Document:

scty-ex42_78.htm

 

Exhibit 4.2

SolarCity Corporation, as Issuer,

-and-

U.S. Bank National Association, as Trustee

 

 

ONE HUNDRED-AND-EIGHTY-SECOND SUPPLEMENTAL INDENTURE

Dated as of August 17, 2016

to

INDENTURE

Dated as of October 15, 2014

 

 

    6.50% Solar Bonds, Series 2016/13-18M

 

 

 

 

 

 

	
 
	
TABLE OF CONTENTS
	
 

	
 
	
 
	
PAGE

	
ARTICLE 1
DEFINITIONS

	
SECTION 1.01
	
Scope of Supplemental Indenture
	
2

	
SECTION 1.02
	
Definitions
	
2

	
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

	
 
	
 
	
 

	
SECTION 2.01
	
Title and Terms
	
3

	
SECTION 2.02
	
Company Global Securities
	
3

	
SECTION 2.03
	
Payments
	
4

	
ARTICLE 3
MISCELLANEOUS PROVISIONS

	
 
	
 
	
 

	
SECTION 3.01
	
Trustee Acceptance
	
4

	
SECTION 3.02
	
Governing Law
	
5

	
SECTION 3.03
	
Trust Indenture Act
	
5

	
SECTION 3.04
	
Execution in Counterparts
	
5

	
SECTION 3.05
	
Severability
	
5

	
SECTION 3.06
	
Appointment of Paying Agent and Security Registrar
	
5

	
SECTION 3.07
	
Ratification of Original Indenture
	
5

	
 
	
 
	
 

	
EXHIBIT

	
Exhibit A
	
Form of Note
	
A-1

 

 

i

 

 

ONE HUNDRED-AND-EIGHTY-SECOND SUPPLEMENTAL INDENTURE, dated as of August 17, 2016 (the “Supplemental Indenture”), between SolarCity Corporation, a Delaware corporation (hereinafter called the “Company”), having its principal executive office located at 3055 Clearview Way, San Mateo, California, 94402, and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (in such capacity, the “Trustee”), to the indenture, dated as of October 15, 2014, between the Company and the Trustee (as amended or supplemented from time to time in accordance with the terms thereof, the “Original Indenture”).

RECITALS OF THE COMPANY

WHEREAS, the Company executed and delivered the Original Indenture to the Trustee to provide, among other things, for the issuance, from time to time, of the Company’s Securities, unlimited as to principal amount, in one or more series to be established by the Company under, and authenticated and delivered as provided in, the Original Indenture;

WHEREAS, Section 801(8) of the Original Indenture provides for the Company and the Trustee to enter into a supplemental indenture to the Original Indenture to provide for the issuance of and establish the forms and terms and conditions of Securities as permitted by Sections 201 and 301 of the Original Indenture;

WHEREAS, the Board of Directors and the Offering Committee thereof have duly adopted resolutions authorizing the Company to execute and deliver this Supplemental Indenture;

WHEREAS, pursuant to the terms of the Original Indenture, the Company desires to establish a new series of its Securities to be known as its 6.50% Solar Bonds, Series 2016/13-18M (the “Notes”), the form and substance of such Notes and the terms, provisions and conditions thereof to be set forth as provided in the Original Indenture and this Supplemental Indenture;

WHEREAS, the Form of Note contemplated under the terms of the Notes is to be substantially in the form hereinafter provided; and

WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture, and all requirements necessary to make (i) this Supplemental Indenture a valid instrument in accordance with its terms, and (ii) the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, in each case, have been performed, and the execution and delivery of this Supplemental Indenture have been duly authorized in all respects.

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the premises and the purchases of the Notes by the Holders thereof, it is mutually agreed, for the benefit of the Company and the equal and proportionate benefit of all Holders of the Notes, as follows:

 

 

Article 1
DEFINITIONS

SECTION 1.01Scope of Supplemental Indenture

.  The changes, modifications and supplements to the Original Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and shall only govern the terms of (and only the rights of the Holders and the obligations of the Company with respect to), the Notes, which may be issued from time to time, and shall not apply to any other Securities that may be issued under the Original Indenture (or govern the rights of the Holders or the obligations of the Company with respect to any other such Securities) unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements.  The provisions of this Supplemental Indenture shall supersede any corresponding or conflicting provisions in the Original Indenture.

SECTION 1.02Definitions

.  For all purposes of the Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(i)the terms defined in this Article 1 shall have the meanings assigned to them in this Article 1 and include the plural as well as the singular;

(ii)all words, terms and phrases defined in the Original Indenture (but not otherwise defined herein) shall have the same meanings as in the Original Indenture;

(iii)all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, shall have the meanings assigned to them in the Trust Indenture Act;

(iv)all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of this instrument; and

(v)the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision.

“Company” has the meaning set forth in the first paragraph of this Supplemental Indenture.

“Form of Note” shall mean the “Form of Note” attached hereto as Exhibit A.

“Indenture” means the Original Indenture, as originally executed and as supplemented from time to time by one or more indentures supplemental thereto, including this Supplemental Indenture, entered into pursuant to the applicable provisions of the Indenture, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Original Indenture and this Supplemental Indenture.

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“Initial Notes” has the meaning specified in Section 2.03.

“Interest Payment Date” means February 15 and August 15 of each year, beginning on February 15, 2017.

“Issue Date” means, with respect to Notes owned by any Holder, the date upon which such Notes were originally issued to such Holder (or transferor of such Holder), as set forth on the Security Register.

“Note” or “Notes” has the meaning specified in the fourth paragraph of the recitals of this Supplemental Indenture, and shall include any Additional Notes issued pursuant to Section 2.03.

“Noteholder,” “Holder” or “holder” as applied to any Note, or other similar terms (but excluding the term “beneficial holder”), means any Person in whose name at the time a particular Note is registered in the Security Register.

“Original Indenture” has the meaning specified in the first paragraph of this Supplemental Indenture.

“Regular Record Date” for the interest payable on any Interest Payment Date means the fifteenth day prior to such Interest Payment Date (whether or not a Business Day).

“Stated Maturity” means, with respect to the payment of principal on the Notes, February 17, 2018.

“Supplemental Indenture” has the meaning specified in the first paragraph hereof.

Article 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

SECTION 2.01Title and Terms

.  There is hereby established a series of Securities designated the “6.50% Solar Bonds, Series 2016/13-18M”.  The aggregate principal amount of the Notes shall not be limited and shall be initially authenticated and delivered from time to time upon delivery to the Trustee of the documents required by Section 303 of the Indenture.  The Notes shall be issued only in fully registered form to each purchaser in the minimum investment amount of $1,000, with no additional limitations on increments that a purchaser may invest once such minimum investment amount has been satisfied by such purchaser.

SECTION 2.02Company Global Securities

.  The Notes initially shall be represented by one or more permanent Company Global Securities.  The Form of Note shall be substantially as set forth in Exhibit A, which is incorporated into and shall be deemed a part of this Supplemental Indenture, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined to be necessary or appropriate by the Officers of the Company executing such Notes, as evidenced by their execution of the Notes.

3

 

SECTION 2.03Payments 

.  The principal amount of Notes then Outstanding shall be payable at the Stated Maturity.  Interest on the Notes shall accrue at a rate of 6.50% per annum, from and including the Issue Date with respect to such Notes, or from the most recent date on which interest has been paid or duly provided for with respect to such Notes, to, but excluding, the next Interest Payment Date, until the principal thereof is paid or made available for payment.  Interest shall be payable in arrears on each Interest Payment Date, beginning on February 15, 2017, to the Persons in whose name a Note is registered on the Security Register at the Close of Business on the Regular Record Date immediately preceding the applicable Interest Payment Date.  If any Stated Maturity or Maturity of, or any other day on which a payment is due shall be a day which is not a Business Day, then such payment may be made on the next succeeding day that is a Business Day with the same force and effect as if made at the Stated Maturity or Maturity or on any such other payment date, as the case may be, and no interest shall accrue on the amount payable on such date or at such time for the period from and after such Stated Maturity, Maturity or other payment date, as the case may be, to the next succeeding Business Day.  Interest will be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any period shorter than a full semi-annual interest period will be computed on the basis of the number of days elapsed in a 180-day semi-annual period of six 30-day months.  Up to $124,000,000 aggregate principal amount of Notes will be authenticated on the date of this Supplemental Indenture (the “Initial Notes”).

The Company may, without the consent of the Holders of the Notes, hereafter issue additional Notes (“Additional Notes”) under the Indenture with the same terms and conditions, except for any difference in the issue price, Issue Date and interest accrued prior to the issue date of the Additional Notes, as the Initial Notes, in an unlimited aggregate principal amount.  Any such Additional Notes shall constitute a single series together with the Initial Notes for all purposes hereunder, including, without limitation, for purposes of any waivers, supplements or amendments to the Indenture requiring the approval of Holders of the Notes and any offers to purchase the Notes.  

The Company shall pay the principal of and interest on any Note in immediately available funds to the Persons in whose name such Note is registered in the Security Register, at the office or agency designated by the Company for that purpose.  All payments on the Notes will be made in US. Dollars or in such other coin or currency of the United States of America as of the time of payment is legal tender for the payment of public and private debts. 

Article 3
MISCELLANEOUS PROVISIONS

SECTION 3.01Trustee Acceptance

  The Trustee has accepted the amendment of the Original Indenture effected by this Supplemental Indenture and agrees to execute the trust created by the Original Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect of any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, or for or with respect to (a) the validity or sufficiency of this Supplemental Indenture or any of 

4

 

the terms or provisions hereof, (b) the proper authorization hereof by the Company by corporate action or otherwise, and (c) the due execution hereof by the Company.

SECTION 3.02Governing Law

.  This Supplemental Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.03Trust Indenture Act

.  This Supplemental Indenture will be subject to, and governed by, the provisions of the Trust Indenture Act that are required to be part of this Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

SECTION 3.04Execution in Counterparts

.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

SECTION 3.05Severability

.  In case any provision in this Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 3.06Appointment of Paying Agent and Security Registrar

.  The Company is hereby appointed to act as Paying Agent and Security Registrar subject to and in accordance with the terms and conditions set forth herein and in the Original Indenture and shall have all of the rights, benefits and immunities of a Paying Agent and Security Registrar as set forth herein and therein.  

SECTION 3.07Ratification of Original Indenture

.  The Original Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Original Indenture in the manner and to the extent herein and therein provided.  For the avoidance of doubt, each of the Company and each Holder of the Notes, by its acceptance of such Notes, acknowledges and agrees that all of the rights, privileges, protections, immunities and benefits afforded to the Trustee and the Agents under the Original Indenture are deemed to be incorporated herein, and shall be enforceable by the Trustee and the Agents hereunder, as if set forth herein in full.

U.S. Bank National Association hereby accepts the trusts in this Supplemental Indenture declared and provided, upon the terms and conditions herein above set forth.

[Remainder of the page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above written.

		
	
 

SOLARCITY CORPORATION

	
 
	
 

	
By:
	
/s/ Tanguy Serra

	
 
	
Name: Tanguy Serra

	
 
	
Title: Chief Financial Officer

 

		
	
U.S. BANK NATIONAL ASSOCIATION, as Trustee

	
 
	
 

	
By:
	
/s/ K. Wendy Kumar

	
 
	
Name: K. Wendy Kumar

	
 
	
Title: Vice President

 

 

 

 

 

Exhibit A

Form of Note

 

 

 

 

NOTE

 

SOLARCITY CORPORATION
    6.50% Solar Bonds, Series 2016/13-18M

			
	
 
	
 
	
 

	
No. [  ]
	
 
	
 

 

SolarCity Corporation, a Delaware corporation (herein called the “Company,” which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to each of the Holders listed on Schedule A hereto, or their registered assigns, the principal sum set forth next to such Holder’s name on Schedule A (the aggregate of which principal sums shall not exceed $124,000,000), on February 17, 2018 at the office or agency of the Company maintained for that purpose in accordance with the terms of the Indenture, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semiannually, on February 15 and August 15 of each year (each, an “Interest Payment Date”), commencing on the Issue Date set forth set forth next to such Holder’s name on Schedule A, on said principal sum at said office or agency, in like coin or currency, at the rate per annum of 6.50%, from and including the most recent Interest Payment Date in respect of which interest has been paid (or commencing on the Issue Date set forth set forth next to such Holder’s name on Schedule A if no interest has been paid hereon).  If any Stated Maturity or Maturity of, or any other day on which a payment is due shall be a day which is not a Business Day, then such payment may be made on the next succeeding day that is a Business Day with the same force and effect as if made at the Stated Maturity or Maturity or on any such other payment date, as the case may be, and no interest shall accrue on the amount payable on such date or at such time for the period from and after such Stated Maturity, Maturity or other payment date, as the case may be, to the next succeeding Business Day.  Interest will be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any period shorter than a full semi-annual interest period will be computed on the basis of the number of days elapsed in a 180-day semi-annual period of six 30-day months.

Reference is made to the further provisions of this Note set forth on the reverse hereof.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or other duly authorized Authenticating Agent under the Indenture.

 

A-1

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

Dated: [  ]

				
	
 
	
 
	
SOLARCITY CORPORATION

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
Name: 

	
 
	
 
	
 
	
Title: 

 

 

			
	
ATTEST:
	
 

	
 
	
 

	
 
	
 

	
By
	
 
	
 

	
 
	
Name: 
	
 

	
 
	
Title:  
	
 

 

 

A-2

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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

U.S. BANK NATIONAL ASSOCIATION 
as Trustee

			
	
By:
	
 
	
 

	
 
	
Authorized Signatory 
	
 

 

A-3

 

REVERSE OF NOTE
SOLARCITY CORPORATION
6.50% Solar Bonds, Series 2016/13-18M

This note is one of a duly authorized issue of notes of the Company, designated as its “6.50% Solar Bonds, Series 2016/13-18M” (herein called the “Notes”), issued under and pursuant to an Indenture, dated as of October 15, 2014 (the “Original Indenture”), between the Company and U.S. Bank National Association, as trustee (in such capacity, the “Trustee”), as supplemented with respect to the Notes by the One Hundred-and-Eighty-Second Supplemental Indenture, dated as of August 17, 2016 (the “Supplemental Indenture,” and together with the Original Indenture, the “Indenture”), between the Company, as issuer, paying agent and security registrar (herein called the “ Paying Agent and Security Registrar”), and the Trustee, as trustee, and as the authenticating agent (herein called the “Authenticating Agent”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, Authenticating Agent, Paying Agent, Security Registrar, the Company and the Holders of the Notes.  Capitalized terms used but not otherwise defined in this Note shall have the respective meanings ascribed thereto in the Indenture.

If an Event of Default (other than an Event of Default specified in clauses (4), (5) or (6) of Section 501 of the Indenture) occurs and is continuing with respect to the Notes, then the Trustee, or the Holders of not less than 25% in aggregate principal amount of the Notes may declare the principal of all the Notes, and accrued and unpaid interest, if any, and premium, if any, thereon to be due and payable immediately.  If an Event of Default specified in clauses (4), (5) or (6) of Section 501 occurs, then the principal and accrued and unpaid interest, if any, and premium, if any, on all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of the Notes. 

Subject to the provisions of the Indenture, the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding may, on behalf of the Holders of all of the Notes, waive any past default or Event of Default, subject to exceptions set forth in the Indenture.  Upon any such waiver, said default shall for all purposes of this Note and the Indenture be deemed to have been cured and not to be continuing, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding, to execute supplemental indentures to modify provisions of the Indenture, subject to exceptions permitting the modification of the Indenture without the consent of any Holder of Notes or requiring the consent of each Holder of a Note affected by such modification all as set forth in the Indenture.

The Notes are issuable in fully registered form, without coupons, in the minimum investment amount of $1,000, with no additional limitations on incremental investments a Holder may make in the Notes once such minimum investment amount has been satisfied by such Holder.  The Notes may be exchanged for a like aggregate principal amount of Notes of any 

A-4

 

other authorized denominations, on the terms and subject to the conditions and limitations set forth in the Indenture.

The Company, the Trustee, Authenticating Agent, Paying Agent and Security Registrar may deem the Persons in whose name this Note shall be registered upon the Security Register to be, and may treat them as, the absolute owners of this Note with respect to the principal sum set forth opposite such Person’s name on Schedule A hereto (whether or not amounts under this Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Security Registrar), for the purpose of receiving payment of or on account of the principal of, and interest on this Note and for all other purposes; and neither the Company or the Trustee nor any Authenticating Agent, Paying Agent or any Security Registrar shall be affected by any notice to the contrary.  All such payments so made to any Holders for the time being, or upon their orders, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for monies payable upon this Note.

No recourse for the payment of the principal of or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any supplemental indenture or in any Note, or because of the creation of any indebtedness represented hereby, shall be had against any incorporator, stockholder, partner, member, manager, employee, agent, officer, director or subsidiary, as such, past, present or future, of the Company or any of the Company’s subsidiaries or of any successor thereto, either directly or through the Company or any of the Company’s subsidiaries or of any successor thereto, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as consideration for, the execution of the Indenture and the issue of this Note.

In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. The Indenture and this Note shall be governed by, and construed in accordance with, the laws of the State of New York.

A-5

 

Schedule A

 

SOLARCITY CORPORATION
6.50% Solar Bonds, Series 2016/13-18M

 

			
	
Name of Holder
	
Principal Amount
	
Issue Date 

	
 
	
 
	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate Principal Amount Outstanding:

 

 

 

 

A-6Exhibit 10.1

 

 

SUBSCRIPTION ESCROW AGREEMENT

THIS ESCROW AGREEMENT (the “Agreement”) is made and entered into as of June 3rd, 2016, by and among Triton Acquisitions, Inc., a Nevada corporation (the “Company” or “Client”), and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation (the “Escrow Agent”). This Agreement shall be effective as provided in Paragraph 1 below.

WHEREAS, the Company proposes to offer and sell, on a best-efforts basis through its sole founder, Larry Beazer (the “Placement Agent”) up to 3,000,000 shares in the Company at a purchase price of $0.35 per share (the “Shares”) to investors pursuant to the Company’s Rule 419 S-1; and

WHEREAS, the Company desires to establish an escrow in which funds received front investors, and certificates will be deposited (the “Consideration”) until termination of escrow as defined below. The Escrow Agent is willing to serve as Escrow Agent upon the terms and conditions herein set forth; and

WHEREAS, in order to subscribe for Shares, a Subscriber must deliver the full amount of its subscription: (i) by check in U.S. dollars, (ii) by wire transfer of available funds in U.S. dollars, or (iii) as otherwise agreed to by the Company (collectively. the “Payment”) (collectively, the “Offering Proceeds” or “Deposited Proceeds”).

NOW. THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties covenant and agree as follows:

1.   Establishment of Escrow Account

The parties have established an escrow account with the Escrow Agent. Company shall sell its shares only at the price of $0.35 per share during this offering.

2.   Appointment of Escrow Agent; Deposits of Cash and Securities

(a) The Client hereby appoints the Escrow Agent as its agent and custodian to hold and disburse the Payments deposited with the Escrow Agent pursuant to the terms of this Escrow Agreement.

(b) Following the execution of this Escrow Agreement, the Client will cause to he delivered to the Escrow Agent from time to time any and all Payments in its possession or received from the Subscribers upon the execution and delivery of the Subscription Agreement (the “Escrow Funds”).

3.   Rule 419

Rule 419 of the Securities Act of 1933 requires that the net offering proceeds, after deduction for underwriting compensation and offering costs, and all securities to he issued (including those sold by a selling shareholder) be deposited into an escrow or trust account (the “Deposited Funds” and “Deposited Securities,” respectively) governed by an agreement which contains certain terms and provisions specified by the rule. Under Rule 419, the Deposited Funds (minus tip to 10% which may be released to the Company upon the meeting of the minimum offering) and Deposited Securities will be released to the Company and to investors, respectively, only after the Company has met the following three conditions: First, the Company must execute an agreement for an acquisition(s) meeting certain prescribed criteria, second, the Company must successfully complete a reconfirmation offering which includes certain prescribed terms and conditions; and third, the acquisition(s) meeting the prescribed criteria must be consummated.

4.   Deposit and Investment of Proceeds.

i. All offering proceeds shall be deposited promptly into the escrow account.

 

ii. Deposited proceeds shall be in the form of checks, drafts, or money orders payable to the order of the escrow agent.

iii. Deposited proceeds and interest or dividends thereon, if any, shall be held for the sole benefit of the purchasers of the securities.

iv. Deposited proceeds shall be invested in one of the following:

A.          An obligation that constitutes a “deposit,” as that term is defined in section 3(1) of the Federal Deposit Insurance Act;

B.          Securities of any open-end investment company registered under the Investment Company Act of 1940 that holds itself out as a money market fund meeting the conditions of paragraphs (e)(2), (e)(3), and (e)(4) of Rule 2a-7 under the Investment Company Act; or

C.          Securities that arc direct obligations of, or obligations guaranteed as to principal or interest by the United States.

Absent written investment direction, the Escrow Agent will invest the Escrow Funds in the BB&T Business Investment Deposit Account type 169.

v. No interest or dividends shall he payable on the funds held in the escrow account until the funds are released in accordance with the provisions of this section.

vi. The Company may receive up to 10 percent of the proceeds remaining after payment of underwriting commissions, underwriting expenses and dealer allowances permitted by Rule 419(b)(2)(i) of the Securities Act exclusive of interest or dividends, only after such time as the minimum offering has been fully completed and upon written request of the Company.

5.   Deposit of Securities

i. All securities issued, sold or to be sold in connection with the offering, whether or not for cash consideration, and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends, or similar rights, shall he deposited directly into the escrow account prior to commencement of the offering if already issued, or as soon as they are sold and issued thereafter. The identity of the purchaser of the securities shall he included on the stock certificates or other documents evidencing such securities.

H. Securities held in the escrow account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers, who shall have voting rights, if any, with respect to securities held in their names, as provided by applicable state law. No transfer or other disposition of securities held in the escrow or trust account shall he permitted other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986 as amended (26 U.S.C. 1 et seq.), or Title 1 of the Employees Retirement Income Security Act (29 U.S.C. 1001 et seq.), or the rules thereunder.

iii. Warrants, convertible securities or other derivative securities relating to securities held in the escrow account may be exercised or converted in accordance with their terms; provided, however, that securities received upon exercise or conversion, together with any cash or other consideration paid in connection with the exercise or conversion, are promptly deposited into the escrow account.

 

6.   Post-Effective Amendment

Once the agreement(s) governing the acquisition(s) of a business(es) meeting the above criteria has (have) been executed. Rule 419 requires the Company to update the registration statement of which the prospectus relative to the acquisition registration is a part with a post-effective amendment. The post-effective amendment must contain information about: the proposed acquisition candidate(s) and its business(es), including audited financial statements; the results of this offering, and the use of the funds to be disbursed from the escrow account. The post-effective amendment must also include the terms of the reconfirmation offer mandated by Rule 419. The offer must include certain prescribed conditions (80% of the investors must reconfirm the offering) which must be satisfied before the Deposited Funds and Deposited Securities can be released from escrow.

7.   Reconfirmation Offering

The reconfirmation offer must commence within five (5) business days after the effective date of the post-effective amendment to the registration statement. Pursuant to Rule 419, the terms or the reconfirmation offer must include the following conditions:

i. The prospectus contained in the post-effective amendment and any amendment or supplement thereto will be sent to each investor whose securities are held in the escrow account within five business days after the effective date of the post-effective amendment;

ii. Each investor will have no fewer than twenty (20), and no more than forty-five (45), business days from the effective date oldie post-effective amendment to notify the Company in writing that the investor elects to remain an investor;

iii. If the Company does not receive written notification from any investor within 45 business days following the effective date of the post-effective amendment, the pro rata portion of the Deposited Funds (and any related interest or dividends) held in the escrow account on such investors behalf will be returned to the investor within five business days by first class mail or other equally prompt means. The Company will send written disbursement instruction to the Escrow Agent including the amount of pro-rata interest owed to the investor.

iv. The acquisition(s) will be consummated only if investors having contributed 80% or more of the maximum offering proceeds elect to reconfirm their investments; and

v. If a consummated acquisition(s) has not occurred within eighteen (18) months from the effective date of the registration statement, the Deposited Funds held in the escrow account shall be returned to all investors on a pro rata basis within five business days by first class mail or other equally prompt means. The Company will send written disbursement instruction to the Escrow Agent including the amount of pro-rata interest owed to the investor if any.

8.   Release of Deposited Securities and Deposited Funds

Methods of Disposition of Escrow Funds.

The Escrow Agent will hold the Escrow Funds and Securities as specified in this Escrow Agreement until authorized hereunder to deliver such Escrow Funds or Deposited Securities as follows:

The Deposited Funds and Deposited Securities may be released to the Company and the investors, respectively, after:

 

i. The Escrow Agent has received written certification from the Company and any other evidence acceptable by the Escrow Agent that the Company has executed an agreement for the acquisition(s) of a business(es), the value of which represents at least 80% of the maximum offering proceeds and has filed the required post-effective amendment, the post-effective amendment has been declared effective, the mandated reconfirmation offer having the conditions prescribed by Rule 419 has been completed, and the Company has satisfied all of the prescribed conditions of the reconfirmation offer, and

ii. The acquisition(s) of the business(es), the value of which represents at least 80% of the maximum offering proceeds is (are) consummated.

If the minimum offering amount is not raised within 180 days (or 360 days if the Company extends the offering period), the pro rata portion of the Deposited Funds will be returned to investors. The Company will send written disbursement instructions to the Escrow Agent, including the amount of pro-rata interest owed to the investor.

9.   Liability of Escrow Agent

a. In performing any of its duties under this Agreement, or upon the claimed failure to perform its duties hereunder, the Escrow Agent shall not be liable to anyone for any damages, losses, or expenses which it may incur as a result of the Escrow Agent so acting, or failing to act; provided, however, the Escrow Agent shall be liable for damages arising out of its willful default or misconduct or its gross negligence under this Agreement. Accordingly, the Escrow Agent shall not incur any such liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel, or counsel for the Company, which is given with respect to any questions relating to the duties and responsibilities of the Escrow Agent hereunder, or (ii) any action taken or omitted to be taken in reliance upon any document, including any written notice or instructions provided for in this Escrow Agreement, not only as to its due execution and to the validity and effectiveness of its provisions but also as to the truth and accuracy of any information contained therein, if the Escrow Agent shall in good faith believe such document to be genuine, to have been signed or presented by a proper person or persons, and to conform with the provisions of this Agreement.

b. The Company hereby agrees to indemnify and hold harmless the Escrow Agent against any and all losses, claims, damages, liabilities and expenses, including, without limitation, reasonable costs of investigation and counsel fees and disbursements which may be incurred by it resulting from any act or omission of the Company; provided, however, that the Company shall not indemnify the Escrow Agent for any losses, claims, damages, or expenses arising out of the Escrow Agent’s willful default, misconduct, or gross negligence under this Agreement.

c. If a dispute ensues between any of the parties hereto which, in the opinion of the Escrow Agent, is sufficient to justify its doing so, the Escrow Agent shall be entitled to tender into the registry or custody of any court of competent jurisdiction, including the Circuit Court of Grange County, Florida, all money or property in its hands under the terms of this Agreement, and to file such legal proceedings as it deems appropriate, and shall thereupon he discharged from all further duties under this Agreement. Any such legal action may be brought in any such court as the Escrow Agent shall determine to have jurisdiction thereof. The Company shall indemnify the Escrow Agent against its reasonable court costs and attorneys’ fees incurred in filing such legal proceedings.

10.   Inability to Deliver

In the event that Payments for subscriptions delivered to the Escrow Agent by the Company pursuant to this Agreement are not cleared through normal banking channels within 5 days after such delivery, the Escrow Agent shall return such uncleared Payments to the Company.

 

11.   Notice

All notices, requests, demands and other communications or deliveries required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, given by facsimile, or deposited for mailing, first class, postage prepaid, registered or certified mail, as follows:

If to the subscribers for Shares:

To their respective addresses as specified in their Subscription Agreements.

If to the Company:

c/o Larry Beazer, President

432 North Larkspur Street

Gilbert, AZ 85234-4509

If to the Escrow Agent:

223 West Nash Street

Wilson, NC 27893

Attention: Corporate Trust Services

12.   Fees to Escrow Agent

In consideration of the services to be provided by the Escrow Agent hereunder, the Company agrees to pay the fees to the Escrow Agent as shown in Attachment I hereto.

13.   General

This Agreement shall he interpreted, construed and enforced in all respects in accordance with the laws of the State of North Carolina applicable to contracts to be made and performed entirely in said state.

d.          The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

e.          This Agreement sets forth the entire agreement and understanding of the parties with regard to this escrow transaction and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof.

f.          This Agreement may be amended, modified, superseded or cancelled, and any of the terms or conditions hereof may be waived, only by a written instrument executed by each party hereto or, in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver in any one or more instances by any party of any condition, or of the breach of any term contained in this Agreement, whether by conduct or otherwise, shall be deemed to be, or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of the breach of any other terms of this Agreement.

g.          This Agreement may he executed simultaneously in two or more counterparts, each of which shall he deemed an original, but all of which together shall constitute one and the same instrument.

 

h.          This Agreement shall inure to the benefit of the parties hereto and their respective administrators, successors, and assigns.

14.   Representation of the Company

The Company hereby acknowledges that the status of the Escrow Agent with respect to the offering of the Shares is that of agent only tier the limited purposes herein set forth, and hereby agrees it will not represent or imply that the Escrow Agent, by serving as the Escrow Agent hereunder or otherwise, has investigated the desirability or advisability of an investment in the Shares, or has approved, endorsed or passed upon the merits of the Shares, nor shall the Company use the name of the Escrow Agent in any manner whatsoever in connection with the offer or sale of the Shares, other than by acknowledgement that it has agreed to serve as Escrow Agent for the limited purposes herein set forth.

15.   Resignation of Escrow Agent

If, at any time, any attempt is made to modify this Agreement in a manner that would increase the duties and responsibilities of the Escrow Agent, or to modify the Escrow Agreement in any manner that the Escrow Agent shall deem undesirable, the Escrow Agent may resign by notifying the Company in writing. Such resignation shall become effective on the earlier to occur of (i) the acceptance by a successor Escrow Agent; or (ii) sixty (60) days following the date upon which notice was mailed. Until such time as the Escrow Agent has resigned in accordance herewith, the Escrow Agent shall perform its duties hereunder in accordance with the terms of this Escrow Agreement.

16.   Force Majeure

The Escrow Agent shall not be responsible for any failure or delay in the performance of its obligations under this Agreement arising out Dior caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, war, civil or military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunctions of utilities or computer (hardware or software) or communication service, accidents, labor disputes, acts of civil or military authority, or governmental actions.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

	
THE COMPANY

	
ARRINGTON JONES, INC.

	 
	 
	
/s/ Larry Beazer

	 
	
Larry Beazer, President

	 
	
Triton Acquisitions, Inc.

	 

	
ESCROW AGENT

	
BRANCH BANK AND TRUST COMPANY

	 
	 
	
By:

	
/s/ Maura S. Pope

	 
	
Name:

	
Maura S. Pope

	 
	
Title:

	
Vice President

	 

 

EXHIBIT 1

	
Setup Fee:

	
$0.00

Note: This fee provides consideration the program review, due diligence and activities leading up to and including the account establishment. This fee is payable in full on or before Closing Date, and shall not he pro-rated.

	
Administration Fee:

	
$1,000.00

Note: This fee is paid on an annual billing period, payable in advance and commencing on the Closing Date.

	
Expenses:

	
$25.00 per disbursement

Note: These fees do not represent extraordinary fees or expenses not otherwise contemplated within this Fee Schedule or the governing documentation. These fees will be applied for each check, wire or transfer that is processed.

	
Investment Fee:

	
$0.00 per trade, per account

Note: This tee shall be charged each billing period, based [per trade: upon an estimate an of 0 trades per billing period; upon investment average invested balances at .0000% over each billing cycle].

	
Statement Fee:

	
$0.00 per year

Note: Accounts will initially be established with web-based online, view-only statement provider, TamLink. These online services shall be available to the Client free of charge. Online TamLink statements can be printed into a paper format and downloaded into data tiles that may be manipulated by the Client through Excel® or other analytical and reporting computer applications. If the Client requests a paper statement, then the Client shall be charged at the rate of $1,000 per year.

	
Legal Fees:

	
At Cost (None Anticipated)

Note: BB&T may use legal counsel of its own selection (acceptable to the client), and all legal counsel expenses of BB&T shall he paid by the Client promptly upon presentment. If permitted under the governing documents, the expenses shall be born by the Company. If internal counsel is employed, a rate of $500 per hour will he applied.

	
Early Termination Fees:

	
$0.00 Plus Pro Rata Fees

Note: Due to the processing services required, termination fees for any reason, including but not limited to early call or put, defeasance, or sale and liquidation, shall entitle BB&T to a single Termination Fee as indicated above. In addition, because BB&T has priced the services described herein, in part, on the basis of the program duration estimate of [insert length of time by years and months], in the event the program terminates prior to this estimated duration. BB&T shall be entitled to the pro-rata portion of fees on a present value basis using an annual discount rate of .0000%.

 

Caveats and Assumptions

		1.	Unless representing titles, or terms defined herein, all capitalized terms shall be as defined in the above-named transaction. Final acceptance of the services contemplated herein shall be subject to a final due diligence and business review of the Agreement.

		2.	All fees and expenses shall become due and payable at the time indicated above.  Any fees or expenses not received when due shall become available from the escrow fund or as permitted under the governing documents.

		3.	BB&T shall be entitled to a minimum of 0.00% per Permitted Investment trade.

		4.	Fees and expenses quoted herein apply to services ordinarily rendered by BB&T as Escrow Agent under the governing documents, and they are subject to reasonable adjustment based on a final review of documents or when BB&T is called upon to undertake extraordinary duties or responsibilities not expressly contemplated in the governing documents, or as changes in law, procedures, or the cost of doing business demand. Services in addition to or not contemplated in this Fee Schedule, including but not limited to, document amendments and revisions, non-standard cash and/or investment transactions, calculations, notices and reports, and legal fees, will be billed as extraordinary expenses unless otherwise expressed herein. Transaction costs include charges for wire transfers, money transfers, checks, internal transfers, security transfers and transfers for investment.

		5.	Unless otherwise indicated in the governing documents or herein, the above fees relate to the establishment of [1] escrow account.  Additional sub-accounts under the same governing documents or supplemental documents thereto may incur additional charges.

		6.	In the event the above transaction is not completed, the Setup Fee and the first Year Administration Fee shall remain due and payable; and in the event such fees are paid they will not be refunded to the Client.

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