Document:

Exhibit 4.5

 

 

SUMMIT MIDSTREAM HOLDINGS, LLC

 

SUMMIT MIDSTREAM FINANCE CORP.

 

 

INDENTURE

 

Dated as of                         , 2013

 

 

U.S. BANK NATIONAL ASSOCIATION

 

Trustee

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I. DEFINITIONS AND   INCORPORATION BY REFERENCE
    	
1
    
	
 
    	
Section 1.1.
    	
Definitions
    	
1
    
	
 
    	
Section 1.2.
    	
Other Definitions
    	
4
    
	
 
    	
Section 1.3.
    	
Incorporation by Reference of Trust Indenture Act
    	
5
    
	
 
    	
Section 1.4.
    	
Rules of Construction
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II. THE SECURITIES 
    	
6
    
	
 
    	
Section 2.1.
    	
Issuable in Series
    	
6
    
	
 
    	
Section 2.2.
    	
Establishment of Terms of Series of Securities
    	
6
    
	
 
    	
Section 2.3.
    	
Execution and Authentication
    	
8
    
	
 
    	
Section 2.4.
    	
Registrar and Paying Agent
    	
9
    
	
 
    	
Section 2.5.
    	
Paying Agent to Hold Money in Trust
    	
10
    
	
 
    	
Section 2.6.
    	
Securityholder Lists
    	
10
    
	
 
    	
Section 2.7.
    	
Transfer and Exchange
    	
10
    
	
 
    	
Section 2.8.
    	
Mutilated, Destroyed, Lost and Stolen Securities
    	
11
    
	
 
    	
Section 2.9.
    	
Outstanding Securities
    	
12
    
	
 
    	
Section 2.10.
    	
Treasury Securities
    	
12
    
	
 
    	
Section 2.11.
    	
Temporary Securities
    	
12
    
	
 
    	
Section 2.12.
    	
Cancellation
    	
13
    
	
 
    	
Section 2.13.
    	
Defaulted Interest
    	
13
    
	
 
    	
Section 2.14.
    	
Global Securities
    	
13
    
	
 
    	
Section 2.15.
    	
CUSIP Numbers
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III. REDEMPTION
    	
15
    
	
 
    	
Section 3.1.
    	
Notice to Trustee
    	
15
    
	
 
    	
Section 3.2.
    	
Selection of Securities to be Redeemed
    	
15
    
	
 
    	
Section 3.3.
    	
Notice of Redemption
    	
16
    
	
 
    	
Section 3.4.
    	
Effect of Notice of Redemption
    	
17
    
	
 
    	
Section 3.5.
    	
Deposit of Redemption Price
    	
17
    
	
 
    	
Section 3.6.
    	
Securities Redeemed in Part
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV. COVENANTS 
    	
17
    
	
 
    	
Section 4.1.
    	
Payment of Principal and Interest
    	
17
    
	
 
    	
Section 4.2.
    	
SEC Reports
    	
17
    
	
 
    	
Section 4.3.
    	
Compliance Certificate
    	
18
    
	
 
    	
Section 4.4.
    	
Stay, Extension and Usury Laws
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V. SUCCESSORS
    	
18
    
	
 
    	
Section 5.1.
    	
When Company May Merge, Etc.
    	
18
    
	
 
    	
Section 5.2.
    	
Successor Entity Substituted
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI. DEFAULTS AND   REMEDIES
    	
19
    
	
 
    	
Section 6.1.
    	
Events of Default
    	
19
    

 

i

 

	
 
    	
Section 6.2.
    	
Acceleration of Maturity; Rescission and Annulment
    	
20
    
	
 
    	
Section 6.3.
    	
Collection of Indebtedness and Suits for Enforcement by   Trustee
    	
21
    
	
 
    	
Section 6.4.
    	
Trustee May File Proofs of Claim
    	
22
    
	
 
    	
Section 6.5.
    	
Trustee May Enforce Claims Without Possession of   Securities
    	
22
    
	
 
    	
Section 6.6.
    	
Application of Money Collected
    	
23
    
	
 
    	
Section 6.7.
    	
Limitation on Suits
    	
23
    
	
 
    	
Section 6.8.
    	
Unconditional Right of Holders to Receive Principal and   Interest
    	
24
    
	
 
    	
Section 6.9.
    	
Restoration of Rights and Remedies
    	
24
    
	
 
    	
Section 6.10.
    	
Rights and Remedies Cumulative
    	
24
    
	
 
    	
Section 6.11.
    	
Delay or Omission Not Waiver
    	
24
    
	
 
    	
Section 6.12.
    	
Control by Holders
    	
24
    
	
 
    	
Section 6.13.
    	
Waiver of Past Defaults
    	
25
    
	
 
    	
Section 6.14.
    	
Undertaking for Costs
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII. TRUSTEE
    	
26
    
	
 
    	
Section 7.1.
    	
Duties of Trustee
    	
26
    
	
 
    	
Section 7.2.
    	
Rights of Trustee
    	
27
    
	
 
    	
Section 7.3.
    	
Individual Rights of Trustee
    	
28
    
	
 
    	
Section 7.4.
    	
Trustee’s Disclaimer
    	
28
    
	
 
    	
Section 7.5.
    	
Notice of Defaults
    	
28
    
	
 
    	
Section 7.6.
    	
Reports by Trustee to Holders
    	
29
    
	
 
    	
Section 7.7.
    	
Compensation and Indemnity
    	
29
    
	
 
    	
Section 7.8.
    	
Replacement of Trustee
    	
30
    
	
 
    	
Section 7.9.
    	
Successor Trustee by Merger, Etc.
    	
31
    
	
 
    	
Section 7.10.
    	
Eligibility; Disqualification
    	
31
    
	
 
    	
Section 7.11.
    	
Preferential Collection of Claims Against Company
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII. SATISFACTION   AND DISCHARGE; DEFEASANCE
    	
31
    
	
 
    	
Section 8.1.
    	
Satisfaction and Discharge of Indenture
    	
31
    
	
 
    	
Section 8.2.
    	
Application of Trust Funds; Indemnification
    	
32
    
	
 
    	
Section 8.3.
    	
Legal Defeasance of Securities of any Series
    	
33
    
	
 
    	
Section 8.4.
    	
Covenant Defeasance
    	
34
    
	
 
    	
Section 8.5.
    	
Repayment to Company
    	
35
    
	
 
    	
Section 8.6.
    	
Reinstatement
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX. AMENDMENTS AND   WAIVERS
    	
36
    
	
 
    	
Section 9.1.
    	
Without Consent of Holders
    	
36
    
	
 
    	
Section 9.2.
    	
With Consent of Holders
    	
37
    
	
 
    	
Section 9.3.
    	
Limitations
    	
37
    
	
 
    	
Section 9.4.
    	
Compliance with Trust Indenture Act
    	
38
    
	
 
    	
Section 9.5.
    	
Revocation and Effect of Consents
    	
38
    
	
 
    	
Section 9.6.
    	
Notation on or Exchange of Securities
    	
38
    
	
 
    	
Section 9.7.
    	
Trustee Protected
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X. MISCELLANEOUS
    	
39
    
	
 
    	
Section 10.1.
    	
Trust Indenture Act Controls
    	
39
    
	
 
    	
Section 10.2.
    	
Notices
    	
39
    

 

ii

 

	
 
    	
Section 10.3.
    	
Communication by Holders with Other Holders
    	
40
    
	
 
    	
Section 10.4.
    	
Certificate and Opinion as to Conditions Precedent
    	
40
    
	
 
    	
Section 10.5.
    	
Statements Required in Certificate or Opinion
    	
41
    
	
 
    	
Section 10.6.
    	
Rules by Trustee and Agents
    	
41
    
	
 
    	
Section 10.7.
    	
Legal Holidays
    	
41
    
	
 
    	
Section 10.8.
    	
No Recourse Against Others
    	
41
    
	
 
    	
Section 10.9.
    	
Counterparts
    	
42
    
	
 
    	
Section 10.10.
    	
Governing Law
    	
42
    
	
 
    	
Section 10.11.
    	
No Adverse Interpretation of Other Agreements
    	
42
    
	
 
    	
Section 10.12.
    	
Successors
    	
42
    
	
 
    	
Section 10.13.
    	
Severability
    	
42
    
	
 
    	
Section 10.14.
    	
Table of Contents, Headings, Etc.
    	
42
    
	
 
    	
Section 10.15.
    	
Securities in a Foreign Currency
    	
42
    
	
 
    	
Section 10.16.
    	
Judgment Currency
    	
43
    
	
 
    	
Section 10.17.
    	
Force Majeure
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI. SINKING FUNDS
    	
44
    
	
 
    	
Section 11.1.
    	
Applicability of Article
    	
44
    
	
 
    	
Section 11.2.
    	
Satisfaction of Sinking Fund Payments with Securities
    	
44
    
	
 
    	
Section 11.3.
    	
Redemption of Securities for Sinking Fund
    	
45
    

 

iii

 

SUMMIT MIDSTREAM HOLDINGS, LLC
 SUMMIT MIDSTREAM FINANCE CORP.

 

Reconciliation and tie between Trust Indenture Act of 1939 and 
 Indenture, dated as of                         , 2013

 

	
§ 310(a)(1
    	
)
    	
 
    	
7.10
    
	
(a)(2)
    	
 
    	
 
    	
7.10
    
	
(a)(3)
    	
 
    	
 
    	
Not   Applicable
    
	
(a)(4)
    	
 
    	
 
    	
Not   Applicable
    
	
(a)(5)
    	
 
    	
 
    	
7.10
    
	
(b)
    	
 
    	
 
    	
7.10
    
	
§ 311(a)
    	
 
    	
 
    	
7.11
    
	
(b)
    	
 
    	
 
    	
7.11
    
	
(c)
    	
 
    	
 
    	
Not   Applicable
    
	
§ 312(a)
    	
 
    	
 
    	
2.6
    
	
(b)
    	
 
    	
 
    	
10.3
    
	
(c)
    	
 
    	
 
    	
10.3
    
	
§ 313(a)
    	
 
    	
 
    	
7.6
    
	
(b)(1)
    	
 
    	
 
    	
7.6
    
	
(b)(2)
    	
 
    	
 
    	
7.6
    
	
(c)(1)
    	
 
    	
 
    	
7.6
    
	
(d)
    	
 
    	
 
    	
7.6
    
	
§ 314(a)
    	
 
    	
 
    	
4.2,   10.5
    
	
(b)
    	
 
    	
 
    	
Not   Applicable
    
	
(c)(1)
    	
 
    	
 
    	
10.4
    
	
(c)(2)
    	
 
    	
 
    	
10.4
    
	
(c)(3)
    	
 
    	
 
    	
Not   Applicable
    
	
(d)
    	
 
    	
 
    	
Not   Applicable
    
	
(e)
    	
 
    	
 
    	
10.5
    
	
(f)
    	
 
    	
 
    	
Not   Applicable
    
	
§ 315(a)
    	
 
    	
 
    	
7.1
    
	
(b)
    	
 
    	
 
    	
7.5
    
	
(c)
    	
 
    	
 
    	
7.1
    
	
(d)
    	
 
    	
 
    	
7.1
    
	
(e)
    	
 
    	
 
    	
6.14
    
	
§ 316(a)
    	
 
    	
 
    	
2.10
    
	
(a)(1)(A)
    	
 
    	
 
    	
6.12
    
	
(a)(1)(B)
    	
 
    	
 
    	
6.13
    
	
(b)
    	
 
    	
 
    	
6.8
    
	
§ 317(a)(1
    	
)
    	
 
    	
6.3
    
	
(a)(2)
    	
 
    	
 
    	
6.4
    
	
(b)
    	
 
    	
 
    	
2.5
    
	
§ 318(a)
    	
 
    	
 
    	
10.1
    

 

iv

 

Note:  This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture.

 

v

 

Indenture dated as of                       , 2013 between SUMMIT MIDSTREAM HOLDINGS, LLC, a limited liability company organized under the laws of Delaware (“Company”), SUMMIT MIDSTREAM FINANCE CORP., a company incorporated under the laws of Delaware (“Finance Corp.”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Trustee”).

 

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.

 

ARTICLE I.
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.1.                                 Definitions.

 

“Additional Amounts” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified herein or therein and which are owing to such Holders.

 

“Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under common control with such specified person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities or by agreement or otherwise.

 

“Agent” means any Registrar, Paying Agent or Notice Agent.

 

“Board of Directors” means:

 

(1)                                 with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

 

(2)                                 with respect to a partnership, the board of directors of the general partner of the partnership;

 

(3)                                 with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

 

(4)                                 with respect to any other Person, the board or committee of such Person serving a similar function.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate and delivered to the Trustee.

 

 

“Business Day” means, unless otherwise provided by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, any day except a Saturday, Sunday or a legal holiday in The City of New York, New York (or in connection with any payment, the place of payment) on which banking institutions are authorized or required by law, regulation or executive order to close.

 

“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock.

 

“Company” means the party named as such above until a successor replaces it and thereafter means the successor.

 

“Company Order” means a written order signed in the name of the Company by an Officer.

 

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business related to this Indenture shall be principally administered.

 

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

“Depositary” means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as Depositary for such Series by the Company, which Depositary shall be a clearing agency registered under the Exchange Act; and if at any time there is more than one such person, “Depositary” as used with respect to the Securities of any Series shall mean the Depositary with respect to the Securities of such Series.

 

“Discount Security” means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2.

 

“Dollars” and “$” means the currency of The United States of America.

 

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

 

“Foreign Currency” means any currency or currency unit issued by a government other than the government of The United States of America.

 

“Foreign Government Obligations” means, with respect to Securities of any Series that are denominated in a Foreign Currency, direct obligations of, or obligations guaranteed by, the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof.

 

“GAAP” means accounting principles generally accepted in the United States of America set forth in the statements and pronouncements of the Financial Accounting Standards

 

2

 

Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect as of the date of determination.

 

“Global Security” or “Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered in the name of such Depositary or nominee.

 

“Holder” or “Securityholder” means a person in whose name a Security is registered.

 

“Indenture” means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of Securities established as contemplated hereunder.

 

“interest” with respect to any Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

 

“Maturity,” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

 

“Officer” means the Chief Executive Officer, President, the Chief Financial Officer, the Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary, and any Vice President of the Company.

 

“Officer’s Certificate” means a certificate signed by any Officer.

 

“Opinion of Counsel” means a written opinion of legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company.

 

“Parent” means Summit Midstream Partners, LP.

 

“person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“principal” of a Security means the principal of the Security plus, when appropriate, the premium, if any, on, and any Additional Amounts in respect of, the Security.

 

“Responsible Officer” means any officer of the Trustee in its Corporate Trust Office having responsibility for administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject.

 

“SEC” means the Securities and Exchange Commission.

 

3

 

“Securities” means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture.

 

“Series” or “Series of Securities” means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.

 

“Stated Maturity” when used with respect to any Security, means the date specified in such Security as the fixed date on which the principal of such Security or interest is due and payable.

 

“Subsidiary” of any specified person means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of that person or a combination thereof.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act as so amended.

 

“Trustee” means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.

 

“U.S. Government Obligations” means securities which are direct obligations of, or guaranteed by, The United States of America for the payment of which its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depositary receipt.

 

Section 1.2.                                 Other Definitions.

 

	
 
    	
 
    	
DEFINED IN
    
	
TERM
    	
 
    	
SECTION
    
	
 
    	
 
    	
 
    
	
“Bankruptcy Law”
    	
 
    	
6.1
    
	
“Custodian”
    	
 
    	
6.1
    
	
“Event of Default”
    	
 
    	
6.1
    
	
“Judgment Currency”
    	
 
    	
10.16
    

 

4

 

	
“Legal Holiday”
    	
 
    	
10.7
    
	
“mandatory sinking fund payment”
    	
 
    	
11.1
    
	
“New York Banking Day”
    	
 
    	
10.16
    
	
“Notice Agent”
    	
 
    	
2.4
    
	
“optional sinking fund payment”
    	
 
    	
11.1
    
	
“Paying Agent”
    	
 
    	
2.4
    
	
“Registrar”
    	
 
    	
2.4
    
	
“Required Currency”
    	
 
    	
10.16
    
	
“successor person”
    	
 
    	
5.1
    

 

Section 1.3.                                 Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:

 

“Commission” means the SEC.

 

“indenture securities” means the Securities.

 

“indenture security holder” means a Securityholder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture securities means the Company and any successor obligor upon the Securities.

 

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used herein as so defined.

 

Section 1.4.                                 Rules of Construction.

 

Unless the context otherwise requires:

 

(a)                                 a term has the meaning assigned to it;

 

(b)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)                                  “or” is not exclusive;

 

(d)                                 words in the singular include the plural, and in the plural include the singular; and

 

(e)                                  provisions apply to successive events and transactions.

 

5

 

ARTICLE II.
 THE SECURITIES

 

Section 2.1.                                 Issuable in Series.

 

The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.  The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided in a Board Resolution, a supplemental indenture or an Officer’s Certificate detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officer’s Certificate or supplemental indenture detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined.  Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture.

 

Section 2.2.                                 Establishment of Terms of Series of Securities.

 

At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1 and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.23) by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution, supplemental indenture hereto or Officer’s Certificate:

 

2.2.1.                                          the title (which shall distinguish the Securities of that particular Series from the Securities of any other Series) and ranking (including the terms of any subordination provisions) of the Series;

 

2.2.2.                                          the price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;

 

2.2.3.                                          any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6);

 

2.2.4.                                          the date or dates on which the principal of the Securities of the Series is payable;

 

2.2.5.                                          the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;

 

6

 

2.2.6.                                          the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered, and the method of such payment, if by wire transfer, mail or other means;

 

2.2.7.                                          if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company;

 

2.2.8.                                          the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

 

2.2.9.                                          the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;

 

2.2.10.                                   if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable;

 

2.2.11.                                   the forms of the Securities of the Series and whether the Securities will be issuable as Global Securities;

 

2.2.12.                                   if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;

 

2.2.13.                                   the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, and if such currency of denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;

 

2.2.14.                                   the designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities of the Series will be made;

 

2.2.15.                                   if payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined;

 

2.2.16.                                   the manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;

 

7

 

2.2.17.                                   the provisions, if any, relating to any security provided for the Securities of the Series;

 

2.2.18.                                   any addition to, deletion of or change in the Events of Default which applies to any Securities of the Series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2;

 

2.2.19.                                   any addition to, deletion of or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;

 

2.2.20.                                   any Depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein;

 

2.2.21.                                   the provisions, if any, relating to conversion or exchange of any Securities of such Series, including if applicable, the conversion or exchange price, the conversion or exchange period, provisions as to whether conversion or exchange will be mandatory, at the option of the Holders thereof or at the option of the Company, the events requiring an adjustment of the conversion price or exchange price and provisions affecting conversion or exchange if such Series of Securities are redeemed;

 

2.2.22.                                   any other terms of the Series (which may supplement, modify or delete any provision of this Indenture insofar as it applies to such Series), including any terms that may be required under applicable law or regulations or advisable in connection with the marketing of Securities of that Series; and

 

2.2.23.                                   whether any of the Company’s direct or indirect Subsidiaries will guarantee the Securities of that Series, including the terms of subordination, if any, of such guarantees.

 

All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officer’s Certificate referred to above.

 

Section 2.3.                                 Execution and Authentication.

 

An Officer shall sign the Securities for the Company by manual or facsimile signature.

 

If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.

 

A Security shall not be valid until authenticated by the manual or facsimile signature of the Trustee or an authenticating agent.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

 

8

 

The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officer’s Certificate, upon receipt by the Trustee of a Company Order.  Each Security shall be dated the date of its authentication.

 

The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8.

 

Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.2) shall be fully protected in relying on:  (a) the Board Resolution, supplemental indenture hereto or Officer’s Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that Series or of Securities within that Series, (b) an Officer’s Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4.

 

The Trustee shall have the right to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not be taken lawfully; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents or a committee of Responsible Officers shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Securities.

 

The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities.  An authenticating agent may authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.

 

Section 2.4.                                 Registrar and Paying Agent.

 

The Company shall maintain, with respect to each Series of Securities, at the place or places specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities of such Series may be presented or surrendered for payment (“Paying Agent”), where Securities of such Series may be surrendered for registration of transfer or exchange (“Registrar”) and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered (“Notice Agent”).  The Registrar shall keep a register with respect to each Series of Securities and to their transfer and exchange.  The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Notice Agent.  If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Notice Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

 

9

 

The Company may also from time to time designate one or more co-registrars, additional paying agents or additional notice agents and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain a Registrar, Paying Agent and Notice Agent in each place so specified pursuant to Section 2.2 for Securities of any Series for such purposes.  The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar, additional paying agent or additional notice agent.  The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Notice Agent” includes any additional notice agent.  The Company or any of its Affiliates may serve as Registrar or Paying Agent.

 

The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Notice Agent for each Series unless another Registrar, Paying Agent or Notice Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued.

 

Section 2.5.                                 Paying Agent to Hold Money in Trust.

 

The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Securities, and will notify the Trustee in writing of any default by the Company in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money.  If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Securityholders of any Series of Securities all money held by it as Paying Agent.  Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Securities.

 

Section 2.6.                                 Securityholder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders of each Series of Securities and shall otherwise comply with TIA § 312(a).  If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders of each Series of Securities.

 

Section 2.7.                                 Transfer and Exchange.

 

Where Securities of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements

 

10

 

for such transactions are met.  To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the Registrar’s request.  No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6).

 

Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning at the opening of business fifteen days immediately preceding the sending of a notice of redemption of Securities of that Series selected for redemption and ending at the close of business on the day such notice is sent, or (b) to register the transfer of or exchange Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called or being called for redemption in part.

 

Section 2.8.                                 Mutilated, Destroyed, Lost and Stolen Securities.

 

If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity bond as may be required by each of them to hold itself and any of its agents harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

 

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

 

Every new Security of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder.

 

11

 

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

 

Section 2.9.                                 Outstanding Securities.

 

The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest on a Global Security effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding.

 

If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.

 

If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding and interest on them ceases to accrue.

 

The Company may purchase or otherwise acquire the Securities, whether by open market purchases, negotiated transactions or otherwise.  A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security (but see Section 2.10 below).

 

In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.2.

 

Section 2.10.                          Treasury Securities.

 

In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver, Securities of a Series owned by the Company or any Affiliate of the Company shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Securities of a Series that a Responsible Officer of the Trustee knows are so owned shall be so disregarded.

 

Section 2.11.                          Temporary Securities.

 

Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order.  Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the

 

12

 

Company shall prepare and the Trustee upon receipt of a Company Order shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities.  Until so exchanged, temporary securities shall have the same rights under this Indenture as the definitive Securities.

 

Section 2.12.                          Cancellation.

 

The Company at any time may deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment.  The Trustee shall cancel all Securities surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Securities (subject to the record retention requirement of the Exchange Act and the Trustee) and deliver a certificate of such cancellation to the Company upon written request of the Company.  The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.

 

Section 2.13.                          Defaulted Interest.

 

If the Company defaults in a payment of interest on a Series of Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record date.  The Company shall fix the record date and payment date.  At least 10 days before the special record date, the Company shall mail to the Trustee and to each Securityholder of the Series a notice that states the special record date, the payment date and the amount of interest to be paid.  The Company may pay defaulted interest in any other lawful manner.

 

Section 2.14.                          Global Securities.

 

2.14.1.                                   Terms of Securities.  A Board Resolution, a supplemental indenture hereto or an Officer’s Certificate shall establish whether the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary for such Global Security or Securities.

 

2.14.2.                                   Transfer and Exchange.  Notwithstanding any provisions to the contrary contained in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other than the Depositary for such Security or its nominee only if (i) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary registered as a clearing agency under the Exchange Act within 90 days of such event or (ii) the Company executes and delivers to the Trustee an Officer’s Certificate to the effect that such Global Security shall be so exchangeable.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as the Depositary shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms.

 

13

 

Except as provided in this Section 2.14.2, a Global Security may not be transferred except as a whole by the Depositary with respect to such Global Security to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.

 

2.14.3.                                   Legends.  Any Global Security issued hereunder shall bear a legend in substantially the following form:

 

“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR DEPOSITARY.”

 

In addition, so long as the Depository Trust Company (“DTC”) is the Depositary, each Global Note registered in the name of DTC or its nominee shall bear a legend in substantially the following form:

 

“UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

2.14.4.                                   Acts of Holders.  The Depositary, as a Holder, may appoint agents and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture.

 

2.14.5.                                   Payments.  Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of and interest, if any, on any Global Security shall be made to the Holder thereof.

 

14

 

2.14.6.                                   Consents, Declaration and Directions.  The Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depositary or by the applicable procedures of such Depositary with respect to such Global Security, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.

 

Section 2.15.                          CUSIP Numbers.

 

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

 

ARTICLE III.
 REDEMPTION

 

Section 3.1.                                 Notice to Trustee.

 

The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities.  If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Series of Securities to be redeemed.  The Company shall give the notice at least 15 days before the redemption date, unless a shorter period is satisfactory to the Trustee.

 

Section 3.2.                                 Selection of Securities to be Redeemed.

 

Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, if less than all the Securities of a Series are to be redeemed, the Securities of the Series to be redeemed will be selected as follows:  (a) if the Securities are in the form of Global Securities, in accordance with the procedures of the Depositary, (b) if the Securities are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange, if any, on which the Securities are listed, or (c) if not otherwise provided for under clause (a) or (b) in the manner that the Trustee deems fair and appropriate, including by lot or other method, unless otherwise required by law or applicable stock exchange requirements, subject, in the case of Global Securities, to the applicable rules and procedures of the Depositary.  The Securities to be redeemed shall be selected from Securities of the Series outstanding not previously called for redemption.  Portions of the principal of Securities of the Series that have denominations larger than $1,000 may be selected for redemption.  Securities of the Series and portions of them it

 

15

 

selected for redemption shall be in amounts of $1,000 or whole multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2.10, the minimum principal denomination for each Series and the authorized integral multiples thereof.  Provisions of this Indenture that apply to Securities of a Series called for redemption also apply to portions of Securities of that Series called for redemption.

 

Section 3.3.                                 Notice of Redemption.

 

Unless otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, at least 15 days but not more than 60 days before a redemption date, the Company shall send or cause to be sent by first-class mail or electronically, in accordance with the procedures of the Depositary, a notice of redemption to each Holder whose Securities are to be redeemed.

 

The notice shall identify the Securities of the Series to be redeemed and shall state:

 

(a)                                 the redemption date;

 

(b)                                 the redemption price;

 

(c)                                  the name and address of the Paying Agent;

 

(d)                                 if any Securities are being redeemed in part, the portion of the principal amount of such Securities to be redeemed and that, after the redemption date and upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion of the original Security shall be issued in the name of the Holder thereof upon cancellation of the original Security;

 

(e)                                  that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price;

 

(f)                                   that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date unless the Company defaults in the deposit of the redemption price;

 

(g)                                  the CUSIP number, if any; and

 

(h)                                 any other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed.

 

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense, provided, however, that the Company has delivered to the Trustee, at least 10 days (unless a shorter time shall be acceptable to the Trustee) prior to the notice date, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice.

 

16

 

Section 3.4.                                 Effect of Notice of Redemption.

 

Once notice of redemption is sent as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date and at the redemption price.  Except as otherwise provided in the supplemental indenture, Board Resolution or Officer’s Certificate for a Series, a notice of redemption may not be conditional.  Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price plus accrued interest to the redemption date.

 

Section 3.5.                                 Deposit of Redemption Price.

 

On or before 11:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed on that date.

 

Section 3.6.                                 Securities Redeemed in Part.

 

Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security of the same Series and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered.

 

ARTICLE IV.
 COVENANTS

 

Section 4.1.                                 Payment of Principal and Interest.

 

The Company covenants and agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest, if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture.  On or before 11:00 a.m., New York City time, on the applicable payment date, the Company shall deposit with the Paying Agent money sufficient to pay the principal of and interest, if any, on the Securities of each Series in accordance with the terms of such Securities and this Indenture.

 

Section 4.2.                                 SEC Reports.

 

To the extent any Securities of a Series are outstanding, the Company shall deliver to the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.  The Company also shall comply with the other provisions of TIA § 314(a). Reports, information and documents filed with the SEC via the EDGAR system will be deemed to be delivered to the Trustee as of the time of such filing via EDGAR for purposes of this Section 4.2.

 

Delivery of reports, information and documents to the Trustee under this Section 4.2 are for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive or actual notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of their

 

17

 

covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

 

Section 4.3.                                 Compliance Certificate.

 

To the extent any Securities of a Series are outstanding, the Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officer’s Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his/her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which the Officer may have knowledge).

 

Section 4.4.                                 Stay, Extension and Usury Laws.

 

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

ARTICLE V.
 SUCCESSORS

 

Section 5.1.                                 When Company May Merge, Etc.

 

The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a “successor person”) unless:

 

(a)                                 the Company is the surviving entity or the successor person (if other than the Company) is an entity organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes the Company’s obligations on the Securities and under this Indenture; and

 

(b)                                 immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.

 

The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and any supplemental indenture comply with this Indenture.

 

18

 

Notwithstanding the above, any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties to the Company or the Parent and the Company may consolidate with, merge into or transfer all or a part of its properties to the Parent. Neither an Officer’s Certificate nor an Opinion of Counsel shall be required to be delivered in connection therewith.

 

Section 5.2.                                 Successor Entity Substituted.

 

Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1, the successor entity formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor person has been named as the Company herein; provided, however, that the predecessor Company in the case of a sale, conveyance or other disposition (other than a lease) shall be released from all obligations and covenants under this Indenture and the Securities.

 

ARTICLE VI.
 DEFAULTS AND REMEDIES

 

Section 6.1.                                 Events of Default.

 

“Event of Default,” wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental indenture or Officer’s Certificate, it is provided that such Series shall not have the benefit of said Event of Default:

 

(a)                                 default in the payment of any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior to 11:00 a.m., New York City time, on the 30th day of such period); or

 

(b)                                 default in the payment of principal of any Security of that Series at its Maturity; or

 

(c)                                  default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than defaults pursuant to paragraphs (a) or (b) above or pursuant to a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series), which default continues uncured for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

 

(d)                                 the Company pursuant to or within the meaning of any Bankruptcy Law:

 

19

 

(i)                                     commences a voluntary case,

 

(ii)                                  consents to the entry of an order for relief against it in an involuntary case,

 

(iii)                               consents to the appointment of a Custodian of it or for all or substantially all of its property,

 

(iv)                              makes a general assignment for the benefit of its creditors, or

 

(v)                                 generally is unable to pay its debts as the same become due; or

 

(e)                                  a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)                                     is for relief against the Company in an involuntary case,

 

(ii)                                  appoints a Custodian of the Company or for all or substantially all of its property, or

 

(iii)                               orders the liquidation of the Company,

 

and the order or decree remains unstayed and in effect for 60 days; or

 

(f)                                   any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, in accordance with Section 2.2.18.

 

The term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

The Company will provide the Trustee written of notice of any Default or Event of Default within 30 days of becoming aware of the occurrence of such Default or Event of Default, which notice will describe in reasonable detail the status of such Default or Event of Default and what action the Company is taking or proposes to take in respect thereof.

 

Section 6.2.                                 Acceleration of Maturity; Rescission and Annulment.

 

If an Event of Default with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred to in Section 6.1(d) or (e)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately

 

20

 

due and payable.  If an Event of Default specified in Section 6.1(d) or (e) shall occur, the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities 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.

 

At any time after such a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if all Events of Default with respect to Securities of that Series, other than the non-payment of the principal and interest, if any, of Securities of that Series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13.

 

No such rescission shall affect any subsequent Default or impair any right consequent thereon.

 

Section 6.3.                                 Collection of Indebtedness and Suits for Enforcement by Trustee.

 

The Company covenants that if

 

(a)                                 default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

 

(b)                                 default is made in the payment of principal of any Security at the Maturity thereof, or

 

(c)                                  default is made in the deposit of any sinking fund payment, if any, when and as due by the terms of a Security,

 

then, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any overdue interest at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.

 

If an Event of Default with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the

 

21

 

rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

 

Section 6.4.                                 Trustee May File Proofs of Claim.

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

 

(a)                                 to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

 

(b)                                 to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same,

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.

 

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.5.                                 Trustee May Enforce Claims Without Possession of Securities.

 

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

 

22

 

Section 6.6.                                 Application of Money Collected.

 

Any money or property collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

 

First:                                                                     To the payment of all amounts due the Trustee under Section 7.7; and

 

Second:                                                    To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and

 

Third:                                                               To the Company.

 

Section 6.7.                                 Limitation on Suits.

 

No Holder of any Security of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

 

(a)                                 such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that Series;

 

(b)                                 the Holders of not less than 25% in principal amount of the outstanding Securities of that Series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

 

(c)                                  such Holder or Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by the Trustee in compliance with such request;

 

(d)                                 the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

 

(e)                                  no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that Series;

 

it being understood, intended and expressly covenanted by the Holder of every Security with every other Holder and the Trustee that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture,

 

23

 

except in the manner herein provided and for the equal and ratable benefit of all such Holders of the applicable Series.

 

Section 6.8.                                 Unconditional Right of Holders to Receive Principal and Interest.

 

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Security on the Maturity of such Security, including the Stated Maturity expressed in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

 

Section 6.9.                                 Restoration of Rights and Remedies.

 

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

 

Section 6.10.                          Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 6.11.                          Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 6.12.                          Control by Holders.

 

The Holders of a majority in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such Series, provided that

 

24

 

(a)                                 such direction shall not be in conflict with any rule of law or with this Indenture,

 

(b)                                 the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction,

 

(c)                                  subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability, and

 

(d)                                 prior to taking any action as directed under this Section 6.12, the Trustee shall be entitled to indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

 

Section 6.13.                          Waiver of Past Defaults.

 

The Holders of not less than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration).  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.14.                          Undertaking for Costs.

 

All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Maturity of such Security, including the Stated Maturity expressed in such Security (or, in the case of redemption, on the redemption date).

 

25

 

ARTICLE VII.
 TRUSTEE

 

Section 7.1.                                 Duties of Trustee.

 

(a)                                 If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event of Default:

 

(i)                                     The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.

 

(ii)                                  In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officer’s Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture; however, in the case of any such Officer’s Certificates or Opinions of Counsel which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officer’s Certificates and Opinions of Counsel to determine whether or not they conform to the form requirements of this Indenture.

 

(c)                                  The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

(i)                                     This paragraph does not limit the effect of paragraph (b) of this Section.

 

(ii)                                  The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

 

(iii)                               The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series in accordance with Section 6.12.

 

(d)                                 Every provision of this Indenture that in any way relates to the Trustee is subject to paragraph (a), (b) and (c) of this Section.

 

26

 

(e)                                  The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in performing such duty or exercising such right or power.

 

(f)                                   The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(g)                                  No provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights or powers, if adequate indemnity against such risk is not assured to the Trustee in its satisfaction.

 

(h)                                 The Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections and immunities as are set forth in paragraphs (e), (f) and (g) of this Section and in Section 7.2, each with respect to the Trustee.

 

Section 7.2.                                 Rights of Trustee.

 

(a)                                 The Trustee may rely on and shall be protected in acting or refraining from acting upon any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

 

(b)                                 Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

 

(c)                                  The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.  No Depositary shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depositary.

 

(d)                                 The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, provided that the Trustee’s conduct does not constitute willful misconduct or negligence.

 

(e)                                  The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder without willful misconduct or negligence, and in reliance thereon.

 

(f)                                   The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

 

27

 

(g)                                  The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

 

(h)                                 The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities generally or the Securities of a particular Series and this Indenture.

 

(i)                                     In no event shall the Trustee be liable to any person for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage.

 

(j)                                    The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.

 

Section 7.3.                                 Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  The Trustee is also subject to Sections 7.10 and 7.11.

 

Section 7.4.                                 Trustee’s Disclaimer.

 

The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.

 

Section 7.5.                                 Notice of Defaults.

 

If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series notice of a Default or Event of Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default.  Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of any Series, the Trustee may withhold the notice if and so long as its corporate trust committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders of that Series.

 

28

 

Section 7.6.                                 Reports by Trustee to Holders.

 

Within 60 days after each anniversary of the date of this Indenture, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear on the register kept by the Registrar, a brief report dated as of such anniversary date, in accordance with, and to the extent required under, TIA § 313.

 

A copy of each report at the time of its mailing to Securityholders of any Series shall be filed with the SEC and each national securities exchange on which the Securities of that Series are listed.  The Company shall promptly notify the Trustee in writing when Securities of any Series are listed on any national securities exchange.

 

Section 7.7.                                 Compensation and Indemnity.

 

The Company shall pay to the Trustee from time to time compensation for its services as the Company and the Trustee shall from time to time agree upon in writing.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable out of pocket expenses incurred by it.  Such expenses shall include the reasonable compensation and expenses of the Trustee’s agents and counsel.

 

The Company shall indemnify each of the Trustee and any predecessor Trustee (including the cost of defending itself) against any cost, expense or liability, including taxes (other than taxes based upon, measured by or determined by the income of the Trustee) incurred by it except as set forth in the next paragraph in the performance of its duties under this Indenture as Trustee or Agent.  The Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, unless and to the extent that the Company is materially prejudiced thereby.  The Company shall defend the claim and the Trustee shall cooperate in the defense.  The Trustee may have one separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.  The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld.  This indemnification shall apply to officers, directors, employees, shareholders and agents of the Trustee.

 

The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through willful misconduct or negligence.

 

To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities of that Series.

 

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(d) or (e) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

 

29

 

The provisions of this Section shall survive the termination of this Indenture.

 

Section 7.8.                                 Replacement of Trustee.

 

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

 

The Trustee may resign with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date of the proposed resignation.  The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company.  The Company may remove the Trustee with respect to Securities of one or more Series if:

 

(a)                                 the Trustee fails to comply with Section 7.10;

 

(b)                                 the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(c)                                  a Custodian or public officer takes charge of the Trustee or its property; or

 

(d)                                 the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

 

If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least a majority in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture.  A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series.  Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it for actions taken or omitted to be taken in accordance with its rights, powers and duties under this Indenture prior to such replacement.

 

30

 

Section 7.9.                                 Successor Trustee by Merger, Etc.

 

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee, subject to Section 7.10.

 

Section 7.10.                          Eligibility; Disqualification.

 

This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5).  The Trustee shall always have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b).

 

Section 7.11.                          Preferential Collection of Claims Against Company.

 

The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

 

ARTICLE VIII.
 SATISFACTION AND DISCHARGE; DEFEASANCE

 

Section 8.1.                                 Satisfaction and Discharge of Indenture.

 

This Indenture shall upon Company Order be discharged with respect to the Securities of any Series and cease to be of further effect as to all Securities of such Series (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute instruments acknowledging satisfaction and discharge of this Indenture, when

 

(a)                                 either

 

(i)                                     all Securities of such Series theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the Trustee for cancellation; or

 

(ii)                                  all such Securities of such Series not theretofore delivered to the Trustee for cancellation

 

(1)                                 have become due and payable by reason of sending a notice of redemption or otherwise, or

 

(2)                                 will become due and payable at their Stated Maturity within one year, or

 

(3)                                 have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or

 

31

 

(4)                                 are deemed paid and discharged pursuant to Section 8.3, as applicable;

 

and the Company, in the case of (1), (2) or (3) above, shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount of money or U.S. Government Obligations, which amount shall be sufficient for the purpose of paying and discharging each installment of principal (including mandatory sinking fund or analogous payments) of and interest on all the Securities of such Series on the dates such installments of principal or interest are due;

 

(b)                                 the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

 

(c)                                  the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the satisfaction and discharge contemplated by this Section have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.2 and 8.5 shall survive.

 

Section 8.2.                                 Application of Trust Funds; Indemnification.

 

(a)                                 Subject to the provisions of Section 8.5, all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.1, 8.3 or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.1, 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Sections 8.1, 8.3 or 8.4.

 

(b)                                 The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Foreign Government Obligations deposited pursuant to Sections 8.1, 8.3 or 8.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders.

 

(c)                                  The Trustee shall deliver or pay to the Company from time to time upon Company Order any U.S. Government Obligations or Foreign Government Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, are then in

 

32

 

excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or Foreign Government Obligations or money were deposited or received.  This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.

 

Section 8.3.                                 Legal Defeasance of Securities of any Series.

 

Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2, to be inapplicable to Securities of any Series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding Securities of any Series on the 91st day after the date of the deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, upon receipt of a Company Order, execute instruments acknowledging the same), except as to:

 

(a)                                 the rights of Holders of Securities of such Series to receive, from the trust funds described in subparagraph (d) hereof, (i) payment of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such Series;

 

(b)                                 the provisions of Sections 2.4, 2.5, 2.7, 2.8, 7.7, 8.2, 8.3, 8.5 and 8.6; and

 

(c)                                  the rights, powers, trusts and immunities of the Trustee hereunder and the Company’s obligations in connection therewith;

 

provided that, the following conditions shall have been satisfied:

 

(d)                                 the Company shall have deposited or caused to be deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds specifically pledged as security for and dedicated solely to the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal of and interest, on and any mandatory sinking fund payments in respect of all the Securities of such Series on the dates such installments of principal or interest and such sinking fund payments are due;

 

33

 

(e)                                  such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;

 

(f)                                   no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;

 

(g)                                  the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;

 

(h)                                 the Company shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and

 

(i)                                     the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section have been complied with.

 

Section 8.4.                                 Covenant Defeasance.

 

Unless this Section 8.4 is otherwise specified pursuant to Section 2.2 to be inapplicable to Securities of any Series, the Company may omit to comply with respect to the Securities of any Series with any term, provision or condition set forth under Sections 4.2, 4.3, 4.4, 4.5, 4.6 and 5.1 and, unless otherwise specified therein, any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2 (and the failure to comply with any such covenants shall not constitute a Default or Event of Default with respect to such Series under Section 6.1) and the occurrence of any event specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2.18 and designated as an Event of Default shall not constitute a Default or Event of Default hereunder, with respect to the Securities of such Series, but, except as specified above, the remainder of this Indenture and such Securities will be unaffected thereby; provided that the following conditions shall have been satisfied:

 

(a)                                 with reference to this Section 8.4, the Company has irrevocably deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust for the purpose of making the following payments specifically pledged as security for, and dedicated solely to, the benefit of the Holders of

 

34

 

such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms, will provide (and without reinvestment), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal (including mandatory sinking fund or analogous payments) of and interest on all the Securities of such Series on the dates such installments of principal or interest are due;

 

(b)                                 such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;

 

(c)                                  no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit;

 

(d)                                 the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel to the effect that (i) the company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm, subject to customary exclusions, that the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, covenant defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, covenant defeasance and discharge had not occurred;

 

(e)                                  The Company shall have delivered to the Trustee an Officer’s Certificate stating the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and

 

(f)                                   The Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the covenant defeasance contemplated by this Section have been complied with.

 

Section 8.5.                                 Repayment to Company.

 

Subject to applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal and interest that remains unclaimed for two years.  After that, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

 

35

 

Section 8.6.                                 Reinstatement.

 

If the Trustee or the Paying Agent is unable to apply any money deposited with respect to Securities of any Series in accordance with Section 8.1 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Indenture with respect to the Securities of such Series and under the Securities of such Series shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.1; provided, however, that if the Company has made any payment of principal of or interest on or any Additional Amounts with respect to any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent after payment in full to the Holders.

 

ARTICLE IX.
 AMENDMENTS AND WAIVERS

 

Section 9.1.                                 Without Consent of Holders.

 

The Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder:

 

(a)                                 to cure any ambiguity, defect or inconsistency;

 

(b)                                 to comply with Article V;

 

(c)                                  to provide for uncertificated Securities in addition to or in place of certificated Securities;

 

(d)                                 to add guarantees with respect to Securities of any Series or secure Securities of any Series;

 

(e)                                  to surrender any of the Company’s rights or powers under this Indenture;

 

(f)                                   to add covenants or events of default for the benefit of the holders of Securities of any Series;

 

(g)                                  to comply with the applicable procedures of the applicable depositary;

 

(h)                                 to make any change that does not adversely affect the rights of any Securityholder;

 

(i)                                     to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as permitted by this Indenture;

 

(j)                                    to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or

 

36

 

change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or

 

(k)                                 to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA.

 

Section 9.2.                                 With Consent of Holders.

 

The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders of each such Series.  Except as provided in Section 6.13, the Holders of at least a majority in principal amount of the outstanding Securities of any Series by notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such Series.

 

It shall not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof.  After a supplemental indenture or waiver under this section becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice briefly describing the supplemental indenture or waiver.  Any failure by the Company to mail or publish such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

Section 9.3.                                 Limitations.

 

Without the consent of each Securityholder affected, an amendment or waiver may not:

 

(a)                                 reduce the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;

 

(b)                                 reduce the rate of or extend the time for payment of interest (including default interest) on any Security;

 

(c)                                  reduce the principal or change the Stated Maturity of any Security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation;

 

(d)                                 reduce the principal amount of Discount Securities payable upon acceleration of the maturity thereof;

 

(e)                                  waive a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration of the Securities of

 

37

 

any Series by the Holders of at least a majority in principal amount of the outstanding Securities of such Series and a waiver of the payment default that resulted from such acceleration);

 

(f)                                   make the principal of or interest, if any, on any Security payable in any currency other than that stated in the Security;

 

(g)                                  make any change in Sections 6.8, 6.13 or 9.3 (this sentence); or

 

(h)                                 waive a redemption payment with respect to any Security, provided that such redemption is made at the Company’s option.

 

Section 9.4.                                 Compliance with Trust Indenture Act.

 

Every amendment to this Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the TIA as then in effect.

 

Section 9.5.                                 Revocation and Effect of Consents.

 

Until an amendment is set forth in a supplemental indenture or a waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date of the supplemental indenture or the date the waiver becomes effective.

 

Any amendment or waiver once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (a) through (h) of Section 9.3.  In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

 

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to give such consent or to revoke any consent previously given or take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

 

Section 9.6.                                 Notation on or Exchange of Securities.

 

The Company or the Trustee may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated.  The Company in exchange for Securities of that Series may issue and the Trustee shall authenticate upon receipt

 

38

 

of a Company Order in accordance with Section 2.3 new Securities of that Series that reflect the amendment or waiver.

 

Section 9.7.                                 Trustee Protected.

 

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Officer’s Certificate or an Opinion of Counsel or both complying with Section 10.4.  The Trustee shall sign all supplemental indentures upon delivery of such an Officer’s Certificate or Opinion of Counsel or both, except that the Trustee need not sign any supplemental indenture that adversely affects its rights.

 

ARTICLE X.
 MISCELLANEOUS

 

Section 10.1.                          Trust Indenture Act Controls.

 

If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the TIA, such required or deemed provision shall control.

 

Section 10.2.                          Notices.

 

Any notice or communication by the Company or the Trustee to the other, or by a Holder to the Company or the Trustee, is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), facsimile transmission, email or overnight air courier guaranteeing next day delivery, to the others’ address:

 

if to the Company:

 

Summit Midstream Holdings, LLC

c/o Summit Midstream Partners, LP

2100 McKinney Avenue, Suite 1250
 Dallas, Texas 75201

Attention:                        Brock M. Degeyter

Telephone:                  (214) 242-1955

 

with a copy to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700
 Houston, Texas 77002

Attention:                        Brett E. Braden

David J. Miller

Telephone:                  (713) 546-5400

 

39

 

if to the Trustee:

 

U.S. Bank National Association
 5555 San Felipe Street, Suite 1150
 Houston, Texas 77056
 Attention:  Corporate Trust Services
 Telephone:  [ · ]

 

with a copy to:

 

[ · ]

Attention:  [ · ]

Telephone: [ · ]

 

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

Any notice or communication to a Securityholder shall be sent electronically or by first-class mail to his address shown on the register kept by the Registrar, in accordance with the procedures of the Depositary.  Failure to mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect to other Securityholders of that or any other Series.

 

If a notice or communication is sent or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder receives it.

 

If the Company sends a notice or communication to Securityholders, it shall send a copy to the Trustee and each Agent at the same time.

 

Notwithstanding any other provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including any notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given to the Depositary for such Security (or its designee) pursuant to the customary procedures of such Depositary.

 

Section 10.3.                          Communication by Holders with Other Holders.

 

Securityholders of any Series may communicate pursuant to TIA § 312(b) with other Securityholders of that Series or any other Series with respect to their rights under this Indenture or the Securities of that Series or all Series.  The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

 

Section 10.4.                          Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

 

40

 

(a)                                 an Officer’s Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

(b)                                 an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

 

Section 10.5.                          Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:

 

(a)                                 a statement that the person making such certificate or opinion has read such covenant or condition;

 

(b)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(d)                                 a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

Section 10.6.                          Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or more Series.  Any Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 10.7.                          Legal Holidays.

 

Unless otherwise provided by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, a “Legal Holiday” is any day that is not a Business Day.  If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

 

Section 10.8.                          No Recourse Against Others.

 

A director, officer, employee or stockholder (past or present), as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

 

41

 

Section 10.9.                          Counterparts.

 

This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 10.10.                   Governing Law.

 

THIS INDENTURE AND THE SECURITIES, INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THE INDENTURE OR THE SECURITIES, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 10.11.                   No Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 10.12.                   Successors.

 

All agreements of the Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture shall bind its successor.

 

Section 10.13.                   Severability.

 

In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 10.14.                   Table of Contents, Headings, Etc.

 

The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

 

Section 10.15.                   Securities in a Foreign Currency.

 

Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such time, there

 

42

 

are outstanding Securities of any Series which are denominated in more than one currency, then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of taking such action shall be determined by converting any such other currency into a currency that is designated upon issuance of any particular Series of Securities.  Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, such conversion shall be at the spot rate for the purchase of the designated currency as published in The Financial Times in the “Currency Rates” section (or, if The Financial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may be selected in good faith by the Company) on any date of determination.  The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.

 

All decisions and determinations provided for in the preceding paragraph shall, in the absence of manifest error, to the extent permitted by law, be conclusive for all purposes and irrevocably binding upon the Trustee and all Holders.

 

Section 10.16.                   Judgment Currency.

 

The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any Series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.  For purposes of the foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close.

 

43

 

Section 10.17.                   Force Majeure.

 

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Trustee shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

ARTICLE XI.
 SINKING FUNDS

 

Section 11.1.                          Applicability of Article.

 

The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of a Series if so provided by the terms of such Securities pursuant to Section 2.2 and except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture.

 

The minimum amount of any sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a “mandatory sinking fund payment” and any other amount provided for by the terms of Securities of such Series is herein referred to as an “optional sinking fund payment.”  If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2.  Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.

 

Section 11.2.                          Satisfaction of Sinking Fund Payments with Securities.

 

The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as credit Securities of such Series to which such sinking fund payment is applicable and which have been repurchased by the Company or redeemed either at the election of the Company pursuant to the terms of such Series of Securities (except pursuant to any mandatory sinking fund) or through the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities, provided that such Securities have not been previously so credited.  Such Securities shall be received by the Trustee, together with an Officer’s Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.  If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such Series to be

 

44

 

redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company.

 

Section 11.3.                          Redemption of Securities for Sinking Fund.

 

Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental indenture hereto or Officer’s Certificate in respect of a particular Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officer’s Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated to pay the amount therein specified.  Not less than 30 days (unless otherwise indicated in the Board Resolution, Officer’s Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date the Securities to be redeemed upon such sinking fund payment date will be selected in the manner specified in Section 3.2 and the Company shall send or cause to be sent a notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in and in accordance with Section 3.3.  Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.4, 3.5 and 3.6.

 

45

 

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

 

	
 
    	
SUMMIT   MIDSTREAM HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SUMMIT   MIDSTREAM FINANCE CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

BETWEEN

 

AGEL ENTERPRISES, INC., 
 as Buyer,

 

AND

 

AGEL ENTERPRISES, L.L.C., 
 as Seller

 

September 25, 2013

 

 

TABLE OF CONTENTS

 

	
1. Definitions
    	
1
    
	
 
    	
 
    
	
2. Basic Transaction
    	
10
    
	
2.1 Purchase and Sale of Assets
    	
10
    
	
2.2 Assumption of Liabilities
    	
10
    
	
2.3 Purchase Price
    	
10
    
	
2.5 The Closing
    	
11
    
	
2.6 Deliveries at the Closing
    	
11
    
	
2.7 Allocation
    	
11
    
	
2.8 Transfer Taxes
    	
11
    
	
 
    	
 
    
	
3. Representations and Warranties of Seller
    	
11
    
	
3.1 Organization, Qualification   and Power
    	
11
    
	
3.2 Capitalization
    	
12
    
	
3.3 Authorization of Transaction
    	
12
    
	
3.4 Noncontravention
    	
12
    
	
3.5 Brokers’ Fees
    	
12
    
	
3.6 Title to Assets
    	
13
    
	
3.7 Subsidiaries
    	
13
    
	
3.8 Financial Statements
    	
13
    
	
3.9 Events Subsequent to Most   Recent Fiscal Year End
    	
13
    
	
3.10 Undisclosed Liabilities
    	
15
    
	
3.11 Legal Compliance
    	
15
    
	
3.12 Tax Matters
    	
16
    
	
3.13 Real Property
    	
17
    
	
3.14 Intellectual Property
    	
17
    
	
3.15 Tangible Assets
    	
18
    
	
3.16 Contracts
    	
19
    
	
3.17 Cash, Notes and Accounts   Receivable
    	
20
    
	
3.18 Powers of Attorney
    	
20
    
	
3.19 Insurance
    	
20
    
	
3.20 Litigation
    	
21
    
	
3.21 Employment Matters
    	
21
    
	
3.22 Employee Benefits
    	
21
    
	
3.23 Guaranties
    	
22
    
	
3.24 Environmental, Health and   Safety Matters
    	
22
    
	
3.25 Certain Business   Relationships with Seller
    	
23
    
	
3.26 Inventories
    	
23
    
	
3.27 Unlawful Payment
    	
24
    
	
3.28 Shares
    	
24
    
	
 
    	
 
    
	
4. Representations and Warranties of Buyer
    	
24
    
	
4.1 Organization of Buyer
    	
24
    
	
4.2 Authorization of Transaction
    	
24
    
	
4.3 Noncontravention
    	
24
    
	
4.4 Brokers’ Fees
    	
25
    
	
4.5 Issuance of Shares
    	
25
    

 

 

	
5. Pre-Closing Covenants
    	
25
    
	
5.1 General
    	
25
    
	
5.2 Notices and Consents
    	
25
    
	
5.3 Operation of Business
    	
25
    
	
5.4 Preservation of Business
    	
26
    
	
5.5 Full Access
    	
26
    
	
5.6 Notice of Developments
    	
27
    
	
5.7 Exclusivity
    	
27
    
	
5.8 Employees
    	
27
    
	
 
    	
 
    
	
6. Post-Closing Covenants
    	
28
    
	
6.1 General
    	
28
    
	
6.2 Litigation Support
    	
28
    
	
6.3 Transition
    	
28
    
	
6.4 Confidentiality
    	
28
    
	
 
    	
 
    
	
7. Conditions to Obligation to Close
    	
29
    
	
7.1 Conditions to Obligation of   Buyer
    	
29
    
	
7.2 Conditions to Obligation of   Seller
    	
30
    
	
 
    	
 
    
	
8. Remedies for Breaches of this Agreement
    	
32
    
	
8.1 Survival of Representations,   Warranties and Covenants
    	
32
    
	
8.2 Indemnification Provisions   for Benefit of Buyer
    	
32
    
	
8.3 Indemnification Provisions   for Benefit of Seller
    	
33
    
	
8.4 Matters Involving Third   Parties
    	
34
    
	
8.5 Limitation of Liability
    	
35
    
	
8.6 Payment
    	
35
    
	
8.7 No Duplications
    	
36
    
	
 
    	
 
    
	
9. Termination
    	
36
    
	
9.1 Termination of Agreement
    	
36
    
	
9.2 Effect of Termination
    	
37
    
	
 
    	
 
    
	
10. Miscellaneous
    	
37
    
	
10.1 Press Releases and Public   Announcements
    	
37
    
	
10.2 No Third-Party Beneficiaries
    	
37
    
	
10.3 Entire Agreement
    	
37
    
	
10.4 Succession and Assignment
    	
37
    
	
10.5 Counterparts and Facsimile   Signatures
    	
37
    
	
10.6 Headings
    	
37
    
	
10.7 Notices
    	
37
    
	
10.8 Governing Law
    	
38
    
	
10.9 Amendments and Waivers
    	
38
    
	
10.10 Severability
    	
38
    
	
10.11 Expenses
    	
38
    
	
10.12 Construction
    	
39
    
	
10.13 Incorporation of Exhibits   and Schedules
    	
39
    
	
10.14 Specific Performance
    	
39
    

 

 

EXHIBITS AND SCHEDULES

 

	
EXHIBITS
    
	
 
    	
 
    
	
Exhibit A
    	
Subsidiaries
    
	
Exhibit B
    	
Form of   Purchase Money Note
    
	
Exhibit C
    	
Allocation   of Purchase Price
    
	
Exhibit D
    	
Form of   Employment Agreement
    
	
 
    	
 
    
	
SCHEDULES
    
	
 
    
	
Seller’s Disclosure Schedule
    

 

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) between AGEL ENTERPRISES, INC., Inc., a Delaware corporation (the “Buyer”), and AGEL ENTERPRISES,  LLC, a Utah limited liability company (the “Seller”), takes effect on September     , 2013.  Buyer and Seller are referred to individually as a “Party” and collectively as the “Parties.”

 

RECITAL

 

Seller desires to sell, transfer and otherwise convey, and Buyer desires to purchase and assume, substantially all of the assets and certain liabilities of Seller, on the terms and subject to the conditions of this Agreement.

 

AGREEMENT

 

In consideration of the above recitals and the promises set forth in this Agreement, the Parties agree as follows:

 

1.                                      Definitions.

 

“Acquired Assets” means all right, title and interest in, to and under all of the assets of Seller (other than the Excluded Assets), including without limitation all of Seller’s:

 

(a)                                 Cash, Inventory and liquid investments;

 

(b)                                 tangible personal property, including equipment, furniture, computers, automobiles, trucks, trailers, tools, jigs and dies, wherever located;

 

(c)                                  Seller’s company name, Intellectual Property, formulas, associated goodwill, licenses and sublicenses, remedies against infringements, URL addresses, and rights to protection of interests under any Law;

 

(d)                                 agreements, contracts, indentures, mortgages, instruments, Security Interests, guaranties and other similar arrangements;

 

(e)                                  accounts, notes and other receivables;

 

(f)                                   ownership interests in the Subsidiaries;

 

(g)                                  claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off and rights of recoupment;

 

(h)                                 Permits and all product registrations of Seller and any Affiliate that is not a Subsidiary;

 

(i)                                     books, records, phone numbers, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings and specifications, creative materials, advertising and promotional materials, studies, reports and other printed or written materials;

 

1

 

(j)                                    all of Seller’s and the Subsidiaries product formulas and manufacturing know-how and technology related to such products and formulas; and

 

(k)                                 all other properties and assets of every kind, character and description, tangible or intangible, owned or leased by Seller and used or held for use in connection with Seller’s business.

 

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses and fees, including court costs and reasonable attorney fees and expenses.

 

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

 

“Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of Law.

 

“Agreement” has the meaning set forth in the preface.

 

“Assumed Liabilities” has the meaning set forth in Section 2.2.

 

“Buyer” has the meaning set forth in the preface.

 

“Buyer Parties” means Buyer and its officers, directors, employees, managers, members, agents and Affiliates.

 

“Cash” means cash and cash equivalents (including marketable securities and short term investments) calculated in accordance with tax basis accounting principles applied on a basis consistent with the preparation of the Financial Statements.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

 

“Closing” has the meaning set forth in Section 2.4.

 

“Closing Date” has the meaning set forth in Section 2.4.

 

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means any information concerning the business and affairs of Seller that is not already generally available to the public. Nothing will be deemed to be confidential information that:  (a) is known to the Buyer at the time of its disclosure to the Buyer; (b) becomes publicly known or available other than through disclosure by the

 

2

 

Seller; (c) is received by the Buyer from a third party not actually known by the Buyer to be bound by a confidentiality agreement with or obligation to the Seller or (d) is required to be disclosed by the Bankruptcy Court or other Governmental Authority.

 

“CVSL” means CVSL Inc., a Florida corporation and the parent company of Buyer.

 

“Employee Benefit Plan” means any:

 

(a)                                 nonqualified deferred compensation or retirement plan or arrangement;

 

(b)                                 qualified defined contribution retirement plan or arrangement that is an Employee Pension Benefit Plan;

 

(c)                                  qualified defined benefit retirement plan or arrangement that is an Employee Pension Benefit Plan (including any Multiemployer Plan); or

 

(d)                                 Employee Welfare Benefit Plan or material fringe benefit or other retirement, bonus or incentive plan or program.

 

“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).

 

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

 

“Encumbrance” means any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal, or similar restriction, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

 

“Environment” means all real property and physical buildings and structures thereon, the premises occupied by Seller or and of the Subsidiaries, the work environment of Seller’s business, all indoor ambient air, wetlands, fens, surface waters, drinking water, groundwater, land surface, subsurface strata, sediment and other natural resources.

 

“Environmental Condition” means the presence of in, or Release into, the Environment of Hazardous Substances, including any migration of Hazardous Substances through the Environment from one location to another location.

 

“Environmental Laws” means all of the following Laws:

 

(a)                                 Laws relating to pollution or protection of the Environment, natural resources or human or worker health or safety, including Laws relating to Releases and threatened Releases of Hazardous Substances or otherwise relating to the manufacture, formulation, generation, processing, distribution, use, treatment, storage, Release, transport, remediation, response, cleanup or handling of Hazardous Substances;

 

3

 

(a)                                 Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances;

 

(b)                                 Laws relating to the management, use, damage to, or cleanup of natural resources; and

 

(c)                                  all Laws, all judicial and administrative orders and enforceable determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, including the Occupational, Safety and Health Act of 1970, as amended.

 

“Environmental Liabilities and Costs” means all liabilities, costs, obligations, damages, and other expenses (including without limitation all reasonable fees, disbursements and expenses of counsel and technical consultants, experts and contractors, and costs of investigations and feasibility studies, and other response, remedial or removal action costs), fines, penalties, sanctions (whether civil or criminal) and interest, and costs of corrective actions, supplemental environmental projects, permitting or pollution control equipment required pursuant to any Environmental Laws.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means each entity that is treated as a single employer with Seller for purposes of Code Section 414.

 

“Excluded Assets” means:

 

(a)                                 the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, and other documents relating to the organization, maintenance and existence of Seller as a corporation;

 

(b)                                 any of the rights of Seller under the transaction Documents (or under any side agreement between Seller and Buyer entered into on or after the date of this Agreement);

 

(c)                                  all personnel records and books that Seller is required by Law to retain in its possession

 

(d)                                 interest in real property, including leaseholds, subleaseholds, improvements, fixtures, fittings, easements, rights-of-way and other appurtenants;

 

(e)                                  copies of records and documents needed by Seller to complete tax returns or to comply with any Law; and

 

(f)                                   Certain cash as identified on Schedule 1(f) of Seller’s Disclosure Schedule.

 

4

 

“Excluded Liabilities” means any Liabilities or obligations of Seller or its Affiliates (other than the Assumed Liabilities), including without limitation:

 

(a)                                 any Liability of Seller for the unpaid Taxes of Seller or any other Person that is not an Assumed Liability, including any liability under Reg. Section 1.1502-6 (or any similar provision of Law), as a transferee or successor, by contract, or otherwise;

 

(b)                                 any obligation of Seller to indemnify any Person (including any of Seller Members or the members of Seller) by reason of the fact that such Person was a director, officer, employee or agent of Seller or was serving at the request of the entity as a partner, trustee, director, officer, employee or agent of another entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses or otherwise and whether such indemnification is pursuant to any Law, charter document, bylaw, agreement or otherwise);

 

(c)                                  any Liability of Seller for costs and expenses incurred in connection with this Agreement and the contemplated transactions;

 

(d)                                 any Liability or obligation of Seller under this Agreement (or under any side agreement between Seller and Buyer entered into on or after the date of this Agreement);

 

(e)                                  all Environmental Liabilities and Costs (i) arising from the ownership or operation of the Acquired Assets on or before the Closing Date, or (ii) of or relating to the acts or omissions of Seller;

 

(f)                                   any Liability arising out of or relating to any services provided by Seller, not including Net Liabilities;

 

(g)                                  any Liability under the agreements, contracts, leases, licenses and other arrangements referred to in the definition of Acquired Assets that arises after the Closing Date but that arises out of any breach that occurred prior to the Closing Date;

 

(h)                                 any Liability arising out of or relating to Seller’s credit facilities or any other indebtedness for borrowed money, or any security interest related thereto;

 

(i)                                     any Liability (i) under any Employee Benefit Plans or relating to payroll, vacation, sick leave, workers’ compensation, unemployment benefits, employee option or profit-sharing plans or any other employee plans or benefits of any kind for Seller’s employees or former employees, or (ii) under any employment, severance, retention or termination agreement with any employee of Seller or any of its Affiliates;

 

5

 

(j)                                    any Liability to any member of Seller, including without limitation any Liability of Seller to distribute the Purchase Price;

 

(k)                                 any Liability arising out of any litigation or other proceedings (i) pending as of the Closing Date, or (ii) commenced after the Closing Date and arising out of any occurrence or event happening prior to the Closing Date;

 

(l)                                     any Liability arising out of or resulting from Seller’s compliance or non-compliance with any Law;

 

(m)                             any Liability based upon Seller’s acts or omissions, whether occurring prior to or after the Closing Date;

 

(o)                                 any Liability arising out of any of the Litigation; and

 

(p)                                 any other obligation or Liability of Seller, its Affiliates or any other Person that is not an Assumed Liability.

 

“Fiduciary” has the meaning set forth in ERISA Section 3(21).

 

“Financial Statements” has the meaning set forth in Section 3.8.

 

“Governmental Authority” means (a) any federal, state, local or foreign governmental, administrative or regulatory authority, court, agency or body, or any division or subdivision, or (b) any arbitration board, tribunal or mediator.

 

“Hazardous Substances” means:

 

(a)                                 any petrochemical or petroleum product, oil or ash, radioactive materials, radon gas, mold, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contains dielectric fluid which may contain polychlorinated biphenyls;

 

(b)                                 any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” hazardous constituents,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “irritants,” “pollutants,” or words of similar meaning under any Law; and

 

(c)                                  any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Law.

 

“Income Tax” means any federal, state, local or foreign income tax (or other tax, such as a franchise tax, the computation of which is based upon net income), including any interest, penalty or addition thereto, whether disputed or not.

 

6

 

“Income Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendments thereof.

 

“Indemnified Party” has the meaning set forth in Section 8.4.

 

“Indemnifying Party” has the meaning set forth in Section 8.4.

 

“Intellectual Property” means:

 

(a)                                 all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations;

 

(b)                                 all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations and including all associated goodwill, and all applications, registrations and renewals;

 

(c)                                  all copyrightable works, all copyrights and all applications, registrations and renewals;

 

(d)                                 all mask works and all applications, registrations and renewals in connection therewith;

 

(e)                                  all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals);

 

(f)                                   all computer software (including data and related documentation);

 

(g)                                  all other proprietary rights; and

 

(h)                                 all copies and tangible embodiments (in whatever form or medium).

 

“Inventory” means all inventory of raw materials, work in process and finished goods, spare parts and all inventory of packaging and shipping supplies, of Seller and the Subsidiaries.

 

“Knowledge” means the actual knowledge after reasonable investigation of the officers of the Seller.

 

“Law” means any federal, state, local or foreign constitution, law, code, plan, statute, rule, regulation, ordinance, order, writ, injunction, ruling, judgment, decree, charge,

 

7

 

restriction or Permit of any Governmental Authority, each as amended and in effect, now or in the future.

 

“Law Suit” means that certain lawsuit styled Glen Jensen, an individual; Agel One, L.L.C., a Utah Limited liability company; and Itsumo Family Investment Company, LLC, a Utah limited liability company, Plaintiffs, v. Agel Enterprises, LLC, a Utah limited liability company; James Savas, an individual; David Harkness, an individual; Ash Capital, LLC, a Utah limited liability company; Jeff Warwick, an individual; Boyd Matheson, an individual; Randy Gage, an individual; Agel Base, LLC; AK Holding Company, LC, a Utah limited liability company; S2 Investments, LLC, a Utah limited liability company, Cause No. 110400718 filed in the Fourth Judicial District Court, Utah County, State of Utah.

 

“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

 

“Litigation” means any of the legal proceedings described on Schedule 3.20.

 

“Material Adverse Effect” means any change or effect that is reasonably likely to be materially adverse to the business, operation, properties, financial condition, assets, Liabilities (including without limitation contingent Liabilities) or prospects of an entity and its Subsidiaries taken as a whole provided, however, that the foregoing shall not include events, circumstances, conditions or effects relating to or arising from (i) the economy of the United States generally, (ii) the transactions contemplated hereby and the public announcement thereof, (iii) an outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or the occurrence of any other similar calamity or crisis, including the occurrence of a terrorist attack, (iv) any events or circumstances, including governmental or regulatory changes and changes in Law or regulations, generally affecting the industry in which the Seller and the Subsidiaries currently operate or (v) any fact, matter or conditions expressly disclosed on the disclosure schedules attached hereto which are to be attached on October 2, 2013.

 

“Most Recent Fiscal Month End” has the meaning set forth in Section 3.8.

 

“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).

 

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

 

“Parties” has the meaning set forth in the preface.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

8

 

“Permits” means any permits, authorizations, approvals, decisions, zoning orders, franchises, registrations, licenses, filings, certificates, variances or similar rights granted by or obtained from any Governmental Authority.

 

“Permitted Liens” means (a) Encumbrances for Taxes and other governmental charges and assessments that are not yet due and payable, (b) Encumbrances of carriers, warehousemen, mechanics, and materialmen and other like Encumbrances arising in the Ordinary Course of Business with respect to obligations that are not delinquent and (c) statutory Encumbrances in favor of lessors arising in connection with any property leased to Seller with respect to obligations that are not delinquent.

 

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Authority.

 

“Premises” means all properties and facilities, owned, leased or otherwise used by Seller and each Subsidiary in the conduct of its business.

 

“Purchase Money Note” has the meaning set forth in Section 2.3.

 

“Purchase Price” has the meaning set forth in Section 2.3.

 

“Reportable Event” has the meaning set forth in ERISA Section 4043.

 

“Representative” means any Person selling Products of the Company or any Subsidiary pursuant to the terms of an oral or written contract.

 

“Representative Contracts” means any written or oral contracts between Seller and any Person related to the sale of Products by Representatives.

 

“Release” means any spill, leak, discharge, disposal, pumping, pouring, emitting, emptying, injecting, leaching, dumping or allowing to escape or escape on, into or through the Environment.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute and the rules and regulations of the United States Securities and Exchange Commission thereunder, all as the same are in effect at the time and from time to time.

 

“Security Interest” means any mortgage, pledge, lien, encumbrance, charge or other security interest.

 

“Seller” has the meaning set forth in the preface.

 

“Seller’s Disclosure Schedule” has the meaning set forth in Section 3.

 

“Seller Members” has the meaning set forth in Section 3.2.

 

9

 

“Shares” has the meaning set forth in Section 2.3.

 

“Spanish Tax Liability” means any liability Agel Enterprises (Netherlands), B.V. may have for failure to pay taxes in Spain.

 

“Subsidiary” means any corporation, partnership, limited liability company or other entity in which any Person has direct or indirect equity or ownership interest is listed on Exhibit A.

 

“Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition, whether disputed or not.

 

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule, attachment or amendment.

 

“Third Party Claim” has the meaning set forth in Section 8.4.

 

“Transaction Documents” means this Agreement and all documents and agreements to be entered into by one or more of the Parties in connection with the transactions contemplated by this Agreement.

 

2.                                      Basic Transaction.

 

2.1                               Purchase and Sale of Assets.  On the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer, convey and deliver to Buyer, the Acquired Assets, free and clear of all Security Interests other than Permitted Liens, at the Closing in exchange for the Purchase Price.

 

2.2                               Assumption of Liabilities.  On the terms and subject to the conditions of this Agreement, Buyer agrees to assume and become responsible for the liabilities set forth in Section 2.2 of the Sellers Disclosure Schedule (the “Assumed Liabilities”) at the Closing.  Buyer will not, however, assume or otherwise be obligated for the Excluded Liabilities, for which Seller remains solely liable. Buyer acknowledges that items listed on Schedule 2.2 of the Seller’s Disclosure Schedule, including without limitation, the Spanish Tax Liability and litigation involving Seller’s Subsidiary in Mexico, will be considered an Assumed Liability and not an Excluded Liability.

 

2.3                               Purchase Price.  Buyer agrees to pay to Seller $3,600,000.00 (the “Purchase Price”) payable as follows:

 

(a)                                 at Closing,  delivery of 7,446,600 shares of Buyer’s unregistered $0.0001 par value common stock (the “Shares”);

 

10

 

(b)                                 at Closing, $1,700,000.00 by delivery of Buyer’s promissory note in the form of Exhibit B (the “Purchase Money Note”) which shall be payable as directed by Seller, and shall be secured by assets of the Buyer and guaranteed by CVSL.

 

2.4                               The Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) will take place at the offices of Wright Ginsberg Brusilow, PC in Dallas, Texas, at 9:00 a.m., on the second business day after the respective Parties have satisfied or waived all conditions to the obligations of the Parties to consummate the transactions contemplated by this Agreement (other than actions the Parties will take at the Closing itself) or any other time and date as the Parties may determine (the “Closing Date”).

 

2.5                               Deliveries at the Closing.  At the Closing:  (a) Seller will execute, acknowledge (if appropriate) and deliver to Buyer any certificates, instruments and documents, including those referred to in Section 7.1 below, as Buyer and its counsel may reasonably request; (b) Buyer will execute, acknowledge (if appropriate) and deliver to Seller any certificates, instruments and documents, including those referred to in Section 7.2 below, as Seller and its counsel may reasonably request; and (c) Buyer will deliver to Seller the Shares and Purchase Money Note.

 

2.6                               Allocation.  The Parties will allocate the Purchase Price and all other capitalizable costs among the Acquired Assets for all purposes, including financial accounting and tax purposes, in accordance with the allocation schedule to be provided by Buyer prior to Closing and attached as Exhibit C.

 

2.7                               Transfer Taxes.  All transfer, documentary, sales, use, stamp, registration and other such Taxes and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transaction contemplated by this Agreement will be paid by Buyer when due and Seller will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges.

 

3.                                      Representations and Warranties of Seller.  Seller represents and warrants to Buyer that the statements contained in this Section 3 are correct and complete in all material respects as of the date of this Agreement and will be correct and complete in all material respects as of the Closing Date, except as set forth in the attached disclosure schedule (the “Seller’s Disclosure Schedule”). Seller’s Disclosure Schedule may be provided through October 2, 2013, and it is understood the representations and warranties in this Section 3 will be subject to the Seller’s Disclosure Schedule provided on October 2, 2013. Seller’s Disclosure Schedule will be provided to Buyer no later than October 2, 2013 and will be arranged in paragraphs corresponding to the sections contained in this Section 3.

 

3.1                               Organization, Qualification and Power.  Seller is a limited liability company duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation.  Seller is duly authorized to conduct business and is in good standing under the Laws of each jurisdiction where qualification is required and where failure to be so qualified would have a Material Adverse Effect.  Seller has full power and authority and all Permits necessary to carry on the business in which it is currently engaged and to own and use the properties owned and used by it.  Section 3.1 of the Seller’s Disclosure Schedule sets forth all Permits held by the

 

11

 

Company and each Subsidiary covering the sale of products sold by each of them including the name of the authority issuing the Permit and the products covered by the Permit.

 

3.2                               Capitalization.  The persons listed in Section 3.2 of Seller’s Disclosure Schedule (the “Seller Members”) own all of the outstanding capital or other membership profits, interests of Seller.  All of the interests in Seller owned by the Seller Members are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.  There are no bonds, debentures, notes or other indebtedness or securities of Seller having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which members of Seller may vote.  There are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Seller is a party or by which Seller is bound obligating Seller to issue, deliver or sell, or cause to be issued, delivered or sold, additional membership interests or other voting securities of Seller or obligating Seller to issue, grant, extend or enter into any such security, option, warrant, call right, commitment, agreement, arrangement or undertaking.

 

3.3                               Authorization of Transaction.  Subject to settlement of the Law Suit, Seller has full power and authority (including full limited liability power and authority) to enter into and perform its obligations under this Agreement and the Transaction Documents to which it is a party.  The managers of Seller have duly authorized the execution, delivery and performance of this Agreement and the Transaction Documents to which Seller is a party.  This Agreement and the other Transaction Documents to which any of Seller or Seller Members is a party constitute valid and legally binding obligations of Seller and Seller Members, as applicable, enforceable in accordance with their respective terms and conditions except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

3.4                               Noncontravention.  Neither the execution and the delivery of this Agreement or the Transaction Documents to which Seller is a party, nor the consummation of the contemplated transactions:  (a) will violate any Law to which Seller is subject; (b) will violate any provision of the articles, charter, LLC agreement, bylaws or other organizational documents of Seller or any Member which is an entity; (c) will, subject to settlement of the Law Suit, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any material agreement, contract, lease, license, instrument or other arrangement to which Seller is a party or by which it is bound or to which any of its Assets are subject (or result in the imposition of any Security Interest upon any of its assets); (d) will require Seller to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Governmental Authority in order for the Parties to consummate the transactions contemplated by this Agreement and the Transaction Documents; or (e) will result in the cancellation, forfeiture, revocation, suspension or adverse modification of any material Permit owned or held by Seller.

 

3.5                               Brokers’ Fees.  Seller has no Liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

12

 

3.6                               Title to Assets.  The properties and assets of Seller and the Subsidiaries shown on the balance sheet contained in the Financial Statements or acquired after the date of the Financial Statements are free and clear of all Security Interests, except for (i) Permitted Liens, (ii) properties and assets disposed of in the Ordinary Course of Business since the date of the Financial Statements and (iii) Encumbrances that will be released at or prior to Closing.  Seller has good and marketable title to or a valid leasehold interest in such properties and assets, including the Acquired Assets, free and clear of any Security Interest (other than Permitted Liens and Encumbrances that will be released at or prior to Closing) or restriction on transfer.

 

3.7                               Subsidiaries.  Each Subsidiary is duly organized, validly existing and in good standing under the Laws of the jurisdiction of it formation except as which may be identified on Schedule 3.7 of Seller’s Disclosure Schedule.  Each Subsidiary is duly authorized to conduct business and is in good standing under the Laws of each jurisdiction where qualification is required and where failure to be so qualified would have a Material Adverse Effect.  Each Subsidiary has full power and authority and all Permits necessary to carry on the business in which it is currently engaged and to own and use the properties owned and used by it.

 

3.8                               Financial Statements.  Attached to Seller’s Disclosure Schedule are the following financial statements (collectively, the “Financial Statements”):  unaudited balance sheet and statements of income for the month of July, 31, 2013, (the “Most Recent Fiscal Month End”) for Seller.  The Financial Statements have been prepared in accordance with accrual basis accounting principles applied on a consistent basis throughout the periods covered, present fairly the financial condition of Seller for those periods in all material respects and are consistent with the books and records of Seller (which books and records are correct and complete in all material respects).

 

3.9                               Events Subsequent to Most Recent Month End.  Since July 31, 2013, except as set forth in Section 3.9 of the Seller’s Disclosure Schedule, there have been no changes in the assets, business, financial condition, operations, results of operations, or future prospects of Seller that individually or in the aggregate would have a Material Adverse Effect on Seller.  Without limiting the foregoing, since that date:

 

(a)                                 Neither Seller nor any Subsidiary has sold, leased, transferred or assigned any of its assets, tangible or intangible, other than for fair consideration in the Ordinary Course of Business;

 

(b)                                 Except for contracts entered into in the Ordinary Course of Business neither Seller nor any Subsidiary has entered into any agreement, contract, lease or license (or series of related agreements, contracts, leases and licenses) involving more than $15,000.00;

 

(c)                                  Except in the Ordinary Course of Business no party (including Seller and the Subsidiaries) has accelerated, terminated, modified or cancelled any agreement, contract, lease or license (or series of related agreements, contracts, leases and licenses) involving more than $15,000.00 to which Seller is a party or by which it is bound;

 

13

 

(d)                                 Except for Permitted Liens and liens that will released at Closing neither Seller nor any Subsidiary has imposed, or had imposed against it, any Security Interest upon any of its assets, tangible or intangible;

 

(e)                                  Neither Seller nor any Subsidiary has made any capital expenditure (or series of related capital expenditures) either involving more than $15,000.00 or outside the Ordinary Course of Business;

 

(f)                                   Neither Seller nor any Subsidiary has made any capital investment in, any loan to or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans and acquisitions) either involving more than $15,000.00 or outside the Ordinary Course of Business;

 

(g)                                  Neither Seller nor any Subsidiary has issued any note, bond or other debt security or created, incurred, assumed or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $15,000.00 singly or $15,000.00 in the aggregate;

 

(h)                                 Except for payments to Affiliates, neither Seller nor any Subsidiary has delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business;

 

(i)                                     Neither Seller nor any Subsidiary has cancelled, compromised, waived or released any right or claim (or series of related rights and claims)  save and except claims made in the Law Suit either involving more than 15,000.00 or outside the Ordinary Course of Business;

 

(j)                                    Neither Seller nor any Subsidiary has granted any license or sublicense of any rights under or with respect to any Intellectual Property;

 

(k)                                 there has been no change made or authorized in the limited liability company agreement or other organizational documents of Seller or any Subsidiary;

 

(l)                                     neither Seller nor any Subsidiary has issued, sold or otherwise disposed of any of its capital or profits or other membership interests, or granted any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital, profits, or other membership interests;

 

(m)                             other than distributions for the payment of Taxes, neither Seller nor any Subsidiary has declared, set aside or paid any dividend or made any distribution with respect to its membership interests (whether in cash or in kind) or redeemed, purchased or otherwise acquired any of capital, profits or other membership interests;

 

(n)                                 Neither Seller nor any Subsidiary has experienced any damage, destruction or loss (whether or not covered by insurance) to its personal property with an aggregate value of more than $15,000.00;

 

14

 

(o)                                 Neither Seller nor any Subsidiary has made any loan to, or entered into any other transaction with, any of its directors, officers and employees;

 

(p)                                 Neither Seller nor any Subsidiary has entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

 

(q)                                 Neither Seller nor any Subsidiary has granted any increase in the base compensation of any director, officer or employee outside the Ordinary Course of Business;

 

(r)                                    Neither Seller nor any Subsidiary has adopted, amended, modified or terminated any bonus, profit-sharing, incentive, severance or other plan, contract or commitment for the benefit of any directors, officers and employees (or taken any such action with respect to any other Employee Benefit Plan);

 

(s)                                   Neither Seller nor any Subsidiary has made any other change in employment terms for any directors, officers and employees outside the Ordinary Course of Business;

 

(t)                                    Except in the Ordinary Course of Business and in connection with settling the Law Suit, neither Seller nor any Subsidiary has paid any amount to any third party for any Liability or obligation (including any costs and expenses Seller has incurred or may incur in connection with this Agreement and the contemplated transactions) that would not constitute an Assumed Liability if in existence as of the Closing;

 

(u)                                 there has not been any other occurrence, event, incident, action, failure to act or transaction outside the Ordinary Course of Business involving Seller or any Subsidiary that would constitute a Material Adverse Effect; and

 

(v)                                 Seller has not committed to any of the items described in this Section 3.9.

 

3.10                        Undisclosed Liabilities.  Except as set forth on Schedule 3.10, neither Seller nor any Subsidiary has any material Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against it giving rise to any material Liability), except for (a) Liabilities set forth on the balance sheet contained in the Financial Statements (rather than in its notes), and (b) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort, infringement or violation of Law).

 

3.11                        Legal Compliance.  Except as set forth on Schedule 3.11, Seller, its predecessors, Affiliates and Subsidiaries have each complied and are in material compliance with all Laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against any of them that is still pending alleging any failure to comply with any Law.

 

15

 

3.12                        Tax Matters.  Except as described in Section 3.12 of Seller’s Disclosure Schedule:

 

(a)                                 Seller, its predecessors, Affiliates and Subsidiaries have each timely filed all required Tax Returns.  All such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all Laws and regulations.  All Taxes owed by Seller, its predecessors, Affiliates and Subsidiaries shown on any Tax Return have been paid.  None of Seller its predecessors, Affiliates and Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return.  No claim has ever been made that Seller its predecessors, Affiliates and Subsidiaries is or may be subject to taxation by a jurisdiction where it does not file Tax Returns.  No assets of Seller have a Security Interest that arose in connection with any failure (or alleged failure) to pay any Tax.

 

(b)                                 Seller, its predecessors, Affiliates and Subsidiaries have each withheld and paid all Taxes required to have been withheld and paid in connection with amounts owing to any employee, independent contractor, creditor, member or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed.

 

(c)                                  Seller, its predecessors, Affiliates and Subsidiaries each do not expect any authority to assess any additional Taxes for any period for which Tax Returns have been filed.  Seller, its predecessors, Affiliates and Subsidiaries each has no dispute or claim concerning its Tax Liability either (i) claimed or raised by any authority in writing, or (ii) as to which Seller has Knowledge.  Section 3.12 of Seller’s Disclosure Schedule lists all Income Tax Returns filed by Seller, its predecessors, Affiliates and Subsidiaries for taxable periods ended after December 31, 2010, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit.  Seller has delivered to Buyer correct and complete copies of all Income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by Seller, its predecessors, Affiliates and Subsidiaries since December 31, 2010.

 

(d)                                 Neither Seller not its predecessors, Affiliates and Subsidiaries have waived any statute of limitations or agreed to any extension of time with respect to a Tax assessment or deficiency which extension is still in effect.

 

(e)                                  The unpaid Taxes of Seller, its predecessors, Affiliates and Subsidiaries (i) did not, as of the date of the balance sheet contained in the Financial Statements, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the balance sheet contained in the Financial Statements, and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller in filing its Tax Returns.

 

(f)                                   The Assumed Liabilities do not include an obligation to make a payment that will not be deductible under Code Section 280G.  Seller, its predecessors, Affiliates and Subsidiaries have each disclosed on its federal Income Tax Returns all positions

 

16

 

taken that could give rise to a substantial understatement of federal Income Tax within the meaning of Code Section 6662.  Seller: (i) is not a party to any Tax allocation or sharing agreement; (ii) is not and has not been a member of an Affiliated Group filing a consolidated federal Income Tax Return (other than a group the common parent of which was Seller); and (iii) has no Liability for the Taxes of any Person (other than Seller) under Reg. Section 1.1502-6 (or any similar provision of Law), as a transferee or successor, by contract or otherwise.

 

(g)                                  None of the Acquired Assets are “tax exempt use property” within the meaning of Section 168(h) of the Code.  None of the Acquired Assets has been financed with, or directly or indirectly secures, any debt the interest on which is tax-exempt under Section 103(a) of the Code.

 

3.13                        Real Property.  Neither Seller nor its Subsidiaries own any real property.

 

3.14                        Intellectual Property.

 

(a)                                 Seller and the Subsidiaries own or have the right to use pursuant to license, sublicense, agreement or permission all Intellectual Property necessary for the operation of the business of Seller and the Subsidiaries have each as presently conducted and as presently proposed to be conducted.  Each item of Intellectual Property owned or used by Seller and the Subsidiaries immediately before the Closing will be owned or available for use by Buyer on identical terms and conditions immediately after the Closing.  Seller and its Subsidiaries have taken all action reasonably necessary to maintain and protect each item of Intellectual Property that it owns or uses.

 

(b)                                 Neither Seller nor its predecessors, Affiliates and Subsidiaries have interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of third parties, save and except Seller represents that it has had a few minor claims made by Getty Images regarding the use of photographs on websites.  These claims have been settled and/or compromised.  Neither Seller nor its predecessors, Affiliates and Subsidiaries have ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any claim that Seller or any of its predecessors, Affiliates and Subsidiaries must license or refrain from using any Intellectual Property rights of any third party).  To the Knowledge of Seller, no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of Seller, its predecessors, Affiliates and Subsidiaries.

 

(c)                                  Neither Seller nor the Subsidiaries own any patents.  Section 3.14(c) of Seller’s Disclosure Schedule identifies the following:  (i) each trade name or unregistered trademark used by Seller and Subsidiaries in connection with their business and (ii) each license, agreement or other permission that Seller or any Subsidiary has granted to any third party with respect to Intellectual Property (together with any exceptions).

 

(d)                                 With respect to each item of Intellectual Property required to be identified in Section 3.14(c) of Seller’s Disclosure Schedule:  (i) Seller or its Subsidiaries possesses

 

17

 

all right, title and interest in and to the item, free and clear of any Security Interest, license or other restriction; (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge; (iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or is threatened that challenges the legality, validity, enforceability, use or ownership of the item; and (iv) neither Seller nor its predecessors, Affiliates or Subsidiaries have ever agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to the item.

 

(e)                                  Section 3.14(e) of Seller’s Disclosure Schedule identifies each item of Intellectual Property that any third party owns and that Seller its predecessors, Affiliates and Subsidiaries have used pursuant to license, sublicense, agreement or permission.  Seller has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements and permissions (as amended to date).

 

(f)                                   With respect to each item of Intellectual Property required to be identified in Section 3.14(e) of Seller’s Disclosure Schedule:  (i) the license, sublicense, agreement or permission covering the item is legal, valid, binding, enforceable and in full force and effect; (ii) the license, sublicense, agreement or permission will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the contemplated transactions; (iii)  to their knowledge no party to the license, sublicense, agreement or permission is in breach or default, and no event has occurred that, with notice or lapse of time, would constitute a breach or default or permit termination, modification or acceleration; (iv) no party to the license, sublicense, agreement or permission has repudiated any provision thereof; (v) for each sublicense, the representations and warranties set forth in subsections (i) through (iv) above are true and correct for the underlying license; (vi) the underlying item of Intellectual Property is not subject to any outstanding injunction, judgment, order, decree, ruling or charge; (vii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to the Knowledge of Seller, is threatened that challenges the legality, validity or enforceability of the underlying item of Intellectual Property; and (viii) neither Seller nor its predecessors, Affiliates and Subsidiaries have granted any sublicense or similar right with respect to the license, sublicense, agreement or permission.

 

(g)                                  Neither Seller nor its predecessors, Affiliates and Subsidiaries will interfere with, infringe upon, misappropriate or otherwise come into conflict with, any Intellectual Property rights of third parties as a result of the continued operation of its business as presently conducted and as presently proposed to be conducted.

 

3.15                        Tangible Assets.  Seller or a Subsidiary owns or leases all buildings, machinery, equipment and other tangible assets necessary for the conduct of their business as presently conducted.  Each such tangible asset is free from defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used.

 

18

 

3.16                        Contracts.  Section 3.16 of Seller’s Disclosure Schedule lists the following contracts and other agreements, whether written or oral, to which Seller or any Subsidiary is a party:

 

(a)                                 any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $5,000.00 per year;

 

(b)                                 any agreement concerning a partnership or joint venture;

 

(c)                                  any agreement (or group of related agreements) under which it has created, incurred, assumed or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $25,000.00 or under which it has imposed a Security Interest on any of its assets, tangible or intangible;

 

(d)                                 any agreement concerning confidentiality or noncompetition that restricts Seller’s business;

 

(e)                                  any agreement involving any Member and their Affiliates (other than Seller);

 

(f)                                   any profit sharing, option, limited liability company interests purchase, limited liability company interest appreciation, deferred compensation, severance or other plan or arrangement for the benefit of its current or former directors, officers and employees;

 

(g)                                  any collective bargaining agreement;

 

(h)                                 any agreement for the employment of any individual on a full-time, part-time, consulting or other basis;

 

(i)                                     any agreement under which it has advanced or loaned any amount to any of its directors, officers and employees outside the Ordinary Course of Business;

 

(j)                                    any agreement granting any power of attorney with respect to the affairs of Seller;

 

(k)                                 any indemnity agreement, suretyship contract, performance bond, Assets maintenance or other form of guaranty agreement;

 

(l)                                     any agreement to indemnify, hold harmless or defend any third party;

 

(m)                             any agreement under which the consequences of a default or termination could have a Material Adverse Effect on Seller or any Subsidiary;

 

(n)                                 any sales or customer contract involving a customer was responsible for more than $50,000.00 in revenue for the year ended December 31, 2012; or

 

19

 

(o)                                 any other agreement (or group of related agreements) the performance of which involves consideration in excess of $15,000.00 other than contracts that have no volume limitations and contracts that are cancellable on 30 days’ notice without liability to Seller.

 

Seller has delivered to Buyer, or provided access to Buyer for review, a correct and complete copy of each written agreement listed in Section 3.16 of Seller’s Disclosure Schedule (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Section 3.16 of Seller’s Disclosure Schedule.  With respect to each such agreement:  (i) the agreement is legal, valid, binding, enforceable and in full force and effect except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity; (ii) the agreement will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (iii) no party is in breach or default, and no event has occurred that, with notice or lapse of time, would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (iv) no party has repudiated any provision of the agreement.

 

3.17                        Cash, Notes and Accounts Receivable.  All notes and accounts receivable of Seller and the Subsidiaries are reflected properly on their books and records and are valid receivables. At Closing at least $865,365.78 in cash (including cash held by the Subsidiaries) will be included in the Acquired Assets.

 

3.18                        Powers of Attorney.  Except as set forth on Schedule 3.18 there are no outstanding powers of attorney executed on behalf of Seller.

 

3.19                        Insurance.

 

(a)                                 Section 3.19 of Seller’s Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability and workers’ compensation coverage and bond and surety arrangements) to which Seller or any Subsidiary is or has been a party, a named insured, or otherwise the beneficiary of coverage at any time since August 31, 2010:  (i) the name, address and telephone number of the agent; (ii) the name of the insurer, the name of the policyholder and the name of each covered insured; (iii) the policy number and the period of coverage; (iv) the scope (including an indication of whether the coverage was on a claims made, occurrence or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and (v) a description of any retroactive premium adjustments or other loss-sharing arrangements.

 

(b)                                 With respect to each such insurance policy: (i) the policy is legal, valid, binding, enforceable and in full force and effect; (ii) the policy will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the contemplated transactions; (iii) neither Seller nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time,

 

20

 

would constitute a breach or default, or permit termination, modification or acceleration, under the policy; and (iv) no party to the policy has repudiated any provision of such policy.

 

(c)                                  Seller and each Subsidiary has been covered during the past 10 years by insurance in scope and amount customary and reasonable for the business in which it has engaged during that period.  Section 3.19 of Seller’s Disclosure Schedule describes any self-insurance arrangements affecting Seller or any Subsidiary.

 

3.20                        Litigation.  Section 3.20 of Seller’s Disclosure Schedule sets forth each instance in which Seller or any Subsidiary (a) is or has been subject to any injunction, judgment, order, decree, ruling or charge, or (b) is or has been a party or, to the Knowledge of Seller or any Subsidiary, is threatened to be made a party to any action, suit, proceeding, hearing or investigation of, in or before any Governmental Authority or before any arbitrator.  Unless otherwise noted, none of the actions, suits, proceedings, hearings and investigations set forth in Section 3.20 of Seller’s Disclosure Schedule could result in any Material Adverse Effect on Seller or any Subsidiary.  Seller has no reason to believe that any such action, suit, proceeding, hearing or investigation may be brought or threatened against Seller or any Subsidiary.

 

3.21                        Employment Matters.  Seller and each Subsidiary has complied in all material respects with all Laws relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar Taxes, occupational safety and health, and plant closing.  No executive, key employee or group of employees has any plans to terminate employment with Seller or any Subsidiary except for those individuals listed on Section 3.21 of Seller’s Disclosure Schedule.  Neither Seller nor any Subsidiary is a party to or bound by any collective bargaining agreement, nor has any of them experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes.  Neither Seller nor any Subsidiary has committed any unfair labor practice.  Neither Seller nor any Subsidiary has Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of Seller or any Subsidiary.

 

3.22                        Employee Benefits.

 

(a)                                 Section 3.22 of Seller’s Disclosure Schedule lists each Employee Benefit Plan that Seller or any Subsidiary maintains or to which Seller or any Subsidiary contributes or has any obligation to contribute.

 

(b)                                 Each Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all respects with the applicable requirements of ERISA, the Code and other applicable Laws.  All required reports and descriptions (including Form 5500 Annual Reports, summary annual reports, PBGC-1’s and summary plan descriptions) have been timely filed and distributed appropriately with respect to each Employee Benefit Plan.

 

(c)                                  Seller will provide COBRA (and any applicable state Law that mandates continuation coverage) notices and coverage with respect to each Employee Benefit Plan

 

21

 

that is an Employee Welfare Benefit Plan for each M & A Qualified Beneficiary, as defined in the COBRA regulations.

 

(d)                                 Neither Seller, and Subsidiary nor any ERISA Affiliate has sponsored or contributed to an Employee Pension Benefit Plan subject to the minimum funding standards under ERISA.

 

(e)                                  Neither Seller nor any ERISA Affiliate contributes to, has contributed to or has been required to contribute to any Multiemployer Plan or has any Liability (including withdrawal liability as defined in ERISA Section 4201) under any Multiemployer Plan.

 

(f)                                   Neither Seller nor any Subsidiary maintains or has ever maintained, or contributes or been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses or their dependents (other than in accordance with Code Section 4980B).

 

3.23                        Guaranties.  Neither Seller nor any Subsidiary is a guarantor or otherwise is responsible for any Liability or obligation (including indebtedness) of any other Person except for endorsements made in the Ordinary Course of Business.

 

3.24                        Environmental, Health and Safety Matters.

 

(a)                                 Seller, Subsidiaries, Acquired Assets and business of Seller have been in material compliance in all respects with all applicable Environmental Laws, including all Permits.  Except for Hazardous Substances necessary in the Ordinary Course of Business and which are and were stored and disposed of in compliance with applicable Environmental Laws, neither Seller nor its predecessors, Affiliates and Subsidiaries have  ever generated, transported, stored, treated or disposed of Hazardous Substances on, at, or about the Premises, and the Premises have not been used by anyone  to store or dispose of waste or Hazardous Substances during the period that Seller has owned or occupied the Premises, or, to the Knowledge of Seller, prior to said period.  No activity has been conducted by Seller at the Premises or adjoining properties that has given rise to, or would reasonably be expected to give rise to, any Adverse Consequences under any Environmental Laws, or any Environmental Liabilities and Costs.

 

(b)                                 Seller and the Subsidiaries hold all Permits required by all Environmental Laws applicable to ownership or operation of their businesses and Premises at all times, including during periods of full production capacity, and all such permits are identified on Section 3.24(a)3.24 of Seller’s Disclosure Schedule.  Seller and each Subsidiary has timely filed all applications, notices and other documents necessary to effect the timely renewal of all such Permits.

 

(c)                                  To the Knowledge of Seller, all Permits for the ownership or operation of Seller’s and the Subsidiaries’ businesses and Premises can be transferred or reissued to Buyer without material modification and, to the Knowledge of Seller, all such Permits

 

22

 

will be renewable upon expiration without imposition of materially stricter requirements if such expiration occurs within one year after the date of this Agreement.

 

(d)                                 None of Seller, the Subsidiaries, the Premises, Seller’s business, the Subsidiaries’ business, or the Acquired Assets, are subject to any outstanding or unresolved citation, notice, request, order, inspection, report, or other directive of any Governmental Authority relating to any Environmental Law, including Permits or Releases of a Hazardous Substance.

 

(e)                                  There are no and have been no circumstances or conditions present at or arising out of the Acquired Assets, or assets formerly owned by Seller or the Subsidiaries, the Premises or premises formerly occupied by Seller or its Subsidiaries, or the current or former ownership or operation of Seller’s or is Subsidiaries’ businesses, including without limitation any on-site or off-site disposal or other Release of a Hazardous Substance, which would reasonably be expected to give rise to any Environmental Liabilities and Costs.

 

(f)                                   Neither Seller, the Subsidiaries nor Seller’s or its Subsidiaries’ businesses or, to Seller’s Knowledge, Premises has received any written or oral notice, report, or information regarding any actual or alleged (i) noncompliance with or violation of Environmental Laws; (ii) actual or alleged Adverse Consequences or Environmental Liabilities and Costs, including any Environmental Condition relating to the Business, the Acquired Assets, the Premises, or Seller or its Subsidiaries arising under Environmental Laws; or (iii) other alleged or actual responsibility for any Environmental Liabilities and Costs relating to any Release of a Hazardous Substance.

 

(g)                                  Seller and the Subsidiaries are in material compliance with all occupational, safety and health standards required by Environmental Laws in connection with the conduct of Seller’s and the Subsidiaries’ businesses and has not received notice of any violation or infraction of same or of any work-related chronic illness or injury among employees of Seller’s or the Subsidiaries’ businesses, except as accurately reported on its OSHA 200/300 Logs, copies of which have been delivered to Buyer.

 

(h)                                 To Seller’s Knowledge this transaction, including the leases of the Premises to Buyer, does not trigger any transaction-based disclosure, cleanup, investigation or other obligation that may result in any Environmental Liabilities and Costs or any Adverse Consequences, under any Environmental Laws or other Laws.

 

3.25                        Certain Business Relationships with Seller.  Except as set forth on Section 3.25 of Seller’s Disclosure Schedule, none of the Seller Members or their Affiliates has been involved in any business arrangement or relationship with Seller or the Subsidiaries within the past 12 months, and except as set forth on Schedule 3.25 none of the Seller Members or their Affiliates owns any asset, tangible or intangible, that is used in the business of Seller or the Subsidiaries.

 

3.26                        Inventories.  The finished goods included in Inventory consist of items that, subject to possible obsolescence, are or would be of a quality presently saleable in the ordinary course of business.  The raw materials and the work in process included in Inventory consist of

 

23

 

items that are or would be useable in the ordinary course of business.  Neither Seller nor any Subsidiary is in possession of any Inventory not owned by them, including goods already sold. At Closing, Inventory held by Seller and the Subsidiaries will have a book value of at least  $2,302,897.00.

 

3.27                        Unlawful Payment.  Except as set forth on Schedule 3.27, no  payments of either cash or other consideration have been made to any Person by or on behalf of Seller or any Subsidiary by any officer, director, member or other Person that were unlawful under any Law, including without limitation the Foreign Corrupt Practices Act.

 

3.28                        Shares.  Seller is fully aware that the offering and sale of the Shares has not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and is being made in reliance upon federal and state exemptions for transactions not involving a public offering.  Seller is acquiring the Shares for its own account, for investment and not with a view to the distribution thereof or any interest therein in violation of the Securities Act or applicable state securities laws.  Seller is an “accredited investor” (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act).

 

4.                                      Representations and Warranties of Buyer.  Buyer represents and warrants to Seller that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date, except as set forth in the disclosure schedule of Buyer accompanying this Agreement (the “Buyer’s Disclosure Schedule”).  Buyer’s Disclosure Schedule will be arranged in paragraphs corresponding to the numbered paragraphs contained in this Section 4.

 

4.1                               Organization of Buyer.  Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.  Buyer is duly authorized to conduct business and is in good standing under the Laws of each jurisdiction where such qualification is required and where failure to be so qualified would have a Material Adverse Effect.  Buyer has full corporate power and authority and all Permits necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

 

4.2                               Authorization of Transaction.  Buyer has full power and authority (including full corporate power and authority) to enter into and perform its obligations under this Agreement and the Transaction Documents to which it is a party.  This Agreement and the Transaction Documents to which it is a party constitute valid and legally binding obligations of Buyer, enforceable in accordance with their respective terms and conditions except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

4.3                               Noncontravention.  Neither the execution and the delivery of this Agreement or the Transaction Documents to which Buyer is a party, nor the consummation of the contemplated transactions: (a) will violate any Law to which Buyer is subject; (b) will violate any provision of the articles, bylaws or other organizational documents of Buyer; (c) will conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any material agreement, contract, lease, license, instrument or other arrangement to which Buyer is a party or

 

24

 

by which it is bound or to which any of its Assets are subject; or (d) except for filings with the United States Securities and Exchange Commission require Buyer to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Governmental Authority in order for the Parties to consummate the transactions contemplated by this Agreement and the Transaction Documents.

 

4.4                               Brokers’ Fees.  Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

4.5                               Issuance of Shares.  Upon issuance the Shares will be non-assessable, duly authorized, fully paid, validly issued., and free from any lien and security interest or rights of third parties.

 

5.                                      Pre-Closing Covenants.  The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing.

 

5.1                               General.  Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 6 below).

 

5.2                               Notices and Consents.  Seller and the Subsidiaries will give any notices to third parties, and Seller that are necessary or that Buyer reasonably may request, in connection with the transactions contemplated by this Agreement.  Each of the Parties will give any notices to, make any filings with and use its reasonable best efforts to obtain any authorizations, consents and approvals of any Governmental Authority necessary in connection with the transactions contemplated by this Agreement.

 

5.3                               Operation of Business.  Neither Seller nor and Subsidiary will, without the prior written consent of Buyer, engage in any practice, take any action or enter into any transaction outside the Ordinary Course of Business with the exception of certain payments made to resolve the Law Suit.  Without limiting the foregoing, neither Seller nor any Subsidiary will, without the prior written consent of Buyer, do any of the following:

 

(a)                                 sell, lease (as lessor), transfer or otherwise dispose of any material assets of Seller or any Subsidiary, other than as used, consumed or replaced in the Ordinary Course of Business consistent with good business practices, or encumber, pledge, mortgage or suffer to be imposed on any of the material assets of Seller or any Subsidiary any Security Interests other than Permitted Liens;

 

(b)                                 amend, terminate or allow to lapse, fail to timely apply for renewal of, or otherwise modify in any respect any agreement identified in Section 3.16 of Seller’s Disclosure Schedule or any Permit other than in the Ordinary Course of Business or as may be required in connection with transferring the rights or obligations under such agreement or Permit to Buyer pursuant to this Agreement;

 

25

 

(c)                                  make any capital expenditures of more than $15,000.00 or enter into a capital commitment with respect thereto;

 

(d)                                 amend or otherwise change its articles, bylaws or equivalent organizational documents;

 

(e)                                  acquire (including without limitation by merger, consolidation or acquisition of capital, profits, or other interests, stock or assets) any corporation, partnership or other business organization or division or any material amount of assets; incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans or advances, except borrowing in the Ordinary Course of Business pursuant to any existing credit agreements; or enter into or amend a contract, agreement, commitment or arrangement with respect to any matter set forth in this paragraph (e);

 

(f)                                   hire any employees other than in the Ordinary Course of Business, increase the compensation payable or to become payable to, or grant any severance or termination pay to, its officers, directors or consultants, if any, or enter into any employment, consulting or severance agreement with, any director, officer or other employee or consultant of Seller or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, option, restricted interests, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement (including any Employee Benefit Plan) for the benefit of any director, officer, employee or consultant;

 

(g)                                  declare, set aside or pay any dividend or make any distribution with respect to its capital, profits or other interests (other than distributions for the payment of Taxes), or redeem, purchase or otherwise acquire any of its membership interests;

 

(h)                                 except in the Ordinary Course of Business pay any amount to any third party with respect to any Liability or obligation (including any costs and expenses Seller or any Subsidiary has incurred or may incur in connection with this Agreement and the contemplated transactions) that would not constitute an Assumed Liability if in existence as of the Closing;

 

(i)                                     otherwise engage in any practice, take any action or enter into any transaction of the sort described in Section 3.9.

 

5.4                               Preservation of Business.  Seller and each Subsidiary will use reasonable efforts to keep its business and properties substantially intact, including its present operations, physical facilities, working conditions and relationships with lessors, licensors, suppliers, customers and employees.

 

5.5                               Full Access.  Seller and each Subsidiary will permit representatives of Buyer to have full access, at all reasonable times and upon reasonable notice, and in a manner so as not to interfere with the normal business operations of Seller and each Subsidiary, to all Premises,

 

26

 

properties, personnel, books, records (including Tax records), contracts and documents of or pertaining to Seller and each Subsidiary.

 

5.6                               Notice of Developments.  Each Party will give prompt written notice to the other Party of any development causing a breach of any of its own representations and warranties in Section 3 and Section 4 above.  No disclosure by Seller after October 2, 2013 pursuant to this Section 5.6, however, shall be deemed to amend or supplement Seller’s Disclosure Schedule, or to prevent or cure any misrepresentation, breach of warranty or breach of covenant unless Buyer in its sole and absolute discretion waives any such misrepresentation, breach of warranty or breach of covenant in writing. No disclosure by Buyer pursuant to this Section 5.6, however, shall be deemed to amend or supplement Buyer’s Disclosure Schedule, or to prevent or cure any misrepresentation, breach of warranty or breach of covenant unless Seller in its sole and absolute discretion waives any such misrepresentation, breach of warranty or breach of covenant in writing. Buyer will provide Seller with written notice whether the Seller’s Disclosure Schedule is acceptable by October 10, 2013.

 

5.7                               Exclusivity.  Neither Seller nor any Subsidiary will (a) solicit, initiate or encourage the submission of any proposal or offer from any Person relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the assets, of Seller or any Subsidiary (including any acquisition structured as a merger, consolidation or share exchange) with the exception of Glen Jensen and his company(s) Itsumo Family Investment Company, LLC, a Utah limited liability company, or (b) participate in any discussions or negotiations regarding, furnish any information, assist or participate in, or facilitate in any other manner any effort or attempt by any Person to do or seek any of the activities under Section 5.7(a).  Seller will notify Buyer immediately if any Person makes any proposal, offer, inquiry or contact in this regard.

 

5.8                               Employees.

 

(a)                                 Seller and each Subsidiary will terminate the employment of all of its employees effective as of the Closing.

 

(b)                                 Seller and each Subsidiary will be responsible for complying with the requirements of COBRA and any applicable state Law requiring continuation coverage with respect to any individual who has a “qualifying event” (within the meaning of Code Section 4980B(f)(3)) that occurs in connection with or results from the transactions contemplated by this Agreement and the individual’s loss of coverage under any Employee Benefit Plan subject to COBRA.  Seller and each Subsidiary will be responsible for any severance or similar obligations to employees who do not accept employment with Buyer.

 

(c)                                  Nothing in this Agreement creates or may be construed to create any rights, including any rights as a third-party beneficiary, in favor of any Person, including the employees of Seller, other than the Parties, or constitute an employment agreement or condition of employment for any employee of Seller.

 

27

 

6.                                      Post-Closing Covenants.  The Parties agree as follows with respect to the period following the Closing.

 

6.1                               General.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, the Transaction Documents and the contemplated transactions, each of the Parties will take such further action (including the execution and delivery of further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 8).  Seller acknowledges and agrees that from and after the Closing Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements and financial data of any sort relating to Seller and each Subsidiary other than the Excluded Assets and copies of books, records and documents required for the preparation of tax returns and that Seller is required by Law to retain copies of. Buyer will retain copies of books and records received from Seller for seven years following Closing.

 

6.2                               Litigation Support.  In the event and for so long as any Party is actively contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand in connection with (a) any transaction contemplated under this Agreement, or (b) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction on or prior to the Closing Date involving Seller or any Subsidiary, each of the other Parties will cooperate with the contesting or defending Party and his, her or its counsel in the contest or defense, make available his, her or its personnel, and provide such testimony and access to his, her or its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8).

 

6.3                               Transition.  Neither Seller nor any Subsidiary will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier or other business associate of Seller or any Subsidiary from maintaining the same business relationships with Buyer and its Subsidiaries after the Closing as it maintained with Seller or the Subsidiaries prior to the Closing.  Seller and the Subsidiaries will refer all customer inquiries relating to the business of Seller and any Subsidiary to Buyer from and after the Closing.

 

6.4                               Confidentiality.  Except as otherwise provided herein, Seller and each Subsidiary will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible embodiments (and all copies) of the Confidential Information that are in his or its possession.  In the event that Seller or any Subsidiary is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, Seller will notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 6.4.  If, in the absence of a protective order or the receipt of a waiver, Seller or any Subsidiary is, on the advice of counsel, compelled to disclose any Confidential Information to the tribunal or else stand liable for contempt, Seller or the Subsidiary may disclose the Confidential Information to the tribunal.  The disclosing party must use his, her

 

28

 

or its reasonable best efforts to obtain, at the reasonable request of Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Buyer shall designate.

 

7.                                      Conditions to Obligation to Close.

 

7.1                               Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

 

(a)                                 the representations and warranties set forth in Section 3 will be true and correct in all material respects at and as of the Closing Date;

 

(b)                                 Seller and each Subsidiary will have performed and complied with all of its covenants contained in this Agreement in all material respects through the Closing;

 

(c)                                  Seller and each Subsidiary will have procured all of the necessary third party consents, authorizations and approvals listed in Section 7.1(c) of Seller’s Disclosure Schedule and all necessary authorizations, consents and approvals of any Governmental Authority;

 

(d)                                 no action, suit or proceeding shall be pending or threatened before any Governmental Authority in which an unfavorable injunction, judgment, order, decree, ruling or charge would:  (i) prevent consummation of any of the transactions contemplated by this Agreement; (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation; or (iii) affect adversely the right of Buyer to own the Acquired Assets or to operate the former business of Seller;

 

(e)                                  Seller will have executed and delivered to Buyer a certificate to the effect that each of the conditions specified in this Section 7.1(a) to 7.1(d) is satisfied in all respects;

 

(f)                                   there will not have occurred any Material Adverse Effect with respect to Seller;

 

(g)                                  The Buyer will have received evidence of release on all Security Interests on the Acquired Assets;

 

(h)                                 Seller will have delivered a certificate of incumbency, dated as of the Closing Date, as to the officers and other personnel of Seller executing this Agreement and any certificate, instrument or document to be delivered by Seller at the Closing;

 

(i)                                     Seller will have delivered a certified copy of resolutions authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement;

 

(j)                                    Seller each will have executed and delivered to Buyer a non-foreign affidavit as described in Section 1445(b)(2) of the Code and its regulations;

 

29

 

(k)                                 Seller will have executed and delivered all documents or instruments reasonably necessary to transfer title of any Intellectual Property to Buyer;

 

(l)                                     Seller will have delivered duly approved and executed articles of amendment to amend the articles of organization of Seller and any other documents necessary to change Seller’s name as of the Closing;

 

(m)                             Seller will have delivered such other documents and instruments as are reasonably necessary or appropriate to effect the consummation of the contemplated transactions or that may be required under any Laws or any agreements to which Seller or any Subsidiary is a party;

 

(n)                                 all actions to be taken by Seller and any Subsidiary in connection with consummation of the contemplated transactions and all certificates, opinions, instruments and other documents required to effect these transactions will be reasonably satisfactory in form and substance to Buyer

 

(o)                                 each of Jeremiah Bradley and Jeff Higginson will have entered into an Employment Agreement in form and substance as set forth in attached Exhibit D, (the “Employment Agreement”);

 

(p)                                 Seller will have entered into the Stock Restriction Agreement in form and substance mutually agreeable to Seller and Buyer, (the “Restriction Agreement”)

 

(q)                                 Seller shall have delivered the Seller’s Disclosure Schedule to Buyer on or before October 2, 2013 and such schedules must be acceptable to Buyer in Buyer’s sole discretion;

 

(r)                                    Seller shall settled the Law Suit on terms and conditions that are acceptable to Buyer in Buyer’s sole discretion;

 

(s)                                   Seller shall deliver Bills of Sale with a warranty of title covering product registrations of Affiliates of Seller that are not Subsidiaries; and

 

(t)                                    Seller will have delivered evidence satisfactory to Buyer of transfer of ownership of the Subsidiaries to Buyer.

 

Buyer may waive any condition specified in this Section 7.1 by providing a written waiver at or prior to the Closing.

 

7.2                               Conditions to Obligation of Seller.  The obligation of Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

 

(a)                                 the representations and warranties set forth in Section 4 above will be true and correct in all material respects at and as of the Closing Date;

 

30

 

(b)                                 Buyer will have performed and complied with all of its covenants contained in this Agreement in all material respects through the Closing;

 

(c)                                  Buyer will have procured all of the necessary third party consents, authorizations and approvals, and all necessary authorizations, consents and approvals of any Government Authority, all of which must be final and non-appealable;

 

(d)                                 no action, suit or proceeding will be pending or threatened before any Governmental Authority in which an unfavorable injunction, judgment, order, decree, ruling or charge would:  (i) prevent consummation of any of the transactions contemplated by this Agreement; (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling or charge will be in effect); or (iii) affect adversely the right of Buyer to own or otherwise assume the transfer of the Acquired Assets or to operate the business;

 

(e)                                  Buyer will have delivered to Seller a certificate to the effect that each of the conditions specified above in this Section 7.2(a) to 7.2(d) is satisfied in all respects;

 

(f)                                   each of Jeremiah Bradley and Jeff Higginson will have entered into an Employment Agreement in form and substance as set forth in attached Exhibit D;

 

(g)                                  Buyer will have delivered a certificate of incumbency, dated as of the Closing Date, as to the officers and other personnel of Buyer executing this Agreement and any certificate, instrument or document to be delivered by Buyer at the Closing;

 

(h)                                 Buyer will have delivered a certified copy of corporate resolutions authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement;

 

(i)                                     Buyer will have delivered such other documents and instruments as are reasonably necessary or appropriate to effect the consummation of the contemplated transactions or that may be required under any Laws or any agreements to which Buyer is a party;

 

(j)                                    A guaranty, in form mutually acceptable to Seller and Buyer, of the Purchase Money Note from CVSL Inc., a Florida corporation;

 

(k)                                 A security agreement from Buyer covering the Purchased Assets in form mutually acceptable to Seller and Buyer;

 

(l)                                     Seller and Buyer will have entered into the Stock Restriction Agreement in form and substance mutually agreeable to the Parties; and

 

(m)                             all actions to be taken by Buyer in connection with consummation of the contemplated transactions and all certificates, opinions, instruments and other documents required to effect the contemplated transactions will be reasonably satisfactory in form and substance to Seller.

 

31

 

Seller may waive any condition specified in this Section 7.2 by providing a written waiver at or prior to the Closing.

 

8.                                      Remedies for Breaches of this Agreement.

 

8.1                               Survival of Representations, Warranties and Covenants.  The Parties agree that:

 

(a)                                 all of the representations and warranties of Buyer, Seller and the Subsidiaries contained in Sections 3 and 4 of this Agreement (other than those contained in Sections 3.1 to 3.4, 3.6, 3.12 and 3.24 of this Agreement) will survive the Closing and continue in full force and effect for a period of 18 months after the Closing;

 

(b)                                 the representations and warranties of Seller and the Subsidiaries contained in Sections 3.1 to 3.4 and 3.6 of this Agreement will survive the Closing and continue in full force and effect forever;

 

(c)                                  the representations and warranties of Seller and the Subsidiaries contained in Sections 3.12 and 3.24 of this Agreement will survive the Closing and continue in full force and effect for the applicable statute of limitations plus three months;

 

(d)                                 the representations and warranties of Seller and the Subsidiaries, contained in Section 3.24 of this Agreement will survive the Closing and continue in full force and effect for five years; and

 

(e)                                  the covenants set forth in this Agreement will survive for 12 months unless a shorter period of survival is specifically set forth in this Agreement.

 

8.2                               Indemnification Provisions for Benefit of Buyer.

 

(a)                                 In the event the Seller or any Subsidiary breaches (or in the event any third party alleges facts that, if true, would mean Seller or a Subsidiary has breached) any representations, warranties or covenants contained in this Agreement, and if there is an applicable survival period pursuant to Section 8.1 (provided that Buyer makes a written claim for indemnification against Seller within the survival period), then Seller agrees to indemnify Buyer Parties from and against the entirety of any Adverse Consequences any of Buyer Parties may suffer through and after the date of the claim for indemnification (including any Adverse Consequences Buyer Parties may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by such breach (or alleged breach).

 

(b)                                 Seller agrees to indemnify Buyer Parties from and against the entirety of any Adverse Consequences any of Buyer Parties may suffer through and after the date of the claim for indemnification (including any Adverse Consequences Buyer Parties may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by:

 

32

 

(i)                                     any Liability arising out of the ownership or operation of the Acquired Assets prior to the Closing Date (other than the Assumed Liabilities);

 

(ii)                                  any Liability of Seller or any Subsidiary for any Taxes for periods prior to Closing;

 

(iii)                               any services provided by Seller or a Subsidiary;

 

(iv)                              any Environmental Liabilities and Costs (A) arising from the ownership or operation of the Acquired Assets on or before the Closing Date, or (B) of or relating to the acts or omissions by Seller or a Subsidiary;

 

(v)                                 any Liability under any Employee Benefit Plans or relating to payroll, vacation, sick leave, workers’ compensation, unemployment benefits, employee option or profit-sharing plans or any other employee plans or benefits of any kind for Seller’s or any Subsidiary’s employees or former employees, or under any employment, severance, retention or termination agreement with any employee of Seller, any Subsidiary or any of their Affiliates;

 

(vi)                              any Liability arising out of or resulting from Seller’s or any Subsidiary’s compliance or non-compliance with any Law;

 

(vii)                           any other Excluded Liability (including any Liability of Seller or any Subsidiary that becomes a Liability of Buyer under any bulk transfer law of any jurisdiction, under any common law doctrine of de facto merger or successor liability, under Environmental Laws, or otherwise by operation of Law).

 

8.3                               Indemnification Provisions for Benefit of Seller.

 

(a)                                 In the event Buyer breaches (or in the event any third party alleges facts that, if true, would mean Buyer has breached) any representations, warranties or covenants contained in this Agreement, and if there is an applicable survival period pursuant to Section 8.1, provided that any of Seller makes a written claim for indemnification against Buyer within the survival period, then Buyer agrees to indemnify Seller and Seller’s officers, managers, members, employees, agents and Affiliates (the “Seller Indemnified Parties”) from and against the entirety of any Adverse Consequences Seller Indemnified Parties may suffer through and after the date of the claim for indemnification (including any Adverse Consequences Seller Indemnified Parties may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of or caused by such breach (or alleged breach).

 

(b)                                 Buyer agrees to indemnify Seller Indemnified Parties from and against the entirety of any Adverse Consequences Seller Indemnified Parties may suffer resulting from, arising out of, relating to, in the nature of or caused by any Assumed Liability.

 

(c)                                  Buyer agrees to indemnify Seller Indemnified Parties from and against the entirety of any Adverse Consequences any Seller Indemnified Parties may suffer through and after the date of the claim for indemnification (including any Adverse Consequences

 

33

 

Seller Indemnified Parties may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by:

 

(i)                                     any Liability arising out of the ownership or operation of the Acquired Assets or from and after the Closing Date,

 

(ii)                                  any Liability of Buyer for any Taxes for periods after Closing;

 

(iii)                               any services provided by Buyer; and

 

(iv)                              any Liability arising out of or resulting from Buyer’s compliance or non-compliance with any Law.

 

8.4                               Matters Involving Third Parties.

 

(a)                                 If any third party shall notify any Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against any other Party (the “Indemnifying Party”) under this Section 8, then the Indemnified Party shall promptly notify each Indemnifying Party in writing.  Delay on the part of the Indemnified Party in notifying any Indemnifying Party shall not relieve the Indemnifying Party from their obligation unless (and then solely to the extent) the Indemnifying Party is prejudiced.

 

(b)                                 Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations, (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.

 

(c)                                  So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 8.4(b), (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any

 

34

 

settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably).

 

(d)                                 If any of the conditions in Section 8.4(b) is not or is no longer satisfied, (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party), (ii) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorney fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 8.

 

8.5                               Limitation of Liability.

 

(a)                                 Seller will not have any liability pursuant to Section 8.2 for any Adverse Consequences unless and until the aggregate amount of all such Adverse Consequences reaches Twenty Five Thousand Dollars ($ 25,000.00)(the “Threshold Amount”), in which event the Seller will be liable for indemnification pursuant to Section 8.2 for any amount in excess of the Threshold Amount up to the maximum amount set forth in Section 8.6(b).

 

(b)                                 The maximum liability of the Seller pursuant to Section 8.2 will not exceed Three Million Six Hundred Thousand Dollars ($3,600,000.00) (the “Indemnity Cap”).

 

(c)                                  Buyer will not have any liability pursuant to Section 8.3 for any Adverse Consequences unless and until the aggregate amount of all such Adverse Consequences exceeds the Threshold Amount, in which event Buyer will be liable for indemnification pursuant to Section 8.3 for the aggregate amount of all such Adverse Consequences in excess of the Threshold Amount, up to the Indemnity Cap. The maximum liability of Buyer pursuant to Section 8.2 will not exceed the Indemnity Cap.

 

(d)                                 The amount of any Adverse Consequences for which indemnification is provided under this Article 8 will be reduced by the insurance proceeds actually received by the Buyer Parties or the Seller Indemnified Parties with respect to such Adverse Consequences.

 

(e)                                  In no event will Seller or Buyer be liable for consequential, special, indirect, incidental, punitive or exemplary damages, costs, expenses, or losses (including, without limitation, lost profits and opportunity costs.

 

8.6                               Payment.

 

(a)                                 Any amounts due Buyer Indemnified Parties may be offset against the Purchase Money Note. Upon a determination of liability under this Article 8, the appropriate party will pay the Indemnified Party the amount so determined within five (5)

 

35

 

Business Days after the date of such determination.  If there should be a dispute as to the amount or manner of determination of any indemnity obligation owed under this Agreement the Indemnifying Party will nevertheless pay when due such portion, if any, of the obligation that is not subject to dispute.  The difference, if any, between the amount of the obligation ultimately determined as properly payable under this Agreement and the portion, if any, theretofore paid will bear interest at the rate of seven percent (7.0%) per annum. Upon the payment in full of any claim, the Indemnifying Party will be subrogated to the rights of the Indemnified Party against any Person, firm, corporation or other entity with respect to the subject matter of such claim.

 

(b)                                 Prior to Closing Buyer and Seller shall mutually agree on a limit to the amount that can be offset against the Purchase Money Note.

 

8.7                               No Duplication.  Any liability for indemnification under this Article 8 will be determined without duplication for recovery because of the state of facts giving rise to the Adverse Consequences constitute a breach of more than one representation, warranty, covenant or agreement hereunder.

 

9.                                      Termination.

 

9.1                               Termination of Agreement.  The Parties may terminate this Agreement as provided below:

 

(a)                                 Buyer and Seller may terminate this Agreement by mutual written consent at any time prior to the Closing;

 

(b)                                 Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing (i) in the event Seller or any Subsidiary has breached any material representation, warranty or covenant contained in this Agreement in any material respect, Buyer has notified Seller of the breach and the breach has continued without cure or written waiver of the breach by Buyer for a period of 30 days after the notice of breach, or (ii) if the Closing will not have occurred on or before November 18, 2013, by reason of the failure of any condition precedent under Section 7.1 (unless the failure results primarily from Buyer itself breaching any representation, warranty or covenant contained in this Agreement) ); or (iii) if the Parties are not able to agree on allocation of the Purchase Price or Buyer has not agreed to Seller Disclosure Schedules by October 10, 2013; and

 

(c)                                  Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (i) in the event Buyer has breached any material representation, warranty or covenant contained in this Agreement in any material respect, Seller has notified Buyer of the breach and the breach has continued without cure or written waiver of the breach by Seller for a period of 30 days after the notice of breach, or (ii) if the Closing will not have occurred on or before November 18, 2013, by reason of the failure of any condition precedent under Section 7.2 (unless the failure results primarily from Seller itself breaching any representation, warranty or covenant contained in this Agreement); or (iii) if the Parties are not able to agree on allocation of the

 

36

 

Purchase Price or Buyer has not agreed to Seller Disclosure Schedules by October 10, 2013.

 

9.2                               Effect of Termination.  If any Party terminates this Agreement pursuant to Section 9.1, all rights and obligations of the Parties under this Agreement will terminate without any Liability of any Party to any other Party (except for any Liability of any Party then in breach), except for any rights, obligations or agreements set forth in Section 6.4, which will survive any such termination indefinitely.

 

10.                               Miscellaneous.

 

10.1                        Press Releases and Public Announcements.  No Party will issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other Party.  Any Party may, however, make any public disclosure it believes in good faith is required by applicable Law.

 

10.2                        No Third-Party Beneficiaries.  This Agreement will not confer any rights or remedies upon any Person (including without limitation employees of or members of Seller) other than the Parties and their respective successors and permitted assigns.

 

10.3                        Entire Agreement.  This Agreement (including the documents referred to in this Agreement) and the Transaction Documents constitute the entire agreement between the Parties and supersede any prior understandings, agreements or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter of this Agreement.

 

10.4                        Succession and Assignment.  This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  No Party may assign either this Agreement or any of its rights, interests or obligations under this Agreement without the prior written approval of the other Party.  Buyer, however, may (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates, and (b) designate one or more of its Affiliates to perform its obligations under this Agreement (in any or all of which cases Buyer nonetheless will remain responsible for the performance of all of its obligations).

 

10.5                        Counterparts and Facsimile Signatures.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument, and by facsimile.

 

10.6                        Headings.  The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

10.7                        Notices.  All notices, requests, demands, claims and other communications under this Agreement will be in writing.  Any notice, request, demand, claim or other communication under this Agreement will be deemed duly given 2 business days after it is sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below:

 

37

 

If to Seller:

 

AGEL ENTERPRISES, INC., LLC

Attention:  Jeffrey K. Warwick

 

Fax:

E-mail:Jwarwick@agel.com

 

If to Buyer:

 

AGEL ACQUISITION, INC., Inc.

Attention:  John Rochon, Jr.

2400 North Dallas Pkwy, Suite 230

Plano, TX 75093-4371

Fax:

E-mail: JRochonJr@richmont.net

 

Any Party may send any notice, request, demand, claim or other communication to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient.  Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving all other Parties notice in the manner set forth in this Agreement.

 

10.8                        Governing Law.  This Agreement will be governed by and construed in accordance with the domestic Laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Texas.

 

10.9                        Amendments and Waivers.  No amendment of any provision of this Agreement will be valid unless the same is in writing and signed by Buyer and Seller.  No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

10.10                 Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

10.11                 Expenses.  Buyer and Seller will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the contemplated transactions.

 

38

 

10.12                 Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

10.13                 Incorporation of Exhibits and Schedules.  The Exhibits and Schedules identified in this Agreement are incorporated by reference and are made a part of this Agreement.

 

10.14                 Specific Performance.  Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached.  Accordingly, each of the Parties agrees that the other Party is entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement in any action instituted in any court of the United States or any state having jurisdiction over the Parties and the matter in addition to any other remedy to which it may be entitled, at law or in equity.

 

[THE REMAINDER OF THIS PAGE IS BLANK.  SIGNATURE PAGE FOLLOWS.]

 

39

 

The Parties have executed this Agreement as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
AGEL   ENTERPRISES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Rochon, Jr.
    
	
 
    	
Its:
    	
Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
AGEL   ENTERPRISES, LLC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeff Higginson
    
	
 
    	
Its:
    	
Co-CEO
    

 

40

 

EXHIBIT A

SUBSIDIARIES

 

	
Country
    	
 
    	
Entity
    
	
 
    	
 
    	
 
    
	
Argentina
    	
 
    	
Agel   Enterprises Argentina SRL
    
	
Argentina
    	
 
    	
Agel   Internacional SRL
    
	
Australia
    	
 
    	
Agel   Australia PTY., LTD
    
	
Canada
    	
 
    	
Agel   Enterprises (Canada) ULC
    
	
Colombia
    	
 
    	
Agel   Enterprises Colombia LTDA
    
	
Denmark
    	
 
    	
Agel   Enterprises Denmark ApS
    
	
Hungary
    	
 
    	
Agel   Enterprises Hungary Medical-Nutritional Products Distributor Limited   Liability Company
    
	
Israel
    	
 
    	
Agel   Israel LTD
    
	
Italy
    	
 
    	
Agel   Italy SRL
    
	
Japan
    	
 
    	
Agel   Japan GK
    
	
Kazakhstan
    	
 
    	
Agel   Enterprises Kazakhstan (LLC)
    
	
Malaysia
    	
 
    	
Agel   Enterprises (Malaysia) SDN BHD
    
	
Mexico
    	
 
    	
Agel   Enterprises Mexico S de RL de CV Importadora, Exploratada y Distribuidora
    
	
Mexico
    	
 
    	
ASGT   Global Mexico S de RL de CV
    
	
Russia
    	
 
    	
Agel   Enterprises RUS LLC
    
	
Singapore
    	
 
    	
Agel   Enterprises, PTE. LTD.
    
	
Netherlands
    	
 
    	
Agel   Enterprises (Netherlands), B.V.
    
	
Ukraine
    	
 
    	
Agel   Enterprises Ukraine
    

 

 

Exhibit D

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into by and between Agel Enterprises, Inc., a wholly owned subsidiary of CVSL Inc., organized under the laws of the State of Delaware (the “Company”), and                  , an individual (the “Executive”), effective as of                      , 2013 (the “Effective Date”).

 

WITNESSETH:

 

WHEREAS, the Company desires to provide for the employment of Executive from and after the Effective Date, and has determined that it is in the best interests of the Company to employ Executive, subject to the terms and conditions of this Agreement; and

 

WHEREAS, the Executive desires to accept employment with the Company on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.                                      EMPLOYMENT. The Company shall employ Executive on the terms and conditions set forth herein. Subject to earlier termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of five (5) years, commencing from the Effective Date (the “Initial Term”).

 

2.                                      POSITION AND DUTIES. During such time as the Executive is employed with the Company (the “Employment Period”), the Executive shall serve in the position of Co-Chief Executive Officer of the Company (the “Position”) and shall have the normal duties, responsibilities and authority associated with or related to such Position, subject to the power and authority of the Board of Directors of the Company (the “Board”) to expand or limit such duties, responsibilities and authority and to override actions of the Executive. Notwithstanding the foregoing, the Executive shall have no authority to hire employees or engage consultants without the consent of the Board or incur expenses in excess of $5,000.00 without approval of the Board. The Executive shall report to the Board. The Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and any duty, task or responsibility assigned or given to the Executive by the Board, and the Executive shall perform these duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

 

2.1                               Outside Directorships. In the event the Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than CVSL or its Subsidiaries, or any religious, charitable or civic organization), the Executive shall notify the Board in writing of such invitation, the entity or organization extending the invitation and the capacity to be served by the Executive for such entity or organization. The Board shall have the sole power and authority to authorize the Executive to accept such invitation based on such criteria and standards as the Board may determine, and the Executive shall not accept such invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

 

2.2                               Delegation by Board. Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for the action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and the Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board had taken such action directly.

 

1

 

3.                                      COMPENSATION AND BENEFITS. During the Employment Period, Executive shall be paid or receive compensation and benefits as follows:

 

3.1                               Base Salary. The base salary for the Executive shall be $199,000.00 U.S. per year, or such other rate as the Board may designate from time to time (the “Base Salary”) subject to yearly increases to adjust for inflation, such increases to be effective as of each anniversary date of the date hereof (the “Determination Date”) based upon the most recently published consumer price index for U.S. City Average prior to each Determination Date. The Base Salary shall be payable in 26 installments per year and shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions. The Executive’s performance shall be evaluated annually by the Board. Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

 

3.2                               Incentive Compensation. For any fiscal year ending during the Employment Period, the Executive shall be entitled to a cash bonus in U.S dollars equal to      percent (_%) percent of the Company’s EBITDA (earnings before interest, taxes, depreciation and amortization) at the end of each fiscal year; provided, however that such cash bonus shall not exceed $200,000 per year (the “Incentive Compensation”) for the first two years of this agreement. The Company shall pay to the Executive any earned Incentive Compensation on or about May 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executive was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions. Upon the first to occur of (i) the second anniversary of this date of this Agreement or (ii) the Company’s EBITDA for the previous twelve months exceeds Four Million Dollars ($4,000,000.00), the Company and the Executive shall discuss the renegotiation of the Incentive Compensation.

 

3.3                               Medical, Dental and Other Benefits. The Executive shall be eligible to enroll and participate in any and all benefit plans provided to senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, life and disability insurance, retirement plans and deferred compensation plans. The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans. The Executive shall receive 4 (four) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited. Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement. All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan document, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

 

3.4                               Stock Grant/Options. The Company anticipates that it will develop a stock option, equity or other benefit plan that applies to grants to the Company’s executives “Equity Program” in which Executive will be eligible to participate. The stock option, equity or other benefit plan shall be subject to the approval of the Board in its discretion and shall be offered and administered in accordance with applicable written agreement(s) and/or applicable plan documents.

 

2

 

3.5                               Business Expenses. The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position. Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

 

4.                                      TERMINATION; EFFECTS OF TERMINATION. This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party’s ongoing obligations under this Agreement. Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determined in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him under this Agreement from the Company in the event of termination.

 

4.1                               Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

 

4.1.1                     Monies and Payments to the Executive. Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans. No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement. The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans. All payments described in this Section 4.1.1 shall be made in U.S. dollars.

 

4.1.2                     Disability Defined. For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of the Executive prevents him from the normal performance of his duties as determined by the Board.

 

4.2                               By Company For Good Cause. Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

 

4.2.1                     Monies and Payments to The Executive. Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executive under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. All payments described in this Section 4.2.1 shall be made in U.S. dollars.

 

4.2.2                     Good Cause Defined. If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”:

 

3

 

(i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction including any plea of guilty or no contest; (ii) an act of fraud, embezzlement, theft, dishonesty, disloyalty or moral turpitude relating to the Company; (iii) a failure to comply with the Company’s “Code of Ethics and Business Conduct” Policy; (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive; (v) material breach of any written policy or procedure of the Company; or (vi) the failure by Executive to substantially perform his material duties, which failure, is not remedied within thirty (30) days after written notice to Executive.

 

4.3                               By Company Without Good Cause. Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

 

4.3.1                     Monies and Benefits to The Executive. Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims as described in Section 4.6; (ii) one and one-half (11⁄2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation earned but unpaid;(iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.3.1(iii) unless the Board determines that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2; (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of eighteen (18) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above unless Executive executes a release of claims in a form acceptable to the Company or if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

 

4.3.2                     Payment of Monies and Benefits. The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. Any payment described in Section 4.3.1(ii) shall be paid to the Executive in thirty-nine (39) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. Any benefits described in Section 4.3.1(iv) shall be provided in accordance with the terms of the applicable plans

 

4

 

and in compliance with COBRA regulations. All payments described in Section 4.3.1(i) (ii) and (iii) shall be made in U.S. dollars.

 

4.4                               By The Executive for Good Reason. Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

 

4.4.1                     Monies and Benefits to The Executive. Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such thirty (30) day period; and, subject to his execution of a release of claims as described in Section 4.6; (ii) one and one-half (11⁄2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation earned but unpaid; (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2; and (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of eighteen (18) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above unless Executive executes a release of claims in a form acceptable to the Company or if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

 

4.4.2                     Payment of Monies and Benefits. The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. Any payment described in Section 4.4.1(ii) shall be paid to the Executive in thirty-nine (39) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions. Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. All payments described in Section 4.4.1(i) (ii) and (iii) shall be made in U.S. dollars.

 

4.4.3                     Good Reason Defined. For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity

 

5

 

level from the level in effect on the Effective Date (or some subsequent higher level put into effect by the Board subsequent to the Effective Date), unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives; (ii) materially reduces pay, reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities; or (iii) hires an executive senior to the Executive at the Company. Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries. Further, Good Reason shall not include any of the events or conditions described in items (i), (ii) or (iii) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executive shall continue to work exclusively for the Company during such thirty (30) day cure period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

 

4.5                               By The Executive Without Good Reason. Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason. If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

 

4.5.1                     Monies and Benefits to The Executive. The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no other monies or benefits shall be payable or owed to the Executive under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

 

4.6                               Execution of Release by the Executive. Except for payment of earned and unpaid Base Salary, unused and accrued vacation, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of the Executive’s termination, the Company shall not be obligated to pay any portion of the monies and benefits described above, if any, unless the Executive shall have executed and delivered to the Company a release of any and all claims or causes of action against the Company, its parent company, the subsidiaries and affiliates thereof and successors and their respective shareholders, partners, member, directors, managers, officers, employees, agents and attorneys, arising out of or related to any act or omission which occurred on or prior to the date on which the Executive’s employment was terminated, in form and substance satisfactory to the Company within 60 days of the Executive’s date of termination. Such release shall also include other provisions including mutual non disparagement, and Executive’s agreement not to disclose confidential information, Executive’s agreement to cooperate with ongoing business matters and litigation, a waiver of reemployment and a release by the Company to Executive.

 

6

 

4.7                               Section 409A. This Agreement is intended to comply with Internal Revenue Code Section 409A and related U.S. Treasury regulations or pronouncements (“Section 409A”) and any ambiguous provision will be construed in a manner that is compliant with or exempt from the application of Section 409A. Any reference to an Executive’s termination of employment shall mean a cessation of the employment relationship between the Executive and the Company which constitutes a “separation from service” as determined in accordance with Section 409A of the Internal Revenue Code and related regulations. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on his date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Internal Revenue Code, then the payments and benefits under this Agreement that are subject to Section 409A and paid by reason of a termination of employment shall be made or provided (subject to the last sentence hereof) on the later of (A) the payment date set forth in this Agreement, or (B) the date that is the earliest of (i) the expiration of the six-month period measured from the date of the Executive’s termination of employment or (ii) the date of the Executive’s death, if applicable (the “Delay Period”). Payments subject to the Delay Period shall be paid to the Executive without interest for such delay in payment. Notwithstanding the foregoing provisions of Sections 4.3.1, 4.4.1, or 4.5.1, the continued health coverage available to Executive and, if applicable, to Executive’s dependents, pursuant to the Company’s payment of COBRA continuation coverage premiums, shall be provided by the Company in a manner such that the Executive will not be taxable on any reimbursements for medical benefits to or on behalf of Executive and, if applicable, to or on behalf of Executive’s dependents. In addition, such health coverage shall be provided at no cost to Executive; provided, however, that if the Company reasonably determines, based on the advice of its legal counsel, that Executive must be taxed on the Company’s actual cost of providing the COBRA continuation coverage to Executive (the “Coverage Cost”) to avoid causing Executive to be taxed on such reimbursements relating to such health coverage, the Company and Executive agree that the Company will deliver timely to Executive appropriate tax information returns to cause Executive to include the Coverage Cost in Executive’s income. If the health coverage provided to Executive under Sections 4.3.1, 4.4.1, or 4.5.1 of this Agreement is subject to the provisions of Section 409A of the Code at any relevant time, (A) payment or reimbursement of health expenses shall be made on or before December 31 of the year following the year in which such expenses are incurred, (B) Executive’s right to payment or reimbursement of such expenses shall not be subject to liquidation or exchange for any other benefit, and (C) the amount of expenses eligible for payment or reimbursement during any calendar year shall not affect the amount of expenses eligible for payment or reimbursement in any other calendar year, except as may be required to comply with limitations included in the arrangement under which such health coverage is provided.

 

4.8                               Conditions of Reimbursement. With respect to any reimbursement of expenses of or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (1) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

5.                                 POST-EMPLOYMENT DUTIES. For a period of one (1) year following the termination of this Agreement, the Executive shall: (i) fully and truthfully cooperate and assist the Company, its parent corporation and their subsidiaries, affiliates or successors, to the fullest extent possible, in any and all issues, matters, legal proceedings or litigation related to or associated with the business, management or operation of or any other matter involving the Company, its parent corporation or their subsidiaries, affiliates or successors in any way or of any nature whatsoever arising from, related

 

7

 

to or connected with any period in which the Executive was employed by or otherwise provided services to the Company, its parent corporation, or their subsidiaries, affiliates  or successors or in which the Executive has or may have past knowledge, information or experience or applicable expertise, and (ii) fully cooperate, assist, participate and work with the Company or its subsidiaries or successors on any and all issues or matters for which the Company or its parent corporation or the subsidiaries or affiliates thereof or successors may reasonably seek the Executive’s cooperation, assistance, participation, involvement or consultation. Such assistance shall be provided at such times and dates which shall not unreasonably interfere or conflict with the Executive’s then current employment or non-profit or charitable services. The Company or its successor shall reimburse the Executive for any and all costs and expenses reasonably incurred by the Executive in providing such assistance in accordance with the standard policies and procedures of the Company or its successor in effect from time to time related to such reimbursable expenses.

 

6.                                      CONFIDENTIAL INFORMATION. The Company agrees that during the course of and in connection with the Executive’s employment with the Company, the Company will provide and the Executive agrees to accept access to and knowledge of Confidential Information (as hereafter defined). Confidential Information may include but is not limited to business decisions, plans, procedures, strategies and policies, legal matters affecting the Company, its parent corporation and the subsidiaries and affiliates thereof and their respective businesses, personnel, customer records information, trade secrets, bid prices, evaluations of bids, contractual terms and arrangements (prospective purchases and sales), pricing strategies, financial and business forecasts and plans and other information affecting the value or sales of products, goods, services or securities of the Company or its subsidiaries, marketing strategies, vendor and supplier information, and personal information regarding employees (collectively, the “Confidential Information”). The Executive acknowledges and agrees the Confidential Information is and shall remain the sole and exclusive property of the Company or such parent corporation or their subsidiaries or affiliates. The Executive shall not disclose to any unauthorized person, or use for the Executive’s own purposes, any Confidential Information without the prior written consent of the Board, which consent may be withheld by the Board at its sole discretion, unless and to the extent that the aforementioned matters become generally known to and available for use by the public other than as a result of the Executive’s acts or omissions. The Executive agrees to maintain the confidentiality of the Confidential Information after the termination of the Executive’s employment; provided, further, that if at any time the Executive or any person or entity to which the Executive has disclosed any Confidential Information becomes legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information, the Executive shall provide the Company with prompt, prior written notice of such requirement so the Company, in its sole discretion, may seek a protective order or other appropriate remedy and/or waive compliance with the terms hereof. In the event that such protective order or other remedy is not obtained or the Company waives compliance with the provisions hereof, the Executive shall ensure that only the portion of the Confidential Information which the Executive or such person is advised by written opinion of the Company’s counsel that the Executive is legally required to disclose is disclosed, and the Executive further covenants and agrees to exercise reasonable efforts to obtain assurance that the recipient of such Confidential Information shall not further disclose such Confidential Information to others, except as required by law, following such disclosure. In addition the Executive covenants and agrees to deliver to the Company upon termination of this Agreement, and at any other time as the Company may request, any and all property of the Company including, but not limited to, keys, computers, credit cards, company car, memoranda, notes, plans, records, reports, computer tapes, printouts and software, Confidential Information in any form whatsoever, and other documents and data (and copies thereof) and relating to the Company or any subsidiary which he may then possess or have under his control or to which the Executive had access to or possession of in the course of such employment.

 

7.                                      PROTECTION OF OTHER BUSINESS INTERESTS.

 

7.1                               Additional Protection of Confidential Information. For and in consideration of the benefits set forth in this Agreement as well as for in consideration of the Asset Purchase Agreement between the Company and Agel Enterprises, LLC (the “Purchase Agreement”) of

 

8

 

which these restrictive covenants are integral part, the Company and Executive agree to the non-competition provisions of this Section 7. Further, the Executive agrees that due to the Executive’s knowledge of the Confidential Information, the Executive would inevitably use and/or disclose that information, in breach of the Executive’s confidentiality and non-disclosure obligations under this Agreement, if the Executive worked in certain capacities or engaged in certain activities for a period of time following the termination of the Executive’s employment relationship with the Company, specifically in the position which involved either (i) responsibility and decision-making authority or input at the executive level regarding any subject, or (ii) responsibility or decision-making authority or input at any management level in the Executive’s individual area of assignment with the Company, or (iii) responsibility or decision-making authority or input that otherwise allows for the use of the Confidential Information for the benefit of any person (including the Executive) or entity that competes with the Company. Therefore, if the Executive is terminated by the Company pursuant to Section 4.2 or if the Employee terminates this Agreement pursuant to Section 4.5, the Executive agrees not to be employed by, consult for or otherwise act on behalf of any person or entity (without regard to geographic location) for a business that competes with the Company, its parent corporation or the subsidiaries or affiliates thereof for a period of 36 months following such termination. If the Executive is terminated by the Company pursuant to Section 4.1 or 4.3 or if the Employee terminates this Agreement pursuant to Section 4.4, the Executive agrees not to be employed by, consult for or otherwise act on behalf of any person or entity (without regard to geographic location) for a business that competes with the Company, its parent corporation or the subsidiaries or affiliates thereof for a period of 18 months following such termination.  The Executive acknowledges that this commitment is intended to protect the Confidential Information and to protect the Company’s goodwill and the goodwill of its parent corporation and the subsidiaries and affiliates thereof.

 

7.2                               Reasonableness of Restriction. The Company has attempted to place the most reasonable limitations on the Executive’s subsequent business activities as are necessary to protect the Confidential Information and the Company’s goodwill, and the Executive agrees that such restrictions are reasonable. To accommodate the Executive in obtaining subsequent employment, the Company may, in its discretion, grant a waiver of one or more of the restrictions or subsequent business activities described in Section 7.1. A request for a waiver shall be in writing and must be received by the Company at least thirty (30) days before the proposed commencement date of the restricted position for which the Executive is seeking a waiver. The request must include the full name and address of the organization with or for which the Executive proposes to perform the restricted occupation, the title to be held or capacity to be occupied by the Executive and a complete description of the responsibilities, decision-making authority and duties the Executive expects to perform in such restricted occupation. If the Company decides to grant a waiver in its sole discretion, the waiver may be subject to such restrictions and conditions as the Company may impose. Also, the granting of such waiver shall not be deemed to make the Confidential Information public and the Confidential Information shall remain confidential. Further, except as specifically provided in the waiver, the Executive’s obligations of confidentiality and non-disclosure under this Agreement shall continue in full force and effect.

 

7.3                               Protection of Other Business Relationships. The Executive understands that the Executive’s position with the Company is one of trust and confidence and that he has an obligation to protect the Company’s assets, including its investment in the training of its other employees, both during and following his employment relationship. Therefore, the Executive agrees that for twenty-four (24) months following his employment with the Company, the Executive will not, directly or indirectly on behalf of any person (including the Executive) or entity, solicit any of the employees of the Company, its parent corporation, their subsidiaries or their affiliates or successors to cease employment with the Company, its parent corporation, their subsidiaries or their affiliates or successors. The foregoing restriction will not apply to the Executive’s spouse, parents, brothers, sisters, grandparents, children, grandchildren, aunts, uncles or first cousins or those of Jeff Higginson.

 

9

 

7.4                               Future Employment. If Executive in the future seeks or is offered employment, or any other position or capacity with another company or entity that competes with the Company as set forth in this Agreement, Executive agrees to inform each new employer or entity, before accepting employment, of the existence of the restrictions contained in Section 7. Further, before taking any employment position with any person during the non-competition period, Executive agrees to give prior written notice to Company of the name of such person or entity. Company shall be entitled to advise such person or entity of the provisions of Section 7 and to otherwise deal with such person or entity to ensure that the provisions of Section 7 are enforced and duly discharged.

 

7.5                               Tolling of Restrictive Periods. If the Executive violates any of the restrictions contained in Section 7, the restrictive periods shall be suspended and will not run in favor of the Executive until such time as the Executive cures the violation to the satisfaction of Company.

 

7.6                               Materiality and Conditionality of Section. The provisions of Section 7 are material to this Agreement and the Purchase Agreement. Executive’s agreement to strictly comply with Section 7 is a precondition for the Company and CVSL Inc. entering into the Purchase Agreement, Executive’s entering into this Agreement and for receipt of payments and other incentives. Whether or not Section 7 or any portion thereof has been held or found invalid or unenforceable for any reason whatsoever by a court, and, transfer or other constituted legal authority of competent jurisdiction, upon any violation of Section 7 or any portion thereof, or upon a finding that a violation would have occurred if such Section 7 or any portion thereof were enforceable, the Executive and Company agree that: (i) neither the Company nor its parent corporation or any subsidiary or affiliate thereof shall have any obligation to make any further payments to Executive of any nature; and (ii) the Company shall be entitled to receive the full value of any payments which were previously made to the Executive in the previous twelve (12) months, as well as the value of any equity awards that may have vested during the past twelve (12) months from the date of the Executive’s termination, for any reason, to the date on which a court or arbitration panel held or found the non-compete article to have been violated; (iii) the Executive’s interest in any post-termination payment pursuant to Sections 4.2, 4.3,4.4,and  4.5 of this Agreement shall automatically lapse and be forfeited; (iv) Company shall have no obligation to make any further payments to Executive under the terms of Sections 4.2, 4.3, 4.4, and 4.5 of the Employment Agreement; and (v) the Company shall be entitled to receive the full value of any payments which were previously made to the Executive pursuant to Sections 4.2, 4.3, 4.4, and 4.5 of the Employment Agreement in the previous twelve (12) months.

 

8.                                      ARBITRATION. Should any dispute arise relating to the meaning, interpretation, enforcement or application of this Agreement, the dispute shall be settled in Texas, in accordance with the terms, conditions and requirements described or contained in the Rules of the American Arbitration Association governing individual employee agreements, and all costs of such arbitration shall be borne by the Company. Each party shall bear its own attorneys’ fees except in the situation that Texas law provides that the prevailing party shall be entitled to recover its fees.

 

The Executive and the Company acknowledge that their employment relationship and this Agreement relate to interstate commerce and agree that any disputes, claims or controversies between the Executive and the Company or any subsidiary which may arise out of the Executive’s employment relationship with Company and/or this Agreement shall be settled by arbitration. Any arbitration shall be in accordance with the Rules of the American Arbitration Association governing individual employee agreements and shall be undertaken pursuant to the Federal Arbitration Act. Arbitration will be held before a single arbitrator in Texas unless the Executive and the Company mutually agree on another location. The decision of the arbitrator will be enforceable in any court of competent jurisdiction. Attorneys’ fees, punitive, liquidated or indirect damages shall not be awarded by the arbitrator unless such damages would be awarded by a court of competent jurisdiction applying the relevant law. The arbitrator shall have the authority to award injunctive or other equitable relief.

 

10

 

9.                                      NOTICES. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed by first class mail, return receipt requested, to the recipient at the address indicated below:

 

	
To the   Executive:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
With a copy   to:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
To Company:
    	
c/o CVSL Inc.
    
	
 
    	
2400 N. Dallas Pkwy, Suite 230
    
	
 
    	
Plano TX 75093-4371
    
	
 
    	
Attention: Heidi Hafer
    
	
With a copy   to:
    	
Wright Ginsberg Brusilow, PC
    
	
 
    	
14755 Preston Rd., Suite 600
   Dallas, Texas 75245
    
	
 
    	
Attention: Michael T. Tarski, Esq.
    

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or mailed.

 

10.                               GOVERNING LAW. Except as provided in Section 8, all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. In furtherance of the foregoing and except as provided in Section 7, the internal law of the State of Texas shall control the interpretation and construction of this Agreement, even though under the jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

 

11.                               SEVERABILITY. Each section, subsection and lesser section of this Agreement constitutes a separate and distinct undertaking, covenant or provision of this Agreement. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable, that provision shall be deemed limited by construction in scope and effect to the minimum extent necessary to render it valid and enforceable, and, in the event that a limiting construction is impossible, the invalid or unenforceable provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

 

12.                               AMENDMENTS; MODIFICATIONS. Neither this Agreement nor any term or provision in it may be changed, waived, discharged, rescinded or terminated orally, but only by an agreement in writing signed by the party against whom or which the enforcement of the change, waiver, discharge, rescission or termination is sought.

 

13.                               WAIVER. No failure on the part of either party to this Agreement to exercise, and no delay in exercising, any right, power or remedy created under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or remedy by any such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. No waiver by either party to this Agreement to any breach of, or default in, any term or condition of this Agreement shall constitute a waiver of or assent to any succeeding breach of or default in the same or any other term or condition of this Agreement. The terms and provisions of this Agreement, whether individually or in their

 

11

 

entirety, may only be waived in writing and signed by the party against whom or which the enforcement of the waiver is sought.

 

14.                               SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefits of the successors, assigns, heirs, legatees, devisees, executors, administrators, receivers, trustees and representatives of the Executive and the Company and its parent corporation and the subsidiaries and affiliates thereof and their respective successors, assigns, administrators, receivers, trustees and representatives.

 

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

 

16.                               COUNTERPARTS. This Agreement may be executed in counterparts, each of which is deemed to be an original and both of which taken together constitute one and the same agreement.

 

17                                  FEES AND EXPENSES. All costs and expenses incurred by either party in the preparation and negotiation of this Agreement shall be borne solely by the party incurring such expense without right of reimbursement.

 

18.                               FURTHER ASSURANCES. The Executive and the Company covenant and agree that each will execute any additional instruments and take any actions as may be reasonably requested by the other party to confirm or perfect or otherwise to carry out the intent and purpose of this Agreement.

 

19.                               CONSTRUCTION. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Executive and the Company, and no presumption or burden of proof shall arise favoring or disfavoring either by virtue of the authorship of any of the provisions of this Agreement.

 

20.                               SURVIVAL. The Executive and the Company agree that the terms and conditions of Sections 4 through 15 (inclusive), 19, 20 and 21 shall survive and continue in full force and effect, notwithstanding any expiration or termination of the Employment Period or this Agreement.

 

21.                               ENTIRE AGREEMENT. This Agreement contains and constitutes the entire agreement between the Executive and the Company and supersedes and cancels any prior agreements, representations, warranties, or communications, whether oral or written, between the Executive and the Company or its subsidiaries relating to the subject matter hereof in any way.

 

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

 

 

	
Agel Enterpriese, Inc.
    	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Kelly L. Kittrell
    	
 
    	
 
    
	
Its:
    	
Chief Financial Officer
    	
 
    	
 
    

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}]]