Document:

Exhibit 10.10

 

 

 

CAREY FINANCIAL, LLC

 

DEALER MANAGER AGREEMENT

 

April 7, 2011

 

 

Carey Financial, LLC

50 Rockefeller Plaza

New York, New York 10020

 

RE:         CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INCORPORATED

 

Ladies and Gentlemen:

 

Corporate Property Associates 17 - Global Incorporated (the “Company”) is a Maryland corporation that is taxed as a real estate investment trust (a “REIT”) for federal income tax purposes.  The Company proposes to offer in a follow on offering (a) up to 100,000,000 shares of common stock, $.001 par value per share (the “Shares”), for a purchase price of $10.00 per Share (subject in certain circumstances to discounts based upon the volume of shares purchased and for certain categories of purchasers), in the primary offering (the “Primary Offering”), and (b) up to 50,000,000 Shares for a purchase price of $9.50 per Share for issuance through the Company’s distribution reinvestment program (the “DRIP” and together with the Primary Offering, the “Offering”), all upon the other terms and subject to the conditions set forth in the Prospectus (as defined in Section 1(a)).  The Company has reserved the right to reallocate the Shares offered in the Offering between the DRIP and the Primary Offering.

 

Upon the terms and subject to the conditions contained in this Dealer Manager Agreement (this “Agreement”), the Company hereby appoints Carey Financial, LLC, a Delaware limited liability company (the “Dealer Manager”), to act as the exclusive dealer manager for the Offering, and the Dealer Manager desires to accept such engagement.

 

1.             Representations And Warranties Of The Company.  The Company hereby represents, warrants and agrees during the term of this Agreement as follows:

 

(a)           Registration Statement and Prospectus.  In connection with the Offering, the Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement (File No. 333-170225) on Form S-11 for the registration of the Shares under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the Commission promulgated thereunder (the “Securities Act Rules and Regulations”); one or more amendments to such registration statement have been or may be so prepared and filed.  The registration statement on Form S-11 and the prospectus contained therein, as finally amended at the date the registration statement is declared effective by the Commission (the “Effective Date”) are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus”, except that:

 

(i)            if the Company files a post-effective amendment to such registration statement, then the term “Registration Statement” shall, from and after the declaration of the effectiveness of such post-effective amendment by the Commission, refer to such registration statement as

 

1
 

 

amended by such post-effective amendment, and the term “Prospectus” shall refer to the amended prospectus then on file with the Commission; and

 

(ii)           if the prospectus filed by the Company pursuant to either Rule 424(b) or 424(c) of the Securities Act Rules and Regulations shall differ from the prospectus on file at the time the Registration Statement or the most recent post-effective amendment thereto, if any, shall have become effective, then the term “Prospectus” shall refer to such prospectus filed pursuant to either Rule 424(b) or 424(c), as the case may be, from and after the date on which it shall have been filed.  As used herein, the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.

 

(iii)          the documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they are hereafter filed with the Commission, will comply in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”), and, when read together with the other information in the Prospectus, at the time the Registration Statement became effective and as of the applicable Effective Date of each post-effective amendment to the Registration Statement, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

As used herein, the term “Effective Date” also shall refer to the effective date of each post-effective amendment to the Registration Statement, unless the context otherwise requires.

 

Further, if a separate prospectus is filed and becomes effective with respect solely to the DRIP (a “DRIP Prospectus”), the term “Prospectus” shall refer to such DRIP Prospectus from and after the declaration of effectiveness of such DRIP Prospectus.

 

(b)           Compliance With the Securities Act.  During the term of this Agreement:

 

(i)            the Registration Statement, the Prospectus and any amendments or supplements thereto have complied, and will comply, in all material respects with the Securities Act, the Securities Act Rules and Regulations, the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”); and

 

(ii)           the Registration Statement does not, and any amendment thereto will not, in each case as of the applicable Effective Date, include any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Prospectus does not, and any amendment or supplement thereto will not, as of the applicable filing date, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; provided, however, that the foregoing provisions of this Section 1(b) will not extend to any statements contained in or omitted from the Registration Statement or the Prospectus that are based upon written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or Prospectus.

 

2
 

 

(c)           Securities Matters.  There has not been:

 

(i)            any request by the Commission for any further amendment to the Registration Statement or the Prospectus or for any additional information;

 

(ii)           any issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or, to the Company’s knowledge, threat of any proceeding for that purpose; or

 

(iii)          any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or any initiation or, to the Company’s knowledge, threat of any proceeding for such purpose.

 

The Company is in compliance in all material respects with all federal and state securities laws, rules and regulations applicable to it and its activities, including, without limitation, with respect to the Offering and the sale of the Shares.

 

(d)           Corporate Status and Good Standing.  The Company is a corporation duly organized and validly existing under the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

 

(e)           Authorization of Agreement.  This Agreement is duly and validly authorized, executed and delivered by or on behalf of the Company and constitutes a valid and binding agreement of the Company enforceable in accordance with its terms,  except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States, any state or any political subdivision thereof which affect creditors’ rights generally or by equitable principles relating to the availability of remedies or except to the extent that the enforceability of the indemnity and contribution provisions contained in this Agreement may be limited under applicable securities laws.

 

The execution and delivery of this Agreement and the performance of this Agreement, the consummation of the transactions contemplated herein and the fulfillment of the terms hereof, do not and will not conflict with, or result in a breach of any of the terms and provisions of, or constitute a default under:

 

(i)            the Company’s or any of its subsidiaries’ charter, bylaws, or other organizational documents, as the case may be;

 

(ii)           any indenture, mortgage, deed of trust, voting trust agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or any of their properties is bound except, for purposes of this clause (ii) only, for such conflicts, breaches or defaults that do not result in and could not reasonably be expected to result in, individually or in the aggregate, a Company MAE (as defined below in this Section 1(e)); or

 

(iii)          any statute, rule or regulation or order of any court or other governmental agency or body having jurisdiction over the Company, any of its subsidiaries or any of their properties.

 

No consent, approval, authorization or order of any court or other governmental agency or body has been or is required for the performance of this Agreement or for the consummation by the

 

3
 

 

Company of any of the transactions contemplated hereby (except as have been obtained under the Securities Act, the Exchange Act, from the Financial Industry Regulatory Authority (“FINRA”) or as may be required under state securities or applicable blue sky laws in connection with the offer and sale of the Shares or under the laws of states in which the Company may own real properties in connection with its qualification to transact business in such states or as may be required by subsequent events which may occur).  Neither the Company nor any of its subsidiaries is in violation of its charter, bylaws or other organizational documents, as the case may be.

 

As used in this Agreement, “Company MAE” means any event, circumstance, occurrence, fact, condition, change or effect, individually or in the aggregate, that is, or could reasonably be expected to be, materially adverse to (A) the condition, financial or otherwise, earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, or (B) the ability of the Company to perform its obligations under this Agreement or the validity or enforceability of this Agreement or the Shares.

 

(f)            Actions or Proceedings.  As of the initial Effective Date, there are no actions, suits or proceedings against, or investigations of, the Company or its subsidiaries pending or, to the knowledge of the Company, threatened, before any court, arbitrator, administrative agency or other tribunal:

 

(i)            asserting the invalidity of this Agreement;

 

(ii)           seeking to prevent the issuance of the Shares or the consummation of any of the transactions contemplated by this Agreement;

 

(iii)          that might materially and adversely affect the performance by the Company of its obligations under or the validity or enforceability of, this Agreement or the Shares;

 

(iv)          that might result in a Company MAE, or

 

(v)           seeking to affect adversely the federal income tax attributes of the Shares except as described in the Prospectus.

 

The Company promptly will give notice to the Dealer Manager of the occurrence of any action, suit, proceeding or investigation of the type referred to above arising or occurring on or after the initial Effective Date.

 

(g)           Hazardous Materials.  The Company does not have any knowledge of:

 

(i)            the unlawful presence of any hazardous substances, hazardous materials, toxic substances or waste materials (collectively, “Hazardous Materials”) on any of the properties owned by it or its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries; or

 

(ii)           any unlawful spills, releases, discharges or disposal of Hazardous Materials that have occurred or are presently occurring off such properties as a result of any construction on or operation and use of such properties, which presence or occurrence in the case of clauses (i) and (ii) would result in, individually or in the aggregate, a Company MAE.

 

In connection with the properties owned by the Company and its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries, the Company has no knowledge

 

4
 

 

of any material failure to comply with all applicable local, state and federal environmental laws, regulations, ordinances and administrative and judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and disposal of any Hazardous Materials.

 

(h)           Sales Literature.  Any supplemental sales literature or advertisement (including, without limitation any “broker-dealer use only” material), regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which previously has been, or hereafter is, furnished or approved by the Company (collectively, “Approved Sales Literature”), shall, to the extent required, be filed with and approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required.  Any and all Approved Sales Literature, when used in connection with the Prospectus, did not or will not at the time provided for use include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(i)            Authorization of Shares.  The Shares have been duly authorized and, upon payment therefor as provided in this Agreement and the Prospectus, will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus.

 

(j)            Taxes.  Any taxes, fees and other governmental charges in connection with the execution and delivery of this Agreement or the execution, delivery and sale of the Shares have been or will be paid when due.

 

(k)           Investment Company.  The Company is not, and neither the offer or sale of the Shares nor any of the activities of the Company will cause the Company to be, an “investment company” or under the control of an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(l)            Tax Returns.  The Company has filed or will file all material federal, state and foreign income tax returns required to be filed by or on behalf of the Company on or before the due dates therefor (taking into account all extensions of time to file) and has paid or provided for the payment of all such material taxes, except those being contested in good faith, indicated by such tax returns and all assessments received by the Company to the extent that such taxes or assessments have become due.

 

(m)          REIT Qualifications.  The Company has made a timely election to be subject to tax as a REIT pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) for its taxable year ended December 31, 2007 and has not revoked such election.  The Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT.  The Company’s current and proposed method of operation as described in the Registration Statement and the Prospectus will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

 

(n)           Independent Registered Public Accounting Firm.  The accountants who have certified certain financial statements appearing in the Prospectus are an independent registered public accounting firm within the meaning of the Securities Act and the Securities Act Rules and Regulations.  Such accountants have not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).

 

(o)           Preparation of the Financial Statements.  The financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus present fairly the consolidated

 

5
 

 

financial position of the Company and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified.  Such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto.  No other financial statements or supporting schedules are required to be included in the Registration Statement or any applicable Prospectus.

 

(p)           Material Adverse Change.  Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, there has not occurred a Company MAE, whether or not arising in the ordinary course of business.

 

(q)           Government Permits.  The Company and its subsidiaries possess such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, other than those the failure to possess or own would not have, individually or in the aggregate, a Company MAE.  Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Company MAE.

 

(r)            Properties.  Except as otherwise disclosed in the Prospectus and except as would not result in, individually or in the aggregate, a Company MAE:

 

(i)            all properties and assets described in the Prospectus are owned with good and marketable title by the Company and its subsidiaries; and

 

(ii)           all liens, charges, encumbrances, claims or restrictions on or affecting any of the properties and assets of any of the Company or its subsidiaries which are required to be disclosed in the Prospectus are disclosed therein.

 

2.             Representations and Warranties of the Dealer Manager.  The Dealer Manager represents and warrants to the Company during the term of this Agreement that:

 

(a)           Organization Status.  The Dealer Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

 

(b)           Authorization of Agreement.  This Agreement has been duly authorized, executed and delivered by the Dealer Manager, and assuming due authorization, execution and delivery of this Agreement by the Company, will constitute a valid and legally binding agreement of the Dealer Manager enforceable against the Dealer Manager in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability and except that rights to indemnity and contribution hereunder may be limited by applicable law and public policy.

 

(c)           Absence of Conflict or Default.  The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default under:

 

(i)            its organizational documents;

 

6
 

 

(ii)           any indenture, mortgage, deed of trust or lease to which the Dealer Manager is a party or by which it may be bound, or to which any of the property or assets of the Dealer Manager is subject; or

 

(iii)          any rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager or its assets, properties or operations, except in the case of clause (ii) or (iii) for such conflicts or defaults that would not individually or in the aggregate have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Dealer Manager.

 

(d)           Broker-Dealer Registration; FINRA Membership.  The Dealer Manager is, and during the term of this Agreement will be, duly registered as a broker-dealer pursuant to the provisions of the Exchange Act, a member in good standing of FINRA, and a broker or dealer duly registered as such in those states where the Dealer Manager is required to be registered in order to carry out the Offering as contemplated by this Agreement.  Moreover, the Dealer Manager’s employees and representatives have all required licenses and registrations to act under this Agreement.  There is no provision in the Dealer Manager’s FINRA membership agreement that would restrict the ability of the Dealer Manager to carry out the Offering as contemplated by this Agreement.

 

3.             Offering and Sale of the Shares.  Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby appoints the Dealer Manager as its agent and distributor to solicit and to retain the Selected Dealers (as defined in Section 3(a)) to solicit subscriptions for the Shares at the subscription price to be paid in cash.  The Dealer Manager hereby accepts such agency and exclusive distributorship and agrees to use its reasonable best efforts to sell or cause to be sold the Shares in such quantities and to such persons in accordance with such terms as are set forth in this Agreement, the Prospectus and the Registration Statement.

 

The Dealer Manager shall do so during the period commencing on the initial Effective Date and ending on the earliest to occur of the following:  (1) the later of (x) two years after the initial Effective Date of the Registration Statement and (y) at the Company’s election, the date on which the Company is permitted to extend the Offering in accordance with the rules of the Commission; (2) the acceptance by the Company of subscriptions for 150,000,000 Shares; (3) the termination of the Offering by the Company, which the Company shall have the right to terminate in its sole and absolute discretion at any time; (4) the termination of the effectiveness of the Registration Statement; and (5) the liquidation or dissolution of the Company (such period being the “Offering Period”).

 

The number of Shares, if any, to be reserved for sale by each Selected Dealer may be determined by mutual agreement, from time to time, by the Dealer Manager and the Company.  In the absence of such determination, the Company shall, subject to the provisions of Section 3(b), accept Subscription Agreements based upon a first-come, first accepted reservation or other similar method.  Under no circumstances will the Dealer Manager be obligated to underwrite or purchase any Shares for its own account and, in soliciting purchases of Shares, the Dealer Manager shall act solely as the Company’s agent and not as an underwriter or principal.

 

(a)           Selected Dealers. The Shares offered and sold through the Dealer Manager under this Agreement shall be offered and sold only by the Dealer Manager and other securities dealers the Dealer Manager may retain (collectively the “Selected Dealers”); provided, however, that:

 

7
 

 

(i)            the Dealer Manager reasonably believes that all Selected Dealers are registered with the Commission, members of FINRA and are duly licensed or registered by the regulatory authorities in the jurisdictions in which they will offer and sell Shares; and

 

(ii)           all such engagements are evidenced by written agreements, the terms and conditions of which substantially conform to the form of Selected Dealer Agreement substantially in the form of Exhibit A hereto (the “Selected Dealer Agreement”).

 

(b)           Subscription Documents.  Each person desiring to purchase Shares through the Dealer Manager, or any other Selected Dealer, will be required to complete and execute the subscription documents described in the Prospectus.

 

Payments for Shares shall be made payable to “Corporate Property Associates 17 - Global Incorporated” and the Selected Dealer shall forward original checks together with an original Subscription Agreement, executed and initialed by the subscriber as provided for in the Subscription Agreement, to Corporate Property Associates 17 - Global Incorporated, c/o Phoenix American Financial Services Inc., at the address provided in the Subscription Agreement.

 

(c)           Completed Sale.  A sale of a Share shall be deemed by the Company to be completed for purposes of Section 3(d) if and only if:

 

(i)            the Company or an agent of the Company has received a properly completed and executed subscription agreement, together with payment of the full purchase price of each purchased Share, from an investor who satisfies the applicable suitability standards and minimum purchase requirements set forth in the Registration Statement as determined by the Selected Dealer or the Dealer Manager, as applicable, in accordance with the provisions of this Agreement;

 

(ii)           the Company has accepted such subscription; and

 

(iii)          such investor has been admitted as a shareholder of the Company.

 

In addition, no sale of Shares shall be completed until at least five (5) business days after the date on which the subscriber receives a copy of the Prospectus.  The Dealer Manager hereby acknowledges and agrees that the Company, in its sole and absolute discretion, may accept or reject any subscription, in whole or in part, for any reason whatsoever or no reason, and no commission or dealer manager fee will be paid to the Dealer Manager with respect to that portion of any subscription which is rejected.

 

(d)           Dealer-Manager Compensation.

 

(i)            Subject to the volume discounts and other special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus or this Section 3(d), the Company agrees to pay the Dealer Manager selling commissions in the amount of six and a half percent (6.5%) of the selling price of each Share for which a sale is completed from the Shares offered in the Primary Offering.  The Company will not pay selling commissions for sales of Shares pursuant to the DRIP, and the Company will pay reduced selling commissions or may eliminate commissions on certain sales of Shares, including the reduction or elimination of selling commissions in accordance with, and on the terms set forth in, the Prospectus.  The Dealer Manager will re-allow all the selling commissions, subject to federal and state securities laws, to the Selected Dealer who sold

 

8
 

 

the Shares, and may re-allow up to 0.5% per share of the Dealer Manager Fee (as defined below) to the Selected Dealer who sold the Shares, as described more fully in the Selected Dealer Agreement.

 

(ii)           Subject to the special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus or this Section 3(d), as compensation for acting as the dealer manager, the Company will pay the Dealer Manager, a dealer manager fee in an amount of up to three and a half percent (3.5%) of the selling price of each Share for which a sale is completed from the Shares offered in the Primary Offering (the “Dealer Manager Fee”).  No Dealer Manager Fee will be paid in connection with Shares sold pursuant to the DRIP.

 

The Dealer Manager may retain or re-allow a portion of the Dealer Manager Fee, subject to federal and state securities laws, to the Selected Dealer who sold the Shares, as described more fully in the Selected Dealer Agreement.

 

(iii)          All sales commissions and Dealer Manager fees payable to the Dealer Manager will be paid at least within ten (10) business days after the investor subscribing for the Share is admitted as a shareholder of the Company, in an amount equal to the sales commissions payable with respect to such Shares.

 

(iv)          In no event shall the total aggregate underwriting compensation payable to the Dealer Manager and any Selected Dealers participating in the Offering, including, but not limited to, selling commissions and the Dealer Manager Fee exceed ten percent (10.0%) of gross offering proceeds from the Primary Offering in the aggregate.

 

(v)           Notwithstanding anything to the contrary contained herein, if the Company pays any selling commission to the Dealer Manager for sale by a Selected Dealer of one or more Shares and the subscription is rescinded as to one or more of the Shares covered by such subscription, then the Company shall decrease the next payment of selling commissions or other compensation otherwise payable to the Dealer Manager by the Company under this Agreement by an amount equal to the commission rate established in this Section 3(d), multiplied by the number of Shares as to which the subscription is rescinded.  If no payment of selling commissions or other compensation is due to the Dealer Manager after such withdrawal occurs, then the Dealer Manager shall pay the amount specified in the preceding sentence to the Company within a reasonable period of time not to exceed thirty (30) days following receipt of notice by the Dealer Manager from the Company stating the amount owed as a result of rescinded subscriptions.

 

(e)           Reasonable Bona Fide Due Diligence Expenses.  In addition to any payments to the Dealer Manager pursuant to Section 3(d), the Company shall reimburse the Dealer Manager or any Selected Dealer for reasonable bona fide due diligence expenses incurred by the Dealer Manager or any Selected Dealer to the extent permitted pursuant to the rules and regulations of FINRA, provided, however, that no due diligence expenses shall be reimbursed by the Company pursuant to this Section 3(e) which would cause the aggregate of all of the Company’s expenses described in Section 3(f) and compensation paid to the Dealer Manager and any Selected Dealer pursuant to Section 3(d) to exceed 15% of the gross proceeds from the sale of the Shares.  Also, the Company shall only reimburse the Dealer Manager or any Selected Dealer for such approved bona fide due diligence expenses to the extent such expenses have actually been incurred and are supported by detailed and itemized invoice(s) provided to the Company.

 

9

 

 

(f)                                   Company Expenses.  Subject to the limitations described above, the Company agrees to pay all costs and expenses incident to the Offering, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including expenses, fees and taxes in connection with:

 

(i)                                    the registration fee, the preparation and filing of the Registration Statement (including without limitation financial statements, exhibits, schedules and consents), the Prospectus, and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Dealer Manager and to Selected Dealers (including costs of mailing and shipment);

 

(ii)                                 the preparation, issuance and delivery of certificates, if any, for the Shares, including any stock or other transfer taxes or duties payable upon the sale of the Shares;

 

(iii)                              all fees and expenses of the Company’s legal counsel, independent public or certified public accountants and other advisors;

 

(iv)                             the qualification of the Shares for offering and sale under state laws in the states that the Company shall designate as appropriate and the determination of their eligibility for sale under state law as aforesaid and the printing and furnishing of copies of blue sky surveys;

 

(v)                                the filing fees in connection with filing for review by FINRA of all necessary documents and information relating to the Offering and the Shares;

 

(vi)                             the fees and expenses of any transfer agent or registrar for the Offered Shares and miscellaneous expenses referred to in the Registration Statement;

 

(vii)                          all costs and expenses incident to the travel and accommodation of the personnel of Carey Asset Management Corp., advisor to the Company (the “Advisor”), and the personnel of any sub-advisor designated by the Advisor and acting on behalf of the Company, in making road show presentations and presentations to Selected Dealers and other broker-dealers and financial advisors with respect to the offering of the Shares; and

 

(viii)                      the performance of the Company’s other obligations hereunder.

 

Notwithstanding the foregoing, the Company shall not directly pay, or reimburse the Advisor for, the costs and expenses described in this Section 3(f) if the payment or reimbursement of such expenses would cause the aggregate of the Company’s “organization and offering expenses” as defined by FINRA Rule 2310 (including the Company expenses paid or reimbursed pursuant to this Section 3(f), all items of underwriting compensation including Dealer Manager expenses described in Section 3(d) and due diligence expenses described in Section 3(e)) to exceed 15.0% of the gross proceeds from the sale of the Shares.

 

4.                                      Conditions to the Dealer Manager’s Obligations.  The Dealer Manager’s obligations hereunder shall be subject to the following terms and conditions:

 

(a)                                 The representations and warranties on the part of the Company contained in this Agreement hereof shall be true and correct in all material respects and the Company shall have complied with its covenants, agreements and obligations contained in this Agreement in all material respects;

 

(b)                                 The Registration Statement shall have become effective and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the Commission and, to the

 

10
 

 

best knowledge of the Company, no proceedings for that purpose shall have been instituted, threatened or contemplated by the Commission; and any request by the Commission for additional information (to be included in the Registration Statement or Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Dealer Manager.

 

5.                                      Covenants of the Company.  The Company covenants and agrees with the Dealer Manager as follows:

 

(a)                                 Registration Statement.  The Company will use its best efforts to cause the Registration Statement and any subsequent amendments thereto to become effective as promptly as possible and will furnish a copy of any proposed amendment or supplement of the Registration Statement or the Prospectus to the Dealer Manager.

 

(b)                                 Commission Orders.  If the Commission shall issue any stop order or any other order preventing or suspending the use of the Prospectus, or shall institute any proceedings for that purpose, then the Company will promptly notify the Dealer Manager and use its best efforts to prevent the issuance of any such order and, if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible.

 

(c)                                  Blue Sky Qualifications.  The Company will use its best efforts to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as the Dealer Manager and the Company shall mutually agree upon and to make such applications, file such documents and furnish such information as may be reasonably required for that purpose. The Company will, at the Dealer Manager’s request, furnish the Dealer Manager with a copy of such papers filed by the Company in connection with any such qualification.  The Company will promptly advise the Dealer Manager of the issuance by such securities administrators of any stop order preventing or suspending the use of the Prospectus or of the institution of any proceedings for that purpose, and will use its best efforts to prevent the issuance of any such order and if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible. The Company will furnish the Dealer Manager with a Blue Sky Survey dated as of the initial Effective Date, which will be supplemented to reflect changes or additions to the information disclosed in such survey.

 

(d)                                 Amendments and Supplements.  If, at any time when a Prospectus relating to the Shares is required to be delivered under the Securities Act, any event shall have occurred to the knowledge of the Company, or the Company receives notice from the Dealer Manager that it believes such an event has occurred, as a result of which the Prospectus or any Approved Sales Literature as then amended or supplemented would include any untrue statement of a material fact, or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Prospectus relating to the Shares to comply with the Securities Act, then the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the Dealer Manager) and will prepare and file with the Commission an amendment or supplement which will correct such statement or effect such compliance to the extent required, and shall make available to the Dealer Manager thereof sufficient copies for its own use and/or distribution to the Selected Dealers.

 

(e)                                  Requests from Commission.  The Company will promptly advise the Dealer Manager of any request made by the Commission or a state securities administrator for amending the Registration Statement, supplementing the Prospectus or for additional information.

 

(f)                                   Copies of Registration Statement. The Company will furnish the Dealer Manager with one signed copy of the Registration Statement, including its exhibits, and such additional copies of the

 

11
 

 

Registration Statement, without exhibits, and the Prospectus and all amendments and supplements thereto, which are finally approved by the Commission, as the Dealer Manager may reasonably request for sale of the Shares.

 

(g)                                  Qualification to Transact Business.  The Company will take all steps necessary to ensure that at all times the Company will validly exist as a Maryland corporation and will be qualified to do business in all jurisdictions in which the conduct of its business requires such qualification and where such qualification is required under local law.

 

(h)                                 Authority to Perform Agreements. The Company undertakes to obtain all consents, approvals, authorizations or orders of any court or governmental agency or body which are required for the Company’s performance of this Agreement and under the Bylaws and the Articles of Amendment and Restatement in the form included as exhibits to the Registration Statement for the consummation of the transactions contemplated hereby and thereby, respectively, or the conducting by the Company of the business described in the Prospectus.

 

(i)                                     Sales Literature.  The Company will furnish to the Dealer Manager as promptly as shall be practicable upon request any Approved Sales Literature (provided that the use of said material has been first approved for use to the extent required by all appropriate regulatory agencies).  Any supplemental sales literature or advertisement, regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which is furnished or approved by the Company (including, without limitation, Approved Sales Literature) shall, to the extent required, be filed with and, to the extent required, approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required.

 

(j)                                    Use of Proceeds.  The Company will apply the proceeds from the sale of the Shares as set forth in the Prospectus.

 

(k)                                 Customer Information.  The Dealer Manager and the Company shall, when applicable:

 

(i)                                     abide by and comply with (A) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) and applicable regulations promulgated thereunder, (B) the privacy standards and requirements of any other applicable federal or state law, including but not limited to, the Fair Credit Reporting Act (“FCRA”), and (C) its own internal privacy policies and procedures, each as may be amended from time to time;

 

(ii)                                  refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law;

 

(iii)                               except as expressly permitted under the FCRA, the Dealer Manager and the Company shall not disclose any information that would be considered a “consumer report” under the FCRA; and

 

(iv)                              determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers from the Selected Dealers (the “List”) to identify customers that have exercised their opt-out rights.  If either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine

 

12
 

 

whether the affected customer has exercised his or her opt-out rights.  Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.

 

(l)                                     Dealer Manager’s Review of Proposed Amendments and Supplements.  Prior to amending or supplementing the Registration Statement, any preliminary prospectus or the Prospectus (including any amendment or supplement through incorporation of any report filed under the Exchange Act), the Company shall furnish to the Dealer Manager for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall not file or use any such proposed amendment or supplement without the Dealer Manager’s consent, which consent shall not be unreasonably withheld or delayed.

 

6.                                      Covenants of the Dealer Manager. The Dealer Manager covenants and agrees with the Company as follows:

 

(a)                                 Compliance With Laws. With respect to the Dealer Manager’s participation and the participation by each Selected Dealer in the offer and sale of the Shares (including, without limitation, any resales and transfers of Shares), the Dealer Manager agrees, and each Selected Dealer in its Selected Dealer Agreement will agree, to comply in all material respects with all applicable requirements of the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations and all other federal regulations applicable to the Offering, the sale of Shares and with all applicable state securities or blue sky laws, and the Rules of FINRA applicable to the Offering, from time to time in effect, specifically including, but not in any way limited to, NASD Conduct Rules 2340, 2420, 2730, 2740, 2750 and FINRA Rule 2310 therein.  The Dealer Manager will not offer the Shares for sale in any jurisdiction unless and until it has been advised that the Shares are either registered in accordance with, or exempt from, the securities and other laws applicable thereto.

 

In addition, the Dealer Manager shall, in accordance with applicable law or as prescribed by any state securities administrator, provide, or require in the Selected Dealer Agreement that the Selected Dealer shall provide, to any prospective investor copies of any prescribed document which is part of the Registration Statement and any supplements thereto during the course of the Offering and prior to the sale.  The Company may provide the Dealer Manager with certain Approved Sales Literature to be used by the Dealer Manager and the Selected Dealers in connection with the solicitation of purchasers of the Shares.  The Dealer Manager agrees not to deliver the Approved Sales Literature to any person prior to the initial Effective Date.  If the Dealer Manager elects to use such Approved Sales Literature after the initial Effective Date, then the Dealer Manager agrees that such material shall not be used by it in connection with the solicitation of purchasers of the Shares and that it will direct Selected Dealers not to make such use unless accompanied or preceded by the Prospectus, as then currently in effect, and as it may be amended or supplemented in the future.

 

The Dealer Manager agrees that it will not use any Approved Sales Literature other than those provided to the Dealer Manager by the Company for use in the Offering.  The use of any other sales material is expressly prohibited.

 

(b)                                 No Additional Information. In offering the Shares for sale, the Dealer Manager shall not, and each Selected Dealer shall agree not to, give or provide any information or make any representation other than those contained in the Prospectus or the Approved Sales Literature.

 

13
 

 

(c)                                  Sales of Shares. The Dealer Manager shall, and each Selected Dealer shall agree to, solicit purchases of the Shares only in the jurisdictions in which the Dealer Manager and such Selected Dealer are legally qualified to so act and in which the Dealer Manager and each Selected Dealer have been advised by the Company or counsel to the Company that such solicitations can be made.

 

(d)                                 Subscription Agreement. The Dealer Manager will comply in all material respects with the subscription procedures and “The Offering/Plan of Distribution” set forth in the Prospectus.  Subscriptions will be submitted by the Dealer Manager and each Selected Dealer to the Company only on the form which is included as Annex A to the Prospectus.  The Dealer Manager understands and acknowledges, and each Selected Dealer shall acknowledge, that the Subscription Agreement must be executed and initialed by the subscriber as provided for by the Subscription Agreement.

 

(e)                                  Suitability. The Dealer Manager will offer Shares, and in its agreement with each Selected Dealer will require that the Selected Dealer offer Shares, only to persons that it has reasonable grounds to believe meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company and will only make offers to persons in the states in which it is advised in writing by the Company that the Shares are qualified for sale or that such qualification is not required.  In offering Shares, the Dealer Manager will comply, and in its agreements with the Selected Dealers, the Dealer Manager will require that the Selected Dealers comply, with the provisions of all applicable rules and regulations relating to suitability of investors, including without limitation the FINRA Rules and the provisions of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc., as revised and amended on May 7, 2007 and as may be further revised and amended (the “NASAA Guidelines”).

 

The Dealer Manager agrees that in recommending the purchase of the Shares in the Primary Offering to an investor, the Dealer Manager and each person associated with the Dealer Manager that make such recommendation shall have, and each Selected Dealer in its Selected Dealer Agreement shall agree with respect to investors to which it makes a recommendation shall agree that it shall have, reasonable grounds to believe, on the basis of information obtained from the investor concerning the investor’s investment objectives, other investments, financial situation and needs, and any other information known by the Dealer Manager, the person associated with the Dealer Manager or the Selected Dealer that:

 

(i)                                    the investor is or will be in a financial position appropriate to enable the investor to realize to a significant extent the benefits described in the Prospectus, including the tax benefits where they are a significant aspect of the Company;

 

(ii)                                 the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity; and

 

(iii)                              an investment in the Shares offered in the Primary Offering is otherwise suitable for the investor.

 

The Dealer Manager agrees as to investors to whom it makes a recommendation with respect to the purchase of the Shares in the Primary Offering (and each Selected Dealer in its Selected Dealer Agreement shall agree, with respect to Investors to whom it makes such recommendations) to maintain in the files of the Dealer Manager (or the Selected Dealer, as applicable) documents disclosing the basis upon which the determination of suitability was reached as to each investor.

 

14
 

 

In making the determinations as to financial qualifications and as to suitability required by the NASAA Guidelines, the Dealer Manager and Selected Dealers may rely on (A) representations from investment advisers who are not affiliated with a Selected Dealer, banks acting as trustees or fiduciaries, and (B) information it has obtained from a prospective investor, including such information as the investment objectives, other investments, financial situation and needs of the person or any other information known by the Dealer Manager (or Selected Dealer, as applicable), after due inquiry. Notwithstanding the foregoing, the Dealer Manager shall not, and each Selected Dealer shall agree not to, execute any transaction in the Company in a discretionary account without prior written approval of the transaction by the customer.

 

(f)                                   Selected Dealer Agreements.  All engagements of the Selected Dealers will be evidenced by a Selected Dealer Agreement.

 

(g)                                  Electronic Delivery.  If it intends to use electronic delivery to distribute the Prospectus to any person, that it will comply with all applicable requirements of the Commission, the Blue Sky laws and/or FINRA and any other laws or regulations related to the electronic delivery of documents.

 

(h)                                 AML Compliance.  The Dealer Manager represents to the Company that it has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with Section 352 of the USA PATRIOT Act of 2001 (the “PATRIOT Act”) and FINRA Rule 3310, that complies with applicable anti-money laundering laws and regulations, including, but not limited to, the customer identification program requirements of Section 326 of the PATRIOT Act, and the suspicious activity reporting requirements of Section 356 of the PATRIOT Act, and the laws, regulations and Executive Orders administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury (collectively, “AML/OFAC Laws”).  The Dealer Manager hereby covenants to remain in compliance with the AML/OFAC Laws and shall, upon request by the Company, provide a certification to the Company that, as of the date of such certification, its AML Program is compliant with the AML/OFAC Laws.

 

(i)                                     Customer Information.  The Dealer Manager will use its best efforts to provide the Company with any and all subscriber information that the Company requests in order for the Company to satisfy its obligations under the AML/OFAC Laws and comply with the requirements under Section 5(k) above.

 

(j)                                    Recordkeeping.  The Dealer Manager will comply, and will require each Selected Dealer to comply, with the record keeping requirements of the Exchange Act, including, but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act, and shall maintain, for at least six years or for a period of time not less than that required in order to comply with all applicable federal, state and other regulatory requirements, whichever is later, such records with respect to each investor who purchases Shares, information used to determine that the investor meets the suitability standards imposed on the offer and sale of the Shares, the amount of Shares sold, and a representation of the investor that the investor is investing for the investor’s own account or, in lieu of such representation, information indicating that the investor for whose account the investment was made met the suitability standards.

 

(k)                                 Suspension or Termination of Offering.  The Dealer Manager agrees, and will require that each of the Selected Dealers agree, to suspend or terminate the offering and sale of the Shares upon request of the Company at any time and to resume the offering and sale of the Shares upon subsequent request of the Company.

 

15
 

 

7.                                      Indemnification.

 

(a)                                 Indemnified Parties Defined.  For the purposes of this Agreement, an “Indemnified Party” shall mean a person or entity entitled to indemnification under Section 7, as well as such person’s or entity’s officers, directors, employees, members, partners, affiliates, agents and representatives, and each person, if any, who controls such person or entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.

 

(b)                                 Indemnification of the Dealer Manager and Selected Dealers.  The Company will indemnify, defend and hold harmless the Dealer Manager and the Selected Dealers, and their respective Indemnified Parties, from and against any losses, claims, expenses (including reasonable legal and other expenses incurred in investigating and defending such claims or liabilities), damages or liabilities, joint or several, to which any such Selected Dealers or the Dealer Manager, or their respective Indemnified Parties, may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon:

 

(i)                                     in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Company, any material breach of a covenant contained herein by the Company, or any material failure by the Company to perform its obligations hereunder or to comply with state or federal securities laws applicable to the Offering;

 

(ii)                                  any untrue statement or alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature or (C) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Offered Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”); or

 

(iii)                               the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof to make the statements therein not misleading or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

The Company will reimburse each Selected Dealer or the Dealer Manager, and their respective Indemnified Parties, for any reasonable legal or other expenses incurred by such Selected Dealer or the Dealer Manager, and their respective Indemnified Parties, in connection with investigating or defending such loss, claim, expense, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, expense, damage or liability arises out of, or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or any post-effective amendment thereof or the Prospectus or any such amendment thereof or supplement thereto.  This indemnity agreement will be in addition to any liability which the Company may otherwise have.

 

16
 

 

Notwithstanding the foregoing, as required by Section II.G. of the NASAA Guidelines, the indemnification and agreement to hold harmless provided in this Section 7(b) is further limited to the extent that no such indemnification by the Company of a Selected Dealer or the Dealer Manager, or their respective Indemnified Parties, shall be permitted under this Agreement for, or arising out of, an alleged violation of federal or state securities laws, unless one or more of the following conditions are met:  (a) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular Indemnified Party; (b) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular Indemnified Party; or (c) a court of competent jurisdiction approves a settlement of the claims against the particular Indemnified Party and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the published position of any state securities regulatory authority in which the securities were offered or sold as to indemnification for violations of securities laws.

 

(c)                                  Dealer Manager Indemnification of the Company.  The Dealer Manager will indemnify, defend and hold harmless the Company and each of its Indemnified Parties and each person who has signed the Registration Statement, from and against any losses, claims, expenses (including the reasonable legal and other expenses incurred in investigating and defending any such claims or liabilities), damages or liabilities to which any of the aforesaid parties may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, expenses, damages (or actions in respect thereof) arise out of or are based upon:

 

(i)                                     in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Dealer Manager or any material breach of a covenant contained herein by the Dealer Manager;

 

(ii)                                  any untrue statement or any alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature, or (C) any Blue Sky Application; or

 

(iii)                               the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof to make the statements therein not misleading, or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the Prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that in each case described in clauses (ii) and (iii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or any such post-effective amendments thereof or the Prospectus or any such amendment thereof or supplement thereto;

 

(iv)                              any use of sales literature, including “broker-dealer use only” materials, by the Dealer Manager that is not Approved Sales Literature; or

 

(v)                                 any untrue statement made by the Dealer Manager or omission by the Dealer Manager to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the Offering, in each case, other than statements or omissions made in conformity with the Registration

 

17
 

 

Statement, the Prospectus, any Approved Sales Literature or any other materials or information furnished by or on behalf on the Company.

 

The Dealer Manager will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, expense, damage, liability or action.  This indemnity agreement will be in addition to any liability which the Dealer Manager may otherwise have.

 

(d)                                 Selected Dealer Indemnification of the Company.  By virtue of entering into the Selected Dealer Agreement, each Selected Dealer severally will agree to indemnify, defend and hold harmless the Company, the Dealer Manager, each of their respective Indemnified Parties, and each person who signs the Registration Statement, from and against any losses, claims, expenses, damages or liabilities to which the Company, the Dealer Manager, or any of their respective Indemnified Parties, or any person who signed the Registration Statement, may become subject, under the Securities Act or otherwise, as more fully described in the Selected Dealer Agreement.

 

(e)                                  Action Against Parties; Notification.  Promptly after receipt by any Indemnified Party under this Section 7 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7, promptly notify the indemnifying party of the commencement thereof; provided, however, that the failure to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been actually prejudiced by such failure.  In case any such action is brought against any Indemnified Party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel.

 

Such participation shall not relieve such indemnifying party of the obligation to reimburse the Indemnified Party for reasonable legal and other expenses incurred by such Indemnified Party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of, and unconditional release of all liabilities from, the claim in respect of which indemnity is sought.  Any such indemnifying party shall not be liable to any such Indemnified Party on account of any settlement of any claim or action effected without the consent of such indemnifying party, such consent not to be unreasonably withheld or delayed.

 

(f)                                   Reimbursement of Fees and Expenses.  An indemnifying party under Section 7 of this Agreement shall be obligated to reimburse an Indemnified Party for reasonable legal and other expenses as follows:

 

(i)                                     In the case of the Company indemnifying the Dealer Manager, the advancement of funds to the Dealer Manager for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought shall be permissible (in accordance with Section II.G. of the NASAA Guidelines) only if all of the following conditions are satisfied:  (A) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (B) the legal action is initiated by a third party who is not a shareholder of the Company or the legal action is initiated by a shareholder of the Company acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and (C) the Dealer Manager undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which the Dealer Manager is found not to be entitled to indemnification.

 

18

 

 

 

 

(ii)                                  In any case of indemnification other than that described in Section 7(f)(i) above, the indemnifying party shall pay all legal fees and expenses reasonably incurred by the Indemnified Party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one Indemnified Party.  If such claims or actions are alleged or brought against more than one Indemnified Party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm (in addition to local counsel) that has been participating by a majority of the indemnified parties against which such action is finally brought; and if a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an Indemnified Party against the action or claim.  Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.

 

8.                                      Contribution.

 

(a)                                 If Indemnification is Unavailable.  If the indemnification provided for in Section 7 is for any reason unavailable to or insufficient to hold harmless an Indemnified Party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred:

 

(i)                                     in such proportion as is appropriate to reflect the relative benefits received by the Company, the Dealer Manager and the Selected Dealer, respectively, from the proceeds received in Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement; or

 

(ii)                                  if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Dealer Manager and the Selected Dealer, respectively, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

(b)                                 Relative Benefits.  The relative benefits received by the Company, the Dealer Manager and the Selected Dealer, respectively, in connection with the proceeds received in the Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement shall be deemed to be in the same respective proportion as the total net proceeds from the Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement (before deducting expenses), received by the Company, and the total selling commissions and dealer manager fees received by the Dealer Manager and the Selected Dealer, respectively, in each case as set forth on the cover of the Prospectus bear to the aggregate offering price of the Shares sold in the Primary Offering as set forth on such cover.

 

(c)                                  Relative Fault.  The relative fault of the Company, the Dealer Manager and the Selected Dealer, respectively, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact

 

19
 

 

related to information supplied by the Company, by the Dealer Manager or by the Selected Dealer, respectively, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

(d)                                 Pro Rata is Unreasonable.  The Company, the Dealer Manager and the Selected Dealer (by virtue of entering into the Selected Dealer Agreement) agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable contributions referred to above in this Section 8.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission or alleged omission.

 

(e)                                  Limits.  Notwithstanding the provisions of this Section 8, the Dealer Manager and the Selected Dealer shall not be required to contribute any amount by which the total price at which the Shares sold in the Primary Offering to the public by them exceeds the amount of any damages which the Dealer Manager and the Selected Dealer have otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.

 

(f)                                   Fraudulent Misrepresentation.  No party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation.

 

(g)                                  Benefits of Contribution.  For the purposes of this Section 8, the Dealer Manager’s officers, directors, employees, members, partners, agents and representatives, and each person, if any, who controls the Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Dealer Manager, and each officers, directors, employees, members, partners, agents and representatives of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Company.  The Selected Dealers’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the number of Shares sold by each Selected Dealer in the Primary Offering and not joint.

 

9.                                      Termination of this Agreement.

 

(a)                                 Term; Expiration.  This Agreement shall become effective on the initial Effective Date and the obligations of the parties hereunder shall not commence until the initial Effective Date. This Agreement may be terminated by either party upon 60 calendar days’ written notice to the other party.  This Agreement shall automatically expire on the termination date of the Offering as described in the Prospectus.

 

(b)                                 Delivery of Records Upon Expiration or Early Termination.  Upon the expiration or early termination of this Agreement for any reason, the Dealer Manager shall:

 

(i)                                     promptly forward any and all funds, if any, in its possession which were received from investors for the sale of Shares for deposit;

 

20
 

 

(ii)                                  to the extent not previously provided to the Company a list of all investors who have subscribed for or purchased shares and all broker-dealers with whom the Dealer Manager has entered into a Selected Dealer Agreement;

 

(iii)                               notify Selected Dealers of such termination; and

 

(iv)                              promptly deliver to the Company copies of any sales literature designed for use specifically for the Offering that it is then in the process of preparing. Upon expiration or earlier termination of this Agreement, the Company shall pay to the Dealer Manager all compensation to which the Dealer Manager is or becomes entitled under Section 3(d) at such time as such compensation becomes payable.

 

10.                               Miscellaneous

 

(a)                                 Survival.  The following provisions of the Agreement shall survive the expiration or earlier termination of this Agreement:  Section 3(d) (Dealer-Manager Compensation); Section 5(l) (Dealer-Manager’s Review of Proposed Amendments and Supplements); Section 6(i) (AML Compliance); Section 7 (Indemnification); Section 8 (Contribution); Section 9 (Termination of This Agreement) and this Section 10 (Miscellaneous).  Notwithstanding anything else that may be to the contrary herein, the expiration or earlier termination of this Agreement shall not relieve a party for liability for any breach occurring prior to such expiration or earlier termination.  In no event shall the Dealer Manager be entitled to payment of any compensation in connection with the Offering that is not completed according to this Agreement; provided, however, that the reimbursement of out-of-pocket accountable expenses actually incurred by the Dealer Manager or person associated with the Dealer Manager shall not be presumed to be unfair or unreasonable and shall be payable under normal circumstances.

 

(b)                                 Notices.  All notices or other communications required or permitted hereunder, except as herein otherwise specifically provided, shall be in writing and shall be deemed given or delivered:  (i) when delivered personally or by commercial messenger; (ii) one business day following deposit with a recognized overnight courier service, provided such deposit occurs prior to the deadline imposed by such service for overnight delivery; (iii) when transmitted, if sent by facsimile copy, provided confirmation of receipt is received by sender and such notice is sent by an additional method provided hereunder; in each case above provided such communication is addressed to the intended recipient thereof as set forth below:

 

If to the Company:

 

Corporate Property Associates 17 - Global Incorporated

50 Rockefeller Plaza

New York, New York 10020

Attention:  Mr. Thomas Zacharias

 

with a copy to:

 

Clifford Chance US LLP

31 West 52nd Street

New York, New York 10019

Facsimile No.:  (212) 878-8375

Attention:  Kathleen L. Werner, Esq.

 

21
 

 

If to the Dealer Manager:

 

Carey Financial, LLC

50 Rockefeller Plaza

New York, New York 10020

Facsimile No.: (212) 492-8922

Attention:  Mr. Richard J. Paley

 

with a copy to:

 

Kunzman & Bollinger, Inc.

5100 N. Brookline Avenue, Suite 600

Oklahoma City, Oklahoma 73112

Facsimile No: (405) 942-3501

Attention:  Wallace W. Kunzman, Jr.

 

Any party may change its address specified above by giving each party notice of such change in accordance with this Section 10(b).

 

(c)                                  Successors and Assigns. No party shall assign (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement without the prior written consent of each other party. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.

 

(d)                                 Invalid Provision.  The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

 

(e)                                  Applicable Law. This Agreement and any disputes relative to the interpretation or enforcement hereto shall be governed by and construed under the internal laws, as opposed to the conflicts of laws provisions, of the State of New York.

 

(f)                                   Waiver.  EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT.  The parties hereto each hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the Borough of Manhattan, New York City, in respect of the interpretation and enforcement of the terms of this Agreement, and in respect of the transactions contemplated hereby, and each hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto each hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court.

 

(g)                                  Attorneys’ Fees.  If a dispute arises concerning the performance, meaning or interpretation of any provision of this Agreement or any document executed in connection with this Agreement, then the prevailing party in such dispute shall be awarded any and all costs and expenses incurred by the prevailing party in enforcing, defending or establishing its rights hereunder or thereunder,

 

22
 

 

including, without limitation, court costs and attorneys and expert witness fees.  In addition to the foregoing award of costs and fees, the prevailing also shall be entitled to recover its attorneys’ fees incurred in any post-judgment proceedings to collect or enforce any judgment.

 

(h)                                 No Partnership. Nothing in this Agreement shall be construed or interpreted to constitute the Dealer Manager or the Selected Dealer as being in association with or in partnership with the Company or one another, and instead, this Agreement only shall constitute the Selected Dealer as a broker authorized by the Company to sell and to manage the sale by others of the Shares according to the terms set forth in the Registration Statement, the Prospectus or this Agreement. Nothing herein contained shall render the Dealer Manager or the Company liable for the obligations of any of the Selected Dealers or one another.

 

(i)                                     Third Party Beneficiaries.  Except for the persons and entities referred to in Section 7 (Indemnification) and Section 8 (Contribution), there shall be no third party beneficiaries of this Agreement, and no provision of this Agreement is intended to be for the benefit of any person or entity not a party to this Agreement, and no third party shall be deemed to be a beneficiary of any provision of this Agreement.  Except for the persons and entities referred to in Section 7 and Section 8, no third party shall by virtue of any provision of this Agreement have a right of action or an enforceable remedy against any party to this Agreement.  Each of the persons and entities referred to in Section 7 and Section 8 shall be a third party beneficiary of this Agreement.

 

(j)                                    Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

 

(k)                                 Nonwaiver.  The failure of any party to insist upon or enforce strict performance by any other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

 

(l)                                     Access to Information. The Company may authorize the Company’s transfer agent to provide information to the Dealer Manager and each Selected Dealer regarding recordholder information about the clients of such Selected Dealer who have invested with the Company on an on-going basis for so long as such Selected Dealer has a relationship with such clients. The Dealer Manager shall require in the Selected Dealer Agreement that Selected Dealers not disclose any password for a restricted website or portion of website provided to such Selected Dealer in connection with the Offering and not disclose to any person, other than an officer, director, employee or agent of such Selected Dealers, any material downloaded from such a restricted website or portion of a restricted website.

 

(m)                             Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterpart copies, each of which shall be deemed an original but all of which together shall constitute one and the same instrument comprising this Agreement.

 

(n)                                 Absence of Fiduciary Relationships.  The parties acknowledge and agree that:

 

23
 

 

(i)                                     the Dealer Manager’s responsibility to the Company is solely contractual in nature; and

 

(ii)                                  the Dealer Manager does not owe the Company, any of its affiliates or any other person or entity any fiduciary (or other similar) duty as a result of this Agreement or any of the transactions contemplated hereby.

 

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return it to us, whereupon this instrument will become a binding agreement between you and the Company in accordance with its terms.

 

[Signatures on following page]

 

24
 

 

IN WITNESS WHEREOF, the parties hereto have each duly executed this Dealer Manager Agreement as of the day and year set forth above.

 

	
 
    	
THE COMPANY:
    
	
 
    	
 
    
	
 
    	
CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL   INCORPORATED
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard J. Paley
    
	
 
    	
 
    	
Name:
    	
Richard J. Paley
    
	
 
    	
 
    	
Title:
    	
Executive Director
    
	
 
    	
 
    	
 
    	
 
    
	
Accepted as of the date first above written:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
THE DEALER MANAGER:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CAREY FINANCIAL, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ C. Jay   Steigerwald III
    
	
 
    	
 
    	
Name:
    	
C. Jay Steigerwald III
    
	
 
    	
 
    	
Title:
    	
SVP National Accounts
    

 

 

[Signature Page to Dealer Manager Agreement]

 

 

EXHIBIT A

 

FORM OF SELECTED DEALER AGREEMENTExhibit 10.28

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 12th day of December, 2012 (the “Effective Date”), between GENERAL MOLY, INC., a Delaware corporation (the “Company”), and ROBERT I. PENNINGTON (“Executive”).

 

RECITALS

 

A.                                    The Company is in the exploration, development and mining business.

 

B.                                    Executive has been employed by the Company as its Chief Operating Officer (“COO”) since January 1, 2012, and prior thereto as its Vice President Engineering & Construction since October, 2007.

 

C.                                    In connection with Executive’s employment with the Company, Executive has had and will continue to have access to confidential, proprietary and trade secret information of the Company and its Affiliates (as defined herein) and relating to the business of the Company and its Affiliates, which confidential, proprietary and trade secret information the Company and its Affiliates desire to protect from disclosure and unfair competition.

 

E.                                     The Company and Executive now desire to enter into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, and the respective covenants and promises of the parties contained herein, the Company and Executive enter into this Agreement and agree as follows:

 

1.                                      DESCRIPTION OF SERVICES. Executive shall, to the best of his ability, industriously and faithfully perform the responsibilities as COO of the Company as specified in the Company’s by-laws and as may be prescribed from time to time by the Company’s Chief Executive Officer (the “CEO”) or the Board of Directors of the Company (the “Board”).  Executive  shall devote all of his business time, attention, skill and efforts exclusively to the business and affairs of Company; provided, however, that Executive may serve on other boards as a director or trustee if such service, in the opinion of the Company, does not interfere with his ability to discharge his duties and responsibilities to Company and is not, in the opinion of the Company, in conflict with the specific thrust of the Company’s business plan.  The Executive shall report to the CEO.  Executive’s specific responsibilities and duties may be changed from time to time by the Company but he shall be primarily responsible for all aspects of the development, construction and operation of the Mt. Hope Project, the continuing exploration, development and permitting of the Liberty Project for future operations, and such other projects that the Company and Board determine.  Such duties and responsibilities shall include engineering, supply side management and general office administration and management and supervision of staff assigned to report to Executive.  The Company may also establish goals for the Company and/or for Executive from time to time which Executive will be responsible to attain.

 

 

2.                                      TERM.  Subject to the provisions for early termination as hereinafter provided, Executive’s employment under the terms and conditions of this Agreement shall commence as of the Effective Date and shall terminate automatically on the earlier of (y) the one-year anniversary of the date on which the Company achieves Commercial Production (as such term is defined in the Amended and Restated Limited Liability Agreement of Eureka Moly, LLC dated February 26, 2008) and (z) December 31, 2016  (the “Term”), provided that if a Change of Control occurs prior to the expiration of the Term specified in the preceding clause and the Term would otherwise expire during the one-year period immediately following the Change of Control (the “Transition Period”) as a result of application of the preceding clause, then the Term shall end upon expiration of the Transition Period.  If Executive remains employed by the Company after the Term has ended, then such continued employment will be based on such terms and conditions as may be established from time to time by the Company, with no agreement or assurance under this Agreement that Executive will be entitled to any separation pay or benefits upon any termination of such continued employment.

 

3.                                      COMPENSATION.

 

3.1.                            Base Compensation. During the Term, base compensation shall be payable to Executive based on an annual rate determined by the Board from time to time (“Base Compensation”). As of the Effective Date, Executive’s Base Compensation shall be TWO HUNDRED NINETY SEVEN THOUSAND DOLLARS ($297,000.00). Base Compensation shall be payable bi-weekly in arrears in accordance with the Company’s regular payroll procedures, policies and practices. Base Compensation may be reviewed and adjusted upward annually by the Board as it deems appropriate.

 

3.2.                            Incentive Compensation.

 

(a)         Incentive Cash Awards. Executive shall be eligible to receive such incentive cash awards as the Board may determine from time to time.  All incentive cash awards shall be paid in a lump sum, on a date determined by the Company, on or before March 15 of the calendar year following the calendar year in which the incentive cash award is earned.

 

(b)         Equity-Based Incentives.  Executive shall be eligible to receive such equity-based incentive awards from time to time under the Company’s 2006 Equity Incentive Plan, as may be amended from time to time (the “Equity Incentive Plan”), as the Board or the Compensation Committee of the Board determines in its discretion from time to time.

 

3.3                               Payments Subject to Deductions. All payments to Executive under Sections 3.1 and 3.2 shall be subject to the customary withholding taxes and the other employee taxes as required by law and deductions authorized by Executive.

 

3.4                               Business Expenses/Reimbursement of Disallowed Expenses. During the Term, the Company shall reimburse Executive for other reasonable and necessary business expenses in connection with the performance by Executive of his duties or services hereunder, including business, entertainment and travel, subject to compliance

 

2

 

with such policies regarding expenses and expense reimbursements as may be adopted from time to time by the Company. If any compensation payment, medical reimbursement, employee fringe benefit, expense allowance payment or other expense incurred by the Company for the benefit of Executive is disallowed in whole or in part as a deductible expense of the Company for federal or state income tax purposes for reasons other than the failure to qualify as “performance-based compensation” for purposes of Code Section 162(m), Executive shall reimburse the Company, upon notice and demand, to the full extent of the disallowance. In lieu of payment by Executive to the Company, Executive authorizes the Company to withhold amounts from Executive’s future compensation payments until the amount owed to the Company has been fully recovered. The Company shall not be required to legally defend any proposed disallowance and the amount required to be reimbursed by Executive shall be the amount, as finally determined by agreement or otherwise, which is actually disallowed as a deduction. This legally enforceable obligation is in accordance with the provisions of Revenue Ruling 69-115 and is for the purpose of entitling Executive to a business expense deduction for the taxable year in which the repayment is made to the Company. In this manner, the Company shall be protected from having to bear the entire burden of a disallowed expense item.

 

3.5                               Fringe Benefits. During the Term, Executive shall be entitled to participate in the retirement and health and welfare benefits offered generally by Company to its employees, to the extent that Executive’s position, tenure, salary, health, and other qualifications make Executive eligible to participate. Executive’s participation in such benefits shall be subject to the terms of the applicable plans, as the same may be amended from time to time. Company does not guarantee the adoption or continuance of any particular employee benefit during Executive’s employment, and nothing in this Agreement is intended to, or shall in any way restrict the right of Company, to amend, modify or terminate any of its benefits during the Term of this Agreement.  Executive also will be entitled to all normal and customary perquisites of employment, including paid-time-off of twenty (20) days per year, available to employees of the Company at Executive’s level, subject to the stated terms and conditions of such perquisites.

 

3.6                               Indemnity. The Company agrees to indemnify Executive for acts or omissions pursuant to its current Indemnity Agreement, a copy of which has been provided to Executive.

 

4.                                      TERMINATION; EFFECT OF TERMINATION.

 

4.1.                            Termination Date. Executive’s employment with the Company hereunder may be terminated as provided in Section 4.2.  Executive’s “Termination Date” shall be the date Executive’s “separation from service” with the Company has occurred for purposes of Section 409A of the Internal Revenue Code, as amended, and the regulations and guidance thereunder (“Code”).

 

3

 

4.2.                            Termination Events.

 

(a)         Termination by the Company Without Cause.  The Company may terminate Executive’s employment with the Company without Cause upon thirty (30) days prior written notice.

 

(b)         Termination by the Company With Cause. The Company may terminate Executive’s employment with the Company at any time with Cause, without notice (except as otherwise provided herein). For the purposes of this Agreement, “Cause” means the good faith determination by the Board that:

 

(i)             Executive has neglected, failed or refused to perform his duties as COO (other than as a result of physical or mental illness);

 

(ii)          Executive has failed to timely attain the goals assigned to Executive by the Company, in its good faith judgment, from time to time;

 

(iii)       Executive has committed an act of personal dishonesty including, without limitation, an act or omission intended to result in personal enrichment of Executive at the expense of the Company;

 

(iv)      Executive has committed a willful or intentional act that could reasonably be expected to injure the reputation, business, or business relationships of the Company or Executive’s reputation or business relationships;

 

(v)         Executive has perpetrated an intentional fraud against or affecting the Company or any customer, supplier, client, agent, or employee thereof;

 

(vi)      Executive has been convicted (including conviction on a nolo contendere, no contest, or similar plea) of a felony or any crime involving fraud, dishonesty, or moral turpitude; or

 

(vii)   Executive materially breaches his obligations under Section 8 of this Agreement.

 

With respect to any of the matters set forth in (i) or (ii) above, the Company shall give Executive notice of the deficiency and a reasonable opportunity to correct the deficiency (not to exceed sixty (60) days) prior to termination. In the event that the Company has given notice of a deficiency and makes a determination that the deficiency has not been cured within a reasonable period of time, Executive’s employment may be terminated for Cause.

 

(c)          Resignation By Executive Without Good Reason.  Executive may terminate Executive’s employment with the Company without Good Reason

 

4

 

upon ninety (90) days prior written notice to the Company, provided the Company may waive the notice period.

 

(d)         Resignation By Executive With Good Reason.  Executive may terminate Executive’s employment with the Company for Good Reason, subject to the notice and cure requirements provided below.  For purposes of this Agreement, “Good Reason” means:

 

(i)             a material diminution in Executive’s base compensation;

 

(ii)          a material diminution in Executive’s authority, duties or responsibilities;

 

(iii)       a material change of more than 50 miles in the geographic location at which Executive is required to perform services;

 

(iv)      any direction or requirement that Executive engage in conduct that could reasonably be construed to violate local, state or federal law; or

 

(v)         a material failure by the Company to pay Base Compensation due Executive pursuant to this Agreement in a timely manner.

 

With respect to any of the matters set forth above, Executive shall provide written notice to the Company within ninety (90) days of the initial existence of the Good Reason condition.  Upon receipt of such notice, the Company shall have a period of thirty (30) days during which it may remedy the condition and not be required to pay any amount payable under Sections 4.3(b) or 4.4(a) below in connection with a resignation with Good Reason.

 

(e)          Termination Due to Executive’s Disability.  Executive’s employment with the Company shall terminate automatically upon the inability of Executive to satisfactorily perform the duties set forth in Section 1 or as assigned to him by the Company from time to time by reason of mental or non-industrial physical illness or injury for a period of one hundred eighty (180) consecutive days (“Disability”).

 

(f)           Termination Due to Executive’s Death.  Executive’s employment with the Company shall terminate automatically upon his death.

 

(g)          Wind Up Activities.  Following any notice of termination required under this Section 4.2, the Company and Executive shall cooperate with each other in all matters relating to the winding up of Executive’s work on behalf of the Company.

 

5

 

4.3.                            Payments Upon Termination of Employment Prior to a Change of Control or After The Expiration of the Transition Period.

 

(a)                                 Involuntary Termination By The Company Without Cause Prior To a Change of Control or After the Expiration of the Transition Period. If Executive’s Termination Date occurs (y) during the Term, and (z) prior to a Change of Control or after the expiration of the Transition Period, and if such termination is involuntary at the initiative of the Company without Cause, then, in addition to such Base Compensation that has been earned but not paid to Executive as of the Termination Date, and in consideration of Executive’s obligations under Section 8.2 below, the Company shall provide to Executive the payments set forth in this Section 4.3(a), subject to the conditions described in Section 4.5:

 

(i)                                     Separation Pay.  The Company shall pay to Executive an amount equal to two times Executive’s Base Compensation as of the Termination Date payable to Executive in approximately equal installments over twelve (12) months, with such period commencing on the first normal payroll date of the Company after the Termination Date and continuing thereafter in accordance with the Company’s regular payroll schedule, but in no event shall such amount paid under this Section 4.3(a)(i) exceed the lesser of two times (A) the limit of compensation set forth in section 401(a)(17) of the Code as in effect for the year in which the Termination Date occurs, or (B) Executive’s annualized compensation based upon the annual rate of pay for services to the Company for the calendar year prior to the calendar year in which the Termination Date occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Employee had not separated from service).  The Company and Executive intend the payments under this Section 4.3(a)(i) to be a “separation pay plan due to involuntary separation from service” under Treas. Reg. § 1.409A-1(b)(9)(iii).

 

(ii)                                  Make-up Payment.  In the event that Executive’s separation pay under Section 4.3(a)(i) above is limited by application of clause (A) or (B) thereof, then the Company shall make an additional lump sum payment to Executive equal to the difference between (x) two times Executive’s Base Compensation as of the Termination Date and (y) the amount payable to Executive under Section 4.3(a)(i).  Such lump sum payment shall be paid to Executive no later than sixty (60) days following the Termination Date, provided that Executive has satisfied the conditions described in Section 4.5. The Company and Executive intend the payment under this Section 4.3(a)(ii) to be a short-term deferral under Treas. Reg. § 1.409A-1(b)(4).

 

(b)                                 Resignation By Executive For Good Reason Prior To a Change of Control.  If Executive’s Termination Date occurs (y) during the Term, and (z) prior to a Change of Control or after the expiration of the Transition Period, and if

 

6

 

such termination is the result of Executive’s resignation for Good Reason, then, in addition to such Base Compensation that has been earned but not paid to Executive as of the Termination Date, and in consideration of Executive’s obligations under Section 8.2 below, the Company shall provide to Executive the payments set forth in this Section 4.3(b), subject to the conditions described in Section 4.5:

 

(i)                                     Separation Pay.  The Company shall pay to Executive an amount equal to one times Executive’s Base Compensation as of the Termination Date payable to Executive in approximately equal installments over twelve (12) months, with such period commencing on the first normal payroll date of the Company after the Termination Date and continuing thereafter in accordance with the Company’s regular payroll schedule, but in no event shall such amount paid under this Section 4.3(b)(i) exceed the lesser of two times (A) the limit of compensation set forth in section 401(a)(17) of the Code as in effect for the year in which the Termination Date occurs, or (B) Executive’s annualized compensation based upon the annual rate of pay for services to the Company for the calendar year prior to the calendar year in which the Termination Date occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Employee had not separated from service).  The Company and Executive intend the payments under this Section 4.3(b)(i) to be a “separation pay plan due to involuntary separation from service” under Treas. Reg. § 1.409A-1(b)(9)(iii).

 

(ii)                                  Make-up Payment.  In the event that Executive’s separation pay under Section 4.3(b)(i) above is limited by application of clause (A) or (B) thereof, then the Company shall make an additional lump sum payment to Executive equal to the difference between (x) one times Executive’s Base Compensation as of the Termination Date and (y) the amount payable to Executive under Section 4.3(b)(i).  Such lump sum payment shall be paid to Executive no later than sixty (60) days following the Termination Date, provided that Executive has satisfied the conditions described in Section 4.5. The Company and Executive intend the payment under this Section 4.3(b)(ii) to be a short-term deferral under Treas. Reg. § 1.409A-1(b)(4).

 

(c)                                  Other Termination Prior to a Change of Control or After Expiration of the Transition Period.  If Executive’s Termination Date occurs (y) during the Term, and (z) prior to a Change of Control or after the expiration of the Transition Period, and is the result of:

 

(i)                                     Executive’s abandonment of or resignation from employment for any reason other than Good Reason;

 

(ii)                                  termination of Executive’s employment by the Company for Cause; or

 

7

 

(iii)                               Executive’s death or Disability;

 

then the Company will pay to Executive, or Executive’s beneficiary or Executive’s estate, as the case may be, such Base Compensation that has been earned but not paid to Executive as of the Termination Date, payable pursuant to the Company’s normal payroll practices and procedures, and Executive shall not be entitled to any additional compensation or benefits provided under this Section 4.

 

4.4.                            Payments Upon Termination of Employment During the Transition Period.

 

(a)                                 Involuntary Termination By The Company Without Cause or Resignation by Executive for Good Reason During the Transition Period. If Executive’s Termination Date occurs during the Transition Period, and if such termination is involuntary at the initiative of the Company without Cause or is the result of Executive’s resignation for Good Reason, then, in addition to such Base Compensation that has been earned but not paid to Executive as of the Termination Date, and in consideration of Executive’s obligations under Section 8.2 below, the Company shall provide to Executive the payments set forth in this Section 4.4(a), subject to the conditions described in Section 4.5:

 

(i)                                     Lump Sum Separation Pay.  The Company shall pay to Executive an amount equal to 100% of Executive’s target annual incentive award for one year (as in effect immediately prior to the closing of the Change of Control), less applicable withholdings, payable to Executive in a lump sum no later than sixty (60) days following the Termination Date, provided that Executive has satisfied the conditions described in Section 4.5.  The Company and Executive intend the payment under this Section 4.4(a)(i) to be a short-term deferral under Treas. Reg. § 1.409A-1(b)(4).

 

(ii)                                  Additional Separation Pay.  The Company shall pay to Executive an amount equal to three times Executive’s Base Compensation as of the Termination Date payable to Executive in approximately equal installments over twelve (12) months, with such period commencing on the first normal payroll date of the Company after the Termination Date and continuing thereafter in accordance with the Company’s regular payroll schedule, but in no event shall such amount paid under this Section 4.4(a)(ii) exceed the lesser of two times (A) the limit of compensation set forth in section 401(a)(17) of the Code as in effect for the year in which the Termination Date occurs, or (B) Executive’s annualized compensation based upon the annual rate of pay for services to the Company for the calendar year prior to the calendar year in which the Termination Date occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Employee had not separated from service).  The Company and Executive intend the payments under this Section 4.4(a)(ii) to be a “separation pay plan due to involuntary separation from service” under Treas. Reg. § 1.409A-

 

8

 

1(b)(9)(iii).

 

(iii)                               Make-up Payment.  In the event that Executive’s separation pay under Section 4.4(a)(ii) above is limited by application of clause (A) or (B) thereof, then the Company shall make an additional lump sum payment to Executive equal to the difference between (x) three times Executive’s Base Compensation as of the Termination Date and (y) the amount payable to Executive under Section 4.4(a)(ii).  Such lump sum payment shall be paid to Executive no later than sixty (60) days following the Termination Date, provided that Executive has satisfied the conditions described in Section 4.5.  The Company and Executive intend the payment under this Section 4.4(a)(iii) to be a short-term deferral under Treas. Reg. § 1.409A-1(b)(4).

 

(b)                                 Other Termination During the Transition Period.  If Executive’s Termination Date occurs during the Transition Period and is the result of:

 

(i)                                     Executive’s abandonment of or resignation from employment for any reason other than Good Reason;

 

(ii)                                  termination of Executive’s employment by the Company for Cause; or

 

(iii)                               Executive’s death or Disability;

 

then the Company will pay to Executive, or Executive’s beneficiary or Executive’s estate, as the case may be, such Base Compensation that has been earned but not paid to Executive as of the Termination Date, payable pursuant to the Company’s normal payroll practices and procedures, and Executive shall not be entitled to any additional compensation or benefits provided under this Section 4.

 

4.5                               Separation Pay Conditions.  Notwithstanding anything above to the contrary, the Company will not be obligated to make any payments to Executive under Section 4.3(a), Section 4.3(b) or Section 4.4(a) unless: (i) Executive has signed a release of claims in favor of the Company and its Affiliates and related entities, and their directors, officers, insurers, employees and agents, in a form prescribed by the Company; (ii) all applicable rescission periods provided by law for releases of claims have expired and Executive has not rescinded the release of claims; and (iii) Executive is in strict compliance with the terms of this Agreement and any other written agreements between the Company and Executive as of the dates of such payments.  Any payments scheduled to be paid to Executive pursuant to Section 4.3(a), Section 4.3(b) or Section 4.4(a) on payroll dates occurring before the conditions set forth in clauses (i) and (ii) of this Section 4.5 are satisfied shall be held and paid to Executive as soon as practicable following satisfaction of such conditions.

 

9

 

4.6                               Section 409A; Deferred Compensation.

 

(a)         Delay in Payment. Notwithstanding anything in the Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s “separation from service” with the Company to be a “specified employee” under Section 409A of the Code, then any non-exempt deferred compensation which would otherwise be payable hereunder shall not be paid until the date which is the first business day following the six-month period after Executive’s separation from service (or if earlier, Executive’s death). Such delay in payment shall only be affected with respect to each separate payment of non-exempt deferred compensation to the extent required to avoid adverse tax treatment to Executive under Section 409A. Any payments or benefits not subject to such delay, shall be paid pursuant to the time and form of payment specified above. Any compensation which would have otherwise been paid during the delay period shall be paid to Executive (or his beneficiary or estate) in a lump sum payment on the first business day following the expiration of the delay period.

 

(b)         Interpretation. The parties intend that all payments or benefits payable under the Agreement will not be subject to the additional tax imposed by Section 409A of the Code, and the provisions of the Agreement shall be construed and administered consistent with such intent. To the extent such potential payments could become subject to Section 409A of the Code, the Company and Executive agree to work together to modify the Agreement to the minimum extent necessary to reasonably comply with the requirements of Section 409A of the Code, provided that the Company shall not be required to provide any additional compensation amounts or benefits and Executive shall be responsible for payment of any and all taxes owed in connection with the consideration provided for under Section 4.3(a), Section 4.3(b) or Section 4.4(a) of this Agreement.

 

5.                                      CHANGE OF CONTROL.

 

5.1                               Definition.  For purposes of this Agreement, “Change of Control” means:

 

(a)                                 The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 5.1(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, or (iii) any acquisition

 

10

 

by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate; or

 

(b)                                 Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or the acquisition of assets or stock of another entity by the Company (each, a “Business Combination”), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination; or

 

(c)                                  Individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(d)                                 A sale or disposition of all or substantially all of the operating assets of the Company to an unrelated party; or

 

(e)                                  Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

11

 

5.2                               Parachute Payment Restrictions.

 

(a)                                 If any payments or benefits (including payments and benefits pursuant to this Agreement or under other compensatory arrangements involving the Executive, including equity-based incentive awards (the “other arrangements”)) in the nature of compensation that the Executive would receive in connection with a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (collectively, “Transaction Payments”) would collectively constitute a “parachute payment” within the meaning of Section 280G of the Code, and if the “net after-tax amount” of such parachute payment to the Executive is less than what the net after-tax amount to the Executive would be if the Transaction Payments otherwise constituting the parachute payment were limited to the maximum “parachute value” of Transaction Payments that the Executive could receive without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Transaction Payments otherwise constituting the parachute payment shall be reduced so that the parachute value of all Transaction Payments, in the aggregate, will equal the maximum parachute value of all Transaction Payments that the Executive can receive without any Transaction Payments being subject to the Excise Tax.  Should such a reduction in Transaction Payments be required, the Executive shall be entitled, subject to the following sentence, to designate those Transaction Payments under this Agreement or the other arrangements that will be reduced or eliminated so as to achieve the specified reduction in Transaction Payments to the Executive and avoid characterization of such Transaction Payments as a parachute payment.  The Company will provide the Executive with all information reasonably requested by the Executive to permit the Executive to make such designation.  To the extent that the Executive’s ability to make such a designation would cause any of the Transaction Payments to become subject to any additional tax under Code Section 409A, or if the Executive fails to make such a designation within ten business days of receiving the requested information from the Company, then the Company shall achieve the necessary reduction in the Transaction Payments by reducing them in the following order: (i) reduction of cash payments payable under this Agreement; (ii) reduction of other payments and benefits to be provided to the Executive; (iii) cancellation or reduction of accelerated vesting of equity-based awards that are subject to performance-based vesting conditions; and (iv) cancellation or reduction of accelerated vesting of equity-based awards that are subject only to service-based vesting conditions.  If the acceleration of the vesting of Executive’s equity-based awards is to be cancelled or reduced, such acceleration of vesting shall be reduced or cancelled in the reverse order of the date of grant.  For purposes of this Section 5.2, a “net after-tax amount” shall be determined by taking into account all applicable income, excise and employment taxes, whether imposed at the federal, state or local level, including the Excise Tax, and the “parachute value” of a Transaction Payment means the present value as of the date of the Change of Control for purposes of Section 280G of the Code of the portion of such Transaction Payment that constitutes a parachute payment under Section 280G(b)(2) of the Code.

 

12

 

(b)                                 The independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change of Control may be utilized by the Compensation Committee to make all determinations required to be made under this Section 5.2.  If the independent registered public accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group affecting the Change of Control, the Compensation Committee may appoint another nationally recognized independent registered public accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by any such independent registered public accounting firm retained hereunder.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

 

5.3                               Effect of Change of Control on Equity Awards.  Notwithstanding anything to the contrary in any award agreement pursuant to which an equity-based compensation award has been made to Executive, the effect of a Change of Control (as defined in the Equity Incentive Plan) on any equity-based compensation award granted to Executive during the Term of this Agreement or the term of the Prior Agreement shall be as provided in Section 12(c) of the Equity Incentive Plan.  If and to the extent the vesting and exercisability of any such equity-based compensation award has not already been accelerated in full in connection with a Change of Control, as contemplated by clause (ii) of Section 12(c) of the Equity Incentive Plan, then the vesting and exercisability of any such award shall be accelerated in full if Executive’s Termination Date occurs during the Transition Period under the circumstances described in 4.4(a) of this Agreement.

 

6.                                      DISCLOSURE OF INFORMATION.

 

6.1.                            Executive acknowledges that he has received and will continue to receive access to non-public, confidential and proprietary business information and trade secrets about the Company and its Affiliates (“Confidential Information”), that this Confidential Information was and will be obtained or developed by the Company at great expense and is zealously guarded by the Company from unauthorized disclosure, and that Executive’s possession of this Confidential Information is due solely to Executive’s employment with the Company. In recognition of the foregoing, Executive will not at any time during employment or following termination of employment for any reason, disclose, use or make otherwise available to any third party any Confidential Information relating to the Company’s or any of its Affiliates’ business, including their products, production methods and development; manufacturing and business methods and techniques; trade secrets, data, specifications, developments, inventions, engineering and research activity; marketing and sales strategies, information and techniques; long and short term plans; current and prospective dealer, customer, vendor, supplier and distributor lists, contacts and information; financial, personnel and information system information; and any other information concerning the business of the Company or its Affiliates. During the term of Executive’s employment with the Company and at all times thereafter, Executive shall take reasonable steps to protect the confidentiality of Confidential Information and shall refrain from any acts or omissions that would reduce the value of Confidential

 

13

 

Information to the Company or any of its Affiliates.  Executive’s foregoing obligations regarding Confidential Information do not apply to any knowledge or information to the extent that it (i) is now or subsequently becomes generally publicly known or generally known in the industry in which the Company operates in the form in which it was obtained from the Company (or its applicable Affiliate), (ii) is independently made available to Executive in good faith by a third party who has not violated an obligation of confidentiality to the Company or any of its Affiliates, or (iii) is required by law to be disclosed (but only to the extent such disclosure is required).  In the latter event, Executive shall disclose to the Company the event and authority requiring disclosure “required by law” at the first opportunity upon learning of the disclosure request.  Nothing contained in the preceding sentence shall be interpreted to legitimize any disclosure of Confidential Information by Executive that occurs outside of any of the events described in items (i) through (iii) above.   The parties acknowledge and agree that Executive’s obligations under this Section 6 to maintain the confidentiality of the Confidential Information are in addition to any obligations of Executive under applicable statutory or common law.

 

6.2.                            Upon termination of employment with the Company, Executive shall deliver to a designated Company representative all records, documents, hardware, software, and all other property of the Company or any of its Affiliates in whatever form and all copies thereof in Executive’s possession. Executive acknowledges and agrees that all such materials are the sole property of the Company or its Affiliates and that Executive will certify in writing to the Company at the time of termination that Executive has complied with this obligation.

 

6.3                               For purposes of this Section 6 and this entire Agreement, Affiliate” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, or an unincorporated organization, that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company.

 

6.4                               Executive acknowledges that Confidential Information constitutes a unique and valuable asset of the Company and its Affiliates and represents a substantial investment of time and expense by the Company and its Affiliates.  Executive further acknowledges that the provisions of this Section 6 are reasonable and necessary to protect the legitimate interests of the Company and its Affiliates, and that any violation of this Section 6 by Executive would cause substantial and irreparable harm to the Company and its Affiliates to such an extent that monetary damages alone would be an inadequate remedy.  Therefore, in the event that Executive violates any provision of this Section 6, the Company and its Affiliates shall be entitled to immediate injunctive relief (without the necessity of proving actual damages or posting bond, or if a bond is required, a bond in the amount of $1,000 is deemed sufficient), in addition to all the other remedies it or they may have, restraining Executive from violating or continuing to violate such provision.

 

14

 

7.                                      DISCLOSURE AND ASSIGNMENT OF INVENTIONS.

 

7.1.                            Executive agrees to promptly disclose to the Company inventions, ideas, processes, writings, designs, developments and improvements, whether or not protectable under the applicable patent, trademark or copyright statutes, which Executive has made, conceived, reduced to practice or learned during his employment with the Company or which Executive makes, conceives, reduces to practice or learns during the period of employment by Company, either alone or jointly with others, relating to any business in which the Company, during the period of Executive’s employment, has been, is or may be concerned (“the Inventions”). Such disclosures shall be made by Executive to the Company in a written report, setting forth in detail the structures, procedures and methodology employed and the results achieved.

 

7.2.                            Consistent with and to the extent permitted by applicable law, Executive hereby assigns and agrees to assign to the Company all rights in and to the Inventions and proprietary rights therein, based thereon or related thereto, including, but not limited to, applications for United States and foreign patents and resulting patents.

 

7.3.                            Executive further agrees, without charge to the Company but at its expense, to assist the Company in every proper way and execute, acknowledge and deliver, during and after employment by the Company, all such documents necessary and perform such other legal acts as may be necessary, in the opinion of the Company, to obtain or maintain United States or foreign patents or other proprietary protection, for any and all Inventions made during his employment by the Company in any and all countries, and to vest title therein to the Company.

 

7.4.                            Executive acknowledges notice from the Company that this foregoing obligation to assign rights in and to any Inventions does not apply to an Invention for which no equipment, supplies, facility or trade secret information of Company was used and which was developed entirely on Executive’s own time and (y) which does not relate (A) directly to the business of the Company, or (B) to the Company’s actual or demonstrably anticipated research or development; or (z) which does not result from any work performed by Executive for the Company.

 

7.5.                            Executive further agrees that prior to separation from employment with the Company for any reason, Executive shall disclose to the Company, in a written report, all Inventions, the rights to which Executive has agreed to assign to the Company under Sections 7.1 and 7.2 above, and which Executive has not previously disclosed.

 

8.                                      RESTRICTIVE COVENANTS.

 

8.1.                            Non-Solicitation.

 

(a)         Executive specifically acknowledges that the Confidential Information described in Section 6.1 includes confidential and trade secret data pertaining to current and prospective customers of the Company, that such data is a valuable and unique asset of the Company’s business and that the success or failure of the Company’s specialized business is dependent in

 

15

 

large part upon the Company’s ability to establish and maintain close and continuing personal contacts and working relationships with such customers and to develop proposals which are specifically designed to meet the requirements of such customers. Therefore, during Executive’s employment with the Company and for the twelve (12) months following termination of employment for any reason, except on behalf of the Company or with the Company’s prior written consent, Executive is prohibited from soliciting, either directly or indirectly, on his own behalf or on behalf of any other person or entity, all such customers with whom Executive had contact during the twenty-four (24) months preceding Executive’s termination of employment.

 

(b)         Executive specifically acknowledges that the Confidential Information described in Section 6.1 also includes confidential and trade secret data pertaining to current and prospective employees and agents of the Company, and Executive further agrees that during Executive’s employment with the Company and for the twelve (12) months following termination of employment for any reason, Executive will not directly or indirectly solicit, on his own behalf or on behalf of any other person or entity, the services of any person who is an employee or agent of the Company or solicit any of the Company’s employees or agents to terminate their employment or agency with the Company.

 

(c)          Executive specifically acknowledges that the Confidential Information described in Section 6.1 also includes confidential and trade secret data pertaining to current and prospective vendors and suppliers of the Company, Executive agrees that during Executive’s employment with the Company and for the twelve (12) months following termination of employment for any reason, Executive will not directly or indirectly solicit, on his own behalf or on behalf of any other person or entity, any Company vendor or supplier for the purpose of either providing products or services to competitors of the Company, as described in Section 8.2(b), or terminating such vendor’s or supplier’s relationship or agency with the Company.

 

(d)         Executive further agrees that, during Executive’s employment with the Company and for the twelve (12) months following termination of employment for any reason, Executive will do nothing to interfere with any of the Company’s business relationships.

 

8.2.                            Non-Competition.

 

(a)         Executive represents to the Company that Executive is not a party to any agreement with a prior employer or otherwise which would prohibit Executive from employment with the Company. Executive further represents that he has provided to the Company copies of any and all agreements (e.g., non-competition, non-solicitation, or non-disclosure agreements) that might limit Executive’s ability, in any way, to perform the duties of Executive’s position on behalf of the Company, and Executive agrees to act at all times on

 

16

 

behalf of the Company in a manner consistent with any such agreements. Executive acknowledges and understands that the Company will have no obligation to provide legal representation to Executive in the event a prior employer or other third party brings or threatens to bring an action against Executive for violating any such agreements; that the Company may elect, at its sole discretion, to provide legal representation to Executive but Executive may be required to reimburse the Company for any legal expenses paid on Executive’s behalf in the event Executive is found to have violated any such agreements; and that Executive may be terminated in the event the Company determines that Executive may have violated any such agreements. Despite anything to the contrary herein, termination based upon the Company’s determination that Executive has violated this Section 8.2 shall be considered termination for Cause.

 

(b)         Executive covenants and agrees that during Executive’s employment with the Company and for the twenty-four (24) months following termination of employment for any reason, he will not, in any state in which Executive worked on behalf of the Company or in any state or country where the Company has a material ownership or possessory interest in molybdenum, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant or in any other capacity, a business competitive with that conducted by the Company.  A “business competitive with that conducted by the Company” shall mean any business or activity involved in the discovery or mining of molybdenum or any similar ore with properties for strengthening or hardening steel, or any other ore with which the Company is in the business of discovering or mining at the time of Executive’s termination. To “engage in or carry on” shall mean to have ownership in such business or consult, work in, direct or have responsibility for any area of such business, including but not limited to the following areas: operations, sales, marketing, manufacturing, procurement or sourcing, purchasing, customer service, distribution, product planning, research, design or development.

 

(c)          For the twelve (12) months following termination of employment for any reason, Executive certifies and agrees that he will notify the Chairman of the Board of the Company of his employment or other affiliation with any potentially competitive business or entity prior to the commencement of such employment or affiliation.

 

8.3                               Executive acknowledges that the provisions of this Section 8 are reasonable and necessary to protect the legitimate interests of the Company and its Affiliates, including without limitation trade secrets, customer and supplier relationships, goodwill and loyalty, and that any violation of this Section 8 by Executive would cause substantial and irreparable harm to the Company and its Affiliates to such an extent that monetary damages alone would be an inadequate remedy.  Therefore, in the event that Executive violates any provision of this Section 8, the Company and its Affiliates shall be entitled to immediate injunctive relief (without the necessity of proving actual damages or posting bond, or if a bond is required, a bond in the amount of $1,000 is deemed

 

17

 

sufficient), in addition to all the other remedies it or they may have, restraining Executive from violating or continuing to violate such provision.

 

8.4                               If the duration of, the scope of or any business activity covered by any provision of this Section 8 is in excess of what is valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that is valid and enforceable.  Executive and the Company agree that this Section 8 shall be given the construction which renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

 

9.                                      NOTICES.  Any notice, consent, approval, request, demand or other communication required or permitted hereunder must be in writing to be effective and shall be deemed delivered and received (i) if personally delivered or if delivered by telex or telecopy with electronic confirmation when actually received by the party to whom sent, or (ii) if delivered by mail (whether actually received or not), at the close of business on the fifth business day next following the day when placed in the federal mail, postage prepaid, certified or registered mail, return receipt requested, addressed as follows:

 

	
If to Executive:
    	
Robert I. Pennington
    
	
 
    	
6200 N. Abington Road
    
	
 
    	
Tucson, AZ 85743
    
	
 
    	
 
    
	
If to Employer:
    	
General Moly, Inc.
    
	
 
    	
Attn: Corporate Counsel — Vice President   Human Resources
    
	
 
    	
1726 Cole Blvd, Suite 115
    
	
 
    	
Lakewood, CO 80401
    
	
 
    	
 
    
	
Copy to:
    	
Faegre & Benson, LLP
    
	
 
    	
Attn: John Haverman
    
	
 
    	
2200 Wells Fargo Center
    
	
 
    	
90 South 7th Street
    
	
 
    	
Minneapolis, MN 55402-3901
    

 

(or to such other address as any party shall specify by written notice so given).

 

10.                               LEGAL REQUIREMENTS. Executive represents and warrants that, during the Term (and thereafter for so long as Executive remains an employee of the Company), Executive shall use his best efforts to comply in all material respects with, and shall use his best efforts, within the scope of his duties to comply with all legal requirements imposed by environmental laws imposed by any local, state or federal authority and the rules and regulations promulgated by any such entity. For the purposes of this Agreement, environmental law shall mean all local, state or federal law, now or hereafter existing, that relate to health, safety or environmental protection. Executive shall use his best efforts to comply in all material respects with, and shall use his best efforts, within the scope of his duties, to cause the Company to comply with, all other applicable laws and regulations governing the Company including, without limitation, all environmental laws and regulations.

 

18

 

11.                               NO IMPLIED WAIVERS. Neither party shall waive any breach of any provision of this Agreement except in writing, and any waiver so granted in any single instance shall not thereby be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement.

 

12.                               HEADINGS. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof, nor to affect the meaning thereof.

 

13.                               GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and construed under Colorado law, without regard to its conflict of laws principles. The parties agree that any litigation in any way relating to this Agreement shall be venued in either federal or state court in Jefferson County, Colorado, and Executive hereby consents to the personal jurisdiction of these courts and waives any objection that such venue is inconvenient or improper.

 

14.                               WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, EXECUTIVE AND COMPANY HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ENFORCEMENT THEREOF.

 

15.                               EXECUTIVE’S RIGHT TO RECOVER ATTORNEYS’ FEES AND COSTS.  In the event of any litigation concerning any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement, the breach hereof or the interpretation hereof, Executive will be entitled to recover from the Company Executive’s reasonable expenses, attorneys’ fees, and costs incurred therein or in the enforcement or collection of any judgment or award rendered therein if (and only if) Executive is the prevailing party.  The “prevailing party” means the party determined by the court to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the party in whose favor a judgment is rendered.

 

16.                               COMPLETE AGREEMENT - AMENDMENTS - PRIOR AGREEMENTS. The foregoing is the entire agreement of the parties with respect to the subject matter hereof, excepting those documents identified herein to be signed by the Executive and the Company, and may not be amended, supplemented, canceled or discharged except by written instrument executed by both parties hereto. This Agreement supersedes any and all prior agreements among the Company and Executive with respect to the matters covered herein, including without limitation the Prior Agreement.

 

17.                               INVALIDITY. The invalidity or lack of enforceability of any particular provision in this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all other respects as though such invalid or unenforceable provisions were permitted. Moreover, the parties agree to replace or have a Court replace such invalid provisions with a substitute provision that will satisfy the intent of the parties.

 

18.                               SURVIVAL. Upon the expiration or termination of this Agreement for any reason, the provisions of this Section and the covenants of the parties herein shall survive and remain in full force and effect.

 

19

 

19.                               BINDING OBLIGATIONS. The Executive and the Company acknowledge and understand that, unless expressly stated above, Executive’s obligations hereunder shall not be affected by the reasons for, circumstances of, or identity of the party who initiates the termination of Executive’s employment with the Company.

 

20.                               FORFEITURE AND COMPENSATION RECOVERY.

 

20.1                        Forfeiture Conditions.  Notwithstanding anything to the contrary in this Agreement, if the Executive breaches any of the restrictions applicable to the Executive under Section 8 of this Agreement after Executive’s Termination Date, then (i) the Executive shall immediately forfeit his right to receive any separation pay under Sections 4.3(a), 4.3(b) or 4.4(a) of this Agreement, and to the extent any portion of such payments has been received, the Executive will be required to repay to the Company the amount of such payments previously received.

 

20.2                        Compensation Recovery Policy.  To the extent that any compensation provided pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”), any such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or its Compensation Committee in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s common stock is then listed.  This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.

 

20

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below, effective as of the Effective Date first set forth above.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
GENERAL MOLY, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ ROBERT I. PENNINGTON
    
	
 
    	
ROBERT I. PENNINGTON
    

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00214-of-00352.parquet"}]]