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BUYER PACIFIC ETHANOL, INC. By:                                                                     Name:     Title:     SELLER [NAME]     By:                                                                     Name:     Title:

 

 

 

  

 

SECTION 1.

Amendments to Credit Agreement.  The Credit Agreement is hereby amended as of the Effective Date (as hereinafter defined) as follows:

 

1.1.

Section 2.03 of the Credit Agreement is hereby amended by deleting clauses (a) and (b) of such section and inserting, in lieu thereof, the following new clauses (a) and (b):

 

 

 

 

(b)

On the First Amendment Effective Date, each Revolving Lender shall deposit into the Letter of Credit Account an amount equal to such Revolving Lender’s Revolving Loan Commitment Percentage of the Stated Amount of the Letter of Credit (it being understood that amounts previously deposited by or on behalf of such Lender in the Letter of Credit Account existing prior to the First Amendment Effective Date shall be applied to offset this obligation and shall be turned over from the exiting Issuing Bank to the new Issuing Bank).  The expiration date of the Letter of Credit may be extended to a date no later than the Maturity Date and the Stated Amount of the Letter of Credit may be increased one or more times in each case upon not less than ten (10) Business Days irrevocable prior written notice from Boardman to the Administrative Agent (an “Extension/Increase Notice”) to a face amount not in excess of one million Dollars ($1,000,000) ; provided, that the Stated Amount of the Letter of Credit plus the aggregate outstanding principal amount of all Revolving Loans at any one time outstanding shall not exceed the Aggregate Revolving Loan Commitment or the then-applicable Revolving Loan Availability.  Promptly upon receipt of an Extension/Increase Notice, the Administrative Agent shall provide a copy thereof to each Revolving Lender.  Within five (5) Business Days of its receipt of an Extension/Increase Notice setting forth an increase in the Stated Amount of the Letter of Credit, each Revolving Lender shall transfer into the Letter of Credit Account an amount equal to such Revolving Lender’s Revolving Loan Commitment Percentage of such increase in the Stated Amount of the Letter of Credit.  Amounts standing to the credit of the Letter of Credit Account shall be held in cash and shall be paid to the Revolving Lenders on the Discharge Date.”

 

1.2.

Section 2.03 of the Credit Agreement is hereby amended by adding at the end of such section the following new clause (j):

 

 

1.3.

Section 2.05(c) of the Credit Agreement is hereby amended to (a) insert prior to the semicolon at the end of the fifth line from the bottom of the paragraph (i.e., after “and specified in the relevant Funding Notice”) the following phrase: “, which transfer shall occur by no later than 2:00 p.m. New York City time on the same Funding Date” and (b) delete the phrase commencing on the third line from the bottom of the paragraph which provides “and not all Lenders have made their respective Loans on such date,” and insert the following new sentence at the end of Section 2.05(c): Notwithstanding any Lender’s failure to timely deliver its Funding Amount as and when required pursuant to this Section 2.05(c), Administrative Agent shall still timely transfer all other Funds timely received by Administrative Agent on the Funding Date pursuant to this Section.”

 

 

 

 

1.4.

Section 3.02(a) of the Credit Agreement is hereby amended by replacing the period at the end of such section with a semicolon and adding at the end of such section the following new proviso (which, for the avoidance of doubt, will modify Section 3.02(a) as a whole, and not merely clause (iv) thereof):

 

 

1.5.

Section 3.07 of the Credit Agreement is hereby amended by: deleting clause (d) of such section and inserting, in lieu thereof, the following new clause (d):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.6.

Section 3.07(e) of the Credit Agreement is hereby amended by adding the following at the end of the paragraph but before the “.”: “provided that, notwithstanding anything to the contrary set forth elsewhere herein, amounts prepaid in accordance with this Section 3.07 in respect of the Revolving Loans (other than any prepayment which is a Voluntary Principal Reduction Payment) may be reborrowed within the limits of Section 2.02(a).”

 

1.7.

Section 3.08 of the Credit Agreement is hereby amended by deleting clause (c) thereof in its entirety and inserting, in lieu thereof, the following new clause (c):

 

 

 

 

 

1.8.

Article III of the Credit Agreement is hereby amended by inserting at the end of such Article the following new Section 3.15:

 

 

 

1.9.

Section 7.01(c) of the Credit Agreement is hereby amended by deleting clauses (ii) and (iii) thereof.

 

 

 

1.10.

Section 7.01 of the Credit Agreement is hereby amended by deleting the clause “No later than sixty (60) days in advance of the beginning of each calendar year,” in clause (k)(iv) of such section and inserting, in lieu thereof, the clause “No later than forty-five (45) days in advance of the beginning of each calendar year,”.

 

1.11.

Section 7.02 of the Credit Agreement is hereby amended by:

 

(a)

deleting the phrase “, with respect to bonds, in an aggregate amount not to exceed fifty thousand Dollars ($50,000) at any one time outstanding;” in clause (a)(ii) of such section and inserting, in lieu thereof, “, with respect to bonds, (A) bonds existing on the First Amendment Effective Date and set forth on Schedule 7.02(a) of the Credit Agreement and replacements or extensions thereof that do not increase the face amount thereof (except to the extent a bond in the amount of such increase would be permitted pursuant to the following clause b) and (b) other bonds in an aggregate amount not to exceed two hundred thousand Dollars ($200,000) at any one time outstanding;”;

 

(b)

deleting the word “and” at the end of clause (a)(iii) of such section;

 

(c)

deleting clause (a)(iv) of such section in its entirety and inserting, in lieu thereof, the following new clause (a)(iv):

 

 

(d)

inserting at the end of clause (a) of such section the following new clauses (a)(v) and (a)(vi):

 

 

 

(e)

deleting the phrase “; provided that such cash collateral does not exceed fifty thousand Dollars ($50,000) in the aggregate;” in clause (b)(v) of such section and inserting, in lieu thereof, the phrase “; provided that such cash collateral does not exceed an amount equal to the sum of (A) the amount of cash collateral for bonds on deposit on the First Amendment Effective Date and set forth on Schedule 7.02(a) of the Credit Agreement and (B) two hundred thousand dollars ($200,000)”;

 

(f)

deleting the word “and” at the end of clause (b)(viii) of such section;

 

 

(g)

replacing the period at the end of clause (b)(ix) of such section with a semicolon;

 

(h)

inserting at the end of clause (b) of such section the following new clauses (b)(x) and (b)(xi):

 

“(x)

cash collateral for Permitted Commodity Hedges; provided that such cash collateral does not exceed the aggregate limits set forth in the Commodity Hedging Policy; and

 

(xi)

purchase money security interests in equipment acquired by any Borrower using Indebtedness permitted by Section 7.02(a)(vi) (Negative Covenants-Restrictions on Indebtedness); provided, that such security interests do not apply to any other property or assets of any Loan Party or any Subsidiary besides those acquired or leased pursuant to such transaction (it being agreed that transactions with the same vendor may be cross-collateralized).”;

 

(i)

deleting subclause (ii) of clause (w) of such section in its entirety and inserting, in lieu thereof, the following:

 

 

(j)

deleting clause (t) of such section and inserting, in lieu thereof, the following:

 

 

1.12.

Section 7.03 of the Credit Agreement is hereby amended by:

 

(a)

deleting the clause “as soon as available and in any event within ninety (90) days after the end of each Fiscal Year” in clause (b) of such section and inserting, in lieu thereof “as soon as available and in any event within one hundred (100) days after the end of each Fiscal Year”;

 

(b)

deleting clause (d) of such section in its entirety and inserting, in lieu thereof, “ (d) [Reserved]”;

 

(c)

deleting clause (e) of such section in its entirety and inserting, in lieu thereof,  “(e) [Reserved]”; and

 

(d)

deleting clause (f) of such section in its entirety and inserting, in lieu thereof,  “(f) [Reserved]”.

 

 

1.13.

Section 8.03 of the Credit Agreement is hereby amended by deleting the phrase “three (3) times each calendar week” in clause (b)(i)(b) of such section and inserting, in lieu thereof, “seven (7) times each calendar week”.

 

1.14.

Section 11.03 of the Credit Agreement is hereby amended by adding at the end of such section the following new provisions:

 

 

 

 

 

 

 

 

 

1.15.

Exhibit A to the Credit Agreement is hereby amended by inserting the following new definitions in alphabetical order therein (and, to the extent relevant, in lieu of any existing definition of the same defined term):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.16.

Annex I to this Amendment shall be appended to the Credit Agreement as new Exhibit D thereto.

 

1.17.

Annex II to this Amendment shall be appended to the Credit Agreement as new Exhibit D thereto.

 

SECTION 2.

New Loans.  The Consenting Lenders named on Schedule A hereto each agree, severally and not jointly, to provide additional Revolving Credit Commitments (which shall be drawn immediately upon the Effective Date) in an aggregate principal amount of $5,000,000 (the “Additional Revolving Loans”) in accordance with the Credit Agreement on the same terms as the existing Revolving Credit Commitments, as extended in accordance with this Amendment, on or within 10 Business Days after the Effective Date in an aggregate principal amount equal to such Consenting Lender’s “Additional Revolving Commitment”) as set forth on such Schedule A (its “Additional Revolving Commitment”).  In addition, each Consenting Lender not listed on such Schedule A shall have the option to, but shall not be required to, provide a percentage of the Additional Revolving Loans equal to the percentage that (x) its Revolving Loans and undisbursed Revolving Loan Commitment constitute of (y) the aggregate Revolving Loans and undisbursed Revolving Loan Commitments of all Consenting Lenders, the election of such option to be expressed by indicating its “Additional Revolving Credit Commitment” on its signature page to this Amendment.  To the extent Consenting Lenders not listed on Schedule A elect to participate in the Additional Revolving Loans, the Additional Revolving Commitments of each Consenting Lender listed on Schedule A shall be reduced ratably by the amount of the Additional Revolving Commitments of such Consenting Lenders (and each Consenting Lender listed on Schedule A shall be released from its obligation to provide Additional Revolving Loans to the extent of such reduction).  Notwithstanding anything to the contrary set forth in the Credit Agreement, the proceeds of such Revolving Credit Commitments shall be permitted to be used for general corporate purposes.  Such new Revolving Loans drawn on the increased Revolving Credit Commitments on the Effective Date shall be made as Base Rate Loans and may be converted to Eurodollar Loans following the Effective Date in accordance with Section 3.03 of the Credit Agreement.  For the avoidance of doubt, such Revolving Credit Commitments and the associated Revolving Loans shall be Revolving Credit Commitments and Revolving Loans (each as extended in accordance with this Amendment) for all purposes under the Credit Agreement).

 

SECTION 3.

Payment of Costs and Fees.  Each Borrower (i) reaffirms its obligations under Section 11.07 of the Credit Agreement and (ii) without limiting the provisions set forth in Section 11.07 of the Credit Agreement, acknowledges, consents and agrees that it shall promptly pay, upon receipt of invoices therefor, to the Administrative Agent and each Consenting Lender all reasonable out-of-pocket costs, fees, expenses and charges of every kind in connection with the preparation, negotiation, execution and delivery of this Amendment incurred by or on behalf of such Persons, including, without limitation, the reasonable fees and disbursements of Willkie Farr & Gallagher LLP, counsel to certain Consenting Lenders.

 

 

 

 

SECTION 4.

Acknowledgements.

 

4.1.

Acknowledgement of Obligations.  Each Borrower and each other Loan Party hereby acknowledges, confirms and agrees that as of the close of business on day immediately preceding the Effective Date (and prior to giving effect thereto), the Borrowers were indebted to the Administrative Agent, the Collateral Agent, the Accounts Bank, the Issuing Bank and the Lenders for Loans, Letters of Credit and other Obligations in the amount of $[______] (inclusive of $[_____] in outstanding Letters of Credit) plus accrued interest thereon plus accrued and unpaid fees, costs and expenses due and owing under the Financing Documents.  All such Obligations under the Credit Agreement and the other Financing Documents owing by the Borrowers together with interest accrued and accruing thereon, and all fees, costs, expenses, indemnities and other charges now or hereafter payable by the Borrower to the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank and each Lender, as the case may be, are unconditionally owing by the Borrower to the Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender, as the case may be, without offset, defense or counterclaim of any kind, nature or description whatsoever.

 

4.2.

Acknowledgement of Security Interests.  Each Loan Party hereby acknowledges, confirms and agrees that the Collateral Agent, for itself and the benefit of Senior Secured Parties, has and shall continue to have valid, enforceable and perfected first-priority liens (subject only to Permitted Liens) upon and security interests in the Collateral granted to the Collateral Agent, for itself and the benefit of Senior Secured Parties, pursuant to the Financing Documents.

 

4.3.

Binding Effect of Documents.  Each Loan Party hereby acknowledges, confirms and agrees that:  (i) each of the Financing Documents to which it is a party has been duly executed and delivered to the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank and the Lenders thereto by it, and each is in full force and effect as of the Effective Date, (ii) the agreements and obligations of such Loan Party contained in the Credit Agreement as amended by this Amendment (the “Amended Credit Agreement”), in each of the other Financing Documents and in this Amendment constitute the legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with their respective terms, and such Loan Party has no valid defense to the enforcement of the obligations under the Amended Credit Agreement or the other Financing Documents, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws limiting creditors rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank and each Lender are and shall be entitled to the rights, remedies and benefits provided for in the Financing Documents and under applicable law or at equity.

 

SECTION 5.

Representations and Warranties.  Each of the Loan Parties hereby represents and warrants in favor of the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank and each Lender as follows:

 

5.1.

The execution, delivery and performance by such Loan Party of this Amendment and the performance of the Amended Credit Agreement are within such Loan Party’s powers and have been duly authorized by all necessary action on the part of such Loan Party.

 

5.2.

This Amendment has been duly executed and delivered by such Loan Party and each of this Amendment, the Amended Credit Agreement and the other Loan Documents constitutes a legal, valid and binding obligation of such Loan Party enforceable in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws limiting creditors rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

 

5.3.

The execution, delivery or performance of this Amendment by such Loan Party (i) does not require any consent or approval of, registration of filing with, or any other action by, any Person (including, without limitation, any Governmental Authority) except (A) such as have been obtained or made and are in full force and effect and (B) filings necessary to perfect Liens created by the Financing Documents, (ii) will not violate the organizational or governing documents of any Loan Party and (iii) will not violate any Requirement of Law or any Contractual Obligation applicable to or binding upon such Loan Party or any of their respective properties or assets.

 

5.4.

No event has occurred or is continuing, that would constitute a Default or an Event of Default under the Amended Credit Agreement or any other Financing Document.

 

5.5.

As of the Effective Date no litigation by, investigation known to such Loan Party by, or proceeding of, any Governmental Authority is pending or, to the knowledge of such Loan Party, has been threatened against such Loan Party which (i) challenges such Loan Party’s right, power, or competence to enter into this Amendment or perform any of its obligations under this Amendment, the Amended Credit Agreement or any other the Financing Documents or the validity or enforceability of this Amendment, the Amended Credit Agreement or any other Financing Document or any action taken under this Amendment, the Amended Credit Agreement or any other Financing Document or (ii) is reasonably likely, if adversely decided, to have a Material Adverse Effect.

 

5.6.

After giving effect to this Amendment, the representations and warranties of such Loan Party contained in the Amended Credit Agreement and the other Financing Documents are true and correct in all material respects (provided, that if any representation or warranty is by its terms qualified by concepts of materiality, such representation shall be true and correct in all respects) on and as of the Effective Date with the same effect as if such representations and warranties had been made on and as of such date, except that any such representation or warranty which is expressly made only as of a specified date need be true only as of such date.

 

SECTION 6.

Conditions to Effectiveness of this Amendment.  This Amendment shall be deemed effective as of June [__], 2012 (the “Effective Date”) only upon satisfaction in full of each of the following conditions on or prior to such date (except to the extent that any of such conditions are waived in writing by the Required Lenders of each Class of Loan and the Required Minority Lenders):

 

6.1.

Amendment.  The Consenting Lenders shall have received duly executed counterparts of this Amendment from each Loan Party, the Required Lenders, the Collateral Agent, the Administrative Agent and the Accounts Bank.

 

6.2.

Costs and Expenses.  The Borrowers shall have paid all fees, costs and expenses incurred in connection with this Amendment and any other Financing Documents that have been invoiced and are required to be paid hereunder or under the Credit Agreement (including, without limitation, reasonable legal fees and expenses of the Administrative Agent and each Consenting Lender).

 

6.3.

Representations and Warranties.  The representations and warranties made or deemed made by the Loan Parties under this Amendment shall be true and correct (subject to the materiality qualifiers set forth in such representations and warranties) as of the Effective Date.

 

6.4.

Customary Closing Documents.  The Consenting Lenders shall have received such officer’s certificates, secretary’s certificates, resolutions, lien searches and other customary deliverables as they shall request.

 

 

SECTION 7.

Effect on the Financing Documents.

 

7.1.

Except for the Administrative Agent’s, the Collateral Agent’s, the Accounts Bank’s and the Consenting Lenders’ agreement expressly set forth in Section 1, the Credit Agreement and each of the other Financing Documents shall be and remain unchanged and in full force and effect in accordance with their respective terms, are hereby ratified and confirmed in all respects and the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank and each Lender expressly reserves the right to require strict compliance with the terms of the Credit Agreement and the other Financing Documents.  The execution, delivery, and performance of this Amendment shall not operate as a modification or waiver of any right, power, or remedy of any Agent or any Lender under the Credit Agreement or any other Financing Document and no such action shall be construed as (i) a waiver or forbearance of any of the Administrative Agent’s, the Collateral Agent’s, the Issuing Bank’s, the Accounts Bank’s or the Lenders’ rights, remedies, and powers against the Borrowers, any other Loan Party or the Collateral (including, without limitation, the right to terminate without notice the making of Revolving Loans) or (ii) a waiver of any Default or Event of Default.  The consent herein is limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not excuse future non-compliance with the Financing Documents, and shall not operate as a consent to any further or other matter under the Financing Documents.  To the extent any provision in the Financing Documents restricts or otherwise prohibits certain acts by any Loan Party during a Default or an Event of Default, those provisions shall remain in full force and effect (and shall be effective to restrict and/or prohibit such acts to the extent that an applicable Default or Event of Default is continuing) and are not waived, modified or excused unless specifically provided for in this Amendment.

 

7.2.

Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “herein,” “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Financing Documents to “the Credit Agreement,” “thereunder,” “therein,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified hereby.

 

7.3.

To the extent that any terms and conditions in any of the Financing Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified hereby (except to the extent that such contradiction or conflict is expressly permitted by this Amendment).

 

SECTION 8.

Governing Law.  This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to conflicts of law principles that would require the application of laws of another jurisdiction.

 

SECTION 9.

Financing Document.  This Amendment shall be deemed to be a Financing Document for all purposes.

 

 

 

SECTION 10.

RELEASE BY LOAN PARTIES.  As of the Effective Date, each Loan Party hereby waives, releases, remises and forever discharges the Administrative Agent, the Collateral Agent, the Issuing Bank, the Accounts Bank, each Lender, each of the other Senior Secured Parties, each of their respective Affiliates and each of the officers, directors, employees, and professionals of each Lender, the Issuing Bank, the Administrative Agent, the Collateral Agent, the Accounts Bank and each of the other Senior Secured Parties and their respective Affiliates (collectively, the “Releasees”), from any and all claims, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character, known or unknown, past or present, liquidated or unliquidated, suspected or unsuspected, which such Loan Party ever had from the beginning of the world or now has or that any of the Loan Parties’ respective successors and assigns hereafter can or may have against any such Releasee which relates, directly or indirectly to the Credit Agreement, any other Financing Document, or to any acts or omissions of any such Releasee relating to the Credit Agreement or any other Financing Document in each case, pertaining to facts, events or circumstances existing on or prior to the date hereof, except for the duties and obligations expressly set forth in this Amendment, the Credit Agreement and the other Financing Documents (as modified by the provisions hereof).  As to each and every claim released hereunder, each Loan Party hereby represents that it has received the advice of legal counsel with regard to the releases contained herein, and waives the benefits of each provision of applicable federal or state law (including, without limitation, the laws of the state of New York), if any, pertaining to general releases after having been advised by its legal counsel with respect thereto.  Each Loan Party understands that the facts which they believe to be true at the time of making the release provided for herein may later turn out to be different than they now believe, and that information which is not now known or suspected may later be discovered.  Each Loan Party accepts this possibility, and each Loan Party assumes the risk of the facts being different and new information being discovered; and each Loan Party further agrees that the release provided for herein shall in all respects continue to be effective and not subject to termination or rescission because of any difference in such facts or any new information.

 

SECTION 11.

Severability.  Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

 

SECTION 12.

Counterparts.  This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of this Amendment by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

 

 

 

 

 

 

 

 

 

 

 

Name of Lender	Additional Revolving Commitment
Candlewood Special Situations Master Fund, Ltd	$
Credit Suisse Loan Funding LLC	$
Wexford Spectrum Investors LLC	$
Wexford Catalyst Investors LLC	$
Debello Investors LLC	$
Continental Casualty Company	$
TOTAL COMMITMENTS	$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 8 HEREOF.

Issuance Date:  June [__], 2012

$[                   ]

1.	PAYMENTS OF PRINCIPAL.

2.

INTEREST; INTEREST RATE.  Interest on this Note shall accrue at the Interest Rate and shall commence accruing on the Issuance Date and Interest shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in cash in arrears on the last day of each calendar month, beginning with June 30, 2012.  From and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to seven percent (7%), and shall be payable on demand. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure, provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

3.	RIGHTS UPON EVENT OF DEFAULT.

4.

NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

5.	COVENANTS. Until all of the Notes have been redeemed or otherwise satisfied in accordance with their terms:

6.

AMENDING THE TERMS OF THIS NOTE.  No provision of this Note may be modified or amended without the prior written consent of the Required Holders and the Company; provided, however (a) no such modification or amendment shall, without the consent of the Holder hereunder, change the stated maturity date of this Note, or reduce the principal amount hereof, or reduce the rate or extend the time of payment of any interest hereon, or reduce any amount payable on redemption or prepayment hereof, or impair or affect the right of the Holder to receive payment of principal of, and interest on, the Notes or to institute suit for payment thereof, or impair or affect the right of the Holder to receive any other payment provided for under this Note and (b) the Holder hereunder may waive, reduce or excuse, or forbear from the exercise of any rights and remedies with respect to, any Event of Default under this Note without notice to or the consent of any holder of any of the Other Notes.

7.

TRANSFER. This Note may be offered, sold, assigned or transferred by the Holder in whole but not in part, subject only to the provisions of the restrictive legend set forth at the top of the first page of this Note; provided that, so long as no Event of Default has occurred and is continuing, any such sale, assignment or transfer shall be subject to the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned.

8.	REISSUANCE OF THIS NOTE.

9.

REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 5).

10.

PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.

11.

CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.

12.

FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

13.	NOTICES; CURRENCY; PAYMENTS.

14.

DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall promptly and in accordance and compliance with applicable law publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise.  In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or its Subsidiaries.

15.

CANCELLATION.  After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full (a) this Note shall automatically be deemed canceled without any action by or notice to Holder or Company and (b) Holder shall promptly mark this Note as cancelled, shall promptly surrender this Note to the Company and this Note shall not be reissued.

16.

WAIVER OF NOTICE.  Except for the notices specifically required by this Note or any other Transaction Document, to the extent permitted by applicable law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Purchase Agreement.

17.

GOVERNING LAW.  This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

18.

MAXIMUM PAYMENTS.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

19.	CERTAIN DEFINITIONS.  For purposes of this Note, the following terms shall have the following meanings:

 

 

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