of Holders of Notes

				
			40

			
	 	 	 
	
			Section 18.3.

				
			Binding Effect, Etc.

				
			41

			
	 	 	 
	
			Section 18.4.

				
			Notes Held by Company, Etc.

				
			41

			
	 	 	 
	
			Section 19.   Notices

				
			41

			
	 	 	 
	
			Section 20.   Reproduction of Documents

				
			42

			
	 	 	 
	
			Section 21.   Confidential Information

				
			42

			
	 	 	 
	
			Section 22.   Substitution of Purchaser

				
			43

			
	 	 	 
	
			Section 23.   Miscellaneous

				
			44

			
	 	 	 
	
			Section 23.1.

				
			Successors and Assigns

				
			44

			
	 	 	 
	
			Section 23.2.

				
			Payments Due on Non-Business Days

				
			44

			
	 	 	 
	
			Section 23.3.

				
			Accounting Terms

				
			44

			
	 	 	 
	
			Section 23.4.

				
			Severability

				
			44

			
	 	 	 
	
			Section 23.5.

				
			Construction, Etc.

				
			44

			
	 	 	 
	
			Section 23.6.

				
			Counterparts

				
			45

			
	 	 	 
	
			Section 23.7.

				
			Governing Law

				
			45

			
	 	 	 
	
			Section 23.8.

				
			Jurisdiction and Process; Waiver of Jury Trial

				
			45

			

 

-iv-

 

 

List of Schedules and Exhibits

 

	
			Schedule A

				—	Information Relating to Purchasers
	 	 	 
	Schedule B	—	Defined Terms
	 	 	 
	Schedule 6.3	—	Disclosure Materials
	 	 	 
	
			Schedule 6.4

				—	Subsidiaries of the Company; Ownership of Subsidiary Stock; Affiliates; Directors and Senior Officers
	 	 	 
	Schedule 6.5	—	Financial Statements
	 	 	 
	Schedule 6.14	—	Use of Proceeds
	 	 	 
	Schedule 6.15	—	Existing Indebtedness
	 	 	 
	Schedule 6.19	—	Partnerships and Joint Ventures
	 	 	 
	Schedule 11.3	—	Affiliate Transactions
	 	 	 
	Exhibit 1	—	Form of 4.07% Series 2018A Senior Unsecured Note due February 7, 2048
	 	 	 
	Exhibit 4.4(a)(1)	—	Form of Closing Opinion of Special Counsel for the Company
	 	 	 
	Exhibit 4.4(a)(2)	—	Form of Closing Opinion of General Counsel of the Company
	 	 	 
	Exhibit 4.4(b)	—	Form of Closing Opinion of Special Counsel to the Purchasers
	 	 	 
	Exhibit 5.4(a)(1)	—	Form of Funding Date Opinion of Special Counsel for the Company
	 	 	 
	Exhibit 5.4(a)(2)	—	Form of Funding Date Opinion of the General Counsel of the Company
	 	 	 
	Exhibit 5.4(b)	—	Form of Funding Date Opinion of Special Counsel to the Purchasers

          

-v-

 

 

Otter Tail Power Company

215 South Cascade Street

Fergus Falls, Minnesota 56537

 

$100,000,000 4.07% Series 2018A Senior Unsecured Notes due February 7, 2048

 

 

Dated as of November 14, 2017

 

To each of the Purchasers

  listed in Schedule A hereto

 

Ladies and Gentlemen:

 

Otter Tail Power Company, a Minnesota corporation (the “Company”), agrees with each of the Purchasers as follows:

 

Section 1.     Authorization of Notes.

 

The Company has duly authorized the issue and sale of $100,000,000 aggregate principal amount of its 4.07% Series 2018A Senior Unsecured Notes due February7, 2048 (the “Notes”). The Notes shall be substantially in the form set out in Exhibit 1 in each case duly completed. As used herein, the term “Notes” means all notes originally delivered pursuant to this Agreement and all notes delivered in substitution or exchange for any of such notes and, where applicable, includes the singular number as well as the plural. The term “Note” means one of the Notes. Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

 

Section 2.     Sale and Purchase of Notes.

 

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, on the Funding Date provided for in Section 3, Notes in the principal amount specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

 

Section 3.     Closing; Funding.

 

The execution and delivery of this Agreement shall occur at the offices of Schiff Hardin LLP, 666 Fifth Avenue, Suite 1700, New York, New York 10103, at a closing (the “Closing”) on November 14, 2017. The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Schiff Hardin LLP, 666 Fifth Avenue, Suite 1700, New York, New York 10103, at 11:00 a.m., New York time, on February 7, 2018 or on such other Business Day thereafter as may be agreed upon by the Company and the Purchasers (the “Funding Date”). On the Funding Date, the Company will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least $100,000 as such Purchaser may request) dated the Funding Date and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer to the account of the Company set forth in the funding instructions delivered by the Company pursuant to Section 5.10.

 

 

 

 

If on the Funding Date the Company shall fail to tender the Notes to be purchased by any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 5 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

 

Section 4.     Conditions to Closing.

 

Each Purchaser’s obligation to execute and deliver this Agreement at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1.     Representations and Warranties. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing.

 

Section 4.2.     Performance; No Default. The Company shall have performed and complied with all conditions to the Closing contained in this Agreement required to be performed or complied with by it prior to or at the Closing and no Default or Event of Default shall have occurred and be continuing.

 

Section 4.3.     Compliance Certificates.

 

(a)     Officer’s Certificate. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.6 have been fulfilled.

 

(b)     Secretary’s Certificate. The Company shall have delivered to such Purchaser a certificate of its Secretary or an Assistant Secretary, dated the date of the Closing, certifying as to (1) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement and (2) the Company’s organizational documents as then in effect.

 

Section 4.4.     Opinions of Counsel. Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing, from:

 

(a)     (1) Dorsey & Whitney LLP, special counsel for the Company and (2) the General Counsel of the Company, substantially in the respective forms set forth in Exhibits 4.4(a)(1) and 4.4(a)(2) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its special counsel may reasonably request (and the Company hereby instructs its special counsel and General Counsel to deliver such opinions to the Purchasers); and

 

-2-

 

 

(b)     Schiff Hardin LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

 

Section 4.5.     Payment of Special Counsel Fees. Without limiting the provisions of Section 5.7 or Section 16.1, the Company shall have paid on or before the Closing the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4(b) to the extent reflected in a statement of such counsel rendered to the Company.

 

Section 4.6.     Changes in Corporate Structure. The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 6.5.

 

Section 4.7.     Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement in respect of the Closing and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

 

Section 5.     Conditions to Funding.

 

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser on the Funding Date is subject to the fulfillment to such Purchaser’s satisfaction, prior to or on the Funding Date, of the following conditions precedent:

 

Section 5.1.     Representations and Warranties. On the Funding Date, the representations and warranties of the Company in this Agreement shall be correct (a) in all respects in the case of representations and warranties containing qualifications as to materiality and (b) in all material respects in the case of representations and warranties not containing qualifications as to materiality; provided that the Company shall be permitted to make additions and deletions to any of Schedules 6.4, 6.5 or 6.15 after the date of the Closing but prior to the Funding Date, so long as (1) the Company shall have provided updated copies of the relevant Schedules to such Purchaser not less than five Business Days prior to the Funding Date and (2) any such additions or deletions are in all respects reasonably satisfactory to such Purchaser as a condition to its obligation to purchase and pay for the Notes to be sold to it on the Funding Date.

 

Section 5.2.     Performance; No Default. The Company shall have performed and complied with all conditions contained in this Agreement required to be performed or complied with by it prior to or on the Funding Date and, after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 6.14), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 11.3 or Section 11.7 had such Sections applied since such date.

 

-3-

 

 

Section 5.3.     Compliance Certificates.

 

(a)     Officer’s Certificate. The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the Funding Date, certifying that the conditions specified in Sections 5.1, 5.2 and 5.9 have been fulfilled.

 

(b)     Secretary’s Certificate. The Company shall have delivered to such Purchaser a certificate of its Secretary or an Assistant Secretary, dated the Funding Date, certifying that no changes to the certificate and accompanying materials delivered pursuant to Section 4.3(b) are required or, if additional resolutions or other corporate proceedings have occurred relating to the authorization, execution and delivery of the Notes and this Agreement or its organizational documents have been amended or otherwise modified, certifying as to such resolutions and proceedings and/or modified organizational documents.

 

Section 5.4.     Opinions of Counsel. Such Purchaser shall have received opinions in form and substance reasonably satisfactory to such Purchaser, dated the Funding Date, from:

 

(a)     (1) Dorsey & Whitney LLP, special counsel for the Company and (2) the General Counsel of the Company, substantially in the respective forms set forth in Exhibits 5.4(a)(1) and 5.4(a)(2) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its special counsel may reasonably request (and the Company hereby instructs its special counsel and General Counsel to deliver such opinions to the Purchasers); and

 

(b)     Schiff Hardin LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 5.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

 

Section 5.5.     Purchase Permitted by Applicable Law, Etc. On the Funding Date, such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date of this Agreement. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

 

Section 5.6.     Sale of Other Notes. On the Funding Date, the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it on the Funding Date as specified in Schedule A.

 

Section 5.7.     Payment of Special Counsel Fees. Without limiting the provisions of Section 4.5 or Section 16.1, the Company shall have paid on or before the Funding Date the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 5.4(b) to the extent reflected in a statement of such counsel rendered to the Company.

 

-4-

 

 

Section 5.8.     Private Placement Number. A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Notes.

 

Section 5.9.     Changes in Corporate Structure. The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 6.5.

 

Section 5.10.     Funding Instructions. At least three (3) Business Days prior to the Funding Date, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company directing the manner of payment of funds and setting forth (a) the name and address of the transferee bank, (b) such transferee bank’s ABA number and (c) the account name and number into which the purchase price for the Notes is to be deposited.

 

Section 5.11.     Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement in respect of the Funding Date and all documents and instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

 

Section 6.     Representations and Warranties of the Company.

 

On the date of the Closing and on the Funding Date, the Company represents and warrants to each Purchaser that:

 

Section 6.1.     Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof. 

 

Section 6.2.     Authorization, Etc. This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

-5-

 

 

Section 6.3.     Disclosure. The Company, through its agents, JPMorgan Securities LLC and KeyBanc Capital Markets have delivered to each Purchaser a copy of a Private Placement Memorandum, dated October 2017 (including the documents incorporated by reference therein, the “Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business of the Company and its Subsidiaries. This Agreement, the Memorandum (but as to information incorporated by reference therein, only such information to the extent that it relates to the Company and its Subsidiaries) and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company prior to October 31, 2017 in connection with the transactions contemplated hereby and identified in Schedule 6.3, and the financial statements listed in Schedule 6.5 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; provided, that, with respect to projected and pro forma financial information contained in the Disclosure Documents, the Company represents only that such information was prepared in good faith based upon estimates and assumptions believed by the Company to be reasonable at the time made, it being recognized by the Purchasers that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. Except as disclosed in the Disclosure Documents, since December 31, 2016, there has been no change in the financial condition, operations, business or properties of the Company or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.

 

Section 6.4.     Organization and Ownership of Shares of Subsidiaries; Affiliates.

 

(a)     Schedule 6.4 contains (except as noted therein) complete and correct lists (1) of the Company’s Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary and (2) of the Company’s directors and senior officers.

 

(b)     All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 6.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 6.4).

 

(c)     Each Subsidiary identified in Schedule 6.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

 

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(d)     No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the agreements listed in Schedule 6.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

 

Section 6.5.     Financial Statements; Material Liabilities. The Company has delivered to each Purchaser copies of the consolidated financial statements of the Company and its Subsidiaries listed in Schedule 6.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to the absence of footnotes and normal year-end adjustments). The Company and its Subsidiaries do not have any material liabilities that were not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

 

Section 6.6.     Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Company of this Agreement and the Notes will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Significant Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter, regulations or by-laws, shareholders agreement or any other Material agreement or instrument to which the Company or any Significant Subsidiary is bound or by which the Company or any Significant Subsidiary or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Significant Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Significant Subsidiary.

 

Section 6.7.     Governmental Authorizations, Etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes; provided, however, that the Company is required to make an annual filing of its capital structure with the Minnesota Public Utilities Commission, and such Commission may thereafter issue orders approving or disapproving of the Company’s capital structure and within twenty (20) days following the Funding Date, the Company is required to make an informational filing with such Commission that describes the basic terms of this Agreement and the Notes.

 

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Section 6.8.     Litigation; Observance of Agreements, Statutes and Orders.

 

(a)     There are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary or directly affecting any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, there are no investigations pending or threatened against the Company or any Subsidiary by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(b)     Neither the Company nor any Subsidiary is (1) in default under any term of any agreement or instrument to which it is a party or by which it is bound, (2) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (3) in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental Laws, ERISA, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 6.16), which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

Section 6.9.     Taxes. The Company and its Subsidiaries have filed, or OTC has filed on behalf of the Company and its Subsidiaries pursuant to a tax sharing agreement, all income and other material tax returns that are required to have been filed in any jurisdiction (“Tax Returns”). The Company and its Subsidiaries have paid, or OTC has paid on behalf of the Company and its Subsidiaries pursuant to a tax sharing agreement, all taxes shown to be due and payable on the Tax Returns and all other taxes and assessments levied upon the Company and its Subsidiaries or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of U.S. federal, state or other taxes for all fiscal periods are adequate. The U.S. federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended December 31, 2013.

 

Section 6.10.     Title to Property; Leases. The Company and its Subsidiaries have good and marketable title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 6.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), except for those defects in title that, individually or in the aggregate, would not have a Material Adverse Effect and, in each case, free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

 

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Section 6.11.     Licenses, Permits, Etc.

 

(a)     The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto that, individually or in the aggregate, are Material, without known conflict with the rights of others.

 

(b)     To the best knowledge of the Company, no product or service of the Company or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person.

 

(c)     To the best knowledge of the Company, there is no material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.

 

Section 6.12.     Compliance with ERISA.

 

(a)     The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that, individually or in the aggregate, would reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to Section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law or Section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material.

 

(b)     The present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of ERISA (other than Multiemployer Plans), determined as of the first day of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by an amount in the case of any single Plan or in the aggregate for all Plans that would reasonably be expected to result in a Material Adverse Effect. The term “benefit liabilities” has the meaning specified in Section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in Section 3 of ERISA.

 

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(c)     The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

 

(d)     The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by Section 4980B of the Code) of the Company and its Subsidiaries is less than an amount that would reasonably be expected to result in a Material Adverse Effect.

 

(e)     The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each Purchaser in the first sentence of this Section 6.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 7.2 as to the sources of the funds to be used to pay the purchase price of the Notes to be purchased by such Purchaser.

 

Section 6.13.     Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 13 other Institutional Investors of the type described in clause (c) of the definition thereof, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any Securities or blue sky laws of any applicable jurisdiction.

 

Section 6.14.     Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes as set forth in Schedule 6.14. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 25% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 25% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

 

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Section 6.15.     Existing Indebtedness; Future Liens. 

 

(a)     Except as described therein, as of September 30, 2017, Schedule 6.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries (including a description of the obligors and obligees, principal amount outstanding, available financing and collateral therefor, if any, and Guaranty thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of such Indebtedness. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary the outstanding principal amount of which exceeds $1,000,000 that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

 

(b)     Except as disclosed in Schedule 6.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit any of its property, whether now owned or hereafter acquired, to be subject to a Lien, or to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien, not permitted by Section 11.7.

 

(c)     Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except as specifically indicated in Schedule 6.15.

 

Section 6.16.     Foreign Assets Control Regulations, Etc.

 

(a)     Neither the Company nor any Controlled Entity (1) is a Blocked Person, (2) has been notified that its name appears or may in the future appear on a State Sanctions List or (3) is a target of sanctions that have been imposed by the United Nations or the European Union.

 

(b)     Neither the Company nor any Controlled Entity (1) has violated, been found in violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws or (2) to the Company’s knowledge, is under investigation by any Governmental Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws.

 

(c)     No part of the proceeds from the sale of the Notes hereunder:

 

(1)     constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person, (ii) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws or (iii) otherwise in violation of any U.S. Economic Sanctions Laws;

 

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(2)     will be used, directly or indirectly, in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or

 

(3)     will be used, directly or indirectly, for the purpose of making any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws.

 

(d)     The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

 

Section 6.17.     Status under Certain Statutes. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, or the ICC Termination Act of 1995, as amended. The Company is subject to regulation under the Public Utility Holding Company Act of 2005, as amended, and the Federal Power Act, as amended, and is not in violation of or in default under any regulations and orders of the Federal Energy Regulatory Commission applicable to the Company or its assets the effect of which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

Section 6.18.     Environmental Matters.

 

(a)     Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

 

(b)     Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

(c)     Neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that would reasonably be expected to result in a Material Adverse Effect.

 

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(d)     All buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 6.19.     Partnerships and Joint Ventures. Schedule 6.19 sets forth as of the date of this Agreement a list of all partnerships or joint ventures in which the Company or any Subsidiary is a partner (limited or general) or joint venturer.

 

Section 6.20.     Ranking of Obligations. The Notes are senior unsecured Indebtedness of the Company, and are pari passu and of equal rank and seniority with all other senior unsecured Indebtedness of the Company. 

 

Section 7.     Representations of the Purchasers.

 

Section 7.1.     Purchase for Investment. Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes.

 

Section 7.2.     Source of Funds. Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

 

(a)     the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

 

(b)     the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

 

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(c)     the Source is either (1) an insurance company pooled separate account, within the meaning of PTE 90-1 or (2) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

 

(d)     the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (1) the identity of such QPAM and (2) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or

 

(e)     the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a Person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (1) the identity of such INHAM and (2) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

 

(f)      the Source is a governmental plan; or

 

(g)     the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or

 

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(h)     the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

 

As used in this Section 7.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

 

Section 7.3.     Accredited Investor Status. Each Purchaser severally represents that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the Securities Act.

 

Section 8.     Information as to Company.

 

Section 8.1.     Financial and Business Information. The Company shall deliver to each Purchaser and each holder of a Note that is an Institutional Investor:

 

(a)     Quarterly Statements — within sixty (60) days (or such shorter period as is the earlier of (x) fifteen (15) days greater than the period applicable to the filing of OTC’s Quarterly Report on Form 10-Q with the SEC regardless of whether OTC is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under any Significant Debt Agreement or the date on which such corresponding financial statements are delivered under any Significant Debt Agreement if such delivery occurs earlier than such required delivery date) after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), copies of:

 

(1)     a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

 

(2)     consolidated statements of income, changes in shareholders’ equity, if then prepared, and cash flows of the Company and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments;

 

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(b)     Annual Statements — within one hundred five (105) days (or such shorter period as is the earlier of (x) fifteen (15) days greater than the period applicable to the filing of OTC’s Annual Report on Form 10-K with the SEC regardless of whether OTC is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under any Significant Debt Agreement or the date on which such corresponding financial statements are delivered under any Significant Debt Agreement if such delivery occurs earlier than such required delivery date) after the end of each fiscal year of the Company, copies of:

 

(1)     a consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and

 

(2)     consolidated statements of income, changes in shareholders’ equity, if then prepared, and cash flows of the Company and its Subsidiaries for such year,

 

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion is based) of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;

 

(c)     SEC and Other Reports — promptly upon their becoming available, one copy of (1) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public securities holders generally and (2) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such Purchaser or holder), and each final prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC;

 

(d)     Notice of Default or Event of Default — promptly, and in any event within five (5) days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given written notice of a claimed default hereunder, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

 

(e)     ERISA Matters — promptly, and in any event within five (5) days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:

 

(1)     with respect to any Plan, any Reportable Event for which notice thereof has not been waived pursuant to such regulations as in effect on the date of this Agreement; or

 

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(2)     the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

 

(3)     any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect;

 

(f)     Notices — to the extent not included by OTC or the Company as part of a filing on Form 8-K with the SEC or otherwise publicly disclosed, (1) promptly, and in any event within thirty (30) days of receipt thereof, copies of any notice to the Company or any Subsidiary from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that would reasonably be expected to have a Material Adverse Effect, including, without limitation, copies of any order issued by the Minnesota Public Utilities Commission regarding the Company’s capital structure, (2) promptly upon becoming aware of the occurrence thereof, notice of the institution of any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision in such litigation or proceeding, which is Material, and the steps being taken by the Person(s) affected by such proceeding, and (3) promptly upon becoming aware of the occurrence thereof, notice of any violation as to any environmental matter by the Company or any of its Subsidiaries and of the commencement of any judicial or administrative proceeding relating to health, safety or environmental matters in which such violation or an adverse determination or result in such proceeding would reasonably be expected to have a Material Adverse Effect;

 

(g)     Resignation or Replacement of Auditors — within ten (10) days following the date on which the Company’s independent auditors resign or the Company elects to change independent auditors, as the case may be, notification thereof, together with such supporting information as the Required Holders may request; and

 

(h)     Requested Information — subject to the provisions of Section 21, with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of a Note.

 

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Section 8.2.     Officer’s Certificate. Contemporaneously with the delivery of each set of financial statements to a Purchaser or a holder of a Note pursuant to Section 8.1(a) or Section 8.1(b) and within the applicable time periods provided thereby, the Company shall deliver a certificate of a Senior Financial Officer:

 

(a)     Covenant Compliance — setting forth the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 11.1, 11.2, 11.8 and 11.9 and any Additional Covenant, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence). In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 23.3) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election; and

 

(b)     Event of Default — certifying that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

 

Section 8.3.     Visitation. Subject to the provisions of Section 21, the Company shall permit the representatives of each holder of a Note that is an Institutional Investor:

 

(a)     No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and

 

(b)     Default — if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.

 

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Section 8.4.     Electronic Delivery. Financial statements, opinions of independent certified public accountants, other information and Officer’s Certificates that are required to be delivered by the Company pursuant to Sections 8.1(a), (b) or (c) and Section 8.2 shall be deemed to have been delivered if the Company satisfies any of the following requirements with respect thereto:

 

(a)     such financial statements satisfying the requirements of Section 8.1(a) or 8.1(b) and the related Officer’s Certificate satisfying the requirements of Section 8.2 and any other information required under Section 8.1(c) are delivered to each Purchaser and holder of a Note by e-mail at the e-mail address set forth on Schedule A for such Purchaser or holder or as communicated from time to time in a separate writing delivered to the Company; 

 

(b)     the Company or OTC shall have timely filed its Quarterly Report on Form 10-Q or Annual Report on Form 10-K, satisfying the requirements of Section 8.1(a) or Section 8.1(b), as the case may be, with the SEC on EDGAR and shall have made such form and the related Officer’s Certificate satisfying the requirements of Section 8.2 available on its home page on the internet, which is located at http://www.ottertail.com as of the date of this Agreement; 

 

(c)     such financial statements satisfying the requirements of Section 8.1(a) or Section 8.1(b) and the related Officer’s Certificate satisfying the requirements of Section 8.2 and any other information required under Section 8.1(c) are timely posted by or on behalf of the Company on IntraLinks or on any other similar website to which each Purchaser and holder of Notes has free access; or 

 

(d)     the Company shall have timely filed any of the items referred to in Section 8.1(c) with the SEC on EDGAR and shall have made such items available on its home page on the internet or on IntraLinks or on any other similar website to which each holder of Notes has free access;

 

provided however, that in no case shall access to such financial statements, other information and Officer’s Certificates be conditioned upon any waiver or other agreement or consent (other than confidentiality provisions consistent with Section 21); provided further, that in the case of any of clauses (b), (c) or (d), the Company shall have given each Purchaser and each holder of a Note written notice at or prior to the expiration of the applicable time period set forth in Section 8.1(a), (b) or (c) or Section 8.2, which may be by e-mail or in accordance with Section 19, of such posting or filing in connection with each delivery, provided further, that upon request of any holder to receive paper copies of such forms, financial statements, other information and Officer’s Certificates or to receive them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.

 

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Section 9.     Payment and Prepayment of the Notes.

 

Section 9.1.     Maturity; Required Prepayment at Holder Option. 

 

(a)     As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof.

 

(b)     In the event that a Change of Control shall occur, the Company will give written notice (a “Change of Control Notice”) of such fact not more than ten (10) days after the Change of Control Date to all holders of the Notes. The Change of Control Notice shall (1) describe the facts and circumstances of the Change of Control in reasonable detail, (2) describe the Indebtedness of the Company in excess of $1,000,000 in principal amount then outstanding, (3) specify the rating, if any, accorded to the senior unsecured debt of the Company by a Designated Rating Agency which is below an Acceptable Rating or state that that the Company has requested a private rating of its senior unsecured debt and that the Designated Rating Agency has not issued a private rating in accordance with such request within the required time period, (4) refer to this Section 9.1(b) and the right of the holders of the Notes to require the Company to prepay their Notes on the terms and conditions provided for herein upon the occurrence of a Change of Control, and (5) contain an offer by the Company to prepay all of the outstanding Notes in full together with unpaid accrued interest to the date of prepayment. 

 

(c)     Each holder of the Notes shall have the right to accept an offer made by the Company pursuant to Section 9.1(b) and require prepayment of the Notes held by such holder in full by written notice (the “Prepayment Notice”) to the Company given within sixty (60) days following receipt of a Change of Control Notice. On the prepayment date designated in such holder’s Prepayment Notice (which shall be a Business Day not less than fifteen (15) days nor more than thirty (30) days after the date such Prepayment Notice is delivered to the Company), the Company shall prepay all Notes held by such holder at 100% of the principal amount of such Notes, together with unpaid accrued interest thereon to the date of prepayment. Failure to respond by a holder of the Notes shall constitute a rejection of such offer by such holder.

 

(d)     In the event the Company fails to give the Change of Control Notice as required above, each holder of Notes shall have the right to require the Company to prepay all Notes held by such holder at 100% of the principal amount of such Notes, together with unpaid accrued interest thereon to the date of prepayment. Notice of any required prepayment pursuant to this Section 9.1(d) shall be delivered by any holder of Notes to the Company not more than one hundred eighty (180) days after such holder has actual knowledge of such Change of Control. On the date designated in such holder’s notice (which shall be a Business Day not less than fifteen (15) days after the date such notice is delivered to the Company), the Company shall prepay all Notes held by such holder at 100% of the principal amount of such Notes, together with unpaid accrued interest thereon to the date of prepayment. If the holder of any Note gives any notice pursuant to this Section 9.1(d) the Company will give a Company Notice within five (5) Business Days of receipt of such notice to all holders of the Notes. 

 

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(e)     The obligation of the Company to give the notices specified in this Section 9.1 shall remain in effect so long as any Notes remain outstanding.

 

Section 9.2.     Optional Prepayments with Make-Whole Amount. The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 9.2 not less than thirty (30) days and not more than sixty (60) days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 9.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two (2) Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Notwithstanding the foregoing, so long as no Default or Event of Default shall then exist, any prepayment made by the Company pursuant to this Section 9.2 of all of the Notes then outstanding on or after August 7, 2047, shall be made at 100% of the principal so prepaid, but without any Make-Whole Amount.

 

Section 9.3.     Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Section 9.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

 

Section 9.4.     Maturity; Surrender, Etc. In the case of each prepayment of Notes pursuant to this Section 9, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

 

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Section 9.5.     Purchase of Notes. The Company will not, and will not permit any Affiliate to, purchase, redeem, prepay or otherwise acquire or assume, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes and (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to each holder upon the same terms and conditions. Any offer made pursuant to clause (b) of the immediately preceding sentence shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least thirty (30) Business Days. If the holders of more than 30% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by such holders of such offer shall be extended by the number of days necessary to give each such remaining holder at least thirty (30) Business Days from its receipt of such notice to accept such offer; provided, that, in no event shall any holder be obligated to accept such offer from the Company. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

 

Section 9.6.     Make-Whole Amount.

 

“Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 9.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

 

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the applicable Note is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% (50 basis points) over the yield to maturity implied by the “Ask Yield(s)” reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the “Ask Yields” Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

 

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If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% (50 basis points) over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (i) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (ii) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

 

“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (1) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (2) the number of years, computed on the basis of a 360-day year comprised of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the applicable Note, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 9.2 or Section 13.1.

 

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 9.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

 

Section 10.     Affirmative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 10.1.     Compliance with Law. Without limiting Section 10.6 or Section 11.6, the Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA PATRIOT Act, Environmental Laws and the other laws and regulations that are referred to in Section 6.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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Section 10.2.     Insurance. The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

 

Section 10.3.     Maintenance of Properties. The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 10.4.     Payment of Taxes. The Company will, and will cause each of its Subsidiaries to, or will cause OTC on behalf of the Company and each of its Subsidiaries pursuant to a tax sharing agreement to, file all Tax Returns and to pay and discharge all taxes shown to be due and payable on such Tax Returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent, provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge or levy if (a) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (b) the nonpayment of all such taxes, assessments, charges and levies individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.

 

Section 10.5.     Corporate Existence, Etc. Subject to Section 11.4, the Company will at all times preserve and keep in full force and effect its corporate existence, its good standing under the laws of its jurisdiction of incorporation and its qualification to transact business in each jurisdiction in which the character of the properties owned, leased or operated by it or the business conducted by it makes such qualification necessary. Subject to Sections 11.4 and 11.8, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect.

 

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Section 10.6.     Environmental Matters. The Company will, and will cause each of its Subsidiaries to, observe and comply with all laws, rules, regulations and orders of any Governmental Authority relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non-compliance would result in a material liability or otherwise constitute a Material Adverse Effect. 

 

Section 10.7.     Ranking of Obligations. The Company will take all actions necessary to assure that the Notes are senior unsecured Indebtedness of the Company, and are and remain pari passu and of equal rank and seniority with all other senior unsecured Indebtedness of the Company. 

 

Section 10.8.     Books and Records. The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and accounts in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be. The Company will, and will cause each of its Subsidiaries to, keep books, records and accounts which, in reasonable detail, accurately reflect all material transactions and dispositions of assets. The Company and its Subsidiaries have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts accurately reflect all material transactions and dispositions of assets and the Company will, and will cause each of its Subsidiaries to, continue to maintain such system.

 

Section 10.9.     Most Favored Lender. 

 

(a)     In the event that the Bank Credit Agreement shall at any time contain any financial covenant, undertaking, restriction or other provision that provides for limitations on interest expense which, for the avoidance of doubt, shall include dividends or interest on Preferred Stock (however expressed and whether stated as a ratio, as a fixed threshold, as an event of default or otherwise) and such covenant, undertaking, restriction or provision is not contained in this Agreement under substantially similar terms, or would be more beneficial to the holders of the Notes than any analogous covenant, undertaking, restriction or provision contained in this Agreement (any such covenant, undertaking, restriction or provision, an “Additional Covenant”) then, unless waived in writing by the Required Holders, such Additional Covenant shall be deemed automatically incorporated by reference into this Agreement, mutatis mutandis, as if set forth fully herein, without any further action required on the part of any Person, effective as of the date when such Additional Covenant became effective under the Bank Credit Agreement. Thereafter, upon the request of any holder of a Note, the Company shall promptly, at its expense (including, without limitation, the fees and expenses of counsel for the holders of the Notes), enter into any additional agreement or amendment to this Agreement reasonably requested by such holder evidencing any of the foregoing.

 

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(b)     Provided that no Default or Event of Default shall have occurred and be continuing, any Additional Covenant shall be deemed automatically (1) amended or otherwise modified in this Agreement at such time as each holder of Notes shall have received notice in writing from the Company certifying that (i) such Additional Covenant shall have been so amended or otherwise modified under the Bank Credit Agreement and (ii) no Default or Event of Default then exists and (2) deleted from this Agreement at such time as each holder of Notes shall have received notice in writing from the Company certifying that (i) such Additional Covenant shall have been deleted from the Bank Credit Agreement and (ii) no Default or Event of Default then exists. If the Company or any other Person shall pay any fee or other compensation to any Person party to the Bank Credit Agreement as an inducement to receiving any amendment, modification or deletion that is the subject of any notice set forth in the foregoing clause (1) or (2), such amendment, modification or deletion shall not become effective under this Agreement until the Company shall have paid the same level of fee or other compensation to each holder of Notes (whether a flat fee or flat compensation or based on a percentage or other metric of outstanding obligations or otherwise).

 

(c)     Notwithstanding anything set forth in this Section 10.9, no covenant contained in this Agreement as of the date of the Closing shall be deemed deleted from this Agreement or made less restrictive than the level set with respect to such covenant (however expressed) as of the date of the Closing unless amended or otherwise modified in accordance with Section 18.

 

Section 10.10.     Filing with the Minnesota Public Utilities Commission. On or prior to the twentieth (20th) day after the Funding Date, the Company shall make an informational filing with the Minnesota Public Utilities Commission that describes the basic terms of this Agreement and the Notes (omitting the Purchasers’ information on Schedule A).

 

Section 11.     Negative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 11.1.     Limitation on Interest-bearing Debt. The Company will not permit Interest-bearing Debt to exceed 60% of Total Capitalization determined as of the end of each fiscal quarter of the Company. 

 

Section 11.2.     Limitation on Priority Indebtedness. The Company will not permit Priority Indebtedness to exceed 20% of Total Capitalization determined as of the end of each fiscal quarter of the Company. 

 

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Section 11.3.     Transactions with Affiliates. The Company will not, and will not permit any Subsidiary to, enter into directly or indirectly any transaction or group of related transactions (including, without limitation, the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate, excluding (a) transactions between the Company and OTC and transactions between Significant Subsidiaries and OTC, (b) transactions otherwise expressly permitted (or required) with such Affiliates under this Agreement, (c) any issuance of Securities or other payments, awards or grants in cash, Securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans approved by the Board of Directors of the Company or a Significant Subsidiary, (d) loans or advances to employees of the Company or any of its Subsidiaries in the ordinary course of business, (e) the payment of fees, reasonable out-of-pocket costs and indemnities and provision of indemnification to directors, officers, consultants and employees of the Company and the Subsidiaries in the ordinary course of business, (f) any employment agreement, benefit plan or arrangement or any health, disability or similar insurance plan which covers employees, entered into by the Company or any of the Subsidiaries in the ordinary course of business, (g) any subscription agreement or similar agreement pertaining to the repurchase of equity interests pursuant to put/call rights or similar rights with employees, officers or directors, (h) payments or loans (or cancellation of loans) to employees that are (1) approved by a majority of the Board of Directors of the Company in good faith, (2) made in compliance with applicable law and (3) otherwise permitted under this Agreement, (i) transactions between the Company or any of the Subsidiaries and any Person, a director of which is also a director of the Company or a Significant Subsidiary, provided, however, that (1) such director abstains from voting as a director of the Company or a Significant Subsidiary on any matter involving such other Person and (2) such Person is not an Affiliate for any reason other than such director’s acting in such capacity, (j) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business and in a manner consistent with past practice, and (k) the payment of fees, expenses, indemnities or other payments pursuant to the agreements in existence on the date of this Agreement and set forth on Schedule 11.3 or any amendment thereto to the extent such an amendment is not adverse to the Purchasers or any other holder of the Notes in any material respect.

 

Section 11.4.     Merger, Consolidation, Etc. The Company will not consolidate with or merge with any other Person or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person unless:

 

(a)     the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation or limited liability company organized and existing under the laws of the United States or any State thereof (including the District of Columbia), and, if the Company is not such corporation or limited liability company, (1) such corporation or limited liability company shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (2) such corporation or limited liability company shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and

 

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(b)     immediately before and immediately after giving effect to such transaction or each transaction in any series of transactions, no Default or Event of Default shall have occurred and be continuing.

 

No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation or limited liability company that shall theretofore have become such in the manner prescribed in this Section 11.4 from its liability under this Agreement or the Notes.

 

Section 11.5.     Line of Business. The Company will not, and will not permit any Subsidiary to, engage in any business if, as a result, the general nature of the business in which the Company or any such Subsidiary would then be engaged would be substantially changed from the regulated utility business of the Company on the date of this Agreement.

 

Section 11.6.     Economic Sanctions Regulations, Etc. The Company will not, and will not permit any Controlled Entity to (a) become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or (b) directly or indirectly have any investment in or engage in any dealing or transaction (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (1) would cause any holder to be in violation of, or subject to sanctions under, any law or regulation applicable to such holder, or (2) is prohibited by or subject to sanctions under any U.S. Economic Sanctions Laws.

 

Section 11.7.     Liens. The Company will not, and will not permit any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except:

 

(a)     Liens for taxes and assessments or governmental charges or levies, provided that payment thereof is not at the time required by Section 10.4;

 

(b)     Liens of or resulting from any judgment or award in an aggregate amount not to exceed $25,000,000, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Company or a Subsidiary shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured;

 

(c)     Liens incidental to the conduct of business or the ownership of properties and assets (including, without limitation, Liens in connection with worker’s compensation, unemployment insurance, and other like laws, carrier’s, warehousemen’s, mechanic’s, materialmen’s liens and statutory landlords’ liens) and Liens and deposits to secure the payment of insurance premiums, performance of bids, tenders or trade contracts, leases, government contracts, agreements with public utilities, and other obligations of a like nature (including with respect to letters of credit in lieu of any such bonds on to support the issuance thereof) or to secure statutory obligations, surety or appeal bonds or other Liens and deposits of like general nature, in any such case incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations, and not in connection with the borrowing of money, provided in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings;

 

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(d)     minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are reasonably necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company and its Subsidiaries;

 

(e)     Liens securing Indebtedness and other obligations of a Subsidiary to the Company or to another Subsidiary;

 

(f)     Liens existing as of the date of this Agreement and described in Schedule 6.15 and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased (other than for premiums, interest, fees or costs capitalized or required to be paid in connection with such refinancing);

 

(g)     Liens in connection with the acquisition of property after the date of this Agreement by way of purchase money mortgage, conditional sale or other title retention agreement, Capitalized Lease or other deferred payment contract, provided that such Liens attach only to the property being acquired and that the Indebtedness and other obligations secured thereby do not exceed the Fair Market Value of such property at the time of acquisition thereof and the Lien shall be created contemporaneously with, or within one hundred eighty (180) days after, the acquisition of such property;

 

(h)     Liens that existed on assets of other Persons at the time of acquisition of such other Persons or of such assets by the Company or a Subsidiary and which continue to attach only to such assets and Liens securing any refinancing of Indebtedness or other obligations secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness or other obligations secured thereby is not increased (other than for premiums, interest, fees or costs capitalized or required to be paid in connection with such refinancing);

 

(i)     Liens arising under or related to any statutory or common law provisions, or customary account agreements, or other customary rights (1) relating to the establishment of depository relations with banks or other financial institutions and not given in connection with the issuance of Indebtedness, including banker’s liens, rights of setoff or similar rights and remedies as to deposit or securities accounts or other funds or instruments maintained or held with a depositary or other financial institution or securities intermediary or (2) relating to pooled deposit or sweep accounts of the Company or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company or a Subsidiary;

 

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(j)     Liens of lessors of real property on which facilities owned or leased by the Company or any Subsidiary are located;

 

(k)     Liens (to the extent falling under the definition of “Lien”) consisting of ownership interests (and protective filings respecting such ownership interests) of lessors of assets (other than Utility Assets) to the Company or any Subsidiary under any operating lease, and of licensors of intellectual property or other rights to the Company or any Subsidiary, it being understood and agreed that for purposes of this clause (k), rail cars shall not be considered “Utility Assets”;

 

(l)     Liens (to the extent falling under the definition of “Lien”) consisting of rights of lessees or sub-lessees of assets of the Company or any Subsidiary leased in the ordinary course of the Company’s or such Subsidiary’s business, which leases do not materially interfere with the ordinary course of business of the Company or such Subsidiary; 

 

(m)     Liens encumbering cash collateral or other financial assets securing investments consisting of hedging arrangements not otherwise prohibited hereunder relating to interest rate, commodity price or foreign exchange rate exposure not entered into for any speculative purpose;

 

(n)     any encumbrance or restriction with respect to the Company’s equity interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement and encumbrances or restrictions in favor of other utility owners arising from agreements governing the Company’s or its Subsidiaries’ interests in jointly owned electric generation plants and transmission lines, in each case, not incurred in connection with the borrowing of money;

 

(o)     Liens on Securities that are the subject of repurchase agreements relating to Securities issued or guaranteed as to principal and interest by the United States of America;

 

(p)     Liens solely on any cash earnest money deposits made by the Company or any Subsidiary in connection with any letter of intent or purchase agreement;

 

(q)     CoBank, ACB’s statutory lien in the CoBank Equities (as defined in the Bank Credit Agreement as in effect on the date of the Closing);

 

(r)     Liens created under any agreement relating to the sale, transfer or other disposition of assets permitted hereunder; provided that such Liens relate solely to the assets to be sold, transferred or otherwise disposed of;

 

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(s)     Liens created, assumed or incurred after the date of the Closing given to secure Indebtedness of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (r) hereof, provided that (l) all Indebtedness secured by such Liens shall have been incurred within the applicable limitations provided in Section 11.2 and (2) at the time of creation, assumption or incurrence of the Indebtedness secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist, and provided further, that, notwithstanding the foregoing, the Company will not, and will not permit any Subsidiary to, grant any Liens securing any Indebtedness outstanding under or pursuant to any Significant Debt Agreement pursuant to this Section 11.7(s) unless and until all obligations of the Company under this Agreement and the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with all such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, as reasonably requested by the Required Holders, an intercreditor agreement that is reasonably acceptable to the Required Holders; and

 

(t)     Liens created, assumed or incurred after the date of the Closing given to secure Indebtedness or other obligations of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (s) hereof; provided that all Indebtedness and other obligations secured by such Liens do not exceed $10,000,000 in the aggregate at any time outstanding; and provided further, that, notwithstanding the foregoing, the Company will not, and will not permit any Subsidiary to, grant any Liens securing any Indebtedness outstanding under or pursuant to any Significant Debt Agreement pursuant to this Section 11.7(t) unless and until all obligations of the Company under this Agreement and the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with all such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, as reasonably requested by the Required Holders, an intercreditor agreement that is reasonably acceptable to the Required Holders.

 

Section 11.8.     Sale of Assets, Etc. Except as permitted under Section 11.4, the Company will not, and will not permit any of its Subsidiaries to, make any Transfer of all or a substantial part of its Utility Assets unless:

 

(a)     such Transfer is in the ordinary course of business of the Company or such Subsidiary;

 

(b)     immediately after giving effect to such Transfer, no Default or Event of Default would exist; and

 

(c)     immediately after giving effect to such Transfer, the Disposition Value of all property that was the subject of any Transfer of Utility Assets (1) occurring in the period of four fiscal quarters of the Company then next ending would not exceed 10% of Total Utility Plant as of the end of the then most recently ended fiscal year of the Company, and (2) occurring after the date of the Closing through the date of determination would not exceed 25% of Total Utility Plant as of the end of the then most recently ended fiscal year; provided, that (i) any Subsidiary may Transfer Utility Assets to the Company or any Wholly-Owned Subsidiary, and (ii) if the Net Proceeds Amount for any Transfer is applied to a Utility Property Reinvestment Application within one year after such Transfer, then such Transfer, only for purposes of compliance with subsection (c) of this Section 11.8 as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be a Transfer of Utility Assets.

 

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Section 11.9.     Contingent Liabilities. The Company will not, and will not permit any of its Subsidiaries to, enter into any Guaranty, except for:

 

(a)     Guaranties by the Company or any Significant Subsidiary of obligations of the Company or any Subsidiary as lessee under any lease that is not a Capitalized Lease;

 

(b)     Guaranties by the Company to assure payment of workers’ compensation, unemployment insurance, old age pensions or other social security obligations, or performance, surety, statutory, stay, customs or appeal bonds, performance and completion guarantees, and other similar obligations, in the ordinary course of business of the Company or a Significant Subsidiary or consistent with past practice; 

 

(c)     Guaranties by the Company or any Subsidiary of the obligations of the Company or any Significant Subsidiary under any unsecured Interest-bearing Debt the incurrence of which is permitted pursuant to Section 11.1 and Section 11.2; provided, that, notwithstanding the foregoing, the Company will not permit any Subsidiary to guaranty any of the obligations of the Company under any Significant Debt Agreement unless and until all obligations of the Company under this Agreement and the Notes shall concurrently be guaranteed by such Subsidiary pursuant to documentation in form and substance reasonably satisfactory to the Required Holders; and 

 

(d)     other Guaranties limited as to principal of recovery to not more than $10,000,000 in the aggregate at any time outstanding; provided, that, notwithstanding the foregoing, the Company will not permit any Subsidiary to guaranty any of the obligations of the Company under any Significant Debt Agreement unless and until all obligations of the Company under this Agreement and the Notes shall concurrently be guaranteed by such Subsidiary pursuant to documentation in form and substance reasonably satisfactory to the Required Holders. 

 

Section 12.     Events of Default.

 

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

 

(a)     the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

 

(b)     the Company defaults in the payment of any interest on any Note for more than five (5) Business Days after the same becomes due and payable; or

 

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(c)     the Company defaults in the performance of or compliance with any term contained in Section 8.1(d), Section 10.5, Section 10.7 or Section 11 or in any Additional Covenant; or

 

(d)     the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 12) and such default is not remedied within thirty (30) days after the earlier of (1) a Responsible Officer obtaining actual knowledge of such default and (2) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 12(d)); or

 

(e)     any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or

 

(f)     (1) the Company or any Significant Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $25,000,000 beyond any period of grace provided with respect thereto, or (2) the Company or any Significant Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $25,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (3) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (i) the Company or any Significant Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $25,000,000, or (ii) one or more Persons have the right to require the Company or any Significant Subsidiary so to purchase or repay such Indebtedness, provided that this paragraph (f) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness, and provided further, that an Event of Default under this paragraph (f) caused by the occurrence of a breach or default with respect to Indebtedness in the aggregate in excess of $25,000,000 shall be cured for purposes of this Agreement upon the Person asserting such breach or default waiving such breach or default or upon the Company or a Significant Subsidiary curing such breach or default if, at the time of such waiver or such cure the Required Holders have not exercised any rights or remedies with respect to an Event of Default under this paragraph (f); or

 

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(g)     the Company or any Significant Subsidiary (1) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (2) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (3) makes an assignment for the benefit of its creditors, (4) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (5) is adjudicated as insolvent or to be liquidated, or (6) takes corporate action for the purpose of any of the foregoing; or

 

(h)     a court or other Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Significant Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Significant Subsidiaries, or any such petition shall be filed against the Company or any of its Significant Subsidiaries and such petition shall not be dismissed within sixty (60) days; or

 

(i)     one or more final judgments or orders for the payment of money aggregating in excess of $25,000,000, including, without limitation, any such final order enforcing a binding arbitration decision are rendered against one or more of the Company and its Significant Subsidiaries and which judgments are not, within sixty (60) days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; or

 

(j)     if (1) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under Section 412 of the Code, (2) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (3) the aggregate “amount of unfunded benefit liabilities” (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $50,000,000, (4) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (5) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (6) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (1) through (6) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect.

 

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As used in Section 12(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

 

Section 13.     Remedies on Default, Etc.

 

Section 13.1.     Acceleration.

 

(a)     If an Event of Default with respect to the Company described in Section 12(g) or (h) (other than an Event of Default described in clause (1) of Section 12(g) or described in clause (6) of Section 12(g) by virtue of the fact that such clause encompasses clause (1) of Section 12(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

 

(b)     If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.

 

(c)     If any Event of Default described in Section 12(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

 

Upon any Notes becoming due and payable under this Section 13.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the applicable Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

 

Section 13.2.     Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 13.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

 

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Section 13.3.     Rescission. At any time after any Notes have been declared due and payable pursuant to Section 13.1(b) or (c), the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the applicable Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 18, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 13.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

 

Section 13.4.     No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 16, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 13, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

 

Section 14.     Registration; Exchange; Substitution of Notes.

 

Section 14.1.     Registration of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person(s) in whose name any Note(s) shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

 

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Section 14.2.     Transfer and Exchange of Notes. Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 19(3)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten (10) Business Days thereafter, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 7.2.

 

Section 14.3.     Replacement of Notes. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 19(3)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

 

(a)     in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $25,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

(b)     in the case of mutilation, upon surrender and cancellation thereof, within ten (10) Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

 

Section 15.     Payments on Notes.

 

Section 15.1.     Place of Payment. Subject to Section 15.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank, N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be the principal office of a bank or trust company in such jurisdiction.

 

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Section 15.2.     Home Office Payment. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 15.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 15.1. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 14.2. The Company will afford the benefits of this Section 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 15.2. 

 

Section 15.3.     FATCA Information. By acceptance of any Note, the holder of such Note agrees that such holder will with reasonable promptness duly complete and deliver to the Company, or to such other Person as may be reasonably requested by the Company, from time to time (a) in the case of any such holder that is a United States Person, such holder’s United States tax identification number or other forms reasonably requested by the Company necessary to establish such holder’s status as a United States Person under FATCA and as may otherwise be necessary for the Company to comply with its obligations under FATCA and (b) in the case of any such holder that is not a United States Person, such documentation prescribed by applicable law (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may be necessary for the Company to comply with its obligations under FATCA and to determine that such holder has complied with such holder’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from any such payment made to such holder. Nothing in this Section 15.3 shall require any holder to provide information that is confidential or proprietary to such holder unless the Company is required to obtain such information under FATCA. In such event, the Company shall treat any such information it receives as confidential, but, for the avoidance of doubt, the Company may report such information to the Internal Revenue Service or other taxing authority to the extent required by FATCA.

 

Section 16.     Expenses, Etc.

 

Section 16.1.     Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of the Purchaser’s special counsel, Schiff Hardin LLP) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO, provided, that such reimbursed costs and expenses under this clause (c) shall not exceed $5,000. If required by the NAIC, the Company shall obtain and maintain at its own cost and expense a Legal Entity Identifier (LEI).

 

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The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes), (ii) any and all wire transfer fees that any bank or other financial institution deducts from any payment under such Note to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note and (iii) any judgment, liability, claim, order, decree, fine, penalty, cost, fee, expense (including, without limitation, reasonable attorneys’ fees and expenses) or obligation resulting from the consummation of the transactions contemplated hereby, including the use of the proceeds of the Notes by the Company, provided that such agreement by the Company to pay and save harmless shall not, as to any Purchaser or holder, be available to the extent that any such judgment, liability, claim, order, decree, fine, penalty, cost, fee, expense or obligation (x) resulted from the gross negligence or willful misconduct of any such Purchaser or holder, (y) resulted from a claim brought by the Company against such Purchaser or holder for material breach of such Purchaser’s or holder’s obligations under this Agreement to the extent that such claim has resulted in a final, non-appealable judgment in favor of the Company or (z) resulted from any dispute solely among two or more Purchasers, two or more holders or one or more Purchasers and one or more holders (not arising as a result of any act or omission by the Company, any of its Affiliates that directly Control the Company or any of its Affiliates that the Company directly Controls). A Purchaser or holder seeking to receive payment under this Section 16.1 shall use reasonable efforts (to the extent permitted by law) to notify the Company of any event requiring such payment within 60 days following such Purchaser’s or holder’s receipt of notice of commencement of any action or proceeding, or such Purchaser’s or holder’s obtaining knowledge of the occurrence of any other event giving rise to a claim for payment hereunder, provided that failure to give such notice shall not affect the Company’s obligations under this paragraph.

 

Section 16.2.     Certain Taxes. The Company agrees to pay all stamp, documentary or similar taxes or fees which may be payable in respect of the execution and delivery or the enforcement of this Agreement or the execution and delivery (but not the transfer) or the enforcement of any of the Notes in the United States of America or any other jurisdiction where the Company has assets or of any amendment of, or waiver or consent under or with respect to, this Agreement or of any of the Notes, and to pay any value added tax due and payable in respect of reimbursement of costs and expenses by the Company pursuant to this Section 16, and will save each holder of a Note to the extent permitted by applicable law harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax or fee required to be paid by the Company hereunder.

 

Section 16.3.     Survival. The obligations of the Company under this Section 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.

 

-39-

 

 

Section 17.     Survival of Representations and Warranties; Entire Agreement.

 

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

 

Section 18.     Amendment and Waiver.

 

Section 18.1.     Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), only with the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6, 7 or 22 or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of each Purchaser and the holder of each Note at the time outstanding, (1) subject to the provisions of Section 13 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of (i) interest on the Notes or (ii) the Make-Whole Amount, (2) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (3) amend any of Sections 9, 12(a), 12(b), 13, 18 or 21.

 

Section 18.2.     Solicitation of Holders of Notes.

 

(a)     Solicitation. The Company will provide each holder of a Note with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 18 to each holder of a Note promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

 

(b)     Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of a Note as consideration for or as an inducement to the entering into by such holder of any waiver or amendment of any of the terms and provisions hereof or of any Note unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of a Note even if such holder did not consent to such waiver or amendment.

 

-40-

 

 

(c)     Consent in Contemplation of Transfer. Any consent made pursuant to this Section 18 by any holder of a Note that has transferred or has agreed to transfer its Note to (1) the Company, (2) any Subsidiary or any other Affiliate or (3) any other Person in connection with, or in anticipation of, such other Person acquiring, making a tender offer for or merging with the Company and/or any of its Affiliates, in each case in connection with such consent shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.

 

Section 18.3.     Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and any holder of a Note and no delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. 

 

Section 18.4.     Notes Held by Company, Etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

 

Section 19.     Notices.

 

Except as otherwise provided in Section 8.4, all notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service (charges prepaid), (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally recognized overnight delivery service (charges prepaid). Any such notice must be sent:

 

(1)     if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,

 

(2)     if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or

 

(3)     if to the Company, to the Company at 4334 – 18th Avenue SW, Fargo, North Dakota 58106 to the attention of the Treasurer, or at such other address as the Company shall have specified to the holder of each Note in writing.

 

Notices under this Section 19 will be deemed given only when actually received.

 

-41-

 

 

Section 20.     Reproduction of Documents.

 

This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing or on the Funding Date (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital, or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 20 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

 

Section 21.     Confidential Information.

 

For the purposes of this Section 21, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser (other than from a source actually known to such Purchaser to be subject to a confidentiality agreement with the Company or any Subsidiary relating to such Confidential Information) prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 8.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (1) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (2) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 21, (3) any other holder of any Note, (4) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 21), (5) any Person from which it offers to purchase any Security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 21), (6) any federal or state regulatory authority having jurisdiction over such Purchaser, (7) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (8) any other Person to which such delivery or disclosure may be necessary or appropriate (i) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (ii) in response to any subpoena or other legal process, (iii) in connection with any litigation to which such Purchaser is a party or (iv) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 21 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 21.

 

-42-

 

 

In the event that as a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 21, this Section 21 shall not be amended thereby and, as between such Purchaser or such holder and the Company, this Section 21 shall supersede any such other confidentiality undertaking.

 

Section 22. Substitution of Purchaser.

 

Each Purchaser shall have the right to substitute any one of its Affiliates or another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser”) as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section 7. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 22), shall be deemed to refer to such Substitute Purchaser in lieu of such original Purchaser. In the event that such Substitute Purchaser is so substituted as a Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other than in this Section 22), shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.

 

-43-

 

 

Section 23. Miscellaneous.

 

Section 23.1.     Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not, except that, subject to Section 11.4, the Company may not assign or otherwise transfer any of its rights or obligations hereunder or under the Notes without the prior written consent of each holder. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

Section 23.2.     Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 9.4 that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

 

Section 23.3.     Accounting Terms. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (a) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (b) all financial statements shall be prepared in accordance with GAAP. For purposes of determining compliance with this Agreement (including, without limitation, Section 10, Section 11 and the definition of “Indebtedness”), any election by the Company to measure any financial liability using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair Value Option, International Accounting Standard 39 – Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

 

Section 23.4.     Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 23.5.     Construction, Etc. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

 

-44-

 

 

Section 23.6.     Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

 

Section 23.7.     Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

Section 23.8.     Jurisdiction and Process; Waiver of Jury Trial.

 

(a)     The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(b)     The Company agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 23.8(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment.

 

(c)     The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 23.8(a) by mailing a copy thereof by registered, certified priority or express mail (or any substantially similar form of mail), postage prepaid, return receipt or delivery confirmation requested, to it at its address specified in Section 19 or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (1) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (2) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

 

-45-

 

 

(d)     Nothing in this Section 23.8 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(e)     The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document executed in connection herewith or therewith.

 

* * * * *

 

-46-

 

 

The execution hereof by the Purchasers shall constitute a contract among the Company and the Purchasers for the uses and purposes hereinabove set forth.

 

	
			 

				
			Very truly yours,

				
			 

			
	 	 	 
	 	Otter Tail Power Company	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Kevin G. Moug

				
			 

			
	
			 

				
			Name: Kevin Moug

			
			Title:   Treasurer

			

				
			 

			

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	Brighthouse Life Insurance Company	 
	 	By: MetLife Investment Advisors, LLC Its Investment Manager
	 	
			 

				 
	 	 	 
	
			 

				
			By: 

				
			/s/   Judith A. Gulotta

				
			 

			
	 	
			Name:  Judith A. Gulotta

			
			Title:    Managing Director

			

				 

 

 

 

	 	
			Union Fidelity Life Insurance Company

				 
	 	By: MetLife Investment Advisors, LLC Its Investment Adviser
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   Judith A. Gulotta

				 
	 	
			Name:  Judith A. Gulotta

			Title:    Managing Director

				 

 

 

 

	 	MetLife Insurance K.K.	 
	 	By: MetLife Investment Advisors, LLC Its Investment Manager
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   John A. Wills

				 
	 	
			Name:  John A. Wills

			Title:    SVP & Managing Director

				 

 

 

 

	 	Pensionskasse Des Bundes Publica	 
	 	By: MetLife Investment Management Limited, as Investment Manager	 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   Jason Rothenberg

				 
	 	
			Name:  Jason Rothenberg

			Title:    Authorised Signatory

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			Thrivent Financial For Lutherans

				 
	 	 	 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   William J. Hochmuth

				 
	 	
			Name:  William J. Hochmuth

			Title:    Managing Director

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			American Equity Investment Life

			  Insurance Company

				 
	 	
			 

				 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   Jeffrey A. Fossell

				 
	 	
			Name:  Jeffrey A. Fossell

			Title:    Authorised Signatory

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			United of Omaha Life Insurance Company

				 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/   Lee Martin

				 
	 	
			Name:  Lee Martin

			Title:    Vice President

				 

 

 

 

	 	
			Mutual of Omaha Insurance Company

				 
	 	
			 

				 
	 	 	 
	 	
			By: 

				
			/s/   Lee Martin

				 
	 	
			Name:  Lee Martin

			Title:    Vice President

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			Connecticut General Life Insurance

			   Company

				 
	 	
			By: Cigna Investments, Inc. (authorized agent)

				 
	 	 	 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/    Christopher D. Potter

				 
	 	
			Name:  Christopher D. Potter

			Title:    Managing Director

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			John Hancock Life Insurance Company

			   (U.S.A.)

				 
	 	 	 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/    Matthew Fedors

				 
	 	
			Name:  Matthew Fedors

			Title:   Director

				 

 

 

 

 

This Agreement is hereby

Accepted and agreed to as

Of the date thereof.

 

	 	
			National Guardian Life Insurance

			   Company

				 
	 	 	 
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/    Mark Solverud

				 
	 	
			Name:  Mark Solverud

			Title:    President & CEO

				 

 

 

 

 

Information Relating to Purchasers

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Brighthouse Life Insurance Company 

			334 Madison Avenue

			Convent Station, New Jersey 07961

				 	
			$3,000,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds to

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) All notices and communications:

			 

			Brighthouse Life Insurance Company

			c/o MetLife Investment Advisors, LLC, Investments – Private Placements

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Fred Sporer, VP Private Placements

			Emails: PPUCompliance@metlife.com     and     fsporer@metlife.com 

			 

			With a copy OTHER than with respect to deliveries of financial statements to:

			 

			Brighthouse Life Insurance Company

			c/o MetLife Investment Advisors, LLC, Investments Law

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Chief Counsel-Investments Law (PRIV)

			Email: sec_invest_law@metlife.com

			
	 
	
			(3) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(4) Nominee: None

			
	 
	
			(5) Tax Identification No.: Provided to Issuer under separate cover.

			

 

Schedule A

(to Note Purchase Agreement)

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Union Fidelity Life Insurance Company 

			7101 College Boulevard

			Suite 1400

			Overland Park, KS 66210

				 	
			$7,600,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds to

			 

			Provided to Issuer under separate cover.

			
	 
	 
	 
	
			(2)All notices and communications:

			 

			Union Fidelity Life Insurance Company

			c/o MetLife Investment Advisors, LLC,

			Investments, Private Placements

			One MetLife Way

			Whippany, NJ 07981

			Attention: Fred Sporer, VP Private Placements

			Emails: PPUCompliance@metlife.com     and     fsporer@metlife.com 

			 

			With a copy OTHER than with respect to deliveries of financial statements to:

			 

			Union Fidelity Life Insurance Company

			c/o MetLife Investment Advisors, LLC, Investments Law

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Chief Counsel-Investments Law (PRIV)

			Email: sec_invest_law@metlife.com

			
	 
	 
	
			(3) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(4) Nominee: Hare & Co.

			
	 
	
			(5) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-2

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Metlife Insurance K.K 

			1-3, Kioicho, Chiyoda-ku

			Tokyo, 102-8525 JAPAN

				 	
			$3,800,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds to

			 

			Provided to Issuer under separate cover..

			
	 
	
			(2) All notices and communications:

			 

			MetLife Asset Management Corp. (Japan)

			Administration Department

			Tokyo Garden Terrace Kioicho Kioi Tower 25F

			1-3, Kioicho, Chiyoda-ku, Tokyo 102-8525 Japan

			Attention:       Administration Dept. Manager

			Email:               saura@metlife.co.jp 

			 

			With a copy to:

			 

			MetLife Insurance K.K.

			c/o MetLife Investment Advisors, LLC,

			Investments, Private Placements

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Fred Sporer, VP Private Placements

			Emails: PPUCompliance@metlife.com     and     fsporer@metlife.com 

			 

			With another copy OTHER than with respect to deliveries of financial statements to:

			 

			 

			MetLife Insurance K.K.

			c/o MetLife Investment Advisors, LLC, Investments Law

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Chief Counsel-Investments Law (PRIV)

			Email: sec_invest_law@metlife.com

			

 

A-3

 

 

	
			(3) Audit Requests should be sent:

			 

			Soft copy to:

			AuditConfirms.PvtPlacements@metlife.com

			 

			Or hard copy to:

			Metropolitan Life Insurance Company,

			Attn: Private Placements Operations

			(ATTN: Audit Confirmations),

			18210 Crane Nest Drive – 

			5th Floor, Tampa, FL 33647

			 

			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			

	 
	
			(5) Nominee: None

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-4

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A

			Notes to be Purchased

			
	 	 	 
	
			Metlife Insurance K.K 

			1-3, Kioicho, Chiyoda-ku

			Tokyo, 102-8525 JAPAN

				 	
			$15,300,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds to

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) All notices and communications:

			 

			MetLife Asset Management Corp. (Japan)

			Administration Department

			Tokyo Garden Terrace Kioicho Kioi Tower 25F

			1-3, Kioicho, Chiyoda-ku, Tokyo 102-8525 Japan

			Attention:       Administration Dept. Manager

			Email:             saura@metlife.co.jp 

			 

			With a copy to:

			 

			MetLife Insurance K.K.

			c/o MetLife Investment Advisors, LLC,

			Investments, Private Placements

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Fred Sporer, VP Private Placements

			Emails: PPUCompliance@metlife.com     and     fsporer@metlife.com 

			 

			With another copy OTHER than with respect to deliveries of financial statements to:

			 

			 

			MetLife Insurance K.K.

			c/o MetLife Investment Advisors, LLC, Investments Law

			One MetLife Way

			Whippany, New Jersey 07981

			Attention: Chief Counsel-Investments Law (PRIV)

			Email: sec_invest_law@metlife.com

			

 

A-5

 

 

	
			(3) Audit Requests should be sent:

			 

			Soft copy to:

			AuditConfirms.PvtPlacements@metlife.com

			 

			Or hard copy to:

			Metropolitan Life Insurance Company,

			Attn: Private Placements Operations

			(ATTN: Audit Confirmations),

			18210 Crane Nest Drive – 

			5th Floor, Tampa, FL 33647

			 

			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			

	 
	
			(5) Nominee: None

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-6

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Pensionskasse des Bundes PUBLICA 

			Attn. Asset Management

			3007 Bern, Switzerland

				 	
			$1,300,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds to

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) All notices and communications:

			 

			Publica

			c/o MetLife Investment Management Limited

			Investments, Private Placements

			One MetLife Way

			Whippany, NJ 07981

			Attention: Fred Sporer, VP Private Placements

			Emails: PPUCompliance@metlife.com     and     fsporer@metlife.com

			 

			With a copy OTHER than with respect to deliveries of financial statements to:

			 

			Pensionskasse des Bundes PUBLICA

			Attn. Asset Management

			Eigerstrasse 57

			3007 Bern, Switzerland

			Facsimile: +41 58 485 21 13

			 

			and

			 

			Publica

			c/o MetLife Investment Management Limited

			One MetLife Way

			Whippany, NJ 07981

			Attention: Chief Counsel-Investments Law (PRIV)

			Email: sec_invest_law@metlife.com

			
	 
	 
	
			(3) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			

 

	
			(4) Nominee: None

			
	 
	
			(5) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-7

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Thrivent Financial For Lutherans

			625 Fourth Avenue South

			Minneapolis, MN 55415

				 	
			$20,000,000

			
	 	 	 
	
			(1) All payments to be by bank wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) Notices of payments and written confirmation of such wire transfers to:

			 

			Investment Division-Private Placements

			Attn: William Hochmuth

			Thrivent Financial for Lutherans

			625 Fourth Avenue South

			Minneapolis, MN 55415

			Fax: (612) 844-4027

			Email: privateinvestments@thrivent.com

			 

			With a copy to:

			 

			Attn: Jeremy Anderson or Harmon Bergenheier

			Thrivent Financial for Lutherans

			625 Fourth Avenue South

			Minneapolis, MN 55415

			Email: boxprivateplacement@thrivent.com

			
	 
	
			(3) All other communications to:

			 

			Thrivent Financial for Lutherans

			Attn: Investment Division-Private Placements

			625 Fourth Avenue South

			Minneapolis, MN 55415

			Fax: (612) 844-4027

			Email: privateinvestments@thrivent.com

			
	 
	
			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(5) Nominee: None

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-8

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			American Equity Investment Life 

			  Insurance Company 

			6000 Westown Parkway

			West Des Moines, IA 50266

				 	
			$16,000,000

			
	 	 	 
	
			(1) All scheduled payments of principal and interest by wire transfer of immediately available funds:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) All notices and communications regarding payment transactions (Payment):

			 

			Email: AssetAdmin.PrivatePlacements@American-Equity.com

			Attention: Mark Kooienga   Phone (515) 273-3576

			
	 
	 
	
			(3) All notices and communications (other than Payment and Legal) shall be sent to:

			 

			American Equity Investment Life Insurance Company

			Investment-Private Placements

			6000 Westown Parkway

			West Des Moines, IA 50266

			Attention: Legal Monitoring

			Email: Legal.PrivatePlacements@American-Equity.com

			

 

A-9

 

 

	
			(4) All notices and communications (legal) shall be sent to:

			 

			American Equity Investment Life Insurance Company

			Investment-Private Placements

			6000 Westown Parkway

			West Des Moines, IA 50266

			Attention: Legal Monitoring

			Email: Legal.PrivatePlacements@American-Equity.com

			
	 
	
			(5) All audit requests shall be sent to:

			 

			Soft copy to AuditConfirms.PrivatePlacements@American-Equity.com

			Or hard copy to:

			 

			American Equity Investment Life Insurance Company

			Investment-Private Placements

			6000 Westown Parkway

			West Des Moines, IA 50266

			Attention: AuditConfirms

			
	 
	
			(6) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(7) Nominee: Chimefish & Co

			
	 
	
			(8) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-10

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			United of Omaha Life Insurance Company 

			3300 Mutual of Omaha Plaza

			Omaha, NE 68175-1011

				 	
			$6,000,000

			
	 	 	 
	
			(1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) Address for all notices in respect of payment of Principal and Interest, Corporate Actions, and Reorganization Notifications:

			 

			Provided to Issuer under separate cover 

			
	 
	
			(3) Address for all other communications (i.e.: Quarterly/Annual reports, Tax filings, Modifications, Waivers regarding the Note):

			 

			4 - Investment Management

			United of Omaha Life Insurance Company

			3300 Mutual of Omaha Plaza

			Omaha, NE 68175-1011

			 

			Email Address for Electronic Document Transmission: privateplacements@mutualofomaha.com

			
	 
	
			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover 

			
	 
	
			(5) Nominee: None

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-11

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Mutual of Omaha Insurance Company 

			3300 Mutual of Omaha Plaza

			Omaha, NE 68175-1011

				 	
			$7,000,000

			
	 	 	 
	
			(1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(2) Address for all notices in respect of payment of Principal and Interest, Corporate Actions, and Reorganization Notifications:

			 

			Provided to Issuer under separate cover 

			
	 
	
			(3) Address for all other communications (i.e.: Quarterly/Annual reports, Tax filings, Modifications, Waivers regarding the Note):

			4 - Investment Management

			United of Omaha Life Insurance Company

			3300 Mutual of Omaha Plaza

			Omaha, NE 68175-1011

			 

			Email Address for Electronic Document Transmission:

			privateplacements@mutualofomaha.com

			 

			
	 
	
			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(5) Nominee: None

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-12

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

			
	 	 	 
	
			Connecticut General Life Insurance 

			  Company 

			900 Cottage Grove Rd

			Bloomfield, Connecticut 06002

				 	
			$8,000,000

			$4,000,000

			 

			
	 	 	 
	
			(1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover. 

			
	 
	
			(2) Address for all notices related to payments:

			 

			CIG & Co.

			c/o Cigna Investments, Inc.

			Attention: Fixed Income Securities

			Wilde Building, A5PRI

			900 Cottage Grove Rd

			Bloomfield, Connecticut 06002

			E-Mail:  CIMFixedIncomeSecurities@Cigna.com

			E-Mail: Christopher.Potter@Cigna.com

			 

			
	 
	
			(3) Address for all other communications:

			 

			CIG & Co.

			c/o Cigna Investments, Inc.

			Attention: Fixed Income Securities

			Wilde Building, A5PRI

			900 Cottage Grove Rd

			Bloomfield, Connecticut 06002

			E-Mail: CIMFixedIncomeSecurities@Cigna.com

			E-Mail: Christopher.Potter@Cigna.com

			
	 
	
			(4) Address for Delivery of Notes:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(5) Nominee: CIG & Co.

			
	 
	
			(6) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-13

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A 

			Notes to be Purchased

				 
	 	 	 	 
	
			John Hancock Life Insurance Company

			(U.S.A.)

			197 Clarendon Street

			Boston, MA 02116

				 	
			$5,000,000

				 
	 	 	 	 
	
			(1) All payments to be by bank wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover.

				 
	 	 
	
			(2) All notices with respect to payments, prepayments (scheduled and unscheduled, whether partial or in full) and audit requests shall be sent to:

			 

			John Hancock Financial Services

			197 Clarendon Street

			Boston, MA 02116

			Attention: Investment Administration

			Fax Number: (617) 572-1799

			Email: InvestmentAdministration@jhancock.com

				 
	 	 
	
			(3) All notices and communication with respect to compliance reporting, financial statements and related certifications shall be sent to:

			 

			John Hancock Financial Services

			197 Clarendon Street

			Boston, MA 02116

			Attention: Bond and Corporate Finance, C-2

			Email Address: powerteam@jhancock.com

				 
	 	 
	
			(4) All other notices shall be sent to:

			John Hancock Financial Services

			197 Clarendon Street

			Boston, MA 02116

			Attention: Investment Law, C-3

			 

			With copy to:

			 

			John Hancock Financial Services

			197 Clarendon Street

			Boston, MA 02116

			Attention: Bond and Corporate Finance, C-2

			Email Address: powerteam@jhancock.com

				 

 

A-14

 

 

	
			(5) Address for Delivery of Notes:

			 

			 

			Provided to Issuer under separate cover.

				 
	 	 
	
			(6) Nominee: None

				 
	 	 
	
			(7) Tax Identification No.: Provided to Issuer under separate cover

				 

 

 

 

 

	
			

			

			

			Name and Address of Purchaser

				 	
			Principal

			Amount of Series 2018A

			Notes to be Purchased

			
	 	 	 
	
			National Guardian Life Insurance

			  Company 

			Two E Gilman St

			Madison, WI 53703

				 	
			$3,000,000

			
	 	 	 
	
			(1) All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds to:

			 

			Provided to Issuer under separate cover.

			 

			
	 
	
			(2) Address for all notices relating to payments, notices and other communications:

			 

			Attn: Investment Dept

			National Guardian Life Insurance Company

			Two E Gilman St

			Madison WI 53703

			
	 
	
			(3) Primary Operations & Credit Contact:

			 

			Robert A. Mucci, CFA

			Executive Vice President & Treasurer

			Phone#: (608) 443-5258

			E-FAX: (608) 443-5158

			Email: ramucci@nglic.com

			

 

A-15

 

 

	
			(4) Secondary Operations & Intralinks Contact:

			 

			Robert B. Bodett, CFA

			Second Vice President - Investment Officer

			Phone#: (608) 443-5252

			E-FAX: (608) 443-5152

			Email: rbbodett@nglic.com

			
	 
	
			(5) Address for Delivery of Notes and Closing Documents:

			 

			Provided to Issuer under separate cover.

			
	 
	
			(6) Nominee: None

			
	 
	
			(7) Tax Identification No.: Provided to Issuer under separate cover.

			

 

A-16

 

 

Defined Terms

 

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

 

“Acceptable Rating” means, with respect to the senior unsecured debt of the Company, a rating of “Baa3” (or the then current equivalent thereof) or better from Moody’s and a rating of “BBB-” (or the then current equivalent thereof) or better from S&P and in the case of any other Designated Rating Agency, a rating equivalent to or better than such Acceptable Rating of Moody’s or S&P. 

 

“Additional Covenant” is defined in Section 10.9.

 

“Affiliate” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person and, with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any Person of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

“Agreement” means this Agreement, including all Schedules and Exhibits attached to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.

 

“Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other corrupt activity, including, without limitation, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

“Anti-Money Laundering Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes, including, without limitation, the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act. 

 

“Bank Credit Agreement” means that certain Second Amended and Restated Credit Agreement dated as of October 29, 2012 among the Company, as Borrower, U.S. Bank National Association, as Administrative Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, KeyBank National Association and CoBank, ACB, as Co-Documentation Agents, and U.S. Bank National Association, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Runners, as the same may be amended or restated, joined, supplemented or otherwise modified from time to time, and any renewals, extensions or replacements thereof.

 

“Blocked Person” means (a) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by OFAC, (b) a Person, entity, organization, country or regime that is blocked or a target of sanctions that have been imposed under U.S. Economic Sanctions Laws or (c) a Person that is an agent, department or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, any Person, entity, organization, country or regime described in clause (a) or (b).

 

Schedule B

(to Note Purchase Agreement)

 

 

“Business Day” means (a) for the purposes of Section 9.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or Minneapolis, Minnesota are required or authorized to be closed.

 

“Capitalized Lease” means, any lease which is or should be capitalized on the books of the lessee in accordance with GAAP.

 

“Change of Control” means, at any time (a) one person or a group of persons (as such terms are used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) acquires more than 50% of the voting shares of the Company and (b) within ninety (90) days after such acquisition (or such longer period as the rating of the Notes shall be under publicly announced consideration by any Designated Rating Agency), the Company fails to establish or maintain an Acceptable Rating.

 

“Change of Control Date” means the first date upon which a Change of Control shall have occurred. 

 

“Change of Control Notice” is defined in Section 9.1(b).

 

“Closing” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

 

“Company” means Otter Tail Power Company, a Minnesota corporation, or any successor that becomes such in the manner prescribed in Section 11.4.

 

“Confidential Information” is defined in Section 21.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Controlled Entity” means (a) any of the Subsidiaries of the Company and any of their or the Company’s respective Controlled Affiliates and (b) if the Company has a parent company, such parent company and its Controlled Affiliates.

 

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

 

B-2

 

 

“Default Rate” means that rate of interest per annum that is the greater of (a) 2% above the rate of interest stated in clause (a) of the first paragraph of the Notes or (b) 2% over the rate of interest publicly announced by U.S. Bank National Association, Minneapolis, Minnesota as its “base” or “prime” rate.

 

“Designated Ratings Agency” means Moody’s and S&P and in the event that either Moody’s or S&P is not rating indebtedness of corporations the common shares of which are publicly traded, then another rating agency or agencies of recognized national standing.

 

“Disclosure Documents” is defined in Section 6.3.

 

“Disposition Value” means, at any time, with respect to any property,

 

(a)     in the case of property that does not constitute Subsidiary Stock, the book value thereof, valued at the time of such disposition in good faith by the Company, and

 

(b)     in the case of property that constitutes Subsidiary Stock, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such stock as is equal to the percentage that the book value of such Subsidiary Stock represents of the book value of all of the outstanding capital stock of such Subsidiary (assuming, in making such calculations, that all Securities convertible into such capital stock are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Company.

 

“EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval System or any successor SEC electronic filing system for such purposes.

 

“Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under Section 414 of the Code.

 

“Event of Default” is defined in Section 12.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, at any time and with respect to any property, the sale value of such property that would be realized in an arm’s-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell).

 

B-3

 

 

“FATCA” means (a) sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), together with any current or future regulations or official interpretations thereof, (b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the United States of America and any other jurisdiction, which (in either case) facilitates the implementation of the foregoing clause (a), and (c) any agreements entered into pursuant to section 1471(b)(1) of the Code.

 

“Funding Date” is defined in Section 3.

 

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America. 

 

“Governmental Authority” means:

 

(a)     the government of:

 

(1)     the United States of America or any State or other political subdivision thereof, or

 

(2)     any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary; or

 

(b)     any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

 

“Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

 

“Guaranty” means to (a) endorse, guarantee, contingently agree to purchase or to provide funds for the payment of, or otherwise become contingently liable upon, any obligation of any other Person, except by the endorsement of negotiable instruments for deposit or collection (or similar transactions) in the ordinary course of business, or (b) agree to maintain the net worth or working capital of, or provide funds to satisfy any other financial test applicable to, or other obligations of, any other Person.

 

“Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be restricted, prohibited or penalized by any applicable law, including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

 

B-4

 

 

“Holder” or “holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 14.1, provided, however, that if such Person is a nominee, then for the purposes of Sections 8, 9.1, 13, 18.2 and 19 and any related definitions in this Schedule B, “holder” shall mean the beneficial owner of such Note whose name and address appears in such register. 

 

“Indebtedness” means, without duplication, all obligations of the Company or any Subsidiary: (a) consisting of Interest-bearing Debt; (b) on account of deposits or advances, excluding deposits and advances received in the ordinary course of business; and (c) constituting a Guaranty by such Person in respect to indebtedness of others to the extent not included in clause (a). For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, but shall exclude trade liabilities and intercompany liabilities incurred in the ordinary course of business.

 

“INHAM Exemption” is defined in Section 7.2(e).

 

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.

 

“Interest-bearing Debt” means, without duplication, all interest-bearing obligations of the Company or a Subsidiary on a consolidated basis: (a) in respect of borrowed money; (b) secured by a Lien on the assets of the Company or a Subsidiary, whether the obligation secured is the obligation of the owner or another Person, provided that the amount of such obligation which has not been assumed by the Company or a Subsidiary shall be the lesser of (1) the amount of such obligation and (2) the fair market value of such assets; (c) for the deferred purchase price of any property or services evidenced by a note, payment contract or other instrument (other than an account payable arising in the ordinary course of business); (d) constituting the principal component of obligations as lessee under any Capitalized Lease; (e) that are Guaranties by the Company or a Subsidiary in respect to Interest-bearing Debt of other Persons; (f) that are net liabilities under any interest rate swap, collar or other interest rate hedging agreement; (g) consisting at any time of the aggregate undrawn and unexpired amount of standby letters of credit plus the aggregate amount of drawings thereunder that have not been reimbursed; (h) constituting the principal component of obligations that are amounts calculated in respect of Synthetic Leases as if such leases were Capitalized Leases; and (i) that are indebtedness attributable to Sales and Leasebacks. For all purposes of this Agreement, Interest-bearing Debt of any Person shall exclude trade liabilities and intercompany liabilities incurred in the ordinary course of business.

 

B-5

 

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capitalized Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).

 

“Make-Whole Amount” is defined in Section 9.6.

 

“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes.

 

“Maturity Date” in respect of each Note is defined in the first paragraph of such Note.

 

“Memorandum” is defined in Section 6.3.

 

“Moody’s” means Moody’s Investors Service, Inc., or any Person succeeding to the securities rating business of such company.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA).

 

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

 

“NAIC Annual Statement” is defined in Section 7.2(a).

 

“Net Proceeds Amount” means, with respect to any Transfer of any property by any Person, an amount equal to the difference of

 

(a)     the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus

 

(b)     all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer.

 

“Notes” is defined in Section 1.

 

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

“OFAC Listed Person” is defined in Section 6.16(a).

 

B-6

 

 

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.

 

“OTC” means Otter Tail Corporation, a Minnesota corporation.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

 

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

 

“Preferred Stock” of the Company or any Subsidiary means stock other than common stock of the Company or such Subsidiary.

 

“Prepayment Notice” is defined in Section 9.1(c).

 

“Priority Indebtedness” means, at any time without duplication, the sum of (a) all Indebtedness of the Company and of any Subsidiaries secured by Liens other than by Liens permitted by Sections 11.7(a) through (g), both inclusive, and (i) through (r), both inclusive, and (b) all Indebtedness of Subsidiaries and Preferred Stock of Subsidiaries held by entities other than the Company or a Wholly-Owned Subsidiary.

 

“Property” or “Properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

 

“PTE” is defined in Section 7.2(a).

 

“Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 14.2), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 14.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer.

 

“QPAM Exemption” is defined in Section 7.2(d).

 

“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

 

B-7

 

 

“Related Fund” means, with respect to any holder of any Note, any fund or entity that (a) invests in Securities or bank loans, and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

 

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a reportable event regardless of the issuance of any such waivers in accordance with Section 412(d) of the Code.

 

“Required Holders” means, at any time, (a) prior to the Funding Date, the Purchasers and (b) on or after the Funding Date, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

 

“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.

 

“Sale and Leasebacks” means sales and leasebacks of assets of the Company or a Subsidiary that give rise to Interest-bearing Debt, calculated as if the relevant leases were Capitalized Leases (whether or not actually constituting Capitalized Leases).

 

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc., or any Person succeeding to the securities rating business of such company. 

 

“SEC” shall mean the Securities and Exchange Commission of the United States, or any successor thereto.

 

“Securities” or “Security” shall have the meaning specified in Section 2(1) of the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

 

“Significant Debt Agreement” shall mean (a) the Bank Credit Agreement, (b) the Note Purchase Agreement dated as of August 20, 2007 by and among the Company and each of the purchasers listed on Schedule A thereto, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof, (c) the Note Purchase Agreement dated as of July 29, 2011 by and among the Company and each of the purchasers listed on Schedule A thereto, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof, (d) the Note Purchase Agreement dated as of August 14, 2013 by and among the Company and each of the purchasers listed on Schedule A thereto, including any renewals, extensions, amendments, supplements, restatements, replacements or refinancings thereof and (e) any other agreement, instrument or facility, and any renewal, refinancing, refunding or replacement thereof, or any two or more of any of the foregoing forming part of a common or interrelated financing or other transaction, pursuant to which the Company or any Subsidiary has outstanding, or is permitted to borrow, $25,000,000 or more in aggregate principal amount of Indebtedness.

 

B-8

 

 

“Significant Subsidiary” means at any time any Subsidiary of the Company that would at such time constitute a “significant subsidiary” (as such term is defined in Regulation S-X, Rule 1-02(w) of the SEC as in effect on the date of this Agreement) of the Company.

 

“Source” is defined in Section 7.2.

 

“State Sanctions List” means a list that is adopted by any state Governmental Authority within the United States of America pertaining to Persons that engage in investment or other commercial activities in Iran or any other country that is a target of economic sanctions imposed under U.S. Economic Sanctions Laws.

 

“Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

 

“Subsidiary Stock” means, with respect to any Person, the stock or other equity (or any options or warrants to purchase stock or other equity or other Securities exchangeable for or convertible into stock or other equity) of any Subsidiary of such Person.

 

“Substitute Purchaser” is defined in Section 22.

 

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

 

“Synthetic Lease” means, at any time, any lease (including leases that may be terminated by the lessee at any time) of any property (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

“Tax Returns” is defined in Section 6.9.

 

“Total Capitalization” means as of any date of determination, the sum of (a) the amounts set forth on the consolidated balance sheet of the Company as the sum of the common stock, preferred stock, additional paid-in capital and retained earnings of the Company (excluding treasury stock); plus (b) the principal amount of Interest-bearing Debt of the Company and its Subsidiaries.

 

B-9

 

 

“Total Utility Plant” means, at any time, the total Utility Plant of the Company which would be shown on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP.

 

“Transfer” means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) or otherwise disposes of (including a dividend or a distribution other than a regular quarterly cash dividend paid by the Company or a distribution by the Company of additional shares of its common stock) any of its property, including, without limitation, Subsidiary Stock. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount.

 

“United States Person” has the meaning set forth in Section 1.1471-1(b)(141) of the United States Treasury Regulations. 

 

“Utility Assets” means the assets of the Utility Plant.

 

“Utility Plant” means all property (including separate and distinct plants, systems and properties), and all permanent improvements, extensions, additions and betterments to or about the plants and properties of the Company which are a part of the Company’s electric utility system (including all generating and transmission plants and properties), and are properly chargeable under GAAP as additions to plant account including, without limiting the scope of the foregoing, property of the character described in the preceding provisions of this definition in process of construction or erection, so far as actually constructed or erected.

 

“Utility Property Reinvestment Application” means, with respect to any Transfer of Utility Assets, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Company of Utility Assets.

 

“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“U.S. Economic Sanctions Laws” shall mean those laws, executive orders, enabling legislation or regulations administered and enforced by the United States pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime, including, without limitation, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC Sanctions Program. 

 

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent of all of the equity interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly-Owned Subsidiaries at such time.

 

B-10

 

 

Disclosure Documents

 

October 26, 2017 Investor Due Diligence Questions and Answers

 

October 23, 2017 Investor Presentation

 

Schedule 6.3

(to Note Purchase Agreement)

 

 

Subsidiaries of the Company; Ownership of Subsidiary Stock; 

Directors and Senior Officers

 

Subsidiaries of the Company: None

 

Ownership of Subsidiary Stock: N/A

 

Directors and Senior Officers:

 

Directors:      George A. Koeck

Charles S. MacFarlane

Timothy Rogelstad

Kevin Moug

John Abbott

 

Officers:        CEO – Charles S. MacFarlane

President – Tim Rogelstad          

Vice President, Asset Management – JoAnn Thompson

Vice President, Customer Service – Mark Helland

Vice President, Energy Supply – Brad Tollerson

Vice President, Regulatory Affairs – Bruce Gerhardson

Chief Financial Officer – George Bell

Vice President, Public Relations – Cris Oehler

Vice President, Information Technology – Don Redden

Treasurer – Kevin Moug

General Counsel and Secretary – Jennifer O. Smestad

Assistant Secretary – George A. Koeck

Assistant Treasurer – Todd Wahlund

 

Agreements restricting the ability of any Subsidiary to pay dividends out of profits or make other similar distributions of profits:

 

Bank Credit Agreement

 

Schedule 6.4

(to Note Purchase Agreement)

 

 

Financial Statements

 

Audited balance sheet and changes in shareholders’ equity and statements of income and cash flows for Company for fiscal years ending December 31, 2014, 2015 and 2016.

 

Unaudited quarterly balance sheet and statements of income and cash flows for the Company as of March 31, 2017 and June 30, 2017.

 

Schedule 6.5

(to Note Purchase Agreement)

 

 

Use of Proceeds

 

 

	
			Use of Proceeds

				 	 	 
	
			(in thousands)

				 	 	 
	 	 	 	 
	
			Sources of Cash

				 	 	 
	
			Note Issuance 

				 	$100,000	 
	 	 	 	 
	
			Uses of Cash

				 	 	 
	
			Pay off Short-term Debt

				 	99,500	 
	
			Estimated Fees 

				 	500	 
	
			Cash on Hand

				 	--	 
	
			Total Uses 

				 	$100,000	 

 

Schedule 
6.14

(to Note Purchase Agreement)

 

 

Existing Indebtedness

 

(as of September 30, 2017)

 

Indebtedness:

	
			(in thousands)

				 	
			September 30, 2017

				 	 	
			December 31, 2016

				 
	
			Short-Term Debt (Lines of Credit)

				 	$102,220	 	 	$42,883	 
	
			Long-Term Debt:

				 	 	 	 	 	 
	
			Senior Unsecured Notes 5.95%, due August 20, 20171

				 	--	 	 	33,000	 
	
			Senior Unsecured Notes 4.63%, due December 1, 20212

				 	140,000	 	 	140,000	 
	
			Senior Unsecured Notes 6.15%, Series B, due August 20, 20221

				 	30,000	 	 	30,000	 
	
			Senior Unsecured Notes 6.37%, Series C, due August 20, 20271

				 	42,000	 	 	42,000	 
	
			Senior Unsecured Notes 4.68%, Series A, due February 27, 20293

				 	60,000	 	 	60,000	 
	
			Senior Unsecured Notes 6.47%, Series D, due August 20, 20371

				 	50,000	 	 	50,000	 
	
			Senior Unsecured Notes, 5.47%, Series B, due February 27, 20443

				 	90,000	 	 	90,000	 
	
			Total Long-Term Debt

				 	$412,000	 	 	$445,000	 
	
			Total Short-Term and Long-Term Debt (with current maturities)

				 	$514,220	 	 	$487,883	 

 

 

1Issued August 20, 2007

2Issued December 1, 2011

3Issued February 27, 2014

 

Schedule 6.15

(to Note Purchase Agreement)

 

 

Partnerships and Joint Ventures

 

In the ordinary course of business, the Company has entered into contractual arrangements with other regional utilities providing for ownership interests (both as tenants-in-common and discretely) in transmission and generation assets.

 

Schedule 6.19

(to Note Purchase Agreement)

 

 

Affiliate Transactions

 

None.

 

Schedule 11.3

(to Note Purchase Agreement)

 

 

Form of Note

 

Otter Tail Power Company

 

4.07%  Series 2018A Senior Unsecured Note Due February 7, 2048

 

 

 

	
			No. 2018AR-___

				 	
			________ __, 20__

			
	 	 	 
	
			$__________

				 	
			PPN  68964* AJ0

			
	 	 	 

 

 

For Value Received, the undersigned, Otter Tail Power Company (herein called the “Company”), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to ____________, or registered assigns, the principal sum of _____________________ Dollars (or so much thereof as shall not have been prepaid) on February 7, 2048 (the “Maturity Date”) with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 4.07% per annum from the date hereof, payable semiannually, on the seventh day of February and August in each year, commencing with the February 7 or August 7 next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (1) on any overdue payment of interest and (2) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the greater of (1) 6.07% or (2) 2.00% over the rate of interest publicly announced by U.S. Bank National Association from time to time in Minneapolis, Minnesota as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).

 

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank, N.A. in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

 

This Note is one of the Series 2018A Senior Unsecured Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of November 14, 2017 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representation set forth in Section 7.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

 

Exhibit 1

(to Note Purchase Agreement)

 

 

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

 

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

 

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

	
			 

				
			Otter Tail Power Company

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	 	 	 	 
	 	 	 	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Name:

			Title:

				
			 

			

 

E-1-2

 

 

Form of Closing Opinion of Special Counsel for the Company

 

 

November 14, 2017

 

To the Purchasers named on

  Schedule A attached hereto

 

Ladies and Gentlemen:

 

We have acted as special counsel to Otter Tail Power Company, a Minnesota corporation (the “Company”), in connection with its execution and delivery of that certain Note Purchase Agreement (the “Note Purchase Agreement”), dated as of November 14, 2017, between the Company and the Purchasers party thereto (the “Purchasers”), pursuant to which it proposes to issue $100,000,000 aggregate principal amount of its 4.07% Series 2018A Senior Unsecured Notes expected to be due February 7, 2048 (the “Notes”). 

 

This opinion is being delivered pursuant to Section 4.4(a)(2) of the Note Purchase Agreement. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement.

 

In connection with this opinion, we have examined the following documents:

 

(A)     The Third Restated Articles of Incorporation of the Company, as amended, certified by the Secretary of State of the State of Minnesota (the “Articles”);

 

(B)     The Restated Bylaws of the Company, as amended, certified by its Secretary (the “Bylaws”);

 

(C)     Resolutions of the Board of Directors of the Company adopted by written action with an effective date of November 2, 2017, certified by the Secretary of the Company;

 

(D)    A Certificate of Good Standing issued by the Secretary of State of the State of Minnesota on November 1, 2017 (the “MN Certificate of Good Standing”), and Certificates of Good Standing issued by the Secretaries of State or comparable offices of the States of North Dakota and South Dakota on November 1, 2017 and November 1, 2017 respectively (together, the “Certificates of Good Standing”); and

 

(E)     An executed copy of the Note Purchase Agreement.

 

We also have examined such other documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In addition, as to questions of fact material to the opinions hereinafter expressed, we have, when relevant facts were not independently established by us, relied upon certificates and opinions of the Company, their attorneys and officers, and of public officials, and the representations made in the Note Purchase Agreement. We have not independently examined the records of any court or public office in any jurisdiction, and our opinion is subject to matters which examination of such records would reveal.

 

Exhibit 4.4(a)(1)

(to Note Purchase Agreement)

 

 

In rendering our opinions set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed (i) the legal capacity for all purposes relevant hereto of all natural persons and, (ii) with respect to all parties to agreements or instruments relevant hereto other than the Company, (A) that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, (B) that the execution, delivery and performance of such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), (C) that such agreements have been duly executed and delivered by such parties and (D) that such agreements or instruments are the valid, binding and enforceable obligations of such parties. We have assumed the representations and warranties of the Company and the Purchasers contained in the Note Purchase Agreement with respect to factual matters are true and correct as of the date of this opinion and all other statements of fact contained in the Note Purchase Agreement are true, but no statements as to law or conclusions of law in the Note Purchase Agreement which are expressly addressed by this opinion are assumed to be true. We have assumed that the Company engages in business activities as described in the Memorandum. We have also assumed that all conditions precedent to the effectiveness of the Note Purchase Agreement have been satisfied or waived.

 

Our opinions expressed below as to certain factual matters are qualified as being limited “to our knowledge” or by other words to the same or similar effect. Such words, as used herein, mean that prior to or during the course of this firm’s representation of the Company in connection with the specific transactions contemplated by the Note Purchase Agreement, no contrary information came to the attention of Gary L. Tygesson, Steven Khadavi or L. Joseph Genereux, the attorneys in our firm who have principally represented the Company in connection with the transactions contemplated by the Note Purchase Agreement. In rendering such opinions, we have not conducted any independent investigation of the Company, consulted with other attorneys in our firm with respect to the matters covered thereby, or reviewed any of our prior files involving the Company. Finally, no inference as to our knowledge with respect to the factual matters upon which we have so qualified our opinions should be drawn from the fact of our representation of the Company.

 

Based on the foregoing, we are of the opinion that:

 

1.     The Company is a corporation duly incorporated, validly existing and, based solely upon the MN Certificate of Good Standing, in good standing, under the laws of the State of Minnesota and has the corporate power and the corporate authority to execute, deliver and perform the Note Purchase Agreement and to issue the Notes, and has the corporate power and the corporate authority to conduct the activities in which it is now engaged, as described in the Memorandum.

 

E-4.4(a)(1)-2

 

 

2.     Based solely upon the Certificates of Good Standing, the Company is duly licensed or qualified and is in good standing as a foreign corporation in North Dakota and South Dakota.

 

3.     The Note Purchase Agreement has been duly authorized by all requisite corporate action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms.

 

4.     The Notes have been duly authorized by all requisite corporate action on the part of the Company.

 

5.     No approval, consent or withholding of objection on the part of, or prior filing, registration or qualification with, any Minnesota, New York or federal governmental authority is required to be obtained or made by the Company in connection with the execution, delivery and performance of the Note Purchase Agreement or the Notes, except such as have been obtained or made.

 

6.     The execution, delivery and performance by the Company of the Note Purchase Agreement do not (a) conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any Lien upon any of the property of the Company pursuant to the provisions of the Articles or Bylaws, or (b) result in the contravention of any law, rule or regulation, or any order known by us to exist, of any Minnesota, New York or federal governmental authority, as to which the Company or its properties or assets or any thereof are subject.

 

7.     The Company is not an “investment company” as such term is defined in the Investment Company Act of 1940, as amended, and to our knowledge, based solely on our review of the statements of beneficial ownership of Otter Tail Corporation’s stock filed as of the date hereof with the Securities and Exchange Commission and in reliance upon certificates of officers of the Company, the Company is not “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

The opinions set forth above are subject to the following qualifications and exceptions:

 

(a)     Our opinions above are subject to the effect of any applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer, statutes of limitation or other similar laws and judicial decisions, in each case affecting or relating to the rights of creditors generally.

 

(b)     Our opinions above are subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). In addition, the availability of specific performance, injunctive relief, the appointment of a receiver, marshalling of assets, stay or other equitable remedies is subject to the discretion of the tribunal before which any proceeding therefor may be brought, unless such discretion is limited by an applicable statute.

 

E-4.4(a)(1)-3

 

 

(c)     Our opinions are further subject to other laws and judicial decisions affecting the rights of creditors and secured creditors generally, including, without limitation, that the enforceability of the remedies, covenants or other provisions of the Note Purchase Agreement and the availability of equitable remedies may be limited where the enforcement of specific rights under the Note Purchase Agreement may require a judgment or decree of a court of competent jurisdiction after prior notice to the Company and an opportunity for the Company to be heard by an appropriate tribunal.

 

(d)     Our opinion relating to the enforceability of the choice of New York law provision of the Note Purchase Agreement is rendered in reliance upon Section 5-1401 of the General Obligations Law of New York and is subject to the qualification that such enforceability may be limited by public policy considerations of any jurisdiction, other than the courts of the State of New York, in which enforcement of such provisions, or of a judgment upon an agreement containing such provisions, is sought.

 

(e)     We express no opinion as to the enforceability of provisions of the Note Purchase Agreement and the Notes to the extent they contain

 

(i)     forum selection provisions, or any provision which purports to confer jurisdiction upon any court or other tribunal;

 

(ii)     waivers by the Company of any statutory or constitutional rights, defenses or remedies, or the right to recover certain types of damages, or the right to impose counterclaims, or of statutes of limitation or the tolling thereof;

 

(iii)     cumulative remedies to the extent such cumulative remedies purport to compensate, or would have the effect of compensating, the party entitled to the benefits thereof in an amount in excess of the actual loss suffered by such party;

 

(iv)     provisions requiring the Company to pay early termination fee or other form of liquidated damages, if the payment of such fee or damages is determined by a court to be unreasonable in relation to actual damages or disproportionate to actual damages suffered by the Purchasers as a result of such prepayment, default or termination;

 

(v)     provisions requiring the Company to pay a prepayment premium upon payment in full of the indebtedness after an acceleration thereof for default or in connection with the payment of any amount due in redemption after default;

 

(vi)     provisions which purport to render prohibited transfers null and void;

 

(vii)     provisions to the effect that the terms of any document may not be waived or modified orally or by course of conduct;

 

(viii)     provisions which purport to establish evidentiary standards;

 

E-4.4(a)(1)-4

 

 

(ix)     provisions which purport to grant powers of attorney to any Purchaser; or

 

(x)     provisions which excuse any person or entity from liability for, or require any person or entity to indemnify any person or entity against, the indemnified person’s or entity’s gross negligence or willful misconduct, or any other indemnification agreement which may be contrary to public policy.

 

(f)     Our opinions in Paragraphs 5 and 6, above, are limited to (x) to our actual knowledge of the specific business activities and properties of the Company based solely upon an officer’s certificate in respect of such matters and (y) laws and regulations (including laws and regulations applicable to a public utility company) normally applicable to transactions of the type contemplated in the Note Purchase Agreement and the Notes and do not extend to licenses, permits and approvals necessary for the conduct of the Company’s business or any federal securities laws (other than as provided in our opinion in Paragraph 7 above), or the securities or “Blue Sky” laws of any state or foreign jurisdiction. In addition and without limiting the previous sentence, we express no opinion herein with respect to the effect of any land use, safety, hazardous material, environmental or similar law, or any local law. 

 

(g)     In rendering our opinion in Paragraph 5, above, we are only opining as to consents, approvals, authorizations, registrations and filings necessary for the Company to execute, deliver and perform its obligations under the Transaction Documents, and we express no opinion with respect to any consent, approval, authorization from, or any registration, declaration or filing with, any governmental authority or agency required generally in connection with the day-to-day business or operations of the Company.

 

(h)     Except as set forth in Paragraph 6, above, we express no opinion as to compliance or the effect of noncompliance by the Company with any laws or regulations applicable to the Company in connection with the transactions described in the Note Purchase Agreement.

 

(i)     We express no opinion as to compliance or the effect of noncompliance by the Purchasers with any state or federal laws or regulations applicable to the Purchasers in connection with the transactions described in the Note Purchase Agreement.

 

The opinions expressed above are limited to the laws of the States of Minnesota and New York and the federal laws of the United States and we express no opinion as to the laws of any other jurisdiction.

 

The foregoing opinions are being furnished solely for the benefit of the addressees named on Schedule A hereto (and their transferees, provided that any transfer of Notes to such transferees is made in accordance with the applicable provisions of the Note Purchase Agreement), and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent, except to the extent required by applicable law or regulation or in response to a subpoena or court order, or in accordance with any auditing or oversight function or to any governmental or regulatory authority, including, without limitation, the National Association of Insurance Commissioners, to which any addressee or permitted transferee is subject. No use of or reliance on the foregoing opinions by any party, including, without limitation, the Purchasers, shall establish or imply an attorney-client relationship between such party and this firm with respect to the Note Purchase Agreement or the transactions contemplated by the Note Purchase Agreement, and each such party by using or relying on our opinions disclaims any such attorney-client relationship with respect to the Note Purchase Agreement and the transactions contemplated by the Note Purchase Agreement for any purpose without our prior written approval. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention, or any changes in the law taking effect, after the date hereof.

 

 

 

Very truly yours,

 

 

Attachment: Schedule A – List of Addressees

 

E-4.4(a)(1)-5

 

 

Schedule A

 

 

E-4.4(a)(1)-6

 

 

Form of Closing Opinion of the General Counsel of the Company

 

 

November 14, 2017

 

 

To the Purchasers named on

 Schedule A attached hereto:

 

 

Ladies and Gentlemen:

 

I have acted as General Counsel to Otter Tail Power Company, a Minnesota corporation (the “Company”), in connection with the transactions contemplated by that certain Note Purchase Agreement (the “Note Purchase Agreement”) dated as of November 14, 2017, between the Company and the Purchasers party thereto (collectively, the “Purchasers”), relating to the issuance and sale by the Company of $100,000,000 aggregate principal amount of its 4.07% Series 2018A Senior Unsecured Notes expected to be due February 7, 2048 (the “Notes”). 

 

This opinion is being delivered pursuant to Section 4.4(a)(2) of the Note Purchase Agreement. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement.

 

In connection with this opinion, I have examined the following documents:

 

(A)     The Third Restated Articles of Incorporation of the Company, as amended;

 

(B)     The Restated Bylaws of the Company, as amended;

 

(C)     Resolutions of the Board of Directors of the Company adopted by written action with an effective date of November 2, 2017; 

 

(D)     An executed copy of the Note Purchase Agreement; and

 

(E)     The other documents delivered in connection with the Closing on the date hereof.

 

I also have examined such other documents and reviewed such questions of law as I have considered necessary and appropriate for the purposes of this opinion.

 

In rendering my opinions set forth below, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures (other than the signatures of officers of the Company) and the conformity to authentic originals of all documents submitted to me as copies. I also have assumed the legal capacity for all purposes relevant hereto of all natural persons (other than officers of the Company) and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to my opinion, I have relied upon representations and certificates of officers and other employees of the Company (known by me to have authority to make such representations and certifications on behalf of the Company) and certificates of public officials.

 

Exhibit 4.4(a)(2)

(to Note Purchase Agreement)

 

 

Based on the foregoing, I am of the opinion that:

 

(i)     No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any North Dakota or South Dakota governmental authority is required to be obtained or made by the Company in connection with the execution, delivery and performance of the Note Purchase Agreement or the Notes, except such as have been obtained or made.

 

(ii)     The execution, delivery and performance by the Company of the Note Purchase Agreement do not conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any Lien upon any of the property of the Company pursuant to any Material agreement or instrument to which the Company is a party or by which it is bound.

 

(iii)     There is no litigation pending or, to the best of my knowledge, threatened which in my opinion could reasonably be expected to have a Material Adverse Effect on the Company or which would impair the ability of the Company to issue and deliver the Notes or to enter into or comply with the provisions of the Note Purchase Agreement.

 

The opinions expressed above are limited to the laws of the States of Minnesota, North Dakota and, in the case of paragraph (i) above, South Dakota, and the federal laws of the United States, and I express no opinion as to the laws of any other jurisdiction.

 

The foregoing opinions are being furnished solely for the benefit of the addressees named on Schedule A hereto (and their transferees, provided that any transfer of Notes to such transferees is made in accordance with the applicable provisions of the Note Purchase Agreement), and may not be relied upon by, nor may copies be delivered to, any other person without my prior written consent, except to the extent required by applicable law or regulation or in accordance with any auditing or oversight function or in response to a subpoena or court order, or to any governmental or regulatory authority, including, without limitation, the National Association of Insurance Commissioners, to which any addressee or permitted transferee is subject. No use of or reliance on the foregoing opinions by any party, including, without limitation, the Purchasers, shall establish or imply an attorney-client relationship between such party and me with respect to the Note Purchase Agreement or the transactions contemplated by the Note Purchase Agreement, and each such party by using or relying on the foregoing opinions disclaims any such attorney-client relationship with respect to the Note Purchase Agreement and the transactions contemplated by the Note Purchase Agreement for any purpose without my prior written approval.

 

E-4.4(a)(2)-2

 

 

I disclaim any obligation to update this opinion letter for events occurring or coming to my attention, or any changes in the law taking effect, after the date hereof.

 

 

	 	
			Very truly yours,

			
	 	 
	 	 
	 	 
	 	
			Jennifer O. Smestad

			General Counsel

			

 

 

 

Attachment: Schedule A – List of Addressees 

 

E-4.4(a)(2)-3

 

 

Schedule A

 

 

E-4.4(a)(2)-4

 

 

Form of Closing Opinion of Special Counsel to the Purchasers

 

The opinion of Schiff Hardin LLP, special counsel to the Purchasers, called for by Section 4.4(b) of the Agreement, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that:

 

1.     The Company is a corporation existing and in good standing under the laws of the State of Minnesota.

 

2.     The Agreement constitutes the legal, valid and binding contract of the Company, enforceable against the Company in accordance with its terms.

 

The opinion of Schiff Hardin LLP shall also state that the opinions of Dorsey & Whitney LLP and the General Counsel of the Company delivered on the date of the Closing are satisfactory in scope and form to Schiff Hardin LLP and that, in their opinion, the Purchasers are justified in relying thereon.

 

In rendering the opinion set forth in paragraph 1 above, Schiff Hardin LLP may rely, as to matters referred to in paragraph 1, solely upon an examination of the certificate of good standing of the Company from the Secretary of State of the State of Minnesota. The opinion of Schiff Hardin LLP is limited to the laws of the State of New York and the Federal laws of the United States.

 

With respect to matters of fact upon which such opinion is based, Schiff Hardin LLP may rely on appropriate certificates of public officials and officers of the Company and upon representations of the Company and the Purchasers delivered in connection with the execution and delivery of the Agreement.

 

Exhibit 4.4(b)

(to Note Purchase Agreement)

 

 

Form of Funding Date Opinion of Special Counsel to the Company

 

February 7, 2018

 

To the Purchasers named on

 Schedule A attached hereto

 

Ladies and Gentlemen:

 

We have acted as special counsel to Otter Tail Power Company, a Minnesota corporation (the “Company”), in connection with the issuance and sale by the Company on the date hereof of $100,000,000 aggregate principal amount of its 4.07% Series 2018A Senior Unsecured Notes due February7, 2048 (the “Notes”) pursuant to that certain Note Purchase Agreement (the “Note Purchase Agreement”), dated as of November 14, 2017 between the Company and the Purchasers party thereto (the “Purchasers”). 

 

This opinion is being delivered pursuant to Section 5.4(a)(1) of the Note Purchase Agreement. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement.

 

In connection with this opinion, we have examined the following documents:

 

(a)     The Third Restated Articles of Incorporation of the Company, as amended, certified by the Secretary of State of the State of Minnesota (the “Articles”);

 

(b)     The Restated Bylaws of the Company, as amended, certified by its Secretary (the “Bylaws”);

 

(c)     Resolutions of the Board of Directors of the Company adopted by written action with an effective date of November 2, 2017 certified by the Secretary of the Company;

 

(d)     A Certificate of Good Standing issued by the Secretary of State of the State of Minnesota on [February ___], 2018 (the “MN Certificate of Good Standing”), and Certificates of Good Standing issued by the Secretaries of State or comparable offices of the States of North Dakota and South Dakota on [February __], 2018 and [February ___], 2018, respectively (together, the “Certificates of Good Standing”);

 

(e)     An executed copy of the Note Purchase Agreement;

 

(f)     Executed copies of the Notes; and

 

(g)     [List other documents delivered in connection with the Closing, if any]

 

Exhibit 5.4(a)(1)

(to Note Purchase Agreement)

 

 

We also have examined such other documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In addition, as to questions of fact material to the opinions hereinafter expressed, we have, when relevant facts were not independently established by us, relied upon certificates and opinions of the Company, their attorneys and officers, and of public officials, the Offeree Letter attached hereto as Schedule B, and the representations made in the Note Purchase Agreement and the Notes. We have not independently examined the records of any court or public office in any jurisdiction, and our opinion is subject to matters which examination of such records would reveal.

 

In rendering our opinions set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed (i) the legal capacity for all purposes relevant hereto of all natural persons and, (ii) with respect to all parties to agreements or instruments relevant hereto other than the Company, (A) that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, (B) that the execution, delivery and performance of such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), (C) that such agreements have been duly executed and delivered by such parties and (D) that such agreements or instruments are the valid, binding and enforceable obligations of such parties. We have assumed the representations and warranties of the Company and the Purchasers contained in the Note Purchase Agreement and the Notes with respect to factual matters are true and correct as of the date of this opinion and all other statements of fact contained in the Note Purchase Agreement and the Notes are true, but no statements as to law or conclusions of law in the Note Purchase Agreement and the Notes which are expressly addressed by this opinion are assumed to be true. We have assumed that the Company engages in business activities as described in the Memorandum. We have also assumed that all conditions precedent to the effectiveness of the Note Purchase Agreement and the purchase and sale of the Notes have been satisfied or waived.

 

Our opinions expressed below as to certain factual matters are qualified as being limited “to our knowledge” or by other words to the same or similar effect. Such words, as used herein, mean that prior to or during the course of this firm’s representation of the Company in connection with the specific transactions contemplated by the Note Purchase Agreement, no contrary information came to the attention of [Gary L. Tygesson, Steven Khadavi or L. Joseph Genereux], the attorneys in our firm who have principally represented the Company in connection with the transactions contemplated by the Note Purchase Agreement. In rendering such opinions, we have not conducted any independent investigation of the Company, consulted with other attorneys in our firm with respect to the matters covered thereby, or reviewed any of our prior files involving the Company. Finally, no inference as to our knowledge with respect to the factual matters upon which we have so qualified our opinions should be drawn from the fact of our representation of the Company.

 

E-5.4(a)(1)-2

 

 

Based on the foregoing, we are of the opinion that:

 

1.     The Company is a corporation duly incorporated, validly existing and, based solely upon the MN Certificate of Good Standing, in good standing, under the laws of the State of Minnesota and has the corporate power and the corporate authority to execute, deliver and perform the Note Purchase Agreement and to issue the Notes, and has the corporate power and the corporate authority to conduct the activities in which it is now engaged, as described in the Memorandum.

 

2.     Based solely upon the Certificates of Good Standing, the Company is duly licensed or qualified and is in good standing as a foreign corporation in North Dakota and South Dakota.

 

3.     The Notes have been duly authorized by all requisite corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms.

 

4.     No approval, consent or withholding of objection on the part of, or prior filing, registration or qualification with, any Minnesota, New York or federal governmental authority is required to be obtained or made by the Company in connection with the performance of the Note Purchase Agreement or the execution, delivery and performance of the Notes, except such as have been obtained or made.

 

5.     None of the issuance and sale of the Notes, the performance of the Note Purchase Agreement and the execution, delivery and performance of the Notes by the Company, (a) conflicts with or results in any breach of any of the provisions of or constitutes a default under or results in the creation or imposition of any Lien upon any of the property of the Company pursuant to the provisions of the Articles or Bylaws, or (b) results in the contravention of any law, rule or regulation, or any order known by us to exist, of any Minnesota, New York or federal governmental authority, as to which the Company or its properties or assets or any thereof are subject.

 

6.     The issuance, sale and delivery of the Notes, under the circumstances contemplated by the Note Purchase Agreement, do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

 

7.     The Company is not an “investment company” as such term is defined in the Investment Company Act of 1940, as amended, and to our knowledge, based solely on our review of the statements of beneficial ownership of Otter Tail Corporation’s stock filed as of the date hereof with the Securities and Exchange Commission and in reliance upon certificates of officers of the Company, the Company is not “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

8.     The issuance of the Notes and the use of the proceeds of the sale of the Notes in accordance with the provisions of and as contemplated by the Note Purchase Agreement do not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

E-5.4(a)(1)-3

 

 

The opinions set forth above are subject to the following qualifications and exceptions:

 

(a)     Our opinions above are subject to the effect of any applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer, statutes of limitation or other similar laws and judicial decisions, in each case affecting or relating to the rights of creditors generally.

 

(b)     Our opinions above are subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). In addition, the availability of specific performance, injunctive relief, the appointment of a receiver, marshalling of assets, stay or other equitable remedies is subject to the discretion of the tribunal before which any proceeding therefor may be brought, unless such discretion is limited by an applicable statute.

 

(c)     Our opinions are further subject to other laws and judicial decisions affecting the rights of creditors and secured creditors generally, including, without limitation, that the enforceability of the remedies, covenants or other provisions of the Note Purchase Agreement and the Notes and the availability of equitable remedies may be limited where the enforcement of specific rights under the Note Purchase Agreement or the Notes may require a judgment or decree of a court of competent jurisdiction after prior notice to the Company and an opportunity for the Company to be heard by an appropriate tribunal.

 

(d)     Our opinion relating to the enforceability of the choice of New York law provisions of the Note Purchase Agreement and the Notes is rendered in reliance upon Section 5-1401 of the General Obligations Law of New York and is subject to the qualification that such enforceability may be limited by public policy considerations of any jurisdiction, other than the courts of the State of New York, in which enforcement of such provisions, or of a judgment upon an agreement containing such provisions, is sought.

 

(e)     We express no opinion as to the enforceability of provisions of the Note Purchase Agreement and the Notes to the extent they contain

 

(i)     forum selection provisions, or any provision which purports to confer jurisdiction upon any court or other tribunal;

 

(ii)     waivers by the Company of any statutory or constitutional rights, defenses or remedies, or the right to recover certain types of damages, or the right to impose counterclaims, or of statutes of limitation or the tolling thereof;

 

(iii)     cumulative remedies to the extent such cumulative remedies purport to compensate, or would have the effect of compensating, the party entitled to the benefits thereof in an amount in excess of the actual loss suffered by such party;

 

E-5.4(a)(1)-4

 

 

(iv)     provisions requiring the Company to pay early termination fee or other form of liquidated damages, if the payment of such fee or damages is determined by a court to be unreasonable in relation to actual damages or disproportionate to actual damages suffered by the Purchasers as a result of such prepayment, default or termination;

 

(v)     provisions requiring the Company to pay a prepayment premium upon payment in full of the indebtedness after an acceleration thereof for default or in connection with the payment of any amount due in redemption after default;

 

(vi)     provisions which purport to render prohibited transfers null and void;

 

(vii)     provisions to the effect that the terms of any document may not be waived or modified orally or by course of conduct;

 

(viii)     provisions which purport to establish evidentiary standards;

 

(ix)     provisions which purport to grant powers of attorney to any Purchaser; or

 

(x)     provisions which excuse any person or entity from liability for, or require any person or entity to indemnify any person or entity against, the indemnified person’s or entity’s gross negligence or willful misconduct, or any other indemnification agreement which may be contrary to public policy.

 

(f)     Our opinions in Paragraphs 4 and 5, above, are limited to (x) to our actual knowledge of the specific business activities and properties of the Company based solely upon an officer’s certificate in respect of such matters and (y) laws and regulations (including laws and regulations applicable to a public utility company) normally applicable to transactions of the type contemplated in the Note Purchase Agreement and the Notes and do not extend to licenses, permits and approvals necessary for the conduct of the Company’s business or any federal securities laws (other than as provided in our opinions in Paragraphs 6 and 7 above), or the securities or “Blue Sky” laws of any state or foreign jurisdiction. In addition and without limiting the previous sentence, we express no opinion herein with respect to the effect of any land use, safety, hazardous material, environmental or similar law, or any local law. 

 

(g)     In rendering our opinion in Paragraph 5, above, we are only opining as to consents, approvals, authorizations, registrations and filings necessary for the Company to execute, deliver and perform its obligations under the Transaction Documents, and we express no opinion with respect to any consent, approval, authorization from, or any registration, declaration or filing with, any governmental authority or agency required generally in connection with the day-to-day business or operations of the Company.

 

(h)     Except as set forth in Paragraph 6, above, we express no opinion as to compliance or the effect of noncompliance by the Company with any laws or regulations applicable to the Company in connection with the transactions described in the Note Purchase Agreement or the Notes.

 

E-5.4(a)(1)-5

 

 

(i)     We express no opinion as to compliance or the effect of noncompliance by the Purchasers with any state or federal laws or regulations applicable to the Purchasers in connection with the transactions described in the Note Purchase Agreement and the Notes.

 

The opinions expressed above are limited to the laws of the States of Minnesota and New York and the federal laws of the United States and we express no opinion as to the laws of any other jurisdiction.

 

The foregoing opinions are being furnished solely for the benefit of the addressees named on Schedule A hereto (and their transferees, provided that any transfer of Notes to such transferees is made in accordance with the applicable provisions of the Note Purchase Agreement), and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent, except to the extent required by applicable law or regulation or in accordance with any auditing or oversight function or in response to a subpoena or court order, or to any governmental or regulatory authority, including, without limitation, the National Association of Insurance Commissioners, to which any addressee or permitted transferee is subject. No use of or reliance on the foregoing opinions by any party, including, without limitation, the Purchasers, shall establish or imply an attorney-client relationship between such party and this firm with respect to the Note Purchase Agreement or the transactions contemplated by the Note Purchase Agreement, and each such party by using or relying on our opinions disclaims any such attorney-client relationship with respect to the Note Purchase Agreement and the transactions contemplated by the Note Purchase Agreement for any purpose without our prior written approval. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention, or any changes in the law taking effect, after the date hereof.

 

	
			 

				
			 Very truly yours,

				
			 

			
	
			 

				
			 

				
			 

				
			 

			

 

Attachment: Schedule A – List of Addressees

 

E-5.4(a)(1)-6

 

 

Schedule A

 

 

E-5.4(a)(1)-7

 

 

Form of Funding Date Opinion of the General Counsel of the Company

 

February 7, 2018

 

 

To the Purchasers named on

 Schedule A attached hereto:

 

 

Ladies and Gentlemen:

 

I have acted as General Counsel to Otter Tail Power Company, a Minnesota corporation (the “Company”), in connection with the transactions contemplated by that certain Note Purchase Agreement (the “Note Purchase Agreement”) dated as of November 14, 2017 between the Company and the Purchasers party thereto (collectively, the “Purchasers”), relating to the issuance and sale by the Company on the date hereof of $100,000,000 aggregate principal amount of its 4.07% Series 2018A Senior Unsecured Notes due February 7, 2048 (the “Notes”).

 

This opinion is being delivered pursuant to Section 5.4(a)(2) of the Note Purchase Agreement. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement.

 

In connection with this opinion, I have examined the following documents:

 

(A)     The Third Restated Articles of Incorporation of the Company, as amended;

 

(B)     The Restated Bylaws of the Company, as amended;

 

(C)     Resolutions of the Board of Directors of the Company adopted by written action with an effective date of November 2, 2017;

 

(D)     An executed copy of the Note Purchase Agreement;

 

(E)     Executed copies of the Notes; and

 

(F)     The other documents delivered in connection with the issuance of the Notes on the date hereof.

 

I also have examined such other documents and reviewed such questions of law as I have considered necessary and appropriate for the purposes of this opinion.

 

Exhibit 5.4(a)(2)

(to Note Purchase Agreement)

 

 

In rendering my opinions set forth below, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures (other than the signatures of officers of the Company) and the conformity to authentic originals of all documents submitted to me as copies. I also have assumed the legal capacity for all purposes relevant hereto of all natural persons (other than officers of the Company) and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to questions of fact material to my opinion, I have relied upon representations and certificates of officers and other employees of the Company (known by me to have authority to make such representations and certifications on behalf of the Company) and certificates of public officials.

 

Based on the foregoing, I am of the opinion that:

 

(i)     No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any North Dakota or South Dakota governmental authority is required to be obtained or made by the Company in connection with the performance of the Note Purchase Agreement or the execution, delivery and performance of the Notes, except such as have been obtained or made.

 

(ii)     None of the issuance and sale of the Notes, the performance of the Note Purchase Agreement and the execution, delivery and performance of the Notes by the Company, conflicts with or results in any breach of any of the provisions of or constitutes a default under or results in the creation or imposition of any Lien upon any of the property of the Company pursuant to any Material agreement or instrument to which the Company is a party or by which it is bound.

 

(iii)     There is no litigation pending or, to the best of my knowledge, threatened which in my opinion could reasonably be expected to have a Material Adverse Effect on the Company or which would impair the ability of the Company to issue and deliver the Notes or to comply with the provisions of the Note Purchase Agreement or the Notes.

 

The opinions expressed above are limited to the laws of the States of Minnesota, North Dakota and, in the case of paragraph (i) above, South Dakota, and the federal laws of the United States, and I express no opinion as to the laws of any other jurisdiction.

 

The foregoing opinions are being furnished solely for the benefit of the addressees named on Schedule A hereto (and their transferees, provided that any transfer of Notes to such transferees is made in accordance with the applicable provisions of the Note Purchase Agreement), and may not be relied upon by, nor may copies be delivered to, any other person without my prior written consent, except to the extent required by applicable law or regulation or in accordance with any auditing or oversight function or in response to a subpoena or court order, or to any governmental or regulatory authority, including, without limitation, the National Association of Insurance Commissioners, to which any addressee or permitted transferee is subject. No use of or reliance on the foregoing opinions by any party, including, without limitation, the Purchasers, shall establish or imply an attorney-client relationship between such party and me with respect to the Note Purchase Agreement or the transactions contemplated by the Note Purchase Agreement, and each such party by using or relying on the foregoing opinions disclaims any such attorney-client relationship with respect to the Note Purchase Agreement and the transactions contemplated by the Note Purchase Agreement for any purpose without my prior written approval. I disclaim any obligation to update this opinion letter for events occurring or coming to my attention, or any changes in the law taking effect, after the date hereof.

 

	
			 

				
			Very truly yours,

				
			 

			
	 	 	 
	 	 	 
	 	 	 
	 	
			Jennifer O. Smestad

			
			General Counsel

			

				 
	
			 

				
			 

				
			 

				
			 

			

 

 

Attachment: List of Addressees

 

E-5.4(a)(2)-2

 

 

Schedule A

 

 

E-5.4(a)(2)-3

 

 

Form of Funding Date Opinion of Special Counsel to the Purchasers

 

The opinion of Schiff Hardin LLP, special counsel to the Purchasers, called for by Section 5.4(b) of the Agreement, shall be dated the Funding Date and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that:

 

1.     The Company is a corporation existing and in good standing under the laws of the State of Minnesota.

 

2.     The Notes being delivered on the date hereof constitute the legal, valid and binding contracts of the Company, enforceable against the Company in accordance with their respective terms.

 

3.     The issuance, sale and delivery of the Notes being delivered on the date hereof under the circumstances contemplated by this Agreement do not, under existing law, require the registration of such Notes under the Securities Act or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

 

The opinion of Schiff Hardin LLP shall also state that the opinions of Dorsey & Whitney LLP and the General Counsel of the Company being delivered on the Funding Date are satisfactory in scope and form to Schiff Hardin LLP and that, in their opinion, the Purchasers are justified in relying thereon.

 

In rendering the opinion set forth in paragraph 1 above, Schiff Hardin LLP may rely, as to matters referred to in paragraph 1, solely upon an examination of the certificate of good standing of the Company from the Secretary of State of the State of Minnesota. The opinion of Schiff Hardin LLP is limited to the laws of the State of New York and the Federal laws of the United States.

 

With respect to matters of fact upon which such opinion is based, Schiff Hardin LLP may rely on appropriate certificates of public officials and officers of the Company and upon representations of the Company and the Purchasers delivered in connection with the issuance and sale of the Notes.

 

Exhibit 5.4(b)

(to Note Purchase Agreement)cosm_ex41.htm

EXHIBIT 4.1
  
 EXECUTION COPY
  
 SECURITIES PURCHASE AGREEMENT
  
 This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 15, 2017, is by and among Cosmos Holdings Inc., a Nevada corporation with offices located at 141 West Jackson Blvd, Suite 4236, Chicago, Illinois 60604 (the “Company”), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
  
 RECITALS
  
 A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
  
 B. The Company has authorized a new series of senior convertible notes of the Company, in the aggregate original principal amount of $3.35 million, substantially in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the Notes and this Agreement, including, without limitation, the Pre-Delivery Shares (as defined in the Notes) or any other shares of Common Stock issuable upon conversion or otherwise, collectively, the “Conversion Shares”).
  
 C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Note in the aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, and (ii) a warrant to initially acquire up to that aggregate number of additional shares of Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”) (as exercised, collectively, the “Warrant Shares”).
  
 D. At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
  
 E. The Notes, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”
    	 
	1
	 
 
	 

  
 AGREEMENT
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
  
 1. PURCHASE AND SALE OF NOTES AND WARRANTS.
  
 (a) Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below) a Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers along with Warrants to initially acquire up to that aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.
  
 (b) Closing. The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.
  
 (c) Purchase Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the “Purchase Price”) shall be $3,000,000, allocated by the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers. Each Buyer shall pay approximately $895.52 for each $1,000 of principal amount of Notes and related Warrants to be purchased by such Buyer at the Closing. Each Buyer and the Company agree that the Notes and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”). The Buyers and the Company mutually agree that the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount of $o allocated to the Warrants and the balance of the Purchase Price allocated to the Notes, and neither the Buyers nor the Company shall take any position inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes.
  
 (d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for the Notes and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below) and (ii) the Company shall deliver to each Buyer (A) a Note in the aggregate original principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, and (B) a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers, in each case, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
   	 
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 2. BUYER’S REPRESENTATIONS AND WARRANTIES.
  
 Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
  
 (a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
  
 (b) No Public Sale or Distribution. Such Buyer (i) is acquiring its Note and Warrants, (ii) upon conversion of its Note will acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof
  
 (c) Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the Securities Act and such representation shall be true and correct as of the date of the Company’s execution of this Agreement and issuance of any Conversion Shares or Warrant Shares to such Buyer and shall survive the closing of such sale; and, if there should be any material change in such information prior to the sale or issuance to the Buyer, the Buyer will as soon as reasonably practicable furnish such revised or corrected information to the Company.
  
 (d) Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.
   	 
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 (e) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer acknowledges that the representations and warranties of the Company set forth in this Agreement and the disclosures set forth in the SEC Documents (as defined below) are the only representations and warranties and disclosures of the Company on which the Purchaser may rely in connection herewith. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
  
 (f) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
  
 (g) Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).
   	 
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 (h) Validity; Enforcement. This Agreement, the Leak-Out Agreements and the Registration Rights Agreement have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
  
 (i) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
  
 (j) Sophistication of the Buyers. Such Buyer has evaluated the merits and risks of purchasing the Securities and has such knowledge and experience in financial and business matters that the Buyer is capable of evaluating the merits and risks of such purchase, is aware of and has considered the financial risks and financial hazards of purchasing the Securities, and is able to bear the economic risk of purchasing the Securities, including the possibility of a complete loss with respect thereto.
  
 (k) Residence. The true and correct residence of such Buyer is set forth on the Schedule of Buyers attached hereto.
  
 (l) Non-Affiliate Status. Such Buyer is not an officer, director or affiliate of the Company.
  
 (m) Fees. Such Buyer is not obligated to pay any brokers, finders or financial advisory fees or commissions to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. Such Buyer will indemnify and hold harmless the Company from and against any claim by any Person alleging that the Company is obligated to pay any such compensation, fee, cost or related expenditure in connection with the transactions contemplated hereby arising from any action by such Buyer.
  
 (n) No General Solicitation. Such Buyer has not received any general solicitation or general advertising regarding the purchase of the Securities.
   	 
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 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
  
 The Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:
  
 (a) Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). Other than the Persons (as defined below) set forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operates all or any material part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.” 
  
 (b) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants) have been duly authorized by the Company’s board of directors or other governing body, as applicable, and (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their shareholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Notes, the Warrants, the Leak-Out Agreements, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
   	 
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 (c) Issuance of Securities. The issuance of the Securities are duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than 150% of the sum of (i) the maximum number of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at the initial Conversion Price (as defined in the Notes) and (y) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares initially issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein). Upon issuance or conversion in accordance with the Notes or exercise in accordance with the Warrants (as the case may be), the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act. 
  
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes, the Warrants, the Conversion Shares and the Warrant Shares and the reservation for issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation, any certificate of designation contained therein), By-Laws (as defined below), certificate of formation, memorandum of association, articles of association, certificate of incorporation, articles of incorporation, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of OTCQB (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.
   	 
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 (e) Consents. Except as set forth on Schedule 3(e), neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no Knowledge (as defined below) of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing. With respect to the Company or the Subsidiaries, “Knowledge” means the actual knowledge upon due investigation of the Company’s executive officers and members of the Board of Directors.
  
 (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its Knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
  
 (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable to Roth Capital Partners, LLC, as placement agent (the “Placement Agent”) in connection with the sale of the Securities. The fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries are as set forth on Schedule 3(g) attached hereto. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged the Placement Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
   	 
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 (h) No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of shareholders of the Company for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
  
 (i) Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares (other than the number of Pre-Delivery Shares, which is not subject to increase, but does not limit any other Conversion Shares issuable pursuant to the Notes) and Warrant Shares may increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Notes and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
  
 (j) Application of Takeover Protections; Rights Agreement. Except as set forth on Schedule 3(j), the Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
   	 
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 (k) SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
   	 
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 (l) Absence of Certain Changes. Except as set forth in any SEC Documents, since the date of the Company’s most recent audited financial statements contained in a Form 10-K, to the Knowledge of the Company, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, with respect to the Company and its Subsidiaries, on a consolidated basis, are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any Knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
  
 (m) No Undisclosed Events, Liabilities, Developments or Circumstances. To the Knowledge of the Company, no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, or (ii) could have a Material Adverse Effect. Schedule 3(m) sets forth a summary of the current material acquisitions of other entities the Company is contemplating as set forth in the SEC Documents (the “Approved Acquisitions”).
   	 
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 (n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, articles of incorporation or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no Knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
  
 (o) Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:
  
 (i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
  
 (ii) assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
  
 (p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
   	 
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 (q) Transactions With Affiliates. Except as disclosed in the SEC Documents and Schedule 3(q), no current or former employee, partner, director, officer or shareholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the Knowledge of the Company, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through an Eligible Market (as defined in the Notes)), nor does any such Person receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. Except as set forth on Schedule 3(q), no employee, officer, shareholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).
  
 (r) Equity Capitalization. 
  
 (i) Definitions: 
  
 (A) “Common Stock” means (x) the Company’s shares of common stock, $0.001 par value per share, and (y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock. 
  
 (B) “Preferred Stock” means (x) the Company’s blank check preferred stock, $0.001 par value per share, the terms of which may be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations). 
  
 (ii) Authorized and Outstanding Capital Stock. As of November 15, 2017, the effective date of the reverse stock split, the authorized capital stock of the Company consists of (A) 300,000,000 shares of Common Stock, of which, 182,203,032 are issued and outstanding and 582,500 shares are reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock and (B) 100,000,000 shares of Preferred Stock, none of which are issued and outstanding. The Company is holding 1,386,894 shares of Common Stock in the treasury of the Company. 
   	 
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 (iii) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and non-assessable. Schedule 3(r)(iii) sets forth the number of shares of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes and the Warrants) and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s Knowledge, except as set forth on Schedule 3®(i)(iii), no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws). 
  
 (iv) Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
  
 (v) Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible Securities and the material rights of the holders thereof in respect thereto. 
   	 
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 (s) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed on Schedule 3(s), has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
   	 
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 (t) Litigation. To the Knowledge of the Company, there is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors , whether of a civil or criminal nature or otherwise, in their capacities as such. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. After reasonable inquiry of its employees, the Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
  
 (u) Insurance. Schedule 3(u) sets forth the applicable insurance policies of the Company and each of its Subsidiaries currently in effect. The Company and each of its Subsidiaries is insured as required by any applicable law or governmental agency. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. 
  
 (v) Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
   	 
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 (w) Title. 
  
 (i) Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries is held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries. 
  
 (ii) Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
  
 (x) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted and presently proposed to be conducted. Schedule 3(x)(i) sets forth all of the Intellectual Property Rights owned by the Company as of the date hereof. The Company does not have any Knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the Knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights
   	 
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 (y) Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
  
 (i) No Hazardous Materials:
  
 (A) have been disposed of or otherwise released from any Interest of the Company or any of its Subsidiaries in violation of any Environmental Laws; or
  
 (B) are present on, over, beneath, in or upon an Interest or any portion thereof in quantities that would constitute a violation of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Property or Interest has occurred that violates any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
  
 (ii) Neither the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise located on any Interest any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
  
 (iii) None of the Interests are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”) list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
  
 (z) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.
   	 
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 (aa) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards (“NOLs”) for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs. 
  
 (bb) Internal Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
  
 (cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect. 
  
 (dd) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
   	 
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 (ee) Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; and (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Warrant Shares or Conversion Shares, as applicable, deliverable with respect to the Securities are being determined and such hedging and/or trading activities, if any, can reduce the value of the existing shareholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any other Transaction Document or any of the documents executed in connection herewith or therewith.
  
 (ff) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the Knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the Placement Agent), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
  
 (gg) U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.
  
 (hh) Registration Eligibility. The Company is eligible to register the Registrable Securities for resale by the Buyers using Form S-1 promulgated under the 1933 Act.
  
 (ii) Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with. 
  
  	 
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 (jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. 
  
 (kk) Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
  
 (ll) Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s Knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries. 
  
 (mm) Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
  
 (nn) Management. Except as set forth in Schedule 3(nn) hereto, during the past five year period, no current or former officer or director or, to the Knowledge of the Company, no current ten percent (10%) or greater shareholder of the Company or any of its Subsidiaries has been the subject of:
  
 (i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
  
 (ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
   	 
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 (iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
  
 (1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
  
 (2) Engaging in any particular type of business practice; or
  
 (3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
  
 (iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
  
 (v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
  
 (vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
  
 (oo) Stock Options. As of the date hereof, the Company does not have any stock option plans or equity incentive plans.
  
 (pp) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
   	 
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 (qq) No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
  
 (rr) Other Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.
  
 (ss) No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
  
 (tt) Public Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
  
 (uu) Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal Power Act, as amended.
  
 (vv) Ranking of Notes. Except with respect to the Synthesis Debt, No Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise. 
  
 (ww) EMEA. 
  
 (i) Except as described in the SEC Documents, the Company possesses all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business as currently conducted, including without limitation all such certificates, authorizations and permits required by the European Medicines Agency (the “EMEA”) and any other federal, state or foreign agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous materials in each jurisdiction in which the Company or any of its Subsidiaries sell any drugs, devices or other pharmaceutical products, except where the failure to so possess such certificates, authorizations and permits, individually or in the aggregate, would not result in a Material Adverse Effect. Except as described in the SEC Documents, the Company has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.
   	 
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 (ii) Except to the extent disclosed in the SEC Documents, the Company has not received any written notices or statements from the EMEA or any other governmental agency, and otherwise has no Knowledge or reason to believe, that (i) any drug candidate of the Company described in SEC Documents (each a “Potential Product”) may or will be rejected or determined to be non-approvable; (ii) a delay in time for review and/or approval of a marketing authorization application or marketing approval application in any jurisdiction for any Potential Product is or may be required, requested or being implemented; or (iii) any license, approval, permit or authorization to conduct any clinical trial of or market any product or Potential Product of the Company has been, will be or may be suspended, revoked, modified or limited, except in the cases of clauses (i), (ii) and (iii) (iv) where such rejections, determinations, delays, requests, suspensions, revocations, modifications or limitations might not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided however, as of the date hereof the Company has not conducted any preclinical and clinical testing or manufacturing of any Potential Products and has solely engaged in the distribution of products manufactured by third parties.
  
 (iii) Except to the extent disclosed in the SEC Documents, to the Company’s knowledge, distribution, promotion and sale of the products and Potential Products of the Company is in compliance, in all material respects, with all laws, rules and regulations applicable to such activities, including without limitation applicable good laboratory practices and maintaining the facility in accordance with any license or permit issued by the applicable Governmental Authority, except for such non-compliance as would not, individually or in the aggregate, have a Material Adverse Effect. Except to the extent disclosed in the SEC Documents, the Company has not received notice of adverse finding, warning letter or clinical hold notice from the EMEA or any other counterpart of any of the foregoing, or any untitled letter or other correspondence or notice from the EMEA or any other governmental authority or agency or any institutional or ethical review board alleging or asserting noncompliance with any law, rule or regulation applicable in any jurisdiction, except notices, letters, and correspondences and other. counterparts thereof alleging or asserting such noncompliance as would not, individually or in the aggregate, have a Material Adverse Effect. Except to the extent disclosed in the SEC Documents, the Company has not, either voluntarily or involuntarily, initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, field correction, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice, or other notice or action relating to an alleged or potential lack of safety or efficacy of any product or Potential Product of the Company, any alleged product defect of any product or Potential Product of the Company, or any violation of any material applicable law, rule, regulation or any clinical trial or marketing license, approval, permit or authorization for any product or Potential Product of the Company, and the Company is not aware of any facts or information that would cause it to initiate any such notice or action and has no knowledge or reason to believe that the EMEA or any other governmental agency or authority or any institutional or ethical review board or other non-governmental authority intends to impose, require, request or suggest such notice or action.
   	 
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 (xx) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement and the SEC Documents, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Except as set forth on Schedule 3(xx), each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
   	 
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 4. COVENANTS.
  
 (a) Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
  
 (b) Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyers.
  
 (c) Reporting Status. Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination. 
  
 (d) Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, but not, directly or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.
  
 (e) Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, shareholders’ equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders.
   	 
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 (f) Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
  
 (g) Fees. The Company shall reimburse the lead Buyer for all costs and expenses incurred by it or its affiliates in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including, without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren LLP, counsel to the lead Buyer, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at the Closing, less $25,000 previously paid by the Company to Kelley Drye & Warren LLP; provided, that the Company shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding at the Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.
  
 (h) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
   	 
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 (i) Disclosure of Transactions and Other Material Information. 
  
 (i) Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement, the form of Notes, the form of the Warrants, the form of Leak-Out Agreements and the form of the Registration Rights Agreement) (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. 
  
 (ii) Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, including, without limitation, Section 4(p) of this Agreement, or any of the covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
   	 
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 (j) Additional Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined in the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement under the 1933 Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or such supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)). “Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of all the Registrable Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date) or (y) the first date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured such Current Public Information Failure).
  
 (k) Additional Issuance of Securities. So long as any Buyer beneficially owns any Securities, the Company will not, without the prior written consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company shall not issue any other securities that would cause a breach or default under the Notes or the Warrants. The Company agrees that for the period commencing on the date hereof and ending on the date immediately following the 90th Trading Day after the Applicable Date (provided that such period shall be extended by the number of calendar days during such period and any extension thereof contemplated by this proviso on which any Registration Statement is not effective or any prospectus contained therein is not available for use or any Current Public Information Failure exists) (the “Restricted Period”), neither the Company nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any convertible debt, any preferred stock or any purchase rights) (any such issuance, offer, sale, grant, disposition or announcement (whether occurring during the Restricted Period or at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (i) shares of Common Stock or standard options to purchase Common Stock to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that (1) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the date hereof and (2) the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion, exercise or other method of issuance (as the case may be) of any such Convertible Security is made solely pursuant to the conversion, exercise or other method of issuance (as the case may be) provisions of such Convertible Security that were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) the Conversion Shares; (iv) the Warrant Shares; or (v) shares of Common Stock and/or Convertible Securities issued pursuant to the Approved Acquisitions; provided that (A) the aggregate number of shares of Common Stock (on an as-exercised and as-converted basis, without regards to any limitations on exercise or conversion related thereto) does not exceed 8 million, (B) each holder of such shares of Common Stock and/or Convertible Security, as applicable, enters into a lock-up agreement, in form and substance reasonably satisfactory to the Holder, restricting any, direct or indirect, sale of such shares of Common Stock for a period of two years, (C) the primary purpose of such issuance is not to raise capital as determined in good faith by the Buyers, (D) the purchaser or acquirer of such shares of Common Stock in such issuance solely consists of either (1) the actual participants in such Approved Acquisition, (2) the actual owners of such assets or securities acquired in such Approved Acquisition or (3) the shareholders, partners or members of the foregoing Persons, and (z) the number or amount (as the case may be) of such shares of Common Stock issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such Approved Acquisition or ownership of such assets or securities to be acquired by the Company (as applicable) (each of the foregoing in clauses (i) through (v), collectively the “Excluded Securities”). “Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee, officer or director for services provided to the Company in their capacity as such. “Convertible Securities” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
   	 
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 (l) Reservation of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 150% of (i) the maximum number of shares of Common Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes hereof that (x) the Notes are convertible at the Conversion Price then in effect, and (y) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding (without regard to any limitations on the exercise of the Warrants set forth therein) (collectively, the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than proportionally in connection with any conversion, exercise and/or redemption, as applicable of Notes and Warrants. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.
  
 (m) Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
  
 (n) Other Notes; Variable Securities. So long as any Notes remain outstanding, the Company and each Subsidiary shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement (including, without limitation, an equity line of credit or an “at-the-market” offering) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
   	 
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 (o) Return of Pre-Delivery Shares. Such Buyers hereby covenant and agree that, in accordance with the terms of the Note, any Pre-Delivery Shares that remain unsold following the repayment in full of all obligations outstanding under the Note and the other Transaction Documents shall be returned to the Company for cancellation.
  
 (p) Participation Right. At any time on or prior to the eighteen month anniversary of the Closing Date, neither the Company nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4(p). The Company acknowledges and agrees that the right set forth in this Section 4(p) is a right granted by the Company, separately, to each Buyer.
  
 (i) At least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public information, a statement asking whether the Investor is willing to accept material non-public information or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement that the Company proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and (z) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the written request of a Buyer within three (3) Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D) offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro rata portion of 40% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(p) shall be (x) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription Amount.
   	 
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 (ii) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice.
  
 (iii) The Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.
  
 (iv) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(p)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw its Notice of Acceptance or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(p)(ii) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(p) prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance with Section 4(p)(i) above.
   	 
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 (v) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance, as reduced pursuant to Section 4(p)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Buyer and its counsel.
  
 (vi) Any Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(p) may not be issued, sold or exchanged until they are again offered to such Buyer under the procedures specified in this Agreement.
  
 (vii) The Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, any agreement previously entered into with the Company or any instrument received from the Company, and (y) any registration rights set forth in such Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in the Registration Rights Agreement.
  
 (viii) Notwithstanding anything to the contrary in this Section 4(p) and unless otherwise agreed to by such Buyer, the Company shall either confirm in writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth in this Section 4(p). The Company shall not be permitted to deliver more than one such Offer Notice to such Buyer in any sixty (60) day period, except as expressly contemplated by the last sentence of Section 4(p)(ii).
   	 
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 (ix) The restrictions contained in this Section 4(p) shall not apply in connection with the issuance of any Excluded Securities. The Company shall not circumvent the provisions of this Section 4(p) by providing terms or conditions to one Buyer that are not provided to all.
  
 (q) Dilutive Issuances. For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Principal Market. 
  
 (r) Passive Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the Code.
  
 (s) Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Buyers.
  
 (t) Corporate Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants.
  
 (u) Stock Splits. Until the Notes and all notes issued pursuant to the terms thereof are no longer outstanding, the Company shall not effect any stock combination, reverse stock split or other similar transaction (or make any public announcement or disclosure with respect to any of the foregoing) without the prior written consent of the Required Holders (as defined below).
  
 (v) Conversion and Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants and the form of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers in order to exercise the Warrants or convert the Notes. Except as provided in Section 5(d), no additional legal opinion, other information or instructions shall be required of the Buyers to exercise their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver the Conversion Shares and Warrant Shares in accordance with the terms, conditions and time periods set forth in the Notes and Warrants.
  
 (w) Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
   	 
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 (x) General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
  
 (y) Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities under the 1933 Act or require shareholder approval under the rules and regulations of the Principal Market and the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated hereby.
  
 (z) Notice of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
  
 (aa) Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Pre-Delivery Shares (as defined in the Notes) may be tacked onto the holding period of Notes and shall, consequently, be deemed to have been issued as of the Closing Date for purposes of Rule 144 and the Company agrees not to take a position contrary to this Section 4(aa).
  
 (bb) Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.
  
 5. REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
  
 (a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.
   	 
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 (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as applicable, the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes or the exercise of the Warrants (as the case may be). The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares or Warrant Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.
  
 (c) Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Warrant Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
  
 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
   	 
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 (d) Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Securities are Conversion Shares or Warrant Shares, credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
   	 
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 (e) Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, a certificate for the number of Conversion Shares or Warrant Shares (as the case may be) to which such Buyer is entitled and register such Conversion Shares or Warrant Shares (as the case may be) on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II) if the Registration Statement covering the resale of the Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares or Warrant Shares, as applicable, electronically without any restrictive legend by crediting such aggregate number of Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 1.5% of the product of (A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior to the Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver a certificate to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Buyer of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d) above that such Buyer is entitled to receive from the Company (a “Buy-In”), then the Company shall, within two (2) Trading Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Conversion Shares or Warrant Shares (as the case may be) that the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable, pursuant to the analogous sections of the Note or Warrant, as applicable, held by such Buyer.
   	 
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 (f) FAST Compliance. While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates in the DTC Fast Automated Securities Transfer Program. 
  
 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
  
 (a) The obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
  
 (i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
  
 (ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with the Flow of Funds Letter.
  
 (iii) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
   	 
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 7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
  
 (a) The obligation of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
  
 (i) The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer (A) a Note in such original principal amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers and (B) a Warrant initially exercisable for such aggregate number of Warrant Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers, in each case, as being purchased by such Buyer at the Closing pursuant to this Agreement.
  
 (ii) Such Buyer shall have received the opinion of Davidoff Hutcher & Citron LLP, the Company’s counsel, dated as of the Closing Date, in the form acceptable to such Buyer.
  
 (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
  
 (iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company issued by the Secretary of State (or comparable office) of Nevada as of a date within ten (10) days of the Closing Date.
  
 (v) The Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten (10) days of the Closing Date.
  
 (vi) The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of Nevada within ten (10) days of the Closing Date.
  
 (vii) The Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and (iii) the Bylaws of the Company, each as in effect at the Closing.
   	 
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 (viii) Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
  
 (ix) The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.
  
 (x) The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market. 
  
 (xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
  
 (xii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
  
 (xiii) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
  
 (xiv) The Company shall have obtained any required approval, if any, of the Principal Market to list or designate for quotation (as the case may be) the Conversion Shares and the Warrant Shares.
  
 (xv) Such Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Flow of Funds Letter”).
  
 (xvi) Each other Buyer shall have executed and delivered to the Company a Leak-Out Agreement in the form of Exhibit D attached hereto (the “Leak-Out Agreement”).
  
 (xvii) The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
   	 
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 8. TERMINATION.
  
 In the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes and the Warrants shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents. 
  
 9. MISCELLANEOUS.
  
 (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
   	 
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 (b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
  
 (c) Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
  
 (d) Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate. 
  
  	 
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 (e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes or all holders of the Warrants (as the case may be). From the date hereof and while any Notes or Warrants are outstanding, the Company shall not be permitted to receive any consideration from a Buyer or a holder of Notes or Warrants that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder of Notes or Warrants in a manner that is more favorable than to other similarly situated Buyers or holders of Notes or Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes or Warrants in a manner that is less favorable than the Buyer or holder of Notes or Warrants that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than another Buyer shall disregard any other securities of the Company purchased or sold by any Buyer. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “Required Holders” means (I) prior to the Closing Date, each Buyer entitled to purchase Notes at the Closing and (II) on or after the Closing Date, holders of a majority of the Registrable Securities as of such time (excluding any Registrable Securities held by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Notes and/or the Warrants (or the Buyers, with respect to any waiver or amendment of Section 4(o)); provided, that such Buyers or holders of Registrable Securities, as applicable, must include Hudson Bay Master Fund Ltd. so long as it beneficially owns any of the Registrable Securities (on an as-converted and as-exercised basis without regard to any limitations on conversion or exercise of any Notes or Warrants, respectively).
   	 
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 (f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:
  
 If to the Company:
  
 Cosmos Holdings Inc.
 141 West Jackson Boulevard, Suite 4236
 Chicago, IL 60604
 Telephone: (312) 536-3102
 Attention: Konstantinos Vassilopoulos
 E-Mail: g.vassilopoulos@cosmoshold.com
  
 With a copy (for informational purposes only) to:
  
 Davidoff Hutcher & Citron LLP
 605 Third Avenue, 15th Floor
 Telephone: 212-557-7200
 Facsimile: 212-286-1884
 Attention: Elliot Lutzker, Esq.
 E-Mail: ehl@dhclegal.com
   	 
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 If to the Transfer Agent:
  
 Globex Transfer, LLC
 780 Deltona Boulevard, Suite 202
 Deltona, FL 32725
 Telephone: (813) 344-4490
 Facsimile: (386) 267-3124
 Attention: Michael Turner
 E-Mail: mt@globextransfer.com
  
 If to a Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
  
 with a copy (for informational purposes only) to:
  
 Kelley Drye & Warren LLP
 101 Park Avenue
 New York, NY 10178
 Telephone: (212) 808-7540
 Facsimile: (212) 808-7897
 Attention: Michael A. Adelstein, Esq.
 E-mail: madelstein@kelleydrye.com
  
 or to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
  
 (g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
   	 
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 (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred to in Section 9(k).
  
 (i) Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
  
 (j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
  
 (k) Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, indemnify and hold harmless each Buyer and each holder of any Securities and all of their shareholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction Documents that remains uncured for any applicable cure period or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief), except with respect to any claims that arise primarily from such Buyer’s misrepresentation or breach of any representation, warranty or covenant made by the Buyer in the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
   	 
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 (l) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial representative) to effect short sales or similar transactions in the future.
  
 (m) Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).
  
 (n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
   	 
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 (o) Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
  
 (p) Judgment Currency.
  
 (i) If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 9(p) referred to as the “Judgment Currency”) an amount due in U.S. Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
  
 (1) the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
  
 (2) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
  
 (ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
  
 (iii) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
   	 
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 (q) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers collectively and not between and among the Buyers. 
  
 [signature pages follow]
   	 
	50
	 
 
	 

  
 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
  
  
  	  
	 COMPANY:
  
 COSMOS HOLDINGS INC.
	  

	  
	  
	  
	  

	  
	 By:
	  
	  

	  
	 Name:
	 Grigorios Siokas 
	  

	  
	 Title:
	  
 
Chief Executive Officer
	  

   	 
	51
	 
 
	 

  
 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
  
  
  	 
	 BUYER:
  
 HUDSON BAY MASTER FUND LTD
	  

	  
	  
	  
	  

	  
	 By:
	  
	  

	  
	 Name:
	  
	  

	  
	 Title:
	  
	  

   	 
	52
	 
 
	 

  
 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
  
  
  	 
	 BUYER:
  
 ALTO OPPORTUNITY MASTER FUND,
SPC - SEGREGATED MASTER PORTFOLIO B
	  

	 
	  
	  

	  

	  
	 By:
	  
	  

	  
	 Name:
	  
	  

	  
	 Title:
	  
	  

  
  	 
	53
	 
 
	 

  
 SCHEDULE OF BUYERS
  
  	  
(1)
	  
(2)
	  
(3)
	  
(5)
	 (6)
	 (7)

						
	  
Buyer
	  
Address and Facsimile Number
	  
Original Principal Amount of Notes
	  
Aggregate
Number of
Warrant Shares
	 Purchase Price
	 Legal Representative’s
Address and Facsimile Number

						 

	 Hudson Bay Master Fund Ltd.
	 Please deliver any notices other than Pre-Notices to:
  
777 Third Avenue, 30th Floor 
New York, NY 10017
 Attention: Yoav Roth
 Facsimile: (212) 571-1279
 E-mail: investments@hudsonbaycapital.com
Residence: Cayman Islands  
 
Please deliver any Pre-Notice to:
  
777 Third Ave., 30th Floor
 New York, NY 10017
 Facsimile: (646) 214-7946
 Attention: Scott Black
 General Counsel and Chief Compliance Officer
	  
$2,791,667.88
	  
4,466,669
	  
$2,500,000
	 Kelley Drye & Warren LLP
 101 Park Avenue 
 New York, NY 10178
 Telephone: (212) 808-7540
 Facsimile: (212) 808-7897
 Attention: Michael A. Adelstein, Esq.

	 Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B
	 c/o Ayrton Capital LLC
 1180 Avenue of Americas
 Suite 842
 New York, NY 10036
 Attention Waqas Khatri
 E-mail: wk@ayrtonllc.com
	  
$558,332.12
	  
893,334
	  
$500,000
	 N/A

	 TOTAL
	  
$3,350,000
	  
5,360,003
	  
$3,000,000
	

  
  
  	 54

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