Document:

Exhibit 4.4

 

	
REGISTERED
    	
 
    	
 
    	
 
    	
REGISTERED
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
NO.   FLR-
    	
 
    	
MEDIUM-TERM NOTE, SERIES F
    	
 
    	
PRINCIPAL AMOUNT:
    
	
 
    	
 
    	
(Floating Rate)
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
CUSIP: 25468PDC7
    
	
 
    	
 
    	
 
    	
 
    	
ISIN: US25468PDC77
    
	
 
    	
 
    	
 
    	
 
    	
Common Code: 107455400
    

 

Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of The Depository Trust Company, New York, New York (“DTC”), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC and any payment is made to Cede & Co. or such other entity as requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.

 

	
ORIGINAL ISSUE DATE: June   2, 2014
   MATURITY DATE: May 30, 2019
   INITIAL MATURITY DATE (for Renewable Notes):
   FINAL MATURITY DATE (for Renewable Notes):
   INITIAL INTEREST RATE: 0.53735%
   BASE RATE OR RATES:

o COMMERCIAL PAPER RATE

x LIBOR

LIBOR Page:

x The display on Reuters (or any successor   service) on the LIBOR 01 page (or any other page as may replace such page on such   service or any such successor service, as the case may be) for the purpose of   displaying the London interbank rates of major banks for U.S. dollars

o Other (specify):

Index Currency (specify):   U.S. dollars

o CD RATE

o FEDERAL FUNDS RATE

o    Federal Funds (Effective) Rate

o Federal Funds Open Rate

o Federal Funds Target Rate

o TREASURY RATE

o PRIME RATE

o CMT RATE

o  Reuters Page FRBCMT

o  Reuters Page FEDCMT

o If Reuters Page FEDCMT:

o 1 Week

o 1 Month

o ELEVENTH DISTRICT COST OF FUNDS RATE

o EURIBOR

o OTHER:

INDEX MATURITY:

o 1 Month

x 3 Months

o 6 Months

o 1 Year

SPREAD: Plus 31 basis points

(Indicate plus or minus

and number of basis points)

SPREAD MULTIPLIER:

 
    	
 
    	
ORIGINAL ISSUE PRICE: 100.000%

 

EARLIEST REDEMPTION DATE:   This Note may be redeemed on the terms and subject to the conditions set forth   in paragraph 14 below

 

REDEMPTION PRICE: See paragraph   14 below

 

INTEREST PAYMENT DATES:   Each February 28, May 30, August 30 and November 30, commencing on August 30,   2014, subject to adjustment as provided herein if any such date is not a Business   Day (as defined herein)

 

REGULAR RECORD DATES: Fifteenth   day (whether or not a Business Day) immediately preceding the applicable Interest   Payment Date

 

INTEREST PAYMENT PERIOD:

o Monthly

x Quarterly

o Semiannually

o Annually

 

ADDITIONAL AMOUNTS: This   Note is subject to payment of Additional Amounts. See paragraphs 10 through 14   below.

 

INTEREST RESET PERIOD:

o Daily

o Weekly

o Monthly

x Quarterly

o Semiannually

o Annually

 

INTEREST RESET DATES: Each   February 28, May 30, August 30 and November 30, commencing August 30, 2014, subject   to adjustment as provided herein if any such date is not a Business Day
    

 

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o OTHER:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
MAXIMUM INTEREST RATE:      Not applicable
    	
 
    	
 
    
	
MINIMUM INTEREST RATE:       Not applicable
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Renewable Note: x No
    	
 
    	
 
    
	
o Yes
    	
 
    	
 
    
	
 
    	
 
    	
CALCULATION AGENT:
    
	
 
    	
 
    	
x WELLS FARGO BANK, NATIONAL 
   ASSOCIATION 

o Other (specify):
    

 

 

Dated:  June 2, 2014

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes of the series designated herein referred to in the within-mentioned Indenture.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

	
By:
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    

 

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THE WALT DISNEY COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (herein referred to as the “Company”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the Principal Amount specified above on the Maturity Date specified above and to pay interest thereon from the Original Issue Date specified above or from the most recent Interest Payment Date specified above to which interest has been paid or duly provided for at a rate per annum equal to the Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issue Date specified above and thereafter at a rate determined in accordance with the provisions below under the heading “Determination of Commercial Paper Rate,” “Determination of LIBOR,” “Determination of CD Rate,” “Determination of Federal Funds Rate,” “Determination of Treasury Rate,” “Determination of Prime Rate,” “Determination of CMT Rate,” “Determination of Eleventh District Cost of Funds Rate” or “Determination of EURIBOR” depending upon whether the applicable Base Rate specified above is the Commercial Paper Rate, LIBOR, CD Rate, Federal Funds Rate, Treasury Rate, Prime Rate, CMT Rate, Eleventh District Cost of Funds Rate or EURIBOR, which rate may be adjusted by adding or subtracting (as specified above) the Spread or multiplying the Base Rate by the Spread Multiplier depending on whether a Spread or Spread Multiplier is specified above, until the principal hereof is paid or duly made available for payment. The “Spread,” if any, is the number of basis points to be added to or subtracted from the Base Rate or Rates, as specified above, and the “Spread Multiplier,” if any, is the percentage of the Base Rate or Rates, as specified above, by which such Base Rate or Rates are to be multiplied. The “Index Maturity,” if any, is the period to maturity of the instrument or obligation with respect to which the related Base Rate or Rates are calculated, as designated above. If more than one Base Rate is specified above, the applicable Base Rate shall be the lowest of such Base Rates on the applicable Interest Determination Date (as defined below). The Company will pay interest in arrears monthly, quarterly, semiannually or annually as specified above under “Interest Payment Period,” commencing with the first Interest Payment Date specified above next succeeding the Original Issue Date and thereafter on the Interest Payment Dates  specified above and at Maturity until the principal hereof is paid or made available for payment; provided, however, that if the Original Issue Date of this Note is between a Regular Record Date specified above and the related Interest Payment Date, the first payment of interest on this Note will be made on the Interest Payment Date immediately following the next succeeding Regular Record Date to the registered Holder on such next succeeding Regular Record Date. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date set forth above (whether or not a Business Day (as defined below)), as the case may be, next preceding such Interest Payment Date; provided, however, that interest payable at Maturity shall be payable to the Person to whom principal shall be payable. If the Maturity of this Note falls on a day that is not a Business Day with respect to this Note, the payment of principal and interest due at Maturity may be made on the next succeeding Business Day with respect to this Note, and no interest on such payment shall accrue for the period from and after the Maturity. Except as otherwise provided in the Indenture, any interest not punctually paid or duly provided for on any Interest Payment Date (herein called “Defaulted Interest”) will forthwith cease to be payable to the Holder on the Regular Record Date with respect to such Interest Payment Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee (as defined below), notice of which shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payment of the principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose, initially designated to be the Corporate Trust Office of the Trustee in Los Angeles, California, and at such additional offices or agencies as the Company may designate, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payments of interest on this Note (other than at Maturity) may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the register of Securities or by wire transfer of immediately available funds to the account of the Holder of this Note if appropriate wire transfer instructions have been received in writing by the Trustee not less than 15 days prior to the applicable payment date.  Notwithstanding the foregoing, the Company will make payments of interest on any Interest Payment Date other than the Maturity Date to each 

 

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registered Holder of $10,000,000 (or, if the payment currency is other than United States dollars, the equivalent thereof in the particular payment currency) or more in aggregate principal amount of definitive Notes (whether having identical or different terms and provisions) by wire transfer of immediately available funds if the applicable registered Holder has delivered appropriate wire transfer instructions in writing to the Trustee not less than 15 days prior to the particular Interest Payment Date.  Any wire transfer instructions received by the Trustee shall remain in effect until revoked by the applicable registered Holder.

 

Reference is hereby made to the further provisions of this Note set forth below, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee or its duly appointed co-authenticating agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Securities of the Company (which term includes any successor corporation under the Indenture hereinafter referred to) issued and to be issued pursuant to such Indenture. This Security is one of a series designated by the Company as its Medium-Term Notes, Series F (the “Notes”). The Indenture does not limit the aggregate principal amount of the Securities.

 

The Company issued this Note pursuant to an Indenture, dated as of September 24, 2001 (herein called the “Indenture”), between the Company and Wells Fargo Bank, National Association, a national banking association, as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.

 

The Notes are issuable as Registered Securities, without coupons, in denominations of $2,000 and any amount in excess thereof which is an integral multiple of $1,000. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of like tenor and terms of any authorized denomination, as requested by the Holder surrendering the same, upon surrender of the Note or Notes to be exchanged at any office or agency described below where Notes may be presented for registration of transfer.

 

The Company may from time to time, without the consent of existing Note Holders, issue additional Notes (“Additional Notes”) having the same terms and conditions (including maturity and interest payment terms) as previously issued Notes in all respects, except for issue date, issue price and the first payment of interest.  Additional Notes issued in this manner will be fungible with the previously issued Notes to the extent specified in the applicable Pricing Supplement.

 

This Note may not be redeemed prior to the Earliest Redemption Date set forth above, and if no Earliest Redemption Date is so set forth, this Note is not redeemable prior to the Maturity Date, except as set forth in the last sentence of this paragraph. Subject to the next sentence of this paragraph, this Note is redeemable at any time on or after the Earliest Redemption Date set forth above at the option of the Company, in whole or from time to time in part, upon not less than 30 nor more than 60 days’ notice mailed to the registered Holder hereof, at the Redemption Price set forth above, together in each case with accrued interest to but excluding the Redemption Date. Notwithstanding the foregoing, in the event this Note is subject to the payment of Additional Amounts (as defined below) as specified above, then this Note may be redeemed, in whole but not in part, on the terms and subject to the conditions set forth below regarding Additional Amounts, and the provisions set forth in the immediately preceding sentence shall not apply to a redemption pursuant to such terms and conditions.

 

Notwithstanding the preceding paragraph, installments of interest whose Stated Maturity is prior to the Redemption Date of any Note will be payable to the Holder of such Note, or one or more Predecessor Securities, of record at the close of business on the relevant Regular Record Dates referred to above, all as provided in the Indenture.

 

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All payments of principal and interest with respect to this Note will be made without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by the United States or any political subdivision or taxing authority thereof or therein, unless such withholding or deduction is required by (i) the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in the United States or any political subdivision thereof).

 

If a withholding or deduction at source is required, in the event this Note is subject to payment of Additional Amounts as specified above, the Company will, subject to certain exceptions and limitations set forth below, pay to the Holder hereof who is a United States Alien (as defined below), as additional interest, such amounts (“Additional Amounts”) as may be necessary in order that every net payment on this Note (including payment of the principal of and interest on this Note) by the Company or a Paying Agent, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed upon or as a result of such payment by the United States (or any political subdivision or taxing authority thereof or therein), will not be less than the amount provided in this Note to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts will not apply to:

 

(a)             any tax, assessment or other governmental charge that would not have been so imposed but for (i) the existence of any present or former connection between such Holder or beneficial owner of this Note (or between a fiduciary, settlor or beneficiary of, or a Person holding a power over, such Holder, if such Holder is an estate or a trust, or a member or shareholder of such Holder, if such Holder is a partnership or corporation) and the United States or any political subdivision or taxing authority thereof or therein, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, Person holding a power, member or shareholder) being or having been a citizen or resident of the United States or treated as a resident thereof or being or having been engaged in a trade or business or present therein or having or having had a permanent establishment therein or (ii) such Holder’s or beneficial owner’s past or present status, as applicable (under prior or current law), as a personal holding company, foreign personal holding company, foreign private foundation or other foreign tax-exempt organization with respect to the United States, passive foreign investment company or controlled foreign corporation for United States tax purposes or corporation that accumulates earnings to avoid United States Federal income tax;

 

(b)             any estate, inheritance, gift, excise, sales, transfer, wealth or personal property tax or any similar tax, assessment or other governmental charge;

 

(c)             any tax, assessment or other governmental charge that would not have been imposed but for the presentation by the Holder of this Note for payment more than 10 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurred later;

 

(d)             any tax, assessment or other governmental charge that is payable otherwise than by withholding from a payment on this Note;

 

(e)             any tax, assessment or other governmental charge required to be withheld by any Paying Agent from a payment on this Note, if such payment could be made without such withholding by any other Paying Agent;

 

(f)              any tax, assessment or other governmental charge that would not have been imposed but for a failure to comply with applicable certification, information, documentation, identification or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Note if such compliance is required by statute or regulation of the United States or by an applicable tax treaty to which the United States is a party as a precondition to relief or exemption from such tax, assessment or other governmental charge;

 

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(g)             any tax, assessment or other governmental charge imposed on a Holder that actually or constructively owns 10 percent or more of the combined voting power of all classes of the Company’s stock or that is a bank receiving interest on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;

 

(h)           any withholding or deduction imposed on a payment to an individual where such withholding or deduction is required to be made pursuant to Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN Council meeting of 26th— 27th November, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or

 

(i)            any combination of items (a), (b), (c), (d), (e), (f), (g) and (h);

 

nor shall Additional Amounts be paid with respect to a payment on this Note to a Holder that is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to Additional Amounts (or payment of Additional Amounts would not have been necessary) had such beneficiary, settlor, member or beneficial owner been the Holder of this Note.

 

Notwithstanding anything to the contrary in the preceding paragraph, the Company, the Trustee and any Person making payments on behalf of the Company, shall be entitled to deduct and withhold as required, and shall not be required to pay any Additional Amounts with respect to any such withholding or deduction imposed on or in respect of this Note, (a) pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (commonly referred to as “FATCA”), any treaty, law, regulation or other official guidance enacted by any jurisdiction implementing FATCA, any agreement between the Company or any other Person and the United States or any jurisdiction implementing FATCA, or any law implementing an intergovernmental approach to FATCA or (b) on or with respect to any “dividend equivalent” payment made pursuant to Section 871 or 881 of the U.S. Internal Revenue Code of 1986, as amended, in respect of this Note.

 

As used in this Note, “United States Alien” means any Person that, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust, and “United States” means the United States of America (including the States and the District of Columbia) and its territories, its possessions and other areas subject to its jurisdiction.

 

If (a) as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States (including of any political subdivision or taxing authority thereof or therein), or any change in the official application (including a ruling by a court of competent jurisdiction in the United States) or interpretation of such laws, regulations or rulings, which change or amendment is announced or becomes effective on or after the Original Issue Date of this Note, the Company becomes or will become obligated to pay Additional Amounts on this Note, on any other Notes with the same Original Issue Date, Stated Maturity and other terms as this Note or on any Additional Notes, if any, with the same Stated Maturity and other terms (other than Original Issue Date, issue price and first payment of interest) as this Note as described above, or (b) any act is taken by a taxing authority of the United States (including of any political subdivision or taxing authority thereof or therein) on or after the Original Issue Date of this Note, whether or not such act is taken with respect to the Company or any affiliate, that results in a substantial likelihood that the Company will or may be required to pay such Additional Amounts on this Note, on any other Notes with the same Original Issue Date, Stated Maturity and other terms as this Note or on any Additional Notes, if any, with the same Stated Maturity and other terms (other than Original Issue Date, issue price and first payment of interest) as this Note, then the Company may, at its option, redeem, as a whole, but not in part, this Note and all other Notes with the same Original Issue Date, Stated Maturity and other terms as this Note and all Additional Notes, if any, with the same Stated Maturity and other terms (other than Original Issue Date, issue price and first payment of interest) as this Note, on not less than 30 nor more than 60 days’ prior notice, at a Redemption Price equal to 100% of the principal amount of such Notes, together with interest, if any, accrued thereon to the date fixed for redemption; provided that the Company determines, in its business judgment, that the obligation 

 

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to pay such Additional Amounts cannot be avoided by the use of reasonable measures available to it, not including substitution of the obligor under the Notes or any action that would entail a material cost to the Company. No redemption pursuant to (b) above may be made unless the Company shall have received an opinion of independent counsel to the effect that an act taken by a taxing authority of the United States (including of any political subdivision or taxing authority thereof or therein) results in a substantial likelihood that it will or may be required to pay Additional Amounts described above and the Company shall have delivered to the Trustee a certificate, signed by a duly authorized officer, stating that based on such opinion the Company is entitled to redeem such Notes pursuant to their terms.

 

All notices of redemption shall state the Redemption Date, the Redemption Price, if fewer than all the outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of Notes to be redeemed, that on the Redemption Date the Redemption Price will become due and payable upon each Note, or portion thereof, to be redeemed, that interest on each Note, or portion thereof, called for redemption will cease to accrue on and including the Redemption Date and the place or places where Notes may be surrendered for redemption. However, payment of the Redemption Price, together with accrued interest to but excluding the Redemption Date, for a Note for which a redemption notice has been delivered is conditioned upon delivery of such Note (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) to the office or agency of the Company maintained for that purpose, initially designated to be the Corporate Trust Office of the Trustee in Los Angeles, California, and at such additional offices or agencies as the Company may designate, at any time (whether prior to, on or after the Redemption Date) after delivery of the redemption notice.  Payment of the Redemption Price for the Note (or portion thereof to be redeemed), together with accrued interest to the Redemption Date, will be made on the later of the Redemption Date or promptly following the time of delivery of the Note.  If fewer than all of this Note, all other Notes with the same Original Issue Date, Base Rate or Rates, Stated Maturity and other terms as this Note and all Additional Notes, if any, with the same Base Rate or Rates, Stated Maturity and other terms (other than Original Issue Date, issue price and first payment of interest) as this Note are to be redeemed at any time, selection of such Notes and Additional Notes, if any, for redemption will be made by the Trustee by such method as the Trustee shall deem fair and appropriate.  If this Note is to be redeemed in part, this Note must be redeemed in a minimum principal amount of $2,000 or a multiple of $1,000 in principal amount in excess thereof; provided that the unredeemed portion of this Note must be an authorized denomination.

 

In the event of redemption of this Note in part only, a new Note or Notes of like tenor for the aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of this Note so surrendered will be issued in the name of the Holder hereof upon the cancellation hereof.

 

For all purposes of this Note and the Indenture, unless the context otherwise requires, all provisions relating to the redemption by the Company of Notes shall relate, in the case of any Notes redeemed or to be redeemed by the Company only in part, to the portion of the principal amount of such Notes which has been or is to be so redeemed.

 

Commencing with the first Interest Reset Date specified above following the Original Issue Date, the rate at which interest on this Note is payable shall be adjusted daily, weekly, monthly, quarterly, semiannually or annually as specified above under “Interest Reset Period.” If any Interest Reset Date specified above would otherwise be a day that is not a Business Day, such Interest Reset Date shall be the next succeeding day that is a Business Day, except that if the rate of interest on this Note shall be determined with reference to the provisions under the heading “Determination of LIBOR” or “Determination of EURIBOR” below, and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding day that is a Business Day with respect to this Note. If any Interest Payment Date (other than an Interest Payment Date occurring on the Maturity Date) specified above falls on a day that is not a Business Day, such Interest Payment Date shall be the following day that is a Business Day, except that if the rate of interest on the Note shall be determined with reference to the provisions under the heading “Determination of LIBOR” or “Determination of EURIBOR” below and such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day. “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New 

 

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York; provided, however, that with respect to Notes the payment of which is to be made in a denominated currency other than U.S. dollars only, such day is also not a day on which commercial banks are authorized or required by law, regulation or executive order to close in the Principal Financial Center of the country of such denominated currency; provided, however, that with respect to LIBOR Notes only, such day is also a London Business Day; and provided, further, that with respect to EURIBOR Notes and notes denominated in Euros only, such day is also a TARGET Business Day. “London Business Day” means any day on which commercial banks are open for business (including dealings in the applicable Index Currency specified above) in London.  “TARGET Business Day” means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET 2) System, which utilizes a single shared platform and which was launched on November 19, 2007, is open.  “U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Bond Market Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.  “Principal Financial Center” means, as applicable: (a) the capital city of the country issuing the payment currency; or (b) the capital city of the country to which the Index Currency relates; provided, however, that with respect to United States dollars, Australian dollars, Canadian dollars, euros, South African rand and Swiss francs, the “Principal Financial Center” shall be The City of New York, Sydney, Toronto (solely in the case of the payment currency), London (solely in the case of the Index Currency), Johannesburg and Zurich, respectively. The interest rate applicable to each Interest Reset Period commencing on the Interest Reset Date or Dates with respect to such Interest Reset Period will be the rate determined on the applicable “Interest Determination Date” determined as specified below. The rate of interest in effect with respect to this Note on each day that is not an Interest Reset Date will be the interest rate determined as of the Interest Determination Date pertaining to the immediately preceding Interest Reset Date and the interest rate in effect on any day that is an Interest Reset Date will be the interest rate determined as of the Interest Determination Date pertaining to such Interest Reset Date, subject in either case to any applicable provisions of law and any Maximum Interest Rate or Minimum Interest Rate limitations specified above; provided, however, that the interest rate in effect with respect to this Note for the period from the Original Issue Date to the first Interest Reset Date will be the Initial Interest Rate specified above.

 

In addition to any Maximum Interest Rate specified above, the interest rate on this Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application.

 

All percentages resulting from any calculation on this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward, and all amounts used in or resulting from such calculation on this Note will be rounded, in the case of United States dollars, to the nearest cent, or in the case of a foreign currency, to the nearest unit (with one-half cent or unit being rounded upward).

 

Determination of Commercial Paper Rate.  If the Commercial Paper Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent specified above with reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“Commercial Paper Rate” means, with respect to any Interest Determination Date specified below (a “Commercial Paper Interest Determination Date”), the Money Market Yield (as defined below) on such date of the rate for commercial paper having the Index Maturity specified above as published in H.15(519), under the heading “Commercial Paper-Nonfinancial.” In the event that such rate is not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Interest Determination Date, then the Commercial Paper Rate will be the Money Market Yield on such Commercial Paper Interest Determination Date of the rate for commercial paper of the Index Maturity specified above as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the heading “Commercial Paper-Nonfinancial.” If such rate is not published in either H.15(519) or H.15 Daily Update by 3:00 P.M., New York City time, on such Calculation Date, then the Commercial Paper Rate will be calculated by the Calculation Agent and will be the Money Market Yield of the arithmetic mean of the offered rates, as of approximately 11:00 A.M., New York City time, on such Commercial 

 

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Paper Interest Determination Date, of three leading dealers of United States dollar commercial paper in New York, New York (which may include one or more of the agents (the “Agents”) appointed by the Company from time to time to offer and sell the Notes or their affiliates) selected by the Calculation Agent (after consultation with the Company) for commercial paper of the Index Maturity specified above placed for an industrial issuer whose bond rating is “AA,” or the equivalent, from a nationally recognized statistical rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the rate of interest in effect for the applicable period will be the same as the interest rate in effect on such Commercial Paper Interest Determination Date.

 

“Money Market Yield” shall be a yield (expressed as a percentage) calculated in accordance with the following formula:

 

	
Money Market Yield =
    	
 D X 360

360 - (D X M)
    	
X 100
    
	
 
    

 

where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and “M” refers to the actual number of days in the interest period for which interest is being calculated.

 

“H.15(519)” as used herein means the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System.

 

“H.15  Daily Update” as used herein means the daily update of H.15(519), available through the world-wide-web site of the Board of Governors of the Federal Reserve System at http:/www.federalreserve.gov/releases/h15/update, or any successor site or publication.

 

Determination of LIBOR.  If LIBOR is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to LIBOR and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

(1)           With respect to a LIBOR Interest Determination Date, LIBOR will be the rate for deposits in the Index Currency specified above having the Index Maturity specified above, commencing on the second London Business Day immediately following that LIBOR Interest Determination Date, that appears on the LIBOR Page (as defined below) as of 11:00 A.M., London time, on that LIBOR Interest Determination Date.

 

(2)           If  the rate referred to in subparagraph (1) above does not appear on the LIBOR Page by 11:00 A.M., London time, on such LIBOR Interest Determination Date, LIBOR will be determined as follows:  the Calculation Agent will select (after consultation with the Company) four major reference banks (which may include affiliates of the Agents) in the London interbank market and will request the principal London office of each of those four selected banks to provide the Calculation Agent with such bank’s quotation of the rate at which deposits in the Index Currency specified above having the Index Maturity specified above, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, are offered to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a principal amount of not less than $1,000,000 (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such market at such time. If at least two such quotations are provided, then LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, then LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted as of approximately 11:00 A.M. in the applicable Principal Financial Center (as defined above) on such LIBOR Interest Determination Date by three major banks (which may include affiliates of the Agents) in such Principal Financial Center selected by the Calculation Agent (after consultation with the Company) for loans in the specified Index Currency to leading European banks 

 

9

 

having the specified Index Maturity, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, and in a principal amount of not less than $1,000,000 (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the rate of interest in effect for the applicable period will be the same as the interest rate in effect on such LIBOR Interest Determination Date.

 

“Index Currency” means the index currency (including composite currencies) specified above as the currency for which LIBOR shall be calculated.  If no such index currency is specified above, the Index Currency shall be U.S. dollars.

 

“LIBOR Page” means either (a) the display on the page specified above for the purpose of displaying the London interbank rates of major banks for the Index Currency; or (b) if no such page is specified above as the method for calculating LIBOR, the display on Reuters (or any successor service) on the LIBOR 01 page (or any other page as may replace such page on such service or any such successor service, as the case may be) for the purpose of displaying the London interbank rates of major banks for the Index Currency.

 

Determination of CD Rate.  If the CD Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the CD Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“CD Rate” means, with respect to any Interest Determination Date specified below (a “CD Interest Determination Date”), the rate on such date for negotiable certificates of deposit having the Index Maturity designated above, as such rate is published in H.15(519) under the caption “CDs (secondary market)” or, if not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CD Interest Determination Date, the CD Rate will be the rate on such CD Interest Determination Date for negotiable certificates of deposit of the Index Maturity as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “CDs (secondary market)”. If by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CD Interest Determination Date such rate is not yet published in either H.15(519) or H.15 Daily Update, then the CD Rate on such CD Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such CD Interest Determination Date, of three leading non-bank dealers in negotiable U.S. dollar certificates of deposit in The City of New York (which may include one or more of the Agents or their affiliates) selected by the Calculation Agent (after consultation with the Company) for negotiable certificates of deposit of major United States money market banks for negotiable United States certificates of deposit with a remaining maturity closest to the Index Maturity specified above in an amount that is representative for a single transaction in that market at that time; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as set forth above, the rate of interest in effect for the applicable period will be the same as the interest rate in effect on such CD Interest Determination Date.

 

Determination of Federal Funds Rate.  If the Federal Funds Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“Federal Funds Rate” means, with respect to any Federal Funds Interest Determination Date, (1) if the “Federal Funds (Effective) Rate” is specified above, the Federal Funds Rate will be the rate on such date for Federal Funds as published in H.15(519) under the heading “Federal Funds (Effective)” and displayed on Reuters (or any successor service) on page FEDFUNDS 1 (or any other page as may replace the specified page on that service) (“FEDFUNDS 1 Page”) or, if the rate does not

 

10

 

so appear on FEDFUNDS 1 Page or is not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Federal Funds Interest Determination Date, the Federal Funds Rate will be the rate on such Federal Funds Interest Determination Date for United States dollar federal funds as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “Federal Funds (Effective)”; (2) if “Federal Funds Open Rate” is specified above, the Federal Funds Rate will be the rate on that date set forth under the caption “Federal Funds” for the Index Maturity specified above opposite the caption “Open” and displayed on Reuters (or any successor service) on page 5 (or any other page as may replace the specified page on that service) (“Reuters Page 5”) or, if the rate does not appear on Reuters Page 5 or is not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to that Federal Funds Interest Determination Date, the Federal Funds Rate will be the rate on that Federal Funds Interest Determination Date displayed on FFPREBON Index page on Bloomberg L.P. (“Bloomberg”), which is the Fed Funds Opening Rate as reported by Prebon Yamane (or a successor) on Bloomberg; (3) if “Federal Funds Target Rate” is specified above, the Federal Funds Rate will be the rate on that date for U.S. dollar federal funds displayed on the FDTR Index page on Bloomberg, or if the rate does not appear on the FDTR Index page on Bloomberg or is not so published by 3:00 P.M., New York City time, on the Calculation Date, the rate for that day appearing on Reuters (or any successor service) on page USFFTARGET= (or any other page as may replace the specified page on that service) (“Reuters Page USFFTARGET=“). If, by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Federal Funds Interest Determination Date such rate referenced above is not yet published, the Federal Funds Rate for such Federal Funds Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight United States dollars Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York (which may include one or more of the Agents or their affiliates), which brokers have been selected by the Calculation Agent (after consultation with the Company), as of 9:00 A.M., New York City time, on such Federal Funds Interest Determination Date; provided, however, that, if the brokers selected as aforesaid by the Calculation Agent are not quoting rates as set forth above, the rate of interest in effect for the applicable period will be the same as the interest rate in effect on such Federal Funds Interest Determination Date.

 

Determination of Treasury Rate.  If the Treasury Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the Treasury Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“Treasury Rate” means, with respect to any Treasury Rate Interest Determination Date, the rate from the auction held on the Treasury Rate Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having the Index Maturity specified above under the caption “INVEST RATE” on the display on Reuters (or any successor service) on page USAUCTION 10 (or any other page as may replace that page on that service) (“USAUCION 10 Page”) or page USAUCTION 11 (or any other page as may replace that page on that service) (“USAUCTION 11 Page”), or if not so displayed, on the Bloomberg service (or any successor service) on page AUCR 18 (or any other page as may replace that page on that service) or, if not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Rate Interest Determination Date, the Bond Equivalent Yield (as defined below) of the auction rate for the applicable Treasury Bills as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Auction High”. If the rate referred to in the preceding sentence is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the Treasury Rate for that Treasury Rate Interest Determination Date will be the Bond Equivalent Yield of the auction rate of the applicable Treasury Bills as announced by the United States Department of the Treasury. If the rate referred to in the preceding sentence is not so announced by the United States Department of the Treasury, or if the Auction is not held, the Treasury Rate for that Treasury Rate Interest Determination Date will be the Bond Equivalent Yield of the rate on that Treasury Rate Interest Determination Date of the applicable Treasury Bills as published in H.15(519) under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”. If the rate referred to in the preceding sentence is not so published by 3:00 P.M., New York 

 

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City time, on the related Calculation Date, the Treasury Rate for that Treasury Rate Interest Determination Date will be the rate on that Treasury Rate Interest Determination Date of the applicable Treasury Bills as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”.  If the rate referred to in the preceding sentence is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the Treasury Rate for that Treasury Rate Interest Determination Date will be the rate on that Treasury Rate Interest Determination Date calculated by the Calculation Agent as the Bond Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers (which may include one or more of the Agents or their affiliates) selected by the Calculation Agent (after consultation with the Company), for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified above; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth in this sentence, the rate of interest in effect for the applicable period will be the same as the interest rate in effect on such Treasury Rate Interest Determination Date.

 

“Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance with the following formula:

 

	
 
    	
 
    	
D X N
    	
 
    	
 
    
	
Bond Equivalent Yield
    	
=
    	
---------------------
    	
X
    	
100
    
	
 
    	
 
    	
360 - (D X M)
    	
 
    	
 
    

 

where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the applicable Interest Reset Period.

 

Determination of Prime Rate.  If the Prime Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the Prime Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“Prime Rate” means, with respect to any Interest Determination Date specified below (a “Prime Rate Interest Determination Date”), the rate published in H.15(519) for such date under the caption “Bank Prime Loan” or, if not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to that Prime Rate Interest Determination Date, the rate on that Prime Rate Interest Determination Date as published in H.15 Daily Update or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “Bank Prime Loan”.  If neither rate is so published by 3:00 P.M., New York City time, on the Calculation Date, the Prime Rate for such Prime Rate Interest Determination Date will be calculated by the Calculation Agent as the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen USPRIME1 Page (as defined below) as the applicable bank’s prime rate or base lending rate as of 11:00 A.M., New York City time, on that Prime Rate Interest Determination Date, or if fewer than four rates are so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the Prime Rate Interest Determination Date calculated by the Calculation Agent as the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by three major banks (which may include one or more of the Agents or their affiliates) in The City of New York selected by the Calculation Agent (after consultation with the Company). If the banks selected by the Calculation Agent are not quoting as mentioned in the preceding sentence, the “Prime Rate” for the Interest Reset Period will be the same as the Prime Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the Initial Interest Rate specified above).  “Reuters Screen USPRIME1 Page” means the display on the Reuters 

 

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Monitor Money Rates Service (or any successor service) on the “USPRIME 1” page (or any other page as may replace that page on that service) for the purpose of displaying prime rates or base lending rates of major United States banks.

 

Determination of CMT Rate.  If CMT Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the CMT Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“CMT Rate” means, with respect to any Interest Determination Date specified below (a “CMT Interest Determination Date”) relating to a CMT Rate Note or any Floating Rate Note for which the interest rate is determined with reference to the CMT Rate, if Reuters Page FRBCMT is specified above:

 

(a)                                 the percentage equal to the yield for United States Treasury securities at “constant maturity” having the Index Maturity specified above as published in H.15(519) under the caption “Treasury Constant Maturities”, as the yield is displayed on Reuters (or any successor service) on page FRBCMT (or any other page as may replace the specified page on that service) (“Reuters Page FRBCMT”), or if not so displayed, on the Bloomberg service (or any successor service) on page NDX 7 (or any other page as may replace the specified page on that service) (“Bloomberg Page NDX 7”) for that CMT Interest Determination Date, or

 

(b)                                 if the rate referred to in clause (a) does not so appear on the Reuters Page FRBCMT or Bloomberg Page NDX 7, as the case may be, the percentage equal to the yield for United States Treasury securities at “constant maturity” having the particular Index Maturity and for that CMT Interest Determination Date as published in H.15(519) under the caption “Treasury Constant Maturities”, or

 

(c)                                  if the rate referred to in clause (b) does not so appear in H.15(519), the rate on that CMT Interest Determination Date for the period of the particular Index Maturity as may then be published by either the Federal Reserve System Board of Governors or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate which would otherwise have been published in H.15(519), or

 

(d)                                 if the rate referred to in clause (c) is not so published, the rate on that CMT Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices at approximately 3:30 P.M., New York City time, on that CMT Interest Determination Date of three leading primary United States government securities dealers in The City of New York (which may include one or more of the Agents or their affiliates) (each, a “Reference Dealer”), selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation, or, in the event of equality, one of the highest, and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity equal to the particular Index Maturity, a remaining term to maturity no more than one year shorter than that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time, or

 

(e)                                  if fewer than five but more than two of the prices referred to in clause (d) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations shall be eliminated, or

 

(f)                                   if fewer than three prices referred to in clause (d) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30 P.M., New York City time, on that CMT Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation or, in the event of equality, one of the highest and the lowest quotation or, in the event of 

 

13

 

equality, one of the lowest, for United States Treasury securities with an original maturity closest to the particular Index Maturity, a remaining term to maturity closest to that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time, or

 

(g)                                  if fewer than five but more than two prices referred to in clause (f) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations will be eliminated, or

 

(h)                                 if fewer than three prices referred to in clause (f) are provided as requested, the CMT Rate in effect on that CMT Interest Determination Date;

 

if Reuters Page FEDCMT is specified above:

 

(a)                                 the percentage equal to the one-week or one-month, as specified above, average yield for United States Treasury securities at “constant maturity” having the Index Maturity specified above as published in H.15(519) opposite the caption “Treasury Constant Maturities”, as the yield is displayed on Reuters (or any successor service) on page FEDCMT (or any other page that may replace the specified page on that service) (“Reuters Page FEDCMT”), or if not so displayed, on the Bloomberg service (or any successor service) on Bloomberg Page NDX 7, for the week or month, as applicable, ended immediately preceding the week or month, as applicable, in which that CMT Interest Determination Date falls, or

 

(b)                                 if the rate referred to in clause (a) does not so appear on Reuters Page FEDCMT or Bloomberg page NDX 7, as the case may be, the percentage equal to the one-week or one-month, as applicable, average yield for United States Treasury securities at “constant maturity” having the particular Index Maturity and for the week or month, as applicable, preceding that CMT Interest Determination Date as published in H.15(519) opposite the caption “Treasury Constant Maturities,” or

 

(c)                                  if the rate referred to in clause (b) does not so appear in H.15(519), the one-week or one-month, as applicable, average yield for United States Treasury securities at “constant maturity” having the particular Index Maturity as otherwise announced by the Federal Reserve Bank of New York for the week or month, as applicable, ended immediately preceding the week or month, as applicable, in which that CMT Interest Determination Date falls, or

 

(d)                                 if the rate referred to in clause (c) is not so published, the rate on that CMT Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices at approximately 3:30 P.M., New York City time, on that CMT Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation, or, in the event of equality, one of the highest, and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity equal to the particular Index Maturity, a remaining term to maturity no more than one year shorter than that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time, or

 

(e)                                  if fewer than five but more than two of the prices referred to in clause (d) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations shall be eliminated, or

 

(f)                                   if fewer than three prices referred to in clause (d) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30 P.M., New York City time, on that CMT Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest 

 

14

 

quotation or, in the event of equality, one of the highest and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity greater than the particular Index Maturity, a remaining term to maturity closest to that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at the time, or

 

(g)                                  if fewer than five but more than two prices referred to in clause (f) are provided as requested, the rate on that CMT Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest or the lowest of the quotations will be eliminated, or

 

(h)                                 if fewer than three prices referred to in clause (f) are provided as requested, the CMT Rate in effect on that CMT Interest Determination Date.

 

If two United States Treasury securities with an original maturity greater than the Index Maturity specified above have remaining terms to maturity equally close to the particular Index Maturity, the quotes for the United States Treasury security with the shorter original remaining term to maturity will be used.

 

Determination of Eleventh District Cost of Funds Rate.  If the Eleventh District Cost of Funds Rate is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the Eleventh District Cost of Funds Rate and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“Eleventh District Cost of Funds Rate” means, with respect to any Interest Determination Date specified below (an “Eleventh District Cost of Funds Interest Determination Date”), the rate equal to the monthly weighted average cost of funds for the calendar month immediately preceding the month in which the Eleventh District Cost of Funds Interest Determination Date falls as set forth under the caption “11th District” on the display on Reuters (or any successor service) on page COFI/ARMS (or any other page as may replace the specified page on that service) (“COFI/ARMS Page”), or if not so displayed, on Bloomberg service (or any successor service) on page ALLX COF (or any other page as may replace the specified page on that service) (“Bloomberg page ALLX COF”) in each case, as of 11:00 A.M., San Francisco time, on the Eleventh District Cost of Funds Interest Determination Date. If such rate does not appear on the COFI/ARMS Page or Bloomberg Page ALLX COF on any related Eleventh District Cost of Funds Interest Determination Date, the Eleventh District Cost of Funds Rate for the Eleventh District Cost of Funds Interest Determination Date will be the Eleventh District Cost of Funds Rate Index, as defined below. If the FHLB of San Francisco fails to announce the rate for the calendar month next preceding the Eleventh District Cost of Funds Interest Determination Date, then the Eleventh District Cost of Funds Rate for that date will be the Eleventh District Cost of Funds Rate in effect on that Eleventh District Cost of Funds Interest Determination Date.

 

The “Eleventh District Cost of Funds Rate Index” will be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank District that the FHLB of San Francisco most recently announced as the cost of funds for the calendar month immediately preceding the Eleventh District Cost of Funds Interest Determination Date.

 

Determination of EURIBOR.  If EURIBOR is the Base Rate or one of the Base Rates specified above, the interest rate payable with respect to this Note shall be calculated by the Calculation Agent with reference to the European Interbank Offered Rate for deposits in euros, or EURIBOR, and the Spread or Spread Multiplier, if any, specified above, in accordance with the following provisions:

 

“EURIBOR” means the rate for deposits in euros as sponsored, calculated and published jointly by the European Banking Federation and ACI — The Financial Market Association, or any company established by the joint sponsors for purposes of compiling and publishing those rates, having the Index Maturity specified above, commencing on the applicable Interest Reset Date, as that rate appears on Reuters, or any successor service, on page EURIBOR01 or any other page as may replace that specified page on that service (“Reuters Page EURIBOR01”) as of 11:00 A.M., Brussels time, on the applicable EURIBOR Interest Determination Date.  If EURIBOR cannot be determined on a 

 

15

 

EURIBOR Interest Determination Date as described in the preceding sentence, then the Calculation Agent will select four major banks in the Euro-zone interbank market, which may include affiliates of the Agents, and request that the principal Euro-zone offices of those four selected banks provide their offered quotations to prime banks in the Euro-zone interbank market at approximately 11:00 A.M., Brussels time, on the EURIBOR Interest Determination Date. These quotations shall be for deposits in Euros for the period of the specified Index Maturity, commencing on such Interest Reset Date.  Offered quotations must be based on a principal amount equal to at least $1,000,000 or the approximate equivalent in Euros that is representative of a single transaction in such market at such time. If two or more quotations are provided, EURIBOR for the Interest Reset Period will be the arithmetic mean of the quotations. If fewer than two quotations are provided, the Calculation Agent will select four major banks in the Euro-zone, which may include affiliates of the Agents, and then determine EURIBOR for the Interest Reset Period as the arithmetic mean of rates quoted by those four major banks in the Euro-zone to leading European banks at approximately 11:00 A.M., Brussels time, on the EURIBOR Interest Determination Date. The rates quoted will be for loans in Euros, for the period of the specified Index Maturity, commencing on the Interest Reset Date. Rates quoted must be based on a principal amount of at least $1,000,000 or the approximate equivalent in Euros that is representative of a single transaction in such market at such time.  If the banks so selected by the Calculation Agent are not quoting rates as described above, EURIBOR will be the EURIBOR in effect on the applicable EURIBOR Interest Determination Date.

 

“Euro-zone” means the region comprised of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union.

 

Renewable Notes.  If this Note is designated as a Renewable Note above (a “Renewable Note”), the following provisions will apply:

 

A Renewable Note will bear interest at the Base Rate or Base Rates, as applicable, specified above and the interest rate payable with respect to a Renewable Note shall be calculated by the Calculation Agent with reference to the specified Base Rate or Base Rates and the Spread or Spread Multiplier, if any, specified above.

 

A Renewable Note will mature on an Interest Payment Date as specified above (the “Initial Maturity Date”), unless the maturity of all or any portion of the principal amount hereof is extended in accordance with the procedures described below.  On the Interest Payment Dates specified above (each such Interest Payment Date, an “Election Date”), the maturity of a Renewable Note will be extended to the Interest Payment Date occurring twelve months after such Election Date, unless the Holder hereof elects to terminate the automatic extension of the maturity of a Renewable Note or of any portion hereof having a principal amount of $2,000 or any multiple of $1,000 in excess thereof by delivering a notice to such effect to the Trustee not less than nor more than a number of days to be specified above prior to such Election Date.  If no notice period is specified above, such notice shall be given no less than 30 days and no more than 60 days prior to such Election Date.  Such option may be exercised with respect to less than the entire principal amount of a Renewable Note; provided that the principal amount for which such option is not exercised is at least $2,000 or any larger amount that is an integral multiple of $1,000.  Notwithstanding the foregoing, the maturity of a Renewable Note may not be extended beyond the Final Maturity Date specified above.  If the Holder hereof elects to terminate the automatic extension of the maturity of any portion of the principal amount of a Renewable Note and such election is not revoked as described below, such portion will become due and payable on the Interest Payment Date falling six months (unless another period is specified above) after the Election Date prior to which the Holder made such election.

 

An election to terminate the automatic extension of maturity may be revoked as to any portion of a Renewable Note having a principal amount of $2,000 or any multiple of $1,000 in excess thereof by delivering a notice to such effect to the Trustee on any day following the effective date of the election to terminate the automatic extension of maturity and prior to the date 15 days before the date on which such portion would otherwise mature.  Such a revocation may be made for less than the entire principal amount of a Renewable Note for which the automatic extension of maturity has been 

 

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terminated; provided that the principal amount of a Renewable Note for which the automatic extension of maturity has been terminated and for which such a revocation has not been made is at least $2,000 or any larger amount that is an integral multiple of $1,000. Notwithstanding the foregoing, a revocation may not be made during the period from and including a Regular Record Date to but excluding the immediately succeeding Interest Payment Date.

 

An election to terminate the automatic extension of the maturity of a Renewable Note, if not revoked as described above by the Holder hereof making the election or any subsequent Holder, will be binding upon such subsequent Holder.

 

A Renewable Note may be redeemed in whole or in part at the option of the Company on the Interest Payment Dates in each year specified above, commencing with the Interest Payment Date specified above, at a redemption price as stated above, together with accrued and unpaid interest to the date of redemption.  Notwithstanding anything to the contrary herein, notice of redemption will be provided by mailing a notice of such redemption to each Holder by first class mail, postage prepaid, at least 180 days (unless otherwise specified above) prior to the date fixed for redemption.

 

Applicable Interest Determination Date and Calculation Date.  The interest rate applicable to each Interest Reset Period commencing on the Interest Reset Date or Dates with respect to such Interest Reset Period will be the rate determined on the applicable Interest Determination Date. The Commercial Paper Interest Determination Date, the Federal Funds Interest Determination Date and the Prime Rate Interest Determination Date will be the Business Day preceding each Interest Reset Date.  The CD Interest Determination Date will be the second Business Day preceding such Interest Reset Date. The LIBOR Interest Determination Date will be the second London Business Day preceding such Interest Reset Date. The EURIBOR Interest Determination Date will be the second TARGET Business Day preceding such Interest Reset Date.  The Eleventh District Cost of Funds Interest Determination Date will be the last working day of the month immediately preceding each Interest Reset Date on which the Federal Home Loan Bank of San Francisco (the “FHLB of San Francisco”) publishes the Eleventh District Cost of Funds Index.  The CMT Interest Determination Date will be the second U.S. Government Securities Business Day preceding each such Interest Reset Date. The Treasury Rate Interest Determination Date will be the day in the week in which the Interest Reset Date falls on which day Treasury Bills would normally be auctioned or, if no such auction is held for a particular week, the first Business Day of that week; provided, however, that if, as a result of a legal holiday, an auction is held on the Friday of the week preceding the Interest Reset Date, the related Interest Determination Date shall be such preceding Friday; and provided, further, that if an auction shall fall on any Interest Reset Date, then the Interest Reset Date shall instead be the first Business Day immediately following such auction. The Interest Determination Date pertaining to a Note the interest rate of which is determined with reference to two or more Base Rates will be the latest Business Day which is at least two Business Days prior to such Interest Reset Date for such a Note on which each Base Rate shall be determinable. Each Base Rate shall be determined and compared on such date, and the applicable interest rate shall take effect on the related Interest Reset Date.

 

The “Calculation Date,” if applicable, pertaining to any Interest Determination Date, is the date by which the applicable interest rate must be calculated and shall be the earlier of (a) the tenth calendar day after such Interest Determination Date, or, if any such day is not a Business Day, the next succeeding Business Day and (b) the Business Day preceding the applicable Interest Payment Date or Maturity Date, as the case may be. The Trustee will, upon the request of the Holder of this Note, provide to such Holder the interest rate hereon then in effect and, if determined, the interest rate that will become effective as a result of the determination made for the next Interest Reset Date.

 

The Calculation Agent shall calculate the interest rate on this Note in accordance with the foregoing rate or rates on or before each Calculation Date and shall promptly thereafter notify the Company of such interest rate. Any such calculation by the Calculation Agent shall be conclusive and binding on the Company, the Trustee and the Holder of this Note, absent manifest error.

 

Interest payments for this Note will include interest accrued to but excluding the Interest Payment Date. Accrued interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid or duly provided for, as the case may be, shall be an amount calculated by multiplying the face 

 

17

 

amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day from the Original Issue Date or from the last date to which interest shall have been paid or duly provided for, to the date for which accrued interest is being calculated. The interest factor for each such day shall be computed by dividing the interest rate applicable to such day by 360, in the case of the Commercial Paper Rate, LIBOR, CD Rate, Federal Funds Rate, Prime Rate, Eleventh District Cost of Funds Rate and EURIBOR and by the actual number of days in the year, in the case of the Treasury Rate and CMT Rate. Unless otherwise specified above, if the interest rate for this Note is calculated with reference to two or more Base Rates, the interest factor for this Note will be calculated in each period in the same manner as if only the lowest of the applicable Base Rates applied.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared or, in certain cases, automatically may become, due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, in certain circumstances therein specified, the amendment thereof without the consent of the Holders of the Securities. The Indenture also permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations under the Indenture of the Company and the rights of Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all the Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

No reference herein to the Indenture and no provision of this Note or, subject to the provisions for satisfaction and discharge in Article Eight of the Indenture, of the Indenture, shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of Notes is registrable in the register of Securities, upon surrender of a Note for registration of transfer at the office or agency of the Company maintained for that purpose, initially designated to be the Corporate Trust Office of the Trustee in Los Angeles, California, and at such additional offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of like tenor and terms, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

No service charge shall be made by the Company, the Trustee or the Registrar for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith (other than exchanges pursuant to Sections 2.11, 3.6, 9.5 or 10.3 of the Indenture, not involving any transfer).

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York, including without limitation, §§ 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Law Rule 327(b).

 

18

 

All undefined terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. References herein to the “principal” of any Notes mean the principal thereof plus premium, if any.

 

[signature page follows]

 

19

 

IN WITNESS WHEREOF, The Walt Disney Company has caused this Note to be signed by the signature or facsimile signature of its Chairman of the Board, one of its Vice Chairmen, its President or one of its Vice Presidents, or its Treasurer or any Assistant Treasurer and attested by its Secretary or one of its Assistant Secretaries by his or her signature or a facsimile thereof, and its corporate seal or a facsimile of its corporate seal to be affixed hereunto or imprinted hereon.

 

	
(SEAL)
    	
THE   WALT DISNEY COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
Attest:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
				

 

20

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN   COM            as tenants   in common
    	
 
    	
UNIF   GIFT MIN ACT       Custodian      
    
	
 
    	
 
    	
(Cust.)                   (Minor)
    
	
 
    	
 
    	
 
    
	
TEN ENT              as tenants by the entireties
    	
 
    	
Under   Uniform Gifts to Minors Act
    
	
 
    	
 
    	
 
    
	
      JT TEN            as joint   tenants with right of survivorship and not as tenants in common
    	
 
    	
(State)
    

 

Additional abbreviations may also be used though not in the above list.

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

Please Insert Social Security or Employer

Identification Number of Assignee

 

	
-
    	
-
    	
 
    	
 
    	
 
    	
 
    

 

 

Please Print or Typewrite Name and Address

Including Postal Zip Code of Assignee

 

 

the within Security and all rights thereunder, hereby irrevocably constituting and appointing 

attorney to transfer said Security on 

the books of the Company, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature
    

 

NOTICE:                                            The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever.

 

21Exhibit 10.3

 

FANTEX BRAND AGREEMENT

 

This Fantex Brand Agreement is entered into as of May 14, 2014 (“Effective Date”) by and between Fantex, Inc. (“Fantex”), on the one hand, and Mohamed Aasin Sanu (“Talent”) on the other hand.  For purposes of this Agreement, “Participant” shall also refer to Talent.  Sometimes each of Participant and Fantex are referred to herein as a “Party” and together as the “Parties.”

 

RECITALS

 

WHEREAS, Fantex operates a registered trading platform through which investors may buy and sell stock linked to the value and performance of an individual’s brand;

 

WHEREAS, Fantex desires to acquire an interest in Participant’s Brand Income (as defined below), which would be financed by an initial public offering of equity securities in the form of a tracking stock in Fantex that is linked to the separate economic performance and value of Participant’s brand, all pursuant to the terms and conditions of this Agreement; and

 

WHEREAS, Participant desires sell to Fantex an interest in Participant’s Brand Income pursuant to the terms and conditions of this Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of good and valuable consideration as set forth in this Agreement, the Parties do hereby agree as follows:

 

1.                        Defined Terms.  The following terms have the meanings specified or referred to in this Section 1:

 

1.1.                            “Affiliate” means, with respect to any specified Person, any Person that directly or indirectly Controls, or is under common Control with, or is Controlled by, such specified Person.

 

1.2.                            “Agreement” means this Fantex Brand Agreement, together with all exhibits, schedules and related documents attached hereto or referenced herein, including:

 

·                  Exhibit A:  Participant Questionnaire;

·                  Exhibit B:  Exclusions from and Examples of “Brand Income”;

·                  Exhibit C:  Standard Terms and Conditions;

·                  Exhibit D:  Closing Certificate;

·                  Exhibit E:  Quarterly Report;

·                  Exhibit F:  Spousal Consent; and

·                  Exhibit G:  Form of Irrevocable Payment Instructions.

 

1.3.                            “Brand Amount” means an amount equal to the product obtained by multiplying (a) any and all Brand Income earned by Participant (whether or not contracted or paid through any third party for or on behalf of Participant, such as a personal services corporation, agency, or otherwise) during the Term, less any applicable Merchandise Income Deduction, by (b) the Brand Percentage.

 

1.4.                            “Brand Percentage” means ten percent (10%).

 

1.5.                            “Brand Income” means any and all Gross Monies, other than Excluded Income, that are payable to Participant after the Effective Date as a result of Participant’s activities (including licensing or assignment of rights) in the Field, including (a) Distributions in connection with any

 

 

Indirect Fantex Equity or Indirect Fantex Co-Investments, and (b) an amount equal to the fair market value of any Merchandise Income.

 

1.6.                            “Brand Income Contract” means any Contract to which Participant is or becomes a party, or under which Participant is obligated to perform, or from which Participant receives any benefit, and in each case which is in the Field, other than Contracts excluded in their entirety (if any) pursuant to the definition of Excluded Income.

 

1.7.                            “Brand Investment Opportunity” has the meaning set forth in Section 8.

 

1.8.                            “Closing” has the meaning set forth in Section 5.1.

 

1.9.                            “Contract” means any contract, commitment, or other arrangement or understanding (and all amendments and supplements thereto), whether written or oral.

 

1.10.                     “Control” (including, with its correlative meanings, “Controlled by” and “under Common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

 

1.11.                     “Direct Fantex Co-Investment” has the meaning set forth in Section 8.1.2.

 

1.12.                     “Direct Fantex Equity” has the meaning set forth in Section 7.1.2.

 

1.13.                     “Distributions” means any Gross Monies received by Participant as a result of Participant receiving, holding, transferring, selling and/or otherwise disposing of any stock or other equity interest issued pursuant to any Brand Income Contract (whether as Equity Income or pursuant to any equity purchased pursuant to a Brand Investment Opportunity), including any distributions, dividends, profit payments, proceeds resulting from the sale, lease, license, exchange, liquidation or other disposition of any equity or assets of the issuer of such Equity Income or Brand Investment Opportunity, or otherwise.

 

1.14.                     “Effective Date” means the date as set forth in the preamble to this Agreement.

 

1.15.                     “Equity Deal Notice” has the meaning set forth in Section 7.1.1.

 

1.16.                     “Equity Income” has the meaning set forth in Section 6.

 

1.17.                     “Escrow Holdback” means an amount equal to 5% of the Purchase Price (i.e., $78,000).

 

1.18.                     “Excluded Income” means as described on Schedule 1.18 attached to this Agreement.

 

1.19.                     “Exercise Payment” has the meaning set forth in Section 7.2.1.

 

1.20.                     “Fantex Co-Investment Interest” has the meaning set forth in Section 8.1.2.

 

1.21.                     “Fantex Equity Interest” has the meaning set forth in Section 7.1.2.

 

1.22.                     “FBS” means Fantex Brokerage Services, LLC, an Affiliate of Fantex.

 

1.23.                     “Field” means: (a) any activities in or substantially related to the Principal Business, including Talent’s employment as a Professional Athlete; (b) any and all of Participant’s activities, including any use of Participant’s Persona in connection with motion pictures, audio-visual programming (for television, Internet or otherwise), radio, music, literary, talent engagements, personal appearances, public appearances, records and recording, or publications; (c) any use of Participant’s Persona, including for purposes of advertising, merchandising, or trade (e.g., sponsorships, endorsements, appearances, etc.); and (d) any other activities performed by Participant which is of the type typically performed by individuals in the Principal Business arising out of or relating to being or having been a Professional Athlete or other professional within the Principal Business (e.g., sports casting, coaching, participating in sports camps, acting

 

 

as spokesperson, etc.)  In the event that there is any ambiguity as to whether an activity is in the Field, the Parties shall discuss in good faith and seek to resolve such matter.  In the event that a resolution is not met within thirty (30) days after initial notice by either Party to the other regarding such activity, then either Party shall be free to refer such matter to arbitration for resolution pursuant to the terms of Section 17.5 of the Terms and Conditions.

 

1.24.                     “FINRA” means the Financial Industry Regulatory Authority, Inc.

 

1.25.                     “Good Reason” means Talent’s resignation from his employment as a Professional Athlete for any of the following reasons: (a) Talent suffers or sustains a Major Injury which renders Talent incapable of performing as a Professional Athlete; or (b) Talent suffers or sustains a Major Injury after the Closing and a qualified medical physician (depending on the nature of the Major Injury) advises Talent that as a result thereof Talent is putting his physical health at substantial risk (i.e., a risk that is substantially greater than simply by virtue of Participant’s participation as a Professional Athlete) by continuing to perform as a Professional Athlete.

 

1.26.                     “Gross Monies” means any and all gross monies or other consideration of any type, including salaries, earnings, fees, royalties, bonuses, shares of profit, shares of stock, partnership interests, percentages and the total amount paid to Participant, and/or received by Participant or Participant’s heirs, executors, administrators or assigns, or by any other Person on Participant’s behalf, net of (a) any reasonable and documented out-of-pocket legal fees incurred by Participant in connection with securing, negotiating or preparing any Brand Income Contract which are not reimbursed or reimbursable, including pursuant to the terms of such Brand Income Contract, (b) any reasonable and documented travel, lodging and per diem expenses incurred by Participant or Participant’s representatives in connection with securing any Brand Income Contract, not to exceed Two Thousand Dollars ($2,000) per Brand Income Contract, to the extent actually paid by Participant and not reimbursed or reimbursable, including pursuant to the terms of such Brand Income Contract, and (c) self-employment taxes to which Participant is subject in connection with the receipt of such amounts or items to the extent that such amounts or items constitute Brand Income; but in each case, prior to the deduction or withholding of (x) any amounts payable to any third party (e.g., agency commissions), (y) any voluntary or personal deductions (e.g., contributions to retirement funds), or (z) any taxes required to be deducted or withheld by any federal, state or local government authority based on the net income of Participant (but excluding any deduction or withholding for payroll, medicare or FICA taxes or other deductions or payments required to be made to any federal, state or local government authority).

 

1.27.                     “Gross Proceeds” means an amount equal to the gross proceeds resulting from the Offering.

 

1.28.                     “Incremental Cost” has the meaning set forth in Section 8.4.1.

 

1.29.                     “Indirect Fantex Co-Investment” has the meaning set forth in Section 8.1.2.

 

1.30.                     “Indirect Fantex Equity” has the meaning set forth in Section 7.1.2.

 

1.31.                     “Investment Deal Notice” has the meaning set forth in Section 8.1.1.

 

1.32.                     “League” means the National Football League and its successors and assigns.

 

1.33.                     “Major Injury” means any injury, illness or medical condition sustained or incurred after the Closing.

 

1.34.                     “Merchandise Income” means any Brand Income in the form of any merchandise, services, service plans, or credits for any of the foregoing.

 

1.35.                     “Merchandise Income Deduction” means an annual (calendar year) deduction from Brand Income solely for the purpose of determining the Brand Amount for each calendar year, equal to

 

 

the sum of (a) the fair market value of Merchandise Income, up to the lesser of (i) $40,000 and (ii) 4% (four percent) of all Brand Income (including Merchandise Income) received by Participant during such calendar year during the Term, and (b) the fair market value of any other Merchandise Income to the extent agreed to by Fantex in writing, in its sole and absolute discretion.

 

1.36.                     “Net Proceeds” means an amount equal to the Gross Proceeds, less the applicable Underwriting Amount payable to FBS, an Affiliate of Fantex, and such other underwriters selected by Fantex (together, the “Underwriters”).

 

1.37.                     “Nonrecurring Brand Income” means the Brand Income payable to Participant under any Brand Income Contract pursuant to which Participant is only entitled to receive a single payment under such Brand Income Contract.

 

1.38.                     “Offering” means an offering of the Series to the public pursuant to the Registration Statement.

 

1.39.                     “Owned Business Notice” has the meaning set forth in Section 9.1.1.

 

1.40.                     “Participant” has the meaning set forth in the preamble to this Agreement.

 

1.41.                     “Participant’s Persona” means Participant’s name, voice, likeness, image, caricature, biography, signature (including facsimile signature), personal talents, or live, photographed or recorded performance.

 

1.42.                     “Participant Owned Business” means any business or commercial venture (of whatever form, including sole proprietorship, partnership, limited liability company, corporation, franchise, etc.) that (a) is owned in whole or part, directly or indirectly, by Participant (other than as a Passive Investment) and not as a result of any Brand Income Contract, and (b) conducts operations or activities in or substantially related to the Principal Business, or otherwise uses Participant’s Persona in its legal name or “dba,” or to market, advertise or promote its business.

 

1.43.                     “Party” and “Parties” has the meaning set forth in the preamble to this Agreement.

 

1.44.                     “Passive Investment” means any investments by Participant in stocks or other equity, bonds, commodities, derivatives, debt or real estate, so long as (a) such investment is not received by Participant as compensation or consideration for activities (including licensing or assignment of rights) in the Field, (b) Participant is not obligated to provide any services related to the Field in connection with such investment (or the business or commercial venture related to such investment) and (c) the business or commercial venture related to such investment does not use Participant’s Persona in its legal name or “dba,” or in connection with its marketing, advertising or promotion.

 

1.45.                     “Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

 

1.46.                     “Personal Information Schedule” refers to the schedule of information provided by Participant to Fantex in a separate document to this Agreement as of the Effective Date, including Schedules 1 through 3 as referenced in the Participant Questionnaire attached hereto as Exhibit A.

 

1.47.                     “Pre-Closing Brand Amount” has the meaning set forth in Section 6.3.

 

1.48.                     “Purchase Price” means One Million Five Hundred Sixty Thousand dollars ($1,560,000).

 

1.49.                     “Purchase Payment” has the meaning set forth in Section 8.2.1.

 

 

1.50.                     “Principal Business” means the sport of football, at the professional, college or other level, regardless of the country in which it is played or the league, association or other governing body as applicable.

 

1.51.                     “Professional Athlete” means a professional football player.

 

1.52.                     “Registration Statement” means a registration statement for the Series on Form S-1 filed with the SEC.

 

1.53.                     “SEC” means the United States Securities and Exchange Commission.

 

1.54.                     “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.55.                     “Series” means of a series of Fantex’s securities linked to the value of the Brand Amount.

 

1.56.                     “Talent” has the meaning set forth in the preamble to this Agreement.

 

1.57.                     “Term” has the meaning set forth in Section 13.

 

1.58.                     “Termination Date” has the meaning set forth in Section 11.1.

 

1.59.                     “Terms and Conditions” means the Fantex Brand Agreement Standard Terms and Conditions in the form attached to this Agreement as Exhibit C.

 

1.60.                     “Transaction Liability” has the meaning set forth in Section 8.4.1.

 

1.61.                     “Underwriting Amount” means underwriting commissions equal to five percent (5%) of the Gross Proceeds of the Offering.

 

2.                        Purchase Price.

 

2.1.                            Upon the terms and subject to the conditions of this Agreement, as full, final and complete consideration for the right to receive the Brand Amount and to participate in Equity Income and Brand Investment Opportunities during the Term, Fantex shall pay Participant an amount equal to the Purchase Price, less only the sum of the Escrow Holdback and the Pre-Closing Brand Amount.

 

2.2.                            The Escrow Holdback shall be deposited into an escrow account established in accordance with Section 5 of the Terms and Conditions.

 

3.                        Offering.

 

3.1.                            Subject to the terms and conditions of this Agreement, Fantex will use commercially reasonable efforts to conduct the Offering as promptly as practicable after the Effective Date.

 

3.2.                            Fantex hereby represents, warrants and covenants, as applicable, that following the Offering (if it occurs): (a) the Series shall be publicly traded on an exchange or alternative trading system registered with the SEC, (b) FBS shall be a broker-dealer registered with the SEC, and (c) FBS shall be a member of FINRA.

 

3.3.                            Upon written request from Participant from time to time after the commencement of the Offering, Fantex shall provide to Participant reasonable information regarding the progress in connection with the Offering and demand for the Series.

 

4.                        Financing Contingency.

 

4.1.                            The obligations of Fantex to pay the Purchase Price and consummate the transactions contemplated by this Agreement are subject to Fantex obtaining the financing to pay the Purchase Price as contemplated by the Offering, unless waived in writing by the Participant.

 

 

4.2.                            If the Offering does not result in aggregate Net Proceeds at least equal to the Purchase Price (or Fantex does not otherwise waive such condition) on or before the earlier of (a) the date that is one month after the effectiveness of the Registration Statement and (b) October 31, 2014, or such later date agreed to in writing by the Parties, then as the sole and exclusive remedy therefor, each of Fantex and Participant shall have the unilateral right, exercisable in its sole and absolute discretion, to terminate this Agreement, which termination shall be automatically effective immediately upon delivery of written notice to the other Party.

 

5.                        Closing.

 

5.1.                            The consummation of the Offering (the “Closing”) shall occur on such date as shall be reasonably determined by Fantex, but in no event greater than ten (10) days, after either (a) Fantex has received commitments to purchase the Series such that the Net Proceeds would equal or exceed the Purchase Price, or (b) Fantex has elected in writing to waive the condition contained in the foregoing clause (a).

 

5.2.                            Upon Closing, Participant will execute and provide to Fantex a written certification in the form attached as Exhibit D.

 

6.                        Brand Amount; Assignment for Security; Deferral of Brand Income.

 

6.1.                            Except with respect to Brand Income in the form of stock or other equity interests (which is addressed in Section 7) or as otherwise agreed in writing by Fantex in its sole discretion with respect to Merchandise Income (on a case-by-case basis), Participant shall pay to Fantex an amount of cash equal to the Brand Amount, subject and pursuant to the terms of Section 4.1 of the Terms and Conditions.  To secure Fantex’s right to receive the payment equal to the Brand Amount, to the maximum extent permitted under applicable law in effect from time to time, Participant hereby assigns (as and when earned), or will assign when Participant has an assignable interest in any future Brand Amounts, to Fantex, all right, title and interest in and to the Brand Amount.

 

6.2.                            Prior to receipt of any Brand Income (other than Nonrecurring Brand Income) after the Closing, except as otherwise agreed to in writing by Fantex (email correspondence from the CEO, Chief Financial Officer or Chief Legal Officer of Fantex is acceptable), Participant shall (a) execute and deliver to each payor of Brand Income under all contracts existing at such time an irrevocable payment instruction in the form attached as Exhibit G, and (b) execute and deliver such additional documents or take such other actions as reasonably requested by Fantex to effectuate and perfect an assignment by Participant of the Brand Amount to secure Participant’s payment obligations to Fantex hereunder. To the extent that (x) any part of the Brand Amount is resulting from Nonrecurring Brand Income, (y) it is not commercially practical, without unreasonable burden to Participant, for installments of the Brand Amount to be delivered directly to Fantex, or (z) any assignment of the Brand Amount (or any portion thereof) is deemed invalid or not enforceable, then such installments of the Brand Amount shall be received by Participant as agent for Fantex, and Participant shall pay and deliver such installments of the Brand Amount to Fantex promptly after the receipt of the corresponding Brand Income by Participant (but in no event later than the fifteenth (15th) day following the receipt of such Brand Amount) pursuant to the timing and other terms as set forth in Section 4.1 of the Terms and Conditions.

 

6.3.                            Notwithstanding anything to the contrary herein, to the extent that Participant receives any Brand Income after the Effective Date but prior to the Closing, then within five (5) business days after receipt of such Brand Income (but no later than the Closing), Participant shall report to Fantex the amount and source of such Brand Income, but shall not be required to pay such Brand Amounts associated therewith (the “Pre-Closing Brand Amount”) prior to the Closing, which Pre-

 

 

Closing Brand Amount shall be deducted from the Purchase Price to be paid to Participant hereunder.

 

6.4.                            In the event that Participant elects to voluntarily defer receipt of any Brand Income (so that such Brand Income is actually received by Participant at a date later than when Participant has the right to receive such Brand Income pursuant to the applicable Brand Income Contract), then for purposes of this Agreement, such Brand Income shall be deemed to have been received on the date that Participant has the right to receive such Brand Income pursuant to the applicable Brand Income Contract.

 

7.                        Equity Income.  In the event that Participant receives, pursuant to any Brand Income Contract, stock or other equity interests (including membership interests and partnership interests), or options, warrants or other rights to acquire any of the foregoing interests in any other Person (collectively, “Equity Income”), then the following shall apply:

 

7.1.                            Notice and Response:

 

7.1.1.                  Participant shall provide reasonable advance written notice (an “Equity Deal Notice”) to Fantex prior to entering into any Brand Income Contract pursuant to which Participant may receive Equity Income, including all details reasonably necessary for Fantex to evaluate such Equity Income.

 

7.1.2.                  Fantex will use commercially reasonable efforts to respond to each Equity Deal Notice within five (5) business days (but no later than ten (10) business days), indicating whether or not Fantex elects to (x) participate in the applicable Equity Income by being issued and holding a direct equity interest in the applicable issuer of such Equity Income (“Direct Fantex Equity”) in an amount calculated by multiplying the Brand Percentage by the shares, membership interests, units (or other reasonable means of measurement) of such Equity Income payable to Participant (any of the foregoing, a “Fantex Equity Interest”), or (y) indirectly participate in the applicable Equity Income as described in Section 7.4 (“Indirect Fantex Equity”).

 

7.1.3.                  If Fantex fails to timely respond to any Equity Deal Notice, then Fantex shall be deemed to have expressly rejected receiving the Direct Fantex Equity with respect to such Brand Income Contract, and elected instead to receive Indirect Fantex Equity.

 

7.1.4.                  If the terms and conditions with respect to any Equity Income change from what were previously presented to Fantex in any Equity Deal Notice, then Participant shall provide a new Equity Deal Notice to Fantex with the updated terms and conditions, and this Section 7.1 shall apply to such new Equity Deal Notice.

 

7.2.                            Fantex Participation; Reimbursement of Costs:

 

7.2.1.                  If Participant is required to make any payment in consideration for such Equity Income (e.g. payments required by the terms of exercise of any options, warrants or other similar rights to acquire stock or other equity interests) (an “Exercise Payment”), and Fantex elects to receive either Direct Fantex Equity or Indirect Fantex Equity, then Fantex shall contribute to Participant (in the case of Indirect Fantex Equity), or pay directly to the applicable issuer (in the case of Direct Fantex Equity) an amount equal to the product of the Brand Percentage multiplied by such Exercise Payment timely and in accordance with the terms of the applicable Brand Income Contract relating to such Equity Income (which shall be deemed to include any subscription agreement, warrant, option agreement or other agreement pursuant to which Participant and Fantex, if applicable, is granted or issued such Equity Income).

 

7.2.2.                  Fantex shall pay to Participant an amount equal to the amount of any self-employment taxes payable by Participant, or the amount of any payroll, medicare or FICA taxes or other deductions or payments required to be made to any federal, state or local government

 

 

(other than taxes based on the income of Participant), in each case to the extent resulting from any Direct Fantex Equity or Indirect Fantex Equity, as applicable.  Fantex shall pay such amounts due under this Section 7.2.2 within five (5) business days after receipt of notice from Participant detailing such amounts (which notice will be delivered after delivery of the stock certificates or other documentation evidencing such Equity Income, or in the case of a warrant, option or other similar right to acquire stock or other equity interest, after exercising such warrant, option or right to acquire the stock or other equity interest).

 

7.2.3.                  In addition, to the extent that Participant incurs any additional cost or expense resulting from Fantex participating (whether via Direct Fantex Equity or Indirect Fantex Equity) in such Equity Income, then Fantex shall pay such incremental costs incurred by Participant (i.e., over and above such amounts that Participant would have incurred but for Fantex’s participation).

 

7.3.                            Direct Fantex Equity.  If Fantex elects to receive Direct Fantex Equity, then Participant shall use commercially reasonable efforts to cause the issuer of such equity to issue the applicable Fantex Equity Interest directly to Fantex; provided, however, that if (after such efforts by Participant) such issuer does not agree to issue the applicable Fantex Equity Interest directly to Fantex, then Fantex shall receive Indirect Fantex Equity with respect to such Equity Income as provided in Section 7.4.  If Fantex receives Direct Fantex Equity and Participant is required to execute any documentation (including subscription agreements, warrants and option agreements) for such Equity Income, then Fantex shall be required to execute substantially similar documentation, as applicable.

 

7.4.                            Indirect Fantex Equity.  If Fantex receives Indirect Fantex Equity (whether by Fantex’s election, or because the issuer of such Equity Income does not agree to issue Direct Fantex Equity to Fantex), then, without limiting Fantex’s obligations under Section 7.2, (y) Fantex shall be entitled to receive as part of the Brand Amount hereunder an amount equal to the Brand Percentage of any Distributions to Participant with respect to such Equity Income, and (z) upon Fantex’s request, Participant will grant to Fantex a security interest in such Equity Income, and will do all acts and execute and deliver, or cause to be executed and delivered, all agreements, documents and instruments that Fantex may reasonably require, and take all further steps relating to the Equity Income and such security interest that Fantex may reasonably require, to perfect such security interest and Fantex’s rights therein and hereunder.

 

8.                        Co-Investment Opportunity:  In the event that Participant receives, pursuant to any Brand Income Contract, the right or opportunity to invest in any other Person, including the right to purchase any stock or other equity interests (including membership interests and partnership interests) (each, a “Brand Investment Opportunity”), then the following shall apply:

 

8.1.                            Notice and Response:

 

8.1.1.                  Participant shall provide reasonable advance written notice (an “Investment Deal Notice”) to Fantex prior to entering into any Brand Income Contract pursuant to which Participant receives any Brand Investment Opportunity, including all details reasonably necessary for Fantex to evaluate such Brand Investment Opportunity.

 

8.1.2.                  Fantex will use commercially reasonable efforts to respond to each Investment Deal Notice within five (5) business days (but no later than ten (10) business days), indicating whether or not Fantex elects to (a) participate in the applicable Brand Investment Opportunity by being issued and holding a direct equity interest in the applicable issuer of such equity (“Direct Fantex Co-Investment”) in an amount calculated by multiplying the Brand Percentage by the number of shares, membership interests, units (or other reasonable means of measurement) applicable to such Brand Investment Opportunity (any of the foregoing, a “Fantex Co-Investment

 

 

Interest”), or (b) indirectly participate in the applicable Brand Investment Opportunity as described in Section 8.4 (“Indirect Fantex Co-Investment”).

 

8.1.3.                  If Fantex fails to timely respond to any Investment Deal Notice, then Fantex shall be deemed to have expressly rejected participating as either a Direct Fantex Co-Investment or an Indirect Fantex Co-Investment with respect to such Brand Investment Opportunity, and elected instead to not participate in such Brand Investment Opportunity.

 

8.1.4.                  If the terms and conditions with respect to any Brand Investment Opportunity change from what were previously presented to Fantex in any Investment Deal Notice, then Participant shall provide a new Investment Deal Notice to Fantex with the updated terms and conditions, and this Section 8.1 shall apply to such new Equity Deal Notice.

 

8.2.                            Fantex Participation; Reimbursement of Costs:

 

8.2.1.                  If Participant is required to make any payment as consideration for any equity interest being issued in connection with such Brand Investment Opportunity (e.g., payments required for the purchase of any such equity interests) (a “Purchase Payment”), and Fantex elects to participate in such Brand Investment Opportunity either as a Direct Fantex Co-Investment or an Indirect Fantex Co-Investment, then Fantex shall contribute to Participant or such other Person as the Parties may mutually agree depending on the structure of the Indirect Fantex Co-Investment (in the case of an Indirect Fantex Co-Investment), or pay directly to the applicable issuer (in the case of a Direct Fantex Co-Investment) an amount equal to the product of the Brand Percentage multiplied by such Purchase Payment timely and in accordance with the terms of the applicable Brand Income Contract relating to such Brand Investment Opportunity (which shall be deemed to include any subscription agreement, purchase agreement or other agreement pursuant to which Participant and Fantex, if applicable, participates in such Brand Investment Opportunity).

 

8.2.2.                  In addition, to the extent that Participant would incur any additional cost or expense resulting from Fantex participating (whether via Direct Fantex Co-Investment or Indirect Fantex Co-Investment) in such Brand Investment Opportunity (including costs relating to the structuring or documentation of any joint ventures, investment vehicles, special purpose entities or similar relationships between the Parties to hold the securities relating to such Brand Investment Opportunity), then Fantex shall pay directly, or reimburse Participant for, such incremental costs incurred by Participant (i.e., over and above such amounts that Participant would have incurred but for Fantex’s participation).

 

8.3.                            Direct Fantex Co-Investment.  If Fantex elects to participate in a Direct Fantex Co-Investment, then Participant shall use commercially reasonable efforts to cause the issuer of such equity to issue the applicable Fantex Co-Investment Interest directly to Fantex; provided, however, that if (after such efforts by Participant) such issuer does not agree to issue the applicable Fantex Co-Investment Interest directly to Fantex, then Fantex shall instead participate via an Indirect Fantex Co-Investment with respect to such Brand Investment Opportunity as provided in Section 8.4.  If Fantex participates in a Direct Fantex Co-Investment and Participant is required to execute any documentation (including subscription agreements and purchase agreements) in connection with such Brand Investment Opportunity, then Fantex shall be required to execute substantially similar documentation, as applicable.

 

8.4.                            Indirect Fantex Equity.

 

8.4.1.                  If Fantex participates in a Brand Investment Opportunity via an Indirect Fantex Co-Investment (whether by Fantex’s election, or because the issuer of the equity interest related to such Brand Investment Opportunity does not agree to permit a Direct Fantex Co-Investment), then, without limiting Fantex’s obligations under Section 8.2, (a) Fantex shall be entitled to

 

 

receive as part of the Brand Amount hereunder an amount equal to the Brand Percentage of any Distributions to Participant with respect to such Brand Investment Opportunity, and (b) upon Fantex’s request, Participant will grant to Fantex a security interest in such equity acquired pursuant to such Brand Investment Opportunity, and will do all acts and execute and deliver, or cause to be executed and delivered, all agreements, documents and instruments that Fantex may reasonably require, and take all further steps relating to the Brand Investment Opportunity and such security interest that Fantex may reasonably require, to perfect such security interest and Fantex’s rights therein and hereunder.  For the avoidance of doubt, and notwithstanding anything to the contrary contained elsewhere in this Section 8, it is the mutual intention of the Parties (to be interpreted in the broadest possible manner) that Participant shall not have, incur or suffer any liability, responsibility, damage, cost or expense, including any self-employment taxes payable by Participant, or the amount of any payroll, medicare or FICA taxes or other deductions or payments required to be made to any federal, state or local government, in connection with Fantex participating in a Brand Investment Opportunity via an Indirect Fantex Co-Investment (collectively, a “Transaction Liability”), regardless of its structure or the events or circumstances leading thereto, in excess of the Transaction Liabilities that Participant would have had, incurred or suffered had Fantex not participated in such Brand Investment Opportunity (such excess, the “Incremental Cost”).  Furthermore, if any Indirect Fantex Co-Investment results in Participant incurring any Incremental Cost, then, within five (5) business days after delivery by Participant to Fantex of reasonably satisfactory supporting documentation, Fantex shall pay Participant an amount equal to such Incremental Cost.

 

8.4.2.                  In the event that Fantex elects to participate in a Brand Investment Opportunity other than via a Direct Fantex Co-Investment, then (without limiting the effect of Section 8.4.1 with respect to Incremental Costs), the Parties shall in good faith use best efforts to structure such transaction in a manner that is efficient to both Parties from an overall tax and expense perspective.

 

9.                        Participant Owned Businesses.   In the event that Participant intends to invest in (alone or with others) or establish a business that would qualify as a Participant Owned Business after the closing of such investment, then the following shall apply:

 

9.1.                            Notice and Response.

 

9.1.1.                  Participant shall provide reasonable advance written notice (an “Owned Business Notice”) to Fantex prior to commencing or investing in any business that would meet the definition of a Participant Owned Business, including all details reasonably requested by Fantex in writing, which are necessary for Fantex to evaluate such Participant Owned Business.

 

9.1.2.                  Fantex will use commercially reasonable efforts to respond to each Owned Business Notice within five (5) business days (but no later than ten (10) business days), indicating whether or not Fantex elects to participate in the applicable potential Participant Owned Business by being issued and holding an equity interest in the Participant Owned Business in an amount calculated by multiplying the Brand Percentage by the shares, membership interests, units (or other reasonable means of measurement) of such Participant Owned Business to be held by Participant.

 

9.1.3.                  If Fantex fails to timely respond to any Owned Business Notice, then Fantex shall be deemed to have expressly rejected participating in the Participant Owned Business.

 

9.1.4.                  If the details of any Participant Owned Business change from what were previously presented to Fantex in any Owned Business Notice, then Participant shall provide a new Owned Business Notice to Fantex with the updated terms and conditions, and this Section 9.1 shall apply to such new Owned Business Notice.

 

 

9.2.                            Fantex Participation; Reimbursement of Costs.

 

9.2.1.                  If Fantex elects to participate in any Participant Owned Business, then (subject to Section 8.2.5) Fantex shall contribute to the applicable Participant Owned Business an amount of investment capital equal to the product of the Brand Percentage multiplied by the amount of the capital investment to be made by Participant in accordance with the terms contained in the Owned Business Notice (or otherwise mutually agreed by the Parties).  Notwithstanding Fantex’s election to participate in a Participant Owned Business, except as otherwise agreed to in writing by Participant and Fantex, Fantex shall have the same rights or entitlements with respect to its investment in such Participant Owned Business pari passu with the rights or entitlements of Participant and other rights provided by statute or the charter or other governing documents of such Participant Owned Business.

 

9.2.2.                  Fantex shall pay such amounts due under this Section 9.2 within five (5) business days after receipt of notice from Participant detailing such amounts, and provided that Fantex has received delivery of the applicable stock certificates or other documentation evidencing such participation by Fantex prior to, concurrent with or within a commercially reasonable time after such payment being due.

 

9.2.3.                  In addition, to the extent that Participant incurs any additional cost or expense resulting from Fantex participating in such Participant Owned Business, then Fantex shall promptly pay, or reimburse Participant for, such incremental costs incurred by Participant (i.e., over and above such amounts that Participant would have incurred but for Fantex’s participation).

 

9.2.4.                  If Participant is required to execute any documentation (including subscription agreements, warrants and option agreements) in connection with any Participant Owned Business, then Fantex shall execute substantially similar documentation, as applicable, in connection with its participation.

 

9.2.5.                  If Fantex elects to participate in any Participant Owned Business pursuant to this Subsection 9, but such direct participation by Fantex is not possible for any reason, then the Parties shall cooperate in good faith to devise and implement commercially reasonable means (without causing any undue burden to Participant) for Fantex to indirectly participate and receive the same practical benefit of a direct participation in such investment.

 

10.                 Merchandise Income.  In the event that Participant receives Merchandise Income, then the Brand Income applicable to such Merchandise Income shall be equal to the fair market value of such goods or services determined as follows: (a) the Parties shall seek to reach mutual agreement of such value within ten (10) business days after receipt thereof by Participant, and (b) if the Parties fail to reach such agreement within such period of time, then the Parties shall engage an independent third party appraiser (if the Parties fail to mutually agree on an appraiser within five (5) business days, then either Party may petition JAMS to promptly appoint such an appraiser), and the Parties shall be bound by the determination of any such appraiser, which shall be delivered in writing within fifteen (15) days after the appraiser’s selection or appointment.  The cost and expenses associated with such an appraiser (and any petition to JAMS) shall be shared by the Parties in proportion to their respective interest in such Brand Income (i.e., Fantex shall pay a portion of such costs and expenses equal to the Brand Percentage).

 

11.                 Claw Back.

 

11.1.                     Claw Back.  If Talent resigns from his employment as a Professional Athlete in the League at any time prior to the second anniversary of the Closing for any reason other than Good Reason, Fantex may elect, in its sole discretion, to terminate this Agreement upon written notice to Participant (the date of such notice is hereinafter referred to as the “Termination Date”).  In the event of such termination, Participant shall pay to Fantex, not later than thirty (30) days following

 

 

the Termination Date, an amount equal to (a) the Purchase Price plus an amount equal to the Underwriting Amount, minus (b) all Brand Amounts previously paid to Fantex, including the Pre-Closing Brand Amount.  In addition, Participant shall concurrently pay to Fantex interest on the Purchase Price at the rate of five percent (5%) per annum, measured from the date the Purchase Price was paid to Participant.

 

11.2.                     Dispute Resolution.  In the event of any dispute between Fantex and Participant concerning whether there is Good Reason for any resignation by Talent from his employment as a Professional Athlete, then the Parties shall engage in informal, good faith discussions and attempt to resolve such dispute.  If the Parties are unable to resolve such dispute, then existence of Good Reason shall be determined by a qualified physician selected by agreement of the Parties or, if no agreement can be reached, then each Party shall select a physician qualified in the field applicable to the claimed Good Reason, and those two physicians shall select a third physician qualified in such field to make the final determination regarding such claimed Good Reason.

 

12.                 Limited Brand Income Encumbrances.

 

12.1.                     In addition to (i.e., exclusive of) the Brand Percentage, Participant shall ensure that the aggregate amount of all other encumbrances on any Brand Income in connection with the payment of agents, financial advisors and any other fee arrangements based on a percentage of Participant’s income (or any portion thereof) shall not exceed a maximum of (a) fifteen percent (15%) of all Brand Income resulting from any employment or player contracts in any given year, and (b) thirty percent (30%) of all other Brand Income in any given year.

 

12.2.                     Without Fantex’s prior written approval, Participant shall not enter into any other arrangement similar to this Agreement (i.e., pursuant to which Participant receives compensation in exchange for a portion of Participant’s future Brand Income) with respect to any portion of the Brand Income.

 

13.                 Term.  The term of this Agreement shall commence as of the Effective Date and shall continue in perpetuity unless and until terminated pursuant to the terms of this Agreement (the “Term”).

 

14.                 Notices.  All notices, requests, consents and other communications required or given by the Parties hereunder shall be in writing and shall be deemed to be delivered (a) on the date delivered, if personally delivered or transmitted via facsimile or electronic mail with return confirmation of such transmission; (b) on the business day after the date sent, if sent by recognized overnight courier service and (c) on the fifth day (or on the next business day thereafter if such fifth day is not a business day) after the date sent, if mailed by first-class certified mail, postage prepaid and return receipt requested, to the addresses of the applicable Party set forth below:

 

If to Participant:

 

Mohamed Aasin Sanu

16 Jeffrey Circle

Dayton, NJ 08810

Fax:

Email:

 

with a copy (which is required, but not alone sufficient, to constitute notice hereunder) to:

 

Pepper Hamilton LLP

The New York Times Building

620 Eighth Avenue

New York, NY 10018

 

 

Attention: Brian Korn, Esq. and Andrew Kupchik, Esq.

Fax: (866) 254-6045 and (800) 801-5349

Email: kornb@pepperlaw.com and kupchika@pepperlaw.com

 

If to Fantex:

 

Fantex, Inc.

330 Townsend Street, Suite 234

San Francisco, CA 94107

Attention: Mr. David Mullin, Chief Financial Officer, and

Mr. Bill Garvey, Chief Legal Officer

 

with a copy (which is required, but not alone sufficient, to constitute notice hereunder) to:

Latham & Watkins

140 Scott Drive

Menlo Park, CA 94025

Attn: Patrick Pohlen

Fax: (650) 463-2600

Email: Patrick.Pohlen@lw.com

 

15.                 Standard Terms and Conditions.  The Parties agree to be bound by Fantex’s Standard Terms and Conditions attached hereto as Exhibit C (the “Terms and Conditions”), which are incorporated herein by this reference.  Any reference in this Agreement or the Terms and Conditions to this “Agreement” shall be deemed to be a reference to this Agreement and the Terms and Conditions, taken as a whole.

 

Upon execution by both Participant and Fantex, this Agreement and the exhibits attached hereto shall constitute a binding commitment of the Parties, as the entire agreement and understanding between the Parties concerning the subject matter hereof and thereof, and shall supersede and replace all prior negotiations, proposed agreements, and discussions, written or oral, relating hereto or thereto.

 

[Signatures on following page]

 

 

Please confirm your agreement with the foregoing by signing where indicated below.

 

 

	
PARTICIPANT:
    	
 
    	
FANTEX:
    
	
 
    	
 
    	
 
    
	
Mohamed Aasin Sanu
    	
 
    	
Fantex, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Mohamed Aasin Sanu
    	
 
    	
By:
    	
/s/   David Mullin
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
May 14, 2014
    	
 
    	
Name:
    	
David   Mullin
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Date:
    	
May 14,   2014
    

 

 

Schedule 1.19

 

Excluded Income

 

1.              All proceeds paid to Talent or the heirs, executors, administrators, successors and assigns of Talent solely with respect to any life, disability or injury insurance policy purchased by Talent after the Effective Date.

 

2.              All compensation from seasons prior to the Effective Date, regardless as to when such compensation is paid, including but not limited to Talent’s 2013 Player Performance Bonus (Article 28 of the CBA) in the amount of $159,254 (expected to be paid in 2016).

 

3.              All consideration payable to Talent, through June 30, 2014, pursuant to the Football Contract between Talent and Nike USA, Inc. dated October 7, 2012.

 

 

Exhibit A

Participant Questionnaire

 

Please answer each of the following questions correctly and completely as of the Effective Date.  The completeness and accuracy of each such statement must be answered from the perspective of the Talent and must be initialed by the Talent on behalf of himself where indicated.  Capitalized terms used but not defined in this questionnaire shall have their respective meanings set forth in the Brand Agreement to which this questionnaire is attached (the “Agreement”).

 

IMPORTANT:  Review each of the following statements and initial each statement where indicated.  By placing your initials next to each below statement you hereby represent, warrant and covenant, as applicable, that each such statement is true and complete, except only as otherwise disclosed on Schedule 3 of the Personal Information Schedule delivered to Fantex in connection with the Agreement.

 

In addition, please provide copies of all documents or other information specifically requested as part of the below statements and/or relevant to any matter for which additional information has been disclosed pursuant to Schedule 3 of the Personal Information Schedule.

 

IT IS IMPORTANT FOR PARTICIPANT TO ENSURE THE ACCURACY AND COMPLETENESS OF ALL INFORMATION PROVIDED TO FANTEX, WHICH WILL BE RELIED UPON BY FANTEX IN CONNECTION WITH THE POTENTIAL SECURITIES OFFERING AND OTHER MATTERS UNDER THIS AGREEMENT.

 

	
Initials
    	
 
    	
Statement
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
1.   I have read and fully understand the terms and conditions of the Agreement,   and I have had the opportunity to be represented by an attorney in the   review, negotiation and execution of the Agreement and performance of my   obligations thereunder.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
2.   I have not made, nor will I hereafter make, any grant, license or assignment   whatsoever, which might conflict with or impair the complete enjoyment of the   rights and privileges granted to Fantex under the Agreement.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
3.   I do not require any consent, approval, authorization or permit from, or   filing or notification to, any Person in connection with my execution and   delivery of the Agreement, and performance of my obligations thereunder.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
4.   I am not subject to any condition, restriction, disability or obligation   (whether physical, legal or contractual), and am otherwise not aware of any   material nonpublic information, which could prevent or interfere with my   continued participation as a Professional Athlete in a manner consistent with   such participation throughout the preceding year, and I will promptly   disclose the occurrence of any such event to Fantex as required pursuant to   Section 6.2 of the Terms and Conditions.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
5.   I have never been convicted in a criminal proceeding, nor have I been named   the subject of a criminal proceeding that is presently pending (excluding only   traffic violations and similar minor offenses).
    

 

 

	
Initials
    	
 
    	
Statement
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
6.   Except only as listed on Schedule 1 of the Personal Information Schedule,   no other Person has any right to receive any portion of my Brand Income in   the form of any commission, royalty or other payment based on a percentage or   set amount of some or all of the Brand Income. I have secured all necessary   consents to make available for review by Fantex (and have so made available)   a complete copy of each Contract pursuant to which any such payments are   owed.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
7.   No other Person has any right to demand or receive any portion of the Brand   Income in a manner that conflicts with any rights granted to Fantex under   this Agreement with respect to the Brand Amounts.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
8.   I Control all assets of Participant, including, if I have delegated the   management of any assets to a third party (“Manager”), then I have   also retained the right in my discretion (a) to approve and/or   disapprove any decision by a Manager regarding Participant’s assets, and   (b) to remove any Manager and/or change Managers at any time.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
9.   To the extent that I have delegated, or during the Term do delegate, the   management of any of my assets to a Manager, then throughout the Term   (subject only to the death or incapacity of Talent), I will:    (a) retain the right in my discretion to remove any Manager and/or   approve or disapprove any decision by a Manager regarding my assets,   (b) exercise reasonable control and oversight regarding each Manager’s   activities in connection with my assets, and (c) cause any such Manager   to comply with the terms and conditions of the Agreement, as applicable.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
10.   I am not a party (plaintiff or defendant) in any lawsuit, government   investigation, arbitration or other legal action, and to my knowledge, there   is no valid basis for any of the foregoing.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
11.   I am not subject to any judgment, order or decree of any court or other   government authority.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
12.   Schedule 2 of the Personal Information Schedule consists of (a) a   complete list of all Brand Income Contracts under which Participant is   obligated to perform, or from which Participant is entitled to receive any   benefit, on or after the Effective Date, and (b) a description of any   Participant Owned Businesses.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
13.   I have provided or made available to Fantex true, correct and complete copies   of each written Brand Income Contract, and an accurate detailed written   summary of each oral Brand Income Contract.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
14.   I am currently, and during the past three years have been, in compliance with   all material terms under each Brand Income Contract, to the extent   applicable, and Participant and I have not received any notice regarding any   breach, default, termination or attempt to renegotiate, with respect to any   Brand Income Contract.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
15.   I am not aware of any facts or circumstances that would cause the payments   under the Brand Income Contracts to be materially less than the amounts   specified in the Brand Income Contracts.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
16.   I am not aware of any material breach by any other party under any Brand   Income Contract.
    

 

 

	
Initials
    	
 
    	
Statement
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
17.   I have timely paid any taxes, fees or withholdings required by any state or   federal or international government authority. I have also timely filed all   forms and documentation required in connection with any such taxes, fees or   withholdings.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
18.   I am not, and have not been subject to any audit by a government authority in   connection with any taxes or governmental fees. I am not subject to any   unsatisfied judgments or tax liens.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
19.   I have not conducted business, applied for or secured credit in, or received   any official government identification under, any name or alias, other than   the name listed in Section 1 of the Personal Information Schedule   provided by Participant concurrently herewith.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
20.   Neither I, nor any business owned or Controlled by me, has ever declared   bankruptcy or settled any debt for less than the amounts actually owed.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
21.   I have the ability to pay all of my debts and obligations as such debts   mature and I do not have any present intention to incur debt beyond my   ability to pay as such debts mature.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
22.   I am not in violation of, and, subject to the immediately following sentence,   throughout the Term will not violate in any material respect, any   (a) laws, codes, permit requirements, rules, regulations, ordinances   and/or provisions of any foreign, federal, state or local government   authority, including with respect to employment, health and safety, wage and   hours, improper payments, bribery, taxation or securities laws; or   (b) rules, standards or requirements of any league, organization,   governing body or association to which I am a member or under which I am   bound to comply in connection with my participation in the Principal Business   as a Professional Athlete, including regarding gambling, anti-doping, or   reporting of any injury or incidents. Notwithstanding the immediately   preceding sentence, I am agreeing to the covenant contained in the   foregoing clause (b) on the express condition that any violation by me   of any “on field” rules of play (as stated in the applicable League   rulebook, as modified from time to time), or the interpretation or   enforcement of any of such rules of play, in each case solely to the   extent that it relates to my actions on the field of play (regardless of   whether any such violation carries with it a fine, suspension or any other   economic consequence to me imposed by the League or other applicable association),   shall not be deemed to be a breach of the foregoing clause (b).
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
23.   Without limiting the effect of any statement in this Exhibit A   (Participant Questionnaire), all of the documents and information that I have   provided, and will provide, to Fantex in connection with the Agreement   (including the Personal Information Schedule) are true, correct and complete   in all material respects, except with respect to any statement that, by its   terms, is already limited as to materiality. My responses to this   questionnaire (and any documents or other information provided by me to   Fantex in connection with the Agreement) do not, and will not, contain any   untrue statement or fail to state a material fact necessary to not make any   of such information not misleading, in light of the circumstances in which it   was provided.
    

 

 

	
Initials
    	
 
    	
Statement
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
24.   I have disclosed all facts and circumstances that could reasonably be   expected to be material to Fantex or a reasonable investor or potential   investor in the Series in the context of the transactions contemplated   by the Agreement, including any event required to be reported to the league,   organization, governing body or association to which I am a member or under   which I am bound to comply in connection with my participation in the   Principal Business as a Professional Athlete. I acknowledge my ongoing   obligations throughout the Term to disclose certain facts and circumstances   to Fantex as required pursuant to the terms of this Agreement, including as   set forth in Section 6 of the Terms and Conditions.
    
	
 
    	
 
    	
 
    
	
MS
    	
 
    	
25.   I have obtained advice from my advisors regarding the legal, tax and   accounting consequences of entering into the Agreement, becoming a Fantex   participant and the transactions contemplated by the Agreement, and I am not   relying on any representation, warranty or statement made by Fantex, or any   of its representatives or advisors, regarding such legal, tax and accounting   consequences of becoming a Fantex participant and the transactions   contemplated by the Agreement. I acknowledge and agree that Fantex is not,   and will not at any time be, an agent or representative to Participant.
    

 

 

Exhibit B

 

Exclusions From and Examples of Brand Income

 

The contents of this Exhibit B are incorporated by reference into and made a part of that certain Brand Agreement between Fantex and Participant to which it is attached (the “Agreement”).  Capitalized terms used but not defined in this Exhibit B shall have their respective meanings contained in the Agreement.

 

The following sources of revenue shall not be included in Brand Income:

 

a.              Any revenues resulting from Participant’s Passive Investments.

 

b.              Any income earned from employment, services rendered or other activities not in the Field.

 

c.               Any reasonable reimbursement of incidental expenses actually incurred by Participant, including travel, lodging, per diem and other incidental expenses, or the value of any such items paid by a third party on Participant’s behalf.

 

d.              Any Excluded Income.

 

Examples of income that would be Brand Income or businesses that would be Participant Owned Businesses include the following:

 

·                  50 Cent received an equity stake in Energy Brands as part of an endorsement deal for Vitamin Water.  The equity received by 50 Cent would be considered Equity Income under Section 6 of the Agreement because it was consideration for 50 Cent’s endorsement services and publicity rights.

·                  Magic Johnson founded Magic Johnson Enterprises to provide entertainment, products and services to urban communities. Commercial ventures pursued by Magic Johnson Enterprises may be a Participant Owned Business that Fantex would have the opportunity to participate in subject to Section 9 of the Agreement, and if so could result in Brand Income.   For example, any basketball camps owned by Magic Johnson Enterprises would be deemed Participant Owned Business because they are in the Field, and operating basketball camps is an activity typically undertaken by a professional basketball player.  However, a 24-Hour Fitness club owned by Magic Johnson Enterprises (but not bearing or branded with the Magic Johnson name) would not be considered a Participant Owned Business because Magic Johnson’s name and likeness are not used to promote the clubs.  Similarly, businesses owned by Magic Johnson such as movie theaters, restaurants and coffee shops that do not bear or are not branded with the Magic Johnson persona would not be considered Participant Owned Businesses (and thus not result in Brand Income), because those types of businesses neither relate to the Principal Business nor utilize Magic Johnson’s name in connection with its marketing, advertising or promotion.

·                  Talent plays any role on an episode of a television program.  Compensation paid to Talent for his performance in such episode would be considered Brand Income.

·                  Talent plays any role in a motion picture (or a made for TV movie, or a feature film distributed over the Internet).  Compensation paid to Talent for his performance in such motion picture would be considered Brand Income.

·                  Talent becomes the host of The Tonight Show.  Compensation paid to Talent for his services as a talk show host for The Tonight Show would be considered Brand Income.

·                  Talent receives a car lease worth $12,000 (i.e., value of monthly lease of $1,000) in exchange for endorsement services for a local car dealership, a $25,000 clothing allowance from an apparel company in exchange for endorsement services, and $3,000 worth of products and service plans 

 

 

from a wireless phone carrier (i.e., a total of $40,000 of Merchandise Income) in exchange for endorsement services.  All of such Merchandise Income would be included in Brand Income.  However, solely for purposes of calculating the Brand Amount, Participant would be entitled to deduct from its Brand Income for such year all of such Merchandise Income under its Merchandise Income Deduction (assuming that such amount is less than 4% of all Brand Income earned by Participant that year).  If, in addition to the foregoing Merchandise Income, Participant also received computer equipment in exchange for endorsement services from a retailer with a fair market value of $5,000, then such $5,000 of Merchandise Income would not be deductible from Brand Income for such year because it exceeds the amount of the allowable Merchandise Income Deduction.

·                  Talent receives a 2014 Chevrolet Corvette Stingray as the Super Bowl XLVIII Most Valuable Player.  The cash value of the MSRP of the Corvette would be considered Brand Income because it was earned by Talent for his performance as a Professional Athlete.  However, solely for purposes of calculating the Brand Amount, up to $40,000 (or 4% of all Brand Income, if less than $40,000) of such value would be deductible from Brand Income for such calendar year under the Merchandise Income Deduction (and assuming there were no other Merchandise Income Deductions) for such year.

 

Examples of types of income that would not be Brand Income include the following:

 

·                  John Elway received an equity stake in Fantex Holdings, Inc., the parent company of Fantex, because he serves on the board of directors.  John Elway’s equity stake in Fantex Holdings, Inc. would not be considered Brand Income because his service as a director of Fantex Holdings is not in the Field.

·                  Arnold Schwarzenegger served as the governor of California from 2003 to 2011. His income from the state of California would not be considered Brand Income because it is not in the Field.

·                  Kerri Strug was employed as an elementary school teacher and in various positions at the U.S. Treasury and Justice Departments. Her employment as a teacher and various positions at the U.S. Treasury and Justice Departments would not be considered Brand Income because such employment was based on her educational background, training and professional skills unrelated to gymnastics, and her salary did not exceed the ordinary amount paid to employees in such position with a similar educational background, training and professional skills and is not in the Field.

 

 

Exhibit C

Fantex Brand Agreement

Standard Terms and Conditions

 

1.              General; Definitions; Interpretation.

 

These Fantex Brand Agreement Standard Terms and Conditions (these “Terms and Conditions”) are incorporated by reference into and made a part of that certain Brand Agreement between Fantex and Participant to which it is attached (the “Agreement”). Capitalized terms used in these Terms and Conditions and not otherwise defined herein, shall have the meaning set forth in the Agreement.  In the event of any inconsistency or conflict between these Terms and Conditions and the Agreement to which these Terms and Conditions is attached, the terms of the Agreement shall govern.

 

2.              Offering.

 

2.1.              Offering. Fantex will use commercially reasonable efforts to conduct the Offering of the Series as promptly as practicable after the Effective Date.  In connection with such Offering, Participant recognizes that Fantex shall have the sole and exclusive right to (and to authorize any other Person to) promote and offer for sale the Series in connection with the Offering.

 

2.2.              Further Assurances; Credit Report Consent. Participant shall execute and deliver to Fantex such further documents, information, consents, forms, instruments, certificates, and other deliveries as Fantex shall reasonably request in writing to further effectuate the intentions of the Parties under this Agreement, or so Fantex can comply with any applicable legal requirements and Participant recognizes that Fantex will rely on information provided by Participant in the preparation and submission of the Registration Statement and materials to meet other reporting obligations as required by applicable law.  Participant shall reasonably cooperate with Fantex, upon Fantex’s specific request, in connection with the offering, marketing and sales of the Offering and the Series; provided, that any such cooperation that would require any personal services on the part of Talent shall be at times and for durations mutually agreed to by Fantex and Participant; provided further, that any such personal services in the form of a personal appearance by Talent shall be on terms mutually agreed to by Fantex and Participant. Participant hereby consents to Fantex and its agents or representatives (i) obtaining reports of Participant’s credit records from time to time throughout the Term of this Agreement (as reasonably determined by Fantex and at Fantex’s sole cost and expense), and (ii) using the information from that report in connection with any diligence related to Participant and the Offering, and reporting obligations under applicable law.  Upon request by Participant, Fantex shall provide to Participant a copy of any report of Participant’s credit records that is received by Fantex.

 

2.3.              Participant Name and Likeness.  Fantex shall have the non-exclusive, irrevocable, fully paid, worldwide right to use and to authorize other Persons, as determined by Fantex, in its reasonable discretion, to use Participant’s Persona from the Effective Date until the termination of this Agreement through any and all distribution channels in connection with the offering, marketing and sales of the Offering or the Series; provided, however, that Fantex shall not make any use, or authorize any other party to make any use, of any part of Participant’s Persona without the prior written approval of Participant; provided further, that any use of Participant’s Persona approved by Participant shall be deemed to be approval of subsequent uses of the same previously approved use until the time that Participant provides written notice to the contrary to Fantex.

 

2.4.              Participant Restrictions.

 

(i)                                                   No Promotion of Series. Except as otherwise expressly approved by Fantex in writing, Participant shall not, and shall not authorize any other Person to, solicit, promote or offer the Series in connection with the Offering.  To the extent that Participant receives unsolicited requests for information regarding the Offering or the Series, then except as otherwise expressly approved by Fantex in writing, Participant shall refer such inquiry to the Registration Statement or to one of the Underwriters of the Offering.

 

(ii)                                                No Assignment of Similar Rights. Participant has not and will not assign or grant to any other Person rights to receive a portion of Brand Income other than (a) as may be granted in the ordinary course of pursuing activities in the Principal Business (such as commissions payable to an agent or financial advisors); (b) in a manner that will not conflict with the rights granted to Fantex, or the obligations of Participant, hereunder with respect to any installment payment of the Brand Amount, and (c) in an amount that would not violate any other the terms of this Agreement.

 

3.              Purchase Price.

 

3.1.              Payment.  Within fifteen (15) days after the Closing of the Offering, Fantex shall pay to Participant 

 

 

an amount equal to the Purchase Price, less the Escrow Holdback and less the Pre-Closing Brand Amount, via wire transfer (less any fees charged by any third party in connection with such transfer, such as bank fees) pursuant to the instructions provided in the Personal Information Schedule, or such updated wire transfer instruction as may be provided by Participant to Fantex in writing from time to time.

 

4.              Brand Amount.

 

4.1.              Payment Terms.

 

(i)                                                   Direct Payment.  Participant shall deliver an irrevocable payment instruction in the form attached as Exhibit G to the Agreement to each payor of Brand Income (other than Nonrecurring Brand Income), and otherwise use commercially reasonable efforts to ensure that the Brand Amount is assigned to Fantex and delivered directly to Fantex from each such payor of Brand Income.  To the extent that direct payment from the source of the Brand Income is not commercially practical, without unreasonable burden on Participant, or any assignment of Brand Income is deemed invalid or not enforceable, then Participant shall comply with paragraph (ii) below and use commercially reasonable efforts to set up automated payments of installments of the Brand Amount through Participant’s banking relationships.

 

(ii)                                                Alternative Payment; Timing.  To the extent that it is not commercially practical, without unreasonable burden on Participant, for Brand Amounts to be delivered directly to Fantex from any payor of Brand Income, or any assignment of Brand Income is deemed invalid or not enforceable, then Participant shall receive such portion of the Brand Amount as agent for Fantex and will deliver such portion of the Brand Amount to Fantex as and when (or as promptly as practicable after) such Brand Income is received by Participant; provided, however, that in no case shall any Brand Amount be delivered later than fifteen (15) days following receipt of funds by Participant (or any other Person on behalf of Participant) with respect to such payment.

 

(iii)                                             Wire Transfer.  Except as otherwise approved by Fantex in writing, each installment payment of the Brand Amount shall be made via wire transfer pursuant to the wire transfer instructions provided by Fantex to Participant in writing, as may be updated by Fantex from time to time; provided, however, that to the extent that any individual installment payment of the Brand Amount is less than $500, such amount may be paid via check.

 

4.2.              Additional Provisions.

 

(i)                                                   In the event that Participant is prohibited from making payment of any installment of the Brand Amount at the time when same is due and payable to Fantex hereunder by reason of any applicable laws, including currency regulations, Participant shall promptly so advise Fantex and Participant shall, upon Fantex’s request, deposit any such blocked funds to the credit of Fantex in a bank or banks or other depository institution as permitted by law and designated in writing by Fantex, or pay them promptly to such Persons as Fantex may designate in writing consistent with applicable law.

 

(ii)                                                Participant acknowledges and agrees that time is of the essence in connection with its payment obligations hereunder.  In the event that any payment due to Fantex hereunder is not paid in full by the applicable date due (unless there is a cure period, then by the date the cure period ends), then, without limiting any other rights or remedies of Fantex, Participant shall also pay to Fantex interest on such amount at the rate of the lesser of (a) the then current prime rate (as reported in the Wall Street Journal) plus three percent (3%) per year, compounded monthly, or (b) the maximum rate permitted by applicable law, measured from the date such amount was due until it is fully paid.

 

(iii)                                             Participant acknowledges and agrees that Fantex may disclose to the public any material breach by Participant of this Agreement, including any failure of Participant to pay any amounts as and when due hereunder (subject to applicable notice and cure periods contained herein); provided, that Fantex covenants and agrees not to make any such disclosure without first notifying Participant and giving Participant a reasonable amount of time to cure such breach, except that no such cure period is required in the event of at least two prior instances of a similar breach (with such notice provided in each instance) during the 12 months period prior to such breach.

 

4.3.              Records.  Participant shall, and shall cause its Affiliates to, maintain (until at least twelve months after termination of this Agreement), records of all Brand Income Contracts, receipts, invoices, reports and other documents relating to the Brand Income and Brand Amount for at least the then current year and previous three (3) calendar years (or such longer period as may be required by law); provided, that the foregoing obligation shall not extend to any time period prior to the Effective Date.

 

 

4.4.              Audit Rights.  Commencing upon the Effective Date and continuing through the date that is twelve (12) months after termination of this Agreement (“Audit Period”), Fantex or its representatives shall have the right to inspect and make copies of the books and records of Participant (and its Affiliates) relating to the Brand Income Contracts, the Brand Income and Brand Amount.  Such audit shall be at Fantex’s sole cost and expense and shall not cover any period greater than the current year and previous three (3) calendar years at the time of such audit, provided that if an audit reveals an underpayment of the Brand Amount by greater than five percent (5%) for the period being audited, then Participant shall reimburse Fantex for its reasonable and documented audit costs.  In any case, either (a) Participant shall promptly pay to Fantex any underpaid amount, together with any interest thereon as provided in Section 4.2(ii) of these Terms and Conditions or (b) Fantex shall promptly pay to Participant any overpaid amount together with interest at the same rate provided in Section 4.2(ii) of these Terms and Conditions; provided, that at Participant’s election, Participant may set off against the immediately following installment payment of the Brand Amount an amount equal to such overpayment.  Fantex shall not audit Participant’s books and records more frequently than once per year during the Audit Period.  Fantex shall provide Participant with reasonable advance written notice that it will be conducting an audit, and any such audit shall be conducted during normal business hours.

 

5.              Escrow Holdback.

 

5.1.              Escrow Amount.  Participant hereby authorizes and instructs Fantex to deduct from the Purchase Price otherwise payable to Participant, an aggregate amount equal to the Escrow Holdback.  Fantex shall deposit the Escrow Holdback into an escrow account (the “Escrow Account” and all such funds included in the Escrow Account, the “Escrow Funds”) established pursuant to the terms of a written escrow agreement (the “Escrow Agreement”) mutually agreed among the Parties and Wells Fargo Bank, N.A., or any other financial services institution agreed to in writing by the Parties (the “Escrow Agent”) based on the form of agreement provided by Escrow Agent as modified to be consistent with the terms of this Agreement, as applicable.

 

5.2.              Use of Escrow Amount.  In the event that Participant fails to timely deliver any installment payment of the Brand Amount prior to the release of Escrow Funds pursuant to Section 5.3 of these Terms and Conditions, then in addition to and without limiting any other rights or remedies available to Fantex, upon written notice from Fantex to the Escrow Agent and Participant, the Escrow Agent shall release to Fantex (up to the amount of available Escrow Funds) an amount equal to such due installment payment of the Brand Amount as notified by Fantex.  Participant shall promptly replenish the Escrow Account by depositing in the Escrow Account an amount equal to any Escrow Funds that are released to Fantex pursuant to this Section 5.2 of these Terms and Conditions.

 

5.3.              Release of Escrow Amount.  Within five (5) business days immediately following the first consecutive six (6) month period after the Closing during which all installment payments of the Brand Amount have been timely delivered to Fantex when due (subject to applicable notice and cure periods contained herein), then the Escrow Agent shall deliver to Participant all amounts then remaining in the Escrow Account, the Escrow Agreement shall be terminated, and Participant shall thereafter have no obligation to maintain any amounts in the Escrow Account.

 

5.4.              Ownership of Escrow Holdback.  The Parties agree to treat the Escrow Holdback as owned by Fantex until released to Participant pursuant to terms hereof; provided, that any interest accrued on the Escrow Holdback shall be the property of Participant.

 

5.5.              Controlling Terms. In the event of any conflict or inconsistency between the terms of this Section 5 and the terms of the Escrow Agreement, the terms of the Escrow Agreement shall govern.

 

6.              Information Rights; New Contracts.

 

6.1.              Quarterly Reports.  Within ten (10) business days after the end of each calendar quarter during the Term, Participant shall provide to Fantex a report in the form mutually agreed by the Parties (each a “Quarterly Report”), which shall detail all Brand Income earned during such quarter, detail the calculation of the Brand Amount for such quarter with respect to such Brand Income, and provide such additional information and certifications required to be included in the Quarterly Report, including such matters as specified in Exhibit E.

 

6.2.              Material Change.  Participant shall promptly provide written notice to Fantex if at any time after the Effective Date and during the Term of this Agreement, there occurs any condition, restriction, disability or obligation (whether physical, legal or contractual) that will or could reasonably be expected to (i) prevent or materially interfere with Participant’s continued performance under any Brand Income Contract and/or participation in the Principal Business as a Professional Athlete, , or (ii) result in any of the representations or warranties made by the Participant on Exhibit A to be untrue in any material respect; provided, that Participant 

 

 

shall not have any obligation to notify Fantex of the contents of any Brand Income Contract provided by Participant to Fantex, including the expiration of any contract pursuant to its terms.

 

6.3.              Brand Income Contracts.  Throughout the Term, Participant shall promptly (and in any case, no later than five (5) business days after the occurrence of the applicable event, and prior to any public announcement thereof) notify Fantex, in writing, and provide copies of all relevant documents and correspondence related to each such occurrence (including copies of all Brand Income Contracts), in the event that:

 

(i)                                                   Participant enters into any Brand Income Contract, including any amendments, modifications or supplements to an existing Brand Income Contract, after the Effective Date (“New Brand Income Contract”);

 

(ii)                                                Participant receives any notice of termination, cancellation, breach or default under any Brand Income Contract;

 

(iii)                                             Participant becomes aware of any event which, with the passage of time or the giving of notice or both, would result in any material default, breach or event of noncompliance by Participant under any Brand Income Contract;

 

(iv)                                            Participant becomes aware that any other party to any Brand Income Contract is in material breach thereof or default thereunder; or

 

(v)                                               there are any renegotiations of or outstanding rights to renegotiate any material amounts paid or payable to Participant under any of the Brand Income Contracts with any Person, or Participant receives any demand for such renegotiation.

 

6.4.              New Brand Income Contracts.  Upon the execution of a New Brand Income Contract, Participant shall be deemed to represent and warrant that such New Brand Income Contract is valid, binding and enforceable against Participant, and enforceable by Participant against the other parties thereto, in accordance with their respective terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally, and subject, as to enforceability, to the effect of general principles of equity, as may apply.

 

6.5.              Disclosure of Brand Income Contracts.

 

(i)                                                   Notwithstanding anything herein to the contrary, Fantex may publicly disclose the terms and conditions of any New Brand Income Contract, to the extent that such disclosure is required in connection with any filing related to the Offering or the Series, as determined by Fantex, upon advice of counsel in connection with such disclosure.

 

(ii)                                                Participant shall use commercially reasonable efforts to cause each counterparty to a Brand Income Contract containing a legal, valid and binding confidentiality obligation of Participant existing as of the Effective Date (each, a “Confidential Brand Income Contract”), to consent to Fantex’s disclosure of the terms and conditions of such Confidential Brand Income Contract to the extent required by any governmental or quasi-governmental bodies or agencies, or self-regulatory organizations, including the SEC and FINRA; provided, that Fantex shall not make any disclosure of any terms or conditions of such an existing Confidential Brand Income Contract if such counterparty fails to so consent; provided further, that failure to obtain a counterparty’s consent with respect to an existing Confidential Brand Income Contract shall not in itself be a breach of this Agreement by Participant so long as Participant has complied with the terms of this paragraph.  Participant shall ensure that any necessary consents to permit disclosure of each New Brand Income Contract (as permitted pursuant to Section 6.5(i) of these Terms and Conditions) are obtained so that such disclosure will not result in any breach of any confidentiality obligation to any Person.

 

(iii)                                             Fantex shall, in consultation with Participant, use commercially reasonable efforts to secure confidential treatment, or similar protection, with respect to any disclosure of any information contained in any New Brand Income Contract which could reasonably be expected to be sensitive to, or the confidential information of, any counterparty to such New Brand Income Contract.

 

(iv)                                            From time to time, as Participant is negotiating or reviewing any potential Brand Income Contract (or any renewal of a Brand Income Contract), Fantex will respond to reasonable requests from Participant (including all relevant details with respect to such potential new or renewed Brand Income Contract) regarding whether or not the terms of such potential Brand Income Contract would be expected to be material and require disclosure pursuant to Section 6.5(i) of these Terms and Conditions, assuming such Brand Income Contract were executed at the time of such response.  Participant may decide in its sole and absolute discretion whether or not to execute any potential Brand Income Contract (or any renewal of a Brand 

 

 

Income Contract).

 

6.6.              Brand Income Statements.  Concurrent with delivery of each Quarterly Report (as required by Section 6.1 of these Terms and Conditions), Participant shall also provide copies of all receipts, invoices, pay stubs, or other documents evidencing all Brand Income referenced in the applicable Quarterly Report.

 

6.7.              Marital Status.  Participant shall use reasonable efforts to secure the signature of Participant’s spouse on the spousal consent attached hereto as Exhibit F.  In the event that Participant fails to secure such signature, and as a result a portion of the Brand Income of Participant is deemed “community property” or Participant’s spouse can otherwise claim legal ownership to any Brand Income, then Participant shall nonetheless be required to calculate and deliver any installment payments of the Brand Amount based on the entirety of the Brand Income (including any such portion thereof that is deemed to be such spouse’s share of community property or otherwise property of such spouse).

 

6.8.                      Additional Information.  Participant shall provide to Fantex such additional information as Fantex shall reasonably request from time to time (in a reasonable amount of time after such request) in connection with the Brand Income and Participant’s participation in the Principal Business; provided, that Fantex shall use commercially reasonable efforts to limit any such requests to no more than once per calendar quarter.

 

7.              Taxes.

 

7.1.              Related to Purchase Price.  Participant shall be solely responsible for the payment of all taxes on the Purchase Price.  Fantex shall be entitled to deduct and withhold any amounts required by applicable law to be deducted and withheld from the Purchase Price and such withheld amounts shall be treated as paid to Participant.  Fantex shall not be required to indemnify or “gross up” Participant for any such amounts withheld.  Participant will indemnify Fantex for and hold it harmless from and against any taxes of Participant, which may be sought against, imposed upon or suffered by Fantex or which Fantex may incur as a result of Fantex’s failure to deduct and withhold such taxes from the Purchase Price payable under this Agreement.

 

7.2.              Related to Brand Amounts.  Fantex shall be solely responsible for the payment of all taxes on the Brand Amounts.  Participant shall be entitled to deduct and withhold any amounts required by applicable law to be deducted and withheld from any installment payment of the Brand Amount.  To the extent that any such installment payment of the Brand Amount is made directly from the payor to Fantex and a withholding obligation is imposed on Participant and Participant has no ability to withhold or cause the payor to withhold from such Brand Amounts the required amounts, then Fantex shall make a payment to Participant (for remittance to the applicable taxing authority), within five (5) business days after receipt of such installment payment, equal to the amount that Participant would have been entitled to deduct and withhold hereunder had such installment payment been made by the payor to Participant and subsequently remitted by Participant to Fantex.  Any such withheld amounts, or amounts paid by Fantex to Participant for remittance to the applicable taxing authorities, shall be treated as having been paid to Fantex.  Participant shall not be required to indemnify or “gross up” Fantex for any such amounts withheld.  Fantex will indemnify Participant for and hold it harmless from and against any taxes of Fantex which may be sought against, imposed upon or suffered by Participant or which Participant may incur as a result of Participant’s failure to deduct and withhold such taxes from any installment payment of the Brand Amount to be delivered under this Agreement.

 

8.              Participant Representations and Warranties.

 

Participant hereby represents, warrants and covenants, as applicable, to Fantex that the statements contained in the Participant Questionnaire attached to the Agreement as Exhibit A, and the statements contained in this Section are and will be true and correct as of the Effective Date and throughout the Term (except only if a different time period is expressly provided).

 

8.1.              Authority.  Participant is free and authorized to enter into this Agreement, to make the covenants, representations and warranties contained herein and to grant the rights granted herein.

 

8.2.              Binding Agreement. This Agreement constitutes a valid and binding obligation of Participant (and its successors and heirs), enforceable in accordance with its terms subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally, and subject, as to enforceability, to the effect of general principles of equity, as may apply.  Participant and its successors and heirs, as applicable, will not challenge the validity or enforceability of this Agreement, or any portion thereof, in any action, proceeding, arbitration or otherwise.

 

8.3.              No Conflict.  Participant has not made nor will make any grant, license or assignment whatsoever, which will or could reasonably be expected to conflict with or impair the substantial enjoyment of the rights and 

 

 

privileges granted to Fantex hereunder; and, the execution and performance of this Agreement by Participant does not, and will not, violate or conflict with any agreement, arrangement, understanding or restriction, written or oral, between Participant and any other Person.

 

8.4.              Brokerage.  Except as expressly contemplated by this Agreement, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any contract to which Participant is a party or that is otherwise binding upon Participant.

 

8.5.              Intellectual Property.  No intellectual property provided by Participant to Fantex at any time in connection with this Agreement will violate the rights of privacy or publicity, constitute a libel or slander or infringe upon the copyright, literary, personal, private, civil, property or other rights of any Person.

 

9.             Fantex Representations and Warranties.

 

Fantex represents, warrants and covenants, as applicable, to Participant, as of the Effective Date and throughout the Term:

 

9.1.              Organization.  Fantex is duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

 

9.2.              Authority.  Fantex possesses all requisite corporate power and authority necessary to enter into and carry out the transactions contemplated by this Agreement.

 

9.3.              Binding Agreement. This Agreement constitutes a valid and binding obligation of Fantex, enforceable in accordance with its terms subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally, and subject, as to enforceability, to the effect of general principles of equity, as may apply.  Fantex will not challenge the validity or enforceability of this Agreement, or any portion thereof, in any action, proceeding, arbitration or otherwise.

 

9.4.              No Conflict. The execution and performance of this Agreement by Fantex does not, and will not, violate or conflict with any agreement, arrangement, understanding or restriction, written or oral, between Fantex and any other Person.

 

9.5.              Brokerage.  Except as expressly contemplated by this Agreement, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any contract to which Fantex is a party or that is otherwise binding upon Fantex.

 

9.6.              Permits.  Fantex and its Affiliates have all permits, licenses, consents and approvals from all applicable governmental and quasi-governmental bodies and agencies, and all self-regulatory organizations, including the SEC and FINRA, necessary for it to carry out the intents and purposes of this Agreement.

 

10.       Confidentiality; Public Statements/Disclosures.

 

10.1.       Confidentiality.  Each Party agrees that the Confidential Information of the other Party will be maintained confidentially and will not be disclosed to any other Person except: (a) as may be required by law or to comply with a valid order of a court of competent jurisdiction, in which event the Party making such disclosure shall promptly notify the other Party and shall seek confidential treatment of such information; (b) to a Party’s employees, agents and representatives (including accountants, auditors, legal advisors, underwriters, etc.), provided that such recipients of the Confidential Information are bound by confidentiality obligations with respect to such disclosure; (c) in order to enforce such Party’s rights under this Agreement; or (d) if mutually agreed to by the Parties in writing or otherwise permitted under this Agreement.  “Confidential Information” means all confidential, proprietary, or commercially sensitive data, materials and/or other information that is either identified as, or reasonably expected to be, confidential information.  Confidential Information of Fantex includes the existence of this Agreement and terms and conditions of this Agreement (until and then only to the extent that such is publicly disclosed by Fantex), and any other non-public information in connection with the Offering, the Series, or Fantex or its Affiliates.  This Section 10 will survive the expiration or termination of this Agreement.

 

10.2.       Public Statements.  Participant will not issue any press release or public statement in connection with the execution of this Agreement, the Series and/or the Offering without Fantex’s prior written consent, which consent Fantex may withhold in its sole discretion.  Fantex will not issue any press release or public statement in connection with this Agreement or which makes any reference to Participant, in each case, without Participant’s prior written consent, which consent will not be unreasonably withheld or delayed and shall be deemed granted if Participant fails to respond to any request for such consent within three (3) days after Fantex requests such consent in writing, in accordance with the notice requirements set forth in the Agreement.

 

10.3.       Fantex Disclosures. Notwithstanding anything herein to the contrary, Fantex shall have the right to 

 

 

disclose the terms and conditions of this Agreement and/or any other information provided by Participant related to this Agreement or the Offering or Series (including Brand Income Contracts, subject to Section 6.5 of these Terms and Conditions), to the extent that such disclosure is required by applicable law in connection with any filing related to the Offering or the Series.  Fantex shall, in consultation with Participant, use commercially reasonable efforts to secure confidential treatment, or similar protection, with respect to any disclosure of personal and confidential information provided by Participant, including the terms and conditions of this Agreement and such information as is provided in the Personal Information Schedule.

 

11.       Obligation to Negotiate.

 

At any time after the Series either ceases to be listed on an exchange or “alternative trading system” or is converted into another security of Fantex or any of its Affiliates, Participant may deliver a written notice to Fantex (a “Discussion Notice”) requesting that Fantex engage in negotiations with Participant in good faith to terminate this Agreement (“Good Faith Negotiations”).  The Parties shall be obligated to commence Good Faith Negotiations within thirty (30) days after Participant’s delivery of a Discussion Notice.  Any termination of this Agreement shall only be on terms mutually agreed to in writing by the Parties.

 

12.       Termination.

 

12.1.       By Mutual Consent.  This Agreement may be terminated by mutual written consent of Participant (or its successors and heirs) and Fantex.

 

12.2.       By Either Party.  This Agreement may be terminated by either Party by delivering written notice of termination to the extent such is permitted pursuant to Section 3.2 of the Agreement.

 

12.3.       Effect of Termination.  Upon the effective date of termination, the rights and obligations of the Parties under this Agreement will cease, except for rights and obligations arising out of Sections 4, 7, 10, 14, 16 and 17 of these Terms and Conditions (to the extent applicable).

 

13.       Assignment.

 

13.1.       The rights and obligations of Fantex under this Agreement will inure to the benefit of and will be binding upon the successors and assigns of Fantex, and Fantex shall have the right to assign its rights and delegate its obligations hereunder (a) in whole or in part to any Affiliate of Fantex, and (b) in connection with a merger, acquisition, corporate restructuring, financing, sale of all or substantially all of its assets, or similar such transaction.

 

13.2.       This Agreement is personal to Participant, and Participant does not have the right to assign this Agreement, whether by operation of law or otherwise, or to delegate any duties or obligations imposed upon Participant under this Agreement without Fantex’s prior written consent; except only that this Agreement shall be automatically assigned and binding on Participant’s successors and heirs upon the death of Participant; provided, that any assignment and assumption of this Agreement by a personal services corporation (or “loan-out” corporation) that is wholly owned and Controlled by Talent shall be expressly authorized hereunder so long as Talent remains the Participant hereunder, jointly and severally with such surviving corporation.

 

14.       Indemnification.

 

14.1.       Participant hereby agrees to indemnify and hold harmless Fantex, its parents, subsidiaries, Affiliates, assigns, successors, and each of their respective officers, directors, agents, representatives and employees (collectively, “Fantex Indemnified Party(ies)”), from and against any and all liabilities, actions, claims, suits, proceedings or investigations of government, quasi-government or administrative agencies, liens, judgments, demands, losses, costs, expenses and damages, including reasonable attorneys’ fees and costs and any and all damages of any kind and nature whatsoever (a “Claim”), arising out of or relating to any breach by Participant, directly or indirectly through any other Person, of any of the terms, covenants, conditions, representations or warranties contained in this Agreement.

 

14.2.       Fantex hereby agrees to indemnify and hold harmless Talent and its Affiliates, heirs, assigns, successors, and each of their respective officers, directors, members, managers, agents, representatives and employees, as applicable, (collectively, “Participant Indemnified Party(ies)”), from and against any and all Claims by any third party (including any and all Claims brought by any holder of the Series or group of class thereof) arising out of or relating to Participant being a party to this Agreement (except those arising out of or relating to any breach by Participant, directly or indirectly through any other Person, of any of the terms, covenants, conditions, representations or warranties contained in this Agreement), including any and all Claims arising out of or relating to (a) any breach by Fantex of any of the terms, covenants, conditions, representations or warranties contained in this Agreement, (b) any violation of any law by Fantex, including any securities laws or any rules or regulations promulgated thereunder, or (c) the Offering, the Series, or the Registration Statement.

 

 

14.3.       A Fantex Indemnified Party or Participant Indemnified Party, as applicable (the “Indemnified Party”), shall promptly deliver a written notice to the Party from whom indemnification is sought (the “Indemnifying Party”), providing notice (a “Claim Notice”) of any Claim asserted or filed by a third party (a “Third-Party Action”) within twenty (20) days (or such shorter period as reasonably necessary to permit timely response to such Claim) after receipt by the Indemnified Party of notice of such Third-Party Action.  Delay or failure to notify the Indemnitor in accordance with this Section 14.3 will not relieve the Indemnifying Party of any liability that it may have to the Indemnified Party, except to the extent the defense of such Claim is prejudiced by the Indemnified Party’s delay or failure to give such Claim Notice.  Such Claim Notice shall describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such Third-Party Action and the amount of the claimed damages. Within twenty (20) days after delivery of such Claim Notice, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third-Party Action with counsel selected by the Indemnifying Party, subject to the Indemnified Party’s approval, which shall not be unreasonably withheld, conditioned or delayed. If the Indemnifying Party does not so assume control of the defense of a Third-Party Action, the Indemnified Party shall have the right to control such defense at its own expense. The non-controlling party may participate in such defense at its own expense. In Third-Party Actions in which the Indemnifying Party is controlling the defense, the Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from, any Third-Party Action without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, conditioned or delayed; provided, that such consent shall not be required if such settlement or judgment (i) fully releases both the Indemnified Party and the Indemnifying Party and (ii) involves only the payment of money damages that are covered in full by the indemnity obligations of the Indemnifying Party hereunder.  In Third-Party Actions in which the Indemnified Party is controlling the defense, the Indemnified Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third-Party Action without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, conditioned or delayed.

 

15.       Disclaimer of Warranties.

 

15.1.       Except as expressly provided in this Agreement (including Exhibit A, Participant Questionnaire) and to the maximum extent permitted by law, neither Party makes any representation or warranty of any kind, whether implied, statutory, or otherwise and disclaims, without limitation, implied warranties of merchantability, fitness for a particular use, and non-infringement.  Each Party acknowledges that it does not rely and has not relied upon any representation or statement made by the other Party or any of its representatives relating to the subject matter of this Agreement except as expressly set forth herein.

 

15.2.       In addition to, and without limiting the effect of, Section 15.1 of these Terms and Conditions, Participant expressly acknowledges and agrees that Fantex makes no representation or warranty regarding the results of the Offering, including the amount of Net Proceeds to be collected or otherwise.

 

16.       Agents.

 

16.1.       Fantex shall not be liable for any claims or demands for commissions or otherwise of any agent of Participant and Participant hereby agrees to indemnify and hold harmless Fantex, its Affiliates, advertisers, employees and all holders of the Series harmless against any liabilities, damages or expenses (including reasonable attorneys’ fees) incurred by them as a result of any such claims or demands.

 

17.       General Terms.

 

17.1.       Entire Agreement; Amendments.  The Agreement (including all exhibits thereto, including these Terms and Conditions) contains the complete, final, exclusive and binding statement of all of the agreements between the Parties with respect to the subject matter thereof and hereof, and supersedes all existing agreements, understandings, negotiations, communications or commitments between the Parties, whether oral or written, concerning the same subject matter.  This Agreement cannot be amended or modified or any provisions or obligations waived or changed except by a writing executed by Fantex and Participant.

 

17.2.       Waiver.  The failure or delay of a Party to insist on strict adherence to any term of this Agreement will not be considered a waiver of, or deprive that Party of the right thereafter to insist on strict adherence to that term or any other term of this Agreement.  No waiver of any breach or default of the other Party shall be construed as a continuing waiver of the same or any other breach or default under this Agreement.

 

17.3.       Further Actions; Attorney-in-Fact.  Participant will, as applicable, at the request of Fantex, execute and deliver to Fantex all such documents as Fantex may from time to time deem reasonably necessary or desirable to effectuate assignment of, and for Fantex to receive all installment payments of, the Brand Amount and 

 

 

otherwise effectuate the purposes of this Agreement.  If Participant fails or refuses to execute or deliver to Fantex any such document within a reasonable period of time following receipt of Fantex’s written request therefor, then Participant irrevocably appoints Fantex as Participant’s agent and attorney-in-fact to sign any such documents in Participant’s name and to make appropriate disposition of them, consistent with this Agreement; provided, that prior to exercising any rights under such power of attorney, Fantex shall notify Participant of its intention to do so.  Participant acknowledges that Fantex’s agency and power of attorney are coupled with an interest.

 

17.4.       Interpretation.  In the interpretation and construction of this Agreement, no term shall be construed against any Party on the basis that the Party was the drafter, and the Parties waive any common law or statutory provision that would construe an ambiguous term against the other Party as the drafter of this Agreement.  Words importing the singular include the plural and vice versa, as the context requires.  Whenever any of the words “include,” “includes” or “including” or the abbreviation “e.g.” is used in this Agreement (including any exhibits hereto), such shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Any reference to “this Agreement,” even if such reference is contained in these Terms and Conditions, shall be a reference to the Agreement and all of the exhibits and schedules attached thereto.  The term “or” is not exclusive.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.  The captions and headings in this Agreement are inserted for convenience of the Parties only, do not constitute a part of this Agreement and will not be deemed to govern, limit, modify or in any other manner affect the scope, meaning, intent or interpretation of the provisions hereof or have any legal effect.  Any obligations or rights of any of the Parties contained in Section 1 of the Agreement shall be valid and binding on the Parties as if it were contained in any other section of this Agreement.

 

17.5.       Governing Law; Arbitration.  The law of California (exclusive of conflict or choice of law rules) shall govern, construe and enforce all of the rights and duties of the Parties arising or in any way relating to the subject matter of this Agreement.  In the event of any dispute, claim or controversy arising out of or relating to this Agreement (including any claim based on contract, tort or statute) or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, (a “Dispute”), then the Parties shall engage in informal, good faith discussions and attempt to resolve the Dispute.  If the Parties are unable to resolve the Dispute, then the Dispute shall be determined by confidential binding arbitration in San Francisco before one arbitrator. The arbitration shall be administered by JAMS pursuant to its Streamlined Arbitration Rules and Procedures.  Judgment on any award pursuant to arbitration may be entered in any court of competent jurisdiction.  The arbitrator shall be a retired judge with at least five years of experience presiding over disputes related to complex commercial transactions.  The arbitrator shall be appointed by agreement of the Parties or, if no agreement can be reached, then each Party shall appoint one JAMS arbitrator for the purpose of selecting the arbitrator to govern the Dispute, and those two arbitrators shall select the arbitrator to govern the Dispute.  In any arbitration arising out of or related to this Agreement, the arbitrator shall award to the prevailing Party, if any, the costs and attorneys’ fees reasonably incurred by the prevailing Party in connection with the arbitration.  If the arbitrator determines a Party to be the prevailing Party under circumstances where the prevailing Party won on some but not all of the claims and counterclaims, the arbitrator may award the prevailing Party an appropriate percentage of the costs and attorneys’ fees reasonably incurred by the prevailing Party in connection with the arbitration.  Without limiting the effect of Section 4.2(iii) of these Terms and Conditions, the Parties shall maintain the confidential nature of the arbitration proceeding and the award, except as may be necessary in connection with a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision.  Notwithstanding anything herein to the contrary, either Party shall be entitled to seek to obtain any provisional remedy, including injunctive or similar relief, from any court of competent jurisdiction as may be necessary to protect that Party’s rights and interests.

 

17.6.       Severability.  Wherever possible, each provision of this Agreement (or portion thereof) will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement (or portion thereof) is held to be null, void, invalid, illegal or unenforceable in any respect under any applicable law or rule by any arbitrator or court of competent jurisdiction, then (a) such provision (or portion thereof) shall be deemed to be restated, to the extent possible, to reflect as nearly as possible the original intentions of the Parties in accordance with applicable law, and if such restatement is not possible, 

 

 

then such provision (or portion thereof) shall be severed, and (b) the remaining provisions, terms or covenants and restrictions in this Agreement will remain in full force and effect.

 

17.7.       No Third Party Beneficiaries.  Nothing herein, express or implied, is intended to nor shall be construed to confer upon or give to any Person, other than the Parties, any interests, rights, remedies or other benefits with respect to or in connection with any agreement or provision contained herein or contemplated hereby.

 

17.8.       Independent Contractors; No Fiduciaries.

 

(i)                                                   The Parties mutually agree that Participant and Fantex are each acting as independent contractors, and that Participant and Fantex are not engaging in any form of employment, partnership, co-ownership or a collaboration for the purpose of sharing any profits or ownership in common, or acting in the capacity of joint venture participants.

 

(ii)                                                Participant and Fantex each acknowledges and agrees that: (a) this Agreement, and the exercise of rights and performance of obligations hereunder, does not create any agency, advisory or fiduciary relationship between Participant and Fantex and its Affiliates; (b) Fantex is not, and at any time during the Term will not be, an agent, representative or advisor to Participant; and (c) Participant has relied on its own personal counsel and advisors with respect to legal, tax, accounting and other issues in connection with entering into and performing under this Agreement.

 

17.9.       Limitation on Liabilities.  In no event shall either Party or any of their representatives be liable under this Agreement to the other Party for any consequential, incidental, indirect, exemplary, special or punitive damages, including damages for business interruption, loss of use, revenue or profit, whether arising out of breach of contract, tort (including negligence and intentional torts), statute or otherwise, regardless of whether such damages were foreseeable and whether or not such Party was advised of the possibility of such damages.  For the avoidance of doubt, in the event that any Brand Income Contract is suspended or terminated or the amount of Brand Income committed to be paid to Participant is reduced as a result of any action or omission by Participant that constitutes a breach of this Agreement, then (without limiting the effect of Section 17.10) the Brand Amount that would have been attributed to such lost or reduced Brand Income shall be considered direct damages of Fantex resulting from such breach and shall not be excluded or waived by Fantex as a result of this Section 17.9.

 

17.10.        Cumulative Remedies.  None of the rights, powers or remedies conferred upon any Party under this Agreement will be mutually exclusive.  Each such right, power or remedy will be cumulative and in addition to every other right, power or remedy available to such Party, whether available at law, in equity or otherwise.

 

17.11.        Counterparts; Binding Agreement.  This Agreement, may be executed in multiple counterparts, each of which individually constitutes an original, but all of which together will constitute one single agreement between the Parties.  The Parties agree that this Agreement shall be legally binding upon the electronic transmission, including by facsimile or email delivery of a .pdf or similar file, by each Party of a signed signature page hereof to the other Party.

 

 

Exhibit D:  Form of Closing Certificate

 

CLOSING CERTIFICATE

 

[DATE]

 

Reference is made to that certain Brand Agreement, by and among Fantex, Inc. (“Fantex”), [INSERT TALENT NAME] and [INSERT COMPANY NAME] (jointly and severally as “Participant”), effective as of  [•] (the “Brand Agreement”).  All capitalized terms used herein which are not defined herein have the meanings given to such terms in the Brand Agreement.

 

The undersigned, [INSERT TALENT NAME], certifies in his individual capacity and on behalf of [INSERT COMPANY NAME] to Fantex that he has carefully examined the Brand Agreement, the Participant Questionnaire and the Personal Information Schedule and that:

 

1.                          the statements included in the Participant Questionnaire remain true and correct (except as disclosed on Schedule 3 of the Personal Information Schedule) as of the date hereof;

 

2.                          Participant has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Brand Agreement in all material respects at or prior to the Closing; and

 

3.                          since the date of the most recent Personal Information Schedule, the undersigned has not become aware of any condition, restriction, disability or obligation (whether physical, legal or contractual) that is described in Section 6.2 of the Terms and Conditions attached as Exhibit C to the Brand Agreement.

 

IN WITNESS WHEREOF, the undersigned has executed this Closing Certificate as of the date first set forth above.

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
[INSERT TALENT NAME]
    

 

 

Exhibit E:  Quarterly Report

 

Form of report to be mutually agreed by the Parties, and include at least the following details:

 

·                  detail all Brand Income earned during such quarter and provide a description of any material changes in the amount of revenue of the most recent quarter as compared to the same quarter in the previous year, including pay stubs, schedule of cash receipts;

 

·                  detail the calculation of each Brand Amount with respect to such Brand Income;

 

·                  any correspondence with tax authorities and tax returns (annual basis)

 

·                  list all Brand Income Contracts entered into / terminated / amended, etc. during the quarter (and provide copies to the extent not previously provided);

 

·                  describe details regarding any condition, restriction, disability or obligation (whether physical, legal or contractual) that is described in Section 6.2 of the Terms and Conditions attached as Exhibit C to the Agreement;

 

·                  certification that certain publicly available facts about the Participant provided by Fantex to Participant in writing are correct and that all facts previously certified by the Participant remain correct (provided, that Fantex provides Participant with a list of all such previously certified facts); and

 

·                  certification that the statements included in the Participant Questionnaire remain true and correct as of the date of such report (or provide any details with respect to any exceptions of such statements) or provide a detailed description of facts or circumstances that have changed to make the statements in the Participant Questionnaire untrue.

 

 

Exhibit F:  Spousal Consent  
 (only required if Participant is married)

 

I, [                        ], being the spouse of [INSERT TALENT NAME], who is a signatory to that certain Brand Agreement dated as of [INSERT DATE] (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Agreement”; capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Agreement), in connection with a potential securities offering linked to the value of the Brand Amounts as set forth in greater detail in the Agreement.  I have had the opportunity to consult with legal counsel regarding this consent and the Agreement; and I am aware that pursuant to the provisions of the Agreement, my spouse agrees to grant a percentage of my spouse’s Brand Income in the form of all right, title and interest in the Brand Amounts to Fantex, which may include community property interest I may have thereof, if any.  I hereby consent to such grants of the Brand Amounts and approve of the provisions of the Agreement and any actions or performance arising therefrom, as applicable, to the extent the same affects any of my community property interest, if any. I further agree that my spouse may join in any future amendment, restatement, supplement or modification of the Agreement or any ratification of the foregoing in each case without any further consent from me.

 

This Spousal Consent shall be binding on the undersigned and on the undersigned’s successors, assigns, representatives, heirs and legatees.

 

	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Date:
    

 

 

Exhibit G:  Form of Irrevocable Payment Instructions

 

IRREVOCABLE PAYMENT INSTRUCTIONS

 

[DATE]

 

[BRAND INCOME SOURCE]

[ADDRESS]

Attn:  [NAME]

 

Re:                             Payment of Amounts to Fantex, Inc. (“Fantex”)

 

Ladies and Gentlemen:

 

[INSERT PARTICIPANT NAME] (“Participant”) has entered into an agreement with Fantex pursuant to which, among other things, Participant has assigned all right, title and interest in and to an amount equal to [                  ] percent ([    ]%) of all gross monies or other consideration of any type (the “Brand Amount”) that Participant may earn from [BRAND INCOME SOURCE] (“Company”) pursuant to [INSERT DESCRIPTION OF BRAND INCOME CONTRACT] (the “Agreement”).

 

Notwithstanding anything to the contrary contained in the Agreement or any prior instructions received by Company, unless and until Company receives written instructions from Fantex to the contrary, effective as of the date of this letter all Brand Amounts from any amounts payable by Company to Participant pursuant to the Agreement shall be delivered concurrent with any payment of the remaining amounts due to Participant, by federal funds wire transfer or electronic depository transfer directly to the following bank account:

 

[INSERT WIRE INSTRUCTIONS]

 

In the event Company receives any different instructions from Fantex with respect to the disposition of Brand Amounts, (a) Company is hereby irrevocably authorized and directed to follow such instructions, without inquiry as to Fantex’s right or authority to give such instructions.  Fantex acknowledges that any instructions from Fantex to Payment Source must be sent to [                                        ], Attention:  [                ]; and (b) such instructions shall only provide for Brand Amounts to be sent to a single deposit account of Fantex.

 

Except only as expressly provided herein with respect to the applicable deposit instructions, this Irrevocable Payment Instructions cannot be changed, modified, or terminated, except by written agreement signed by Fantex, Payment Source and Participant.

 

Please acknowledge your receipt of, and agreement to, the foregoing by signing in the space provided below.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
[INSERT PARTICIPANT NAME]
    
	
 
    	
 
    
	
Acknowledged   and Agreed: 
    	
 
    
	
 
    	
 
    
	
Fantex, Inc.   
    	
 
    	
[INSERT   BRAND INCOME SOURCE]
    
	
 
    	
 
    	
 
    
	
By:   
    	
 
    	
 
    	
 
    	
By:   
    	
 
    
	
Name/Title:   
    	
 
    	
 
    	
 
    	
Name/Title:   
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
Title:

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