Document:

Exhibit 10.1

 

EXECUTION COPY

 

RESTRUCTURING AGREEMENT

 

This RESTRUCTURING AGREEMENT (this “Agreement”) is made and entered into as of August 17, 2012, by and among AVENTINE RENEWABLE ENERGY HOLDINGS, INC., a corporation organized under the laws of Delaware (the “Borrower”), AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (“AREI”), AVENTINE RENEWABLE ENERGY — AURORA WEST, LLC, a Delaware limited liability company (“ARE-AW”), AVENTINE RENEWABLE ENERGY — MT VERNON, LLC, a Delaware limited liability company (“ARE-MT”), AVENTINE RENEWABLE ENERGY — CANTON, LLC, a Delaware limited liability company (“ARE-C”), AVENTINE POWER, LLC, a Delaware limited liability company (“Power”), and NEBRASKA ENERGY, L.L.C., a Kansas limited liability company (“Nebraska”; together with AREI, ARE-AW, ARE-MT, ARE-C and Power, each a “Guarantor”, and collectively, jointly and severally, the “Guarantors”; and together with the Borrower, each a “Loan Party” and collectively, the “Loan Parties”), each Lender listed on the signature pages hereof, such Lenders constituting 100% of the Lenders under the Credit Agreement referred to below (the “Consenting Lenders”), and certain shareholders of the Borrower beneficially holding the Borrower’s issued and outstanding common stock in the amounts set forth in Exhibit B hereto (the “Majority Shareholders”).  The Loan Parties, the Consenting Lenders, the New Term Loan Lenders (as defined below) and the Majority Shareholders are collectively referred to herein as the “Parties.”

 

WITNESSETH:

 

WHEREAS, the Borrower, the Lenders, Citibank, N.A., in its capacity as administrative agent and collateral agent (in such capacities, the “Agent”) for the Lenders, and certain other Persons in their capacity as Joint Lead Arrangers, Joint Book-Runners and/or as Co-Syndication Agents are parties to that certain Senior Secured Term Loan Credit Agreement, dated as of December 22, 2010, as amended from time to time (the “Credit Agreement”), and subject to the Forbearance Agreement, dated as of July 27, 2012 (the “Forbearance Agreement”).

 

WHEREAS, the Consenting Lenders, the Loan Parties and the Majority Shareholders have agreed to a restructuring of the indebtedness and capital stock of the Borrower and other Loan Parties (the “Restructuring”), subject to the terms and conditions described in this Agreement and the term sheet that is attached hereto as Exhibit A and made a part hereof (the “Restructuring Term Sheet”).

 

NOW, THEREFORE, in consideration of the agreement and provisions herein contained, the Parties do hereby agree as follows:

 

Section 1.                                          Definitions.  All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

 

Section 2.                                          Consent.  Each of the Parties agrees as follows:

 

2.01                        Consenting Lenders.  Each Consenting Lender agrees to the Restructuring, as set forth herein and in the Restructuring Term Sheet, subject to the Restructuring Conditions, the other conditions set forth herein, and the conditions set forth in the Restructuring Term Sheet.

 

 

2.02                        New Term Loan Lenders.   Each New Term Loan Lender agrees to fund its Commitment and provide its share of the New Term Loan, as set forth herein and in the Restructuring Term Sheet, subject to the New Term Loan Conditions, the other conditions set forth herein, and the conditions set forth in the Restructuring Term Sheet.

 

2.03                        Loan Parties.  Each Loan Party agrees to the Restructuring, and further agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, to consummate and make effective the transactions contemplated by the Restructuring as provided herein and in the Restructuring Term Sheet.

 

2.04                        Majority Shareholders.  Each of the Majority Shareholders agrees to vote, in connection with any request for approval submitted by the Borrower to its shareholders, the shares of common stock owned or controlled by such Majority Shareholder in favor of approval of the Restructuring, and further agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Restructuring as provided herein and in the Restructuring Term Sheet.

 

Section 3.                                          Conditions to Restructuring Applicable to Consenting Lenders and New Term Loan Lenders.

 

3.01                        Each Consenting Lender’s consent to the Restructuring is subject to (i) all material definitive documentation for the Restructuring being in form and substance reasonably satisfactory to such Consenting Lender, (ii) approval by such Consenting Lender of the terms noted in the Restructuring Term Sheet as “TBD”, and (iii) reasonable determination by such Consenting Lender that the further conditions precedent set forth below and in the Restructuring Term Sheet have been satisfied (clauses (i), (ii) and (iii), the “Restructuring Conditions”).

 

3.02                        The Consenting Lenders have agreed to provide (or to cause one or more of its affiliates or funds under its management to provide) $30,000,000 of new financing to the Borrower and the other Loan Parties (the “New Term Loan”) on the terms and subject to the conditions set forth in the Restructuring Term Sheet, provided that each Consenting Lender shall only be obligated to fund any portion of the New Term Loan if it receives all of its required internal credit approvals (each such Consenting Lender which obtains such internal credit approvals and commits to fund a portion of the New Term Loan, in such capacity, a “New Term Loan Lender” and collectively the “New Term Loan Lenders”).  It is expected that, subject to receipt of such internal credit approvals, each New Term Loan Lender shall commit to fund a pro rata portion of the New Term Loan (such amount representing such New Term Loan Lender’s “Commitment”), corresponding to its ownership of the amount outstanding under the Credit Agreement.  Any changes to such expected allocations will be approved by all of the Consenting Lenders.  Each New Term Loan Lender’s Commitment is subject to (i) all material definitive documentation for the New Term Loan being in form and substance reasonably satisfactory to such New Term Loan Lender, (ii) approval by such New Term Loan Lender of the terms noted in the Restructuring Term Sheet as “TBD,” (iii) reasonable determination by such New Term Loan Lender that the further conditions precedent set forth below and in the Restructuring Term

 

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Sheet have been satisfied, and (iv) receipt of internal credit approvals by each of the New Term Loan Lender (clauses (i), (ii), (iii), and (iv) the “New Term Loan Conditions”).

 

Section 4.                                          Conditions to Consent of All Parties.  Each Consenting Lender’s consent to the Restructuring, each New Term Loan Lender’s Commitment for the New Term Loan, each Loan Party’s consent to the Restructuring, and each Majority Shareholder’s consent to the Restructuring, is subject to the following conditions:

 

(a)                                  the execution of this Agreement by the Consenting Lenders, the New Term Loan Lenders, the Loan Parties and the Majority Shareholders;

 

(b)                                 the negotiation and execution of documentation evidencing the Restructuring, in a form reasonably satisfactory to each Consenting Lender, the Majority Shareholders and the Loan Parties, on the terms and conditions set forth or contemplated in, and subject to the limitations contemplated by, this Agreement and the Restructuring Term Sheet (it being understood that each Consenting Lender and the Loan Parties shall act on a good faith commercially reasonable basis to agree upon such documentation), in accordance with the Restructuring Term Sheet;

 

(c)                                  the negotiation and execution of documentation evidencing the New Term Loan, in a form reasonably satisfactory to each New Term Lender and the Loan Parties, on the terms and conditions set forth or contemplated in, and subject to the limitations contemplated by, this Agreement and the Restructuring Term Sheet (it being understood that each New Term Lender and the Loan Parties shall act on a good faith commercially reasonable basis to agree upon such documentation), in accordance with the Restructuring Term Sheet;

 

(d)                                 the New Term Loan Lenders’ receipt on the Closing Date (as defined in the Restructuring Term Sheet) of a fully earned nonrefundable fee equal to 3% of each Term A Lender’s (as defined in the Restructuring Term Sheet) portion of the Term A Loan (as defined in the Restructuring Term Sheet), which fee shall be paid in kind by being added to the principal amount of the Term A Loan (as defined in the Restructuring Term Sheet) (the “Closing Fee”);

 

(e)                                  the New Term Loan Lenders’ having earned on the Closing Date a nonrefundable fee equal to 3% of each Term A Lender’s portion of the Term A Loan, which fee shall be paid in cash at the time specified in the Restructuring Term Sheet (the “Exit Fee”);

 

(f)                                    the simultaneous funding by each New Term Loan Lender in respect of the New Term Loan so that the New Term Loan is fully funded on the Closing Date; and

 

(g)                                 the other conditions specified in the Restructuring Term Sheet.

 

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Section 5.                                          Acknowledgements.  Each Consenting Lender, each New Term Loan Lender and each Majority Shareholder acknowledges that it has independently and without reliance on any other Party, and based on the financial information of the Loan Parties and such other documents and information as it has deemed appropriate, made its own credit and other investment analysis and decision to enter into the Restructuring and, if applicable, to provide its Commitment for the New Term Loan.

 

Section 6.                                          Representations of the Consenting Lenders.  Each Consenting Lender represents and warrants, on a several but not joint basis, as of the date hereof:

 

(a)                                  that it is the legal owner, beneficial holder, and/or the investment advisor or manager for the legal or beneficial owner of the Term Loans identified in Exhibit C hereto(1);

 

(b)                                 such Term Loans are free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction, right of first refusal or other limitation on disposition or encumbrances of any kind, that might adversely affect in any way such Consenting Lender’s performance of its obligations contained in this Agreement at the time such obligations are required to be performed;

 

(c)                                  that there is no amount of Term Loans of which it is the legal owner, beneficial owner and/or investment manager for the legal or beneficial owner that are not disclosed in Exhibit C hereto unless such Consenting Lender does not possess the full power to vote and dispose of such Term Loans; and

 

(d)                                 that it has the full power to vote, dispose of and compromise, consistent with the provisions contained in the Restructuring Term Sheet, the aggregate principal amount of its Term Loans.

 

Section 7.                                          Representations of the Majority Shareholders.  The Majority Shareholders represent and warrant, jointly and severally, as of the date hereof:

 

(e)                                  that they are the legal owners and/or beneficial holders of the number of shares of common stock of the Borrower identified in Exhibit B hereto of the Majority Shareholders; and

 

(f)                                    such shares of common stock of the Borrower are free and clear of any voting agreement, voting restriction or other similar restriction or limitation that might adversely affect in any way such Majority Shareholder’s performance of its obligations contained in this Agreement at the time such obligations are required to be performed.

 

Section 8.                                          Consenting Lender and Majority Shareholder Acknowledgements.  Each of the Consenting Lenders acknowledges and agrees (for itself), regardless of whether such Consenting Lender’s interest in the Credit Agreement constitutes “securities” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and each Majority Shareholder acknowledges and agrees (for itself) that (a) such Consenting Lender or such Majority

 

(1)  Holdings on Exhibit C include the PIK Forbearance Fee under the Forbearance Agreement and accrued interest under the Credit Agreement to July 31, 2012.

 

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Shareholder, as the case may be, is (i) an “accredited investor” as such term is defined in Rule 501(a) of the Securities Act, or (ii) a “qualified institutional buyer” as such term is defined in Rule 144A of the Securities Act, and (b) adequate information was available to such Consenting Lender or such Majority Shareholder, as the case may be, in order to enable it to make an informed decision such that, were this Agreement to be construed as or deemed to constitute a solicitation or acceptance governed by the U.S. securities laws, such solicitation was in compliance with U.S. securities rules, and regulations governing the adequacy of disclosure in connection with such solicitation.

 

Section 9.                                          Effectiveness.  This Agreement shall become effective upon execution by each of the Parties.

 

Section 10.                                   Termination of Agreement.

 

(a)                                  This Agreement shall automatically terminate on the earliest to occur of (i) the Closing Date, (ii) September 30, 2012, or (iii) the expiration date of the Forbearance Agreement (as the same may be extended from time to time), provided, however, that this Agreement shall not be terminable by a Party if the date in clause (b) is not met due to a breach by such Party of its obligations under this Agreement or, if applicable, under such Lender’s Commitment.  This Agreement may be terminated by the mutual consent of the Consenting Lenders, the New Term Loan Lenders, the Loan Parties and the Majority Shareholders.

 

(b)                                 Notwithstanding anything herein to the contrary, the Loan Parties may terminate this Agreement in the event of (i) breach by any Party (other than a Loan Party) that would have a material adverse effect on the Loan Parties, (ii) the governing board of any Loan Party determines in good faith, based upon the written legal advice of counsel, that proceeding with the transactions contemplated by this Agreement would be a breach, or inconsistent with the exercise, of their respective fiduciary duties under applicable law, or (iii) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling or order enjoining the consummation of this Agreement.

 

(c)                                  Upon the termination of this Agreement, this Agreement shall forthwith become void and of no further force or effect, each Party shall be released from its commitments, undertakings and agreements under or related to this Agreement, and there shall be no liability or obligation on the part of any Party under this Agreement; provided, however, that in no event shall any such termination relieve a Party from (i) liability for its breach or non-performance of its obligations hereunder prior to the date of such termination and (ii) obligations under the Credit Agreement or the Forbearance Agreement; and provided, further that, notwithstanding anything to the contrary herein, termination of this Agreement pursuant to and in accordance with this Section 10 may be waived by the Party having the right to so terminate, in which case the termination of this Agreement

 

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shall be deemed not to have occurred, this Agreement shall be deemed to continue in full force and effect, and the rights and obligations of the Parties shall be restored, subject to any modification set forth in such waiver.

 

Section 11.                                   Forbearance Agreement.  The Consenting Lenders hereby agree that the forbearance provided for under the Forbearance Agreement shall remain in effect until September 30, 2012, provided that (i) no other Termination Event (as defined in the Forbearance Agreement) occurs prior to such date and (ii) the ABL Agent and ABL Lender (each as defined in the Term Sheet) have extended the forbearance under the ABL Forbearance Agreement (as defined in the Term Sheet) until September 30, 2012 without any other modifications to the ABL Forbearance Agreement that are adverse to the Lenders or to the Loan Parties.

 

Section 12.                                   Miscellaneous.

 

12.01                 Changes.  This Agreement, the consent of each Consenting Lender, Loan Party and Majority Shareholder to the Restructuring, and each New Term Loan Lender’s Commitment, may not be withdrawn, amended, supplemented, or changed except pursuant to a writing signed by all of the Parties.

 

12.02                 Binding Effect; Assignment.  Each Consenting Lender, New Term Loan Lender, Loan Party and Majority Shareholder agrees that this Agreement, including the attached Restructuring Term Sheet, is a valid, binding and enforceable agreement with respect to the subject matter contained herein, it being understood that the agreement remains subject to conditions set forth herein and in the Restructuring Term Sheet.

 

(a)                                  Each Consenting Lender and New Term Loan Lender may assign its obligations under this Agreement, including a New Term Loan Lender’s obligation to fund its Commitment, in whole or in part to any of its affiliates or related funds, any other Lender, or another party; provided, however, that (i) such assignee party executes a joinder to this Agreement, and (ii) such assigning Lender shall not be relieved of any of its obligations to fund hereunder in the event any such assignee lender shall fail to fund in accordance with the terms hereof.  Any sale, transfer or assignment of any obligations hereunder that does not comply with this Section 12.02(a) shall be deemed null and void ab initio.  The obligations under this Agreement shall be binding on the successors or assigns of each Consenting Lender and New Term Loan Lender.

 

(b)                                 Each Majority Shareholder may, subject to compliance with applicable securities laws, sell, transfer or assign its common stock in the Borrower to any other Person, provided however, that (i) such purchaser, transferee or assignee executes a joinder to this Agreement, and (ii) such Majority Shareholder shall not be relieved of any of its obligations pursuant to the terms of this Agreement.

 

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12.03                 Confidentiality.  The contents of this Agreement are confidential  and, with respect to each Party party to a confidentiality agreement with the Borrower regarding the subject matter herein, this Agreement is subject to the terms and conditions set forth in such confidentiality agreement.  Except as required by law, statute, rule, regulation, valid judicial process or in response to a request from a regulatory or self-regulatory or supervisory authority having or asserting jurisdiction over such Party,  this Agreement shall not be disclosed or displayed or its contents otherwise disclosed by any Party to any third person (other than, on a confidential basis, to Agent, the ABL Lender and ABL Agent (each as defined in the Restructuring Term Sheet), to any Party’s counsel, officers, employees, advisors and the limited partners or clients of such Party’s managed funds and accounts) without the prior written consent of the non-disclosing Parties.

 

12.04                 Severability.  The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Agreement in any jurisdiction.

 

12.05                 Counterparts.  This Agreement may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart.

 

12.06                 Headings.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

12.07                 Submission of Agreement.  The submission of this Agreement to the Parties or their agents or attorneys for review or signature does not constitute a commitment by any Consenting Lender, New Term Loan Lender, Loan Party or Majority Shareholder to take or refrain from taking any action contemplated hereby and this Agreement shall have no binding force or effect until all of the conditions to the effectiveness of this Agreement have been satisfied as set forth herein.

 

12.08                 Authorization.  Each of the Parties hereby represents and warrants that the execution, delivery and performance of this Agreement by such Party (i) is within the power and authority of such Party and has been duly authorized by all necessary action by such Party and (ii) has been duly authorized, executed and delivered by such Party and constitutes the legal, valid and binding obligation of such Party, enforceable in accordance with its terms.

 

12.09                 Governing Law; Waiver of Jury Trial.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  Each of the Consenting Lenders, New Term Loan Lenders, Loan Parties and Majority Shareholders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the Consenting Lenders, New Term Loan Lenders,

 

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Loan Parties and/or Majority Shareholders in the negotiation, administration, performance or enforcement hereof.

 

12.10                 Conflicts.  In the event of a conflict between the specific terms contained in the body of this Agreement and the specific terms of the Restructuring Term Sheet, the terms contained in the body of this Agreement shall control.

 

[remainder of page left intentionally blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	
 
    	
 
    	
BORROWER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
AVENTINE   RENEWABLE ENERGY HOLDINGS, INC.

as   Borrower
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Title:   Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
SUBSIDIARY   GUARANTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
AVENTINE   RENEWABLE ENERGY, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
AVENTINE   RENEWABLE ENERGY-AURORA WEST, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
AVENTINE   RENEWABLE ENERGY- MT VERNON, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
AVENTINE   POWER, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    

 

[Signature Page Restructuring Agreement]

 

 

	
 
    	
 
    	
AVENTINE   RENEWABLE ENERGY-CANTON, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
NEBRASKA ENERGY, L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Calvin Stewart 
    
	
 
    	
 
    	
 
    	
Name:   Calvin Stewart
    
	
 
    	
 
    	
 
    	
Title:   Treasurer
    

 

[Signature Page Restructuring Agreement]

 

 

	
MIDTOWN ACQUISITIONS L.P.,
    
	
as a Lender
    
	
 
    
	
By: Midtown Acquisitions GP LLC, its general   partner
    
	
 
    	
 
    
	
 
    	
/s/   Conor Bastable
    	
 
    
	
 
    	
Name:   Conor Bastable
    	
 
    
	
 
    	
Title:   Manager
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

 

	
REDWOOD MASTER FUND, LTD.,
    
	
as a Lender
    
	
 
    
	
By: 
    	
REDWOOD CAPITAL MANAGEMENT, LLC,
    
	
 
    	
its Investment Advisor
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Jed Nussbaum
    	
 
    
	
 
    	
Name:   Jed Nussbaum 
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
				

 

[Signature Page Restructuring Agreement]

 

 

	
APOLLO INVESTMENT CORPORATION,
    
	
as a Lender
    
	
 
    
	
By: Apollo Investment Management, L.P., as Advisor
    
	
By: ACC Management, LLC, as its General Partner
    
	
 
    	
 
    
	
 
    	
/s/   Ted J. Goldthorpe
    	
 
    
	
 
    	
Name:   Ted J. Goldthorpe 
    	
 
    
	
 
    	
Title:   Chief Investment Officer
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

 

	
ALTAI CAPITAL MASTER   FUND, LTD.
    
	
as a Lender
    
	
 
    
	
By: 
    	
Altai Capital Management, L.P., as
    
	
 
    	
Investment   Adviser
    
	
 
    	
 
    
	
 
    	
/s/   Toby E. Symonds
    	
 
    
	
 
    	
Name:   Toby E. Symonds
    
	
 
    	
Title:   
    	
Managing   Principal of the Investment
    
	
 
    	
 
    	
Adviser   to Altai Capital Master Fund, Ltd.
    
					

 

[Signature Page Restructuring Agreement]

 

 

	
 
    
	
LJR CAPITAL L.P.,
    
	
as a Lender
    
	
 
    
	
 
    	
/s/   Lawrence B. Gill
    	
 
    
	
 
    	
Name:   Lawrence B. Gill
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ALJ CAPITAL I, L.P.,
    
	
as a Lender
    
	
 
    
	
 
    	
/s/   Lawrence B. Gill
    	
 
    
	
 
    	
Name:   Lawrence B. Gill
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ALJ   CAPITAL II L.P.,
    
	
as a Lender
    
	
 
    
	
 
    	
/s/   Lawrence B. Gill
    	
 
    
	
 
    	
Name:   Lawrence B. Gill
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
 
    	
 
    
	
ROCHDALE FIXED INCOME   PORTFOLIOS,
    
	
as a Lender
    
	
 
    
	
By: 
    	
Seix Investment Advisors LLC,
    
	
 
    	
in its capacity as Sub-Adviser
    
	
 
    
	
 
    	
/s/   George Goudelias
    	
 
    
	
 
    	
Name:   George Goudelias
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
RIDGEWORTH SEIX FLOATING RATE   HIGH INCOME
    
	
FUND,
    
	
as a Lender
    
	
 
    
	
By: 
    	
Seix Investment Advisors LLC,
    
	
 
    	
in its capacity as Sub-Adviser
    
	
 
    	
 
    
	
 
    	
/s/   George Goudelias
    	
 
    
	
 
    	
Name:   George Goudelias
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
RIDGEWORTH HIGH INCOME FUND
    
	
as a Lender
    
	
 
    
	
By: 
    	
Seix Investment Advisors LLC,
    
	
 
    	
in its capacity as Sub-Adviser
    
	
 
    	
 
    
	
 
    	
/s/   Brian Nold
    	
 
    
	
 
    	
Name:   Brian Nold
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
SEIX MULTI-SECTOR ABSOLUTE   RETURN FUND LP,
    
	
as a Lender
    
	
 
    
	
By: 
    	
Seix Investment Advisors LLC,
    
	
 
    	
in its capacity as Investment Manager
    
	
 
    	
 
    
	
 
    	
/s/   Brian Nold
    	
 
    
	
 
    	
Name:   Brian Nold
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    
				

 

[Signature Page Restructuring Agreement]

 

 

	
UNIVERSITY   OF ROCHESTER,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
Seix   Investment Advisors LLC,
    	
 
    
	
 
    	
in   its capacity as Investment Manager
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   George Goudelias
    	
 
    
	
 
    	
 
    	
Name:   George Goudelias
    	
 
    
	
 
    	
 
    	
Title:   Managing Director
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
TPG   CREDIT OPPORTUNITIES INVESTORS, L.P.,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
TPG   Credit Opportunities Fund GP, L.P.
    	
 
    
	
 
    	
Its   General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Name:   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TPG   CREDIT STRATEGIES FUND, L.P.,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
TPG   Credit Strategies GP., L.P.
    	
 
    
	
 
    	
Its   General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Name:   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TPG   Credit Strategies Fund II, L.P.,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
TPG   Credit Strategies II GP., L.P.
    	
 
    
	
 
    	
Its   General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Name:   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TPS   II Opportunities, L.P.,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
TPG   Credit Strategies II GP, L.P.
    	
 
    
	
 
    	
Its   General Partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Name:   Julie K. Braun 
    	
 
    
	
 
    	
 
    	
Title:   Authorized Signatory
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
TPG   Credit Opportunities Fund L.P.,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
TPG   Credit Opportunities Fund GP, LP
    	
 
    
	
 
    	
Its   general partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Name:   Julie K. Braun
    	
 
    
	
 
    	
 
    	
Title:   COO
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
MACQUARIE   BANK LIMITED,
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Brad Abraham
    	
 
    
	
 
    	
Name:   Brad Abraham
    	
 
    
	
 
    	
Title:   Division Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Joel Outlaw
    	
 
    
	
 
    	
Name:   Joel Outlaw 

Title:   Associate Director
    	
 
    
	
 
    	
Legal Risk Management
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
ALLIANCEBERNSTEIN   STRATEGIC OPPORTUNITIES FUND, L.P.
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
AllianceBernstein,   L.P.,
    	
 
    
	
 
    	
as   Investment Adviser
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Jack Kelley
    	
 
    
	
 
    	
 
    	
Name:   Jack Kelley
    	
 
    
	
 
    	
 
    	
Title:   Senior Vice President
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ALLIANCEBERNSTEIN   EVENT DRIVEN OPPORTUNITIES FUND (DELAWARE), L.P.
    	
 
    
	
as   a Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
AllianceBernstein,   L.P.,
    	
 
    
	
 
    	
as   Investment Adviser
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Jack Kelley
    	
 
    
	
 
    	
 
    	
Name:   Jack Kelley
    	
 
    
	
 
    	
 
    	
Title:   Senior Vice President
    	
 
    

 

[Signature Page Restructuring Agreement]

 

 

	
CREDIT   SUISSE LOAN FUNDING LLC
    
	
as   a Lender
    
	
 
    
	
 
    	
/s/   Robert Healey
    	
 
    
	
 
    	
Name:   Robert Healey
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Barry Zamore
    	
 
    
	
 
    	
Name:   Barry Zamore
    
	
 
    	
Title:   Managing Director
    

 

[Signature Page Restructuring Agreement]

 

 

	
 
    	
SENATOR   GLOBAL OPPORTUNITY MASTER FUND L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Senator   Master GP LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/   Evan Gartenlaub
    
	
 
    	
 
    	
 
    	
Name:   Evan Gartenlaub
    
	
 
    	
 
    	
 
    	
Title:   General Counsel
    

 

[Signature Page Restructuring Agreement]

 

 

	
 
    	
MAJORITY   SHAREHOLDERS:
    
	
 
    	
 
    
	
 
    	
BRIGADE   LEVERAGED CAPITAL STRUCTURES FUND LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
Brigade   Capital Management, LLC,
    
	
 
    	
 
    	
its   investment manager
    
	
 
    	
 
    	
 
    
	
 
    	
      By:
    	
/s/   Raymond Luis
    
	
 
    	
 
    	
Name:   Raymond Luis
    
	
 
    	
 
    	
Title:   CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SEI   GLOBAL MASTER FUND PLC – THE SEI HIGH YIELD FIXED INCOME FUND
    
	
 
    	
 
    
	
 
    	
By:
    	
Brigade   Capital Management, LLC,
    
	
 
    	
 
    	
its   portfolio manager
    
	
 
    	
 
    
	
 
    	
      By:
    	
/s/   Raymond Luis
    
	
 
    	
 
    	
Name:   Raymond Luis
    
	
 
    	
 
    	
Title:   CFO
    
	
 
    	
 
    
	
 
    	
SEI   INSTITUTIONAL INVESTMENTS TRUST – HIGH YIELD BOND FUND
    
	
 
    	
 
    
	
 
    	
By:
    	
Brigade   Capital Management, LLC,
    
	
 
    	
 
    	
its   sub-adviser
    
	
 
    	
 
    
	
 
    	
   By:
    	
/s/   Raymond Luis
    
	
 
    	
 
    	
Name:   Raymond Luis
    
	
 
    	
 
    	
Title:   CFO
    
	
 
    	
 
    
	
 
    	
SEI   INSTITUTIONAL MANAGED TRUST – HIGH YIELD BOND FUND
    
	
 
    	
 
    
	
 
    	
By:
    	
Brigade   Capital Management, LLC,
    
	
 
    	
 
    	
its   sub-adviser
    
	
 
    	
 
    
	
 
    	
   By:
    	
/s/   Raymond Luis
    
	
 
    	
 
    	
Name:   Raymond Luis
    
	
 
    	
 
    	
Title:   CFO
    
				

 

[Signature Page Restructuring Agreement]

 

 

	
 
    	
SENATOR   GLOBAL OPPORTUNITY MASTER FUND L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Senator   Master GP LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    
	
 
    	
   By:
    	
/s/   Evan Gartenlaub
    
	
 
    	
 
    	
Name:   Evan Gartenlaub
    
	
 
    	
 
    	
Title:   General Counsel
    
				

 

[Signature Page Restructuring Agreement]

 

 

	
DW   INVESTMENT MANAGEMENT, LP
    
	
 
    
	
 
    
	
 
    	
/s/   David R. Warren
    	
 
    
	
 
    	
By   its General Partner,
    
	
 
    	
DW   Investment Partners, LLC
    
	
 
    	
By:   David Warren,
    
	
 
    	
Manager
    

 

[Signature Page Restructuring Agreement]

 

 

DAVID KEMPNER PARTNERS

 

By:  MHD Management Co., its general partner

By:  MHD Management Co. GP, L.L.C., its general partner

 

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Managing Member
    

 

 

DAVIDSON KEMPNER INSTITUTIONAL PARTNERS, L.P.

 

By:  Davidson Kempner Advisers, Inc., it general partner

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Principal
    

 

 

M.H. DAVIDSON & CO.

 

By:  M.H. Davidson &  Co., L.L.C., its general partner

 

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Managing Member
    

 

 

DAVIDSON KEMPNER INTERNATIONAL, LTD.

 

By:  Davidson Kempner International Advisors, L.L.C., its Investment Manager

 

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Managing Member
    

 

[Signature Page Restructuring Agreement]

 

 

DAVIDSON KEMPNER DISTRESSED OPPORTUNITIES FUND LP

 

By:  DK Group LLC, its general partner

 

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Managing Member
    

 

 

DAVIDSON KEMPNER DISTRESSED OPPORTUNITIES INTERNATIONAL LTD.

 

By:  DK Management Partners LP, its Investment Manager

 

 

	
 
    	
/s/   Avram Z. Friedman
    	
 
    
	
 
    	
Name:   Avram Z. Friedman
    
	
 
    	
Title:   Limited Partner
    

 

[Signature Page Restructuring Agreement]

 

 

Exhibit A

 

Restructuring Term Sheet

 

 

EXECUTION COPY

 

CONFIDENTIAL

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

Restructuring Term Sheet

 

This term sheet reflects the material terms and conditions of an out-of-court restructuring for Aventine Renewable Holdings, Inc. and its affiliates (the “Restructuring”).  This term sheet is intended to be attached to an agreement among Lenders under the Existing Credit Agreement (as defined below) (the “Consenting Lenders”), the Borrower and Guarantors (as defined below, and together, the “Loan Parties”), and certain shareholders of the Borrower beneficially holding in the aggregate more than 50% of the Borrower’s issued and outstanding common stock (the “Majority Shareholders”) (the “Agreement”).  These terms are not enforceable or binding on any party unless and until definitive agreements are executed by each party thereto, as applicable, and thereafter shall be enforceable and binding only on the signatories to the respective definitive agreements and only by the other signatories to such definitive agreements.  This term sheet does not contain all of the contemplated terms and conditions of the Restructuring.  Subject to the terms of the Agreement, this term sheet and the terms set forth herein are not to be disseminated to any party or person who is not an attorney or advisor of a party to the Agreement.  The consummation of the Restructuring shall be subject to, among other things, (a) the Restructuring Conditions (as defined in the Agreement) and (b) the negotiation, execution, and delivery of definitive agreements that are mutually acceptable to each of the Consenting Lenders, the New Term Loan Lenders (as defined below) and the Loan Parties, and the satisfaction of customary and specific conditions precedent for transactions of the type described herein.

 

	
Borrower:
    	
 
    	
Aventine Renewable Energy Holdings, Inc. (the   “Borrower”).
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
Aventine Renewable Energy, Inc., Aventine   Renewable Energy- Aurora West, LLC, Aventine Renewable Energy — Mt Vernon,   LLC, Aventine Power, LLC, Nebraska Energy, L.L.C. and Aventine Renewable   Energy- Canton, LLC (collectively, the “Subsidiary Guarantors”) and   any Additional Guarantors (as defined in Section 9(b) of the Subsidiary   Guaranty) (the Subsidiary Guarantors and the Additional Guarantors,   collectively referred to as the “Guarantors”).
    
	
 
    	
 
    	
 
    
	
Existing Credit Agreement:
    	
 
    	
Senior Secured Term Loan Credit Agreement,   dated as of December 22, 2010, as amended to date (the “Existing Credit   Agreement”), and subject to the Forbearance Agreement, dated as of July 27,   2012 (the “Forbearance Agreement”), by and among the Borrower, the   Existing Lenders, the Existing Agent and certain other parties thereto.
    
	
 
    	
 
    	
 
    
	
Existing Lenders:
    	
 
    	
The Lenders holding 100% of the outstanding   Existing Term Loan.
    
	
 
    	
 
    	
 
    
	
Existing Agent:
    	
 
    	
Citibank, N.A., as the Administrative Agent   and the Collateral Agent under the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Existing Term Loan:
    	
 
    	
The term loans made under the Existing Credit   Agreement, including (without limitation) all principal, interest,   capitalized
    

 

 

	
 
    	
 
    	
interest, fees and expenses.
    
	
 
    	
 
    	
 
    
	
New Term Loan:
    	
 
    	
A new term loan made by all or certain of the   Existing Lenders (the “New Term Loan Lenders”) to the Borrower in the   principal amount of $30,000,000. The New Term Loan would be funded on the   Closing Date.
    
	
 
    	
 
    	
 
    
	
New Term Loan Lenders:
    	
 
    	
Existing Lenders that fund the New Term Loan.
    
	
 
    	
 
    	
 
    
	
Transaction Summary/Debt:
    	
 
    	
The out of court restructuring of the debt of   the Borrower would be accomplished through the following steps, subject to   the terms set forth herein:

 

·      Existing ABL Facility

 

The Existing ABL Facility(1) with Wells   Fargo, as lender (the “ABL Lender”) and as agent (the “ABL Agent”)   would be amended or amended and restated to (i) provide for a reduced   commitment of $30,000,000, with the ability to increase the facility to   $50,000,000 pursuant to an uncommitted incremental facility, (ii) permanently   waive the defaults specified in the ABL Forbearance Agreement and reset   covenants consistent with the terms set forth herein such that borrowings and   letters of credit would be available to the Borrower, subject to customary   conditions, (iii) incorporate the other terms applicable to the Amended ABL   Facility described below and (iv) permit the other terms of the Restructuring   (the “Amended ABL Facility”).

 

·      Existing Credit Facility

 

The Existing Credit Agreement would be   amended or amended and restated to (i) provide for the New Term Loan, (ii) reinstate   $100,000,000 in principal amount of the Existing Term Loan, (iii) convert   into common stock of the Borrower the remaining principal balance of the   Existing Term Loan, in the approximate amount of $135,000,000 (less any   proceeds received as a result of the Buy-In Right described below), (iv) permanently   waive the defaults specified in the Forbearance Agreement and reset covenants   consistent with the terms set forth herein, (v) incorporate the other terms   applicable to the Amended Term Loan Facility described below and (v) permit   the other terms of the Restructuring (the “Amended Term Loan Facility”).   Each Existing Lender shall receive its pro rata share of the reinstated   portion of the Existing Term Loan, any proceeds from the Buy-In Right, and   the common
    

 

(1)  As defined in the Existing Credit Agreement.  The Existing ABL Facility is subject to a Forbearance Agreement dated as of July 27, 2012 (the “ABL Forbearance Agreement”).

 

2

 

	
 
    	
 
    	
stock issued in exchange for the cancellation   of the balance of the Existing Term Loan.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
·      Priorities

 

The New Term Loan shall be denominated as   “Term Loan A” and the reinstated portion of the Existing Term Loan shall be   denominated as “Term Loan B”. The Term Loan A shall have (i) priority over   the Term Loan B with respect to any and all payments (other than payments of   cash interest prior to the occurrence of an Event of Default), including   (without limitation) prepayments or proceeds received or realized prior to or   after the occurrence of an Event of Default, and (ii) voting control with respect   to the exercise of remedies and certain other matters. The inter-lender   arrangements among the Term A Lenders, the Term B Lenders and the Existing   Agent (all as defined herein) will be set forth in a separate agreement among   lenders (the “AAL”) executed on the Closing Date. The Borrower and the   Guarantors shall not be parties to the AAL.

 

The lien intercreditor arrangement between   the Term A Lenders and Term B Lenders, on the one hand, and the ABL Lender,   on the other hand, shall be substantially the same as set forth in the   existing intercreditor agreement between the Existing Agent and the ABL   Agent, which intercreditor agreement shall be amended or amended and restated   for the purpose of making such changes as are necessary to permit the   Restructuring or as are consistent therewith (the “Amended Intercreditor   Agreement”).
    
	
 
    	
 
    	
 
    
	
Debt Documentation:
    	
 
    	
The restructuring of the debt of the Borrower   and its Subsidiaries shall be evidenced by:

 

(i) the Amended ABL Facility;

 

(ii) the Amended Term Loan Facility;

 

(iii) the Amended Intercreditor Agreement;   and

 

(iv) the AAL.
    
	
 
    	
 
    	
 
    
	
Additional Terms/Amended ABL Facility:

 
    	
 
    	
The following additional terms shall be   applicable to the Amended ABL Facility:

 

·      The borrowing base applicable under the Existing ABL Facility would   be retained except that reserves would be adjusted as follows: [TBD].

·      Letters of Credit   (as defined in the Existing ABL Facility) issued and outstanding would remain   in place, and new Letters of Credit could be obtained, but the ABL Agent
    

 

3

 

	
 
    	
 
    	
shall agree not to cash collateralize the   existing Letters of Credit or new Letters of Credit prior to an Event of   Default (as defined in the Amended ABL Facility).

·      Minimum liquidity covenants reduced to $[TBD].

·      [Other] [TBD]
    
	
 
    	
 
    	
 
    
	
Additional Terms/Amended Term Loan Facility:(2)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
New Term Loan (“Term Loan A”)

 
    	
 
    	
The following terms shall be applicable to   the New Term Loan:

 

Maturity: Four years from the Closing Date.

 

Interest Rate: Term Loan A shall bear interest at 12% per annum, payable in cash.

 

Closing Fees & Exit Fees: On the Closing Date, each of the New Term Loan Lenders (the “Term   A Lenders”) shall have fully earned a nonrefundable fee equal to 3% of each   Term A Lender’s portion of the Term A Loan, which fee shall be paid in kind   by being added to the principal amount of the Term A Loan (the “Closing   Fee”). On the Closing Date, each of the Term A Lenders shall have fully   earned a nonrefundable fee equal to 3% of each Term A Lender’s portion of the   Term A Loan (the “Exit Fee”). The Exit Fee shall be payable in cash to   the holders of such Term A Lender’s portion of the Term A Loan on the Exit   Fee Payment Date. The “Exit Fee Payment Date” means the earlier of (i)   the maturity date of the Term Loan A and (ii) the prepayment in full of the   Term Loan A.

 

Collateral: Same Collateral as the Existing Term Loan.
    
	
 
    	
 
    	
 
    
	
Existing Term Loan (“Term   Loan B”)
    	
 
    	
The following terms shall be applicable to   the Existing Term Loan:

 

$100,000,000 of the Existing Term Loan will   rollover into a “Term Loan B” (such Existing Lenders holding any   portion of the Existing Term Loan being referred to as the “Term B Lenders”),   subject to the terms set forth below:

 

Maturity: Five years from the Closing Date.
    

 

(2)  The Consenting Lenders reserve the right (in their sole discretion) to adjust the economics between the Term Loan A and Term Loan B, as well as the allocation of the equity received by the Consenting Lenders, so long as the all-in-cost to the Borrower is unchanged and any such adjustment is finalized by the execution of definitive documentation.

 

4

 

	
 
    	
 
    	
Interest Rate: Term Loan B shall bear interest payable in kind at a rate of 15% per   annum or payable in cash at a rate of 10.5% per annum, at Borrower’s option

 

Collateral: Same Collateral as the Existing Term Loan.
    
	
 
    	
 
    	
 
    
	
Transaction Summary/Equity:(3)
    	
 
    	
·      Existing Lenders:

 

As consideration for restructuring the   Existing Term Loan, the Existing Lenders shall receive newly issued shares of   common stock equal to 92.5% of the issued and outstanding common stock of the   Borrower, on a fully diluted basis, immediately after giving effect to such   issuance, estimated at 109,314,897 shares (prior to the Reverse Stock Split   referred to below), in exchange for the cancellation of that portion of the   outstanding balance of the Existing Term Loan (inclusive of fees, PIK amounts   and accrued interest) exceeding $100,000,000 (which is estimated to be   approximately $135,000,000 at the Closing Date) (collectively, the “New   Equity”). The New Equity shall be subject to downward adjustment and/or   dilution as a result of, among things, (i) the Buy-In Right described below,   (ii) the exercise of the Warrants described below and (iii) the Management   Incentive Plan described below. It is intended that the shares will be   transferable (x) to Qualified Institutional Buyers and/or Accredited   Investors in reliance on (and subject to compliance with) the private   placement exemptions of the securities laws or (y) on and after one (1) year   from the Closing Date, in accordance with SEC Rule 144 (subject to the   further provisions with respect to SEC Rule 144 set forth below).

 

The definitive agreements will include a   customary registration rights agreement for the benefit of the Existing   Lenders, the existing equity holders that receive New Equity, and the Warrant   holders, provided that demand and registration rights shall require   the affirmative approval of a majority of the stockholders of the Borrower   (on a fully diluted basis). Any “cutbacks” will be allocated pro rata among   all equity holders. The definitive agreements will also include provisions   requiring the Borrower to provide plant level financials, on a monthly,   quarterly and annual
    

 

(3)  The numbers in this section “Transaction Summary/Equity” are based upon (i) an estimated accrued Existing Term Loan claim of $235 million and (ii) fully diluted shares of common stock estimated at 8,863,370 as of the date hereof, which amount excludes unexercised warrants to purchase 449,503 shares and 63,795 shares of common stock held in treasury.  For purposes of this term sheet, when used herein, the phrase “on a fully diluted basis” and similar phrases refers to the method of calculation used in the immediately preceding sentence to determine fully diluted shares of the Borrower’s common stock outstanding.  All final prices and amounts to be based upon final calculations of the accrued claim by the Existing Agent and shares outstanding, on a fully diluted basis, by the Borrower on the Closing Date.

 

5

 

	
 
    	
 
    	
basis, and other information which would be   considered material non public information to lenders, equity holders and   potential lenders and equity holders upon execution of a customary non   disclosure agreement (“NDA Signatories”). The Borrower shall also be   required to hold quarterly calls with the NDA Signatories.

 

In addition, the definitive documents will   include a provision that, if the Borrower is not required to file periodic   reports with the SEC, will require the Borrower to publicly disclose such   information as is required to permit transfers pursuant to SEC Rule 144 (via   its corporate website or other electronic means, to be agreed upon by the   Existing Lenders), commencing on the date that is one (1) year after the   Closing Date following the request of stockholders representing more than 50%   of the issued and outstanding common stock of the Borrower.

 

The Board of Directors shall consist of five   members as follows: (i) the Borrower’s CEO, (ii) 3 independent directors   selected by the Existing Lenders (one of whom will be the Chairman, as   determined by the Board of Directors) and (iii) one independent director   selected by the existing equity holders of the Borrower. Subject to customary   confidentiality restrictions, the Existing Lenders who hold at least 10% of   the issued and outstanding common stock following the closing of the   transactions contemplated hereby shall have certain observer rights to the   meetings of the Board of Directors. D&O coverage will continue without   any lapses for new, continuing and departing directors.

 

·      Existing Equity:

 

The Majority Shareholders, as such term is   used in the Agreement, shall consist of the existing beneficial owners,   directly or indirectly, of more than 50% of the issued and outstanding common   stock of the Borrower. After execution of the Agreement, if so required by   the Borrower and its counsel, the Majority Shareholders shall take such steps   as are necessary to hold such shares directly as record holders (including   through “DWAC” transmissions, if necessary) and to execute such further   documents as are necessary to evidence their consent and agreement to the   Restructuring.

 

Existing equity holders of the Borrower shall   retain 7.5% of the fully diluted shares of common stock of the Borrower   immediately after giving effect to the New Equity Issuance (the “Retained   Equity”), estimated at 8,863,370 shares as of the date hereof, on a fully   diluted basis (prior to the Reverse Stock Split). The Retained Equity shall   be subject to further dilution as a result of, among things, (i) the exercise   of the Warrants described below and (ii) the Management Incentive Plan   described below.
    

 

6

 

	
 
    	
 
    	
In accordance with Rule 506 of Regulation D   under the Securities Act, as amended after the date hereof, existing equity   holders of the Borrower that are accredited investors shall be offered the   right to buy, on a pro rata basis, up to $50,000,000 of the Borrower’s common   stock at a $146,000,000 valuation (the “Buy-In Right”), representing   34% of the issued and outstanding common stock of the Borrower, on a fully   diluted basis (subject to adjustment for, among other things, the Management   Incentive Plan and the exercise of the Warrants described below), with such   proceeds repaying the Existing Term Loan and reducing the equity otherwise   distributable to the Existing Lenders. The subscription and payment   deadline(s) for the Buy-In Right will expire prior to the Closing Date and   the Buy-In Right will close on the Closing Date. If for any reason the   subscription or payment deadline(s) is extended or the Buy-In Right closes   after the Closing Date, proceeds from the Buy-In Right will be used to redeem   shares of newly issued common stock from the Existing Lenders on a pro rata   basis at a to-be-determined price, subject to compliance with applicable   laws. The Buy-In Right may or may not be transferable, subject to compliance   with applicable securities laws.

 

Existing equity holders of the Borrower shall   also be issued without payment therefor 5 year warrants for 25% of the Borrower’s   issued and outstanding common stock, on a fully   diluted basis, at an estimated strike price of $61.75 post Reverse Stock   Split (or at an estimated strike price of $1.23 prior to the Reverse Stock   Split), exercisable at a $146,000,000 valuation (the “Warrants”)   (subject to adjustment for, among other things, the Management Incentive Plan   described below).  The maximum   number of shares to be purchased pursuant to the exercise of the Warrants is   estimated to be 39,392,756 shares prior to the Reverse Stock Split and   787,855 post Reverse Stock Split. The Warrants will contain customary terms   with respect to stock splits, recapitalizations, merger protections as well   as a customary cashless exercise right. If a Warrant holder is an accredited   investor, the Warrants (when “in-the-money”) would be immediately exercisable   in reliance upon Rule 506 of Regulation D under the Securities Act, as   amended after the date hereof. If a Warrant holder is not an accredited   investor, the Warrants would not be exercisable until the later of the one   year anniversary date of issuance and the date a registration statement under   the Securities Act covering the issuance of the underlying shares of common   stock is declared effective (and provided that the Warrants are then “in-the-money”).   In the event of a change of control transaction, Warrant holders would   receive a change a control payment if and to the extent that the per share   amount payable upon such change of control exceeds the per share Warrant   exercise price.

 

In the event the Buy-In Right and the Warrant   issuance cannot be structured in accordance with the foregoing terms and   conditions
    

 

7

 

	
 
    	
 
    	
due to applicable securities laws, the   transactions would be restructured, subject to the approval of the Existing   Lenders, in a manner that would have substantially the same economic and   commercial effect on the parties to the Agreement.

 

·      Management Incentive Plan/Management Agreements:

 

The Management Incentive Plan and Management   Agreements (including with respect to directors) will be determined by the   new Board of Directors as early as possible following the Closing Date.

 

·      Reverse Stock Split:

 

The Reverse Stock Split is expected to result   in one (1) new share being issued for fifty (50) existing shares. Holders   that would otherwise be entitled to fractional shares would receive cash in   lieu of stock for such fractional shares. The total shares post Reverse Stock   Split shall not exceed 2,363,565, on a fully diluted basis (estimated).
    
	
 
    	
 
    	
 
    
	
Equity Documentation:
    	
 
    	
The restructuring of the equity of the   Borrower and its Subsidiaries shall be evidenced by:

 

·      Rights Offering Memorandum/Information Circular

·      Rights Offering Subscription Materials

·      Shareholders Agreement (which will include customary voting   agreements for board nominees)

·      Share Issue authorization documentation (Board and Shareholder   Approvals)

·      Amended and Restated Certificate of Incorporation and an Amended and   Restated Bylaws

·      Management Incentive Plan and Award Agreements

·      Subscription Agreement for New Equity

·      Warrant Agreement and Certificates

·      Registration Rights Agreement

·      [TBD]
    
	
 
    	
 
    	
 
    
	
Closing Date of the Restructuring:
    	
 
    	
Such date as all conditions set forth herein,   in the Amended Term Loan Facility, the Amended ABL Facility and the Equity   Documentation have been satisfied (the “Closing Date”).
    
	
 
    	
 
    	
 
    
	
Conditions to the Restructuring:
    	
 
    	
The Restructuring, as set forth herein, is   subject to (but limited to) the following conditions being satisfied: (1) completion   of due diligence and internal approvals by the Existing Lenders and the New   Term Loan Lenders with respect to the New Term Loan, (2) approval by the ABL   Lender, (3) approval by the Existing Agent, (4) prompt notice to any   shareholder who is not a party to the definitive agreements, to the extent   required by and in accordance with applicable law, (5) completion and   execution of the necessary
    

 

8

 

	
 
    	
 
    	
documentation for the Restructuring, (6) the   Closing Date to occur upon the earlier of (i) September 30, 2012, or (ii) the   expiration date of the Forbearance Agreement, as the same may be extended   from time to time, including pursuant to Section 11 of the Agreement, (7) the   absence of any material adverse change in the financial condition, operations   or properties of the Borrower since the date of this term sheet (an “MAE”),   (8) any and all governmental and third party consents and approvals necessary   in connection with the proposed transaction, (9) the absence of any   governmental or regulatory investigation or proceeding, or any litigation,   that would reasonably be expected to result in an MAE or to otherwise   prohibit or restrict consummation of the Restructuring on the terms set forth   herein, (10) other customary conditions for transactions of this type to be   set forth in definitive agreements, and (11) the conditions specified in the   Agreement.
    
	
 
    	
 
    	
 
    
	
Governing Law and Submission to Jurisdiction:
    	
 
    	
State of New York, or in the case of certain   of the Equity Documentation, the State of Delaware.
    

 

9

 

 

Exhibit B

 

Shares Owned by Majority Shareholders

 

	
Shareholder
    	
 
    	
Shares of Common Stock
    	
 
    
	
Senator Global   Opportunity Master Fund L.P.
    	
 
    	
1,152,455
    	
 
    
	
Brigade Leveraged   Capital Structures Fund Ltd.
    	
 
    	
1,873,386
    	
 
    
	
SEI Global Master   Fund plc - The SEI High Yield Fixed Income Fund
    	
 
    	
18,599
    	
 
    
	
SEI Institutional   Investments Trust - High Yield Bond Fund
    	
 
    	
66,719
    	
 
    
	
SEI Institutional   Managed Trust - High Yield Bond Fund
    	
 
    	
70,573
    	
 
    
	
DW Investment   Management, LP
    	
 
    	
1,371,390
    	
 
    
	
Funds affiliated   with Davidson Kempner Capital Management LLC
    	
 
    	
778,713
    	
 
    

 

 

Exhibit C

 

Term Loans Owned by Consenting Lenders

 

	
Lender Name
    	
 
    	
Amount of Term
   Loan Held as of
   August 17, 2012(2)
    	
 
    	
%
    	
 
    
	
ALJ Capital
    	
 
    	
$
    	
10,280,275.51
    	
 
    	
4.51
    	
%
    
	
ALJ CAPITAL I LP
    	
 
    	
$
    	
879,991.78
    	
 
    	
0.39
    	
%
    
	
ALJ CAPITAL II LP
    	
 
    	
$
    	
4,794,719.29
    	
 
    	
2.10
    	
%
    
	
LJR CAPITAL LP
    	
 
    	
$
    	
4,605,564.44
    	
 
    	
2.02
    	
%
    
	
Alliance Capital
    	
 
    	
$
    	
3,559,421.36
    	
 
    	
1.56
    	
%
    
	
ALLIANCEBERNSTEIN EVENT   DRIVEN OPPORTUNITIES MASTER FUND L P
    	
 
    	
$
    	
1,021,549.33
    	
 
    	
0.45
    	
%
    
	
ALLIANCEBERNSTEIN   STRATEGIC OPPORTUNITIES FUND LP(ALLIANCEBERNSTEIN LP)
    	
 
    	
$
    	
2,537,872.03
    	
 
    	
1.11
    	
%
    
	
Altai Capital Management
    	
 
    	
$
    	
7,088,276.57
    	
 
    	
3.11
    	
%
    
	
ALTAI CAPITAL MASTER FUND   LTD
    	
 
    	
$
    	
7,088,276.57
    	
 
    	
3.11
    	
%
    
	
Apollo / Stone Tower
    	
 
    	
$
    	
25,570,929.37
    	
 
    	
11.22
    	
%
    
	
APOLLO INVESTMENT   CORPORATION
    	
 
    	
$
    	
25,570,929.37
    	
 
    	
11.22
    	
%
    
	
Credit Suisse
    	
 
    	
$
    	
1,012,610.94
    	
 
    	
0.44
    	
%
    
	
CREDIT SUISSE LOAN FUNDING   LLC
    	
 
    	
$
    	
1,012,610.94
    	
 
    	
0.44
    	
%
    
	
DK Partners
    	
 
    	
$
    	
61,281,995.83
    	
 
    	
26.89
    	
%
    
	
MIDTOWN ACQUISITIONS L.P.   FKA DK ACQUISITIONS PARTNERS, L.P
    	
 
    	
$
    	
61,281,995.83
    	
 
    	
26.89
    	
%
    
	
Macquarie Group
    	
 
    	
$
    	
14,714,582.01
    	
 
    	
6.46
    	
%
    
	
MACQUARIE BANK LIMITED-SYDNEY   HEAD OFFICE
    	
 
    	
$
    	
14,714,582.01
    	
 
    	
6.46
    	
%
    
	
Redwood Capital Management
    	
 
    	
$
    	
24,367,970.26
    	
 
    	
10.69
    	
%
    
	
REDWOOD MASTER FUND, LTD   (REDWOOD CAPITAL MGMT)
    	
 
    	
$
    	
24,367,970.26
    	
 
    	
10.69
    	
%
    
	
Seix Advisors
    	
 
    	
$
    	
27,353,184.70
    	
 
    	
12.00
    	
%
    
	
RIDGEWORTH FUNDS - HIGH   INCOME FUND FKA STI CLASSIC - HIGH INCOME FUND
    	
 
    	
$
    	
11,045,072.85
    	
 
    	
4.85
    	
%
    
	
RIDGEWORTH FUNDS - SEIX   FLOATING RATE HIGH INCOME FUND FKA STI CLASSIC - SEIX FLOATING RATE HIGH   INCOME FUND
    	
 
    	
$
    	
14,394,277.18
    	
 
    	
6.32
    	
%
    

 

(1) Holdings listed herein include the PIK Forbearance Fee under the Forbearance Agreement and accrued interest under the Credit Agreement to July 31, 2012.

 

 

	
Lender Name
    	
 
    	
Amount of Term
   Loan Held as of
   August 17, 2012(2)
    	
 
    	
%
    	
 
    
	
ROCHDALE FIXED INCOME   OPPORTUNITIES PORTFOLIO (SEIX ADVISORS)
    	
 
    	
$
    	
799,962.64
    	
 
    	
0.35
    	
%
    
	
SEIX MULTI-SECTOR ABSOLUTE   RETURN FUND LP (SEIX ADVISORS)
    	
 
    	
$
    	
1,012,610.94
    	
 
    	
0.44
    	
%
    
	
UNIVERSITY OF ROCHESTER   (SEIX ADVISORS)
    	
 
    	
$
    	
101,261.09
    	
 
    	
0.04
    	
%
    
	
Senator Investment Group
    	
 
    	
$
    	
8,100,887.51
    	
 
    	
3.55
    	
%
    
	
SENATOR GLOBAL OPPORTUNITY   MASTER FUND LP(SENATOR INVESTMENT GROUP LP)
    	
 
    	
$
    	
8,100,887.51
    	
 
    	
3.55
    	
%
    
	
TPG
    	
 
    	
$
    	
44,570,773.93
    	
 
    	
19.56
    	
%
    
	
TCS II OPPORTUNITIES LP
    	
 
    	
$
    	
1,916,124.87
    	
 
    	
0.84
    	
%
    
	
TPG CREDIT OPPORTUNITIES   FUND LP (TPG CREDIT MANAGEMENT)
    	
 
    	
$
    	
4,534,471.78
    	
 
    	
1.99
    	
%
    
	
TPG CREDIT OPPORTUNITIES   INVESTORS L.P(TPG CREDIT OPPORTUNITIES INVESTORS,L.P)
    	
 
    	
$
    	
5,063,054.69
    	
 
    	
2.22
    	
%
    
	
TPG CREDIT STRATEGIES FUND   II LP
    	
 
    	
$
    	
30,019,289.77
    	
 
    	
13.17
    	
%
    
	
TPG CREDIT STRATEGIES   FUND, LP
    	
 
    	
$
    	
3,037,832.82
    	
 
    	
1.33
    	
%
    
	
 
    	
 
    	
$
    	
227,900,907.99
    	
 
    	
100.00
    	
%exhibit41.htm

Exhibit 4.1

 

 

 

these securities have not been registered with the united states securities and exchange commission or the securities commission of any state pursuant to an exemption from registration under regulation d promulgated under the securities act of 1933, as amended (the “act”).  this warrant shall not constitute an offer to sell nor a solicitation of an offer to buy the securities in any jurisdiction in which such offer or solicitation would be unlawful.  the securities are “restricted” and may not be resold or transferred except as permitted under the act pursuant to registration or exemption therefrom.

COMMON STOCK PURCHASE WARRANT

To Purchase Shares of $0.001 Par Value Common Stock (“Common Stock”) of

No. [W-_____]

NUVEL HOLDINGS, INC.

(f/k/a Harmony Metals, Inc.)

THIS CERTIFIES that, for value received, ________________ (the “Purchaser” or “Holder”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and on or prior to 8:00 p.m. New York City Time on the date that is five (5) years after the date hereof (the “Termination Date”), but not thereafter, to subscribe for and purchase from Nuvel Holdings, Inc., formerly known as Harmony Metals, Inc., a Florida corporation (the
“Company”), a number of shares of the Company’s common stock (“Warrant Shares”) equal to fifty percent (50%) of the number of shares of Common Stock into which the Shares held by Holder are convertible subject to adjustment as provided herein (such shares, the “Warrant Shares”) at an initial exercise price of $0.80 per share (as adjusted from time to time pursuant to the terms hereof, the “Exercise Price,” after giving effect to the Reverse Split).

The Exercise Price and the number of shares for which the Warrant is exercisable shall be subject to adjustment as provided herein.  This Warrant is being issued in connection with the Subscription Agreement dated ____________, 2012 (the “Subscription Agreement”), entered into between the Company and accredited investors in connection with the Company’s offering by the Company of up to $5,000,000 in Series A Preferred Stock (the “Series A Preferred Stock,” and such offering, the
“Offering”).

Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Subscription Agreement.

	
1.  

	
Title of Warrant.  Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with (a) the Assignment Form annexed hereto properly endorsed, and (b) any other documentation reasonably necessary to satisfy the Company that such transfer is in compliance with all applicable securities
laws.  The term “Holder” shall refer to the Purchaser or any subsequent transferee of this Warrant.

 

 

 

 

 

  

- 1 -

  

 

	
2.  

	
Authorization of Shares.  The Company covenants that all shares of Common Stock which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant and payment of the Exercise Price as set forth herein, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue or otherwise specified herein).

 

	
3.  

	
Exercise of Warrant.

 

	
a.  

	
The Holder may exercise this Warrant, in whole or in part, at any time and from time to time by delivering (which may be by facsimile) to the offices of the Company or any transfer agent for the Common Stock this Warrant, together with a Notice of Exercise in the form annexed hereto specifying the number of Warrant Shares with respect to which this Warrant is being exercised, together with payment in cash to the Company of the Exercise Price therefore.

 

	
b.  

	
In the event that the Warrant is not exercised in full, the number of Warrant Shares shall be reduced by the number of such Warrant Shares for which this Warrant is exercised and/or surrendered, and the Company, if requested by Holder and at its expense, shall within three (3) Trading Days (as defined below) issue and deliver to the Holder a new Warrant of like tenor in the name of the Holder or as the Holder (upon payment by Holder of any applicable transfer taxes) may request, reflecting such adjusted Warrant Shares.  Notwithstanding anything to the contrary set forth herein, upon exercise of any portion of this Warrant in accordance with the terms hereof, the Holder shall not be required to physically surrender this
Warrant to the Company unless such Holder is purchasing the full amount of Warrant Shares represented by this Warrant.  The Holder and the Company shall maintain records showing the number of Warrant Shares so purchased hereunder and the dates of such purchases or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Warrant upon each such exercise.  The Holder and any assignee, by acceptance of this Warrant or a new Warrant, acknowledge and agree that, by reason of the provisions of this Section, following exercise of any portion of this Warrant, the number of Warrant Shares which may be purchased upon exercise of this Warrant may be less than the number of Warrant Shares set forth on the face hereof.  Certificates for shares of Common Stock purchased hereunder shall be delivered
to the Holder hereof within three (3) Trading Days after the date on which this Warrant shall have been exercised as aforesaid.  The Holder may withdraw its Notice of Exercise at any time if the Company fails to timely deliver the relevant certificates to the Holder as provided in this Agreement.  A Notice of Exercise shall be

 

 

 

 

 

  

- 2 -

  

 

deemed sent on the date of delivery if delivered before 8:00 p.m. New York Time on such date, or the day following such date if delivered after 8:00 p.m. New York Time; provided that the Company is only obligated to deliver Warrant Shares against delivery of the Exercise Price from the holder hereof and, if the Holder is purchasing the full amount of Warrant Shares represented by this Warrant, surrender of this Warrant (or appropriate affidavit and/or indemnity in lieu thereof).  In lieu of delivering physical certificates representing the Warrant Shares issuable upon conversion of this Warrant, provided the Company’s transfer agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Warrant Shares issuable upon exercise to the Holder, by crediting the account of the Holder’s prime broker with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system. The time periods for delivery described above shall apply to the electronic transmittals through the DWAC system. The Company agrees to coordinate with DTC to accomplish this objective.

 

	
c.  

	
If at any time this Warrant is exercised following the twelve month anniversary of the date of issuance of this Warrant, but before the Expiration Date and on the Trading Day immediately preceding the Holder’s delivery of an Exercise Notice in respect of such exercise, a Registration Statement covering the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares, the Holder of this Warrant also may exercise this Warrant as to any or all of such Unavailable Warrant Shares and, in lieu of making the cash payment otherwise contemplated to be made to
the Company upon such exercise in payment of the aggregate Exercise Price, elect instead to receive upon such exercise a reduced number of shares of Common Stock (the “Net Number”) determined according to the following formula (a “Cashless Exercise”):

 

                                Net Number = (A x B) - (A x C)

                                                          ---------------------

                                                                     B

For purposes of the foregoing formula:

A= the total number of shares with respect to which this Warrant is then being exercised in a Cashless Exercise.

 

 

 

 

 

  

- 3 -

  

B= the Market Price on the Trading Day immediately preceding the date of the Exercise Notice.

C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

There cannot be a Cashless Exercise unless “B” exceeds “C.”

 

	
d.  

	
The term “Trading Day” means (x) if the Common Stock is not listed on the NYSE Euronext or NYSE AMEX but sale prices of the Common Stock are reported on Nasdaq Global Market, Nasdaq Global Select Market, Nasdaq Capital Market or another automated quotation system, a day on which trading is reported on the principal automated quotation system on which sales of the Common Stock are reported, (y) if the Common Stock is listed on the NYSE Euronext or NYSE AMEX, a day on which there is trading on such stock exchange, or (z) if the foregoing provisions are inapplicable, a day on which quotations are reported by National Quotation Bureau
Incorporated.

 

The Company’s obligations to issue and deliver Warrant Shares upon an exercise in accordance with Section 3 above are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to
the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’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 upon exercise of the Warrant as required pursuant to the terms hereof.

	
4.  

	
No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  In lieu of issuance of a fractional share upon any exercise hereunder, the Company will either round up to nearest whole number of shares or pay the cash value of that fractional share, which cash value shall be calculated on the basis of the average closing price of the Common Stock during the five (5) Trading Days immediately preceding the date of exercise.

 

 

 

 

  

- 4 -

  

 

	
5.  

	
Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant or in such name or names as may be directed by the Holder of this Warrant; provided,
however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder hereof; and provided further, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant certificates or any certificates for the Warrant Shares other than the issuance of a Warrant Certificate to the Holder in connection with the Holder’s surrender of a Warrant Certificate upon the exercise of all or less than all of the
Warrants evidenced thereby.

 

	
6.  

	
Closing of Books.  The Company will at no time close its shareholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

	
7.  

	
No Rights as Shareholder until Exercise.  Subject to Section 12 of this Warrant and the provisions of any other written agreement between the Company and the Purchaser, the Purchaser shall not be entitled to vote or receive dividends or be deemed the holder of Warrant Shares or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Purchaser, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein.  However, at the time of the exercise of this Warrant pursuant to Section 3 hereof, the Warrant Shares so purchased hereunder shall be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised.

 

	
8.  

	
Assignment and Transfer of Warrant.  This Warrant may be assigned by the surrender of this Warrant and the Assignment Form annexed hereto duly executed at the office of the Company (or such other office or agency of the Company or its transfer agent as the Company may designate by notice in writing to the registered Holder hereof at the address of such Holder appearing on the books of the Company); provided, however, that this Warrant may not be resold or
otherwise transferred except (a) in a transaction registered under the Act, or (b) in a transaction pursuant to an exemption, if available, from registration under the Act and whereby, if reasonably requested by the Company, an opinion of counsel reasonably satisfactory to the Company is obtained by the Holder of this Warrant to the effect that the transaction is so exempt.

 

 

 

 

 

  

- 5 -

  

 

 

 

	
9.  

	
Loss, Theft, Destruction or Mutilation of Warrant; Exchange.  The Company represents, warrants and covenants that (a) upon receipt by the Company of evidence and/or indemnity reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant or stock certificate representing the Warrant Shares, and in case of loss, theft or destruction, of indemnity reasonably satisfactory to it, and (b) upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of this Warrant or
stock certificate, without any charge therefor.  This Warrant is exchangeable at any time for an equal aggregate number of Warrants of different denominations, as requested by the holder surrendering the same, or in such denominations as may be requested by the Holder following determination of the Exercise Price.  No service charge will be made for such registration or transfer, exchange or reissuance.

 

	
10.  

	
Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

 

	
11.  

	
Effect of Certain Events. If at any time while this Warrant or any portion thereof is outstanding and unexpired there shall be a transaction (by merger or otherwise) in which more than 50% of the voting power of the Company is disposed of (collectively, a “Sale or Merger Transaction”), the Holder of this Warrant shall have the right thereafter to purchase, by exercise of this Warrant and payment of the aggregate Exercise Price in effect immediately prior to such action, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to receive after the happening of such transaction had this Warrant been exercised immediately prior thereto, subject to further adjustment as provided in Section 12.

 

	
12.  

	
Adjustments of Exercise Price and Number of Warrant Shares. The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as set forth in this Section 12.

 

	
a.  

	
Subdivisions, Combinations, Stock Dividends and other Issuances.   If the Company shall, at any time while this Warrant is outstanding, (i) pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, or (iii) combine outstanding Common Stock into a smaller number of shares, then the Exercise Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock

 

 

 

 

 

  

- 6 -

  

 

outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section 12(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.  The number of shares which may be purchased hereunder shall be increased proportionately to any reduction in Exercise Price, or decreased proportionately to any increase in Exercise Price, pursuant to this paragraph 12(a), so that after such adjustments the
aggregate Exercise Price payable hereunder for the  applicable number of shares shall be the same as the aggregate Exercise Price in effect just prior to such adjustments.

 

	
b.  

	
Other Distributions. If at any time after the date hereof the Company distributes to holders of its Common Stock, other than as part of its dissolution, liquidation or the winding up of its affairs, any shares of its capital stock, any evidence of indebtedness or any of its assets (other than Common Stock), then the number of Warrant Shares for which this Warrant is exercisable shall be increased to equal: (i) the number of Warrant Shares for which this Warrant is exercisable immediately prior to such event, (ii) multiplied by a fraction, (A) the numerator of which shall be the Fair Market
Value (as defined below) per share of Common Stock on the record date for the dividend or distribution, and (B) the denominator of which shall be the Fair Market Value price per share of Common Stock on the record date for the dividend or distribution minus the amount allocable to one share of Common Stock of the value (as jointly determined in good faith by the Board of Directors of the Company and the Holder) of any and all such evidences of indebtedness, shares of capital stock, other securities or property, so distributed.  For purposes of this Warrant, “Fair Market Value” shall equal the  average closing trading price of the Common Stock on the Principal Market for the five (5) Trading Days preceding the date of determination or, if the
Common Stock is not listed or admitted to trading on any Principal Market, and the average price cannot be determined as contemplated above, the Fair Market Value of the Common Stock shall be as reasonably determined in good faith by the Company’s Board of Directors and the Holder.  If the Fair Market Value of the Common Stock cannot be determined by the Company’s Board of Directors and the Holder after five (5) business days, such determination shall be made by a third party appraisal firm mutually agreeable by the Board of Directors and the Holder, at the expense of the Company (the “Independent Appraiser”).  The fair market value as determined by the Independent Appraiser shall be final.  The Exercise Price shall be reduced to equal: (i) the Exercise Price in effect
immediately before the occurrence of any event (ii) multiplied by a fraction, (A) the numerator of which is the number of Warrant Shares for which this Warrant is exercisable immediately before the adjustment, and (B) the denominator of which is the number of Warrant Shares for which this Warrant is exercisable immediately after the adjustment.

 

 

 

 

 

  

- 7 -

  

 

 

 

	
c.  

	
Merger, etc. If at any time after the date hereof there shall be a merger or consolidation of the Company with or into or a transfer of all or substantially all of the assets of the Company to another entity, then the Holder shall be entitled to receive upon or after such transfer, merger or consolidation becoming effective, and upon payment of the Exercise Price then in effect, the number of shares or other securities or property of the Company or of the successor corporation resulting from such merger or consolidation, which would have been received by the Holder for the shares of stock subject to this Warrant had this Warrant been exercised
just prior to such transfer, merger or consolidation becoming effective or to the applicable record date thereof, as the case may be.  The Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property, assets and business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation (if not the Company), or such transferee corporation, as the case may be, shall expressly assume in writing the due and punctual performance and observance of each and every covenant and condition of this Warrant to be performed and observed by the Company.

 

	
d.  

	
Reclassification, etc.  If at any time after the date hereof there shall be a reorganization or reclassification of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, then the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares or other securities or property resulting from such reorganization or reclassification, which would have been received by the Holder for the shares of stock subject to this Warrant
had this Warrant at such time been exercised.

 

	
13.  

	
Call Provision.  If at any time after the date hereof, (i) the volume weighted average price of the Common Stock for twenty (20) consecutive Trading Days (the “Measurement Period”) is at least $1.20 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the date hereof), (ii) the average daily volume of the Common Stock for such Measurement Period is at least $150,000 per Trading Day, (iii) the Holder is not in possession of any information that constitutes, or might constitute, material non-public
information which was provided by the Company, and (iv) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the Warrant Shares, then the Company may, within 1 Trading Day of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered.  To exercise this right, the Company must deliver to the Holder a written notice (the “Call Notice”), indicating therein the unexercised portion of this Warrant to which such notice applies.  Any unexercised portion of this Warrant for which a Notice of Exercise shall not have been received, will be cancelled at 6:30 p.m. (New York City time) on the thirtieth
(30th) calendar day after the date of the Call Notice.

 

 

 

 

 

  

- 8 -

  

 

 

 

	
14.  

	
Notice of Adjustment.  Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, the Company, at its expense, shall promptly mail to the Holder of this Warrant a notice setting forth the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares after such adjustment and setting forth the computation of such adjustment and a brief statement of the facts requiring such
adjustment.

 

	
15.  

	
Authorized Shares.  The Company covenants that during the period the Warrant is outstanding and exercisable, it will reserve and keep available from its authorized and unissued Common Stock a sufficient number of shares to provide solely for the issuance of the Warrant Shares upon the exercise of any and all purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the
Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law, regulation, or rule of any applicable market or exchange.

 

	
16.  

	
Compliance with Securities Laws.  The Holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered (or if no exemption from registration exists), will have restrictions upon resale imposed by state and federal securities laws.  Each certificate representing the Warrant Shares issued to the Holder upon exercise (if not registered, for resale or otherwise, or if no exemption from registration exists) will bear substantially the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

 

 

 

 

  

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17.  

	
Purpose of Warrant Shares.  Without limiting the Purchaser’s right to transfer, assign or otherwise convey the Warrant or Warrant Shares in compliance with all applicable securities laws, the Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Purchaser’s own account and not as a nominee for any other party, and that the Purchaser will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable federal and state securities laws.

 

	
18.  

	
Registration Rights. The Holder shall be entitled to the registration rights as are provided in the Subscription Agreement of even date herewith, by and among Nuvel Holdings, Inc. and the Purchasers named therein.

 

	
19.  

	
Miscellaneous.

 

	
a.  

	
Issue Date; Choice of Law; Venue; Jurisdiction.  The provisions of this Warrant shall be construed and shall be given effect in all respects as if it had been issued and delivered by the Company on the date hereof.  This Warrant shall be binding upon any successors or assigns of the Company.  This Warrant will be construed and enforced in accordance with and governed by the laws of the State of New York, except for matters arising under the Act, without reference to principles of conflicts of law.  Each of the parties consents to the exclusive
jurisdiction of the Federal and State Courts sitting in the County of New York in the State of New York in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens or venue, to the bringing of any such proceeding in such jurisdiction.

 

	
b.  

	
Modification and Waiver.  This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.  Any amendment effected in accordance with this paragraph shall be binding upon the Purchaser, each future holder of this Warrant and the Company.  No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.

 

	
c.  

	
Notices.  Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice.  The addresses for such communications shall be to the addresses as shown on the books of the Company or to the Company at the address set forth for Nuvel Holdings, Inc. in the Offering Documents.  A party may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice in accordance with the provisions of this
Section 19(c).

 

 

 

 

 

  

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d.  

	
Severability.  Whenever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Warrant in such jurisdiction or affect the validity, legality or enforceability of any provision in any other jurisdiction, but this Warrant shall
be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

	
e.  

	
Specific Enforcement.  The Company and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Warrant were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Warrant and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which either of them may be entitled by law or equity.

 

	
f.  

	
Counterparts/Execution.  This Warrant may be executed by facsimile and in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute one agreement.  Execution and delivery of this Warrant by facsimile transmission (including delivery of documents in Adobe PDF format) shall constitute execution and delivery of this Warrant for all purposes, with the same force and effect as execution and delivery of an original manually signed copy hereof.

 

 

 

[SIGNATURE PAGE TO FOLLOW]

 

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized.

Dated:  _______________ __, 2012

                                                                      NUVEL HOLDINGS, INC.

                                                                      By:  /s/   Jay
Elliot                                                          

                                                                      Name:    Jay Elliot

                                                                      Title:      Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

  

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NOTICE OF EXERCISE

 

 

To:           NUVEL HOLDINGS, INC.

 

(1)           The undersigned hereby elects to exercise the attached Warrant for and to purchase thereunder, _________ shares of Common Stock, and herewith makes payment therefor of $____________.

 

(2)           Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

_______________________________

(Name)

 

_______________________________

(Address)

 

_______________________________

 

(3)           Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:

 

 

_________________________________

(Name)

____________________

(Date)

_________________________________

(Signature)

 

_________________________________

(Address)

 

 

Dated:

 

______________________________

Signature

 

 

 

  

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

                      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is ________________________________________________________________________.

 

	  	
Dated:  ______________,

	  	  
	  	  
	
Holder’s Signature:

	
___________________________________________________

	  	  
	
Holder’s Address:

	
___________________________________________________

	  	  
	  	
___________________________________________________

	  	  

 

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

 

  

- 14 -

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