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Exhibit 10.1
Execution Version
FOURTH AMENDED AND RESTATED MANAGEMENT AGREEMENT
THIS FOURTH AMENDED AND RESTATED MANAGEMENT AGREEMENT dated July 31, 2020, (this
“Agreement”) is made by and among EXANTAS CAPITAL CORP., a Maryland corporation
(the “Company”), ACRES CAPITAL, LLC, a New York limited liability company
(together with its permitted assignees, the “Manager”), and ACRES CAPITAL CORP.,
a Delaware corporation (“Acres Capital”).
WHEREAS, the Company is a corporation that has elected and has qualified to be
treated as a real estate investment trust for federal income tax purposes; and
WHEREAS, the Company is a party to that certain Third Amended and Restated
Management Agreement dated as of December 14, 2017 by and among the Company
(formerly known as Resource Capital Corp.), Exantas Capital Manager Inc., a
Delaware corporation (“Exantas Capital,” formerly known as Resource Capital
Manager, Inc.), and Resource America, Inc., a Delaware corporation (
“Resource”), as amended by that certain Amendment No. 1 to the Third Amended and
Restated Management Agreement, dated as of February 20, 2020, by and among the
Company, Exantas Capital and Resource (as so amended, the “Third Amended
Agreement”).
NOW THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms have the meanings assigned them:
(a) “Affiliate” means a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified. It is acknowledged and agreed that, for all purposes of
this Agreement, Oaktree, as of the date hereof, is not an Affiliate of (i) Acres
Capital or (ii) any Affiliate of Acres Capital, including, without limitation,
the Manager. For purposes of this definition of Affiliate, “Oaktree” shall mean
Oaktree Capital Management, L.P., any funds or accounts managed by it, and any
of its or their respective direct or indirect subsidiaries, officers, directors,
managers, partners, members, stockholders, employees or Affiliates.
(b) “Agreement” means this Fourth Amended and Restated Management Agreement, as
amended from time to time.
(c) “Ancillary Operating Subsidiary” means a Subsidiary, including a TRS and its
Subsidiaries, that is an operating entity principally engaged in the evaluation,
underwriting, origination, servicing, holding, trading and financing of loans,
securities, investments and credit products other than commercial real estate
loans.
(d) “Base Management Fee” means the base management fee, calculated and paid
monthly in arrears, in an amount equal to (i) one-twelfth (1/12) of Equity as of
the end of such month, multiplied by (ii) 1.50%. If applicable, the initial and
final installments of the Base Management Fee shall be pro-rated based on the
number of days during the initial and final month, respectively, that this
Agreement is in effect.
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(e) “Board of Directors” means the Board of Directors of the Company.
(f) “Book Value” means, with respect to any fiscal quarter end, the total
stockholders’ equity of the Company at September 30, 2017, excluding equity
attributable to preferred stock ($460,568,964), as adjusted to include net
income or loss from the operations or gain or loss on resolutions of Strategic
Plan Assets between October 1, 2017, and that fiscal quarter end, with the
calculation of such adjustments being subject to the approval by a majority of
the Independent Directors; provided that no such adjustments shall be made for
any fiscal quarter after the quarter ending December 31, 2018. For the avoidance
of doubt, Book Value for any fiscal quarter ending after December 31, 2018,
shall include such adjustments for the period between October 1, 2017 and
December 31, 2018.
(g) “Book Value Equity” means (a) the sum of (1) the total stockholders’ equity
of the Company calculated in accordance with GAAP, less the equity attributable
to any outstanding preferred stock (based on the equity value attributable to
such preferred stock included in such total stockholders’ equity), at
September 30, 2022, plus (2) the total amount of net proceeds (or the value of
Common Shares issued upon the conversion of convertible securities, if
applicable and without duplication) from any issuance of common stock of the
Company after October 1, 2022, after deducting any underwriting discounts and
commissions and other expenses and costs relating to such issuance, and plus
(3) cumulative Core Earnings from and after October 1, 2022 to the end of the
most recently completed calendar quarter, (b) less (1) any distributions to the
Company’s stockholders after October 1, 2022, (2) any amount that the Company
has paid to repurchase the Company’s Common Stock after October 1, 2022, and
(3) any Incentive Compensation paid after October 1, 2022. For the avoidance of
doubt, Book Value Equity shall include any restricted shares of Common Stock or
common equity of Subsidiaries and any other shares of Common Stock or common
equity of Subsidiaries underlying awards granted under one or more of the
Company’s or its subsidiary’s equity incentive plans. The amount of net proceeds
received shall be subject to the determination of the Board to the extent such
proceeds are other than cash.
(h) “Change of Control” means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Manager, taken as a whole, to any
Person other than a direct or indirect wholly owned subsidiary of Acres Capital;
or
(ii) the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), in a single transaction or in a related series of transactions,
by way of merger, consolidation or other business combination or purchase of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act,
or any successor provision) of 50% or more of the total voting power of the
voting capital interests of the Manager.
(i) “Code” means the Internal Revenue Code of 1986, as amended.
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(j) “Common Share” means a share of capital stock of the Company now or
hereafter authorized as common voting stock of the Company.
(k) “Company Account” has the meaning set forth in Section 5 hereof.
(l) “Company Indemnified Party” has the meaning set forth in Section 11(b)
hereof.
(m) “Core Earnings” means, with respect to any period, GAAP net income (loss)
attributable to Common Shares for such period, adjusted to: (A) exclude the
following items incurred during such period: (i) non-cash equity compensation
expense, (ii) Incentive Compensation payable to the Manager, (iii) unrealized
gains and losses, (iv) non-cash provisions for loan losses, (v) non-cash
impairments on securities, (vi) non-cash amortization of discounts or premiums
associated with borrowings, (vii) net income or loss from the operations or gain
or loss on resolutions of Strategic Plan Assets, (viii) real estate depreciation
and amortization, (ix) foreign currency gains or losses and (x) income or loss
from discontinued operations; and (B) add any realized gain and deduct any
realized loss incurred during such period (excluding any realized gain or loss
on the resolution of any Strategic Plan Asset) to the extent such realized gain
or loss was previously excluded from the calculation of Core Earnings for a
previous period.
(n) “Current Term” has the meaning set forth in Section 13(a) hereof.
(o) “Effective Termination Date” has the meaning set forth in Section 13(a)
hereof.
(p) “Equity” means, for purposes of calculating the Base Management Fee for any
month: (a) (i) the total amount of net proceeds (or the value of Common Shares
issued upon the conversion of convertible securities, if applicable and without
duplication) from any issuance of capital stock of the Company (including common
stock and preferred stock) during such month, after deducting any underwriting
discounts and commissions and other expenses and costs relating to such
issuance, plus (or minus) (ii) the Company’s retained earnings (or deficit) at
the end of such month (without taking into account any non-cash equity
compensation expense incurred in current or prior periods), less (b) all amounts
that the Company pays for repurchases of any capital stock of the Company
(including common stock and preferred stock) during such month; provided, that
the foregoing calculation of Equity shall be adjusted to exclude one-time events
pursuant to changes in GAAP, as well as non-cash charges after discussion
between the Manager and the Independent Directors and approval by a majority of
the Independent Directors in the case of non-cash charges. For all purposes of
this Agreement, “preferred stock” means all preferred stock, whether redeemable
(mandatorily or otherwise) or not, other than trust preferred stock.
(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(r) “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System.
(s) “GAAP” means generally accepted accounting principles, as applied in the
United States.
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(t) “Governing Instruments” means, with regard to any entity, the articles of
incorporation and bylaws in the case of a corporation, certificate of limited
partnership (if applicable) and the partnership agreement in the case of a
general or limited partnership, the articles of formation and the operating
agreement in the case of a limited liability company, the trust instrument in
the case of a trust, or similar governing documents, in each case as amended
from time to time.
(u) “Guidelines” shall have the meaning set forth in Section 2(b)(i) hereof.
(v) “Incentive Compensation” means, with respect to each fiscal quarter
commencing with the quarter ending September 30, 2020, through the fiscal
quarter ending September 30, 2022, an incentive management fee calculated and
payable in an amount, not less than zero, equal to the product of: (A) twenty
percent (20%) of the dollar amount by which (i) the amount of the Company’s Core
Earnings per Common Share for such quarter (based on the weighted average number
of Common Shares outstanding during such quarter) exceeds (ii) an amount equal
to (1) the weighted average of (a) Book Value as of the end of such quarter
divided by 30,881,351 and (b) the price per share (including the conversion
price, if applicable) paid for Common Shares in each offering (or issuance, upon
the conversion of convertible securities) by the Company subsequent to
September 30, 2017, in each case at the time of issuance thereof, multiplied by
(2) the greater of (a) 1.75% or (b) 0.4375% plus one-fourth of the Ten Year
Treasury Rate for such quarter; multiplied by (B) the weighted average number of
Common Shares outstanding during such quarter; provided, that the foregoing
calculation of Incentive Compensation shall be adjusted (x) to exclude events
pursuant to changes in GAAP or the application of GAAP, as well as non-recurring
or unusual transactions or events, after discussion between the Manager and the
Independent Directors and approval by a majority of the Independent Directors in
the case of non-recurring or unusual transactions or events, and (y) by
deducting an amount equal to any TRS Directly Paid Fees accrued (calculated as
if such fees were payable on a quarterly basis) not previously used to offset
Incentive Compensation.
“Incentive Compensation” means, with respect to each fiscal quarter commencing
with the quarter ending December 31, 2022, an incentive management fee
calculated and payable in arrears in an amount, not less than zero, equal to:
(i) for the first full calendar quarter ending December 31, 2022, the product of
(a) 20% and (b) the excess of (i) Core Earnings of the Company for such calendar
quarter, over (ii) the product of (A) the Company’s Book Value Equity as of the
end of such calendar quarter, and (B) 7% per annum;
(ii) for each of the second, third and fourth full calendar quarters following
the calendar quarter ending December 31, 2022, the excess of (1) the product of
(a) 20% and (b) the excess of (i) Core Earnings of the Company for the calendar
quarter(s) following September 30, 2022, over (ii) the product of (A) the
Company’s Book Value Equity in the calendar quarter(s) following September 30,
2022, and (B) 7% per annum, over (2) the sum of any Incentive Compensation paid
to the Manager with respect to the prior calendar quarter(s) following
September 30, 2022 (other than the most recent calendar quarter); and
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(iii) for each calendar quarter thereafter, the excess of (1) the product of
(a) 20% and (b) the excess of (i) Core Earnings of the Company for the previous
12-month period, over (ii) the product of (A) the Company’s Book Value Equity in
the previous 12-month period, and (B) 7% per annum, over (2) the sum of any
Incentive Compensation paid to the Manager with respect to the first three
calendar quarters of such previous 12-month period; provided, however, that no
Incentive Compensation shall be payable with respect to any calendar quarter
unless Core Earnings for the 12 most recently completed calendar quarters (or
such lesser number of completed calendar quarters from September 30, 2022) in
the aggregate is greater than zero.
Securities of the Company or any of its Subsidiaries that are entitled to a
specified periodic distribution or have other debt characteristics shall not
constitute equity securities and shall not be included in “Book Value Equity”
for the purpose of calculating Incentive Compensation and instead the aggregate
distribution amount that accrues to such securities during the calendar quarter
of such calculation shall be subtracted from Core Earnings, before Incentive
Compensation for purposes of calculation Incentive Compensation, unless such
distribution is otherwise excluded from Core Earnings.
For purposes of Incentive Compensation, the definition of Equity shall be deemed
to exclude preferred stock.
(w) “Indemnified Party” has the meaning set forth in Section 11(a) hereof.
(x) “Independent Directors” means the members of the Board of Directors who are
not, and have not been within the last two years, officers or employees of the
Manager or any Person directly or indirectly controlling or controlled by, or
otherwise an Affiliate of, the Manager and who are otherwise “independent” in
accordance with the Company’s Governing Instruments and, if applicable, the
rules of any national securities exchange on which any capital stock of the
Company is listed.
(y) “Investment Company Act” means the Investment Company Act of 1940, as
amended.
(z) “Investments” means the investments of the Company.
(aa) “Notice of Proposal to Negotiate” has the meaning set forth in
Section 13(a) hereto.
(bb) “Person” means any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
(cc) “REIT” means a “real estate investment trust” as defined under the Code.
(dd) “Renewal Term” has the meaning as set forth in Section 13(a) hereto.
(ee) “Strategic Plan Assets” means certain non-core businesses, investments or
other assets identified on Exhibit C hereto.
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(ff) “Subsidiary” means any subsidiary of the Company; any partnership, the
general partner of which is the Company or any subsidiary of the Company; and
any limited liability company, the managing member of which is the Company or
any subsidiary of the Company.
(gg) “Ten Year Treasury Rate” means the average of the weekly average yield to
maturity for U.S. Treasury securities (adjusted to a constant maturity of ten
(10) years) as published weekly by the Federal Reserve Board in publication
H.15, or any successor publication, during a fiscal quarter, or if such rate is
not published by the Federal Reserve Board, any Federal Reserve Bank or agency
or department of the federal government selected by the Company. If the Company
determines in good faith that the Ten Year Treasury Rate cannot be calculated as
provided above, then the rate shall be the arithmetic average of the per annum
average yields to maturities, based upon closing asked prices on each business
day during a quarter, for each actively-traded marketable U.S. Treasury fixed
interest rate security with a final maturity date not less than eight or more
than twelve years from the date of the closing asked prices as chosen and quoted
for each business day in each such quarter in New York City by at least three
recognized dealers in U.S. government securities selected by the Company.
(hh) “Termination Fee” has the meaning set forth in Section 13(b) hereof.
(ii) “Termination Notice” has the meaning set forth in Section 13(a) hereof.
(jj) “Treasury Regulations” means the regulations promulgated under the Code
from time to time, as amended.
(kk) “TRS” means a Subsidiary that is a taxable REIT subsidiary as defined in
Section 856(1) of the Code.
(ll) “TRS Directly Paid Fees” means fees paid directly by a TRS (or any
subsidiary thereof) to employees, agents and/or Affiliates of the Manager with
respect to profits of such TRS (or subsidiary thereof) generated from the
services of such employees, agents and/or Affiliates, the fee structure of which
shall have been approved by a majority of the Company’s Independent Directors
and which fees may not exceed 20% of the net income (before such fees) of such
TRS (or subsidiary thereof). TRS Directly Paid Fees may be accrued and paid in
subsequent periods if the structure of such fees requires their payment on a
periodic basis other than quarterly.
SECTION 2. APPOINTMENT AND DUTIES OF THE MANAGER.
(a) The Company hereby appoints the Manager to manage the assets of the Company
and its Subsidiaries subject to the further terms and conditions set forth in
this Agreement and the Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein. The appointment of the
Manager shall be exclusive to the Manager except to the extent that the Manager
otherwise agrees, in its sole and absolute discretion, and except to the extent
that the Manager elects, in accordance with the terms of this Agreement, to
cause the duties of the Manager hereunder to be provided by third parties.
During the term of this Agreement, the Manager shall have the right to designate
not less than two persons as nominees for election to the Board of Directors
(“Manager Directors”). The Nominating and Corporate Governance Committee of the
Board of Directors and the full Board of Directors shall take all
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necessary action to effect the foregoing. Each Manager Director shall agree to
resign as a member of the Board of Directors effective immediately upon either
(x) the number of Manager Directors being equal to or more than the number of
Independent Directors (following any cure period granted under the New York
Stock Exchange or other applicable listing rules or standards), provided that,
such resignation shall only be in effect for the period during which the number
of Manager Directors is equal to or more than the number of Independent
Directors, and provided further that under the circumstances set forth in this
clause (x), the Manager shall be entitled to continue to have at least one
Manager Director on the Board of Directors, or (y) the termination of this
Agreement.
(b) The Manager, in its capacity as manager of the assets and the day-to-day
operations of the Company, at all times will be subject to the supervision of
the Company’s Board of Directors and will have only such functions and authority
as the Company may delegate to it including, without limitation, the functions
and authority identified herein and delegated to the Manager hereby. The Manager
will be responsible for the day-to-day operations of the Company and will
perform (or cause to be performed) such services and activities relating to the
assets and operations of the Company as may be appropriate, including, without
limitation:
(i) serving as the Company’s consultant with respect to the periodic review of
the investment criteria and parameters for Investments, borrowings and
operations, any modifications to which shall be approved by a majority of the
Independent Directors (such policy guidelines as initially approved, as the same
may be modified with such approval, the “Guidelines”) and other policies for
approval by the Board of Directors;
(ii) investigation, analysis and selection of investment opportunities;
(iii) with respect to any prospective investment by the Company and any sale,
exchange or other disposition of any Investment by the Company, conducting
negotiations on behalf of the Company with sellers and purchasers and their
respective agents, representatives and investment bankers;
(iv) engaging and supervising, on behalf of the Company and at the Company’s
expense, independent contractors which provide investment banking, mortgage
brokerage, securities brokerage and other financial services and such other
services as may be required relating to the Investments;
(v) coordinating and managing operations of any joint venture or co-investment
interests held by the Company and conducting all matters with the joint venture
or co-investment partners;
(vi) providing executive and administrative personnel, office space and office
services required in rendering services to the Company;
(vii) administering the day-to-day operations of the Company and performing and
supervising the performance of such other administrative functions necessary in
the management of the Company as may be agreed upon by the Manager and the Board
of Directors, including, without limitation, the collection of revenues and the
payment of the Company’s debts and obligations and maintenance of appropriate
computer services to perform such administrative functions;
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(viii) communicating on behalf of the Company with the holders of any equity or
debt securities of the Company as required to satisfy the reporting and other
requirements of any governmental bodies or agencies or trading markets and to
maintain effective relations with such holders;
(ix) counseling the Company in connection with policy decisions to be made by
the Board of Directors;
(x) evaluating and recommending to the Board of Directors hedging strategies and
engaging in hedging activities on behalf of the Company, consistent with such
strategies, as so modified from time to time, with the Company’s status as a
REIT, and with the Guidelines;
(xi) counseling the Company regarding the maintenance of its status as a REIT
and monitoring compliance with the various REIT qualification tests and other
rules set out in the Code and Treasury Regulations thereunder;
(xii) counseling the Company regarding the maintenance of its exclusion from
status as an investment company under the Investment Company Act and monitoring
compliance with the requirements for maintaining such exclusion;
(xiii) assisting the Company in developing criteria for asset purchase
commitments that are specifically tailored to the Company’s investment
objectives and making available to the Company its knowledge and experience with
respect to mortgage loans, real estate, real estate securities, other real
estate-related assets and non-real estate related assets;
(xiv) furnishing reports and statistical and economic research to the Company
regarding the Company’s activities and services performed for the Company by the
Manager or the Subsidiaries;
(xv) monitoring the operating performance of the Investments and providing
periodic reports with respect thereto to the Board of Directors, including
comparative information with respect to such operating performance and budgeted
or projected operating results;
(xvi) investing and re-investing any moneys and securities of the Company
(including investing in short-term Investments pending investment in other
Investments, payment of fees, costs and expenses, or payments of dividends or
distributions to stockholders and partners of the Company) and advising the
Company as to its capital structure and capital raising;
(xvii) causing the Company to retain qualified accountants and legal counsel, as
applicable, to assist in developing appropriate accounting procedures,
compliance procedures and testing systems with respect to financial reporting
obligations and compliance with the provisions of the Code applicable to REITs
and non-taxable REIT subsidiaries and to conduct quarterly compliance reviews
with respect thereto;
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(xviii) causing the Company to qualify to do business in all applicable
jurisdictions and to obtain and maintain all appropriate licenses;
(xix) assisting the Company in complying with all regulatory requirements
applicable to the Company in respect of its business activities, including
preparing or causing to be prepared all financial statements required under
applicable regulations and contractual undertakings and all reports and
documents, if any, required under the Exchange Act;
(xx) taking all necessary actions to enable the Company and its Subsidiaries to
make required tax filings and reports, including soliciting stockholders for
required information to the extent provided by the provisions of the Code and
Treasury Regulations applicable to REITs;
(xxi) handling and resolving all claims, disputes or controversies (including
all litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company may be involved or to which the Company may be subject arising
out of the Company’s day-to-day operations, subject to such limitations or
parameters as may be imposed from time to time by the Board of Directors;
(xxii) using commercially reasonable efforts to cause expenses incurred by or on
behalf of the Company to be commercially reasonable or commercially customary
and within any budgeted parameters or expense guidelines set by the Board of
Directors from time to time;
(xxiii) advising the Company with respect to obtaining appropriate warehouse or
other financings for its assets;
(xxiv) advising the Company with respect to and structuring long-term financing
vehicles for the Company’s portfolio of assets, and offering and selling
securities publicly or privately in connection with any such structured
financing;
(xxv) performing such other services as may be required from time to time for
management and other activities relating to the assets of the Company as the
Board of Directors shall reasonably request or the Manager shall deem
appropriate under the particular circumstances; and
(xxvi) using commercially reasonable efforts to cause the Company to comply with
all applicable laws.
Without limiting the foregoing, the Manager will perform portfolio management
services (the “Portfolio Management Services”) on behalf of the Company with
respect to the Investments. Such services will include, but not be limited to,
consulting with the Company on the purchase and sale of, and other investment
opportunities in connection with, the Company’s portfolio of assets; the
collection of information and the submission of reports pertaining to the
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Company’s assets, interest rates and general economic conditions; periodic
review and evaluation of the performance of the Company’s portfolio of assets;
acting as liaison between the Company and banking, mortgage banking, investment
banking and other parties with respect to the purchase, financing and
disposition of assets; and other customary functions related to portfolio
management. Additionally, the Manager will perform monitoring services (the
“Monitoring Services”) on behalf of the Company with respect to any loan
servicing activities provided by third parties. Such Monitoring Services will
include, to the extent applicable, negotiating servicing agreements; acting as a
liaison between the servicers of the assets and the Company; review of
servicers’ delinquency, foreclosure and other reports on assets; supervising
claims filed under any insurance policies; and enforcing the obligation of any
servicer to repurchase assets.
(c) The Manager may enter into agreements with other parties, including its
Affiliates, for the purpose of engaging one or more parties for and on behalf,
and at the sole cost and expense, of the Company to provide property management,
asset management, leasing, development, brokerage, financial advisory, custodial
and/or other services to the Company (including, without limitation, Portfolio
Management Services and Monitoring Services) pursuant to agreement(s) with terms
which are then customary for agreements regarding the provision of services to
companies that have assets similar in type, quality and value to the assets of
the Company; provided, that (i) any such agreements entered into with Affiliates
of the Manager shall be (A) on terms no more favorable to such Affiliate than
would be obtained from a third party on an arm’s-length basis and (B) to the
extent the same do not fall within the provisions of the Guidelines, approved by
a majority of the Independent Directors, (ii) with respect to Portfolio
Management Services, (A) any such agreements shall be subject to the Company’s
prior written approval (and approved by a majority of the Independent Directors)
and (B) the Manager shall remain liable for the performance of such Portfolio
Management Services, and (iii) with respect to Monitoring Services, any such
agreements shall be subject to the Company’s prior written approval (and
approved by a majority of the Independent Directors).
(d) The Manager may retain, for and on behalf, and at the sole cost and expense,
of the Company, such services of accountants, legal counsel, appraisers,
insurers, brokers, transfer agents, registrars, developers, investment banks,
financial advisors, banks and other lenders and others as the Manager deems
necessary or advisable in connection with the management and operations of the
Company. Notwithstanding anything contained herein to the contrary, the Manager
shall have the right to cause any such services to be rendered by its employees
or Affiliates. The Company shall pay or reimburse the Manager or its Affiliates
performing such services for the cost thereof; provided, that such costs and
reimbursements are no greater than those which would be payable to outside
professionals or consultants engaged to perform such services pursuant to
agreements negotiated on an arm’s-length basis.
(e) As frequently as the Manager may deem necessary or advisable, or at the
direction of the Board of Directors, the Manager shall, at the sole cost and
expense of the Company, prepare, or cause to be prepared, with respect to any
Investment, reports and other information with respect to such Investment as may
be reasonably requested by the Company.
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(f) The Manager shall prepare, or cause to be prepared, at the sole cost and
expense of the Company, all reports, financial or otherwise, with respect to the
Company reasonably required by the Board of Directors in order for the Company
to comply with its Governing Instruments, or any other materials required to be
filed with any governmental body or agency, and shall prepare, or cause to be
prepared, all materials and data necessary to complete such reports and other
materials including, without limitation, an annual audit of the Company’s books
of account by a nationally recognized independent accounting firm.
(g) The Manager shall prepare, at the sole cost and expense of the Company,
regular reports for the Board of Directors to enable the Board of Directors to
review the Company’s acquisitions, portfolio composition and characteristics,
credit quality, performance and compliance with the Guidelines and policies
approved by the Board of Directors.
(h) Notwithstanding anything contained in this Agreement to the contrary, except
to the extent that the payment of additional moneys is proven by the Company to
have been required as a direct result of the Manager’s acts or omissions which
result in the right of the Company to terminate this Agreement pursuant to
Section 15 of this Agreement, the Manager shall not be required to expend money
(“Excess Funds”) in connection with any expenses that are required to be paid
for or reimbursed by the Company pursuant to Section 9 in excess of that
contained in any applicable Company Account (as herein defined) or otherwise
made available by the Company to be expended by the Manager hereunder. Failure
of the Manager to expend Excess Funds out-of-pocket shall not give rise or be a
contributing factor to the right of the Company to terminate this Agreement
under (x) Section 13(a) of this Agreement due to the Manager’s unsatisfactory
performance or (y) Section 15 of this Agreement for cause.
(i) In performing its duties under this Section 2, the Manager shall be entitled
to rely reasonably on qualified experts and professionals (including, without
limitation, accountants, legal counsel and other professional service providers)
hired by the Manager at the Company’s sole cost and expense.
SECTION 3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES OF THE MANAGER.
(a) The Manager will provide the Company with a management team, including a
Chief Executive Officer and President, along with appropriate support personnel,
to provide the management services to be provided by the Manager to the Company
hereunder, the members of which team shall devote such of their time to the
management of the Company as may be reasonably necessary and appropriate,
commensurate with the level of activity of the Company from time to time. The
Manager shall also provide the Company with a Chief Financial Officer who shall
be fully dedicated to the operations of the Company and a sufficient amount of
services of additional accounting, finance and investor relations professionals
(which amount shall be reviewed and approved by the Board of Directors).
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, an Ancillary Operating Subsidiary shall, with the approval of a
majority of the Independent Directors, directly incur and pay all of its own
operating costs and expenses, including without limitation, compensation of
employees of such Ancillary Operating Subsidiary and reimbursement of any
compensation costs incurred by the Manager for personnel principally devoted to
such Ancillary Operating Subsidiary.
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(b) The Manager agrees to offer the Company the right to participate in all
investment opportunities that the Manager determines are appropriate for the
Company in view of its investment objectives, policies and strategies, and other
relevant factors, with the understanding that, in accordance with the Manager’s
Conflict of Interests Policy (attached hereto as Exhibit A and as may be amended
from time to time in the sole discretion of the Manager), the Company might not
participate in each such opportunity but will on an overall basis equitably
participate with the Manager’s and its Affiliates’ other clients in all such
opportunities. Except as provided in the penultimate sentence of this
Section 3(b), nothing in this Agreement shall (i) prevent the Manager or any of
its Affiliates, officers, directors or employees, from engaging in other
businesses or from rendering services of any kind to any other Person,
including, without limitation, investing in, or rendering advisory services to
others investing in, any type of conduit CMBS or other mortgage loans
(including, without limitation, investments that meet the principal investment
objectives of the Company), whether or not the investment objectives or policies
of any such other Person or entity are similar to those of the Company or
(ii) in any way bind or restrict the Manager or any of its Affiliates, officers,
directors or employees from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom the
Manager or any of its Affiliates, officers, directors or employees may be
acting. While information and recommendations supplied to the Company shall, in
the Manager’s reasonable and good faith judgment, be appropriate under the
circumstances and in light of the investment objectives and policies of the
Company, they may be different from the information and recommendations supplied
by the Manager or any Affiliate of the Manager to other investment companies,
funds and advisory accounts. The Company shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and
any other services, but the Company recognizes that it is not entitled to
receive preferential treatment as compared with the treatment given by the
Manager or any Affiliate of the Manager to any investment company, fund or
advisory account. Notwithstanding anything to the contrary in this Section 3(b),
the Manager hereby agrees that, during the term of this Agreement set forth in
Section 13 hereof, neither the Manager nor any entity controlled by the Manager
shall raise, sponsor or advise any new REIT that invests primarily in domestic
mortgage backed securities in the United States. The Company shall have the
benefit of the Manager’s best judgment and effort in rendering services
hereunder and, in furtherance of the foregoing, the Manager shall not undertake
activities that, in its good faith judgment, will adversely affect the
performance of its obligations under this Agreement.
(c) Directors, officers, employees and agents of the Manager or Affiliates of
the Manager may serve as directors, officers, employees, agents, nominees or
signatories for the Company or any Subsidiary, to the extent permitted by their
Governing Instruments, as from time to time amended, or by any resolutions duly
adopted by the Board of Directors pursuant to the Company’s Governing
Instruments. When executing documents or otherwise acting in such capacities for
the Company, such Persons shall use their respective titles in the Company.
(d) The Manager is authorized, for and on behalf, and at the sole cost and
expense of the Company, to employ such securities dealers for the purchase and
sale of investment assets of the Company as may, in the good faith judgment of
the Manager, be necessary to obtain the best commercially available net results
for the Company taking into account such factors as the policies of the Company,
price, dealer spread, the size, type, timing and difficulty of the transaction
involved, the firm’s general execution and operational facilities and the firm’s
risk in
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positioning the securities involved. Consistent with this policy, the Manager is
authorized to direct the execution of the Company’s portfolio transactions to
dealers and brokers furnishing statistical information or research deemed by the
Manager to be useful or valuable to the performance of its investment advisory
functions for the Company.
(e) The Company (including the Board of Directors) agrees to take all actions
reasonably required to permit and enable the Manager to carry out its duties and
obligations under this Agreement, including, without limitation, all steps
reasonably necessary to allow the Manager to file any registration statement on
behalf of the Company in a timely manner or to deliver any financial statements
or other reports with respect to the Company. If the Manager is not able to
provide a service, or in the reasonable judgment of the Manager it is not
prudent to provide a service, without the approval of the Board of Directors or
the Independent Directors, as applicable, then the Manager shall be excused from
providing such service (and shall not be in breach of this Agreement) until the
applicable approval has been obtained.
SECTION 4. AGENCY. The Manager shall act as agent of the Company in making,
acquiring, financing and disposing of Investments, disbursing and collecting the
Company’s funds, paying the debts and fulfilling the obligations of the Company,
supervising the performance of professionals engaged by or on behalf of the
Company and handling, prosecuting and settling any claims of or against the
Company, the Board of Directors, holders of the Company’s securities or the
Company’s representatives or properties.
SECTION 5. BANK ACCOUNTS. At the direction of the Board of Directors, the
Manager may establish and maintain one or more bank accounts in the name of the
Company or any Subsidiary (any such account, a “Company Account”), and may
collect and deposit funds into any such Company Account or Company Accounts, and
disburse funds from any such Company Account or Company Accounts, under such
terms and conditions as the Board of Directors may approve; and the Manager
shall, from time to time and upon request, render appropriate accountings of
such collections and payments to the Board of Directors and to the auditors of
the Company or any Subsidiary.
SECTION 6. RECORDS; CONFIDENTIALITY. The Manager shall maintain appropriate
books of accounts and records relating to services performed under this
Agreement, and such books of account and records shall be accessible for
inspection by representatives of the Company or any Subsidiary at any time
during normal business hours upon one (1) business day’s advance written notice.
The Manager shall keep confidential any and all information obtained in
connection with the services rendered under this Agreement and shall not
disclose any such information (or use the same except in furtherance of its
duties under this Agreement) to nonaffiliated third parties except (i) with the
prior written consent of the Board of Directors, (ii) to legal counsel,
accountants and other professional advisors; (iii) to appraisers, financing
sources and others in the ordinary course of the Company’s business; (iv) to
governmental officials having jurisdiction over the Company; (v) in connection
with any governmental or regulatory filings of the Company or disclosure or
presentations to Company investors; (vi) as required by law or legal process to
which the Manager or any Person to whom disclosure is permitted hereunder is a
party; or (vii) to lenders or other financing sources of the Company, provided
that any such lender or other financing source executes a customary
nondisclosure agreement reasonably acceptable to the Independent Directors (it
being understood any such
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nondisclosure agreement shall include customary restrictions on the use of any
material, nonpublic information with respect to the Company). The foregoing
shall not apply to information which has previously become publicly available
through the actions of a Person other than the Manager not resulting from the
Manager’s violation of this Section 6. The provisions of this Section 6 shall
survive the expiration or earlier termination of this Agreement for a period of
one year.
SECTION 7. OBLIGATIONS OF MANAGER; RESTRICTIONS.
(a) The Manager shall require each seller or transferor of investment assets to
the Company to make such representations and warranties regarding such assets as
may, in the reasonable judgment of the Manager, be necessary and appropriate or
as advised by the Board of Directors and consistent with standard industry
practice. In addition, the Manager shall take such other action as it deems
necessary or appropriate or as advised by the Board of Directors and consistent
with standard industry practice with regard to the protection of the
Investments.
(b) The Manager shall refrain from any action that, in its sole judgment made in
good faith, (i) is not in compliance with the Guidelines, (ii) would adversely
affect the status of the Company as a REIT under the Code or the Company’s
status as an entity excluded from investment company status under the Investment
Company Act or (iii) would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or any
Subsidiary or that would otherwise not be permitted by the Company’s Governing
Instruments. If the Manager is ordered to take any such action by the Board of
Directors, the Manager shall promptly notify the Board of Directors of the
Manager’s judgment that such action would adversely affect such status or
violate any such law, rule or regulation or the Governing Instruments.
Notwithstanding the foregoing, the Manager, its directors, officers,
stockholders and employees shall not be liable to the Company or any Subsidiary,
the Board of Directors, or the Company’s or any Subsidiary’s stockholders or
partners, for any act or omission by the Manager, its directors, officers,
stockholders or employees except as provided in Section 11 of this Agreement.
(c) The Company shall not invest in joint ventures with the Manager or any
Affiliate thereof, unless (i) such Investment is made in accordance with the
Guidelines and (ii) such Investment is approved in advance by a majority of the
Independent Directors.
(d) The Manager shall not (i) consummate any transaction which would involve the
acquisition by the Company of an asset in which the Manager or any Affiliate
thereof has an ownership interest or the sale by the Company of an asset to the
Manager or any Affiliate thereof, or (ii) under circumstances where the Manager
is subject to an actual or potential conflict of interest, in the reasonable
judgment of the Manager or the Board of Directors, because it manages both the
Company and another Person (not an Affiliate of the Company) with which the
Company has a contractual relationship, take any action constituting the
granting to such Person of a waiver, forbearance or other relief, or the
enforcement against such Person of remedies, under or with respect to the
applicable contract, unless such transaction or action, as the case may be and
in each case, is approved by a majority of the Independent Directors.
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(e) The Board of Directors periodically reviews the Guidelines and the Company’s
portfolio of Investments but will not review each proposed investment, except as
otherwise provided herein. If a majority of the Independent Directors determines
in the periodic review of transactions by the Independent Directors, that a
particular transaction does not comply with the Guidelines (including as a
result of violation of the provisions of Section 7(d) above), then a majority of
the Independent Directors will consider what corrective action, if any, can be
taken. The Manager shall be permitted to rely upon the direction of the
Secretary of the Company to evidence the approval of the Board of Directors or
the Independent Directors with respect to a proposed investment.
(f) The Manager shall at all times during the term of this Agreement (including
the Current Term and any Renewal Term) maintain a tangible net worth equal to or
greater than $1,000,000. The Manager shall at all times during the term of this
Agreement maintain “errors and omissions” insurance coverage and other insurance
coverage which is customarily carried by property, asset and investment managers
performing functions similar to those of the Manager under this Agreement with
respect to assets similar to the assets of the Company, in an amount that1 is
comparable to that customarily maintained by other managers or servicers of
similar assets.
SECTION 8. COMPENSATION.
(a) During the term of this Agreement (including the Current Term and any
Renewal Term), the Company shall pay the Manager the Base Management Fee monthly
in arrears; provided, however, that for each calendar month beginning on the
date hereof through July 31, 2022, such fee shall be equal to the greater of
(A) $442,000 and (B) the Base Management Fee (and such amount shall be deemed to
be the “Base Management Fee” for such month for all purposes of this Agreement).
(b) The Manager shall compute the amount of each installment of the Base
Management Fee within fifteen (15) business days after the end of the calendar
month with respect to which such installment is payable. A copy of the
computations made by the Manager to calculate such installment amount shall
thereafter, for informational purposes only and subject in any event to
Section 13(a) of this Agreement, promptly be delivered to the Board of Directors
and, upon such delivery, payment of such installment of the Base Management Fee
shown therein shall be due and payable no later than the date which is twenty
(20) business days after the end of the calendar month with respect to which
such installment is payable.
(c) The Base Management Fee is subject to adjustment pursuant to and in
accordance with the provisions of Section 13(a) of this Agreement.
(d) In addition to the Base Management Fee otherwise payable hereunder, the
Company shall pay the Manager quarterly Incentive Compensation. The Incentive
Compensation calculation and payment shall be made for each fiscal quarter in
arrears.
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(e) The Manager shall compute the amount of each installment of the Incentive
Compensation within thirty (30) days after the end of each fiscal quarter with
respect to which such installment is payable. A copy of the computations made by
the Manager to calculate such installment amount shall thereafter, subject to
Section 13(a) of this Agreement, promptly be delivered to the Board of Directors
and payment of such Incentive Compensation, or such other amount as may be
determined pursuant to the last sentence of this Section 8(e), shall be due and
payable no later than the date which is five (5) business days after the date of
delivery to the Board of Directors of such computations. The amount of Incentive
Compensation may be increased or decreased, if the Manager agrees and if a
majority of the Independent Directors determines in the exercise of reasonable
discretion that the amount so calculated is not equitable based upon facts and
circumstances that may include, without limitation, dividend payments, market
conditions, managerial performance or other factors not reflected in Core
Earnings.
(f) Twenty-five percent (25%) of the Incentive Compensation shall (subject to
the remaining provisions of this Section 8(f) and the provisions of Sections
8(g), 8(h) and 8(i)) be payable to the Manager in Common Shares, and the
remainder thereof shall be paid in cash; provided, the Manager may (subject to
the remaining provisions of this Section 8(f) and the provisions of Sections
8(g), 8(h) and 8(i)) elect, by so indicating in the installment calculation
delivered to the Board of Directors, to receive more than twenty-five percent
(25%) of the Incentive Compensation in the form of Common Shares; provided,
however, the Manager may not receive payment of any portion of the Incentive
Compensation in the form of Common Shares, either automatically or by election,
if such payment would result in the Manager directly or indirectly through one
or more subsidiaries owning in the aggregate more than 9.8% of the outstanding
Common Shares. For purposes of this computation, Common Shares include shares
issued and outstanding (whether vested or unvested or forfeitable or
non-forfeitable) and shares to be issued upon exercise of outstanding stock
options (whether such options are exercisable or nonexercisable). The Manager’s
receipt of Common Shares in accordance herewith shall be subject to all
applicable securities exchange rules and securities laws (including, without
limitation, prohibitions on transfers and insider trading). All Common Shares
paid to the Manager as Incentive Compensation will be fully vested upon
issuance, provided that the Manager hereby agrees not to sell such shares prior
to the date that is one year after the date such shares are due and payable.
Notwithstanding such restriction and subject to compliance with all applicable
securities laws (including, without limitation, prohibitions on insider
trading), the Manager shall have the right to allocate such shares in its sole
and absolute discretion to its officers, employees and other individuals who
provide services to it at any time. In addition, the foregoing restriction
regarding the sale of such shares shall terminate upon termination of this
Agreement.
(g) Common Shares payable as Incentive Compensation shall be valued as follows:
(i) if such shares are traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the shares on such exchange
over the thirty (30) day period ending three (3) days prior to the issuance of
such shares;
(ii) if such shares are actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sales price as applicable over
the thirty (30) day period ending three (3) days prior to the issuance of such
shares; and
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(iii) if there is no active public market for such shares, the value shall be
the fair market value thereof, as reasonably determined in good faith by the
Board of Directors of the Company.
(h) If at any time the Manager shall, in connection with a determination of fair
market value made by the Board of Directors, (i) dispute such determination in
good faith by more than five percent (5%), and (ii) such dispute cannot be
resolved between the Independent Directors and the Manager within ten
(10) business days after the Manager provides written notice to the Company of
such dispute (the “Valuation Notice”), then the matter shall be resolved by an
independent appraiser of recognized standing selected jointly by the Independent
Directors and the Manager within not more than twenty (20) days after the
Valuation Notice. In the event the Independent Directors and the Manager cannot
agree with respect to such selection within the aforesaid twenty (20) day
time-frame, the Independent Directors shall select one such independent
appraiser and the Manager shall select one independent appraiser within five
(5) business days after the expiration of the twenty (20) day period, with one
additional such appraiser (the “Last Appraiser”) to be selected by the
appraisers so designated within five (5) business days after their selection,
each of which shall conduct an appraisal of fair market value. The three
appraisers shall be instructed to deliver appraisals to the Manager and the
Company within fifteen (15) days after the selection of the Last Appraiser. The
average of the two appraisals closest in amount shall be utilized for
determination of the fair market value and shall be deemed final and binding
upon the Company, the Board of Directors and the Manager. The expenses of the
appraisals shall be paid by the party with the estimate which deviated the
furthest from the final valuation determination.
(i) The Company agrees to register the resale of the stock portion of the
Incentive Compensation in accordance with the provisions of Exhibit B.
(j) Not later than seventy-five (75) days after the end of each fiscal year, the
Company shall pay to the Manager an amount equal to the positive difference, if
any, between (i) the Incentive Compensation payable for the prior fiscal year
before deducting paid or accrued TRS Directly Paid Fees, less (ii) the sum of
(A) the Incentive Compensation actually paid in the prior fiscal year plus
(B) the TRS Directly Paid Fees actually paid for the prior fiscal year.
SECTION 9. EXPENSES OF THE COMPANY. The Company shall pay all of its expenses
and shall reimburse the Manager and its Affiliates for documented expenses of
the Manager and its Affiliates incurred on the Company’s behalf (collectively,
the “Expenses”). Expenses include all costs and expenses which are expressly
designated elsewhere in this Agreement as the Company’s, together with the
following:
(a) expenses in connection with the issuance and transaction costs incident to
the acquisition, disposition and financing of Investments;
(b) costs of legal, tax, accounting, consulting, auditing, administrative and
other similar services rendered for the Company by providers retained by the
Manager or, if provided by the employees of the Manager or its Affiliates, in
amounts which are no greater than those which would be payable to outside
professionals or consultants engaged to perform such services pursuant to
agreements negotiated on an arm’s-length basis;
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(c) per loan underwriting and review fees in connection with valuations of and
potential investments in certain subordinate commercial mortgage pass-through
certificates, in amounts approved by a majority of the Independent Directors
from time to time;
(d) the compensation and expenses of the Company’s directors and the cost of
liability insurance to indemnify the Company’s directors and officers;
(e) costs associated with the establishment and maintenance of any credit
facilities and other indebtedness of the Company (including commitment fees,
accounting fees, legal fees, closing and other costs) or any securities
offerings of the Company;
(f) expenses connected with communications to holders of securities of the
Company or its Subsidiaries and other bookkeeping and clerical work necessary in
maintaining relations with holders of such securities and in complying with the
continuous reporting and other requirements of governmental bodies or agencies,
including, without limitation, all costs of preparing and filing required
reports with the Securities and Exchange Commission, the costs (including
transfer agent and registrar costs) in connection with the listing and/or
trading of the Company’s securities on any exchange or inter-dealer quotation
system, the fees to any such exchange or inter-dealer quotation system in
connection with its listing, costs of complying with the rules, regulations or
policies of such exchange or inter-dealer quotation system, costs of preparing,
printing and mailing the Company’s annual report to its stockholders and proxy
materials with respect to any meeting of the stockholders of the Company;
(g) the allocable costs associated with any computer software or hardware,
electronic equipment or purchased information technology services from third
party vendors that is used for the Company;
(h) expenses incurred by managers, officers, employees and agents of the Manager
and its Affiliates for travel on the Company’s behalf and other out-of-pocket
expenses incurred by managers, officers, employees and agents of the Manager and
its Affiliates in connection with the purchase, financing, refinancing, sale or
other disposition of an Investment or establishment and maintenance of any
credit facilities and other indebtedness or any securities offerings of the
Company;
(i) the allocable costs and expenses incurred with respect to market information
systems and publications, research publications and materials, and settlement,
clearing and custodial fees and expenses;
(j) compensation and expenses of the Company’s custodian and transfer agent, if
any;
(k) the costs of maintaining compliance with all federal, state and local rules
and regulations or any other regulatory agency;
(l) all taxes and license fees;
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(m) all insurance costs incurred in connection with the operation of the
Company’s business except for the costs attributable to the insurance that the
Manager elects to carry for itself and its employees;
(n) costs and expenses incurred in contracting with third parties, including
Affiliates of the Manager, for the servicing and special servicing of assets of
the Company;
(o) all other costs and expenses relating to the Company’s business and
investment operations, including, without limitation, the costs and expenses of
acquiring, owning, protecting, maintaining, developing and disposing of
Investments, including appraisal, reporting, audit and legal fees;
(p) expenses relating to any office(s) or office facilities, including but not
limited to disaster backup recovery sites and facilities, maintained for the
Company or Investments separate from the office or offices of the Manager;
(q) expenses connected with the payments of interest, dividends or distributions
in cash or any other form authorized or caused to be made by the Board of
Directors to or on account of the holders of securities of the Company or its
Subsidiaries, including, without limitation, in connection with any dividend
reinvestment plan;
(r) any judgment or settlement of pending or threatened proceedings (whether
civil, criminal or otherwise) against the Company or any Subsidiary, or against
any trustee, director or officer of the Company or of any Subsidiary in his or
her capacity as such for which the Company or any Subsidiary is required to
indemnify such trustee, director or officer by any court or governmental agency,
or settlement of pending or threatened proceedings or by the charter and bylaws
of the Company;
(s) the allocable portion of rent, telephone, utilities, office furniture,
equipment, machinery and other office, internal and overhead expenses of the
Manager and its Affiliates required for the Company’s operations; and
(t) expenses for personnel of the Manager or its Affiliates for their services
in connection with the making of fixed-rate commercial real estate loans by the
Company or a Subsidiary, in an amount equal to one percent (1%) of the principal
amount of each such loan made; and
(u) all other expenses actually incurred by the Manager or its Affiliates which
are reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement.
Without regard to the amount of compensation received under this Agreement by
the Manager, the Manager shall bear the expense of the wages, salaries and
benefits of the Manager’s officers and employees, with the exception that the
Company shall bear the expense of the personnel described in the penultimate and
final sentences of Section3(a) hereof, in proportion to such personnel’s
percentage of time dedicated to the operations of the Company.
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The provisions of this Section 9 shall survive the expiration or earlier
termination of this Agreement to the extent such expenses have previously been
incurred or are incurred in connection with such expiration or termination.
SECTION 10. CALCULATIONS OF EXPENSES.
The Manager shall prepare a statement documenting the Expenses of the Company
and the Expenses incurred by the Manager on behalf of the Company during each
calendar month, and shall deliver such statement to the Company within twenty
(20) days after the end of each calendar month. Expenses incurred by the Manager
on behalf of the Company shall be reimbursed by the Company to the Manager on
the first business day of the month immediately following the date of delivery
of such statement; provided, however, that such reimbursements may be offset by
the Manager against amounts due to the Company. The provisions of this
Section 10 shall survive the expiration or earlier termination of this
Agreement.
SECTION 11. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.
(a) The Manager assumes no responsibility under this Agreement other than to
render the services called for under this Agreement in good faith and shall not
be responsible for any action of the Board of Directors in following or
declining to follow any advice or recommendations of the Manager, including as
set forth in Section 7(b) of this Agreement. The Manager, its stockholders,
members, managers, officers, employees and Affiliates (including Acres Capital)
will not be liable to the Company or any Subsidiary, to the Board of Directors,
or the Company’s or any Subsidiary’s stockholders or partners for any acts or
omissions by the Manager, its stockholders, members, managers, officers,
employees or Affiliates (including Acres Capital), pursuant to or in accordance
with this Agreement, except by reason of acts constituting bad faith, willful
misconduct, gross negligence or reckless disregard of the Manager’s duties under
this Agreement. The Company shall, to the full extent lawful, reimburse,
indemnify and hold the Manager, its stockholders, members, managers, officers,
employees and Affiliates (including Acres Capital) and each other Person, if
any, controlling the Manager (each, an “Indemnified Party”), harmless of and
from any and all expenses, losses, damages, liabilities, demands, charges and
claims of any nature whatsoever (including attorneys’ fees) in respect of or
arising from any acts or omissions of such Indemnified Party made in good faith
in the performance of the Manager’s duties under this Agreement and not
constituting such Indemnified Party’s bad faith, willful misconduct, gross
negligence or reckless disregard of the Manager’s duties under this Agreement.
(b) The Manager and Acres Capital shall, jointly and severally, to the full
extent lawful, reimburse, indemnify and hold the Company, its stockholders,
directors, officers and employees and each other Person, if any, controlling the
Company (each, a “Company Indemnified Party”), harmless of and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including attorneys’ fees) in respect of or arising from the
Manager’s bad faith, willful misconduct, gross negligence or reckless disregard
of its duties under this Agreement or any claims by Manager’s employees relating
to the terms and conditions of their employment by Manager.
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SECTION 12. NO JOINT VENTURE. Nothing in this Agreement shall be construed to
make the Company, the Manager and Acres Capital partners or joint venturers or
impose any liability as such on either of them.
SECTION 13. TERM; TERMINATION.
(a) Until this Agreement is terminated in accordance with its terms, this
Agreement shall be in effect until July 31, 2023 (the “Current Term”) and shall
be automatically renewed for a one-year term on that date and each anniversary
date thereafter (a “Renewal Term”) unless at least two-thirds of the Independent
Directors or the holders of at least a majority of the outstanding Common Shares
agree not to automatically renew because (i) there has been unsatisfactory
performance by the Manager that is materially detrimental to the Company or (ii)
the compensation payable to the Manager hereunder is unfair; provided, that the
Company shall not have the right to terminate this Agreement under clause
(ii) above if the Manager agrees to continue to provide the services under this
Agreement at a fee that at least two-thirds of the Independent Directors
determines to be fair pursuant to the procedure set forth below. If the Company
elects not to renew this Agreement at the expiration of the Current Term or any
Renewal Term as set forth above, the Company shall deliver to the Manager prior
written notice (the “Termination Notice”) of the Company’s intention not to
renew this Agreement based upon the terms set forth in this Section 13(a) not
less than one hundred and eighty (180) days prior to the expiration of the then
existing term. If the Company so elects not to renew this Agreement, the Company
shall designate the date (the “Effective Termination Date”), not less than one
hundred and eighty (180) days from the date of the notice, on which the Manager
shall cease to provide services under this Agreement and this Agreement shall
terminate on such date; provided, however, that in the event that such
Termination Notice is given in connection with a determination that the
compensation payable to the Manager is unfair, the Manager shall have the right
to renegotiate such compensation by delivering to the Company, no fewer than
forty-five (45) days prior to the prospective Effective Termination Date,
written notice (any such notice, a “Notice of Proposal to Negotiate”) of its
intention to renegotiate its compensation under this Agreement. Thereupon, the
Company (represented by the Independent Directors) and the Manager shall
endeavor to negotiate in good faith the revised compensation payable to the
Manager under this Agreement. Provided that the Manager and at least two-thirds
of the Independent Directors agree to the terms of the revised compensation to
be payable to the Manager within forty-five (45) days following the receipt of
the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of
no force and effect and this Agreement shall continue in full force and effect
on the terms stated in this Agreement, except that the compensation payable to
the Manager hereunder shall be the revised compensation then agreed upon by the
parties to this Agreement. The Company and the Manager agree to execute and
deliver an amendment to this Agreement setting forth such revised compensation
promptly upon reaching an agreement regarding same. In the event that the
Company and the Manager are unable to agree to the terms of the revised
compensation to be payable to the Manager during such forty-five (45) day
period, this Agreement shall terminate, such termination to be effective on the
date which is the later of (A) ten (10) days following the end of such
forty-five (45) day period and (B) the Effective Termination Date originally set
forth in the Termination Notice.
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(b) In the event that this Agreement is terminated in accordance with the
provisions of Section 13(a) or Section 15(c) of this Agreement, the Company
shall pay to the Manager, on the date on which such termination is effective, a
termination fee (the “Termination Fee”) equal to the amount of four times the
sum of the average annual Base Management Fee and the average annual Incentive
Compensation earned by the Manager during the two 12-month periods immediately
preceding the last quarter end prior to the date of such termination, calculated
as of the end of the most recently completed fiscal quarter prior to the date of
termination provided that the parties acknowledge and agree that if (and only
if) any such termination in accordance with the provisions of Section 13(a) or
15(c) of this Agreement occurs prior to July 31, 2022, then the amount of the
Termination Fee shall be equal to four times the sum of the average annual Base
Management Fee and the average annual Incentive Compensation earned in the
aggregate by the Company’s manager during the two twelve (12)-month periods
immediately preceding the date of such termination, calculated as of the end of
the most recently completed fiscal quarter prior to the date of termination. The
parties acknowledge and agree that the aggregate quarterly Base Management Fee
and Incentive Compensation earned by the Company’s manager prior to the date
hereof for each of the quarters in the twenty-four (24) month period ended
June 30, 2020 is attached hereto as Exhibit D and shall be utilized in
determining the Termination Fee in accordance with the preceding sentence, if
necessary. The obligation of the Company to pay the Termination Fee shall
survive the termination of this Agreement.
(c) No later than one hundred and eighty (180) days prior to the expiration of
the Current Term or any Renewal Term, the Manager may deliver written notice to
the Company informing it of the Manager’s intention to decline to renew this
Agreement, whereupon this Agreement shall not be renewed and extended and this
Agreement shall terminate effective upon expiration of the then current term.
(d) If this Agreement is terminated pursuant to Section 13 or Section 15 hereof,
such termination shall be without any further liability or obligation of either
party to the other, except as provided in Sections 6, 9, 10, 13(b) and 16 of
this Agreement. In addition, Sections 8(i) (including the provisions of Exhibit
B) and 11 of this Agreement shall survive termination of this Agreement.
SECTION 14. ASSIGNMENT.
(a) Except as set forth in Section 14(b) of this Agreement, this Agreement shall
terminate automatically in the event of its assignment, in whole or in part, by
the Manager, unless such assignment is consented to in writing by the Company
with the consent of a majority of the Independent Directors. Any such permitted
assignment shall bind the assignee under this Agreement in the same manner as
the Manager is bound, and the Manager shall be liable to the Company for all
errors or omissions of the assignee under any such assignment. In addition, the
assignee shall execute and deliver to the Company a counterpart of this
Agreement naming such assignee as Manager. This Agreement shall not be assigned
by the Company without the prior written consent of the Manager, except in the
case of assignment by the Company to another REIT or other organization which is
a successor (by merger, consolidation or purchase of assets) to the Company, in
which case such successor organization shall be bound under this Agreement and
by the terms of such assignment in the same manner as the Company is bound under
this Agreement.
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(b) Notwithstanding any provision of this Agreement, the Manager may subcontract
and assign any or all of its responsibilities under Sections 2(b), 2(c) and 2(d)
of this Agreement to any of its Affiliates in accordance with the terms of this
Agreement applicable to any such subcontract or assignment, and the Company
hereby consents to any such assignment and subcontracting. In addition, provided
that the Manager provides prior written notice to the Company for informational
purposes only, nothing contained in this Agreement shall preclude any pledge,
hypothecation or other transfer of any amounts payable to the Manager under this
Agreement.
SECTION 15. TERMINATION FOR CAUSE.
(a) The Company may terminate this Agreement effective upon thirty (30) days’
prior written notice of termination from the Company to the Manager, without
payment of any Termination Fee, if (i) the Manager materially breaches any
provision of this Agreement and such breach shall continue for a period of
thirty (30) days after the Manager’s receipt of written notice thereof
specifying such breach and requesting that the same be remedied in such thirty
(30) day period, (ii) the Manager engages in any act of fraud, misappropriation
of funds, or embezzlement against the Company, (iii) there is an event of any
gross negligence on the part of the Manager in the performance of its duties
under this Agreement, (iv) there is a Change of Control of the Manager and a
majority of the Independent Directors determines, in their sole discretion, at
any point during the 18 months following such Change of Control, that such
Change of Control was detrimental to the ability of the Manager to perform its
duties hereunder in substantially the manner conducted prior to such Change of
Control, or (v) there is entered an order for relief or similar decree or order
with respect to the Manager by a court having competent jurisdiction in an
involuntary case under the federal bankruptcy laws as now or hereafter
constituted or under any applicable federal or state bankruptcy, insolvency or
other similar laws; or (vi) the Manager (A) ceases, or admits in writing its
inability, to pay its debts as they become due and payable, or makes a general
assignment for the benefit of, or enters into an composition or arrangement
with, creditors; (B) applies for, or consents (by admission of material
allegations of a petition or otherwise) to a sequestrator (or other similar
official) of the Manager or of any substantial part of its properties or assets,
or authorizes such an application or consent, or proceedings seeking such
appointment are commenced without such authorization, consent or application
against the Manager and continue undismissed for sixty (60) days; (C) authorizes
or files a voluntary petition in bankruptcy, or applies for or consents (by
admission of material allegations of a petition or otherwise) to the application
of any bankruptcy, reorganization, arrangement, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of any jurisdiction,
or authorizes such application or consent, or proceedings to such end are
instituted against the Manager without such authorization, application or
consent and are approved as properly instituted and remain undismissed for sixty
(60) days or result in adjudication of bankruptcy or insolvency; or (D) permits
or suffers all or any substantial part of its properties or assets to be
sequestered or attached by court order and the order remains undismissed for
sixty (60) days.
(b) The Manager agrees that if any of the events specified above occur, it will
give prompt written notice thereof to the Company’s Board of Directors after the
occurrence of such event.
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(c) The Manager may terminate this Agreement effective upon sixty (60) days’
prior written notice of termination to the Company in the event that the Company
shall default in the performance or observance of any material term, condition
or covenant contained in this Agreement and such default shall continue for a
period of thirty (30) days after written notice thereof specifying such default
and requesting that the same be remedied in such thirty (30) day period, and in
such event, the Termination Fee will be payable by the Company to the Manager.
(d) The Manager may terminate this Agreement, without the Company being required
to pay a Termination Fee, in the event the Company becomes regulated as an
“investment company” under the Investment Company Act, with such termination
deemed to have occurred immediately prior to such event.
SECTION 16. ACTION UPON TERMINATION. From and after the effective date of
termination of this Agreement, pursuant to Sections 13, 14, or 15 of this
Agreement, the Manager shall not be entitled to compensation for further
services under this Agreement, but shall be paid all compensation accruing to
the date of termination and, if terminated pursuant to Section 13 or
Section 15(c), the applicable Termination Fee. Upon such termination, the
Manager shall forthwith:
(i) after deducting any accrued compensation and reimbursement for its Expenses
to which it is then entitled, pay over to the Company or a Subsidiary all money
collected and held for the account of the Company or a Subsidiary pursuant to
this Agreement;
(ii) deliver to the Board of Directors a full accounting, including a statement
showing all payments collected by it and a statement of all money held by it,
covering the period following the date of the last accounting furnished to the
Board of Directors with respect to the Company or a Subsidiary; and
(iii) deliver to the Board of Directors all property and documents of the
Company or any Subsidiary then in the custody of the Manager.
SECTION 17. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST. The Manager
agrees that any money or other property of the Company or Subsidiary held by the
Manager under this Agreement shall be held by the Manager as custodian for the
Company or Subsidiary, and the Manager’s records shall be appropriately marked
clearly to reflect the ownership of such money or other property by the Company
or such Subsidiary. Upon the receipt by the Manager of a written request signed
by a duly authorized officer of the Company requesting the Manager to release to
the Company or any Subsidiary any money or other property then held by the
Manager for the account of the Company or any Subsidiary under this Agreement,
the Manager shall release such money or other property to the Company or any
Subsidiary within a reasonable period of time, but in no event later than sixty
(60) days following such request. The Manager shall not be liable to the
Company, any Subsidiary, the Independent Directors, or the Company’s or a
Subsidiary’s stockholders or partners for any acts performed or omissions to act
by the Company or any Subsidiary in connection with the money or other property
released to the Company or any Subsidiary in accordance with the second sentence
of this Section 17. The Company and any Subsidiary shall indemnify the Manager
and
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its members, managers, officers and employees against any and all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever, which arise in connection with the Manager’s release of such money
or other property to the Company or any Subsidiary in accordance with the terms
of this Section 17. Indemnification pursuant to this provision shall be in
addition to any right of the Manager to indemnification under Section 11 of this
Agreement.
SECTION 18. REPRESENTATIONS AND WARRANTIES.
(a) The Company hereby represents and warrants to the Manager as follows:
(i) The Company is duly organized, validly existing and in good standing under
the laws of the State of Maryland, has the corporate power to own its assets and
to transact the business in which it is now engaged and is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except for failures to be so qualified, authorized or
licensed that could not in the aggregate have a material adverse effect on the
business operations, assets or financial condition of the Company.
(ii) The Company has the corporate power and authority to execute, deliver and
perform this Agreement and all obligations required hereunder and has taken all
necessary corporate action to authorize this Agreement on the terms and
conditions hereof and the execution, delivery and performance of this Agreement
and all obligations required hereunder. No consent of any other person
including, without limitation, stockholders or creditors of the Company, and no
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required by the Company in connection with this Agreement or the execution,
delivery or performance of this Agreement and all obligations required
hereunder. This Agreement has been, and each instrument or document required
hereunder will be, executed and delivered by a duly authorized officer of the
Company, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute, the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms.
(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder will not violate any provision of
any existing law or regulation binding on the Company, or any order, judgment,
award or decree of any court, arbitrator or governmental authority binding on
the Company, or the charter or bylaws of, or any securities issued by, the
Company or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Company is a party or by which the
Company or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Company, and will not result in, or require, the creation or
imposition of any lien on any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
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(iv) There are no actions, suits, proceedings, inquiries or investigations
pending or, to the knowledge of the Company, threatened against the Company or
its subsidiaries, or any of their respective assets, and to the knowledge of the
Company, its respective directors, officers or employees at law or in equity, or
before or by any governmental authority, the adverse outcome of which could
reasonably be expected to result in, individually or in the aggregate, a
material adverse effect to the Company.
(b) The Manager hereby represents and warrants to the Company as follows:
(i) The Manager is duly organized, validly existing and in good standing under
the laws of the State of New York, has the limited liability company power to
own its assets and to transact the business in which it is now engaged and is
duly qualified to do business and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except for failures to be so qualified,
authorized or licensed that could not in the aggregate have a material adverse
effect on the business operations, assets or financial condition of the Manager
and its Subsidiaries, taken as a whole.
(ii) The Manager has the limited liability company power and authority to
execute, deliver and perform this Agreement and all obligations required
hereunder and has taken all necessary corporate action to authorize this
Agreement on the terms and conditions hereof and the execution, delivery and
performance of this Agreement and all obligations required hereunder. No consent
of any other person including, without limitation, stockholders or creditors of
the Manager, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by the Manager in connection with this
Agreement or the execution, delivery or performance of this Agreement and all
obligations required hereunder. This Agreement has been, and each instrument or
document required hereunder will be, executed and delivered by a duly authorized
agent of the Manager, and this Agreement constitutes, and each instrument or
document required hereunder when executed and delivered hereunder will
constitute, the valid and binding obligation of the Manager enforceable against
the Manager in accordance with its terms.
(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder, will not violate any provision of
any existing law or regulation binding on the Manager, or any order, judgment,
award or decree of any court, arbitrator or governmental authority binding on
the Manager, or the certificate of formation or operating agreement of, or any
securities issued by, the Manager or of any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which the Manager is a party or
by which the Manager or any of its assets may be bound, the violation of which
would have a material adverse effect on the business operations, assets or
financial condition of the Manager and its subsidiaries, taken as a whole, and
will not result in, or require, the creation or imposition of any lien on any of
its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
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(c) Acres Capital hereby represents and warrants to the Company as follows:
(i) Acres Capital is duly organized, validly existing and in good standing under
the laws of the State of Delaware, has the corporate power to own its assets and
to transact the business in which it is now engaged and is duly qualified to do
business and is in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that could not in the aggregate have a material adverse effect on the business
operations, assets or financial condition of Acres Capital and its Subsidiaries,
taken as a whole.
(ii) Acres Capital has the corporate power and authority to execute, deliver and
perform this Agreement and all obligations required hereunder and has taken all
necessary corporate action to authorize this Agreement on the terms and
conditions hereof and the execution, delivery and performance of this Agreement
and all obligations required hereunder. No consent of any other person
including, without limitation, stockholders or creditors of Acres Capital, and
no license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required by Acres Capital in connection with this Agreement or the execution,
delivery or performance of this Agreement and all obligations required
hereunder. This Agreement has been, and each instrument or document required
hereunder will be, executed and delivered by a duly authorized agent of Acres
Capital, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute, the
valid and binding obligation of Acres Capital enforceable against Acres Capital
in accordance with its terms.
(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder, will not violate any provision of
any existing law or regulation binding on Acres Capital, or any order, judgment,
award or decree of any court, arbitrator or governmental authority binding on
Acres Capital, or the charter or bylaws of, or any securities issued by, Acres
Capital or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which Acres Capital is a party or by which Acres
Capital or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of Acres Capital and its subsidiaries, taken as a whole, and will not
result in, or require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
SECTION 19. NOTICES. Unless expressly provided otherwise in this Agreement, all
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when delivered against receipt or upon actual receipt of
(i) personal delivery, (ii) delivery by reputable overnight courier,
(iii) delivery by facsimile transmission with telephonic confirmation or
(iv) delivery by registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
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(a)
If to the Company:
Exantas Capital Corp.
c/o
Quaker Bio Partners
CiraCenter
2929 Arch Street
Philadelphia, PA 19104
Attention: P. Sherrill Neff
(b)
If to Acres Capital:
Acres Capital Corp
865 Merrick Avenue, Suite 200S
Westbury, New York 11590
Attention: Chief Executive Officer
(c)
If to the Manager:
Acres Capital, LLC
c/o Acres Capital Corp
865 Merrick Avenue, Suite 200S
Westbury, New York 11590
Attention: Chief Executive Officer
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this Section 19 for the giving of notice.
SECTION 20. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns as
provided in this Agreement. Each of the Company, the Manager and Acres Capital
agree that the representations, warranties, covenants and agreements of the
Company contained herein are made on behalf of the Company and its wholly-owned
Subsidiaries for the benefit of the Manager and Acres Capital and the
representations, warranties, covenants and agreements of the Manager and Acres
Capital are for the benefit of the Company and its wholly-owned Subsidiaries.
SECTION 21. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter of
this Agreement, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter of this Agreement.
The express terms of this Agreement control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms of this
Agreement. This Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto.
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SECTION 22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 23. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of any party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. No waiver of any provision hereto shall be effective unless it
is in writing and is signed by the party asserted to have granted such waiver.
SECTION 24. COSTS AND EXPENSES. Each party hereto shall bear its own costs and
expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matters incident thereto.
SECTION 25. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed part of this
Agreement.
SECTION 26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 27. SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction
SECTION 28. GENDER. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
EXANTAS CAPITAL CORP. By:
/s/ Matthew Stern
Name: Matthew Stern Title: President ACRES CAPITAL, LLC By:
Name: Title: ACRES CAPITAL CORP. By:
Name: Title:
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
EXANTAS CAPITAL CORP. By:
Name: Mark Fogel Title: President & CEO ACRES CAPITAL, LLC By:
/s/ Andrew Fentress
Name: Andrew Fentress Title: Managing Partner ACRES CAPITAL CORP. By:
/s/ Andrew Fentress
Name: Andrew Fentress Title: Managing Partner
[Signature Page to Amended and Restated Management Agreement]
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Exhibit A
ACRES CAPITAL LLC
CONFLICTS OF INTEREST POLICY
The Manager, by itself and through its Affiliates, including Acres Capital, and
their respective subsidiaries (collectively, “Acres”), provides investment
advisory services and manages the assets and day-to-day operations of various
entities, including Exantas Capital Corp. (the “Company”). Acres is responsible
for all activities relating to the assets and operations of the Company and, in
such capacity, hereby sets forth the following policies with respect to
conflicts of interest that might arise among the Company and Acres’ other
advisees:
(a) Except with the approval of a majority of the Independent Directors, the
Company will not be permitted to invest in any investment fund, collateralized
loan obligation or collateralized debt obligation structured, co-structured or
managed by Acres or its Affiliates (each, an “Investment Vehicle”) other than
those structured, co-structured or managed primarily on the Company’s behalf. If
the Company does invest in any Investment Vehicle that has other investors,
Acres will waive, or refund to the Company, any base asset management fees
allocable to the Company in respect of its investment in such Investment
Vehicle.
(b) Except with the approval of a majority of the Independent Directors, the
Company will not be permitted to enter into any transaction with Acres or any
investment entity or fund managed or advised by Acres (collectively, “Other
Clients”), including but not limited to purchasing any investment from, or
selling any investment to, Acres or an Other Client, except that the Company may
purchase an investment originated by Acres either (i) within 60 days before such
investment is acquired by the Company or (ii) with the specific intent to sell
such investment to the Company.
(c) Investments that may be appropriate for the Company, on the one hand, and
one or more of Acres or Other Clients, on the other hand, will be allocated as
between the Company, Acres and such Other Clients in accordance with Acres’
allocation policies and procedures in effect from time to time.
Acres may make exceptions to these general policies when circumstances render
the application thereof inequitable or uneconomic.
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Exhibit B
Registration Rights Agreements
1. Piggyback Rights. The Manager and any Permitted Transferee (as hereinafter
defined) shall have the unlimited right to piggyback on to any registration
statement of the Company (other than a registration statement on Form S-4 or
Form S-8 or any successor form); provided, however, that in the event of an
underwritten offering, the managing underwriters may exclude the shares of the
Manager and any Permitted Transferee to the same extent and in the same
proportion that shares of holders (other than the Company) are excluded, if the
managing underwriters determine in good faith that marketing factors require a
limitation on the number of shares to be included in such offering.
2. Demand Rights. The Manager and any Permitted Transferee shall also have the
right to require the Company to prepare, file and maintain at all times such
number of registration statements as are specified in the next sentence of this
Section 2(a) exclusively for the resale of the stock portion of the Incentive
Compensation (the “Incentive Shares”). The Manager and any Permitted Transferee
shall be entitled to (i) an unlimited number of registrations on Form S-3 or any
successor or replacement forms and (ii) if the Management Agreement terminates
and the Company is not then eligible to use Form S-3 or any successor or
replacement form, a single registration on such other form as the Company is
then eligible to use. Notwithstanding anything herein to the contrary, the
demand rights described herein may only be exercised upon request of the Manager
and any Permitted Transferee, in the case of clause (i), who hold in the
aggregate at least twenty percent (20%) of all outstanding Incentive Shares and,
in the case of clause (ii), who hold in the aggregate at least one-third of all
outstanding Incentive Shares.
3. Registration Procedures. The Company shall use its commercially reasonable
efforts to effect or cause to be effected the registration of the Incentive
Shares under the Securities Act of 1933, as amended (the “Securities Act”), to
permit the resale of the Incentive Shares by the Manager or any Permitted
Transferee.
4. Expenses. The Company shall bear all expenses of registration, including its
professional fees and registration and filing fees with the SEC, state
securities administrators and applicable stock exchanges, and printing, word
processing and delivery and distribution fees with respect to any registration
statement, prospectus (preliminary or final), or any amendments or supplements
thereto, and reasonable fees and disbursements of one counsel to the Manager and
any Permitted Transferees, provided, however, the Company shall not be liable
for the underwriting discounts and commissions associated with the sale of the
Incentive Shares.
5. Successors and Assigns; Permitted Transferees. The agreements in this Exhibit
B shall inure to the benefit of and be binding upon the successors and assigns
of each of the Company and the Manager. For purposes of this Exhibit B, the term
“Permitted Transferee” shall mean each person or entity to whom the Manager
transfers any Incentive Shares.
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6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless (i) the Manager and its
Permitted Transferees and (ii) each person, if any, who controls the Manager and
its Permitted Transferees within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (iii) the
respective officers, directors, partners, employees, representatives and agents
of the Manager and its Permitted Transferees or any person who controls any of
the foregoing (each person referred to in clause (i), (ii) or (iii) are referred
to collectively as the “Indemnified Parties”), from and against any losses,
claims, damages or liabilities, joint or several, or any actions in respect
thereof (including, but not limited to, any losses, claims, damages, judgments,
expenses, liabilities or actions relating to purchases and sales of the
Incentive Shares) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, judgments, expenses, liabilities or actions arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus, including any document
incorporated by reference therein, or in any amendment or supplement thereto or
in any preliminary prospectus relating to a registration statement, or arise out
of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse, as incurred, the Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a registration
statement or prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus relating to a registration statement, in reliance upon
and in conformity with written information pertaining to the Manager or its
Permitted Transferees or furnished to the Company by or on behalf of the Manager
or its Permitted Transferees specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to a registration
statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of the Manager or any Permitted Transferee from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Incentive Shares concerned, to the extent that a prospectus relating to such
Incentive Shares was required to be delivered by the Manager or such Permitted
Transferee, as the case may be, under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of the Manager or such
Permitted Transferee results from the fact that there was not sent or given to
such person, at or prior to the written confirmation of the sale of such
Incentive Shares to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to the Manager or such Permitted
Transferee; provided further, however, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Manager or any Permitted Transferee
if requested by the Manager or such Permitted Transferee.
34
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(b) In connection with any registration statement in which the Manager or a
Permitted Transferee is participating and as a condition to such participation,
the Manager and such Permitted Transferee, severally and not jointly, will
indemnify and hold harmless the Company, its officers, directors, partners,
employees, representatives, agents and investment advisers and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (the “Company Indemnified Persons”) from and against any losses,
claims, damages or liabilities or any actions in respect thereof, to which the
Company or any such controlling person may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to the registration statement, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to the Manager or such
Permitted Transferee or furnished to the Company by or on behalf of the Manager
or such Permitted Transferee specifically for inclusion therein; and, subject to
the limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company or any Company Indemnified Person for any legal or other
expenses reasonably incurred by the Company or such Company Indemnified Person
in connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof. This indemnity agreement will be in addition to
any liability which the Manager or such Permitted Transferee may otherwise have
to the Company or any Company Indemnified Person.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 6, notify the
indemnifying party of the commencement thereof; but the failure to notify the
indemnifying party shall not relieve it from any liability that it may have
under subsection (a) or (b) above except to the extent that it has been
materially prejudiced by such failure; and provided further that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under subsection (a) or
(b) above. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who may be counsel to the indemnifying party unless, in the reasonable
judgment of the indemnified party, a potential conflict exists), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 6 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
any unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action, and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
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(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or
(b) above in such proportion as is appropriate to reflect the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Manager or such Permitted Transferee or such other
indemnified party, as the case may be, on the other, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding any other provision of this Section 6(d), neither the Manager
nor any Permitted Transferee shall be required to contribute any amount in
excess of the amount by which the net proceeds received by the Manager or such
Permitted Transferee from the sale of the Incentive Shares pursuant to the
registration statement exceeds the amount of damages which the Manager or such
Permitted Transferees have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 6 shall survive the sale of the
Incentive Shares pursuant to a registration statement and shall remain in full
force and effect, regardless of any termination or cancellation of the
Management Agreement or any investigation made by or on behalf of any
indemnified party.
36
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Exhibit C
STRATEGIC PLAN ASSETS
In November 2016, the Board of Directors approved a strategic plan (the “Plan”),
which included, among other things, disposing of certain non-core businesses and
investments and underperforming legacy commercial real estate loans owned by the
Company or a Subsidiary (“Strategic Plan Assets”). As part of the Plan, certain
Strategic Plan Assets were reclassified as discontinued operations (“Discops”)
and/or assets held for sale (“AHFS”) during the fourth quarter of 2016. The
following table delineates, by business segment, the Strategic Plan Assets owned
by the Company or a Subsidiary at September 30, 2017 and their respective net
book values at September 30, 2017 (in millions):
Net Book Value at September 30, 2017
Discops and AHFS
Legacy CRE Loans
78.5
Middle Market Loans
29.2
Residential Mortgage Lending Segment
19.0
Other AHFS
6.6
Subtotal—Discops and AHFS
133.3
Investments in Unconsolidated Entities
12.3
Commercial Finance Assets
3.5
Total
$ 149.1
37
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Exhibit D
Base Management Fee and Incentive Compensation
Attached
38
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Exantas - Base and Incentive Management Fees Paid
Base Management Fee
Incentive Management Fee (Quarterly)
Period
Covered
Paid
Amount
Paid
Cash Stock Total
July-18
August-18 $ 685,626
August-18
September-18 690,170
September-18
October-18 694,028 $ — $ — $ —
October-18
November-18 688,182
November-18
December-18 692,928
December-18
January-19 696,503 — — —
January-19
February-19 690,882
February-19
March-19 694,911
March-19
April-19 698,675 — — —
April-19
May-19 690,700
May-19
June-19 694,991
June-19
July-19 699,461
July-19
August-19 690,131 August-19 123,557 41,175
164,731 For 2Q 2019 IMF
August-19
September-19 695,568
September-19
October-19 700,614
October-19
November-19 693,375 November-19 330,920 110,295
441,215 For 3Q 2019 IMF
November-19
December-19 697,526
December-19
January-20 701,249 — — —
January-20
February-20 688,008
February-20
March-20 688,502
March-20
April-20 691,861 — — —
April-20
May-20 439,189
May-20
June-20 441,621
June-20
July-20 446,308 — — —
$ 454,476 $ 151,470 $ 605,946
|
EXHIBIT 10.3
EXECUTION VERSION
AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
This Amended and Restated Investment Management Agreement (the “Agreement”),
dated as of December 31, 2019 and effective as of October 1, 2019 (the
“Effective Date”), is by and between FGL US Holdings Inc., a corporation
organized under the laws of Delaware (the “Company”) and Blackstone ISG-I
Advisors L.L.C., a Delaware limited liability company (the “Investment
Manager”).
WHEREAS, the Company desires that the Investment Manager supervise and direct
the investment and reinvestment with respect to the assets in the Company’s
general account and any other accounts of the Company (the assets in such
accounts, and together with all additions, substitutions and alterations
thereto, are collectively referred to herein as the “Account”), and the
Investment Manager wishes to accept such appointment on the terms and conditions
set forth in this Agreement.
WHEREAS, the Company and the Investment Manager desire to amend and restate the
Investment Management Agreement dated as of November 30, 2017 between the
Company and the Investment Manager, effective as of the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment of Investment Manager. On the terms and subject to the conditions
set forth herein, the Company hereby appoints the Investment Manager as
investment manager of the Account with discretionary authority to manage the
investment and reinvestment of the funds and assets of the Account in accordance
with the terms hereof, and the Investment Manager accepts such appointment. In
the course of providing the services contemplated by this Agreement, the
Investment Manager shall act as a fiduciary and shall discharge its fiduciary
duties and exercise each of its powers under this Agreement with the care, skill
and diligence that a registered investment adviser, acting in a like capacity
and familiar with insurance company matters, would use in the conduct of a like
enterprise with like aims, taking into consideration the facts and circumstances
then prevailing, and such fiduciary duties shall specifically include a duty
(a) to act with good faith; (b) of loyalty to Company; (c) to provide full and
fair disclosure of all material facts; (d) to employ reasonable care to avoid
misleading Company; and (e) to act in a manner consistent with the Investment
Guidelines for the Account as agreed to between Investment Manager and Company.
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2. Management Services; Duties of and Restrictions on Investment Manager;
Sub-Managers.
(a) For the avoidance of doubt and without limiting the generality of the powers
conferred upon it by Section 1, the Investment Manager shall be responsible for
the investment and reinvestment of the assets of the Account in accordance with
the Investment Guidelines set forth in Schedule 1 attached hereto (as amended or
supplemented from time to time by an agreement in writing of the Company and the
Investment Manager, the “Investment Guidelines”). In connection therewith, the
Investment Manager shall have full authority:
(i) to buy, sell, sell short, hold and trade, on margin or otherwise and in or
on any market or exchange within or outside the United States or otherwise,
preferred and common stock of domestic and foreign issuers, securities
convertible into preferred or common stock of domestic and foreign issuers, debt
securities of and/or loans to domestic and foreign governmental issuers
(including federal, state, municipal, governmental sponsored agency, global and
regional development bank and export-import bank issuers) and domestic and
foreign corporate issuers, investment company securities, money-market
securities, partnership interests, mortgage and asset backed securities, foreign
currencies and currency forwards, futures contracts and options thereon, bank
and debtor-in-possession loans, trade receivables, repurchase and reverse
repurchase agreements, commercial paper, other securities, futures and
derivatives (including equity, interest rate and currency swaps, swaptions,
caps, collars and floors), asset hedging, rights and options on all of the
foregoing and other investments, assets or property selected by the Investment
Manager in its discretion;
(ii) to select, open, maintain or close one or more sub-accounts with any
Custodian (as defined below) pursuant to the applicable Custodial Agreement (as
defined below);
(iii) to transfer funds (by wire transfer or otherwise) or securities (by
transfer via the Depository Trust & Clearing Corporation or otherwise) (A)
between the Account’s Custodians (if more than one), (B) between sub-accounts
maintained by any Custodian for the Account, (C) subject to Section 20(d),
between the Account and any account owned by other clients of the Investment
Manager or (D) to or from any brokers or dealers engaged by the Investment
Manager on behalf of the Company in connection with the investments permitted
herein;
(iv) to select and open, maintain and close one or more trading accounts with
brokers and dealers for the execution of transactions on behalf of the Company
and to negotiate, enter into, execute, deliver, perform, renew, extend and
terminate all contracts, agreements, and other undertakings on behalf of the
Company with brokers, dealers, prime brokers or other counterparties, including,
but not limited to, executing broker agreements; and
(v) to effect such other investment transactions involving the assets in the
Company’s name and solely for the Account, including without limitation, to
execute swaps, futures, options and other agreements with counterparties on the
Company’s behalf as the Investment Manager deems appropriate from time to time
in order to carry out the Investment Manager’s responsibilities hereunder.
(b) In accordance with the Investment Manager’s policies and procedures set
forth in Schedule 3 attached hereto, the Investment Manager or its agent is
authorized, but shall not be required, to vote, tender or convert any securities
in the Account; to execute waivers, consents and other instruments with respect
to such securities; to endorse, transfer or deliver such securities or to
consent to any class action, plan of reorganization, merger, combination,
2
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consolidation, liquidation or similar plan with reference to such securities;
and the Investment Manager shall not incur any liability to the Company by
reason of any exercise of, or failure to exercise, any such discretion in the
absence of gross negligence or bad faith.
(c) Notwithstanding anything in this Agreement to the contrary, the Investment
Manager may, in its own discretion, but with the prior verbal or written consent
of the Company, delegate any or all of its discretionary investment, advisory
and other rights, powers, functions and obligations hereunder to one or more
investment advisers (each, a “Sub-Manager”), including its affiliates; provided
that (i) any such delegation shall be revocable by either the Investment Manager
or the Company consistent with the terms and conditions related to the
appointment of such Sub-Manager, (ii) no such designation shall relieve the
Investment Manager from any of its obligations or liabilities hereunder, and the
Investment Manager shall always remain responsible to the Company for all
obligations or liabilities of such Sub-Manager with regards to providing such
service or services as if provided by the Investment Manager and (iii) the
Investment Manager shall be responsible for ensuring that any Sub-Manager
complies with the Investment Guidelines. Except as otherwise provided in
Section 3(a), any fees and other remuneration payable to Sub-Managers (the
“Sub-Manager Fees”) will be payable out of the assets managed by such
Sub-Managers.
3. Compensation; Expenses.
(a) The Company agrees to pay, from the assets of the Account, the Investment
Manager or its designee a management fee (“Management Fee”) for the services
provided pursuant to this Agreement, calculated and paid in accordance with
Schedule 2 attached hereto. To the extent that the Investment Manager engages a
sub-advisor to assist with the services to be provided by the Investment Manager
pursuant to this Agreement, the Investment Manager will be responsible for all
fees and expenses payable to such sub-advisor in connection with such engagement
and the Company will not incur additional fees related to such engagement of a
sub-advisor.
(b) [Reserved].
(c) The Investment Manager will be responsible for all fees and expenses
incurred by it in performing its obligations under this Agreement, including any
fees and expenses incurred by any sub-advisor engaged by the Investment Manager
(which shall include internal costs of the Company related to the management of
the Account as may be invoiced to the Investment Manager by the Company or its
Affiliates) except, for the avoidance of doubt, (i) Sub-Manager Fees which shall
be paid in accordance with Section 2(c) and (ii) Account Trading and Investment
Expenses, which shall be paid by the Company out of the assets of the Account.
For purposes of this Agreement, “Account Trading and Investment Expenses” shall
mean all out-of-pocket brokerage fees, brokerage commissions and all other
brokerage transaction costs, stock borrowing and lending fees, interest on cash
balances, custodial fees, reasonable transaction legal expenses, regulatory fees
or taxes payable in respect of the Account, professional expenses (including
fees in connection with the use of proxy voting services) and any other fees and
expenses related to the trading and investment activity of the Account as
determined by the Investment Manager (or any Sub-Manager) in good faith.
3
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(d) Any fees charged that are payable out of the assets of the Company managed
by Sub-Managers that are Affiliates of the Investment Manager or otherwise
charged to the Company for separately-managed account or fund investments
managed or developed by Sub-Managers that are Affiliates of the Investment
Manager will be at rates no less favorable than the fees charged with respect to
comparably-sized third-party investors, including, in the case of such
Sub-Managers that are Affiliates of the Investment Manager, fees charged to
comparably-sized clients of Investment Manager or its affiliates pursuing
similar investment strategies.
4. Custodian.
(a) The assets of the Account shall be held by one or more custodians, trustees
or securities intermediaries duly appointed by the Company (each, a
“Custodian”), in one or more accounts at each such Custodian pursuant to
custodial, trust or similar agreements approved by the Company (each, a
“Custodial Agreement”). The Investment Manager may open new sub-accounts under
any Custodial Agreement, and cause the assets of the Account to be held in such
sub-accounts established with the applicable Custodian in accordance with such
Custodial Agreement. The Investment Manager is authorized to give instructions
to each Custodian, in writing, with respect to all investment decisions
regarding the Account. Nothing contained herein shall be deemed to authorize the
Investment Manager to take or receive physical possession of any of the assets
for the Account, it being intended that sole responsibility for safekeeping
thereof (in such investments as the Investment Manager may direct) and the
consummation of all purchases, sales, deliveries and investments made pursuant
to the Investment Manager’s direction shall rest upon the Custodians. The
Custodians may be changed from time to time upon the written instructions of the
Company.
(b) The Company shall instruct each Custodian to send the Investment Manager
duplicate copies of all Account statements given to the Company by the
Custodian. The Company acknowledges that it receives Account statements from
each Custodian at least quarterly.
5. Brokerage. The Company hereby delegates to the Investment Manager sole and
exclusive authority to designate the brokers or dealers through whom all
purchases and sales on behalf of the Account will be made. To the extent
permitted by applicable law, such brokers or dealers may include affiliates of
the Investment Manager. The Investment Manager will determine the rate or rates,
if any, to be paid for brokerage services provided to the Account. In selecting
brokers or dealers to effect transactions on behalf of the Account, the
Investment Manager, subject to its overall duty to obtain “best execution” of
Account transactions, will have authority to and may consider the full range and
quality of the ability of the brokers or dealers to execute transactions
efficiently, their responsiveness to the Investment Manager’s instructions,
their facilities, reliability and financial responsibility and the value of any
research or other services or products they provide. The Investment Manager will
not be obligated to seek in advance competitive bidding for the most favorable
commission rate applicable to any particular transaction for the Account or to
select any broker-dealer on the basis of its purported posted commission rate.
As long as the services or other products provided by a particular broker or
dealer (whether directly or through a third party) qualify as “brokerage and
research” services within the meaning of Section 28(e) of the Securities
Exchange Act of 1934, as amended (and
4
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relevant Securities and Exchange Commission interpretations of that section) and
the Investment Manager determines in good faith that the amount of commission
charged by such broker or dealer is reasonable in relation to the value of such
“brokerage and research services,” the Investment Manager may utilize the
services of that broker or dealer to execute transactions for the Account on an
agency basis even if (i) the Account would incur higher transaction costs than
it would have incurred had another broker or dealer been used and (ii) the
Account does not necessarily benefit from the research or products provided by
that broker or dealer.
6. Limitation of Liability; Indemnification.
(a) The Investment Manager does not guarantee the future performance of the
Account or any specific level of performance, the success of any investment
decision or strategy that the Investment Manager may use or the success of the
Investment Manager’s overall management of the Account. The Investment Manager
does not provide any express or implied warranty as to the performance or
profitability of the Account or any part thereof or that any specific investment
objectives will be successfully met. The Company understands that investment
decisions made by the Investment Manager on behalf of the Account are subject to
various market, currency, economic, political and business risks, and that those
investment decisions will not always be profitable.
(b) The Investment Manager, any affiliate of the Investment Manager or any
member, partner, shareholder, principal, director, officer, employee or agent of
the Investment Manager or any such affiliate (each, an “Investment Manager
Party”) shall not be liable for any loss, liability or damage (“Losses”)
resulting from: (i) any act or omission (including any such acts or omissions
deemed to constitute willful misconduct, negligence or bad faith) of any
independent representative, consultant, independent contractor, broker, agent or
other person (other than any Sub-Manager) who is selected, engaged or retained
by the Investment Manager in connection with the performance of ministerial
services, without investment management discretion, under this Agreement, unless
such person was selected, engaged or retained by the Investment Manager in a
grossly negligent manner or in bad faith; (ii) any act or failure to act by any
Custodian or any other third party (other than any Sub-Manager); (iii) the
failure by the Investment Manager or any Sub-Manager to adhere to any
limitations or restrictions contained in the Investment Guidelines as a result
of changes in market value, additions to or withdrawals from the Account,
portfolio rebalancing or other non-volitional acts of the Investment Manager or
any Sub-Manager; or (iv) any act or omission by the Investment Manager or any
Sub-Manager in connection with the performance of its services under this
Agreement, except in cases of willful misconduct, gross negligence, bad faith or
reckless disregard by the Investment Manager or such Sub-Manager of the
obligations and duties of the Investment Manager under this Agreement. The
Investment Manager shall have no liability for any Losses suffered, and shall be
fully indemnified by the Company for any Losses it may suffer, as the result of
any actions it takes or any actions it does not take based on instructions
received from any of the authorized persons of the Company reasonably believed
by the Investment Manager to be genuine. The Investment Manager may consult with
legal counsel at its cost and expense concerning any question which may arise
with reference to this Agreement or its duties hereunder.
5
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(c) The Investment Manager shall indemnify, defend, hold and save harmless the
Company, any affiliate of the Company or any member, partner, shareholder,
principal, director, officer, employee or agent of the Company or any such
affiliate (each, a “Company Party”) against any Losses, costs and expenses
(including, without limitation, any interest, penalties and reasonable
attorneys’ fees incurred in connection with the defense of Proceedings) to the
extent arising from: (i) any inaccuracy in or breach of the representations and
warranties made by the Investment Manager contained in Section 8(b) of this
Agreement, (ii) any breach or failure by the Investment Manager to perform any
of its covenants or obligations contained in this Agreement, (iii) any act or
omission by the Investment Manager deemed to constitute a breach of the standard
of care set forth in Section 1 of this Agreement or (iv) any bad faith, willful
misfeasance, gross negligence or reckless disregard of duties in connection with
the performance by Investment Manager, its officers, agents and employees of its
obligations under this Agreement. The Investment Manager will provide written
notice to the Company promptly if the Investment Manager identifies any matter
that is or is reasonably likely to result in a breach of this Agreement.
(d) The federal and state securities laws impose liabilities under certain
circumstances on persons who act in good faith, and therefore nothing in this
Agreement will waive or limit any rights that the Company may have under those
laws.
7. Termination.
(a) Either party may terminate this Agreement upon thirty (30) calendar days
prior written notice (a “Termination Notice”) or such shorter period of time as
the parties may agree in writing.
(b) Termination of this Agreement shall not, however, affect liabilities and
obligations incurred or arising from transactions initiated under this Agreement
prior to the termination date, or consummation of any transactions initiated
prior to the receipt by one party of the other party’s notice of termination.
Following a Termination Notice, the Investment Manager shall work with the
Company to effect a prompt and orderly transition of the portfolio; provided,
however, that the Investment Manager will have no obligation to recommend any
action with respect to, or to liquidate, the assets in the portfolio nor shall
the Investment Manager be required to incur any out of pocket expense.
8. Representations, Warranties and Covenants.
(a) The Company represents and warrants to the Investment Manager as follows:
(i) the Company has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder;
(ii) this Agreement constitutes a binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights or
by general equity principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
6
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(iii) the execution, delivery and performance of this Agreement by the Company
do not violate (A) any law applicable to the Company, (B) any provision of the
constituent documents of the Company or (C) any agreement or instrument to which
the Company is a party, except for such violations as would not have a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement;
(iv) no consent of any person, and no license, permit, approval or authorization
of, exemption by, report to, or registration, filing or declaration with, any
governmental authority is required by the Company in connection with the
execution, delivery and performance of this Agreement, other than those already
obtained;
(v) the Company is not an investment company (as that term is defined in the
Investment Company Act of 1940, as amended) nor exempt from the definition of
investment company by reason of Section 3(c)(1) of such Act;
(vi) the Company is a “qualified institutional buyer” (“QIB”) as defined in Rule
144A under the Securities Act of 1933, as amended, and the Company will promptly
notify the Investment Manager if the Company ceases to be a QIB;
(vii) the Company is a “qualified eligible person” (“QEP”) as defined in
Commodity Futures Trading Commission Rule 4.7 (“CFTC Rule 4.7”), and the Company
will promptly notify the Investment Manager if the Company ceases to be a QEP,
and hereby consents to be treated as an “exempt account” under CFTC Rule 4.7 by
the Investment Manager or any Sub-Manager, as the case may be;
(viii) the Company is a “qualified purchaser” (“QP”) as defined in
Section 2(a)(51) of the Investment Company Act of 1940, as amended, and the
Company will promptly notify the Investment Manager if the Company ceases to be
a QP;
(ix) none of the assets contained in the Account are or will be “plan assets” of
an employee benefit plan subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue
Code of 1986, as amended;
(x) the Company has adopted appropriate anti-money laundering policies and
procedures consistent with the applicable requirements of the USA PATRIOT Act
and any other applicable anti-money laundering laws and regulations; and
(xi) the Company has received a copy of the Investment Manager’s Form ADV Part
2A.
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(b) The Investment Manager represents and warrants, and with respect to clause
(vii) below, covenants, to the Company as follows:
(i) the Investment Manager has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder;
(ii) this Agreement constitutes a binding obligation of the Investment Manager,
enforceable against the Investment Manager in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights or by general equity principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law;
(iii) the execution, delivery and performance of this Agreement by the
Investment Manager do not violate (A) any law applicable to the Investment
Manager, (B) any provision of the articles of incorporation or by-laws of the
Investment Manager or (C) any agreement or instrument to which the Investment
Manager is a party, except for such violations as would not have a material
adverse effect on the ability of the Investment Manager to perform its
obligations under this Agreement;
(iv) no consent of any person, and no license, permit, approval or authorization
of, exemption by, report to, or registration, filing or declaration with, any
governmental authority is required by the Investment Manager in connection with
the execution, delivery and performance of this Agreement, other than those
already obtained;
(v) the Investment Manager is registered under the Investment Advisers Act of
1940, as amended, as an “investment adviser”;
(vi) the Investment Manager has adopted appropriate anti-money laundering
policies and procedures consistent with the applicable requirements of the USA
PATRIOT Act and any other applicable anti-money laundering laws and regulations;
and
(vii) the Investment Manager shall continue to be registered under the
Investment Advisers Act of 1940, as amended, as an “investment adviser” for as
long as this Agreement is in full force and effect or until this Agreement is
otherwise terminated in accordance with Section 7.
(c) The Company acknowledges and agrees that, in accordance with Section 4, the
Investment Manager shall under no circumstances act as custodian of the assets
of the Account or any securities or other investments purchased or sold for the
Account or cash pending contribution to or distribution from any such investment
or take or have title to or possession of the assets of the Account or any
securities or other investments purchased or sold for the Account. The
Investment Manager shall not have the power or authority to amend the terms of
any of the Company’s custody arrangements with respect to the Account or related
cash or to appoint a custodian without the Company’s prior written consent.
8
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9. Asset Hedging Activities. The Company hereby authorizes the Investment
Manager to enter into, in the name, and on behalf, of the Company, such
over-the-counter, exchange traded and other asset hedging and derivative
transactions with respect to the Account (including executing any and all
contracts or agreements related thereto) as are permitted pursuant to the
Investment Guidelines and in accordance with the Company’s derivative use plan
as adopted by the Company’s Board of Directors (each such transaction, a
“Derivative Transaction”) and any such Derivative Transaction shall be the
responsibility of the Company.
10. Notices. All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given if delivered by
hand, facsimile, e-mail, or mailed by first class, registered mail, return
receipt requested, postage and registry fees prepaid and addressed as follows:
(a)
If to the Company:
FGL US Holdings Inc.
1000 Fleet Street, 6th Floor
Baltimore, MD 21202
Email: legalgovernance@fglife.com
Attention: General Counsel
(b)
If to the Investment Manager:
Blackstone ISG-I Advisors L.L.C.
345 Park Avenue
New York, New York 10154
Email: jeffrey.iverson@blackstone.com
Attention: Jeffrey Iverson
Managing Director and Chief Compliance Officer
Addresses may be changed by notice in writing signed by the addressee.
11. No Assignment. This Agreement may not be assigned by any party to this
Agreement without the prior written consent of the other parties hereto. For
purposes of the preceding sentence, the term “assign” shall have the meaning
given the term “assignment” in Section 202(a)(1) of the Advisers Act and Rule
202(a)(1)-1 thereunder. Subject to the foregoing, this Agreement shall inure to
the benefit of and be binding on the parties hereto and their successors and
permitted assigns, in each case provided that such successor or assignee agrees
to be bound by the terms and conditions of this Agreement.
12. Governing Law. To the extent consistent with any mandatorily applicable
federal law, this Agreement shall be governed by the laws of the State of New
York without giving effect to any principles of conflicts of law thereof that
would permit or require the application of the law of another jurisdiction and
are not mandatorily applicable by law.
13. [Reserved].
9
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14. Arbitration. Any controversy arising out of or in connection with this
Agreement shall be settled by arbitration in New York City in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect, and any award rendered thereon shall be enforceable in any court of
competent jurisdiction. Without giving effect to Section 12, any such
arbitration and this Section 14 shall be governed by Title 9 of the U.S. Code
(Arbitration).
15. Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Each party hereby (i) certifies
that no representative, agent or attorney of the other has represented,
expressly or otherwise, that the other would not, in the event of a proceeding,
seek to enforce the forgoing waiver and (ii) acknowledges that it has been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this paragraph.
16. Right to Audit. The Company and its representatives shall have the right, at
its own expense, to conduct an audit of the relevant books, records and accounts
of the Investment Manager related to the Account during normal business hours
upon giving reasonable notice of their intent to conduct such an audit. In the
event of such audit, the Investment Manager shall comply with the reasonable
requests of the Company and its representatives and provide access to all books,
records and accounts necessary to the audit and the Company shall reimburse the
Investment Manager for its reasonable costs and expenses in connection with such
audit.
17. Books and Records. The Investment Manager shall keep and maintain proper
books and records wherein shall be recorded the business transacted by it on
behalf of, in the name of or on account of the Company in respect of the
Account.
18. Reports. The Investment Manager shall furnish the Company with such reports
relating to the Account as the Company shall from time to time reasonably
require.
19. Force Majeure. No party to this Agreement shall be liable for damages
resulting from delayed or defective performance when such delays arise out of
causes beyond the control and without the fault or gross negligence of the
offending party. Such causes may include, but are not restricted to, acts of God
or of the public enemy, terrorism, acts of the state in its sovereign capacity,
fires, floods, earthquakes, power failure, disabling strikes, epidemics,
quarantine restrictions and freight embargoes.
20. Non-Exclusive Dealings with and by Investment Manager Parties; Conflicts of
Interest.
(a) Although nothing herein shall require the Investment Manager to devote its
full time or any material portion of its time to the performance of its duties
and obligations under this Agreement, the Investment Manager shall furnish
continuous investment management services for the Account and, in that
connection, devote to such services such of its time and activity (and the time
and activity of its employees) during normal business days and hours as it
10
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shall reasonably determine to be necessary for the Account to achieve its
investment objective(s); provided, however, that nothing contained in this
Section 20(a) shall preclude the Investment Manager Parties from acting,
consistent with the foregoing, either individually or as a member, partner,
shareholder, principal, director, trustee, officer, official, employee or agent
of any entity, in connection with any type of enterprise (whether or not for
profit), regardless of whether the Company, Account or any Investment Manager
Party has dealings with or invests in such enterprise.
(b) The Company understands that the Investment Manager will continue to furnish
investment management and advisory services to others, and that the Investment
Manager shall be at all times free, in its discretion, to make recommendations
to others which may be the same as, or may be different from those made to the
Account. The Company further understands that the Investment Manager Parties may
or may not have an interest in the securities whose purchase and sale the
Investment Manager may recommend. Actions with respect to securities of the same
kind may be the same as or different from the action which the Investment
Manager Parties or other investors may take with respect thereto. Furthermore,
the Company understands and agrees that each Investment Manager Party shall have
the right to engage, directly or indirectly, in the same or similar business
activities or lines of business as the Investment Manager and any other
Investment Manager Party and no knowledge or expertise of any Investment Manager
Parties or any opportunities available to such Investment Manager Parties shall
be imputed to the Investment Manager or any other Investment Manager Parties.
(c) The Company agrees that the Investment Manager may refrain from rendering
any advice or services concerning securities of companies of which any of the
Investment Manager Parties are directors or officers, or companies as to which
the Investment Manager Parties have any substantial economic interest or
possesses material non-public information, unless the Investment Manager either
determines in good faith that it may appropriately do so without disclosing such
conflict to the Company or discloses such conflict to the Company prior to
rendering such advice or services with respect to the Account.
(d) From time to time, when determined by the Investment Manager to be in the
best interest of the Company, the Account may purchase securities from or sell
securities to another account (including, without limitation, public or private
collective investment vehicles) managed, maintained or trusteed by the
Investment Manager or an affiliate at prevailing market levels in accordance
with applicable law and utilizing such pricing methodology determined to be fair
and equitable to the Company in the Investment Manager’s good faith judgment.
(e) Consistent with applicable law, the Company hereby authorizes the Investment
Manager to effect securities transactions on behalf of the Account with its
affiliated broker-dealers, and understands that such affiliated broker-dealers
may retain commissions in connection with effecting any transactions for the
Account. The Investment Manager and any affiliated broker-dealers are also
hereby authorized, consistent with applicable law, by the Company to execute
agency cross transactions on behalf of the Account. Agency cross transactions
may facilitate a purchase or sale of a block of securities for the Account at a
predetermined price and may avoid unfavorable price movements which might
otherwise be suffered if the purchase or sale order were exposed to the market.
However, the Investment Manager and its affiliated broker-dealers may receive
commissions from, and therefore may
11
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have a potentially conflicting division of loyalties and responsibilities
regarding, both parties to an agency cross transaction. The Company understands
that its authority to the Investment Manager to effect agency cross transactions
for the Company is terminable at will without penalty, effective upon receipt by
the Investment Manager of written notice from the Company.
21. Aggregation and Allocation of Orders. The Company acknowledges that
circumstances may arise under which the Investment Manager determines that,
while it would be both desirable and suitable that a particular security or
other investment be purchased or sold for the account of more than one of the
Investment Manager’s clients’ accounts, there is a limited supply or demand for
the security or other investment. Under such circumstances, the Company
acknowledges that, while the Investment Manager will seek to allocate the
opportunity to purchase or sell that security or other investment among those
accounts on a fair and reasonable basis, the Investment Manager shall not be
required to assure equality of treatment among all of its clients (including
that the opportunity to purchase or sell that security or other investment will
be proportionally allocated among those clients according to any particular or
predetermined standards or criteria). Where, because of prevailing market
conditions, it is not possible to obtain the same price or time of execution for
all of the securities or other investments purchased or sold for the Account,
the Investment Manager may average the various prices and charge or credit the
Account with the average price.
22. Investment Manager Independent. For all purposes of this Agreement, the
Investment Manager shall be deemed to be an independent contractor and shall
have no authority to act for, bind or represent the Company or the Company’s
shareholders in any way, except as expressly provided herein, and shall not
otherwise be deemed to be an agent of the Company. Nothing contained herein
shall create or constitute the Investment Manager and the Company as a member of
any partnership, joint venture, association, syndicate, unincorporated business
or other separate entity, nor shall anything contained herein be deemed to
confer on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of any other person, except as expressly
provided herein.
23. Anti-Money Laundering. Upon request from the Company no more than once per
calendar year, the Investment Manager shall promptly provide to the Company a
signed, written certification in the Investment Manager’s standard form with
respect to the Investment Manager’s compliance of their services rendered to the
Company with the Investment Manager’s anti-money laundering policies and
procedures. If the Investment Manager fails to deliver to the Company an
accurate certification of compliance with the Investment Manager’s anti-money
laundering policies and procedures as required by this Section 23, the Company
shall have the right to audit the Investment Manager for compliance with the
Investment Manager’s anti-money laundering policies and procedures, as
determined by the Company’s Anti-Money Laundering Officer.
24. Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter of this Agreement. There are no
understandings between the parties with respect to the subject matter of this
Agreement other than as expressed herein.
12
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25. Severability. To the extent this Agreement may be in conflict with any
applicable law or regulation, this Agreement shall be construed to the greatest
extent practicable in a manner consistent with such law or regulation. The
invalidity or illegality of any provision of this Agreement shall not be deemed
to affect the validity or legality of any other provision of this Agreement.
26. Counterparts; Amendment. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
not be modified or amended, except by an instrument in writing signed by the
party to be bound or as may otherwise be provided for herein.
27. Business Day. For the purpose of this Agreement, “Business Day” shall mean
any day other than a Saturday, Sunday or any other day on which banking
institutions are authorized or required by law or executive order to close in
New York, New York.
[Remainder of page intentionally left blank.]
13
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the date and year first above
written.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT
DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE
COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING
COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR
ACCOUNT DOCUMENT.
Blackstone ISG-I Advisors L.L.C. LOGO [g856352img01.jpg] Name: Jeffrey
Iverson Title: Chief Compliance Officer and General Counsel FGL US Holdings
Inc.
Name: Title:
Signature Page
Amended and Restated Investment Management Agreement
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the date and year first above
written.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT
DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE
COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING
COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR
ACCOUNT DOCUMENT.
Blackstone ISG-I Advisors L.L.C.
Name: Jeffrey Iverson Title: Chief Compliance Officer and General Counsel
FGL US Holdings Inc. LOGO [g856352img02.jpg] Name: Eric L. Marhoun Title:
General Counsel and Secretary
Signature Page
Amended and Restated Investment Management Agreement
--------------------------------------------------------------------------------
Schedule I
Investment Guidelines
Capitalized terms used but not otherwise defined in these Investment Guidelines
have the meanings ascribed to such terms in the Investment Management Agreement.
Account Investment Guidelines
The following Investment Guidelines shall apply to the assets in the Account.
Investment Objectives
The Company’s investment objectives are to ensure the prudent management of the
Company’s investments, taking into account the safety of principal, investment
yield and return, stability in the value of the investment and liquidity
necessary to meet the Company’s obligations, expected business needs and
investment diversification.
Board Oversight
The management of the Account shall at all times remain under the oversight of
the Board of Directors of the Company. The Company’s management will oversee the
ongoing activities of the Investment Manager to achieve the Company’s business
goals within its risk, capital and liquidity tolerances. The Company reserves
the right to review and direct as needed specific investment activity to achieve
its objectives.
IG-1
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Schedule 2
Management Fee Schedule
Capitalized terms used but not otherwise defined in this Schedule 2 have the
meanings ascribed to such terms in the Investment Management Agreement.
1.
Management Fee: In consideration of the services performed under the Agreement,
the Company shall pay the Investment Manager a “Management Fee” for each
calendar quarter equal to the per annum Average Month-End Management Fee Rate
for such quarter of the Average Month-End Net Asset Value.
The Management Fee Rate will be calculated based on the aggregate assets under
management of the Company and other subsidiaries of FGL Holdings by the
Investment Manager, such that the Investment Manager’s per annum Management Fee
will be 0.30% of such aggregate assets under management up to $25 billion, 0.24%
of such aggregate assets under management above $25 billion and up to
$75 billion and 0.22% of such aggregate assets under management above
$75 billion. Accordingly, the “Management Fee Rate” for the Account shall, for
any calendar month, be equal to:
•
if the aggregate month-end net asset values of the Account and each other
account of FGL Holdings and its subsidiaries managed by the Investment Manager
(in each case) with adjustments for contributions to, or withdrawals from, the
Account during such month (“Aggregate FGLH AUM”) are less than or equal to
$25 billion, 0.30%;
•
if Aggregate FGLH AUM exceeds $25 billion, but is less than or equal to
$75 billion, the result of (x) divided by (y), where (x) is equal to the sum of
(i) 0.30% multiplied by $25 billion and (ii) 0.24% multiplied by the excess of
Aggregate FGLH AUM for such month over $25 billion and where (y) is equal to
Aggregate FGLH AUM for such month; and
•
if Aggregate FGLH AUM exceeds $75 billion, the result of (x) divided by (y),
where (x) is equal to the sum of (i) 0.30% multiplied by $25 billion, (ii) 0.24%
multiplied by $50 billion and (iii) 0.22% multiplied by the excess of Aggregate
FGLH AUM for such month over $75 billion and where (y) is equal to Aggregate
FGLH AUM for such month.
The “Average Month-End Management Fee Rate” for each calendar quarter shall be
the average of the Management Fee Rates for each calendar month end during such
calendar quarter.
The “Average Month-End Net Asset Value” for a calendar quarter shall be the
average of the month-end net asset values of the Account during such calendar
quarter with adjustments for contributions to, or withdrawals from, the Account
during such period.
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If the period in respect of which a Management Fee is payable is less than a
calendar quarter, then the Management Fee shall be pro-rated accordingly.
2.
Valuation. The Custodian shall be responsible for determining the value of the
Account and shall submit a proposed valuation of the Account as of each
month-end to the Investment Manager. The parties agree to negotiate in good
faith as to any objections raised by the Investment Manager about the valuation
of assets in the Account for purposes of determining the Management Fee.
3.
Payment of Fees: The Management Fee will be calculated, billed and paid
quarterly in arrears, based on the Average Month-End Management Fee Rate and the
Average Month-End Net Asset Value of the Account as of the last business day of
each and all of the three calendar months during the relevant quarter, or in the
case of any partial quarterly period, the last day of each calendar month during
the relevant period and the last business day of such period. Any fee payable by
the Company hereunder will be paid by Company within 10 Business Days following
receipt by the Company of an invoice for such fee, detailing the calculation of
such fee. Upon termination of the Agreement, any outstanding Management Fee
shall become immediately payable by the Company.
4.
Sub-Manager Fees. For the avoidance of doubt, nothing in this Schedule shall
affect the provisions of the Agreement pursuant to which any Sub-Manager Fees
(subject to the requirements of the Investment Guidelines) shall be payable out
of the assets managed by such Sub-Managers, which are in addition to any
Management Fees payable hereunder. |
Exhibit 10.1
PUBLIC STORAGE
[plan#year] EQUITY AND PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN
RESTATED STOCK UNIT AGREEMENT
THIS RESTATED STOCK UNIT AGREEMENT (the “Agreement”) is made as of January 1,
2020 (the “Restatement Date”), by and between Public Storage (the “Company”) and
[Participant#Name] (the “Participant”). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the
Company’s [plan#year] Equity and Performance-Based Incentive Compensation Plan
(as amended and/or restated from time to time, the “Plan”).
WHEREAS, the Board of Trustees of the Company has duly adopted, and the
shareholders of the Company have duly approved, the Plan, which provides for the
grant to Service Providers of Stock Units relating to the Company’s common
shares of beneficial ownership, par value $.10 per share (the “Stock”), which
may be granted from time to time as the Committee so determines.
WHEREAS, the Company previously determined that it was desirable and in its best
interests to grant to the Participant, pursuant to the Plan, Stock Units
relating to a certain number of shares of Stock as compensation for services
rendered to the Company, and/or in order to provide the Participant with an
incentive to advance the interests of the Company, all according to the terms
and conditions set forth herein.
WHEREAS, the Company and the Participant have now determined to amend and
restate certain terms of the Participant’s grant.
NOW, THEREFORE, in consideration of the mutual benefits hereinafter provided,
and each intending to be legally bound, the Company and the Participant hereby
agree as follows:
1.
GRANT OF STOCK UNITS.
Subject to and pursuant to the terms of the Plan (the terms of which are
incorporated by reference herein), on [Grant#Date] (the “Grant Date”), the
Company granted to the Participant [No#of#RSUs#Granted] Stock Units, on the
terms and subject to the conditions set forth in this Agreement.
2.
VESTING OF STOCK UNITS.
2.1.
Generally.
Subject to the Participant’s continued Service from the Grant Date through each
applicable Vesting Date, rights in respect of [Yearly#%] of the number of Stock
Units shall vest on each of the first [five#eight] anniversaries of the Grant
Date (each, a “Vesting Date”). Any resulting fractional shares shall be
rounded to the nearest whole share and shall be rounded up or down as necessary
as of the last Vesting Date; provided, in all cases, the Participant cannot vest
in more than the number of Stock Units subject to this Agreement. No Stock
Units shall vest after the Participant’s Service has terminated for any reason.
2.2.
Special Vesting Provisions. Notwithstanding anything to the contrary in Section
2.1:
2.2.1. Death or Disability. Upon the Participant’s death or Disability, all
Stock Units granted to the Participant pursuant to this Agreement that have not
previously vested shall immediately become vested.
2.2.2. Retirement. If the Participant’s Service is terminated by reason of such
Participant’s Retirement, all Stock Units granted to the Participant pursuant to
this Agreement that have not previously vested shall immediately become vested
as of the Participant’s Retirement Date (or upon the Revocation
[Participant#Name]/[Employee#ID#No]
[Grant#Date]/[Grant#Code]
[five#eight] year vesting
--------------------------------------------------------------------------------
Expiration Time, if applicable and later). For purposes of this Agreement,
“Retirement” means the Participant’s termination of Service other than due to
death, Disability, or Cause if:
(a)by the Retirement Date the Participant is at least 55 years old and has
provided at least 10 years of Service as defined in the Plan and applied by the
Company’s HR department (generally including service with the Company, PS
Business Parks, and their Affiliates);
(b)by the Retirement Date the sum of the Participant’s age and total years of
Service equals at least 80;
(c)the Participant provided the Company written notice of the Participant’s
intention to retire at least 12 months’ prior to the Retirement Date;
(d)on or prior to the Retirement Date the Participant has entered into a
separation agreement, in a form acceptable to the Company, which includes a full
release of claims and certain restrictive covenants as of the date of
Retirement, and if the execution of such separation agreement is subject to a
revocation period by applicable law, the separation agreement has not been
revoked and the applicable revocation period, which may not exceed 10 days, has
expired (the “Revocation Expiration Time”); and
(e)subject to the Participant’s continued Service through both the Certification
Date and the Retirement Date, the Equity Awards Committee has taken separate
action to establish a date of termination of Service for the Participant (the
“Retirement Date”) and to approve such accelerated vesting for such Participant
(the date of such action by that committee, the “Certification Date”); provided,
however, that (i) the Participant shall have no right to such accelerated
vesting if that committee does not take action to approve such accelerated
vesting for such Participant or revokes its approval before the Retirement Date;
and (ii) if the Participant’s Service is terminated for any reason other than
death or Disability prior to such Retirement Date, any Stock Units held by the
Participant that have not vested shall terminate immediately, and the
Participant shall forfeit any rights with respect to such unvested Stock Units
as of such termination of Service.
2.3.
Restrictions on Transfer.
The Participant may not sell, transfer, assign, pledge, or otherwise encumber or
dispose of the Stock Units.
3.
TERMINATION OF SERVICE.
Upon the termination of the Participant’s Service for any reason, other than by
reason of death, Disability, or Retirement (pursuant to Section 2.2.2), any
Stock Units held by the Participant that have not vested shall terminate
immediately, and the Participant shall forfeit any rights with respect to such
unvested Stock Units as of such termination of Service.
4.
Delivery of Shares.
4.1.
Delivery Dates.
Delivery of the shares of Stock represented by the Participant’s vested Stock
Units shall be made as soon as administratively practicable following the date
on which such Stock Units vest; provided, however, that such delivery shall
occur no later than March 15th of the calendar year following the calendar year
in which such Stock Units vested.
4.2.
Issuance.
On or as promptly as is practicable after the respective delivery date(s), the
Company will issue the shares of Stock registered in the name of the
Participant, the Participant’s authorized assignee, or the Participant’s legal
representative, as applicable. The Company may reasonably postpone the issuance
of the shares of Stock until it receives satisfactory proof that the issuance of
such shares of Stock will not
2
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violate any of the provisions of the Securities Act or the Exchange Act, any
rules or regulations of the Securities and Exchange Commission promulgated
thereunder, or the requirements of applicable state or foreign law relating to
authorization, issuance, or sale of securities, or until there has been
compliance with the provisions of such acts or rules; provided that the delivery
shall be made at the earliest date at which the Company reasonably anticipates
that it will not cause such violation. The Company may also reasonably postpone
the issuance of the shares of Stock in the event of the Participant’s death
until it receives such evidence as the Committee deems necessary to establish
the validity of the issuance to the Participant’s estate. Notwithstanding the
provisions of this Section 4.2, the Company will not act in a manner as to cause
the delivery of the shares of Stock to fail to be exempt from Section 409A or to
comply with the requirements of Section 409A, as applicable. Upon the
issuance of the shares, Participant’s payment of the aggregate par value of the
shares delivered to Participant will be deemed paid by Participant’s past
Services to the Company or its Affiliates.
5.
DIVIDEND AND VOTING RIGHTS.
The Participant shall have none of the rights of a shareholder with respect to
the Stock Units. Notwithstanding the foregoing, the Participant shall be
entitled to receive, upon the Company’s payment of a cash dividend on its
outstanding shares of Stock, a cash payment for each Stock Unit held as of the
record date for such dividend equal to the per-share dividend paid on the shares
of Stock, which cash payment shall be made at the same time as the Company’s
payment of a cash dividend on its outstanding shares of Stock.
6.
WITHHOLDING OF TAXES.
The Company and any Affiliates shall have the right to deduct from payments of
any kind otherwise due to the Participant any federal, state, or local taxes of
any kind required by law to be withheld with respect to the Stock Units. The
Participant shall pay to the Company or its Affiliates any amount that the
Company or its Affiliates may reasonably determine to be necessary to satisfy
such withholding obligation. Subject to the prior approval of the Company,
which may be withheld by the Company in its sole discretion, the Participant may
elect to satisfy such obligations, in whole or in part, (a) by causing the
Company to withhold shares of Stock otherwise deliverable or (b) by delivering
to the Company shares of Stock already owned by the Participant. The shares of
Stock so delivered or withheld shall have a Fair Market Value not exceeding the
minimum amount of tax required to be withheld by applicable law. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company as of the date that the amount of tax to be
withheld is to be determined. A Participant who has made an election pursuant
to this Section 6 may satisfy his or her withholding obligation only with shares
of Stock that are not subject to any repurchase, forfeiture, unfulfilled
vesting, or other similar requirements.
7.
DISCLAIMER OF RIGHTS.
No provision of this Agreement shall be construed to confer upon the Participant
the right to continue in Service, or to interfere in any way with the right and
authority of the Company or any Affiliate either to increase or decrease the
compensation of the Participant at any time, or to terminate the Participant’s
Service.
8.
DATA PRIVACY.
To administer the Plan, the Company and its Affiliates may process personal data
about the Participant. Such data includes, but is not limited to, the
information provided in this Agreement and any changes thereto, other
appropriate personal and financial data about the Participant such as home
address and business addresses and other contact information, and any other
information that might be deemed appropriate by the Company to facilitate the
administration of the Plan. By accepting this grant, the Participant hereby
gives express consent to the Company and its Affiliates to process any such
personal data. The Participant also gives express consent to the Company to
transfer any such personal data outside the country in which Participant works,
including, with respect to non-U.S. resident participants, to the
3
--------------------------------------------------------------------------------
United States, to transferees who will include the Company and other persons who
are designated by the Company to administer the Plan.
9.
CONSENT TO ELECTRONIC DELIVERY OF MATERIALS.
The Company may choose to deliver certain statutory materials relating to the
Plan in electronic form. By accepting this grant, the Participant agrees that
the Company may deliver the Plan’s prospectus and any annual reports to the
Participant in an electronic format. If at any time the Participant would prefer
to receive paper copies of these documents, as the Participant is entitled to,
the Company would be pleased to provide copies. The Participant may contact the
Company’s Legal Department to request paper copies of these documents.
10.
INTERPRETATION OF THE AGREEMENT.
All decisions and interpretations made by the Committee with regard to any
question arising under the Plan or this Agreement shall be binding and
conclusive on the Company and the Participant and any other person. In the
event that there is any inconsistency between the provisions of this Agreement
and of the Plan, the provisions of the Plan shall govern.
11.
SECTION 409A.
The grant of Stock Units under this Agreement is intended to comply with Section
409A of the Code (“Section 409A”) to the extent subject thereto, and,
accordingly, to the maximum extent permitted, this Agreement will be interpreted
and administered to be in compliance with Section 409A. The Company, however,
will have no liability to the Participant if Section 409A is determined to apply
and adversely affects the Participant. With respect to payments under this
Agreement, for purposes of Section 409A, each payment (if there is more than one
payment) will be considered one of a series of separate payments. If at the
time of the Participant’s separation from service, (a) the Participant is a
“specified employee” (as defined in Section 409A and using the identification
methodology selected by the Company from time to time), and (b) the Company
makes a good faith determination that an amount payable on account of such
separation from service to the Participant constitutes “deferred compensation”
(within the meaning of Section 409A), payment to the specified employee may not
be made before the date that is six months after the date of the Participant’s
separation from service from the Company or its Affiliates (or, if earlier, the
date of the Participant’s death).
With respect to any amount payable under this Agreement to the Participant that
constitutes “deferred compensation” (within the meaning of Section 409A),
payment under this Agreement may not be accelerated upon a Change in Control
under the Plan, unless such Change in Control is also a “change in control” (as
defined in Section 409A) or unless otherwise permitted by Section 409A. Upon a
Change in Control under the Plan that is not a “change in control” (as defined
in Section 409A), such payment shall be made on the next payment date permitted
by Section 409A.
12.
GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Maryland, except
that if Participant’s principal place of employment is in California, then this
Agreement will be governed by the laws of the State of California, in either
case without giving effect to any choice or conflict of law provision or rule.
13.
BINDING EFFECT.
Subject to all restrictions provided for in this Agreement and by applicable
law, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, transferees and assigns.
14.
CLAWBACK.
The Stock Units shall be subject to mandatory repayment by the Participant to
the Company to the extent the Participant is, or in the future becomes, subject
to (a) any Company “clawback” or recoupment
4
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policy that is adopted to comply with the requirements of any applicable laws,
or (b) any applicable laws which impose mandatory recoupment, under
circumstances set forth in such applicable laws.
15.
ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement regarding this grant
and supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged, or terminated
except by a written instrument signed by the Company and the Participant;
provided, however, that the Company unilaterally may amend, waive, discharge, or
terminate any provision hereof to the extent that such amendment, waiver,
discharge, or termination does not adversely affect the interests of the
Participant hereunder, but no such waiver shall operate as or be construed to be
a subsequent waiver of the same provision or a waiver of any other provision
hereof.
5
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or
caused this Agreement to be duly executed on their behalf, as of the Restatement
Date.
PARTICIPANT:
PUBLIC STORAGE:
By:
[Participant#Name]
Name: [Officer#Name]
Title: [Officer#Title]
ADDRESS FOR NOTICE TO PARTICIPANT:
[No#Street#Participant#Address]
[City#State#Zip#Participant#Address]
(RSUF01)
Signature Page to the Restated Stock Unit Agreement; [Grant#Code]
--------------------------------------------------------------------------------
Merge fields:
name of field:
example:
[Participant#Name]
Peggy J. Smith
[Employee#ID#No]
000 111
[Grant#Date]
December 31, 2016
[Grant#Code]
RSU123
[plan#year]
2007 (or 2016)
[No#of#RSUs#Granted]
1,000
[Yearly#%]
20% (or 12.5%)
[five#eight]
five (or eight)
[No#Street#Participant#Address]
123 Main Street
[City#State#Zip#Participant#Address]
Los Angeles, CA 90010
[Officer#Name]
Joe Jones
[Officer#Title]
Vice President
-------------------------------------------------------------------------------- |
Exhibit 10.1
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of November 19, 2020 (this
“Amendment”), by and among ALLISON TRANSMISSION, INC., a Delaware corporation
(the “Borrower”), ALLISON TRANSMISSION HOLDINGS, INC., a Delaware corporation
(“Holdings”), CITIBANK, N.A., as Administrative Agent (in such capacity, the
“Administrative Agent”) and the 2020 Revolving Credit Lenders (as defined below)
party hereto, to the Second Amended and Restated Credit Agreement, dated as of
March 29, 2019, among the Borrower, Holdings, the Administrative Agent, Citicorp
North America, Inc., as collateral agent, and each lender from time to time
party thereto (as amended, amended and restated, supplemented or otherwise
modified from time to time through the date hereof, including by Amendment No. 1
to Credit Agreement, dated as of October 11, 2019, the “Credit Agreement” and
the Credit Agreement, as amended by this Amendment, the “Amended Credit
Agreement”). Terms defined in the Amended Credit Agreement and used herein shall
have the meanings given to them in the Amended Credit Agreement unless otherwise
defined herein.
W I T N E S S E T H:
WHEREAS, the Borrower has hereby notified the Administrative Agent and each
Revolving Credit Lender that it intends to incur Specified Refinancing Debt
pursuant to Section 2.18 of the Credit Agreement (the “Revolving Maturity
Extension”) in order to refinance and extend the maturity of the existing
Revolving Credit Commitments under the Credit Agreement immediately prior to the
Amendment No. 2 Effective Date (as defined below) (the “Existing Revolving
Credit Commitments”);
WHEREAS, pursuant to Section 2.18 of the Credit Agreement, the Borrower may
incur Specified Refinancing Debt by, among other things, entering into this
Amendment, pursuant to the terms and conditions of the Credit Agreement, with
Revolving Credit Lenders agreeing to provide such Specified Refinancing Debt
(the “2020 Refinancing Revolving Credit Lenders”);
WHEREAS, the Borrower has requested that the 2020 Refinancing Revolving Credit
Lenders collectively extend credit to the Borrower in the form of Revolving
Credit Commitments in an aggregate principal amount of $600,000,000.00 (the
“2020 Refinancing Revolving Credit Commitments”), which shall replace in full
all of the Existing Revolving Credit Commitments;
WHEREAS, the Borrower has also hereby notified the Administrative Agent, each
Revolving Credit Lender and each 2020 Refinancing Revolving Credit Lender that
it intends to incur a Revolving Credit Commitment Increase pursuant to
Section 2.14 in an aggregate amount of $50,000,000, effective immediately after
the Revolving Maturity Extension takes effect (such aggregate amount of
Revolving Credit Commitment Increase, the “2020 Revolving Credit Commitment
Increase” and the loans thereunder, the “2020 Incremental Revolving Credit
Loans”);
WHEREAS, pursuant to Section 2.14 of the Credit Agreement, the Borrower may
obtain a Revolving Credit Commitment Increase by, among other things, entering
into this Amendment, pursuant to the terms and conditions of the Credit
Agreement, with Revolving Credit
--------------------------------------------------------------------------------
Lenders agreeing to provide the 2020 Revolving Credit Commitment Increase (the
“2020 Incremental Revolving Credit Lenders” and collectively, with the 2020
Refinancing Revolving Credit Lenders, the “2020 Revolving Credit Lenders”);
WHEREAS, each 2020 Refinancing Revolving Credit Lender has indicated its
willingness to lend such 2020 Refinancing Revolving Credit Commitments and each
2020 Incremental Revolving Credit Lender has indicated its willingness to lend
such 2020 Revolving Credit Commitment Increase, collectively in an aggregate
amount not to exceed the amount set forth under the heading “Revolving Credit
Commitment” opposite such 2020 Revolving Credit Lender’s name on Exhibit A
hereto on the terms and subject to the conditions herein;
WHEREAS, the Administrative Agent and each 2020 Revolving Credit Lender have
agreed, subject to the terms and conditions set forth herein, to amend the
Credit Agreement as set forth in Article II below.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Provisions Relating to Revolving Credit Commitments
Section 1.1. Revolving Credit Commitments. The 2020 Refinancing Revolving Credit
Commitments and the 2020 Revolving Credit Commitment Increase shall have the
same terms as the Existing Revolving Credit Commitments, except as set forth in
and modified by this Amendment.
Section 1.2. Revolving Credit Loans. On and after the Amendment No. 2 Effective
Date, (i) each existing Revolving Credit Loan outstanding under the Credit
Agreement (the “Existing Revolving Credit Loans”) shall constitute an
outstanding Revolving Credit Loan under the Amended Credit Agreement issued in
respect of the 2020 Refinancing Revolving Credit Commitments (the “2020
Refinancing Revolving Credit Loans”) and (ii) each 2020 Refinancing Revolving
Credit Loan and each 2020 Incremental Revolving Credit Loan shall be deemed to
have been made on a pro rata basis in accordance with Section 2.02 of the
Amended Credit Agreement.
Section 1.3. Letters of Credit. On and after the Amendment No. 2 Effective Date,
(i) each Letter of Credit outstanding under the Credit Agreement shall
constitute an outstanding Letter of Credit under the Amended Credit Agreement
issued in respect of the 2020 Refinancing Revolving Credit Commitments and
(ii) each 2020 Refinancing Revolving Credit Lender and each 2020 Incremental
Revolving Credit Lender shall be deemed to have acquired a pro rata
participation in respect thereof in accordance with Section 2.03 of the Amended
Credit Agreement.
Section 1.4. Credit Agreement Governs. Effective as of the Amendment No. 2
Effective Date, (i) the 2020 Refinancing Revolving Credit Commitments and the
2020 Revolving Credit Commitment Increase shall be “Revolving Credit
Commitments” under the Amended Credit Agreement and (ii) the 2020 Revolving
Credit Lenders shall be “Revolving Credit Lenders” under the Amended Credit
Agreement, and each shall be subject to the provisions, including any
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provisions restricting the rights, or regarding the obligations, of the Loan
Parties or any provisions regarding the rights of the Revolving Credit Lenders
and the other Secured Parties, of the Amended Credit Agreement and the other
Loan Documents.
Section 1.5. 2020 Refinancing Revolving Credit Lenders. Each 2020 Refinancing
Revolving Credit Lender agrees that, upon the Amendment No. 2 Effective Date,
all of its Existing Revolving Credit Commitments shall be converted to 2020
Refinancing Revolving Credit Commitments under the Amended Credit Agreement.
Section 1.6. Representations of 2020 Incremental Revolving Credit Lenders. Each
2020 Incremental Revolving Credit Lender (i) confirms that a copy of the Credit
Agreement and the other applicable Loan Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Amendment and provide the 2020 Revolving Credit
Commitment Increase, as applicable, has been made available to such 2020
Incremental Revolving Credit Lender by the Administrative Agent and, with
respect to the other applicable Loan Documents, to the extent requested by such
2020 Incremental Revolving Credit Lender prior to the date hereof; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
any Agent-Related Person or any other Lender or agent and based on such
documents and information as it has deemed appropriate at the time, made its own
appraisal of, and investigation into, the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties
and their respective Subsidiaries, and all applicable bank or other regulatory
Laws relating to the transactions contemplated under the Credit Agreement and
the other applicable Loan Documents, including this Amendment, and made its own
decision to enter into this Amendment and to extend credit to the Borrower and
the other Loan Parties under the Credit Agreement or the other applicable Loan
Documents, including this Amendment; (iii) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent, as the case may be, by the terms thereof,
together with such powers as are reasonably incidental thereto;
(iv) acknowledges and agrees that upon the Amendment No. 2 Effective Date each
Incremental Revolving Credit Lender shall be a “Lender” and “Revolving Credit
Lender”, as applicable, under, and for all purposes of, the Credit Agreement and
the other Loan Documents, and shall be subject to and bound by the terms
thereof, and shall perform all the obligations of and shall have all rights of a
Lender thereunder; and (v) consents to each amendment set forth in Article II
hereof in its capacity as a 2020 Incremental Revolving Credit Lender and, if
applicable, in its capacity as an existing Lender under the Credit Agreement.
ARTICLE II
Amendments
Section 2.1. Amendments. Subject to satisfaction (or waiver) of the conditions
set forth in Article IV hereof, on the Amendment No. 2 Effective Date, the
Credit Agreement is hereby amended as follows:
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(a) The third WHEREAS clause under Preliminary Statements is hereby amended by
replacing $600,000,000 with $650,000,000.
(b) The following defined terms shall be added to Section 1.01 of the Credit
Agreement in alphabetical order:
“Amendment No. 2” means Amendment No. 2 to this Agreement, dated as of
November 19, 2020.
“Amendment No. 2 Effective Date” means November 19, 2020, the date of
effectiveness of Amendment No. 2.
(c) The definition of “Loan Documents” in Section 1.01 of the Credit Agreement
is hereby amended by replacing the word “and” that is immediately before “(x)”
with a comma and inserting the following at the end of the sentence: “and
(xi) Amendment No. 2”.
(d) The definition of “Maturity Date” in Section 1.01 of the Credit Agreement is
hereby amended by replacing the date “September 23, 2024” in (a)(i) with
“September 23, 2025”.
(e) The definition of “Revolving Credit Commitments” is hereby amended and
restated as follows:
“Revolving Credit Commitments” means, as to any Revolving Credit Lender, its
obligation, if any, to (a) make Revolving Credit Loans to the Borrower pursuant
to Section 2.01(b), and (b) purchase participations in L/C Obligations, in an
aggregate principal and/or face amount not to exceed the amount set forth under
the heading “Revolving Credit Commitment” opposite such Lender’s name on
Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender
became a party hereto, as applicable, as the same may be adjusted from time to
time in accordance with this Agreement. The Revolving Credit Commitments shall
include all Revolving Credit Commitment Increases and all 2020 Refinancing
Revolving Credit Commitments (as defined in Amendment No. 2). The original
amount of the Revolving Credit Commitments shall be $600,000,000 on the Closing
Date. The aggregate Revolving Credit Commitment as of the Amendment No. 2
Effective Date shall be $650,000,000, as such amount may be adjusted from time
to time in accordance with the terms of this Agreement.
(f) Schedule 2.01 of the Credit Agreement is hereby amended by replacing the
table under the heading “Revolving Commitments” with the table attached hereto
as Exhibit A.
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ARTICLE III
Representations and Warranties
In order to induce Lenders and the Administrative Agent to enter into this
Amendment and to amend the Credit Agreement in the manner provided herein, each
Loan Party party hereto represents and warrants to the Administrative Agent,
Collateral Agent and the Lenders that:
Section 3.1. Existence, Qualification and Power; Compliance with Laws. Each Loan
Party and each of the Restricted Subsidiaries (a) is a Person duly organized,
formed or incorporated, validly existing and in good standing (to the extent
such concept is applicable in the relevant jurisdiction) under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to (i) own or lease its assets and carry on its business and
(ii) execute, deliver and perform its obligations under this Amendment and the
consummation of the transactions contemplated hereby, (c) is duly qualified and
is authorized to do business and in good standing (to the extent such concept is
applicable in the relevant jurisdiction) under the Laws of each jurisdiction
where its ownership, lease or operation of properties or the conduct of its
business requires such qualification (d) has all requisite governmental
licenses, authorizations, consents and approvals to operate its business as
currently conducted and (e) is in compliance with all Laws; except in each case
referred to in clause (a) (other than with respect to the Borrower), (b)(i)
(other than with respect to the Borrower), (c), (d) and (e), to the extent that
any failure to be so or to have such would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.2. Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of this Amendment and the consummation of the
transactions contemplated hereby, are within such Loan Party’s corporate or
other powers, have been duly authorized by all necessary corporate or other
organizational action and do not (a) contravene the terms of any of such
Person’s Organization Documents, (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under (other than as permitted by
Section 7.02 of the Credit Agreement), (i) any Contractual Obligation to which
such Person is a party or (ii) any material order, injunction, writ or decree of
any Governmental Authority applicable to such Person or its property is subject,
except to the extent that such breach, contravention or creation of Lien would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, or (c) violate any Law; except to the extent that such violation
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
Section 3.3. Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery, performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, or for the
consummation of the Transactions, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents or (c) the perfection or
maintenance of the Liens created under the Collateral Documents, except for
(w) with respect to the Loan Parties, filings and registrations necessary to
perfect the Liens on the Collateral granted by the
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Loan Parties or any Restricted Subsidiary in favor of the Secured Parties
consisting of UCC financing statements, filings in the United States Patent and
Trademark Office and the United States Copyright Office and Mortgages, (x) the
approvals, consents, exemptions, authorizations, actions, notices and filings
which have been duly obtained, taken, given or made and are in full force and
effect, (y) those approvals, consents, exemptions, authorizations or other
actions, notices or filings set out in the Collateral Documents and (z) those
approvals, consents, exemptions, authorizations or other actions, notices or
filings, the failure of which to obtain or make would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.4. Binding Effect. This Amendment has been duly executed and delivered
by each Loan Party. Subject to the Legal Reservations, this Amendment
constitutes, a legal, valid and binding obligation of each Loan Party party
hereto, enforceable against each such Loan Party.
Section 3.5. Existing Credit Agreement Representations and Warranties. All
representations and warranties of the Borrower and each other Loan Party
contained in Article V of the Credit Agreement or any other Loan Document are
true and correct in all material respects (and in all respects if any such
representation or warranty is already qualified by materiality) on and as of the
Amendment No. 2 Effective Date, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they are
true and correct in all material respects (and in all respects if any such
representation or warranty is already qualified by materiality) as of such
earlier date.
Section 3.6. Default. No Default or Event of Default exists or has occurred and
is continuing on and as of the Amendment No. 2 Effective Date immediately before
(in the case of the Existing Credit Agreement) and immediately after (in the
case of the Credit Agreement) giving effect to the provisions of this Amendment.
ARTICLE IV
Conditions to Effectiveness
This Amendment shall become effective on the date (the “Amendment No. 2
Effective Date”) on which the following conditions precedent are satisfied (or
waived by the Administrative Agent):
(a) The Administrative Agent shall have received from (i) the 2020 Revolving
Credit Lenders, (ii) the Administrative Agent and (iii) each Loan Party, a
counterpart of this Amendment duly executed on behalf of such party.
(b) The Administrative Agent shall have received (i) such customary resolutions
or other action of each Loan Party as the Administrative Agent may reasonably
require evidencing the authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this
Amendment and (ii) with respect to each Loan Party, such documents and
certifications (including, without limitation, incumbency certificates,
Organization Documents and, if applicable, good standing certificates) as the
Administrative Agent may reasonably require to evidence that
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each Loan Party is duly organized or formed, and that each Loan Party is validly
existing and in good standing and (iii) to the extent applicable in the relevant
jurisdiction, bring down good standing certificates of each Loan Party dated as
of a recent date.
(c) Holdings, the Borrower and each of the Subsidiary Guarantors shall have
provided the documentation and other information reasonably requested in writing
at least ten (10) days prior to the Amendment No. 2 Effective Date by the 2020
Revolving Credit Lenders as they reasonably determine is required by regulatory
authorities in connection with applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
PATRIOT Act, and the Beneficial Ownership Regulation, in each case at least
three (3) Business Days prior to the Amendment No. 2 Effective Date (or such
shorter period as the Administrative Agent shall otherwise agree).
(d) The Borrower shall have paid to the Administrative Agent for the ratable
account of the Lenders holding outstanding Existing Revolving Credit Loans and
Existing Revolving Credit Commitments all accrued and unpaid interest on such
Existing Revolving Credit Loans and any accrued and unpaid commitment fees to,
but not including, the Amendment No. 2 Effective Date.
(e) All costs, fees, expenses (including without limitation legal fees and
expenses), in each case solely to the extent required to be paid pursuant to
Section 10.04 of the Amended Credit Agreement, and other compensation separately
agreed in writing to be payable to the Citigroup Global Markets Inc., as sole
lead arranger in connection with the Amendment, and the Administrative Agent
shall have been paid to the extent due (and, in the case of expenses, invoiced
in reasonable detail at least two Business Days prior to the Amendment No. 2
Effective Date).
(f) After giving effect to this Amendment and the 2020 Revolving Credit
Commitment Increase, (A) the representations and warranties of the Borrower and
each other Loan Party contained in Article V of the Credit Agreement, Article
III hereunder and each other Loan Document are true and correct in all material
respects (and in all respects if any such representation or warranty is already
qualified by materiality) on and as of the Amendment No. 2 Effective Date,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct in all material
respects (and in all respects if any such representation or warranty is already
qualified by materiality) as of such earlier date and (B) no Default shall
exist, or would result immediately after giving effect to the provisions of this
Amendment. A Responsible Officer of the Borrower shall have delivered a
certificate certifying as to the matters set forth in sub-clauses (A) and (B) of
this clause (f).
(g) The Administrative Agent shall have received an opinion of Latham & Watkins
LLP, special New York counsel to the Loan Parties, in form and substance
reasonably satisfactory to the Administrative Agent.
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(h) The Administrative Agent shall have received a solvency certificate signed
by the chief financial officer or similar officer, director or authorized
signatory of Holdings substantially in the form of Exhibit H of the Credit
Agreement.
(i) A Responsible Officer of the Borrower shall have delivered a certificate
certifying that this Amendment, the 2020 Refinancing Revolving Credit
Commitments and the 2020 Incremental Revolving Credit Increase comply with the
conditions set forth in Section 2.18 or Section 2.14 of the Credit Agreement, as
applicable.
ARTICLE V
Miscellaneous
Section 5.1. Expenses. As and to the extent provided in Section 10.04 of the
Credit Agreement, the Borrower agrees to reimburse the Administrative Agent for
its reasonable out-of-pocket expenses incurred by it in connection with this
Amendment, including the reasonable fees, charges and disbursements of Fried,
Frank, Harris, Shriver & Jacobson LLP, counsel for the Administrative Agent.
Section 5.2. Continuing Effect; No Other Amendments or Waivers. Except as
expressly set forth herein, this Amendment shall not by implication or otherwise
limit, impair, constitute a waiver of or otherwise affect the rights and
remedies of the Lenders or the Agents under the Credit Agreement or any other
Loan Document, and shall not alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other provision of the Credit Agreement or any other
Loan Document, all of which are hereby ratified and affirmed in all respects and
shall continue in full force and effect. Except as expressly waived hereby, the
provisions of the Credit Agreement and the other Loan Documents are and shall
remain in full force and effect in accordance with their terms. The parties
hereto acknowledge and agree that the amendment of the Credit Agreement pursuant
to this Amendment and all other Loan Documents amended and/or executed and
delivered in connection herewith shall not constitute a novation of the Credit
Agreement and the other Loan Documents as in effect prior to the Amendment No. 2
Effective Date. This Amendment shall constitute a “Loan Document” for all
purposes of the Credit Agreement and the other Loan Documents. All references to
the Credit Agreement in any document, instrument, agreement, or writing shall
from after the Amendment No. 2 Effective Date be deemed to refer to the Credit
Agreement as amended hereby, and, as used in the Credit Agreement, the terms
“Agreement,” “herein,” “hereafter,” “hereunder,” “hereto” and words of similar
import shall mean, from and after the Amendment No. 2 Effective Date, the Credit
Agreement as amended hereby.
Section 5.3. Counterparts. This Amendment may be executed in any number of
separate counterparts by the parties hereto (including by telecopy or via
electronic mail), each of which counterparts when so executed shall be an
original, but all the counterparts shall together constitute one and the same
instrument.
Section 5.4. GOVERNING LAW. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE
OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT
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OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 5.5. Reaffirmation. Each Loan Party hereto expressly acknowledges the
terms of this Amendment and reaffirms, as of the date hereof and on the
Amendment No. 2 Effective Date, that its guarantee of the Obligations and its
grant of Liens on and security interest in the Collateral to secure the
Obligations pursuant to each Collateral Document to which it is a party, in each
case, remains in full force and effect on a continuous basis and extends to the
obligations of the Loan Parties under the Loan Documents (including the Credit
Agreement as amended by this Amendment) subject to any limitations set out in
the Credit Agreement (as so amended) and any other Loan Document applicable to
that Loan Party. Each Loan Party agrees that the Obligations include, among
other things and without limitation, the prompt and complete payment and
performance by the Borrower when due and payable (whether at the stated
maturity, by acceleration or otherwise) of principal and interest on, and
premium (if any) on, the applicable Loans under the Amended Credit Agreement and
that the Obligations under the Amended Credit Agreement are included in the
“Secured Obligations” (as defined in the Guarantee and Collateral Agreement and
the other Collateral Documents). Neither the execution, delivery, performance or
effectiveness of this Amendment nor the modification of the Credit Agreement
effected pursuant hereto: (i) impairs the validity, effectiveness or priority of
the Liens or security interests granted pursuant to any Loan Document, and such
Liens and security interests continue unimpaired with the same priority to
secure repayment of all Obligations, whether heretofore or hereafter incurred;
or (ii) requires that any new filings be made or other action be taken to
perfect or to maintain the perfection of such Liens or security interests.
Section 5.6. Electronic Signature. The words “execution,” “signed,” “signature,”
and words of like import in this Amendment and the other Loan Documents
(including any Assignment and Assumption) shall be deemed to include electronic
signatures or electronic records, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.
Section 5.7. CUSIP. The CUSIP number for the 2020 Refinancing Revolving Credit
Commitments is 01973KAG1.
[Signature Pages Follow]
- 9 -
--------------------------------------------------------------------------------
Allison Transmission Holdings, Inc.
By:
/s/ Eric C. Scroggins
Name:
Eric C. Scroggins
Title:
Vice President, General Counsel and
Secretary
Allison Transmission, Inc.
By:
/s/ Eric C. Scroggins
Name:
Eric C. Scroggins
Title:
Vice President, General Counsel and
Secretary
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
CitiBank, N.A., as Administrative Agent, a 2020
Refinancing Revolving Credit Lender and a 2020
Incremental Revolving Credit Lender
By:
/s/ Matthew Burke
Name: Matthew Burke Title: Managing Director & Vice President
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
BMO Harris Bank, N.A., as a 2020
Refinancing Revolving Credit Lender and a 2020
Incremental Revolving Credit Lender
By:
/s/ Betsy Phillips
Name: Betsy Phillips Title: Director
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
Fifth Third Bank, National Association., as a 2020
Refinancing Revolving Credit Lender and a 2020
Incremental Revolving Credit Lender
By:
/s/ Mike Gifford
Name: Mike Gifford Title: Director
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
MUFG Bank, Ltd., as a 2020
Refinancing Revolving Credit Lender
By:
/s/ Eric Hill
Name: Eric Hill Title: Authorized Signatory
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
MUFG Bank, Ltd., as a 2020 Incremental
Revolving Credit Lender
By:
/s/ Eric Hill
Name: Eric Hill Title: Authorized Signatory
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
Bank of America, N.A., as a 2020 Refinancing
Revolving Credit Lender
By:
/s/ Prathamesh Kshirsagar
Name: Prathamesh Kshirsagar Title: Director
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
BARCLAYS BANK PLC, as a 2020 Refinancing
Revolving Credit Lender
By:
/s/ Craig Malloy
Name: Craig Malloy
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
JPMorgan Chase Bank, N.A., as a 2020
Refinancing Revolving Credit Lender
By:
/s/ Suzanne Ergastolo
Name: Suzanne Ergastolo Title: Executive Director
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
Sumitomo Mitsui Banking Corporation, as a
2020 Refinancing Revolving Credit Lender
By:
/s/ Michael Maguire
Name: Michael Maguire Title: Managing Director
[Allison – Amendment No. 2]
--------------------------------------------------------------------------------
Exhibit A
Revolving Credit Lender
Revolving Credit
Commitment Applicable
Percentage
Citibank, N.A.
$ 91,111,111.11 14.0171 %
BMO Harris Bank, N.A.
$ 85,000,000.00 13.0769 %
Fifth Third Bank
$ 85,000,000.00 13.0769 %
MUFG Bank, LTD.
$ 71,111,111.11 10.9401 %
Bank of America, N.A.
$ 61,111,111.11 9.4017 %
Barclays Bank PLC
$ 61,111,111.11 9.4017 %
JPMorgan Chase Bank, N.A.
$ 61,111,111.11 9.4017 %
Sumitomo Mitsui Banking Corporation
$ 61,111,111.11 9.4017 %
Deutsche Bank AG New York Branch
$ 36,666,666.67 5.6410 %
Goldman Sachs Bank USA
$ 36,666,666.67 5.6410 %
Total
$ 650,000,000.00 100 %
|
Exhibit 10.37
LOAN AGREEMENT
Dated as of August 26, 2020
among
THE ENTITIES SET FORTH ON SCHEDULE 1 ATTACHED HERETO,
individually and collectively, as Borrower
and
DLP LENDING FUND LLC,
as Lender
TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1 Section 1.1
Definitions 1 Section 1.2 Principles of Construction 10 ARTICLE II
GENERAL TERMS 10 Section 2.1 Loan Commitment; Disbursement to Borrower 10
2.1.1 Agreement to Lend and Borrow 10 2.1.2 Single Disbursement to Borrower
10 2.1.3 The Note, Security Instrument and Loan Documents 10 2.1.4 Use
of Proceeds 10 2.1.5 Upfront Payment 11 Section 2.2 Interest Rate 11
2.2.1 Interest Rate 11 2.2.2 Interest Calculation 11 2.2.3 Default Rate
11 2.2.4 Usury Savings 11 Section 2.3 Debt Service Payments 11 2.3.1
Payments Generally 11 2.3.2 Monthly Debt Service Payment 11 2.3.3
Payment on Maturity Date 11 2.3.4 Late Payment Charge 11 2.3.5 Method
and Place of Payment 12 Section 2.4 Prepayments 12 2.4.1 Voluntary
Prepayments 12 2.4.2 Mandatory Prepayments 13 2.4.3 Prepayments After
Default 13 Section 2.5 Release of Property 13 Section 2.6 Extension
Option(s) 13 2.6.1 Extension Option(s) 13 2.6.2 Extension Documentation
14 Section 2.7 Release of Individual Property 14 ARTICLE III
[Intentionally Omitted] 15 ARTICLE IV REPRESENTATIONS AND WARRANTIES 15
Section 4.1 Borrower Representations 15 4.1.1 Organization 15 4.1.2
Proceedings 15 4.1.3 Litigation 16 4.1.4 Agreements 16 4.1.5 Title
16 4.1.6 Solvency 16 4.1.7 Full and Accurate Disclosure 16 4.1.8 No
Plan Assets 17 4.1.9 Compliance 17 4.1.10 Financial Information 17
4.1.11 Condemnation 17 4.1.12 Federal Reserve Regulations 18
i
4.1.13 Public Access 18 4.1.14 Not a Foreign Person 18 4.1.15
Separate Lots 18 4.1.16 Assessments 18 4.1.17 Enforceability 18
4.1.18 No Prior Assignment 18 4.1.19 Insurance 18 4.1.20 Flood Zone 18
4.1.21 Leases 18 4.1.22 Survey 19 4.1.23 Principal Place of Business;
State of Organization 19 4.1.24 Filing and Recording Taxes 19 4.1.25
Intentionally Omitted 19 4.1.26 Illegal Activity 19 4.1.27 No Change in
Facts or Circumstances; Disclosure 19 4.1.28 Investment Company Act 19
4.1.29 Embargoed Person 19 4.1.30 Filing of Returns 19 4.1.31 Operations
Agreements 20 Section 4.2 Survival of Representations 20 ARTICLE V
BORROWER COVENANTS 20 Section 5.1 Affirmative Covenants 20 5.1.1
Existence; Compliance with Legal Requirements 20 5.1.2 Taxes and Other
Charges 21 5.1.3 Litigation 21 5.1.4 Access to Property 21 5.1.5
Notice of Default 21 5.1.6 Cooperate in Legal Proceedings 21 5.1.7
Perform Loan Documents 21 5.1.8 Award and Insurance Benefits 21 5.1.9
Further Assurances 22 5.1.10 Mortgage Taxes 22 5.1.11 Financial
Reporting 22 5.1.12 Business and Operations 23 5.1.13 Title to the
Property 23 5.1.14 Costs of Enforcement 23 5.1.15 Estoppel Statement 23
5.1.16 Loan Proceeds 24 5.1.17 Performance by Borrower 24 5.1.18 No
Joint Assessment 24 5.1.19 Leasing Matters 24 5.1.20 Operation of
Property 24 5.1.21 Changes in the Legal Requirements Regarding Taxation 25
5.1.22 No Credits on Account of the Obligations 25 5.1.23 Personal
Property 25 5.1.24 Infrastructure Project 25 Section 5.2 Negative
Covenants 26 5.2.1 Operation of Property 26 5.2.2 Liens 26 5.2.3
Dissolution 26 5.2.4 Change in Business 26
ii
5.2.5 Debt Cancellation 26 5.2.6 Zoning 26 5.2.7 No Joint Assessment
26 5.2.8 Principal Place of Business and Organization 26 5.2.9 ERISA 26
5.2.10 Transfers; Assumptions 26 5.2.11 Operations Agreements 27
5.2.12 [Intentionally omitted] 27 5.2.13 Embargoed Person; OFAC 27
5.2.14 Distributions 27 5.2.15 Affiliate Agreements 28 ARTICLE VI
INSURANCE; CASUALTY; CONDEMNATION 28 Section 6.1 Insurance 28 Section 6.2
Casualty 30 Section 6.3 Condemnation 30 Section 6.4 Restoration 31
ARTICLE VII RESERVE FUNDS 33 Section 7.1 [Intentionally Omitted] 33 Section
7.2 [Intentionally Omitted] 33 Section 7.3 Reserve Funds, Generally 33
Section 7.4 Project Reserve Funds 34 7.4.1 Deposits of Project Reserve Funds
34 7.4.2 Disbursement of Project Reserve Funds 34 ARTICLE VIII
DEFAULTS 36 Section 8.1 Event of Default 36 8.1.1 Generally 36 8.1.2
Remedies 37 8.1.3 Remedies Cumulative; Waivers 38 ARTICLE IX
SPECIAL PROVISIONS 39 Section 9.1 Transfer of Loan 39 Section 9.2 Severed
Loan Documents 40 Section 9.3 Servicer 40 Section 9.4 Cooperation 40
ARTICLE X MISCELLANEOUS 40 Section 10.1 Survival 40 Section 10.2 Lender’s
Discretion 41 Section 10.3 Governing Law 41 Section 10.4 Modification,
Waiver in Writing 42 Section 10.5 Delay Not a Waiver 42 Section 10.6 Notices
43 Section 10.7 Waiver of Trial by Jury 43 Section 10.8 Headings 43
Section 10.9 Severability 44 Section 10.10 Preferences 44 Section 10.11
Waiver of Notice 44 Section 10.12 Remedies of Borrower 44 Section 10.13
Expenses; Indemnity 44 Section 10.14 Exhibits and Schedules Incorporated 45
Section 10.15 Offsets, Counterclaims and Defenses 45 Section 10.16 No Joint
Venture or Partnership; No Third Party Beneficiaries 45 Section 10.17
Publicity 45 Section 10.18 Waiver of Marshalling of Assets; Homestead Waiver
45 Section 10.19 Waiver of Counterclaim 46 Section 10.20 Conflict;
Construction of Documents; Reliance 46 Section 10.21 Brokers and Financial
Advisors 46 Section 10.22 Prior Agreements 46 Section 10.23 Cumulative
Rights 46 Section 10.24 Counterparts; Electronic Delivery 46 Section 10.25
Time is of the Essence 46 Section 10.26 Consent of Holder 47 Section 10.27
Successor Laws 47 Section 10.28 Reliance on Third Parties 47 Section 10.29
Joint Borrower 47
SCHEDULES
Schedule 1 Borrower Entities Schedule 1.1(a) Allocated Loan Amounts
Schedule 1.1(b) List of Projects Schedule 4.1.1 Organizational Chart
iii
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of August 26, 2020 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between DLP LENDING FUND LLC, a Delaware limited liability company
(“Lender”), having an address at 95 Highland Avenue, St. Augustine, FL 32095,
and THE ENTITIES SET FORTH ON SCHEDULE 1 ATTACHED HERETO, jointly and severally
(individually and collectively, “Borrower”), having its principal place of
business at 16 Berryhill Road, Suite 200 Columbia, SC 29210
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain a loan in the original principal amount of
TWO MILLION TWO HUNDRED TWENTY FIVE THOUSAND FIVE HUNDRED NINETY THREE and
30/100 Dollars ($2,225,593.30) from Lender pursuant to this Agreement (the
“Loan”); and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender to Borrower
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:
“Accrued Interest” shall mean all accrued and unpaid interest on the outstanding
principal balance of the Loan from time to time.
“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person or of an Affiliate of such Person.
“Agreement” shall mean this Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
“Allocated Loan Amount” shall mean, with respect to each Individual Property,
the amount set forth on Schedule 1.1(a) hereof.
“ALTA” shall mean American Land Title Association or any successor thereto.
“Approved Plans” means complete plans, drawings, specifications and scope of
work, that comply with applicable Legal Requirements and have been approved in
writing by Lender, for the Project.
“Assignment of Management Agreement” shall mean individually and collectively as
applicable, an Assignment of Management Agreement and Subordination of
Management Fees, dated as of the date hereof or thereafter, as applicable, among
Lender, Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or part of the Property.
1
“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (b) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition against such Person; (c) such Person
filing an answer consenting to or otherwise acquiescing in or joining in any
involuntary petition filed against it, by any other Person under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or soliciting
or causing to be solicited petitioning creditors for any involuntary petition
from any Person; (d) such Person consenting to or acquiescing in or joining in
an application for the appointment of a custodian, receiver, trustee, assignee,
sequestrator (or similar official), liquidator, or examiner for such Person or
any portion of the Property; (e) the filing of a petition against a Person
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Bankruptcy Code or any other applicable
law, (f) under the provisions of any other law for the relief or aid of debtors,
an action taken by any court of competent jurisdiction that allows such court to
assume custody or Control of a Person or of the whole or any substantial part of
its property or assets or (g) such Person making an assignment for the benefit
of creditors, or admitting, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due.
“Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C. §
101, et seq., as the same may be amended from time to time, and any successor
statute or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors’ rights or any other Federal or state bankruptcy or insolvency law.
“Basic Carrying Costs” shall mean, for any period, the sum of the following
costs: (a) Taxes, (b) Other Charges and (c) Insurance Premiums.
“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its permitted successors and assigns.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which any of the following institutions is not open for business: (i) banks
and savings and loan institutions in New York or Pennsylvania, (ii) the
financial institution that maintains any collection account for or on behalf of
any Reserve Funds, (iii) the New York Stock Exchange or (iv) the Federal Reserve
Bank of New York.
“Casualty” shall have the meaning set forth in Section 6.2 hereof.
“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii)
hereof.
“Closing Date” shall mean the date of this Agreement.
“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be
further amended from time to time, and any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
“Collateral” shall have the meaning ascribed to such term in the Security
Instrument.
“Completion” or “Complete” shall mean one hundred percent (100%) completion of
construction, renovation, rehabilitation of a Project, as applicable, subject to
usual and customary punch list items, in a good and workmanlike manner and in
compliance with all Legal Requirements, and in a manner consistent and compliant
in all material respects with the applicable Project Documents as approved by
Lender, and free and clear of all liens, claims, encumbrances and rights of
others, other than Permitted Encumbrances, as evidenced by the issuance of
certificates of completion by Lender’s consultant or inspecting architect or
engineer, if any, in each case in form and substance acceptable to Lender and,
if available or required under applicable Legal Requirements, a final or partial
certificate of occupancy and, as applicable, acceptance of completion by the
applicable tenant.
2
“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.
“Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b)
hereof.
“Control” shall mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of such Person, whether through ownership of voting
securities, by contract or otherwise. “Controlled” and “Controlling” shall have
correlative meanings.
“Debt” shall mean the Outstanding Principal Balance together with all interest
accrued and unpaid thereon and all other sums due to Lender in respect of the
Loan under the Note, this Agreement, the Security Instrument or any other Loan
Document.
“Debt Service” shall mean, with respect to any particular period of time,
scheduled principal and interest payments due under this Agreement and the Note.
“Default” shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would be an Event of Default.
“Default Rate” shall mean twenty-four percent (24%) per annum.
“Distribution” means (i) any dividend, distribution or other payment of any kind
on any shares of capital stock or other securities or partnership, membership,
economic or other interests, or (ii) any fee, payment, bonus or other
remuneration of any kind, or (iii) any repayment of or debt service on loans or
other indebtedness other than the Loan.
“Dollars” and the sign “$” shall mean lawful money of the United States of
America.
“Embargoed Person” shall mean any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA Patriot Act
(including the anti-terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder including those related to Specially Designated Nationals and
Specially Designated Global Terrorists, with the result that the investment in
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by Lender is in violation of law.
“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement (Unsecured), dated as of the date hereof, executed by Borrower and
each Guarantor in connection with the Loan for the benefit of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
“Environmental Statutes” shall mean any present and future Federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment, relating
to Hazardous Substances, and/or relating to liability for or costs of other
actual or threatened danger to human health or the environment. The term
“Environmental Statutes” includes, but is not limited to, the following
statutes, as amended, any successor thereto, and any regulations promulgated
pursuant thereto, and any state or local statutes, ordinances, rules,
regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Substances Transportation Act;
the Resource Conservation and Recovery Act (including but not limited to
Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
River and Harbors Appropriation Act. The term “Environmental Statutes” also
includes, but is not limited to, any present and future Federal, state and local
laws, statutes ordinances, rules, regulations, permits or authorizations and the
like, as well as common law, that (a) condition transfer of property upon a
negative declaration or other approval of a Governmental Authority of the
environmental condition of the Property; (b) require notification or disclosure
of releases of Hazardous Substances or other environmental condition of a
property to any Governmental Authority or other Person, whether or not in
connection with any transfer of title to or interest in such property; (c)
impose conditions or requirements in connection with permits or other
authorization for lawful activity relating to Hazardous Substances; (d) relate
to nuisance, trespass or other causes of action relating to Hazardous Substances
in connection with the Property; and/or (e) relate to wrongful death, personal
injury, or property or other damage in connection with any physical condition or
use relating to Hazardous Substances in connection with the Property.
3
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the ruling issued
thereunder.
“ERISA Affiliate” shall mean each person (as defined in section 3(9) of ERISA)
that together with Borrower would be deemed to be a “single employer” within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
“Event of Default” shall have the meaning set forth in Section 8.1.1(a) hereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as the same may
be amended, modified or replaced, from time to time.
“Exchange Act Filing” shall have the meaning set forth in Section 5.1.11(f)
hereof.
“Extended Maturity Date” shall have the meaning set forth in Section 2.6.1
hereof.
“Extension Notice” shall have the meaning set forth in Section 2.6.1 hereof.
“First Extension Option” shall have the meaning set forth in Section 2.6.1
hereof.
“First Payment Date” shall have the meaning set forth in Section 2.3.2 hereof.
“Fiscal Year” shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during each year of the term of the Loan.
“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.
“Governmental Authority” shall mean any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (Federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence.
“Guarantor” shall mean, jointly and severally, and, as the context requires,
individually and collectively, Alexander Szkaradek, Antoni Szkaradek, Michael P.
Beys each an individual; US Home Rentals, LLC, a Delaware limited liability
company and FTE Networks, Inc., a Delaware corporation.
“Guaranty” shall mean that certain Guaranty dated as of the date hereof, from
Guarantor in favor of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
“Hazardous Substances” shall include, but is not limited to, (a) any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Statutes or that may have a
negative impact on human health or the environment, including, but not limited
to, petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, lead, radon, radioactive materials,
flammables and explosives, but excluding substances of kinds and in amounts
ordinarily and customarily used or stored in properties similar to the Property
for the purposes of cleaning or other maintenance or operations and otherwise in
compliance with all Environmental Statutes, and (b) mold, mycotoxins, microbial
matter, and/or airborne pathogens (naturally occurring or otherwise) which pose
a threat (imminent or otherwise) to human health or the environment or adversely
affect the Property.
4
“Improvements” shall have the meaning set forth in the granting clause of the
Security Instrument.
“In Balance” means, with respect to each Project, no Deficiency then exists with
respect to such Project.
“Indemnified Liabilities” shall have the meaning set forth in Section 10.13(b)
hereof.
“Indemnified Parties” shall mean Lender and any of its Affiliates and any of
their officers, directors, members, partners, employees, representatives and
consultants.
“Indemnifying Person” shall mean Borrower and each Guarantor, on a joint and
several basis.
“Individual Property” shall mean all parcels of land, the Improvements thereon
and all personal property owned by the Borrower and encumbered by a Security
Instrument, together with all rights pertaining to such property and
Improvements, as more particularly described in the granting clauses of each
such Security Instrument and referred to therein as the “Property”.
“Interest Period” shall mean (i) initially, the period commencing on and
including the date of the funding of the Loan and ending on and including the
last day of the calendar month of the Closing Date, and (ii) thereafter, for any
specified Payment Date including the Maturity Date, the period commencing on and
including the first (1st) day of the calendar month prior to such Payment Date
and ending on the last day of the calendar month in which such Payment Date
occurs.
“Interest Rate” shall mean a fixed rate of Eleven and Ninety-Nine Hundredths
percent (11.99%) per annum.
“Lease” shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property by or on behalf of Borrower, and (a) every modification, amendment or
other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or
other agreement, and (b) every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed and observed by the
other party thereto.
“Legal Requirements” shall mean all Federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting the Property or
any part thereof, or the construction, use, alteration or operation thereof, or
any part thereof, whether now or hereafter enacted and in force, including,
without limitation, any Environmental Statutes, the Americans with Disabilities
Act of 1990, as amended, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting Borrower, the Property or any part
thereof, including, without limitation, any which may (a) require repairs,
modifications or alterations in or to the Property or any part thereof, or (b)
in any way limit the use and enjoyment thereof.
“Lender” shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.
“Lien” shall mean any mortgage, deed of trust, deed to secure debt, indemnity
deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement,
restrictive covenant, preference, assignment, security interest, or any other
encumbrance, charge or transfer of, or any agreement to enter into or create any
of the foregoing, on or affecting Borrower, the Property, or any portion thereof
or any interest therein, or any direct or indirect interest in Borrower,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic’s,
materialmen’s and other similar liens and encumbrances.
5
“Loan” shall have the meaning set forth in the recitals hereof.
“Loan Documents” shall mean, collectively, this Agreement, the Note, Security
Instrument, the Environmental Indemnity, the Assignment of Management Agreement
and Subordination of Management Fees, if applicable, the Guaranty, and all other
documents executed and/or delivered in connection with the Loan.
“Management Agreement” shall mean any property management agreement or similar
agreement entered into by and between Borrower and Manager, pursuant to which
Manager is to provide management and other services with respect to the
Property, and any successor property management approved by Lender, in writing,
in Lender’s sole discretion.
“Manager” shall mean, the individual or entity who provides management and other
services with respect to the Property pursuant to a Management Agreement.
“Material Adverse Change” or “Materially Adverse Effect” shall mean that the
business, operations, property, assets, liabilities or financial condition of
any applicable Person and each of their subsidiaries, taken as a whole, or the
ability of any such Person to perform its obligations under the Loan Documents,
has changed in a manner which could materially impair the value of Lender’s
security for the Loan or prevent timely repayment of the Loan or otherwise
prevent the applicable person or entity from timely performing any of its
material obligations under the Loan Documents or any Lease, as the case may be,
as determined by Lender.
“Material Agreements” shall have the meaning set forth in Section 15.20 hereof.
“Maturity Date” shall mean the Stated Maturity Date, provided that (a) in the
event of the exercise by Borrower of the First Extension Option pursuant to
Section 2.6, the Maturity Date shall be the First Extended Maturity Date, and
(b) in the event of the exercise by Borrower of the Second Extension Option
pursuant to Section 2.6, the Maturity Date shall be the Second Extended Maturity
Date, or such earlier date on which the final payment of principal of the Note
becomes due and payable as herein or therein provided, whether at the Stated
Maturity Date, by declaration of acceleration, or otherwise.
“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
“Multiemployer Plan” shall mean a multiemployer plan, as defined in Section
4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions or has within any of the preceding
three plan years made or accrued an obligation to make contributions.
“Multiple Employer Plan” shall mean an employee benefit plan, other than a
Multiemployer Plan, to which Borrower or any ERISA Affiliate, and one or more
employers other than Borrower or an ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such plan has been
terminated, to which Borrower or an ERISA Affiliate made or accrued an
obligation to make contributions during any of the five plan years preceding the
date of termination of such plan.
“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
“Net Proceeds Account” shall have the meaning set forth in Section 6.4(b)(ii)
hereof.
“Net Proceeds Deficiency” shall have the meaning set forth in Section 6.4(b)(vi)
hereof.
“Note” shall mean that certain Promissory Note of even date herewith in the
principal amount of the Loan made by Borrower in favor of Lender, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
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“Obligations” shall mean, collectively, Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations.
“OFAC” shall mean the Office of Foreign Asset Control of the Department of the
Treasury of the United States of America.
“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized officer of (i) Borrower, or (ii) any direct or
indirect general partner or member of Borrower with authority to act on behalf
of and bind Borrower.
“Operations Agreements” shall mean any covenants, restrictions, easements,
declarations or agreements of record relating to the construction, operation or
use of the Property, together with all amendments, modifications or supplements
thereto.
“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes, any “common expenses” or expenses allocated to and required to
be paid by Borrower under any Operations Agreements and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Property, now or hereafter levied
or assessed or imposed against the Property or any part thereof.
“Other Obligations” shall mean (a) the performance of all obligations of
Borrower contained herein; (b) the performance of each obligation of Borrower or
any Guarantor contained in any other Loan Document; (c) the payment of all
costs, expenses, legal fees and liabilities incurred by Lender in connection
with the enforcement of any of Lender’s rights or remedies under the Loan
Documents, or any other instrument, agreement or document which evidences or
secures any other Obligations or collateral therefor, whether now in effect or
hereafter executed; and (d) the payment, performance, discharge and satisfaction
of all other liabilities and obligations of Borrower and/or Guarantor to Lender,
whether now existing or hereafter arising, direct or indirect, absolute or
contingent, and including, without limitation, each liability and obligation of
Borrower and each Guarantor under any one or more of the Loan Documents and any
amendment, extension, modification, replacement or recasting of any one or more
of the instruments, agreements and documents referred to herein or therein or
executed in connection with the transactions contemplated hereby or thereby.
“Outstanding Principal Balance” shall mean, as of any date, the outstanding
principal balance of the Loan. For the avoidance of doubt, the outstanding
principal balance of the Loan shall include Project Reserve Funds and all other
funds held by lender or escrow agent.
“Payment Date” shall mean, commencing with the First Payment Date, the first
(1st) day of each calendar month during the term of the Loan until and including
the Maturity Date or, for purposes of making payments hereunder, but not for
purposes of calculating Interest Periods, if such day is not a Business Day, the
immediately preceding Business Day.
“Permitted Encumbrances” shall mean, collectively (a) the Liens and security
interests created by the Loan Documents, (b) all Liens, encumbrances and other
matters disclosed in “Schedule B-I” of the Title Insurance Policy, (c) Liens, if
any, for Taxes imposed by any Governmental Authority which are not yet due or
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender’s sole discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower’s ability to repay the Loan.
“Permitted Transfer” means any of the following: (a) any Transfer, directly as a
result of the death of a natural person, of stock, membership interests,
partnership interests or other ownership interests previously held by the
decedent in question to the Person or Persons lawfully entitled thereto; (b) any
Transfer, directly as a result of the legal incapacity of a natural person, of
stock, membership interests, partnership interests or other ownership interests
previously held by such natural person to the Person or Persons lawfully
entitled thereto; and (c) any Transfer expressly permitted by and completed
strictly in accordance with Section 5.2.10.
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“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
Governmental Authority, and any fiduciary acting in such capacity on behalf of
any of the foregoing.
“Personal Property” shall have the meaning set forth in the granting clause of
the Security Instrument.
“Policies” shall have the meaning specified in Section 6.1(b) hereof.
“Prohibited Transaction” shall mean any action or transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the ERISA or Section 4975 of the Code.
“Project” shall mean and refer to, individually and collectively as applicable,
the rehabilitation improvements to each Individual Property more particularly
described on Schedule 1.1(b) hereto, that will be funded, in whole or in part,
with disbursements of Project Reserve Funds.
“Project Budget” shall mean a budget for construction of each Project approved
by Lender in its sole discretion and any modifications thereof approved by
Lender in writing in its sole and absolute discretion.
“Project Contracts” shall mean each contract or agreement to which Borrower or
any agent of Borrower is a party, providing for the provision of construction
services (including architect’s or engineering services), labor or material in
connection with a Project.
“Project Costs” shall mean all costs and expenses of every kind and nature
whatsoever to be incurred by Borrower in connection with the Completion of a
Project, including such reserves and contingencies as Lender shall reasonably
require.
“Project Documents” shall mean each of the following as approved by Lender with
respect to each Project: the Approved Plans and the applicable Project
Contracts.
“Project Reserve Account” shall have the meaning set forth in Section 7.4.1
hereof.
“Project Reserve Funds” shall have the meaning set forth in Section 7.4.1
hereof.
“Property” shall mean, collectively, each and every Individual Property which is
subject to the terms of this Agreement.
“Release Amount” shall mean, for an Individual Property, the lesser of:
(a) the Debt; or
(b) an amount equal to the Allocated Loan Amount for such Individual Property
set forth on Schedule 1.1(a) (as adjusted pursuant to Sections 2.4.1(c) and
2.4.2(a) if applicable) multiplied by one hundred and ten percent (110%).
“Release Property” shall have the meaning set forth in Section 2.7 hereof.
“Rents” shall mean all rents (including additional rents of any kind and
percentage rents), rent equivalents, moneys payable as damages (including
payments by reason of the rejection of a Lease in a Bankruptcy Action) or in
lieu of rent or rent equivalents, royalties (including, without limitation, all
oil and gas or other mineral royalties and bonuses), income, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payments and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower or any of their agents or employees
from any and all sources arising from or attributable to the Property, and the
Improvements, including charges for oil, gas, water, steam, heat, ventilation,
air-conditioning, electricity, license fees, maintenance fees, charges for
Taxes, operating expenses or other amounts payable to Borrower (or for the
account of Borrower), revenues from telephone services, vending and all
receivables, customer obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of the Property or rendering of services by
Borrower, or any of its agents or employees and proceeds, if any, from business
interruption or other loss of income insurance.
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“Reserve Accounts” shall mean, collectively, the Project Reserve Account, the
Net Proceeds Account, and any other escrow or reserve account established
pursuant to the Loan Documents
“Reserve Funds” shall mean, collectively, the Project Reserve Funds and any
other escrow or reserve funds established pursuant to the Loan Documents.
“Restoration” shall mean the repair and restoration of the Property after a
Casualty or Condemnation as nearly as possible to the condition the Property was
in immediately prior to such Casualty or Condemnation, with such alterations as
may be reasonably approved by Lender.
“Retention Amount” shall have the meaning set forth in Section 6.4(b)(iv)
hereof.
“Second Extension Option” shall have the meaning set forth in Section 2.6.1
hereof.
“Securities” shall have the meaning set forth in Section 9.1 hereof.
“Security Instrument” shall mean those certain first priority Deeds of Trust,
Security Agreements, Assignment of Leases and Fixture Filings of even date
herewith, made by Borrower for the benefit of Lender as security for the
Obligations and encumbering the Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
“Servicer” shall have the meaning set forth in Section 9.3 hereof.
“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.
“Severed Loan Documents” shall have the meaning set forth in Section 9.2 hereof.
“State” shall mean the State or Commonwealth in which the Property or any part
thereof is located.
“Stated Maturity Date” shall mean August 31, 2021.
“Survey” shall mean a survey of the Property prepared by a surveyor licensed in
the State and satisfactory to Lender and the company or companies issuing the
Title Insurance Policy, and containing a certification of such surveyor
satisfactory to Lender.
“Taxes” shall mean all taxes, assessments, water rates or sewer rents, now or
hereafter levied or assessed or imposed against (a) the Property or part
thereof, together with all interest and penalties thereon and (b) against the
rents, issues, income or profits thereof or upon the lien or estate hereby
created, whether any or all of said taxes, assessments or charges be levied
directly or indirectly or as excise taxes or ad valorem real estate or personal
property taxes or as income taxes.
“Tenant” shall mean the lessee of all or any portion of the Property under a
Lease.
“Title Company” shall mean the title insurance company which issued the Title
Insurance Policy.
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“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in
a form acceptable to Lender (or, if the State does not permit the issuance of
such ALTA policy, such form as shall be permitted in the State and acceptable to
Lender) with respect to the Property and insuring the Lien of any of the
Security Instrument encumbering the Property.
“Transfer” shall mean means the sale, transfer, hypothecation, pledge,
encumbrance, mortgage, conveyance, lease, alienation, assignment, disposition,
divestment, or leasing with option to purchase, or assignment of the Property,
or any portion thereof or interest therein or in Borrower (whether direct or
indirect, legal or equitable including the issuance, sale, assignment,
alienation, conveyance, divestment, transfer, disposition, hypothecation,
pledge, mortgage or encumbrance of any ownership interest in Borrower or in any
entity having an ownership interest in Borrower, whether direct or indirect); or
entering into any agreement or contract to do any of the foregoing which is not
conditioned on compliance with the terms of the Loan Documents with respect to
Transfers, or undertaking, suffering or causing any of the foregoing to occur
voluntarily, involuntarily or by operation of law.
“UCC” shall mean the Uniform Commercial Code as in effect in the State in which
the Property is located, as the same may be amended from time to time; provided,
however, that if by reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection or priority of the security interest in
any item or portion of the collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State in which the Property is
located (“Other UCC State”), “UCC” means the Uniform Commercial Code as in
effect in such Other UCC State, as the same may be amended from time to time,
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or priority.
“U.S. Obligations” shall mean non-redeemable securities evidencing an obligation
to timely pay principal and/or interest in a full and timely manner that are (a)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged, or (b) to the extent acceptable to the Lender,
in its sole discretion, other “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended.
Section 1.2 Principles of Construction. All references to sections and schedules
are to sections and schedules in or to this Agreement unless otherwise
specified. All uses of the word “including” shall mean “including, without
limitation” unless the context shall indicate otherwise. Unless otherwise
specified, the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
ARTICLE II
GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower.
2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and conditions
set forth herein, Lender hereby agrees to make, and Borrower hereby agrees to
borrow, the Loan on the Closing Date.
2.1.2 Single Disbursement to Borrower. Borrower may request and receive only one
disbursement hereunder in respect of the Loan and any amount borrowed and repaid
in respect of the Loan may not be re-borrowed. Borrower acknowledges and agrees
that the Loan has been fully funded as of the Closing Date.
2.1.3 The Note, Security Instrument and Loan Documents. The Loan shall be
evidenced by the Note and secured by the Security Instrument, and the other Loan
Documents.
2.1.4 Use of Proceeds. Borrower shall use the proceeds of the Loan to (a)
refinance the Property, (b) make deposits of Reserve Funds into the Reserve
Accounts on the Closing Date in the amounts provided herein (Borrower hereby
authorizing Lender to reserve a portion of the proceeds of the Loan in the
amount of the Reserve Funds from disbursement of the proceeds of the Loan on the
date hereof), (c) pay costs and expenses incurred in connection with the closing
of the Loan, as approved by Lender, and (d) pay for Project Costs.
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2.1.5 Upfront Payment. At Closing, Borrower shall pay to Lender an upfront fee
(the “Upfront Payment”) in an amount equal to Seventy-Five Thousand and No/100
Dollars ($75,000.00), less any portion of the Upfront Fee paid to Lender prior
to the Closing. The Upfront Payment is fully earned and non-refundable.
Section 2.2 Interest Rate.
2.2.1 Interest Rate. Subject to Section 2.2.4 hereof, interest on the
Outstanding Principal Balance shall accrue from the date of the funding of the
Loan to but excluding the Maturity Date at the Interest Rate.
2.2.2 Interest Calculation. With respect to any applicable period, interest on
the Outstanding Principal Balance shall be calculated by multiplying (a) the
actual number of days elapsed in the period for which the calculation is being
made by (b) a daily rate based on the Interest Rate and a three hundred sixty
(360) day year by (c) the average Outstanding Principal Balance in effect for
the applicable period as calculated by Lender.
2.2.3 Default Rate. In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the Outstanding Principal Balance and, to
the extent permitted by law, all accrued and unpaid interest in respect thereof
and any other amounts due pursuant to the Loan Documents, shall accrue interest
at the Default Rate, calculated from the date such payment was due without
regard to any grace or cure periods contained herein.
2.2.4 Usury Savings. This Agreement, the Note and the other Loan Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
Section 2.3 Debt Service Payments.
2.3.1 Payments Generally. For purposes of making payments hereunder, but not for
purposes of calculating Interest Periods, if the day on which such payment is
due is not a Business Day, then amounts due on such date shall be due on the
immediately succeeding Business Day. All amounts due pursuant to this Agreement
and the other Loan Documents shall be payable without setoff, counterclaim,
defense or any other deduction whatsoever.
2.3.2 Monthly Debt Service Payment. On the Closing Date, Borrower shall make a
payment of interest only for the period commencing on and including the date of
the funding of the Loan through and including September 30, 2020. Beginning on
October 1, 2020 (the “First Payment Date”) and each subsequent Payment Date up
to and including the Maturity Date, Borrower shall make a payment to Lender of
principal (if any) and interest in an amount equal to the Monthly Debt Service
Payment Amount, which payments shall be applied to accrued and unpaid interest.
2.3.3 Payment on Maturity Date. Borrower shall pay to Lender not later than 3:00
P.M., Philadelphia city time, on the Maturity Date the Outstanding Principal
Balance, all accrued and unpaid interest and all other amounts due hereunder and
under the Note, the Security Instrument and the other Loan Documents.
2.3.4 Late Payment Charge. If any principal, interest or any other sums due
under the Loan Documents, including the payment of principal due on the Maturity
Date, is not paid by Borrower on or prior to the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of (a)
five percent (5%) of such unpaid sum, and (b) the Maximum Legal Rate, in order
to defray the expense incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Security Instrument
and the other Loan Documents to the extent permitted by applicable law.
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2.3.5 Method and Place of Payment. Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be
made to Lender not later than 2:00 P.M., Philadelphia city time, on the date
when due and shall be made in Dollars in immediately available funds at Lender’s
office or as otherwise directed by Lender, and any funds received by Lender
after such time shall, for all purposes hereof, be deemed to have been paid on
the next succeeding Business Day. Any prepayments required to be made hereunder
shall be deemed to have been timely made for purposes of this Section 2.3.5.
2.3.6 ACH Payment. All payments due and owing under this Agreement or any other
Loan Documents shall be made by wire transfer to an account designated by Lender
to Borrower from time to time, or at Lender’s election, shall be made through
automated clearing house (“ACH”) transfers from the Borrower directly to Lender.
In this regard, if Lender elects to receive payments through ACH, shall execute
and deliver to Lender an authorization agreement for direct payments whereby,
among other things, Lender shall be irrevocably authorized to initiate ACH
transfers from the a payment account designated by Borrower to Lender in the
amounts required or permitted under this Agreement and all other Loan Documents.
Lender’s authorization for direct ACH transfers as hereby provided shall be
irrevocable and such ACH transfers shall continue until all Obligations are paid
in full. For so long as any Obligations remain outstanding, Borrower shall: (i)
not revoke Lender’s authority to initiate ACH transfers as hereby contemplated;
(ii) not change, modify, close or otherwise affect the designated payment
account; (iii) deposit all revenues of any nature or kind whatsoever relating to
Borrower or its business only into the designated payment account; and (iv) be
responsible for all costs, expenses or other fees and charges incurred by Lender
as a result of any failed or returned ACH transfers, whether resulting from
insufficient sums being available in the designated payment account, or
otherwise. Borrower shall undertake any and all required actions, execute any
required documents, instruments or agreements, or to otherwise do any other
thing required or requested by Lender in order to effectuate the requirements of
this Section 2.3.6.
Section 2.4 Prepayments.
2.4.1 Voluntary Prepayments.
(a) Except as otherwise provided in this Section 2.4, Borrower shall not have
the right to prepay the Loan in whole or in part. Provided no Event of Default
has occurred and is continuing, Borrower may prepay the Loan in whole upon the
satisfaction of the following conditions:
(b) Borrower shall provide a written notice to Lender of such prepayment no less
than thirty (30) days, and no more than sixty (60) days, prior to the date of
such prepayment, specifying the Business Day on which a prepayment of the Debt
(the “Prepayment Date”) is to be made; and
(c) Borrower shall pay to Lender on the Prepayment Date, together with any
portion of the Outstanding Principal Balance being repaid:
(i) all accrued and unpaid interest on the amount of the Outstanding Principal
Balance being prepaid, which, for the avoidance of doubt, shall include interest
on such amount calculated at the applicable Interest Rate through the end of the
Interest Period in which such prepayment occurs; and
(ii) without duplication of any of the foregoing, all other sums, then due under
the Note, this Agreement, the Security Instrument, and the other Loan Documents.
(d) If for any reason Borrower fails to prepay the Loan on the Prepayment Date
(including if such notice is revoked), Borrower shall pay to Lender any actual
out-of-pocket losses, costs, damages or expenses (including reasonable
attorneys’ fees and expenses) incurred by Lender in connection therewith.
(e) Upon receipt by Lender of a voluntary prepayment permitted pursuant to the
terms of this Agreement, except for a prepayment made (i) in connection with a
release of any Individual Property from the Lien of any of the Security
Instruments or (ii) any Casualty/Condemnation Prepayment up to the Allocated
Loan Amount of the applicable Individual Property, the Allocated Loan Amount for
each Individual Property that is then subject to the Lien of any of the Security
Instruments shall be reduced on a pro rata basis by such amount.
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2.4.2 Mandatory Prepayments.
(a) 90-Day Principal Payments. On December 1, 2020, Borrower shall make a
payment to Lender (the “Initial 90-Day Principal Payment”) in an amount equal to
five percent (5%) of the Outstanding Principal Balance. Beginning on March 1,
2021 and on each third (3rd) Payment Date thereafter (i.e., on June 1, September
1, December 1 and March 1 of each calendar year), Borrower shall make a payment
to Lender (each such payment, and together with the Initial 90-Day Principal
Payment, collectively the “90-Day Principal Payments”) in an amount (but not
less than zero) equal to (a) ten percent (10%) of the Outstanding Principal
Balance, less (b) all Release Amounts paid to Lender pursuant to and in
accordance with Section 2.7 hereof and applied to pay down the Outstanding
Principal Balance but only to the extent such Release Amounts have not been
applied to reduce any prior 90-Day Principal Payments. Provided no Event of
Default exists, Lender shall apply the 90-Day Principal Payments to the
Outstanding Principal Balance.
(b) Net Proceeds Payments. On the Payment Date immediately succeeding the date
on which Lender actually receives any Net Proceeds, and if Lender is not
required to make such Net Proceeds available to Borrower for a Restoration in
accordance with the terms of this Agreement, Borrower shall prepay or authorize
Lender to apply the Net Proceeds as a prepayment of the Outstanding Principal
Balance in an amount equal to one hundred percent (100%) of such Net Proceeds
provided that Borrower shall simultaneously therewith pay to Lender all accrued
and unpaid interest on the principal amount being repaid (which, for the
avoidance of doubt, shall include interest accruing on such amounts through the
last day of the Interest Period in which such repayment occurs). Notwithstanding
anything herein to the contrary, so long as no Event of Default has then
occurred and is continuing, no or any other prepayment premium, penalty or fee
shall be due in connection with any prepayment made pursuant to this Section
2.4.2.
2.4.3 Prepayments After Default. If, during the continuance of an Event of
Default, payment of all or any part of the Debt is tendered by Borrower and
accepted by Lender or is otherwise recovered by Lender (including through
application of any Reserve Funds), such tender or recovery shall be deemed to be
a voluntary prepayment by Borrower in violation of the prohibition against
prepayment set forth in Section 2.4.1 hereof, and Borrower shall pay, as part of
the Debt, all of the interest calculated at the Interest Rate on the amount of
principal being prepaid through and including the end of the Interest Period in
which such prepayment occurs.
Section 2.5 Release of Property. Except as set forth in Section 2.7 below, no
repayment, prepayment of all or any portion of the Note shall cause, give rise
to a right to require, or otherwise result in, the release of the Lien of any of
the Security Instruments. Lender shall, upon the written request and at the
expense of Borrower, upon payment in full of the Debt in accordance with the
terms of this Agreement and the other Loan Documents, release the Lien of the
Security Instruments.
Section 2.6 Extension Option(s).
2.6.1 Extension Option(s). Subject to the provisions of this Section 2.6.1,
Borrower shall have the option (the “First Extension Option”), by irrevocable
written notice (the “First Extension Notice”) delivered to Lender no later than
thirty (30) days prior to the Stated Maturity Date, to extend the Maturity Date
to August 31, 2022 (the “First Extended Maturity Date”). Borrower’s right to so
extend the Maturity Date shall be subject to the satisfaction of the following
conditions precedent prior to the effectiveness of any such extension:
(a) (i) no Event of Default shall have occurred and be continuing on the date
Borrower delivers the First Extension Notice or the Second Extension Notice, as
applicable, and (ii) no Default or Event of Default shall have occurred and be
continuing on the Stated Maturity Date and the First Extended Maturity Date, as
applicable;
(b) All amounts due and payable by Borrower and any other Person pursuant to
this Agreement or the other Loan Documents as of the Stated Maturity Date or the
First Maturity Date, as applicable, and all costs and expenses of Lender,
including fees and expenses of Lender’s counsel, in connection with the Loan
and/or the extension shall have been paid in full;
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(c) Borrower shall deliver an Officer’s Certificate to Lender (i) certifying
that all representations and warranties set forth in this Agreement remain true,
correct and complete in all material respects as of the commencement of the
applicable Extension Option, and (ii) waiving any claims, counterclaims, rights
of rescission, set-offs or defenses, known or unknown, against Lender as of the
commencement of the applicable Extension Option.
If Borrower is unable to satisfy all of the foregoing conditions within the
applicable time frames for each, Lender shall have no obligation to extend the
Stated Maturity Date hereunder.
2.6.2 Extension Documentation. If requested by Lender, Borrower shall execute
and deliver an agreement in form and substance reasonably acceptable to Lender
commemorating the extension of the Maturity Date upon the exercise of an
Extension Option and satisfaction of all applicable conditions to such extension
as provided in Section 2.6.1; provided that no such agreement shall materially
increase or alter the obligations of Borrower pursuant to the Loan Documents (it
being acknowledged that a ratification by Borrower or any Guarantor of its
respective obligations under the Loan Documents to which it is a party or a
certification by Borrower and/or any Guarantor that its respective
representations and warranties set forth in the Loan Documents to which it is a
party remain true and correct in all material respects as of the first day of
any extension term shall not constitute an increase in Borrower’s obligations
for such purpose).
2.7 Release of Individual Property. At any time Borrower may obtain the release
of an Individual Property from the Lien of the applicable Security Instrument
thereon and related Loan Documents (each such Individual Property, a “Release
Property”) and the release of Borrower’s obligations under the Loan Documents
with respect to such Release Property (other than those expressly stated to
survive), upon the satisfaction of each of the following conditions:
(a) Not more than ninety (90) calendar days and not less than ten (10) calendar
days prior to the date of the release, Borrower delivers a notice to Lender
setting forth (i) the date of the proposed release and (ii) a description of the
Release Property that will be subject to the release;
(b) no Event of Default shall be continuing on the date that the Release
Property is released from the Lien of the Security Instrument thereon other than
as expressly permitted below;
(c) Borrower shall have paid to Lender the applicable Release Amount;
(d) Borrower shall submit to Lender, not less than ten (10) days prior to the
date of such release, a release of Lien (and related Loan Documents) for such
Release Property for execution by Lender. Such release shall be in a form
appropriate in each jurisdiction in which such Release Property is located and
that would be reasonably satisfactory to a prudent lender. In addition, Borrower
shall provide all documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer’s Certificate
certifying that such documentation (A) will effect such release in accordance
with the terms of this Agreement, and (B) will not impair or otherwise adversely
affect the Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan Documents and
Individual Properties subject to the Loan Documents not being released);
(e) Borrower shall have paid or reimbursed Lender for all reasonable out of
pocket costs and expenses incurred by Lender (including, without limitation,
reasonable attorneys’ fees and disbursements) in connection with any release
effectuated pursuant to this Section 2.7, and Borrower shall have paid all
third-party fees, costs and expenses incurred in connection with any such
release, including but not limited to, the payment of all recording charges,
filing fees, taxes or other similar expenses incurred in the reasonable judgment
of Lender in order to effectuate the release;
(f) [Intentionally omitted]
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(g) At Lender’s request, Borrower shall deliver to Lender (i) an endorsement to
the Title Insurance Policy for the remaining Property (to the extent reasonably
available in the State in which the remaining Property is located) insuring the
Security Instrument, which endorsement (A) extends the effective date of such
Title Insurance Policy for the remaining Property to the effective date of the
release, (B) confirms no change in the priority of the Security Instrument on
the balance of the Property (exclusive of the Release Parcel); and (C) lists any
Permitted Encumbrances; and (ii) at Lender’s request, a survey in form and
substance reasonably acceptable to Lender of the remaining portion of the
Property; and
(h) Notwithstanding the foregoing provisions of this Section 2.7, if the Loan is
included in a REMIC Trust, as a condition to such release, Borrower shall have
established to Lender’s reasonable satisfaction that the loan-to-value ratio of
the Loan (expressed as a percentage) based upon valuations obtained by Borrower
at its sole cost and expense using (i) an existing appraisal (if such release
occurs within twenty-four (24) months of the Closing Date), (ii) a new appraisal
or (iii) a broker’s price opinion or other written determination of value using
a commercially reasonable valuation method (provided, in each case, that such
appraisal, opinion or other determination constitutes a commercially reasonable
method permitted to a REMIC Trust, and provided, further, that such valuation
shall be based solely on the value of real property and shall exclude personal
property and going-concern value) does not exceed 125% immediately after the
release of the Release Property, no such release will be permitted unless the
Borrower pays down the principal balance of the Loan by an amount not less than
the greater of (A) the Release Amount or (B) the least of one of the following
amounts: (i) if the Individual Property is sold, the net proceeds of an
arm’s-length sale of the Release Property to an unrelated Person, (ii) the fair
market value of the Release Property at the time of the release, or (iii) an
amount such that the loan-to-value ratio of the Loan as so determined by Lender
after the release is not greater than the loan-to-value ratio of the Loan
immediately prior to the release, unless the Lender receives an opinion of
counsel that, if (B) is not followed, the Securitization will not fail to
maintain its status as a REMIC Trust as a result of the release.
ARTICLE III
[**Intentionally Omitted**]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Borrower Representations. Borrower represents and warrants as of the
date hereof that:
4.1.1 Organization. Borrower has been duly organized and is validly existing and
in good standing with requisite power and authority to own its properties and to
transact the business in which it is now engaged and as contemplated by this
Agreement, including, without limitation, the power and authority to do business
in the State. Borrower is duly qualified to do business and is in good standing
in each jurisdiction where it is required to be so qualified in connection with
its properties, businesses and operations. Borrower possesses all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
entitle it to own its properties and to transact the businesses in which it is
now engaged. The sole business of Borrower is the ownership, management and
operation of the Property. The ownership interests of Borrower are as set forth
on the organizational chart attached hereto as Schedule 4.1.1. Borrower (a) has
complied in all respects with its articles of organization or limited liability
company agreement; (b) has maintained complete books and records and bank
accounts separate from those of its Affiliates; and (c) has obeyed all
formalities required to maintain its status as, and at all times has held itself
out to the public as, a legal entity separate and distinct from any other entity
(including, but not limited to, any Affiliate thereof). The signatory hereto has
all necessary power, authority and legal right to execute this Agreement, the
Note and the other Loan Documents on Borrower’s behalf to which Borrower is a
party. Guarantor has the necessary power, authority and legal right to execute,
deliver and perform its obligations under the Guaranty.
4.1.2 Proceedings. Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents. This Agreement and the other Loan Documents to which it is a party
have been duly executed and delivered by or on behalf of Borrower and constitute
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms, subject only to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
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4.1.3 No Conflicts. The execution, delivery and performance of this Agreement
and the other Loan Documents by Borrower and/or Guarantor, as applicable, will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien,
charge or encumbrance (other than pursuant to the Loan Documents) upon any of
the property or assets of Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement, management
agreement or other agreement or instrument to which Borrower is a party or by
which any of Borrower’s property or assets is subject, nor will such action
result in any violation of the provisions of any Legal Requirements of any
Governmental Authority having jurisdiction over Borrower or any of Borrower’s
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any court or any such Governmental
Authority required for the execution, delivery and performance by Borrower
and/or any Guarantor, as applicable, of this Agreement or any other Loan
Documents has been obtained and is in full force and effect.
4.1.4 Litigation. There are no actions, suits or proceedings at law or in equity
by or before any Governmental Authority or other agency now pending or
threatened against or affecting Borrower, any Guarantor, or the Property, which
actions, suits or proceedings, if determined against Borrower, any Guarantor, or
the Property.
4.1.5 Agreements. Borrower is not a party to any agreement or instrument or
subject to any restriction which might materially and adversely affect Borrower
or the Property, or Borrower’s business, properties or assets, operations or
condition, financial or otherwise. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which Borrower or the Property are bound. Borrower has no material
financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower is a party or by
which Borrower or the Property is otherwise bound, other than as permitted by
this Agreement.
4.1.6 Title. Borrower has good, marketable and insurable fee simple title to the
real property comprising part of the Property and good title to the balance of
the Property, free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. The Security Instrument, when
properly recorded in the appropriate records, together with any UCC-1 financing
statements required to be filed in connection therewith, will create (a) a
valid, perfected first priority lien on the Property, subject only to Permitted
Encumbrances and the Liens created by the Loan Documents, and (b) perfected
security interests in and to, and perfected collateral assignments of, all
personalty, solely to the extent such security interests can be perfected by the
filing of a UCC-1 financing statement, all in accordance with the terms thereof,
in each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. There are no claims for payment for work, labor or materials
affecting the Property which are or may become a Lien prior to, or of equal
priority with, the Liens created by the Loan Documents.
4.1.7 Solvency. Borrower has (a) not entered into the transaction contemplated
by this Agreement or executed the Note, this Agreement or any other Loan
Documents with the actual intent to hinder, delay or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
such Loan Documents. After giving effect to the Loan, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the making of the
Loan, exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s liabilities (including contingent
liabilities, if any), including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower’s assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to incur debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debts and liabilities as they mature (taking into account the timing
and amounts of cash to be received by Borrower and the amounts to be payable on
or in respect of the obligations of Borrower). No Bankruptcy Action exists
against Borrower and Borrower has never been a debtor party in a Bankruptcy
Action. No Bankruptcy Action exists against any Guarantor, and neither Borrower
nor has any Guarantor has ever been a debtor party in a Bankruptcy Action.
Neither Borrower nor any Guarantor is contemplating either a Bankruptcy Action
or the liquidation of all or a major portion of Borrower’s or Guarantor’s
respective assets or properties, and Borrower has no knowledge of any Person
contemplating the filing of any petition against Borrower or any Guarantor.
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4.1.8 Full and Accurate Disclosure. No statement of fact made by or on behalf of
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material information that has not been disclosed to Lender which adversely
affects, nor as far as Borrower can reasonably foresee, might materially
adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower or any Guarantor.
4.1.9 No Plan Assets. Borrower is not an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code,
and none of the assets of Borrower constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
Compliance by Borrower and each Guarantor with the provisions hereof will not
involve any Prohibited Transaction. Neither Guarantor nor Borrower has any
pension, profit sharing, stock option, insurance or other arrangement or plan
for employees covered by Title IV of ERISA, and no “Reportable Event” as defined
in ERISA has occurred and is now continuing with respect to any such plan. The
performance by Borrower of its obligations under the Loan Documents and
Borrower’s conducting of its operations do not violate any provisions of ERISA.
In addition, (a) Borrower is not a “governmental plan” within the meaning of
Section 3(32) of ERISA, (b) transactions by or with Borrower are not subject to
any state statute or regulation regulating investments of, or fiduciary
obligations with respect to, governmental plans within the meaning of Section
2(32) of ERISA which is similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Agreement, and (c) none of
Borrower, Guarantor or ERISA Affiliate is at the date hereof, or has been at any
time within the two years preceding the date hereof, an employer required to
contribute to any Multiemployer Plan or Multiple Employer Plan, or a
“contributing sponsor” (as such term is defined in Section 4001 of ERISA) in any
Multiemployer Plan or Multiple Employer Plan; and none of Borrower, Guarantor or
any ERISA Affiliate has any contingent liability with respect to any
post-retirement “welfare benefit plan” (as such term is defined in ERISA) except
as disclosed to Lender in writing.
4.1.10 Compliance. Borrower and the Property (including the use thereof) comply
in all material respects with all applicable Legal Requirements, including,
without limitation, building and zoning ordinances and codes. Borrower is not in
default or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, including, without limitation, any order of a bankruptcy
court or plan approved thereby. There has not been committed by Borrower (or any
other Person), any act or omission affording any Governmental Authority the
right of forfeiture as against the Property or any part thereof or any monies
paid in performance of Borrower’s obligations under any of the Loan Documents.
Neither the Improvements, if any, as constructed, nor the use of the Property or
any contemplated accessory uses, will violate (a) any Legal Requirements
(including subdivision, zoning, building, environmental protection and wetland
protection Legal Requirements), or (b) any building permits, restrictions or
records, or agreements affecting the Property or any part thereof. Neither the
zoning authorizations, approvals or variances nor any other right to construct
or to use the Property is to any extent dependent upon or related to any real
estate other than the Property.
4.1.11 Financial Information. All financial data with respect to the Property
and Guarantor, including, without limitation, the statements of cash flow and
income and operating expense, that have been delivered to Lender in connection
with the Loan (a) are true, complete and correct in all material respects, (b)
fairly and accurately represent the financial condition of the Property and each
Guarantor as of the date of such reports, and (c) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with GAAP (or such other accounting basis acceptable to Lender)
throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a Materially Adverse Effect on the Property or the
Project. Since the date of such financial statements, there has been no Material
Adverse Change (or any other material change) in the financial condition,
operation or business of Borrower or any Guarantor from that set forth in said
financial statements.
17
4.1.12 Condemnation. No Condemnation or other similar proceeding has been
commenced or, to Borrower’s best knowledge, is threatened with respect to all or
any portion of the Property or for the relocation of any roadway providing
access to the Property.
4.1.13 Federal Reserve Regulations. No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or for any other purpose which would be inconsistent with such Regulation U or
any other Regulations of such Board of Governors, or for any purposes prohibited
by any Legal Requirements or by the terms and conditions of this Agreement or
the other Loan Documents.
4.1.14 Public Access. The Property has rights of access to public ways and, upon
construction thereon, will be served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Property for its intended uses. All
public utilities necessary or convenient to the full use and enjoyment of the
Property are located either in the public right-of-way abutting the Property
(which will be connected so as to serve the Property without passing over other
property) or in recorded easements serving the Property and such easements are
set forth in and insured by the Title Insurance Policy. All roads necessary for
the use of the Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities. There is
no on-site sewage disposal system and, upon construction thereon, the Property
will be served by a sewer system maintained by a Governmental Authority or
property owners association.
4.1.15 Not a Foreign Person. Borrower is not a “foreign person” within the
meaning of §1445(f)(3) of the Code.
4.1.16 Separate Lots. The Property is comprised of multiple parcels more
particularly described on Schedule 1.1(a) which each constitute(s) a separate
tax lot or lots and does not constitute a portion of any other tax lot not a
part of the Property.
4.1.17 Assessments. There are no pending or proposed special or other
assessments for public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may result in such
special or other assessments.
4.1.18 Enforceability. The Loan Documents are enforceable by Lender (or any
subsequent holder thereof) in accordance with their respective terms, subject to
principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’ obligations. The
Loan Documents are not subject to any right of rescission, set-off, counterclaim
or defense by Borrower or Guarantor, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable (subject to principles
of equity and bankruptcy, insolvency and other laws generally affecting
creditors’ rights and the enforcement of debtors’ obligations), and neither
Borrower nor any Guarantor have asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
4.1.19 No Prior Assignment. There are no prior assignments of any Leases or any
portion of the Rents due and payable or to become due and payable which are
presently outstanding.
4.1.20 Insurance. Borrower has obtained and has delivered to Lender evidence of
all Policies, with all premiums paid thereunder, reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. No claims
have been made or are currently pending, outstanding or otherwise remain
unsatisfied under any such Policies, and neither Borrower nor any other Person,
has done, by act or omission, anything which would impair the coverage of any
such Policies.
4.1.21 Flood Zone. None of the Improvements on the Property are located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards or, if so located, the flood insurance required pursuant
to Section 6.1(a)(i) hereof is in full force and effect with respect to the
Property.
18
4.1.22 Leases. Any and all Leases at the Property (a) provide for rental rates
comparable to existing local market rates, contain reasonable market rate terms
and do not contain any terms which would materially adversely affect Lender’s
rights under the Loan Documents, (b) are for a lease term not exceeding one
year, including all extensions, (c) are with individual, residential,
non-commercial tenants, and (d) have been entered into by Borrower in its
ordinary course of business. No Person has any possessory interest in the
Property or right to occupy the same other than tenants pursuant to the express
terms of the Leases.
4.1.23 Survey. Each Survey for the Property delivered to Lender is accurate.
4.1.24 Principal Place of Business; State of Organization. Borrower’s principal
place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement. Borrower is organized under the laws
of the State of Delaware and is qualified to do business in the all states in
which Borrower is required to be qualified.
4.1.25 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements currently in effect in connection
with the transfer of the Property to Borrower have been paid. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Security Instrument, have been paid or are being paid
simultaneously with the disbursement of the proceeds of the Loan to Borrower.
4.1.26 [Intentionally omitted].
4.1.27 Illegal Activity. No portion of the Property has been or will be
purchased with proceeds of any illegal activity.
4.1.28 No Change in Facts or Circumstances; Disclosure. All information
submitted by Borrower and any Guarantor to Lender including, but not limited to,
all financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower and each Guarantor in this Agreement
or in any other Loan Document, are accurate, complete and correct in all
material respects. There has been no Material Adverse Change in any condition,
fact, circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that otherwise
materially and adversely affects or might materially and adversely affect the
use, operation or value of the Property or the business operations and/or the
financial condition of Borrower or any Guarantor. Borrower and each Guarantor
have disclosed to Lender all material facts and have not failed to disclose any
material fact that could cause any information provided to Lender or
representation or warranty made herein to be materially misleading.
4.1.29 Investment Company Act. Borrower is not (a) an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (b) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 2005, as amended; or (c) subject to any other
Federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
4.1.30 Embargoed Person. As of the date hereof and at all times throughout the
term of the Loan, including after giving effect to any Transfers permitted
pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower and any Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any
interest of any nature whatsoever in Borrower or any Guarantor, as applicable,
with the result that the investment in Borrower or any Guarantor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law; and (c) none of the funds of Borrower or any Guarantor, as
applicable, have been derived from any unlawful activity with the result that
the investment in Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.
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4.1.31 Filing of Returns. Borrower and each Guarantor have filed all Federal
income tax returns and all other material tax returns, domestic and foreign, or
extensions, as the case may be, required to be filed by it and have paid all
material taxes and assessments payable by it that have become due, other than
those not yet delinquent and except for those being contested in good faith.
Borrower and each Guarantor have each established on its books such charges,
accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by sound accounting
principles consistently applied. Neither Borrower, nor any Guarantor knows of
any proposed assessment for additional Federal, foreign or state taxes for any
period, or of any basis therefor, that, individually or in the aggregate, taking
into account such charges, accruals and reserves in respect thereof as such
Person has made, could reasonably be expected to cause a Material Adverse Change
with respect to Borrower, Guarantor or the Property.
4.1.32 Operations Agreements. Each Operations Agreement is in full force and
effect and neither Borrower nor, to the best of Borrower’s knowledge, any other
party to any such Operations Agreement, is in default thereunder, and to the
best of Borrower’s knowledge, there are no conditions which, with the passage of
time or the giving of notice, or both, would constitute a default thereunder.
Section 4.2 Survival of Representations. Borrower agrees that all of the
representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
BORROWER COVENANTS
Section 5.1 Affirmative Covenants. From the date hereof and until payment and
performance in full of all Obligations, Borrower hereby covenants and agrees
with Lender that:
5.1.1 Existence; Compliance with Legal Requirements. Borrower shall do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its existence, rights, licenses, permits and franchises and comply with
all Legal Requirements applicable to Borrower and the Property. There shall
never be committed by Borrower, and Borrower shall not permit any other Person
in occupancy of or involved with the operation or use of the Property to commit,
any act or omission affording any Governmental Authority the right of forfeiture
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower shall not
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all
franchises and trade names, preserve all the remainder of its property used or
useful in the conduct of its business, and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Security Instrument.
Borrower shall keep the Property insured at all times by financially sound and
reputable insurers, to such extent and against such risks, and maintain
liability and such other insurance, as is more fully provided in this Agreement.
After prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding promptly initiated and conducted in good faith and
with due diligence, the validity of any Legal Requirement, the applicability of
any Legal Requirement to Borrower or the Property or any alleged violation of
any Legal Requirement, provided, that: (a) no Default or Event of Default has
occurred and is continuing; (b) such proceeding shall be permitted under, and be
conducted in accordance with, the provisions of any instrument to which Borrower
is subject and shall not constitute a default thereunder and such proceeding
shall be conducted in accordance with all applicable statutes, laws and
ordinances; (c) neither the Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, cancelled or lost; (d)
Borrower shall, upon final determination thereof, promptly comply with any such
Legal Requirement determined to be valid or applicable or cure any violation of
any Legal Requirement; (e) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower and the Property; and (f) Borrower
shall furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith. Lender may
apply any such security, as necessary to cause compliance with such Legal
Requirement at any time when, in the judgment of Lender, the validity,
applicability or violation of such Legal Requirement is finally established or
the Property (or any part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated, cancelled or lost.
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5.1.2 Taxes and Other Charges. Borrower shall pay, all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Property, or any part
thereof, as the same become due and payable. Borrower will deliver or cause to
be delivered to Lender receipts for payment or other evidence satisfactory to
Lender that the Taxes and Other Charges have been so paid or are not then
delinquent no later than ten (10) days prior to the date on which the Taxes
and/or Other Charges would otherwise be delinquent if not paid. Borrower shall
not suffer and shall promptly pay or cause to be paid and discharged any Lien or
charge whatsoever which may be or become a Lien or charge against the Property,
and shall promptly pay or cause to be paid all utility services provided to the
Property. After prior notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (a) no Default or
Event of Default has occurred and remains uncured; (b) such proceeding shall be
permitted under, and be conducted in accordance with, the provisions of any
other instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; (c) neither the Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (d) Borrower shall promptly upon final
determination thereof pay or cause to be paid the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (e) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the Property (except
that if such Taxes or Other Charges must be paid sooner in order to avoid being
delinquent, then Borrower shall pay or cause the same to be paid prior to
delinquency, and upon making such payment or causing such payment to be made
prior to delinquency Borrower may continue such contest); and (f) Borrower shall
furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon. Lender may pay over any such
cash deposit or part thereof held by Lender to the claimant entitled thereto at
any time when, in the judgment of Lender, the entitlement of such claimant is
established or the Property (or part thereof or interest therein) shall be in
danger of being sold, forfeited, terminated, cancelled or lost or there shall be
any danger of the Lien of the Security Instrument being primed by any related
Lien.
5.1.3 Litigation. Borrower shall give prompt notice to Lender of any litigation
or proceedings by any Governmental Authority pending or threatened against
Borrower and/or any Guarantor which might have a Materially Adverse Effect on
Borrower’s or any Guarantor’s condition (financial or otherwise) or business or
the Property.
5.1.4 Access to Property. Borrower shall permit agents, representatives and
employees of Lender to inspect the Property or any part thereof at reasonable
hours upon reasonable advance notice (which may be given verbally).
5.1.5 Notice of Default. Borrower shall promptly advise Lender of any Material
Adverse Change in Borrower’s or any Guarantor’s condition, financial or
otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
5.1.6 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender
with respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
5.1.7 Perform Loan Documents. Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions of, and shall pay when due all
costs, fees and expenses to the extent required under the Loan Documents.
Payment of the costs and expenses associated with any of the foregoing shall be
in accordance with the terms and provisions of this Agreement, including,
without limitation, the provisions of Section 10.13 hereof.
5.1.8 Award and Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with the Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
attorneys’ fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of Casualty or Condemnation affecting
the Property or any part thereof) out of such Insurance Proceeds.
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5.1.9 Further Assurances. Borrower shall, at Borrower’s sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, appraisals, title
and other insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or which are reasonably requested by
Lender in connection therewith;
(b) authorize the filing or recording of or execute and deliver to Lender such
documents, instruments, certificates, assignments, financing statements and
other writings, and do such other acts necessary or desirable, to evidence,
preserve and/or protect the collateral at any time securing or intended to
secure the Obligations under the Loan Documents, as Lender may reasonably
require; and
(c) do and execute all and such further lawful and reasonable acts, conveyances
and assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time. In furtherance hereof, Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose
of protecting, perfecting, preserving and realizing upon the interests granted
pursuant to this Agreement and to effect the intent hereof, all as fully and
effectually as Borrower might or could do; and Borrower hereby ratifies all that
Lender shall lawfully do or cause to be done by virtue hereof. Upon receipt of
an affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any other Loan Document which is not of public record,
and, in the case of any such mutilation, upon surrender and cancellation of such
Note or other applicable Loan Document, and in the case of the Note, receipt of
an indemnity from Lender, Borrower will issue, in lieu thereof, a replacement
Note or other applicable Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Note or other Loan Document in the same principal amount
thereof and otherwise of like tenor. Borrower hereby authorizes Lender to file
an “all assets” financing statement with respect to the Collateral.
5.1.10 Mortgage Taxes. Borrower shall simultaneously with the disbursement of
the proceeds of the Loan pay all state, county and municipal recording and all
other taxes imposed upon the execution and recordation of the Security
Instrument.
5.1.11 Financial Reporting.
(a) Borrower will keep and maintain or will cause to be kept and maintained on a
Fiscal Year basis in accordance with GAAP (or such other accounting basis
selected by Borrower and reasonably acceptable to Lender), proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation of the
Property. Lender shall have the right from time to time at all times during
normal business hours upon reasonable notice (which may be verbal) to examine
such books, records and accounts at the office of Borrower or any other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower’s accounting records with respect to the Property, as Lender shall
reasonably determine to be necessary or appropriate in the protection of
Lender’s interest. Upon Lender’s request, Borrower shall furnish to Lender such
other information reasonably necessary and sufficient to fairly represent the
financial condition of Borrower and the Property.
(b) Borrower will furnish to Lender annually, within one hundred twenty (120)
days following the end of each Fiscal Year of Borrower, and within thirty (30)
days of the end of each calendar quarter, a complete copy of Borrower’s and each
Guarantor’s annual (or quarterly, as applicable) financial statements certified
as true and correct by the party providing such statements (and, for the annual
of statements of Borrower prepared by an independent certified public accountant
acceptable to Lender) in accordance with GAAP (or such other accounting basis
acceptable to Lender, consistently applied) covering the Property for such
Fiscal Year (or calendar quarter) and containing statements of profit and loss
for Borrower, Guarantor and the Property and a balance sheet for Borrower and
each Guarantor. Such statements of Borrower shall set forth the financial
condition and the results of operations for the Property for such Fiscal Year
(or calendar quarter), and an Officer’s Certificate certifying that each annual
financial statement of Borrower fairly presents the financial condition and the
results of operations of Borrower and the Property subject to such reporting,
and that such financial statements have been prepared in accordance with GAAP
and as of the date thereof whether there exists an event or circumstance which
constitutes a Default or Event of Default by Borrower under the Loan Documents,
and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.
Guarantor’s annual financial statements shall be accompanied by a certificate
executed and delivered by Guarantor (if such Guarantor is a natural person) or
an officer or other duly authorized representative of Guarantor (if such
Guarantor is an entity) certifying that each annual financial statement presents
fairly the financial condition and the results of operations of Guarantor being
reported upon and that such financial statements have been prepared in
accordance with GAAP (or such other accounting basis acceptable to Lender, and,
for Guarantors, Lender hereby approves sound and prudent cash based financial
statements consistently applied)and as of the date thereof whether there exists
an event or circumstance which constitutes a Default or Event of Default by
Guarantor under the Loan Documents, and if such Default or an Event of Default
exists, the nature thereof, the period of time it has existed and the action
then being taken to remedy the same.
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(c) Borrower shall also provide such monthly reports and statements as are
reasonably required by Lender within twenty (20) days after the end of each
calendar month.
(d) Borrower shall furnish to Lender, within twenty (20) days after request (or
as soon thereafter as may be reasonably possible), such further detailed
information with respect to the operation of the Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(e) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered in electronic form (or such other form as
required by Lender) and Borrower agrees that Lender may disclose information
regarding the Property and Borrower that is provided to Lender pursuant to this
Section 5.1.11 in connection with any Lender Assignment to such parties
requesting such information in connection with such Lender Assignment.
(f) Without limitation on other requirements of this Agreement, Lender may
require, at Borrower’s cost and expense, quarterly valuations of the Loan and
Borrower shall cooperate in connection therewith; provided, however, so long as
no Event of Default exists, Borrower shall not be required to reimburse Lender
more than $2,500 for the cost of any such quarterly valuation.
5.1.12 Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property or ownership
and management of an interest in Borrower (as applicable).
5.1.13 Title to the Property. Borrower will warrant and defend (a) the title to
the Property and every part thereof, subject only to Permitted Encumbrances, and
(b) the validity and priority of the Lien of each of the Security Instruments,
subject only to Permitted Encumbrances, in each case against the claims of all
Persons whomsoever. Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including attorneys’ fees and expenses, and court costs)
incurred by Lender if an interest in the Property, other than as permitted
hereunder, is claimed by another Person.
5.1.14 Costs of Enforcement. In the event (a) that the Security Instrument is
foreclosed in whole or in part or that the Security Instrument is put into the
hands of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any mortgage prior to or subsequent to the Security Instrument in
which proceeding Lender is made a party, or (c) of a Bankruptcy Action related
to Borrower or an assignment by Borrower for the benefit of its creditors,
Borrower, on behalf of itself and its successors and assigns, agrees that
it/they shall be chargeable with and shall pay all costs of collection and
defense, including attorneys’ fees and expenses, and court costs, incurred by
Lender or Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.
5.1.15 Estoppel Statement.
(a) After request by Lender, Borrower shall within ten (10) days furnish Lender
with a statement, duly acknowledged and certified, setting forth (i) the
original principal amount of the Loan, (ii) the Outstanding Principal Balance,
(iii) the Interest Rate of the Loan, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to the performance
of the Obligations, if any, and (vi) that the Note, this Agreement, the Security
Instrument and the other Loan Documents are valid, legal and binding obligations
of Borrower and have not been modified or if modified, giving particulars of
such modification.
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(b) Borrower shall use commercially reasonable efforts to deliver to Lender upon
request, tenant estoppel certificates from each commercial Tenant, if any, in
form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than once in
any calendar year.
5.1.16 Loan Proceeds. Borrower shall use the proceeds of the Loan received by it
on the Closing Date only for the purposes set forth in Section 2.1.4.
5.1.17 Performance by Borrower. Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrower and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document without the prior written
consent of Lender.
5.1.18 No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of the Property (a) with any other real property constituting a
tax lot separate from the Property, and (b) which constitutes real property with
any portion of the Property which may be deemed to constitute personal property,
or any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to such real
property portion of the Property.
5.1.19 Leasing Matters. Any Lease executed after the date hereof (and any
amendment or termination thereof) shall require the prior written consent of
Lender, which consent shall be in Lender’s sole and absolute discretion.
Borrower shall furnish Lender with true, correct and complete executed copies of
all Leases, amendments thereof and any related agreements. Without limitation,
and as applicable, Lender shall be deemed to have approved all renewals of
Leases and all proposed Leases so long as the same (a) provide for rental rates
comparable to existing local market rates, contain reasonable market rate terms
and do not contain any terms which would materially adversely affect Lender’s
rights under the Loan Documents, (b) are for a lease term not exceeding one
year, including all extensions, (c) are with individual, residential,
non-commercial tenants, and (d) have been entered into by Borrower in its
ordinary course of business. All Leases executed after the date hereof shall
provide that they are subordinate to the Security Instrument and the Liens
created thereby and that the Tenant thereunder agrees to attorn to Lender or any
other purchaser of the Property at a sale by foreclosure (or deed in lieu
thereof) or power of sale. Borrower (a) shall observe and perform the
obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (b) shall enforce the terms, covenants and conditions
contained in the Leases upon the part of the Tenant thereunder to be observed or
performed in a commercially reasonable manner and in a manner which does not
impair the value of the Property involved, provided that in no event shall
Borrower terminate or accept the surrender of any Lease by a Tenant unless by
reason of a Tenant default and then only in a commercially reasonable manner to
preserve and protect the Property; provided, however, that no such termination
or surrender of any Lease will be permitted without the prior written consent of
Lender or unless such termination or surrender is specifically provided for in
the Lease; (c) shall not collect any of the Rents more than one (1) month in
advance (other than security deposits required pursuant to such Lease); (d)
shall not execute any other assignment of the lessor’s interest in the Leases or
the Rents (except to Lender pursuant to the Loan Documents); (e) shall not
alter, modify or change the terms of the Leases; and (f) shall execute and
deliver at the request of Lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time
reasonably require. Lender shall have the right to require each new Tenant to
execute and deliver to Lender a subordination, non-disturbance of possession and
attornment agreement in form, content and manner of execution reasonably
acceptable to Lender.
5.1.20 Operation of Property.
(a) Borrower shall: (i) promptly perform and/or observe in all material respects
all of the covenants and agreements required to be performed and observed by it
under any of the Operations Agreements and do all things necessary to preserve
and to keep unimpaired its material rights thereunder; (ii) promptly notify
Lender of any material default under any Operations Agreement of which it is
aware; and (iii) enforce the performance and observance of all of the covenants
and agreements required to be performed and/or observed by any party (other than
Borrower) under the Operations Agreements, in a commercially reasonable manner.
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(b) All Material Agreements shall be subject to the prior review and approval,
not to be unreasonably withheld, of Lender. As used herein, “Material
Agreements” shall mean each contract and agreement relating to the ownership,
management, development, use, operation, leasing, maintenance, repair or
improvement of the Property, as to which either (a) there is an obligation of
Borrower to pay more than $50,000 in the aggregate, or (b) the term thereof
extends beyond one year (unless cancelable on thirty (30) days or less notice
without requiring the payment of termination fees or payments of any kind).
5.1.21 Changes in the Legal Requirements Regarding Taxation. If any Legal
Requirement or other law, order, requirement or regulation of any Governmental
Authority is enacted or adopted or amended after the date the Loan is funded
which imposes a tax, either directly or indirectly, on the Obligations or
Lender’s interest in the Property, Borrower must pay or cause to be paid such
tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of such tax or interest and penalties by
Borrower would be unlawful or taxable to Lender or unenforceable or provide the
basis for a defense of usury, then in any such event, Lender may, by written
notice to Borrower of not less than ninety (90) days, declare the Obligations
immediately due and payable.
5.1.22 No Credits on Account of the Obligations. Borrower will not claim or
demand or be entitled to any credit or credits on account of the Obligations for
any payment of Taxes assessed against the Property and no deduction shall
otherwise be made or claimed from the assessed value of the Property for real
estate tax purposes because of the Loan Documents or the Obligations. If Legal
Requirements or other laws, orders, requirements or regulations require such
claim, credit or deduction, Lender may, by written notice to Borrower of not
less than ninety (90) days, declare the Obligations immediately due and payable.
5.1.23 Personal Property. Borrower shall cause all of its personal property,
fixtures, attachments and equipment delivered upon, attached to or used in
connection with the operation of the Property to always be located at the
Property and shall be kept free and clear of all Liens, encumbrances and
security interests, except Permitted Encumbrances.
5.1.24 Rehabilitation Project.
(a) Project Documents. Borrower shall diligently and continuously undertake to
Complete each Project in conformance with the applicable Project Documents.
Borrower will perform its obligations under the Project Documents and will
enforce the terms of the Project Documents.
(b) Permits. Borrower shall pay for and obtain or cause to be paid for and
obtained all permits, licenses and approvals required by applicable Legal
Requirements with regard to each Project.
(c) Lender Consultants. At Borrower’s expense, Lender shall have the right to
employ an inspecting architect, engineer or consultant with respect to a
Project. Borrower shall pay immediately upon demand the fees and expenses of any
architect, engineer or consultant employed by Lender for the purpose of
reviewing plans or otherwise engaged by Lender with respect to any Project.
(d) Performance by Lender. Upon the occurrence of an Event of Default, Lender
shall have the right, without limitation of Lender’s other remedies under the
Loan Documents, upon written notice to Borrower, either before or after
accelerating the Debt or commencing foreclosure, either directly or through
Lender’s agents and contractors to (i) enter onto the Property, (ii) complete
the Project, (iii) modify the Project as Lender deems necessary, (iv) hire or
replace any contractor or vendor retained by Borrower in connection with the
Project as Lender deems necessary, (v) expend such sums as Lender determines
necessary to Complete such Project and (vi) purchase any insurance coverage
deemed appropriate by Lender in its sole discretion relating to the Project or
Lender’s exercise of its rights under this Section 5.1.24(d). Borrower hereby
waives any right to contest any such costs or expenses incurred by Lender in the
exercise of Lender’s rights under this Section 5.1.24(d), and such costs and
expenses (a) shall be added to the Debt, (b) shall be secured by the Security
Instrument, (c) shall accrue interest at the Default Rate, and (d) shall be
payable to Lender upon demand. Borrower hereby agrees to indemnify and hold
harmless Lender for any such costs or expenses. Borrower hereby grants Lender an
irrevocable power of attorney, coupled with an interest, to exercise Lender’s
rights under this Section 5.1.24(d). Lender does not have and shall not have any
obligation to complete any Project.
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Section 5.2 Negative Covenants. From the date hereof until payment and
performance in full of the Obligations, Borrower covenants and agrees with
Lender that it will not do, directly or indirectly, any of the following:
5.2.1 Operation of Property. Borrower shall not, without Lender’s prior consent
(which consent shall be in Lender’s sole and absolute discretion): enter into,
amend, surrender, terminate, waive any rights under or cancel any Management
Agreement.
5.2.3 Liens. Borrower shall not create, incur, assume, permit or suffer to exist
any Lien on any portion of the Property or permit any such action to be taken,
except for Permitted Encumbrances.
5.2.4 Dissolution. Borrower shall not (a) engage in any dissolution,
liquidation, consolidation or merger with or into any other business entity, (b)
engage in any business activity not related to the ownership and operation of
the Property, (c) transfer, lease or sell, in one transaction or any combination
of transactions, the assets or all or substantially all of the properties or
assets of Borrower except to the extent permitted by the Loan Documents, or (d)
modify, amend, waive or terminate its organizational documents or its
qualification and good standing in any jurisdiction.
5.2.5 Change in Business. Borrower shall not enter into any line of business
other than the ownership and operation of the Property, or make any material
change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
5.2.6 Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower’s business.
5.2.7 Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of the Property or seek any variance under any
existing zoning ordinance, or use or permit the use of any portion of the
Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, in each case, without the prior written consent of Lender.
5.2.8 No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of all or any portion of the Property with (a) any other real
property constituting a tax lot separate from the Property, or (b) any portion
of the Property which may be deemed to constitute personal property, or any
other procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.
5.2.9 Principal Place of Business and Organization. Borrower shall not change
its principal place of business set forth in the introductory paragraph of this
Agreement without first giving Lender at least thirty (30) days prior notice.
Borrower shall not change the place of its organization as set forth in Section
4.1.24 without the consent of Lender, which consent shall not be unreasonably
withheld. Upon Lender’s request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender’s security interest in the
Property as a result of such change of principal place of business or place of
organization.
5.2.10 ERISA.
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
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(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (1) Borrower is not an
“employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32)
of ERISA; (2) Borrower is not subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans;
and (3) one or more of the following circumstances is true: (i) Equity interests
in Borrower are publicly offered securities, within the meaning of 29 C.F.R.
§2510.3-101(b)(2); (ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower is held by “benefit plan investors” within
the meaning of 29 C.F.R. §2510.3-101(f)(2); (iii) Borrower qualifies as an
“operating company” or a “real estate operating company” within the meaning of
29 C.F.R. §2510.3-101(c) or (e); or (iv) The Loan meets the requirements of PTE
95-60, 90-1, 84-14 or similar exemption.
5.2.11 Transfers; Assumptions.
(a) Without the prior written consent of Lender and except to the extent
otherwise set forth in this Section 5.2.10, no Transfer may occur without the
prior written consent of Lender in its sole and absolute discretion.
(b) Notwithstanding the provisions of this Section 5.2.10, Lender’s consent
shall not be required in connection with a Permitted Transfer; provided,
however, that all of the following conditions are satisfied with respect to any
such Transfers: (1) Borrower shall provide Lender thirty (30) days’ prior
written notice thereof (other than a Permitted Transfer for which notice shall
occur within thirty (30) days’ after such Transfer), (2) such Transfer shall not
result in a change in the day-to-day management and operations of the Property,
(3) [intentionally omitted], and (4) such Transfer shall not result in a breach
of Section 5.2.9 or 5.2.13. Notwithstanding anything set forth herein, and
without limiting any restrictions on any Transfer set forth herein, if any
proposed transfer of any direct or indirect interests in Borrower would
otherwise be a Permitted Transfer or not require Lender’s consent but shall
result in any Person owning more than twenty percent (20%) of the direct or
indirect legal, beneficial or economic interest in Borrower (other than Persons
currently owning more than twenty percent (20%) of the direct or indirect legal,
beneficial or economic interest in Borrower), approval of such transferee is
required so that Lender can confirm the transfer and transferee complies with
all legal and regulatory requirements and Lender policies relating to such
transfer and transferee, including, without limitation, the Patriot Act and
federal regulations issued with respect thereto and to ensure compliance with
the representations in Section 4.1.30 hereof.
(c) Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Transfer without Lender’s consent. This
provision shall apply to every Transfer regardless of whether voluntary or not,
or whether or not Lender has consented to any previous Transfer.
5.2.12 Operations Agreements. Borrower shall not, without the prior written
consent of Lender, modify any of the Operations Agreements.
5.2.13 [Intentionally omitted].
5.2.14 Embargoed Person; OFAC. As of the date hereof and at all times throughout
the term of the Loan, including after giving effect to any Transfers permitted
pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower and any Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any
interest of any nature whatsoever in Borrower or any Guarantor, as applicable,
with the result that the investment in Borrower or any Guarantor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law; and (c) none of the funds of Borrower or any Guarantor, as
applicable, have been derived from any unlawful activity with the result that
the investment in Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law. Neither
Borrower nor any Guarantor is (or will be) a Person with whom Lender is
restricted from doing business under OFAC regulations (including those persons
named on OFAC’s Specially Designated and Blocked Persons list) or under any
statute, executive order (including the September 24, 2001 #13224 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action and is
not and shall not engage in any dealings or transactions or otherwise be
associated with such Persons. In addition, to help the US Government fight the
funding of terrorism and money laundering activities, The USA Patriot Act (and
the regulations thereunder) requires Lender to obtain, verify and record
information that identifies its customers. Borrower shall provide Lender with
any additional information that Lender deems necessary from time to time in
order to ensure compliance with The USA Patriot Act and any other applicable
Legal Requirements concerning money laundering and similar activities.
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5.2.15 Distributions. Borrower shall not make or permit any Distribution.
5.2.16 Affiliate Agreements. Borrower shall not enter into any agreement with an
Affiliate without Lender’s prior written consent, in its sole and absolute
discretion.
ARTICLE VI
INSURANCE; CASUALTY; CONDEMNATION
Section 6.1 Insurance.
(a) Borrower shall obtain and maintain, or cause to be maintained, insurance for
Borrower and the Property providing at least the following coverages:
(i) comprehensive “All Risk” or “Special Form” insurance on the Improvements and
the Personal Property (A) in an amount equal to one hundred percent (100%) of
the “Full Replacement Cost,” which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations) with no
depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and Personal Property waiving all co-insurance provisions, or
confirmation that co-insurance does not apply; and (C) providing for no
deductible in excess of Twenty-Five Thousand and No/100 Dollars ($25,000.00) for
all such insurance coverage. In addition, Borrower shall obtain: (x) if any
portion of the Improvements is currently, or at any time in the future, located
in a Federally designated “special flood hazard area”, flood hazard insurance in
an amount equal to the Outstanding Principal Balance or such other amount as
Lender shall require; (y) earthquake insurance in amounts and in form and
substance satisfactory to Lender in the event the Property is located in an area
with a high degree of seismic activity; and (z) windstorm insurance in amounts
and in form and substance satisfactory to Lender in the event such windstorm
coverage is excluded under the Special Form Coverage, provided that the
insurance pursuant to clauses (x), (y) and (z) hereof shall be on terms
consistent with the comprehensive “All Risk” or “Special Form” insurance policy
required under this subsection (i);
(ii) commercial general liability insurance, including a broad form
comprehensive general liability endorsement and coverage against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Property, such insurance (A) to be on the so-called “occurrence” form
with a combined limit of not less than Two Million and No/100 Dollars
($2,000,000.00) in the aggregate and One Million and No/100 Dollars
($1,000,000.00) per occurrence (and, if on a blanket policy, containing an
“Aggregate Per Location” endorsement); (B) to continue at not less than the
aforesaid limit until required to be changed by Lender in writing by reason of
changed economic conditions making such protection inadequate; and (C) to cover
at least the following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4)
blanket contractual liability for all insured contracts; and (5) contractual
liability covering the indemnities contained in Article VIII of the Security
Instrument to the extent the same is available;
(iii) if there are tenants of the Property, rental loss insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; and (C) for loss of Rents in an
amount equal to one hundred percent (100%) of the projected rents from ` for a
period of twelve (12) months from the date of such Casualty (assuming such
Casualty had not occurred) and notwithstanding that the policy may expire prior
to or at the end of such period. The amount of such loss of Rents or business
income insurance shall be determined prior to the date hereof and at least once
each year thereafter based on Borrower’s reasonable estimate of income to be
derived from the Property for the succeeding twelve (12) month period.
Notwithstanding anything to the contrary set forth herein, all proceeds payable
to Lender pursuant to this subsection shall be held by Lender and shall be
applied at Lender’s sole discretion to (I) the Debt, or (II) operating expenses
for the Property approved by Lender in its sole discretion; provided, however,
that nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the Debt, except to the extent such amounts are actually paid
out of the proceeds of such business income insurance;
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(iv) at all times during which structural construction, repairs or alterations
are being made with respect to the Improvements, and only if the Property
coverage forms do not otherwise apply, (A) owner’s and contractor’s protective
liability insurance covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability insurance policy;
and (B) the insurance provided for in subsection (i) above written in a
so-called builder’s risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant to subsection (i) above, (3)
including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provision, or confirmation that co-insurance
does not apply;
(v) if Borrower ever has any direct employees, worker’s compensation insurance
with respect to any employees of Borrower, as required by any Governmental
Authority or Legal Requirement;
(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as
shall be reasonably required by Lender on terms consistent with the commercial
property insurance policy required under subsection (i) above;
(vii) if Borrower ever has any direct employees or owns any motor vehicles,
motor vehicle liability coverage for all owned and non-owned vehicles, including
rented and leased vehicles containing minimum limits per occurrence of not less
than One Million and No/100 Dollars ($1,000,000.00);
(viii) umbrella or excess liability insurance in an amount not less than Five
Million and No/100 Dollars ($5,000,000.00) per occurrence on terms consistent
with the commercial general liability insurance policy required under subsection
(ii) above;
(ix) if the Property is or becomes a legal “non-conforming” use or structure,
ordinance or law coverage to compensate for the value of the undamaged portion
of the Property, the cost of demolition and increased cost of construction in
amounts as requested by Lender;
(x) if applicable, the commercial property, business income, general liability
and umbrella or excess liability insurance required under Sections 6.1(a)(i),
(ii), (iii) and (viii) above shall cover perils of terrorism and acts of
terrorism and Borrower shall maintain commercial property and business income
insurance for loss resulting from perils and acts of terrorism on terms
(including amounts) consistent with those required under Sections 6.1(a)(i),
(ii), (iii) and (viii) above at all times during the term of the Loan so long as
Lender determines that either (I) prudent owners of real estate comparable to
the Property are maintaining same or (II) prudent institutional lenders
(including, without limitation, investment banks) to such owners are requiring
that such owners maintain such insurance; and
(xi) upon sixty (60) days’ notice, such other insurance and in such amounts as
Lender from time to time may request against such other insurable hazards which
at the time are commonly insured against for properties similar to the Property
located in or around the region in which the Property is located.
(b) All insurance provided for in Section 6.1(a) shall be obtained under valid
and enforceable policies (collectively, the “Policies” or in the singular, the
“Policy”), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by financially sound and responsible insurance companies authorized to do
business in the State and having a claims paying ability rating of “A-” or
better by S&P or “A-X” or better by AM Best or “A3” or better by Moody’s
Investor Service, Inc.. Prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
renewal or successor Policies accompanied by evidence satisfactory to Lender of
payment of the premiums due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender. Borrower shall supply an original or certified
copy of the original policy within ten (10) days of request by Lender, provided
that the policy is available.
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(c) Any blanket insurance Policy shall specifically allocate to the Property the
amount of coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only the
Property in compliance with the provisions of Section 6.1(a).
(d) All Policies provided for or contemplated by Section 6.1(a), except for the
Policy referenced in Section 6.1(a)(v), shall name Borrower as the insured and
Lender (and its successors and assigns) as Mortgagee, Loss Payee and Additional
Insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
(e) All Policies provided for in this Section 6.1 shall contain clauses or
endorsements to the effect that: (i) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned; (ii) the
Policies on which Lender is listed as a Mortgagee shall not be canceled without
at least thirty (30) days’ notice to Lender; (iii) Lender shall not be liable
for any Insurance Premiums thereon or subject to any assessments thereunder; and
(iv) shall contain a waiver of subrogation in favor of Lender.
(f) If at any time Lender is not in receipt of written evidence that all
Policies are in full force and effect, Lender shall have the right, without
notice to Borrower, to take such action as Lender deems necessary to protect its
interest in the Property, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate. All
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and, until paid, shall be secured by the Security Instrument and shall
bear interest at the Default Rate. Provided no Event of Default exists, Lender
shall promptly provide Borrower with notice of any such premiums incurred.
(g) Without limitation, Borrower shall continue to maintain all insurance that
is in effect as of the date hereof.
Section 6.2 Casualty. If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty (a “Casualty”), Borrower shall (a) give
prompt notice of such damage to Lender, and (b) promptly commence and diligently
prosecute the completion of Restoration so that the Property resembles, as
nearly as possible, the condition the Property was in immediately prior to such
Casualty, with such alterations as may be reasonably approved by Lender and
otherwise in accordance with Section 6.4. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance. Lender may, but
shall not be obligated to make proof of loss if not made promptly by Borrower.
In addition, Lender may participate in (and have approval rights over) any
settlement discussions with any insurance companies with respect to any Casualty
in which the Net Proceeds or the costs of completing Restoration are equal to or
greater than five percent (5%) of the applicable Allocated Loan Amount for the
affected Individual Property and Borrower shall deliver to Lender all
instruments required by Lender to permit such participation.
Section 6.3 Condemnation. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding in respect of Condemnation,
and shall deliver to Lender copies of any and all papers served in connection
with such proceedings. Lender may participate in any such proceedings, and
Borrower shall from time to time deliver to Lender all instruments requested by
Lender to permit such participation. Borrower shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Lender, its attorneys and
experts, and cooperate with them in the carrying on or defense of any such
proceedings. Notwithstanding any taking by any public or quasi-public authority
through Condemnation or otherwise (including, but not limited to, any transfer
made in lieu of or in anticipation of the exercise of such taking), Borrower
shall continue to perform the Obligations at the time and in the manner provided
in this Agreement and the other Loan Documents and the Outstanding Principal
Balance shall not be reduced until any Award shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Obligations. Lender shall not be limited to the
interest paid on the Award by the applicable Governmental Authority but shall be
entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by a
Governmental Authority, Borrower shall promptly commence and diligently
prosecute Restoration and otherwise comply with the provisions of Section 6.4.
If the Property is sold, through foreclosure or otherwise, prior to the receipt
by Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
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Section 6.4 Restoration. If there are any Improvements on the Property, the
following provisions shall apply:
(a) If the Net Proceeds and the costs of completing Restoration shall each be
less than five percent (5%) of the applicable Allocated Loan Amount for the
affected Individual Property, then the Net Proceeds will be disbursed by Lender
to Borrower upon receipt, provided that all of the conditions set forth in
Section 6.4(b)(i) are met and Borrower delivers to Lender a written undertaking
to expeditiously commence and to satisfactorily complete with due diligence
Restoration in accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than five percent (5%) of the
applicable Allocated Loan Amount for the affected Individual Property, but less
than twenty percent (20%) of the applicable Allocated Loan Amount for the
affected Individual Property, or the costs of completing Restoration are equal
to or greater than five percent (5%) of the applicable Allocated Loan Amount for
the affected Individual Property, but less than twenty percent (20%) of the
applicable Allocated Loan Amount for the affected Individual Property, then, in
either case, the Net Proceeds will be held by Lender and Lender shall make the
Net Proceeds available for Restoration in accordance with the provisions of this
Section 6.4. The term “Net Proceeds” for purposes of this Section 6.4 shall
mean: (i) the net amount of all insurance proceeds received by Lender pursuant
to Section 6.1 (a)(i), (iv), (vi), (ix) and (x) as a result of such damage or
destruction, after deduction of Lender’s reasonable costs and expenses
(including, but not limited to, reasonable counsel costs and fees), if any, in
collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award,
after deduction of Lender’s reasonable costs and expenses (including, but not
limited to, reasonable counsel costs and fees), if any, in collecting same
(“Condemnation Proceeds”), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for Restoration upon
the determination of Lender in its sole discretion that the following conditions
are met:
(A) no Event of Default shall have occurred and be continuing;
(B) in the event the Net Proceeds are Condemnation Proceeds, less than ten
percent (10%) of the land constituting the affected Individual Property is
taken, and such land is located along the perimeter or periphery of such
Property, and no portion of the Improvements is located on such land;
(C) if applicable, Leases demising in the aggregate a percentage amount equal to
or greater than ninety percent (90%) of the total rentable space in the affected
Individual Property which has been demised under executed and delivered Leases
in effect as of the date of the occurrence of such Casualty or Condemnation,
whichever the case may be, shall remain in full force and effect during and
after the completion of Restoration, notwithstanding the occurrence of any such
Casualty or Condemnation, whichever the case may be, and will make all necessary
repairs and restorations thereto at their sole cost and expense;
(D) Borrower shall commence Restoration as soon as reasonably practicable (but
in no event later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently pursue the same to
satisfactory completion;
(E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the affected Individual Property as a result of the
occurrence of any such Casualty or Condemnation, whichever the case may be, will
be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to
in Section 6.1(a)(iii), if applicable, or (3) by other funds of Borrower;
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(F) Lender shall be satisfied that Restoration will be completed on or before
the earliest to occur of (1) four (4) months prior to the Maturity Date, (2) the
earliest date required for such completion under the terms of any Leases, (3)
such time as may be required under all applicable Legal Requirements in order to
repair and restore the affected Individual Property to the condition it was in
immediately prior to such Casualty or to as nearly as possible the condition it
was in immediately prior to such Condemnation, as applicable, or (4) the
expiration of the insurance coverage referred to in Section 6.1(a)(iii);
(G) the affected Individual Property and the use thereof after Restoration will
be in compliance with and permitted under all applicable Legal Requirements;
(H) Restoration shall be done and completed by Borrower in an expeditious and
diligent fashion and in compliance with all applicable Legal Requirements;
(I) such Casualty or Condemnation, as applicable, does not result in the loss of
access to the affected Individual Property or the related Improvements;
(J) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing Restoration, which budget shall be acceptable to
Lender; and
(K) the Net Proceeds together with any cash or cash equivalent deposited by
Borrower with Lender are sufficient in Lender’s discretion to cover the cost of
Restoration.
(ii) The Net Proceeds shall be paid directly to Lender for deposit in an
interest-bearing account (the “Net Proceeds Account”) and, until disbursed in
accordance with the provisions of this Section 6.4(b), shall constitute
additional security for the Debt and the Other Obligations. The Net Proceeds
shall be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of Restoration, upon receipt of evidence satisfactory to
Lender that (A) all materials installed and work and labor performed (except to
the extent that they are to be paid for out of the requested disbursement) in
connection with Restoration have been paid for in full, and (B) there exist no
notices of pendency, stop orders, mechanic’s or materialman’s liens or notices
of intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the Title Company.
(iii) All plans and specifications required in connection with Restoration shall
be subject to prior review and acceptance in all respects by Lender in its
discretion and by an independent consulting engineer selected by Lender (the
“Casualty Consultant”). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with Restoration. The identity of the contractor engaged in
Restoration, as well as the contracts under which it has been engaged, shall be
subject to prior review and acceptance by Lender in its discretion and the
Casualty Consultant. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available for Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant’s fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of Restoration, as certified by the Casualty
Consultant, minus the Retention Amount. The term “Retention Amount” shall mean,
as to each contractor, subcontractor or materialman engaged in Restoration, an
amount equal to ten percent (10%) of the costs actually incurred for work in
place as part of Restoration, as certified by the Casualty Consultant, until
Restoration has been completed. The Retention Amount shall in no event, and
notwithstanding anything to the contrary set forth above in this Section 6.4(b),
be less than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in Restoration. The Retention Amount
shall not be released until the Casualty Consultant certifies to Lender that
Restoration has been completed in accordance with the provisions of this Section
6.4(b) and that all approvals necessary for the re-occupancy and use of the
Property have been obtained from all appropriate Governmental Authorities, and
Lender receives evidence satisfactory to Lender that the costs of Restoration
have been paid in full or will be paid in full out of the Retention Amount;
provided, however, that Lender will release the portion of the Retention Amount
being held with respect to any contractor, subcontractor or materialman engaged
in Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the Title Company
issuing the Title Insurance Policy, and Lender receives an endorsement to the
Title Insurance Policy insuring the continued priority of the lien of the
related Security Instrument and evidence of payment of any premium payable for
such endorsement. If required by Lender, the release of any such portion of the
Retention Amount shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
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(v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the opinion of Lender in consultation with the Casualty Consultant, be
sufficient to pay in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the completion of
Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net Proceeds
shall be made. The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with
Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall
constitute additional security for the Debt and the Other Obligations.
(vii) The excess, if any, of the Net Proceeds and the remaining balance, if any,
of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that Restoration has been completed in accordance
with the provisions of this Section 6.4(b), and the receipt by Lender of
evidence satisfactory to Lender that all costs incurred in connection with
Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing.
(c) If Net Proceeds are (i) equal to or greater than twenty percent (20%) of the
applicable Allocated Loan Amount for the affected Individual Property, (ii) not
required to be made available for Restoration (due to Borrower’s inability to
satisfy the conditions set forth in Section 6.4(b)(i) or otherwise), or (iii)
not to be returned to Borrower as excess Net Proceeds pursuant to Section
6.4(b)(vii), then in any such event all Net Proceeds may be retained and applied
by Lender in accordance with Section 2.4.2 hereof toward reduction of the
Outstanding Principal Balance whether or not then due and payable in such order,
priority and proportions as Lender in its sole discretion shall deem proper, or,
in the sole discretion of Lender, the same may be paid, either in whole or in
part, to Borrower for such purposes as Lender shall approve, in its sole
discretion. No prepayment charge shall be payable by Borrower by reason of a
Casualty or Condemnation.
(d) In the event of foreclosure of the Security Instrument, or other transfer of
title to the Property in extinguishment in whole or in part of the Debt all
right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.
ARTICLE VII
RESERVE FUNDS
Section 7.1 [Intentionally Omitted]
Section 7.2 [Intentionally Omitted]
Section 7.3 Reserve Funds, Generally.
(a) Borrower (i) hereby grants to Lender a first priority security interest in
all of the Reserve Funds and any and all monies now or hereafter deposited in
each Reserve Account as additional security for payment and performance of the
Obligations and (ii) will take all actions necessary to maintain in favor of
Lender a perfected first priority security interest in the Reserve Funds,
including, without limitation, filing or authorizing Lender to file UCC-1
financing statements and continuations thereof. Until expended or applied in
accordance herewith, the Reserve Funds shall constitute additional security for
the Obligations.
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(b) Upon the occurrence of an Event of Default, Lender may, in addition to any
and all other rights and remedies available to Lender, apply any sums then
present in any or all of the Reserve Funds to the reduction of the Outstanding
Principal Balance or the payment of any other amounts then due and owing under
this Agreement or any of the other Loan Documents in any order in its sole
discretion.
(c) Borrower shall not further pledge, assign or grant any security interest in
any Reserve Fund or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
financing statements, except those naming Lender as the secured party, to be
filed with respect thereto.
(d) The Reserve Funds shall not constitute trust funds and may be commingled
with other monies held by Lender. No earnings or interest on the Reserve Funds
shall be payable to Borrower. Lender shall not have any obligation to keep or
maintain such Reserve Funds or any funds deposited therein in interest bearing
accounts.
(e) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys’ fees and expenses) (collectively, “Claims”) arising from or in any
way connected with the Reserve Funds or the performance of the obligations for
which the Reserve Funds were established; provided, however, Borrower shall not
be obligated to indemnify Lender for any such Claims to the extent arising from
Lender’s gross negligence or willful misconduct. Borrower shall assign to Lender
all rights and claims Borrower may have against all Persons supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
(f) Upon payment in full of the Debt in accordance with the terms of this
Agreement and the other Loan Documents, Lender shall return any remaining
Reserve Funds to Borrower.
Section 7.4 Project Reserve Funds.
7.4.1 Deposits of Project Reserve Funds. Borrower shall deposit with Lender
(which amount may be net funded by Lender but deemed disbursed) an amount equal
to $175,000.00 on the Closing Date for the purpose of funding Project Costs,
which amounts shall be deposited into a Reserve Account (the “Project Reserve
Account”). Amounts deposited from time to time into the Project Reserve Account
pursuant to this Section 7.4.1 are referred to herein as the “Project Reserve
Funds”. The allocated amount of Project Reserve Funds with respect to each
Individual Property, are set forth on Schedule 1.1(a) hereof.
7.4.2 Disbursement of Project Reserve Funds.
(a) Disbursements Upon Completion of Project at Individual Property. Each
disbursement of Project Reserve Funds shall be released subject to satisfaction
of the following conditions, any of which may be waived by Lender in Lender’s
sole discretion:
(i) Any request for a disbursement of Project Reserve Funds shall be submitted
to Lender on Lender’s form of request, not less than ten (10) Business Days
prior to the anticipated date for the disbursement of Project Reserve Funds, and
shall be accompanied by all evidence required to be approved by Lender as a
condition to such disbursement, including an Officer’s Certificate stating that
said conditions are then satisfied;
(ii) Disbursement of Project Reserve Funds shall only be used for the portion of
the Project at the Individual Property to which the request for disbursement of
Project Reserve Funds relates shall not exceed the amount of the Project Reserve
Funds allocated to the applicable Individual Property;
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(iii) Borrower shall be in compliance with the terms and conditions of Section
5.1.24;
(iv) The relevant portion of the Project at an Individual Property to which the
requested disbursement of Project Reserve Funds relates shall be Complete;
(v) At Lender’s election, Lender shall have received certificates of Lender’s
consultant, any Architect and the General Contractor that the such portion of
the Project is Complete;
(vi) Evidence reasonably acceptable to Lender, together with all other
appropriate certificates and other documentation that Lender may require from,
and as are customarily issued by, applicable Governmental Authorities,
evidencing (i) compliance with all applicable Legal Requirements, including
final certificates of occupancy and all consents or approvals required from
third parties or any Governmental Authority have been obtained, and (ii) that no
petitions, actions or proceedings are pending or threatened which could
reasonably be expected to materially alter or declare invalid any approvals,
consents, permits or certificates for or relating to the Project, or any part
thereof;
(vii) Final unconditional waivers of lien (and evidence of payment) from all
other contractors, subcontractors and materialmen as required by Lender or the
Title Company; and
(viii) Lender shall have received notices of title continuation showing that
since the date of the last disbursement of Project Reserve Funds there has been
no adverse change in the state of title to the applicable Individual Property
not approved by Lender, and, to the extent that any new improvements have been
constructed at the applicable Individual Property outside their footprint on the
date of the most recent survey, no adverse survey exceptions with respect to the
Property not theretofore approved by Lender, and Lender may, in its discretion,
require an endorsement to the Title Insurance Policy, in form and content
satisfactory to Lender, insuring, in effect, that such disbursement has the same
priority as the initial disbursement of the Loan and that there has been no
Material Adverse Change in the condition of title to the Property since the
issuance of the Title Insurance Policy;
(ix) No actions, suits or proceedings shall then be pending nor have any been
threatened against or which affect Borrower, any Guarantor or the Property which
could have a Material Adverse Change on Borrower, Guarantor or the Property;
(x) No Default or Event of Default shall have occurred and be continuing and all
representations and warranties set forth in this Agreement and in any other Loan
Document shall be materially true and correct as of the date of Borrower’s
request for the disbursement, the date the disbursement is made, and immediately
following the making of the disbursement;
(xi) No substantial unrepaired damage to any portion of the Property by fire or
other casualty which is not in Lender’s judgment adequately covered by
collectible proceeds of insurance; and
(xii) Borrower shall have paid all of the costs and expenses incurred by Lender,
including reasonable attorneys’ fees and expenses, all title premiums and other
title and survey charges in connection with the proposed disbursement and a
nonrefundable rehabilitation management in the amount of Two Hundred Ninety-Five
and No/100 Dollars ($295.00) payable to Lender with respect to each disbursement
of Project Reserve Funds.
(b) Disbursement by Wire Transfer. Disbursement of Project Reserve Funds shall
be made at Lender’s election by wire transfer, at Borrower’s cost and expense,
or by check. Lender may, in its election, make payments of the Project Reserve
Funds directly to the contractor, subcontractor, or material supplier. Lender
may also require, at Lender’s election, in its sole discretion, at Borrower’s
sole cost and expense, that disbursements of Project Reserve Funds be made
through (a) the Title Company pursuant to a construction loan disbursement
escrow agreement or (b) a vending control company. Any such arrangement with the
Title Company or a vending control company shall be in Lender’s sole discretion
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(c) Waiver of Conditions. Lender may from time to time, in its sole discretion,
waive any condition or conditions to any disbursement of Project Reserve Funds
without such waiver or series of waivers constituting a course of dealing or any
amendment to this Agreement or a prohibition against subsequent imposition of
such condition or conditions or a waiver of a default.
ARTICLE VIII
DEFAULTS
Section 8.1 Event of Default.
8.1.1 Generally.
(a) Each of the following events shall constitute an event of default hereunder
(an “Event of Default”):
(i) if any portion of the Debt is not paid when due (including, without
limitation, the failure of Borrower to repay the entire outstanding principal
balance of the Note in full on the Maturity Date);
(ii) if any of the Taxes or Other Charges are not paid when the same are due and
payable without payment of a penalty;
(iii) if the Policies are not kept in full force and effect, or if copies of the
certificates evidencing the Policies (or certified copies of the Policies if
requested by Lender) are not delivered to Lender within thirty (30) days after
written request therefor;
(iv) the occurrence of any Transfer (except a Permitted Transfer) or other
encumbrance with respect to any portion of the Property or the Collateral in
violation of the provisions of this Agreement or Article 6 of the Security
Instrument, or the occurrence of any Transfer in violation of the provisions of
Section 5.2.10 hereof;
(v) if any representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made or deemed remade;
(vi) if Borrower or any Guarantor shall (i) make an assignment for the benefit
of creditors or (ii) generally not be paying its debts as they become due;
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, or
if Borrower shall be adjudicated bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to Federal bankruptcy law, or
any similar Federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, or if any proceeding for the dissolution or
liquidation of Borrower shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, upon the same not being discharged, stayed or
dismissed within ninety (90) days;
(viii) if a receiver, liquidator or trustee shall be appointed for any Guarantor
or if any Guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to Federal
bankruptcy law, or any similar Federal or state law, shall be filed by or
against, consented to, or acquiesced in by, any Guarantor, or if any proceeding
for the dissolution or liquidation of any Guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by the applicable Guarantor, upon the same not
being discharged, stayed or dismissed within ninety (90) days; provided,
further, however, it shall be at Lender’s option to determine whether any of the
foregoing shall be an Event of Default;
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(ix) if Borrower attempts to assign its rights under this Agreement or any of
the other Loan Documents or any interest herein or therein in contravention of
the Loan Documents;
(x) if Borrower breaches any representation, warranty or covenant contained in
Section 4.1.26 or any of its respective negative covenants contained in Section
5.2;
(xi) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be
in default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;
(xii) Borrower breaches any covenant contained in Section 5.1.11 and such breach
continues for ten (10) days after notice from Lender;
(xiii) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to
(xi) above, for ten (10) days after notice to Borrower from Lender, in the case
of any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed ninety (90) days; or
(xiv) if there shall be a Default under any of the other Loan Documents beyond
any applicable cure periods contained in such documents, whether as to Borrower,
Guarantor or the Property.
(b) Upon the occurrence of an Event of Default (other than an Event of Default
described in clauses (vi), (vii) or (viii) above) and at any time thereafter, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, Lender may take
such action, without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and in and to the Property, including,
without limitation, declaring the Obligations to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or remedies provided
in the Loan Documents against Borrower and the Property, including, without
limitation, all rights or remedies available at law or in equity; and upon any
Event of Default described in clauses (vi), (vii) or (viii) above, the Debt and
all Other Obligations of Borrower hereunder and under the other Loan Documents
shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
8.1.2 Remedies.
(a) Upon the occurrence of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time (including, without limitation,
Lender may accelerate the Loan and declare the Outstanding Principal Balance and
all other amounts under the Loan Documents due and payable and institute
foreclosure proceedings), whether or not all or any of the Debt shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singularly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. To the fullest extent permitted by law or equity, without limiting
the generality of the foregoing, Borrower agrees that if an Event of Default is
continuing (i) Lender shall not be subject to any “one action” or “election of
remedies” law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Property and the Security
Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Obligations have been paid in full.
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(b) With respect to Borrower and the Property, nothing contained herein or in
any other Loan Document shall be construed as requiring Lender to resort to the
Property for the satisfaction of any of the Debt in any preference or priority,
and Lender may seek satisfaction out of the Property, or any part thereof, in
its absolute discretion in respect of the Debt. In addition, Lender shall have
the right from time to time to partially foreclose the Security Instrument in
any manner and for any amounts secured by the Security Instrument then due and
payable as determined by Lender in its sole discretion, including, without
limitation, the following circumstances: (i) in the event Borrower defaults
beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the Security Instrument
to recover such delinquent payments or (ii) in the event Lender elects to
accelerate less than the entire Outstanding Principal Balance, Lender may
foreclose the Security Instrument to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the Security
Instrument as Lender may elect. Notwithstanding one or more partial
foreclosures, the Property shall remain subject to the Security Instrument to
secure payment of sums secured by the Security Instrument and not previously
recovered.
(c) Lender shall have the right from time to time to partially foreclose the
Security Instrument in any manner and for any amounts secured by the Security
Instrument then due and payable as determined by Lender in its sole discretion,
including the following circumstances: (i) in the event Borrower defaults beyond
any applicable grace period in the payment of one or more scheduled payments of
principal and/or interest, Lender may foreclose the Security Instrument to
recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire Outstanding Principal Balance, Lender may
foreclose the Security Instrument to recover so much of the Debt as Lender may
accelerate and such other sums secured by the Security Instrument as Lender may
elect. Notwithstanding one or more partial foreclosures, the Property shall
remain subject to the Security Instrument to secure payment of sums secured by
the Security Instrument and not previously recovered.
(d) To the fullest possible extent permitted by applicable law or equity, any
amounts recovered from the Property or any other collateral for the Loan after
an Event of Default may be applied by Lender toward the payment of any interest
and/or principal of the Loan and/or any other amounts due under the Loan
Documents in such order, priority and proportions as Lender in its sole
discretion shall determine.
(e) If an Event of Default exists, Lender may (directly or by its agents,
employees, contractors, engineers, architects, nominees, attorneys or other
representatives), but without any obligation to do so and without notice to
Borrower and without releasing Borrower from any obligation hereunder, cure the
Event of Default in such manner and to such extent as Lender may deem necessary
to protect the security hereof. Subject to Tenants’ rights under the Leases,
Lender (and its agents, employees, contractors, engineers, architects, nominees,
attorneys or other representatives) are authorized to enter upon the Property to
cure such Event of Default, and Lender is authorized to appear in, defend, or
bring any action or proceeding reasonably necessary to maintain, secure or
otherwise protect the Property or the priority of the Lien granted by the
Security Instrument.
(f) Lender may appear in and defend any action or proceeding brought with
respect to the Property and may bring any action or proceeding, in the name and
on behalf of Borrower, which Lender, in its sole discretion, decides should be
brought to protect its interest in the Property. Lender shall, at its option, be
subrogated to the Lien of any mortgage or other security instrument discharged
in whole or in part by the Obligations, and any such subrogation rights shall
constitute additional security for the payment of the Obligations.
(g) As used in this Section 8.1.2, a “foreclosure” shall include, without
limitation, a power of sale.
8.1.3 Remedies Cumulative; Waivers. The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
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8.1.4 CONFESSION OF JUDGMENT. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF
AUTHORITY FOR ANY ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING
THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, BORROWER,
FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT) COUNSEL FOR BORROWER
AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY KNOWINGLY, INTENTIONALLY,
VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS BORROWER HAS OR MAY
HAVE TO PRIOR NOTICE AND AN OPPORTUNITY OF REHEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA, THE COMMONWEALTH OF
PENNSYLVANIA, OR ELSEWHERE. IT IS SPECIFICALLY ACKNOWLEDGED BY BORROWER THAT
LENDER HAS RELIED ON THIS WARRANT OF ATTORNEY AS AN INDUCEMENT TWO GRANT
FINANCIAL ACCOMMODATIONS TO BORROWER. UPON AND FOLLOWING THE OCCURRENCE OF AN
UNCURED EVENT OF DEFAULT, BORROWER HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY
OF ANY COURT OF RECORD OR THE PROTHONOTARY OR CLERK OF ANY COUNTY IN THE
COMMONWEALTH OF PENNSYLVANIA, OR IN ANY JURISDICTION WHERE PERMITTED BY LAW OR
THE CLERK OF ANY UNITED STATES DISTRICT COURT, TO APPEAR FOR BORROWER IN ANY AND
ALL ACTIONS WHICH MAY BE BROUGHT HEREUNDER AND ENTER AND CONFESS JUDGMENT
AGAINST BORROWER OR ANY OF THEM IN FAVOR OF LENDER FOR SUCH SUMS AS ARE DUE OR
MAY BECOME DUE HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, TOGETHER WITH COSTS
OF SUIT AND ACTUAL COLLECTION COSTS INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS’ FEES EQUAL TO FIVE PERCENT (5%) OF THE LIABILITIES THEN DUE AND OWING
BUT IN NO EVENT LESS THAN $5,000, WITH OR WITHOUT DECLARATION, WITHOUT PRIOR
NOTICE, WITHOUT STAY OF EXECUTION AND WITH RELEASE OF ALL PROCEDURAL ERRORS AND
THE RIGHT TO ISSUE EXECUTIONS FORTHWITH. IF A COPY OF THIS NOTE VERIFIED BY
AFFIDAVIT OF ANY OFFICER OF LENDER SHALL HAVE BEEN FILED IN SUCH ACTION, IT
SHALL NOT BE NECESSARY TO FILE THE ORIGINAL THEREOF AS A WARRANT OF ATTORNEY,
ANY PRACTICE OR USAGE TO THE CONTRARY NOTWITHSTANDING. THE AUTHORITY HEREIN
GRANTED TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY SINGLE EXERCISE
THEREOF, BUT SHALL CONTINUE AND MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS
LENDER SHALL FIND IT NECESSARY AND DESIRABLE AND AT ALL TIMES UNTIL FULL PAYMENT
OF ALL AMOUNTS DUE HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. LENDER MAY
CONFESS ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR
ANY PART OF BORROWER’S OBLIGATIONS ARISING HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT TO WHICH BORROWER IS A PARTY, WITHOUT REGARD TO WHETHER JUDGMENT HAS
THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION FOR THE SAME OBLIGATIONS.
IN THE EVENT THAT ANY JUDGMENT CONFESSED AGAINST BORROWER IS STRICKEN OR OPENED
UPON APPLICATION BY OR ON BEHALF OF BORROWER FOR ANY REASONS, LENDER IS HEREBY
AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWER FOR ANY PART OR ALL OF THE LIABILITIES DUE AND OWING UNDER THIS NOTE
AND THE OTHER LOAN DOCUMENTS, AS HEREIN PROVIDED.
ARTICLE IX
SPECIAL PROVISIONS
Section 9.1 Transfer of Loan. Lender may, at any time, sell, transfer or assign
this Agreement, the Note, the Security Instrument and the other Loan Documents,
and any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities (the
“Securities”) evidencing a beneficial interest in a rated or unrated public
offering or private placement (such sales, participation, offering and/or
placement, collectively, a “Lender Assignment”). Lender may forward to each
purchaser, transferee, assignee, servicer, participant or investor in such
participations or Securities (collectively, the “Investor”), each prospective
Investor, and any organization maintaining databases on the underwriting and
performance of commercial mortgage loans, all documents and information which
Lender now has or may hereafter acquire relating to the Loan or to Borrower, any
Guarantor or the Property, whether furnished by Borrower, any Guarantor or
otherwise, as Lender determines necessary or desirable, including, without
limitation, financial statements relating to Borrower, Guarantor, the Property
and any Tenant at the Property. Borrower irrevocably waives any and all rights
it may have under law or in equity to prohibit such disclosure, including but
not limited to any right of privacy.
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Section 9.2 Severed Loan Documents. Lender shall have the right from time to
time to sever the Note and the other Loan Documents into one or more separate
notes, mortgages and other security documents (the “Severed Loan Documents”) in
such denominations as Lender shall determine in its sole discretion for purposes
of evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver (and cause other parties who executed any of the Loan
Documents to execute and deliver) to Lender from time to time, promptly after
the request of Lender, a severance agreement and such other documents as Lender
may reasonably request in order to effect the severance described in the
preceding sentence, all in form and substance reasonably satisfactory to Lender
and Borrower. The Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by the parties thereto only as of the Closing Date.
Section 9.3 Servicer. At the option of Lender, the Loan may be serviced by a
master servicer, primary servicer, special servicer and/or trustee (any such
master servicer, primary servicer, special servicer, and trustee, together with
its agents, nominees or designees, are collectively referred to as “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to Servicer
pursuant to a pooling and servicing agreement, servicing agreement, special
servicing agreement or other agreement providing for the servicing of one or
more mortgage loans (collectively, the “Servicing Agreement”) between Lender and
Servicer. Without limitation, Borrower shall promptly reimburse Lender on demand
for (a) interest payable on advances made by Servicer with respect to delinquent
debt service payments (to the extent interest at the Default Rate actually paid
by Borrower in respect of such payments are insufficient to pay the same) or
expenses paid by Servicer or trustee in respect of the protection and
preservation of the Property (including, without limitation, on account of Basic
Carrying Costs), (b) all costs and expenses, liquidation fees, workout fees,
special servicing fees, operating advisor fees or any other similar fees payable
by Lender to Servicer which may be due and payable under the Servicing Agreement
(whether on a periodic or a continuing basis) as a result of an Event of Default
under the Loan, the Loan becoming specially serviced, the commencement or
continuance of any enforcement action of any kind with respect to the Loan or
any of the Loan Documents, a refinancing or a restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” of the
Loan Documents, or any Bankruptcy Action involving Borrower, Principal,
Guarantor or any of their respective principals or Affiliates, (c) all costs and
expenses of any Property inspections and/or appraisals (or any updates to any
existing inspection or appraisal) that Servicer or the trustee may be required
to obtain (but not more than one appraisal in any twelve months unless an Event
of Default exists), and (d) all costs and expenses relating to or arising from
any special requests made by Borrower or Guarantor during the term of the Loan
including, without limitation, in connection with a prepayment, defeasance,
assumption or modification of the Loan.
Section 9.4 Cooperation. Borrower and Guarantor agree to reasonably cooperate
with Lender (and agree to cause their respective officers and representatives to
cooperate) in connection with any Lender Assignment or potential Lender
Assignment.
ARTICLE X
MISCELLANEOUS
Section 10.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Obligations are outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan Documents.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the legal representatives, successors and
assigns of such party. All covenants, promises and agreements in this Agreement,
by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
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Section 10.2 Lender’s Discretion. Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole and absolute discretion of Lender and shall be final and conclusive.
Section 10.3 Governing Law. THIS AGREEMENT WAS NEGOTIATED IN THE COMMONWEALTH OF
PENNSYLVANIA, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE
COMMONWEALTH OF PENNSYLVANIA, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT
HERETO WERE DISBURSED FROM THE COMMONWEALTH OF PENNSYLVANIA, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE SECURITY
INSTRUMENT AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND/OR THE
OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA.
(a) EXCEPTIONS. NOTWITHSTANDING THE FOREGOING CHOICE OF LAW:
(i) THE PROCEDURES GOVERNING THE ENFORCEMENT BY LENDER OF ITS FORECLOSURE AND
OTHER REMEDIES AGAINST BORROWER AND GUARANTOR UNDER THE SECURITY INSTRUMENT AND
UNDER THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE REAL PROPERTY ASSETS OF
BORROWER, INCLUDING BY WAY OF ILLUSTRATION, BUT NOT IN LIMITATION, ACTIONS FOR
FORECLOSURE, FOR INJUNCTIVE RELIEF OR FOR THE APPOINTMENT OF A RECEIVER SHALL BE
GOVERNED BY THE LAWS OF THE STATE WHERE SUCH PROPERTY OR OTHER ASSETS ARE
LOCATED;
(ii) LENDER SHALL COMPLY WITH APPLICABLE LAW IN THE STATE WHERE THE PROPERTY OR
OTHER ASSETS ARE LOCATED TO THE EXTENT REQUIRED BY THE LAW OF SUCH JURISDICTION
IN CONNECTION WITH THE FORECLOSURE OF THE SECURITY INTERESTS AND LIENS CREATED
UNDER THE SECURITY INSTRUMENT;
(iii) PROVISIONS OF FEDERAL LAW AND THE LAW OF THE STATE WHERE THE PROPERTY IS
LOCATED SHALL APPLY IN DEFINING THE TERMS HAZARDOUS SUBSTANCES, ENVIRONMENTAL
STATUTES, AND LEGAL REQUIREMENTS AS SUCH TERMS ARE USED IN THIS LOAN AGREEMENT,
AND THE OTHER LOAN DOCUMENTS, WITH RESPECT TO THE PROPERTY, BORROWER AND
GUARANTOR; AND
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(iv) MATTERS OF REAL ESTATE, LANDLORD-TENANT AND PROPERTY LAW SHALL BE GOVERNED
BY THE LAWS OF THE STATE WHERE THE PROPERTY IS SITUATED.
(b) AGENT FOR SERVICE OF PROCESS. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S
SOLE OPTION BE INSTITUTED IN ANY FEDERAL DISTRICT COURT OR STATE COURT IN THE
COMMONWEALTH OF PENNSYLVANIA, COUNTY OF NORTHAMPTON, PURSUANT TO PENNSYLVANIA
LAW, AND BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTIONS WHICH
BORROWER MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
FTE Networks, Inc.
237 West 35th Street, Suite 806
New York, NY 10001
Attn: CEO
Phone: 646-755-3605
Email: mbeys@blmllp.com
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON BORROWER’S BEHALF SERVICE
OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN THE COMMONWEALTH OF PENNSYLVANIA,
AND BORROWER AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER
PROVIDED HEREIN SHALL CONCLUSIVELY BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE
COMMONWEALTH OF PENNSYLVANIA. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF
ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND
FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN THE
COMMONWEALTH OF PENNSYLVANIA(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN THE COMMONWEALTH OF PENNSYLVANIA OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.
Section 10.4 Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on Borrower, shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
Section 10.5 Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under the Note or under any other Loan Document, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.
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Section 10.6 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
and shall be effective for all purposes if hand delivered or sent by (a)
certified or registered United States mail, postage prepaid, return receipt
requested, (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (c) facsimile (with
answer back acknowledged) or as a PDF or similar attachment to an e-mail,
provided that such facsimile or email attachment shall be followed within one
(1) business day by delivery of such notice pursuant to clause (a) or (b) above,
in each case addressed as follows (or at such other address and Person as shall
be designated from time to time by any party hereto, as the case may be, in a
notice to the other parties hereto in the manner provided for in this Section
10.6):
If to Lender: DLP Lending Fund LLC 95 Highland Avenue, Suite 300 Bethlehem,
PA 28017 Attention: Barry W. DeGroot, Esq. E-Mail:barry@dlpre.com with a
copy to: Pircher, Nichols & Meeks LLP 1901 Avenue of the Stars, Suite 1200
Los Angeles, California 90067 Attention: Real Estate Notices (WBT: 6004.2)
Facsimile No.: (310) 201-8922 E-Mail: realestatenotices@pircher.com If to
Borrower: FTE Legal 237 West 35th Street, Suite 806 New York, NY 10001
Attn: Corporate Counsel Phone: (239) 315-3161 Email: legal@ftenet.com
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day;
or in the case of facsimile or PDF or similar attachment to an e-mail, upon
sender’s receipt of a machine-generated confirmation of successful transmission
after advice by telephone to recipient that a facsimile or e-mail notice is
forthcoming. Any failure to deliver a notice by reason of a change of address
not given in accordance with this Section 10.6, or any refusal to accept a
notice, shall be deemed to have been given when delivery was attempted. Any
notice required or permitted to be given by any party hereunder or under any
other Loan Document may be given by its respective counsel.
Section 10.7 Waiver of Trial by Jury. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 10.8 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
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Section 10.9 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement 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 Agreement.
Section 10.10 Preferences. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the Debt. To the extent Borrower makes a payment or payments to Lender, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or Federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the Obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
Section 10.11 Waiver of Notice. Borrower hereby expressly waives, and shall not
be entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of notice.
Section 10.12 Remedies of Borrower. In the event that a claim or adjudication is
made that Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case where by law or under this Agreement or the other Loan
Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, Borrower agrees that neither Lender nor its agents shall
be liable for any monetary damages, and Borrower’s sole remedies shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment. The parties hereto agree that any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment. Further, it is agreed Lender shall not be in default under
this Agreement, or under any other Loan Document, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within thirty (30) days after Borrower first had knowledge of the occurrence of
the event which Borrower alleges gave rise to such claim and Lender does not
remedy or cure the default, if any there be, promptly thereafter. Failure to
give such notice shall constitute a waiver of such claim.
Section 10.13 Expenses; Indemnity.
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of notice from Lender for all costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred by Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Property); (ii) Borrower’s ongoing performance of
and compliance with Borrower’s respective agreements and covenants contained in
this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Lender; (v) securing Borrower’s compliance
with any requests made pursuant to the provisions of this Agreement; (vi) the
filing and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing
or preserving any rights, either in response to third party claims or in
prosecuting or defending any action or proceeding or other litigation, in each
case against, under or affecting Borrower, this Agreement, the other Loan
Documents, the Property, or any other security given for the Loan; and (viii)
enforcing any obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to the Property, or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work-out” or of any insolvency
or bankruptcy proceedings or any other amounts required under Section 9.3;
provided, however, that Borrower shall not be liable for the payment of any such
costs and expenses to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of Lender. Any cost and
expenses due and payable to Lender may be paid by Lender from any Reserve
Account.
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(b) Borrower shall indemnify, defend and hold harmless the Indemnified Parties
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against any Indemnified Party in any manner
relating to or arising out of (i) any breach by Borrower of its Obligations
under, or any misrepresentation by Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (the liabilities, losses, costs, expenses and other matters described in
this subparagraph (b), collectively, the “Indemnified Liabilities”); provided,
however, that Borrower shall not have any obligation to an Indemnified Party
hereunder to the extent that such Indemnified Liabilities arise from the gross
negligence, illegal acts, fraud or willful misconduct of such Indemnified Party.
To the extent that the undertaking to indemnify, defend and hold harmless set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnified Parties.
Section 10.14 Exhibits and Schedules Incorporated. Any Exhibits and Schedules
annexed hereto are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.
Section 10.15 Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses solely to
the extent such offsets, counterclaims or defenses are unrelated to such
documents which Borrower may otherwise have against any assignor of such
documents, and no such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon such documents and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Borrower.
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the Obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.
Section 10.17 Publicity. All news releases, publicity or advertising by Borrower
or its Affiliates through any media intended to reach the general public which
refers to the Loan Documents or the financing evidenced by the Loan Documents,
to Lender or any of its Affiliates shall be subject to the prior approval of
Lender.
Section 10.18 Waiver of Marshalling of Assets; Homestead Waiver. To the fullest
extent permitted by law, Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Borrower, Borrower’s
partners and others with interests in Borrower, and of the Property, or to a
sale in inverse order of alienation in the event of foreclosure of the Security
Instrument, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever. To the extent permitted by applicable law,
Borrower hereby waives any Homestead protections that may be available to
Borrower under the law of the state in which the Property is located.
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Section 10.19 Waiver of Counterclaim. Borrower hereby waives the right to assert
a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
Section 10.20 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any Affiliate of Lender. Lender
shall not be subject to any limitation whatsoever in the exercise of any rights
or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender’s exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates.
Section 10.21 Brokers and Financial Advisors. Borrower hereby represents that it
has dealt with no financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the transactions contemplated by this
Agreement other than Direct Lending Partners LLC, which arranged the Loan.
Borrower hereby agrees to indemnify, defend and hold Lender harmless from and
against any and all claims, liabilities, costs and expenses of any kind
(including Lender’s attorneys’ fees and expenses) in any way relating to or
arising from a claim by any Person that such Person acted on behalf of Borrower
or Lender in connection with the transactions contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.
Section 10.22 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, including, without limitation,
the Term Sheet dated April 13, 2020 between Borrower (or an agent or
representative of Borrower) and Lender, are superseded by the terms of this
Agreement and the other Loan Documents.
Section 10.23 Cumulative Rights. All of the rights of Lender under this
Agreement hereunder and under each of the other Loan Documents and any other
agreement now or hereafter executed in connection herewith or therewith, shall
be cumulative and may be exercised singly, together, or in such combination as
Lender may determine in its sole judgment.
Section 10.24 Counterparts; Electronic Delivery. This Agreement and all of the
other Loan Documents may be executed in several counterparts, each of which when
executed and delivered is an original, but all of which together shall
constitute one instrument. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart which is
executed by the party against whom enforcement of this Agreement is sought. The
delivery of an executed counterpart of this Agreement or any other Loan Document
(other than Note) by facsimile or as a PDF or similar attachment to an email
shall constitute effective delivery of such counterpart for all purposes with
the same force and effect as the delivery of an original, executed counterpart.
Section 10.25 Time is of the Essence. Time is of the essence of each provision
of this Agreement and the other Loan Documents.
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Section 10.26 Consent of Holder. Wherever this Agreement refers to Lender’s
consent or discretion or other rights, such references to Lender shall be deemed
to refer to any holder of the Loan. The holder of the Loan may from time to time
appoint a trustee or servicer, and Borrower shall be entitled to rely upon
written instructions executed by a purported officer of the holder of the Loan
as to the extent of authority delegated to any such trustee or from time to time
and determinations made by such trustee or servicer to the extent identified as
within the delegated authority of such trustee or servicer, unless and until
such instructions are superseded by further written instructions from the holder
of the Loan.
Section 10.27 Successor Laws. Any reference in this Agreement to any statute or
regulation shall be deemed to include any successor statute or regulation.
Section 10.28 Reliance on Third Parties. Lender may perform any of its
responsibilities hereunder through one or more agents, attorneys or independent
contractors. In addition, Lender may conclusively rely upon the advice or
determinations of any such agents, attorneys or independent contractors in
performing any discretionary function under the terms of this Agreement.
Section 10.29 Joint Borrower. The representations, covenants, warranties and
obligations of Borrower shall be joint and several. Each entity that constitutes
Borrower acknowledges and agrees that it shall be jointly and severally liable
for the Loan and all other Obligations arising under this Agreement and/or any
of the other Loan Documents. In furtherance thereof, each Borrower acknowledges
and agrees as follows:
(a) For the purpose of implementing the joint borrower provisions of the Loan
Documents, each Borrower hereby irrevocably appoints each other Borrower as its
agent and attorney-in-fact for all purposes of the Loan Documents, including the
giving and receiving of notices and other communications.
(b) To induce Lender to make the Loan, and in consideration thereof, each
Borrower hereby agrees to indemnify Lender against, and hold Lender harmless
from, any and all liabilities, expenses, losses, damages and/or claims of damage
or injury asserted against Lender by any Borrower or by any other Person arising
from or incurred by reason of (i) reliance by Lender on any requests or
instructions from any Borrower, or (ii) any other action taken by Lender in good
faith with respect to this Agreement or the other Loan Documents.
(c) Each Borrower acknowledges that the liens and security interests created or
granted herein and by the other Loan Documents will secure the Obligations of
all Borrowers under the Loan Documents and, in full recognition of that fact,
each Borrower consents and agrees that Lender may, at any time and from time to
time, without notice or demand, and without affecting the enforceability or
security hereof or of any other Loan Document:
(i) agree with any Borrower to supplement, modify, amend, extend, renew,
accelerate, or otherwise change the time for payment or the terms of the
Obligations or any part thereof, including any increase or decrease of the
rate(s) of interest thereon;
(ii) agree with any Borrower to supplement, modify, amend or waive, or enter
into or give any agreement, approval or consent with respect to, the Obligations
or any part thereof or any of the Loan Documents or any additional security or
guaranties, or any condition, covenant, default, remedy, right, representation
or term thereof or thereunder;
(iii) accept new or additional instruments, documents or agreements in exchange
for or relative to any of the Loan Documents or the Obligations or any part
thereof;
(iv) accept partial payments on the Obligations;
(v) receive and hold additional security or guaranties for the Obligations or
any part thereof;
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(vi) release, reconvey, terminate, waive, abandon, subordinate, exchange,
substitute, transfer and enforce any security for or guaranties of the
Obligations, and apply any security and direct the order or manner of sale
thereof as Lender, in its sole and absolute discretion may determine;
(vii) release any Person or any guarantor from any personal liability with
respect to the Obligations or any part thereof; or
(viii) settle, release on terms satisfactory to Lender or by operation of
applicable laws or otherwise liquidate or enforce any Obligations and any
security therefor or guaranty thereof in any manner, consent to the transfer of
any such security and bid and purchase at any sale; and consent to the merger,
change or any other restructuring or termination of the corporate existence of
any Borrower or any other Person, and correspondingly restructure the
obligations of such Borrower or other Person, and any such merger, change,
restructuring or termination shall not affect the liability of any Borrower or
the continuing existence of any lien or security interest hereunder, under any
other Loan Document to which any Borrower is a party or the enforceability
hereof or thereof with respect to all or any part of the Obligations.
(d) Upon the occurrence of and during the continuance of any Event of Default,
Lender may enforce this Agreement and the other Loan Documents independently as
to each Borrower and independently of any other remedy or security Lender at any
time may have or hold in connection with the Obligations, and in collecting on
the Loan it shall not be necessary for Lender to marshal assets in favor of any
Borrower or any other Person or to proceed upon or against and/or exhaust any
other security or remedy before proceeding to enforce this Agreement and the
other Loan Documents. Each Borrower expressly waives any right to require
Lender, in connection with Lender’s efforts to obtain repayment of the Loan and
Other Obligations, to marshal assets in favor of any Borrower or any other
Person or to proceed against any other Person or any collateral provided by any
other Person, and agrees that Lender may proceed against any Persons and/or
collateral in such order as it shall determine in its sole and absolute
discretion in connection with Lender’s efforts to obtain repayment of the Loan
and other Obligations. Lender may file a separate action or actions against each
Borrower to enforce the Obligations, whether action is brought or prosecuted
with respect to any other security or against any other Person, or whether any
other Person is joined in any such action or actions. Each Borrower agrees that
Lender, each Borrower and/or any other Person may deal with each other in
connection with the Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the security of this
Agreement or the other Loan Documents. The rights of Lender hereunder and under
the other Loan Documents shall be reinstated and revived, and the enforceability
of this Agreement and the other Loan Documents shall continue, with respect to
any amount at any time paid on account of the Obligations which thereafter shall
be required to be restored or returned by Lender as a result of the bankruptcy,
insolvency or reorganization of any Borrower or any other Person, or otherwise,
all as though such amount had not been paid. The enforceability of this
Agreement and the other Loan Documents at all times shall remain effective even
though any or all Obligations, or any other security or guaranty therefor, may
be or hereafter may become invalid or otherwise unenforceable as against any
Borrower or any other Person and whether or not any Borrower or any other Person
shall have any personal liability with respect thereto. Each Borrower expressly
waives any and all defenses to the enforcement of its Obligations under the Loan
Documents now or hereafter arising or asserted by reason of (i) any disability
or other defense of any Borrower or any other Person with respect to the
Obligations, (ii) the unenforceability or invalidity of any security or guaranty
for the Obligations or the lack of perfection or continuing perfection or
failure of priority of any security for the Obligations, (iii) the cessation for
any cause whatsoever of the liability of any Borrower or any other Person (other
than by reason of the full and final payment and performance of all
Obligations), (iv) any failure of Lender to marshal assets in favor of any of
the Borrowers or any other Person, (v) any failure of Lender to give notice of
sale or other disposition of any Collateral for the Obligations to any Borrower
or to any other Person or any defect in any notice that may be given in
connection with any such sale or disposition, (vi) any failure of Lender to
comply in any non-material respect with applicable laws in connection with the
sale or other disposition of any collateral or other security for any
Obligation, (vii) any act or omission of Lender or others that directly or
indirectly results in or aids the discharge or release of any Borrower or of any
other Person or of any of the Obligations or any other security or guaranty
therefor by operation of law or otherwise, (viii) any law which provides that
the obligation of a surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or which reduces a
surety’s or guarantor’s obligation in proportion to the principal obligation,
(ix) any failure of Lender to file or enforce a claim in any bankruptcy or
similar proceeding with respect to any Person, (x) the election by Lender, in
any bankruptcy or similar proceeding of any Person, of the application or
non-application of Section 1111(b)(2) of the Bankruptcy Code, (xi) any extension
of credit or the grant of any lien under Section 364 of the Bankruptcy Code
except to the extent otherwise provided in this Agreement, (xii) any use of cash
collateral under Section 363 of the Bankruptcy Code, (xiii) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy or similar proceeding of any Person, (xiv) the avoidance of any lien
or security interest in favor of Lender securing the Obligations for any reason,
or (xv) any bankruptcy or similar proceeding commenced by or against any Person,
including any discharge of, or bar or stay against collecting, all or any of the
Obligations (or any interest thereon) in or as a result of any such proceeding.
Without in any way limiting the foregoing, with respect to the Loan Documents
and the Obligations, Borrower: (A) waives all rights and defenses arising out of
an election of remedies by Lender even though that election of remedies, such as
non-judicial foreclosure with respect to security for Borrowers’ obligations,
has destroyed each of their rights of subrogation and reimbursement against the
other; and (B) waives any right to a fair value hearing or similar proceeding
following a non-judicial foreclosure of the Obligations.
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(e) Borrowers represent and warrant to Lender that they have established
adequate means of obtaining from each other, on a continuing basis, financial
and other information pertaining to their respective businesses, operations and
condition (financial and otherwise) and their respective properties, and each
now is and hereafter will be completely familiar with the businesses, operations
and condition (financial and otherwise) of the other and their respective
properties. Each Borrower hereby expressly waives and relinquishes any duty on
the part of Lender to disclose to such Borrower any matter, fact or thing
related to the businesses, operations or condition (financial or otherwise) of
the other Borrowers or the other Borrowers’ properties, whether now known or
hereafter known by Lender during the life of this Agreement. With respect to any
of the Obligations, Lender need not inquire into the powers of any Borrower or
the officers, employees or other Persons acting or purporting to act on such
Borrower’s behalf.
(f) Without limiting the foregoing, or anything else contained in this
Agreement, each Borrower waives all rights and defenses that it may have because
the Obligations are secured by real property. This means, among other things:
(i) Lender may collect on the Obligations from any Borrower without first
foreclosing on any real or personal property collateral pledged by the other
Borrowers; and
(ii) If Lender foreclose on any real property collateral pledged by any Borrower
for the Obligations: (A) the amount of the indebtedness owed by the other
Borrowers may be reduced only by the price for which that collateral is sold at
the foreclosure sale, even if the collateral is worth more than the sale price;
and (B) Lender may collect from any Borrower even if Lender, by foreclosing on
the real property collateral, has destroyed any right any Borrower may have to
collect from the other Borrowers.
(iii) This is an unconditional and irrevocable waiver of any rights and defenses
each Borrower may have because the Obligations are secured by real property.
Each Borrower expressly waives any right to receive notice of any judicial or
nonjudicial foreclosure or sale of any real property collateral provided by the
other Borrowers to secure the Obligations and failure to receive any such notice
shall not impair or affect such Borrower’s obligations hereunder or the
enforceability of this Agreement or the other Loan Documents or any liens
created or granted hereby or thereby.
(iv) Notwithstanding anything to the contrary elsewhere contained herein or in
any other Loan Document to which any Borrower is a party, with respect to the
Loan and all other Obligations, each Borrower hereby waives with respect to the
other Borrowers and their successors and assigns (including any surety) and any
other Person any and all rights at law or in equity, to subrogation, to
reimbursement, to exoneration, to contribution, to set-off, to any other rights
and defenses available to it or to any other rights that could accrue to a
surety against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accommodated, or to a holder or transferee
against a maker and which each of them may have or hereafter acquire against the
other or any other Person in connection with or as a result of such Borrower’s
execution, delivery and/or performance of this Agreement or any other Loan
Document to which it is a party until the Obligations are paid and performed in
full. Each Borrower agrees that it shall not have or assert any such rights
against any other Borrower or any other Borrower’s successors and assigns or any
other Person (including any surety), either directly or as an attempted set-off
to any action commenced against such Borrower by any other Borrower (as borrower
or in any other capacity) or any other Person until all the Obligations are paid
and performed in full. Each Borrower hereby acknowledges and agrees that this
waiver is intended to benefit Lender and shall not limit or otherwise affect any
Borrower’s liability under this Agreement or any other Loan Document to which it
is a party, or the enforceability hereof or thereof.
EACH BORROWER WARRANTS AND AGREES THAT EACH OF THE WAIVERS AND CONSENTS SET
FORTH HEREIN IS MADE WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES,
WITH THE UNDERSTANDING THAT EVENTS GIVING RISE TO ANY DEFENSE WAIVED MAY
DIMINISH, DESTROY OR OTHERWISE ADVERSELY AFFECT RIGHTS WHICH EACH OTHERWISE MAY
HAVE AGAINST THE OTHER, AGAINST LENDER OR OTHERS, OR AGAINST ANY COLLATERAL. IF
ANY OF THE WAIVERS OR CONSENTS HEREIN IS DETERMINED TO BE CONTRARY TO ANY
APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVERS AND CONSENTS SHALL BE EFFECTIVE TO
THE MAXIMUM EXTENT PERMITTED BY LAW.
[The Remainder of the Page is Intentionally Blank]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.
BORROWER: Alan Investments III, LLC, a Delaware limited liability
company /s/ Michael P. Beys By: Michael P. Beys, in his capacity as
President of US Home Rentals, LLC, the sole member of Alan Investments III, LLC
(Signatures continue on following page)
LENDER: DLP Lending Fund LLC, a Delaware limited liability company
By: /s/ Donald Wenner Donald Wenner President
SCHEDULE 1
Borrower Entities
[to be inserted]
Schedule 1 - 1
SCHEDULE 1.1(a)
Allocated Loan Amounts
Attached.
Schedule 1.1(a) - 1
SCHEDULE 1.1(b)
List of Projects
[to be inserted]
Schedule 1.1(b) - 1
SCHEDULE 4.1.1
Organizational Chart
[to be inserted]
Schedule 4.1.1 - 1
|
Exhibit 10.6
[ex10-6_001.jpg]
[ex10-6_002.jpg]
[ex10-6_003.jpg]
|
Exhibit 10.18
FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Fifth Amendment to Loan and Security Agreement is entered into as of August
29, 2017 (the "Amendment"), by and among TELKONET, INC. ("Borrower"), and
HERITAGE BANK OF COMMERCE ("Bank").
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement dated
as of September 30, 2014 and as amended from time to time, including pursuant to
that certain First Amendment to Loan and Security Agreement dated as of February
17, 2016, that certain Second Amendment to Loan and Security Agreement dated as
of October 27, 2016, that certain Third Amendment to Loan and Security Agreement
dated as of January 25, 2017 and that certain Fourth Amendment to Loan and
Security Agreement dated as of March 29, 2017 (collectively, the "Agreement").
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. The following definitions are added or amended and restated in its
entirety to read as follows:
"Credit Card Sublimit" means a sublimit for credit card transactions under the
Revolving Line not to exceed One Hundred Thousand Dollars ($100,000).
"Credit Extension" means each Advance, use of the Credit Card Sublimit or any
other extension of credit by Bank for the benefit of Borrower hereunder.
2. The first sentence in Section 2.1(a)(i) of the Agreement is
amended and restated in its entirety to read as follows:
(i) Subject to and upon the terms and conditions of this Agreement,
Borrower may request Advances in an aggregate outstanding amount not to exceed
the lesser of (i) the Revolving Line or (ii) the Borrowing Base, minus, in each
case the Tax Reserve and the amount of Credit Card Services being provided under
the Credit Card Sublimit.
3. The following is added as a new subsection (b) to the end of
Section 2.1 of the Agreement:
(i) Credit Card Sublimit. Subject to the terms and conditions of this
Agreement and availability under the Revolving Line and the Borrowing Base,
Borrower may request business credit cards and other related services (the
"Credit Card Services") by delivering to Bank such applications on Bank's
standard forms as requested by Bank; provided, however, that the total amount of
the Credit Card Services shall not exceed the Credit Card Sublimit, and that
availability under the Revolving Line shall be reduced by the entire amount of
the Credit Card Services being provided hereunder. In addition, Bank may, in its
sole discretion, charge as Advances any amounts that become due or owing to Bank
in connection with the Credit Card Services. If at any time the Revolving
Facility is terminated or otherwise ceases to exist, Borrower shall immediately
secure its obligations with respect to any Credit Card Services with cash
collateral in such amounts as Bank may require, and, effective as of such date,
the balance in any deposit accounts held by Bank and the certificates of deposit
issued by Bank in Borrower's name (and any interest paid thereon or proceeds
thereof, including any amounts payable upon the maturity or liquidation of such
certificates), shall automatically secure such obligations to the extent of the
then outstanding Credit Card Services. Borrower authorizes Bank to hold such
balances in pledge and to decline to honor any drafts thereon or any requests by
Borrower or any other Person to pay or otherwise transfer any part of such
balances for so long as the Credit Card Services continue.
1
4. Subsection (d) to Section 5.5 is amended and restated in its
entirety to read as follows:
(d) is located at Borrower's headquarters or such other Borrower-operated
facility as to which Bank has received a landlord waiver, inventory holder's
acknowledgement or other waiver or written acknowledgement in the form
satisfactory to Bank (except that Inventory subject to a contract between
Borrower and a customer under which contract Borrower retains ownership of such
Inventory ("Offsite Inventory"), may be located at such customer's location
provided that such Offsite Inventory does not exceed $225,000 in the aggregate
at any time).
5. Exhibit C is replaced in its entirety with Exhibit C attached
hereto.
6. Borrower represents and warrants that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
7. Unless otherwise defined, all initially capitalized terms in this
Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. Except as
expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof. Borrower ratifies and reaffirms the continuing effectiveness of all
agreements entered into in connection with the Agreement.
8. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a ".pdf' format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or ".pdf' signature page were an original hereof.
9. As a condition to the effectiveness of this Amendment, Bank shall
have received, in form and substance satisfactory to Bank, the following:
(a) the original signed Amendment and all other Loan Documents being
executed in connection herewith, duly executed by Borrower;
(b) payment of an amount equal to all Bank Expenses incurred through the
date of this Amendment; and
(c) such other documents, and completion of such other matters, as Bank
may reasonably deem necessary or appropriate.
[SIGNATURE PAGE FOLLOWS]
2
TELKONET, INC. By: /s/ Gene Mushrush Name: Gene
Mushrush Title: CFO HERITAGE BANK OF
COMMERCE By: /s/ Karla Schrader Name: Karla Schrader
Title: VP
3
Exhibit C
BORROWING BASE CERTIFICATE
Borrowers: Telkonet, Inc. and EthoStream LLC Lender: HERITAGE BANK OF COMMERCE
Commitment Amount: $2,000,000 Loan #:
ACCOUNTS RECEIVABLE Period: 1 Accounts Receivable Book Value as of:
X/X/XX $0.00 2 Total Accounts Receivable: $0.00 ACCOUNTS
RECEIVABLE DEDUCTIONS 3 Accounts Receivable Aged over 90 Days from
invoice date Contra Accounts (including $0.00 4 Customer's Related
Deposits) $0.00 5 Concentration 30% $0.00 6 Cross aging
over 25% $0.00 7 Foreign Accounts (Net of >90s, w/out Insurance or LC)
$0.00 8 Government Accounts (Net of >90s) $0.00
9 Affiliate /Employee Accounts (Net of >90s) $0.00 10 Related
Party Transactions $0.00 11 Consumer Accounts $0.00
12 Over 90 Credits $0.00 13 Other Deductions: Progress Billings,
Pre-Billings, Bonded Projects, Retentions $0.00 14 Total Ineligible
Accounts: $0.00 15 Total Eligible Accounts (#2 — #14) $0.00
16 Advance Rate 80% 17 Borrowing Base (#15 multiplied by #16)
$0.00 INVENTORY 18 Total Value of Inventory $0.00
19 Less Ineligible Inventory $0.00 20 Total Eligible Inventory
$0.00 Eligible Inventory Advance 21 Rate 25%
22 Available Eligible Inventory (the lessor of $600,000 or #20 x #21)
$0.00 BALANCES 23 Maximum Loan Amount $2,000,000
24 Total Borrowing Base [Lesser of #17 + #22 or $2,000,000] $0.00
25 Less: Present Balance owing on Line of Credit $0.00 26 Less:
Cash Management Services (up to $100,000) $0.00 Less: Other balances,
i,e., Tax Reserve (as defined in the Loan and Security
27 Agreement) $0.00 28 Less: Funding Request Today $0.00
29 Remaining Availability [#24 — (#25 through #28)] $0.00
If line #29 is a negative number, this amount must be remitted to the Bank
immediately to bring loan balance into compliance. By signing this form you
authorize Bank to deduct any advance amounts directly from the company's
checking account at HERITAGE BANK OF COMMERCE in the event there is an
overadvance.
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and HERITAGE BANK OF COMMERCE.
4
Each Borrower hereby requests funding in the amount of $__________ in accordance
with this Borrowing Base Certificate. All representations and warranties of
Borrowers stated in the Loan and Security Agreement are true, correct, and
complete in all material respects as of the date of this Borrowing Base
Certificate; provided that those representations and warranties expressly
referring to another date shall be true, correct, and complete in all material
respects as of such date.
By (Authorized Signer): Title: Date: Reviewed
by Bank: Title: Date:
5
|
Exhibit 10.4
Execution Version
--------------------------------------------------------------------------------
TRANSFER AND SERVICING AGREEMENT
among
VERIZON OWNER TRUST 2020-A,
as Issuer,
VERIZON ABS LLC,
as Depositor
and
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS,
as Servicer, Marketing Agent and Custodian
Dated as of January 29, 2020
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I USAGE AND DEFINITIONS
1
Section 1.1
Usage and Definitions
1
ARTICLE II TRANSFER AND ACQUISITION OF DEPOSITOR TRANSFERRED PROPERTY;
REPRESENTATIONS AND WARRANTIES
Section 2.1
Transfers of Depositor Transferred Property
1
Section 2.2
Acknowledgement of Further Assignments
3
Section 2.3
Savings Clause
3
Section 2.4
Representations and Warranties About Depositor Transferred Property.
3
Section 2.5
Originators’ Reacquisition and Servicer’s Acquisition of Receivables for Breach
of Representations
5
Section 2.6
Originators’ Reacquisition or Servicer’s Acquisition of Bankruptcy Surrendered
Receivables
6
ARTICLE III SERVICING OF RECEIVABLES
7
Section 3.1
Engagement
7
Section 3.2
Servicing of Receivables.
7
Section 3.3
Servicer’s Acquisition of Receivables
9
Section 3.4
Sale of Written-Off Receivables
10
Section 3.5
Servicer Reports and Compliance Statements
11
Section 3.6
Review of Servicer’s Records
12
Section 3.7
Servicer’s Authorized and Responsible Persons
13
Section 3.8
Servicer’s Fees
13
Section 3.9
Servicer’s Expenses
13
Section 3.10
Custodian.
13
Section 3.11
Marketing Agent
14
Section 3.12
Termination of Upgrade Programs; Credits Related to Upgrade Programs
15
Section 3.13
Notices to Obligors
16
ARTICLE IV ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS
16
Section 4.1
Bank Accounts
16
Section 4.2
Investment of Funds in Bank Accounts
18
Section 4.3
Deposits and Payments
19
Section 4.4
Reserve Account; Negative Carry Account; Acquisition Account
21
Section 4.5
Direction to Indenture Trustee for Distributions
22
ARTICLE V DEPOSITOR
23
Section 5.1
Depositor’s Representations and Warranties
23
Section 5.2
Liability of Depositor
24
Section 5.3
Merger, Consolidation, Succession or Assignment
25
Section 5.4
Depositor May Own Notes
25
Section 5.5
Depositor’s Authorized and Responsible Persons
25
Section 5.6
Company Existence
25
Section 5.7
No Division
25
ARTICLE VI SERVICER AND MARKETING AGENT
25
Section 6.1
Servicer’s and Marketing Agent’s Representations and Warranties
25
Section 6.2
Liability of Servicer and Marketing Agent
29
Section 6.3
Indemnities of Servicer and the Marketing Agent
29
--------------------------------------------------------------------------------
Section 6.4
Delegation and Contracting
31
Section 6.5
Servicer May Own Notes
31
Section 6.6
Annual Statement as to Compliance
31
Section 6.7
Assessment of Compliance and Accountants’ Attestation
31
ARTICLE VII SERVICER RESIGNATION AND TERMINATION; SUCCESSOR SERVICER
32
Section 7.1
No Resignation
32
Section 7.2
Servicer Termination Events
33
Section 7.3
Continue to Perform
34
Section 7.4
Successor Servicer
35
Section 7.5
Transition of Servicing
36
Section 7.6
Merger, Consolidation, Succession or Assignment
37
ARTICLE VIII TERMINATION
37
Section 8.1
Optional Acquisition of Receivables; Clean-Up Redemption of Notes
37
Section 8.2
Optional Redemption of Notes
38
Section 8.3
Termination
39
ARTICLE IX OTHER AGREEMENTS
39
Section 9.1
Financing Statements
39
Section 9.2
No Transfer or Lien by Depositor
40
Section 9.3
Expenses
40
Section 9.4
Receivables Information
40
Section 9.5
No Petition
40
Section 9.6
Limited Recourse
40
Section 9.7
Limitation of Liability
41
Section 9.8
Tax Treatment of Notes
41
Section 9.9
Regulation RR Risk Retention
41
Section 9.10
Cap Collateral Account
41
ARTICLE X MISCELLANEOUS
42
Section 10.1
Amendments
42
Section 10.2
Assignment; Benefit of Agreement; Third-Party Beneficiary
44
Section 10.3
Notices
44
Section 10.4
Agent for Service
45
Section 10.5
GOVERNING LAW
45
Section 10.6
Submission to Jurisdiction
45
Section 10.7
WAIVER OF JURY TRIAL
46
Section 10.8
No Waiver; Remedies
46
Section 10.9
Severability
46
Section 10.10
Headings
46
Section 10.11
Counterparts
46
Section 10.12
Limitation of Rights of the Cap Counterparty
46
Section 10.13
Intent of the Parties; Reasonableness
46
ARTICLE XI ASSET REPRESENTATIONS REVIEW; DISPUTE RESOLUTION
47
Section 11.1
Asset Representations Review
47
Section 11.2
Dispute Resolution
47
--------------------------------------------------------------------------------
Schedule A
Schedule of Initial Receivables
SA-1
Schedule B
Notice Addresses
SB-1
Appendix A
Usage and Definitions
AA-1
Exhibit A
Custodian’s Security Requirements
EA-1
Exhibit B
Form of Annual Certification
EB-1
--------------------------------------------------------------------------------
TRANSFER AND SERVICING AGREEMENT, dated as of January 29, 2020 (this
“Agreement”), among VERIZON OWNER TRUST 2020-A, a Delaware statutory trust, as
issuer (the “Issuer”), VERIZON ABS LLC, a Delaware limited liability company, as
depositor (the “Depositor”), and Cellco Partnership d/b/a Verizon Wireless, a
Delaware general partnership (“Cellco”), as servicer (in such capacity, the
“Servicer”), as marketing agent (in such capacity, the “Marketing Agent”) and as
custodian (in such capacity, the “Custodian”).
BACKGROUND
In the normal course of their businesses, Cellco and the other Originators
originate device payment plan agreements for various wireless devices. In
addition, the Master Trust holds certain device payment plan agreements
originated by Cellco and certain other Originators.
In connection with a securitization transaction sponsored by Cellco in which the
Issuer will issue Notes secured by a pool of Receivables consisting of device
payment plan agreements, certain of the Originators and/or the Master Trust have
transferred a pool of Receivables and related property, and any of the
Originators and/or the Master Trust may from time to time transfer additional
pools of Receivables and related property to the Depositor, who will transfer
them to the Issuer. The Issuer will engage the Servicer to service the
Receivables.
The parties agree as follows:
ARTICLE I
USAGE AND DEFINITIONS
Section 1.1 Usage and Definitions. Capitalized terms used but not defined
in this Agreement are defined in Appendix A. Appendix A also contains usage
rules that apply to this Agreement. Appendix A is incorporated by reference
into this Agreement.
ARTICLE II
TRANSFER AND ACQUISITION OF DEPOSITOR TRANSFERRED PROPERTY;
REPRESENTATIONS AND WARRANTIES
Section 2.1 Transfers of Depositor Transferred Property.
(a) Transfer and Absolute Assignment of Initial Receivables. In
consideration of the Issuer’s delivery to the Depositor of the Notes, the Class
A Certificate and the Class B Certificate, effective on the Closing Date, the
Depositor transfers and absolutely assigns to the Issuer, without recourse
(other than the Depositor’s obligations under this Agreement), all of the
Depositor’s right, title and interest, whether now owned or later acquired, in
the Initial Receivables and the other related Depositor Transferred Property.
The Depositor certifies that the Credit Enhancement Test and the Pool
Composition Tests are satisfied for the transfer and assignment of the Initial
Receivables and the other related Depositor Transferred Property on the Closing
Date.
(b) Transfers and Absolute Assignments of Additional Receivables.
Subject to the satisfaction of the conditions in Section 2.1(d), effective on
each Acquisition Date, in consideration of the Issuer’s distribution to the
Depositor of the (i) Additional Receivables Cash
--------------------------------------------------------------------------------
Transfer Amount for the Additional Receivables to be transferred to the Issuer
on that Acquisition Date and (ii) an increase in the Class B Certificate
Principal Balance in an amount equal to the excess, if any, of the Additional
Receivables Transfer Amount over the Additional Receivables Cash Transfer Amount
for such Additional Receivables, the Depositor will transfer and absolutely
assign to the Issuer, without recourse (other than the Depositor’s obligations
under this Agreement), all of the Depositor’s right, title and interest, whether
then owned or later acquired, in the Additional Receivables and the other
related Depositor Transferred Property.
(c) No Assumption of Obligations. These transfers and absolute
assignments do not, and are not intended to, include any obligation of the
Depositor or any Originator to the Obligors or any other Person relating to the
Receivables and the other Depositor Transferred Property, and the Issuer does
not assume any of these obligations.
(d) Conditions for Transfers of Additional Receivables. The transfer
and assignment of the Additional Receivables and the other related Depositor
Transferred Property on each Acquisition Date will be subject to the
satisfaction of the following conditions on or before such Acquisition Date:
(i) Transfer Notice. At least two (2) Business Days before the
applicable Acquisition Date, the Administrator shall deliver to the Issuer and
the Indenture Trustee a Transfer Notice for the Additional Receivables to be
transferred and absolutely assigned on that Acquisition Date, which will specify
the Additional Receivables Transfer Amount and attach or include therewith the
Schedule of Receivables;
(ii) Satisfaction of Tests. After giving effect to the transfer and
assignment of the Additional Receivables by the Depositor to the Issuer, (A) the
Credit Enhancement Test is satisfied and (B) the Receivables, in the aggregate,
owned by the Issuer, excluding any Temporarily Excluded Receivables, satisfy
each of the Pool Composition Tests under Section 3.5(b); and
(iii) Depositor’s Certifications. The Depositor certifies that:
(A)
as of such Acquisition Date, (1) the Depositor is Solvent and will not become
insolvent as a result of the transfer and assignment of the Additional
Receivables on the Acquisition Date, (2) the Depositor does not intend to incur
or believe that it would incur debts that would be beyond the Depositor’s
ability to pay as they matured and (3) the transfer and assignment of the
Additional Receivables is not made by the Depositor with actual intent to
hinder, delay or defraud any Person;
(B)
each of the representations and warranties made by the Depositor under Sections
2.4(a) and 2.4(b), in each case, solely with respect to the related Additional
Receivables, will be true and correct as of the Acquisition Date; and
(C)
all conditions to the transfer and assignment of the related Additional
Receivables by the Originators to the Depositor under
2
--------------------------------------------------------------------------------
Section 2.1(d) of the Originator Receivables Transfer Agreement and by the
Master Trust to the Depositor under Section 2.1(d) of the Master Trust
Receivables Transfer Agreement, as applicable, have been satisfied.
The delivery by the Administrator, on behalf of the Depositor, of the Transfer
Notice will be considered a certification by the Depositor that the conditions
set forth in this Section 2.1(d) have been satisfied or will be satisfied on the
Acquisition Date.
Section 2.2 Acknowledgement of Further Assignments. The Depositor
acknowledges that, under the Indenture, the Issuer will assign and pledge the
Depositor Transferred Property and related property and rights to the Indenture
Trustee for the benefit of the Secured Parties.
Section 2.3 Savings Clause. The Depositor and the Issuer intend that each
transfer and assignment under this Agreement be an absolute transfer and
assignment of the Depositor Transferred Property, conveying good title to the
Depositor Transferred Property free and clear of any Lien, other than Permitted
Liens, from the Depositor to the Issuer. The Depositor and the Issuer intend
that the Depositor Transferred Property not be a part of the Depositor’s estate
if there is a bankruptcy or insolvency of the Depositor. If, despite the intent
of the Depositor and the Issuer, a transfer and assignment of Depositor
Transferred Property under this Agreement is determined to be a pledge for a
financing or is determined not to be an absolute transfer and assignment, the
Depositor Grants to the Issuer a security interest in the Depositor’s right,
title and interest in the Depositor Transferred Property to secure a loan in an
amount equal to all amounts payable by the Depositor under this Agreement, all
amounts payable as principal of or interest on the Notes, all amounts payable as
Servicing Fees under this Agreement and all other amounts payable by the Issuer
under the Transaction Documents. In that case, this Agreement will be a
security agreement under Law and the Issuer will have the rights and remedies of
a secured party and creditor under the UCC.
Section 2.4 Representations and Warranties About Depositor Transferred
Property.
(a) Representations and Warranties About Pool of Receivables. The
Depositor makes the following representations and warranties about the pool of
Receivables on which the Issuer is relying in acquiring the Depositor
Transferred Property. The representations and warranties are made as of the
Closing Date (for the Initial Receivables) and as of each Acquisition Date (for
the related Additional Receivables) and will survive the transfer and absolute
assignment of the Depositor Transferred Property by the Depositor to the Issuer
under this Agreement and the pledge of the Depositor Transferred Property by the
Issuer to the Indenture Trustee under the Indenture.
(i) Valid Transfer and Assignment. This Agreement evidences a valid
transfer and absolute assignment of the Depositor Transferred Property from the
Depositor to the Issuer, enforceable against creditors of, purchasers from and
transferees and absolute assignees of the Depositor.
(ii) Good Title to Depositor Transferred Property. Immediately
before the transfer and absolute assignment under this Agreement, the Depositor
has good title to
3
--------------------------------------------------------------------------------
the Depositor Transferred Property free and clear of any Lien, other than
Permitted Liens, and, immediately after the transfer and absolute assignment
under this Agreement, the Issuer will have good title to the Depositor
Transferred Property, free and clear of any Lien, other than Permitted Liens.
(iii) Security Interest in Depositor Transferred Property.
(A)
This Agreement creates a valid and continuing security interest (as defined in
the applicable UCC) in the Depositor Transferred Property in favor of the
Issuer, which is prior to any Lien, other than Permitted Liens, and is
enforceable against all creditors of, purchasers from and transferees and
absolute assignees of the Depositor.
(B)
All filings (including UCC filings) necessary in any jurisdiction to give the
Depositor a first priority, validly perfected ownership and security interest in
the Originator Transferred Property and the Master Trust Transferred Property,
to give the Issuer a first priority, validly perfected ownership and security
interest in the Depositor Transferred Property and to give the Indenture Trustee
a first priority perfected security interest in the Collateral, will be made
within ten (10) days after the Closing Date or the related Acquisition Date, as
applicable.
(C)
All financing statements filed or to be filed against the Depositor in favor of
the Issuer describing the Depositor Transferred Property transferred under this
Agreement will contain a statement to the following effect: “A purchase,
absolute assignment or transfer of or security interest in any collateral
described in this financing statement will violate the rights of the Secured
Party/Assignee.”
(D)
The Depositor has not authorized the filing of and is not aware of any financing
statements against the Depositor that include a description of collateral
covering any Depositor Transferred Property other than the financing statements
relating to the security interest Granted to the Depositor under the Receivables
Transfer Agreements, by the Depositor to the Issuer under this Agreement or by
the Issuer to the Indenture Trustee under the Indenture, or that has been
terminated.
(b) Representations and Warranties About Security Interest. If the
transfer and absolute assignment of the Depositor Transferred Property under
this Agreement is determined to be a pledge relating to a financing or is
determined not to be a transfer and absolute assignment, the Depositor makes the
following representations and warranties on which the Issuer is relying in
acquiring the Depositor Transferred Property, which representations and
warranties are made as of the Closing Date or as of the related Acquisition
Date, as applicable,
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will survive termination of this Agreement and may not be waived by the Issuer
or the Indenture Trustee:
(i) Valid Security Interest. This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Depositor
Transferred Property in favor of the Issuer, which is prior to all other Liens,
other than Permitted Liens, and is enforceable against creditors of, purchasers
from and transferees and absolute assignees of the Depositor.
(ii) Type. Each Receivable is (A) if the Receivable is not secured
by the related Device, an “account” or “payment intangible,” or (B) if the
Receivable is secured by the related Device, “chattel paper,” in each case,
within the meaning of the applicable UCC.
(iii) Good Title. Immediately before the transfer and absolute
assignment under this Agreement, the Depositor owns and has good title to the
Depositor Transferred Property free and clear of all Liens, other than Permitted
Liens. The Depositor has received all consents and approvals required by the
terms of the Depositor Transferred Property to Grant to the Issuer its right,
title and interest in the Depositor Transferred Property, except to the extent
the requirement for consent or approval is extinguished under the applicable
UCC.
(iv) Filing Financing Statements. The Depositor has caused, or will
cause within ten (10) days after the Closing Date, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable Law to perfect the security interest Granted in
the Depositor Transferred Property to the Issuer under this Agreement. All
financing statements filed or to be filed against the Depositor in favor of the
Issuer under this Agreement describing the Depositor Transferred Property will
contain a statement to the following effect: “A purchase, absolute assignment or
transfer of or grant of a security interest in any collateral described in this
financing statement will violate the rights of the Secured Parties.”
(v) No Other Transfer, Grant or Financing Statement. Other than the
security interest Granted to the Issuer under this Agreement, the Depositor has
not transferred or Granted a security interest in any of the Depositor
Transferred Property. The Depositor has not authorized the filing of and is not
aware of any financing statements against the Depositor that include a
description of collateral covering any of the Depositor Transferred Property,
other than financing statements relating to the security interest Granted to the
Issuer. The Depositor is not aware of any judgment or tax Lien filings against
it.
Section 2.5 Originators’ Reacquisition and Servicer’s Acquisition of
Receivables for Breach of Representations.
(a) Representations and Warranties from Receivables Transfer
Agreements. Each Originator and the Servicer, severally has made, as of the
Closing Date, and each Originator or the Servicer, as applicable, severally will
make, as of each Acquisition Date, the Eligibility
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Representation about the Receivables transferred and absolutely assigned by such
Originator or the Master Trust, respectively, on that date, and has consented to
the transfer by the Depositor to the Issuer of the Depositor’s rights to such
Eligibility Representation. The Issuer is relying on each applicable
Originator’s or the Servicer’s Eligibility Representation in acquiring the
Receivables, which Eligibility Representation will survive the transfer and
absolute assignment of the Receivables by the Depositor to the Issuer under this
Agreement and the pledge of the Receivables to the Indenture Trustee under the
Indenture.
(b) Reacquisition or Acquisition. Under Section 2.1(a), the
Depositor has transferred and absolutely assigned to the Issuer the Depositor’s
rights under the Receivables Transfer Agreements, including the right to require
(i) an Originator to reacquire any Receivables transferred and absolutely
assigned by it under the Originator Receivables Transfer Agreement or (ii) the
Servicer to acquire any Receivable transferred and absolutely assigned by the
Master Trust under the Master Trust Receivables Transfer Agreement, in each
case, for which such party has made the Eligibility Representation if, in each
case, there is a breach of such Eligibility Representation, such breach is not
cured and such breach results in a material adverse effect on the Issuer. If
any Originator or the Servicer breaches the Eligibility Representation made by
it with respect to any Receivable transferred by such Originator or the Master
Trust, respectively, to the Depositor, such breach is not cured and such breach
has a material adverse effect on the Issuer, then the Depositor will enforce
such Originator’s or the Servicer’s obligation, as applicable, to reacquire or
acquire, respectively, any such Receivable transferred and absolutely assigned
by it to the Depositor for which the Eligibility Representation was breached
pursuant to Section 3.4 of the applicable Receivables Transfer Agreement.
(c) Reacquisition or Acquisition Sole Remedy. The sole remedy of the
Depositor, the Issuer or the Indenture Trustee for a breach of any Eligibility
Representation is to require the related Originator or the Servicer, as
applicable, to reacquire or acquire, respectively, the Receivable under Section
3.4 of the applicable Receivables Transfer Agreement.
Section 2.6 Originators’ Reacquisition or Servicer’s Acquisition of
Bankruptcy Surrendered Receivables.
(a) Reacquisition or Acquisition. Under Section 2.1(a), the
Depositor has transferred and absolutely assigned to the Issuer the Depositor’s
rights under the Receivables Transfer Agreements, including the right to require
(i) an Originator to reacquire any Receivables transferred and absolutely
assigned by it under the Originator Receivables Transfer Agreement or (ii) the
Servicer to acquire any Receivable transferred and absolutely assigned by the
Master Trust under the Master Trust Receivables Transfer Agreement, in each
case, when such Receivable becomes a Bankruptcy Surrendered Receivable. If any
Receivable becomes a Bankruptcy Surrendered Receivable, the Depositor will
enforce such Originator’s or the Servicer’s obligation, as applicable, to
reacquire or acquire, respectively, any such Receivable transferred and
absolutely assigned by it to the Depositor pursuant to Section 4.6 or 4.7,
respectively, of the applicable Receivables Transfer Agreement.
(b) Reacquisition or Acquisition Sole Remedy. If a Receivable
becomes a Bankruptcy Surrendered Receivable, the sole remedy of the Depositor,
the Issuer or the Indenture Trustee is to require the related Originator or the
Servicer, as applicable, to reacquire
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or acquire, respectively, the Bankruptcy Surrendered Receivable under Section
4.6 or 4.7, respectively, of the applicable Receivables Transfer Agreement.
ARTICLE III
SERVICING OF RECEIVABLES
Section 3.1 Engagement. The Issuer engages Cellco as the Servicer of the
Receivables for the Issuer and the Indenture Trustee, and Cellco accepts this
engagement.
Section 3.2 Servicing of Receivables.
(a) General Servicing Obligations. The Servicer will manage,
service, administer and collect on the Receivables with reasonable care using
that degree of skill and attention that the Servicer exercises for all
comparable device payment plan agreement receivables that it services for itself
or others according to the Servicing Procedures. Without limiting the
generality of the foregoing, the Servicer’s obligations will include:
(i) collecting and applying all payments made on, or credits applied
to, the Receivables and any other amounts received related to the Depositor
Transferred Property;
(ii) investigating delinquencies;
(iii) sending invoices and notices and responding to inquiries of
Obligors;
(iv) processing requests for extensions, modifications and
adjustments;
(v) administering payoffs, prepayments, defaults and delinquencies;
(vi) maintaining accurate and complete accounts and receivables
systems for servicing the Receivables;
(vii) providing to the Custodian copies, or access to, any documents
that modify or supplement information in the Receivable Files; and
(viii) preparing and providing Monthly Investor Reports and any other
periodic reports required to be prepared by the Servicer under this Agreement or
any other Transaction Document.
(b) Collection of Payments; Extensions and Amendments. The Servicer
shall take, or cause to be taken, all actions necessary or advisable to collect
each Receivable in accordance with this Agreement and the Servicing Procedures
using commercially reasonable care and diligence and in any event, with no less
care or diligence than the Servicer exercises in collecting other similar
receivables or obligations owed to it and its Affiliates. All payments remitted
by an Obligor to the Servicer in respect of a Receivable, any release of a
security deposit, and any application of a Credit granted to a customer by
Verizon Wireless (other than applications of payments and credits granted to an
Obligor under a Receivable in respect of cancellations, prepayments, invoicing
errors or in connection with an Upgrade Offer as described under Section
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3.12(b)) will be applied to the related account by the Servicer based on invoice
aging, so that such amounts are applied to the oldest invoiced balances first,
then the second oldest invoiced balances, etc., and finally to current billing
amounts, in each case, in the order described below:
•
late fees;
•
service and all other charges, including, but not limited to, insurance premium
payments and purchases (including accessories) billed to the account, other than
amounts due under any device payment plan agreement, including any Receivable;
and
•
any amounts related to any device payment plan agreements, including
Receivables, which, in the case of multiple device payment plan agreements
related to a single account, will be applied in the order in which such device
payment plan agreements were originated with the most recent device payment plan
agreement being paid last.
Notwithstanding anything to the contrary in any other Transaction Document, the
process for application of payments remitted by an Obligor to the Servicer in
respect of a Receivable, releases of security deposits, and applications of
Credits granted to an Obligor under a Receivable by Verizon Wireless (other than
those credits granted to an Obligor in respect of an Upgrade Offer as described
under Section 3.12(b)) described in the bullet points above may be changed at
any time in the sole discretion of the Servicer, as long as any change in such
application of any such amounts applicable to the Receivables (i) is also
applicable to any device payment plan agreements that the Servicer services for
itself and others and (ii) so long as Cellco is the Servicer, does not have a
material adverse effect on the Noteholders. In addition, the Servicer may waive
late payment charges or other fees that may be collected in the ordinary course
of servicing a Receivable. The Servicer may grant extensions, refunds, rebates
or adjustments on any Receivable or amend any Receivable according to the
Servicing Procedures. However, if the Servicer (i) grants payment extensions
resulting in the final payment date of the Receivable being later than the
Collection Period immediately preceding the Final Maturity Date for the latest
maturing Class of Notes, (ii) cancels a Receivable or reduces or waives
(including with respect to any Upgrade Offer) the remaining Principal Balance
under a Receivable or any portion thereof and/or as a result, the monthly
payments due thereunder, or (iii) modifies, supplements, amends or revises a
Receivable to grant the Obligor under such Receivable a contractual right to
upgrade the related Device, it will acquire the affected Receivable solely as
described under Section 3.3, unless it is required to take the action by Law.
In addition, if the Marketing Agent or the Servicer (x) applies a payment or
grants a credit to an Obligor with respect to cancellations, prepayments or
invoicing errors the Servicer may apply such credits either directly to the
applicable device payment plan agreement or in accordance with its customary
payment application procedures set forth above and (y) applies a payment or
grants a credit to an Obligor under a Receivable in connection with an Upgrade
Offer as set forth in Section 3.12(b), the Servicer will apply such credits
directly to the applicable device payment plan agreement and will not apply such
credits in accordance with its customary payment application procedures set
forth above.
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(c) Maintenance of Security Interests in the Receivables. The
Servicer will maintain perfection of the security interest of the Issuer and the
Indenture Trustee in each Receivable.
(d) No Impairment. The Servicer will not impair in any material
respect the rights of the Issuer or the Noteholders in any Receivable except as
permitted by this Agreement.
(e) Assignment for Enforcement. Effective as of the related Cutoff
Date, the Receivables are assigned to the Servicer solely for the purpose of
permitting the Servicer to perform its servicing and administrative obligations
under this Agreement, including the start or pursuit of or participation in a
legal proceeding to enforce its rights or remedies with respect to a Receivable
or such other Proceeding otherwise related to a Receivable. If in a legal
proceeding it is held that the Servicer may not enforce its rights or remedies
with respect to a Receivable on the grounds that it is not a real party in
interest or a holder entitled to enforce rights or remedies with respect to the
Receivable, the Issuer will, at the Servicer’s expense and direction, assign the
Receivable to the Servicer solely for that purpose or take steps to enforce its
rights and remedies with respect to the Receivable, including bringing suit in
the names of the Indenture Trustee, the Noteholders and the Issuer.
(f) Powers of Attorney. The Issuer appoints the Servicer as the
Issuer’s attorney-in-fact, with full power of substitution to exercise all
rights of the Issuer for the servicing and administration of the Receivables.
This power of attorney, and all authority given, under this Section 3.2(f) is
revocable and is given solely to facilitate the performance of the Servicer’s
obligations under this Agreement and may only be used by the Servicer consistent
with this Agreement. On request of the Servicer, the Issuer will furnish the
Servicer with written powers of attorney and other documents to enable the
Servicer to perform its obligations under this Agreement.
(g) Release Documents. The Servicer is authorized to execute and
deliver, on behalf of itself, the Issuer, the Indenture Trustee and the
Noteholders any documents of satisfaction, cancellation, partial or full release
or discharge, and other comparable documents, for the Receivables.
(h) Enforcement of Receivables Under an Upgrade Offer. If an Obligor
accepts an Upgrade Offer with respect to a Receivable but fails to satisfy the
required terms and conditions related to such Upgrade Offer, the Servicer agrees
to (i) not waive any amounts due by such Obligor under the related Receivable
and pursue its Servicing Procedures against such Obligor in respect of the
related Receivable until all amounts due under the related Receivable are
received and (ii) enforce, on behalf of the Issuer, any rights and obligations
under the related Receivable.
Section 3.3 Servicer’s Acquisition of Receivables.
(a) Acquisition for Servicer Modifications. If extensions,
modifications, amendments, cancellations or waivers of Receivables or any terms
thereof are made that would require such Receivables to be acquired under
Section 3.2(b), the Servicer will acquire all such Receivables as set forth in
Section 3.3(d).
(b) Acquisition for Breach of Servicer’s Obligations. If a
Responsible Person of the Servicer receives written notice from the Depositor,
the Issuer, the Owner Trustee or the
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Indenture Trustee of a breach of the Servicer’s obligations in Section 3.2(c) or
(d), and the Servicer fails to correct such failure or impairment in all
material respects by the end of the second month following the month in which
the Servicer received such written notice, the Servicer will acquire all
Receivables with respect to which such breach was not so cured as set forth in
Section 3.3(d).
(c) Acquisition for System Limitation or Inability to Service. If
the Servicer, in its sole discretion, determines that as a result of a
receivables systems error or receivables systems limitation or for any other
reason the Servicer is unable to service a Receivable according to the Servicing
Procedures and the terms of this Agreement, the Servicer may acquire the
relevant Receivable as set forth in Section 3.3(d).
(d) Acquisition of Receivables; Payment of Acquisition Amount. For
any acquisition of a Receivable by the Servicer under this Section 3.3, the
Servicer will acquire the Receivable by remitting the related Acquisition Amount
on or prior to the second Business Day before the Payment Date related to the
Collection Period in which such Receivable was acquired by the Servicer. If
Cellco is the Servicer, it may pay any Acquisition Amounts according to Section
4.3(c).
(e) Transfer and Assignment of Acquired Receivables. When the
Servicer’s payment of the Acquisition Amount for a Receivable is included in
Available Funds for a Payment Date, the Issuer will be deemed to have
transferred and assigned to the Servicer, effective as of the last day of the
Collection Period immediately preceding the related Collection Period, all of
the Issuer’s right, title and interest in the Receivable and all security and
documents relating to the Receivable. The transfer and assignment will not
require any action by the Issuer or the Indenture Trustee and will be without
recourse, representation or warranty by the Issuer except the representation
that the Issuer owns the Receivable free and clear of any Lien, other than
Permitted Liens. After the transfer and assignment, the Servicer will mark its
receivables systems to indicate that the receivable is no longer a Receivable
and may take any action necessary or advisable to transfer the Receivable free
from any Lien of the Issuer or the Indenture Trustee.
(f) No Obligation to Investigate. None of the Issuer, the Owner
Trustee, the Indenture Trustee (including in its capacity as Successor Servicer
hereunder), the Sponsor, the Marketing Agent, the Depositor, the Parent Support
Provider, the Administrator or the Servicer will be obligated to investigate
whether a breach or other event has occurred that would require the acquisition
of any Receivable under this Section 3.3 or whether any Receivables are
otherwise required to be acquired under this Section 3.3.
(g) Acquisition is Sole Remedy. The sole remedy of the Issuer, the
Indenture Trustee, the Owner Trustee, and the Secured Parties for any extension,
modification, amendment, cancellation or waiver of a Receivable or any terms
thereof under Section 3.2(b) or a breach of the covenants made by the Servicer
in Section 3.2(c) or (d) is the Servicer’s acquisition of the Receivables, as
described under this Section 3.3.
Section 3.4 Sale of Written-Off Receivables. The Servicer may sell to any
third party a Receivable that has been written off. Proceeds of any sale
allocable to the Written-Off
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Receivable will be Recoveries. Any Recoveries will be paid to the Servicer as
Supplemental Servicing Fees and will not be a part of Available Funds. If the
Servicer elects to sell a Written-Off Receivable, the Receivable will be deemed
to have been transferred and assigned by the Issuer to the Servicer immediately
before the sale by the Servicer. After the sale, the Servicer will mark its
receivables systems to indicate that the Written-Off Receivable sold is no
longer a Receivable and may take any action necessary or advisable to transfer
the receivable free from any Lien of the Issuer or the Indenture Trustee.
Section 3.5 Servicer Reports and Compliance Statements.
(a) Monthly Investor Report.
(i) On or about the 15th day of each month, and in no case later than
at least two (2) Business Days before each Payment Date, the Servicer will
deliver to the Depositor, the Indenture Trustee, the Owner Trustee, the Note
Paying Agent, the Cap Counterparty, the Rating Agencies and the Administrator a
servicing report (the “Monthly Investor Report”) for that Payment Date and the
related Collection Period. The Monthly Investor Report will include (i) an
Acquisition Date Supplement if the Collection Period includes an Acquisition
Date and (ii) a statement as to whether or not a Delinquency Trigger has
occurred in respect of the related Collection Period, together with reasonably
detailed calculations thereof. A Responsible Person of the Servicer will
certify that the information in the Monthly Investor Report is accurate in all
material respects. The Monthly Investor Report will also be posted on the
Indenture Trustee’s password protected website located at
https://pivot.usbank.com.
(ii) The Sponsor, in its capacity as Servicer, will include
information about the pool of Initial Receivables and the disclosure required by
Section 246.4(c)(1)(ii) of the U.S. Credit Risk Retention Rules in the Monthly
Investor Report for the first Payment Date, which Monthly Investor Report will
also be included in the Distribution Report on Form 10-D filed with the
Commission for the related Collection Period.
(iii) The Sponsor, in its capacity as Servicer, will include in the
Monthly Investor Report notice of the occurrence of (i) any Benchmark Transition
Event and its related Benchmark Replacement Date, (ii) the determination of any
Benchmark Replacement, and (iii) the making of any Benchmark Replacement
Conforming Changes.
(b) Credit Enhancement and Pool Composition Tests. On or before each
Payment Date and each Acquisition Date, the Servicer will determine whether the
pool of Receivables to be held by the Issuer as of the related Cutoff Date,
including any Additional Receivables to be acquired, satisfies the Credit
Enhancement Test and each Pool Composition Test. If the pool of Receivables
does not satisfy all of the Pool Composition Tests, the Administrator may
identify Receivables in the pool as Temporarily Excluded Receivables so that the
remaining Receivables in the pool will satisfy all of the Pool Composition
Tests; provided, that the Administrator may only deem Receivables to be
Temporarily Excluded Receivables if the Overcollateralization Target Amount is
reached as of the close of business on such date of determination, without
taking into account the Temporarily Excluded Receivables. In addition, the
Principal Balance of any Temporarily Excluded Receivables will be subtracted
from the Adjusted Pool Balance for
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purposes of calculating the Credit Enhancement Test. The Servicer will state on
the Acquisition Date Supplement for each Collection Period for which there is an
Acquisition Date the aggregate Principal Balance of the Receivables deemed
Temporarily Excluded Receivables. For the avoidance of doubt, Collections on
Temporarily Excluded Receivables (solely during the time that they are
Temporarily Excluded Receivables) will not constitute Available Funds and, up to
the amount of the Temporarily Excluded Receivables Servicing Fee will be
distributed to the Servicer, and any remaining amounts will be deposited into
the Certificate Distribution Account for distribution to the Certificateholders
in the priority set forth in Section 4.1(b) of the Trust Agreement. The
Administrator may, at its sole option, designate Receivables that were deemed
Temporarily Excluded Receivables on any prior date to no longer be deemed
Temporarily Excluded Receivables as long as after such designation by the
Administrator, all of the Pool Composition Tests either will remain satisfied or
will not be adversely affected.
(c) Amortization Events. In connection with the preparation of each
Monthly Investor Report, the Servicer will review the Amortization Events and
determine whether an Amortization Event occurred during the Collection Period
immediately preceding the related Collection Period (after giving effect to any
acquisition of Additional Receivables during such Collection Period), and the
Monthly Investor Report shall indicate whether or not an Amortization Event has
occurred.
(d) Remittance Reports. For as long as the Servicer and the
Marketing Agent are depositing Collections pursuant to Section 4.3(b)(ii) and
depositing any required Upgrade Payments within two (2) Business Days after the
identification that all of the terms and conditions related to such Upgrade
Offer have been satisfied by the related Obligor, the Servicer will provide a
written report (which may be electronically submitted) to the Indenture Trustee
and the Note Paying Agent on each such deposit or remittance date setting forth
(x) the aggregate dollar amount deposited or remitted into the Collection
Account by the Servicer, the Marketing Agent or an Originator on such date, (y)
the aggregate dollar amount of Collections deposited by the Servicer on such
date and (z) the aggregate number of Upgrade Offers accepted since the deposit
or remittance date immediately preceding the related deposit or remittance date,
and the aggregate amount of Upgrade Payments remitted by the Marketing Agent or
an Originator on such date.
Section 3.6 Review of Servicer’s Records. The Servicer will maintain
records and documents relating to its performance under this Agreement according
to its customary business practices. Upon reasonable request not more than once
during any calendar year, and with reasonable notice, the Servicer will give the
Issuer, the Depositor, the Parent Support Provider, the Administrator, the Owner
Trustee and the Indenture Trustee (or their representatives) access to the
records and documents to conduct a review of the Servicer’s performance under
this Agreement. Any access or review will be conducted by all parties at the
same time at the Servicer’s offices during its normal business hours at a time
reasonably convenient to the Servicer and in a manner that will minimize
disruption to its business operations. Any access or review will be subject to
the Servicer’s security, confidentiality and privacy policies and any
regulatory, legal and data protection policies. Notwithstanding the foregoing,
the permissive right of the Indenture Trustee to access or review any records of
the Servicer shall not be deemed to be an obligation of the Indenture Trustee to
do so.
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Section 3.7 Servicer’s Authorized and Responsible Persons. On or before
the Closing Date, the Servicer will notify the Indenture Trustee and the Owner
Trustee and provide a specimen signature of each Person who (a) is authorized to
give instructions and directions to the Indenture Trustee and the Owner Trustee
on behalf of the Servicer and (b) is a Responsible Person for the Servicer. The
Servicer may change such Persons at any time by notifying the Indenture Trustee
and the Owner Trustee.
Section 3.8 Servicer’s Fees. As compensation for performing its
obligations under this Agreement, the Servicer will be paid the Servicing Fee.
On each Payment Date, the Issuer will pay the Servicing Fee to the Servicer
according to Section 8.2 of the Indenture. In addition, the Servicer may retain
any Supplemental Servicing Fees. The Servicer will also receive the Temporarily
Excluded Receivables Servicing Fee on each Payment Date, which will be payable
solely from Collections on the Temporarily Excluded Receivables, as set forth in
Section 3.5(b).
Section 3.9 Servicer’s Expenses. Except as otherwise stated in this
Agreement, the Servicer will pay all its expenses for servicing the Receivables
under this Agreement, including fees and expenses of legal counsel and
independent accountants, taxes imposed on the Servicer and expenses to prepare
reports, certificates or notices under this Agreement.
Section 3.10 Custodian.
(a) Appointment of Custodian. To reduce administrative costs and
facilitate the servicing of the Receivables by the Servicer, the Issuer appoints
Cellco, in its capacity as the Servicer, to act as the Custodian of the
Receivables for the Issuer and the Indenture Trustee (for the benefit of the
Secured Parties), as their interests may appear. Cellco accepts the appointment
and agrees to perform the custodial obligations in this Section 3.10.
(b) Custody of Receivable Files. The Custodian will hold and
maintain in custody the following documents for each Receivable (the “Receivable
File”) for the benefit of the Issuer and the Indenture Trustee, using reasonable
care and according to the Servicing Procedures:
(i) the original Receivable (or an imaged copy of such Receivable) or
an authoritative copy of the Receivable, if in electronic form; and
(ii) all other documents, notices and correspondence relating to the
Receivable or the Obligor that the Servicer generates in the course of servicing
the Receivable.
Except as stated above, any document in a Receivable File may be a photocopy or
in electronic format or may be converted to electronic format at any time. The
Custodian will hold and maintain the Receivable Files, including any receivables
systems on which the Receivable Files are electronically stored, in a manner
that will permit the Servicer and the Issuer to comply with this Agreement and
the Indenture Trustee to comply with the Indenture.
(c) Delivery of Receivable Files. The Receivable Files are or will
be constructively delivered to the Indenture Trustee, as pledgee of the Issuer
under the Indenture, and the Custodian confirms to the Issuer and the Indenture
Trustee that it has received the Receivable Files for the Initial Receivables
and, by its delivery (in its capacity as Servicer) to the Issuer and the
Indenture Trustee of an Acquisition Date Supplement, will be deemed to confirm
to the
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Issuer and the Indenture Trustee that it has received the Receivable Files for
the Additional Receivables. No initial review or any periodic review of the
Receivable Files by the Issuer, the Owner Trustee or the Indenture Trustee is
required.
(d) Location of Receivable Files. The Custodian will maintain the
Receivable Files (or access to any Receivable Files stored in an electronic
format) at one of its offices or the offices of one of its custodians in the
United States. On request of the Depositor, the Issuer and the Indenture
Trustee, the Custodian will provide a list of locations of the Receivable Files.
(e) Access to Receivable Files. The Custodian will give the Servicer
access to the Receivable Files and, on request of the Servicer, the Custodian
will promptly release any document in the Receivable Files to the Servicer for
purposes of servicing the Receivables. The Custodian will give the Depositor,
the Issuer and the Indenture Trustee access to the Receivable Files and the
receivables systems to conduct a review of the Receivables. Any access or
review will be conducted at the Custodian’s offices during normal business hours
at a time reasonably convenient to the Custodian in a manner that will minimize
disruption of its business operations. Any access or review will be subject to
the Custodian’s legal, regulatory, confidentiality, privacy and data protection
policies. Attached hereto as Exhibit A is a copy of the Custodian’s security
requirements in effect on the date of this Agreement.
(f) Effective Period and Termination. Cellco’s appointment as
custodian is effective as of the Initial Cutoff Date and will continue until the
later of (i) the date on which all obligations of the Issuer have been paid in
full and (ii) the date on which such appointment is terminated under this
Section 3.10(f). If the Servicer resigns under Section 7.1 or is terminated
under Section 7.2, the Servicer’s appointment as custodian under this Agreement
may be terminated in the same manner as the Servicer may be terminated under
Section 7.2. As soon as practicable after any termination of its appointment as
custodian and subject to the legal, regulatory, confidentiality, privacy and
data protection policies of the Custodian and Cellco, the Custodian will deliver
the Receivable Files to the Indenture Trustee or its designee or successor
custodian at a place designated by the Indenture Trustee. All reasonable
expenses of transferring the Receivable Files to the designee or successor
custodian will be paid by the terminated custodian on receipt of an invoice in
reasonable detail.
(g) No Agency. Neither the Custodian nor the Servicer shall be
deemed to be an agent of the Indenture Trustee, and the Indenture Trustee shall
have no liability for the acts or omissions of the Custodian or the Servicer.
Section 3.11 Marketing Agent.
(a) Appointment of Marketing Agent. The Issuer and the Servicer
appoint Cellco to act as Marketing Agent for the Receivables. Cellco accepts
the appointment and agrees to perform its obligations set forth in this
Agreement.
(b) Duties of the Marketing Agent. The Marketing Agent will be
required to remit, or to cause the related Originator to remit, to the
Collection Account the amounts set forth in Sections 4.3(g), (h) and (i).
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(c) Fees and Expenses of the Marketing Agent. Fees and expenses, if
any, of the Marketing Agent will be paid by the Originators, as separately
agreed to under the Marketing Agent Agency Agreement.
(d) Covenants of the Marketing Agent. The Marketing Agent will not
(i) make any Upgrade Offers that waive any obligations of an Obligor under the
related device payment plan agreement, (ii) eliminate the obligation of Verizon
Wireless to pay off a device payment plan agreement if an Obligor satisfies the
related terms and conditions thereof, or (iii) eliminate or impair any third
party beneficiary rights of an assignee under an Upgrade Offer, including the
right of such assignee to enforce Verizon Wireless’ payment obligation under any
Upgrade Offer.
Section 3.12 Termination of Upgrade Programs; Credits Related to Upgrade
Programs.
(a) To the extent any Upgrade Offer has not been terminated and an
Obligor satisfies all of the terms and conditions of such Upgrade Offer in
respect of a Receivable, and (i) the Marketing Agent fails to make, or to cause
the related Originator to make, the required Upgrade Payment into the Collection
Account as set forth in Section 4.3(g) and (ii) the Parent Support Provider
fails to make any required Upgrade Payments as set forth in Section 1 of the
Parent Support Agreement, the Servicer and the Marketing Agent shall terminate
all Upgrade Offers within ten (10) Business Days after the date the Parent
Support Provider received notice from the Indenture Trustee that an Upgrade
Payment was due under Section 1 of the Parent Support Agreement.
(b) If the Marketing Agent, the relevant Originator and the Parent
Support Provider fail to make such Upgrade Payments with respect to an Upgrade
Offer, (i) the Servicer shall deliver the notice to Obligors pursuant to Section
3.13 with respect to such Obligors’ recoupment rights against Verizon Wireless,
and (ii) notwithstanding any failure to deliver such notice, (x) if Cellco is
still the Servicer, the Servicer shall give a monthly credit to the Obligor
against amounts owing with respect to the new device payment plan agreement
resulting from the Upgrade Offer, in an amount equal to the amount due that
month under the original device payment plan agreement that is a Receivable, or
(y) if Cellco is no longer the Servicer, Cellco, (1) if required, shall give
such monthly credit to the Obligor only if Cellco has received notice from the
Servicer that the Obligor has paid the amount due in the prior month under the
original device payment plan agreement that is a Receivable, and (2) shall
cooperate with any Successor Servicer to properly bill and credit such Obligor’s
account with respect to the Receivable and the new device payment plan agreement
related to the Upgrade Offer. Any such monthly credit granted to an Obligor
shall be applied directly against the monthly payment due on the new device
payment plan agreement and will not be applied in accordance with the Servicer’s
customary payment application procedures pursuant to its Servicing Procedures,
if different. For the avoidance of doubt, if during such time as Cellco is no
longer the Servicer, an Obligor remits the full amount due under the related new
device payment plan agreement, but does not make a payment to the new Servicer
for the original device payment plan agreement, a portion of such amount equal
to the amount of the monthly credit granted to such Obligor resulting from the
Upgrade Offer in respect of the original device payment plan agreement that is a
Receivable shall be paid by Cellco to the new Servicer. In such case, to the
extent that all other amounts owed on the related account are current, the
Servicer will not consider such account or payments
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under the new device payment plan agreement to be Delinquent. In addition,
regardless of whether Cellco continues to be the Servicer of any Receivable for
which the terms and conditions of an Upgrade Offer (other than the requirement
that the Marketing Agent remit, or cause the related Originator to remit, an
Upgrade Payment for such Receivable) were satisfied by the related Obligor and
for which the Marketing Agent, the related Originator and the Parent Support
Provider failed to make the related Upgrade Payment, Cellco shall remit any
Collections received on such Receivable to the Collection Account in the time
period in which it would have been otherwise obligated to do so.
Section 3.13 Notices to Obligors.
Within ten (10) days following the earlier to occur of (i) a ratings downgrade
by each of the Rating Agencies of Verizon to below investment grade, or (ii) a
Servicer Termination Event, the Servicer will send a notice to all Obligors
indicating (a) that their Receivables have been assigned to the Issuer, and
(b)(x) if Cellco has not been removed as Servicer, that the Obligors shall
continue to make their payments as they had previously, or (y) if Cellco has
been removed as Servicer, the name of the Successor Servicer and any new
instructions with respect to their payments. In addition, if the Servicer
Termination Event was as a result of the failure of the Marketing Agent to
satisfy its obligation to make, or to cause the related Originators to make,
required Upgrade Payments pursuant to Section 7.2(a)(i)(y), then Cellco shall
also send a notice to (i) all Obligors who have a continuing right to an
upgrade, indicating that Cellco has recently failed to make the necessary
prepayments with respect to one or more of its customers in connection with an
Upgrade Offer, and that if any Obligor chooses to upgrade and Cellco fails to
make the related Upgrade Payment with respect to them, such Obligor will still
be required to make payments on his or her original device payment plan
agreement, but that such Obligor will have a corresponding recoupment right
against his or her new device payment plan agreement with Verizon Wireless, and
(ii) all Obligors who had initiated upgrades under an Upgrade Offer, indicating
that Cellco had failed to make the relevant Upgrade Payment, and stating that
such Obligors will continue to have an obligation to make payments on their
original device payment plan agreements, but will have a corresponding right of
recoupment against their new device payment plan agreements with Verizon
Wireless.
ARTICLE IV
ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS
Section 4.1 Bank Accounts.
(a) Establishment of Bank Accounts. On or before the Closing Date,
the Servicer will establish the following segregated accounts or subaccounts at
a Qualified Institution (initially the corporate trust department of U.S. Bank
National Association), each in the name of “U.S. Bank National Association, as
Note Paying Agent for the benefit of the Indenture Trustee, as secured party for
Verizon Owner Trust 2020-A”, to be designated as follows:
(i) “Collection Account” with account number 272062000;
(ii) “Reserve Account” with account number 272062001;
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(iii) “Acquisition Account,” as a subaccount of the Collection
Account, with account number 272062002; and
(iv) “Negative Carry Account” with account number 272062003.
(b) Control of Bank Accounts. Each of the Bank Accounts will be
under the control of the Indenture Trustee so long as the Bank Accounts remain
subject to the Lien of the Indenture, except that the Servicer may make deposits
into and direct the Note Paying Agent to make deposits into or withdrawals from
the Bank Accounts according to the Transaction Documents. The Servicer may
direct the Note Paying Agent to withdraw from the Collection Account and pay to
the Servicer, or as directed by the Servicer, amounts that are not Available
Funds for a Collection Period or that were deposited into the Collection Account
in error. Following the payment in full of the Notes and the release of the
Bank Accounts from the Lien of the Indenture, the Bank Accounts will be under
the control of the Issuer.
(c) Benefit of Accounts; Deposits and Withdrawals. The Bank Accounts
and all cash, money, securities, investments, financial assets and other
property deposited in or credited to them will be held by the Note Paying Agent
for the benefit of the Indenture Trustee as secured party for the benefit of the
Secured Parties and, after payment in full of the Notes and the release of the
Bank Accounts from the Lien of the Indenture, as agent of the Issuer and as part
of the Trust Property. All deposits to and withdrawals from the Bank Accounts
will be made according to the Transaction Documents.
(d) Maintenance of Accounts. If an institution maintaining the Bank
Accounts ceases to be a Qualified Institution, the Servicer will, with the
Indenture Trustee’s assistance as necessary, move the Bank Accounts to a
Qualified Institution within thirty (30) days.
(e) Compliance. Each Bank Account will be subject to the Account
Control Agreement. The Servicer will ensure that the Account Control Agreement
requires the Qualified Institution maintaining the Bank Accounts to comply with
“entitlement orders” (as defined in Section 8-102 of the UCC) from the Indenture
Trustee without further consent of the Issuer, if the Notes are Outstanding, and
to act as a “securities intermediary” according to the UCC.
(f) Agreements With Respect to Accounts. The Servicer, the Issuer,
the Indenture Trustee and the Securities Intermediary agree as follows:
(i) each of the Bank Accounts is, and will be maintained as, a
“securities account” (as defined in Section 8-501 of the UCC);
(ii) the Securities Intermediary is acting, and will act as a
“securities intermediary” (as defined in the UCC) with respect to the Bank
Accounts;
(iii) this Agreement (together with the Indenture and the Account
Control Agreement) is the only agreement entered into among the parties with
respect to the Bank Accounts and the parties will not enter into any other
agreement related to the Bank Accounts; and
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(iv) at the time this Agreement was entered into and the Bank
Accounts were established, the Securities Intermediary has one or more offices
in the United States of America that maintains the securities accounts.
Section 4.2 Investment of Funds in Bank Accounts.
(a) Permitted Investments. If (i) no Default or Event of Default has
occurred and is continuing and (ii) Cellco is the Servicer, the Servicer may
instruct the Indenture Trustee to invest any funds in the Collection Account,
the Acquisition Account, the Reserve Account and the Negative Carry Account in
Permitted Investments and, if investment instructions are received, the
Indenture Trustee will direct the Qualified Institution maintaining the Bank
Accounts to invest the funds in the Collection Account, the Acquisition Account,
the Reserve Account or the Negative Carry Account, as applicable, in those
Permitted Investments; provided, that, if on any Payment Date, the amount on
deposit in the Acquisition Account (after giving effect to the acquisition of
any Additional Receivables on such date) is greater than 25% of the aggregate
Note Balance (after giving effect to any payments made on the Notes on such
date), the Servicer shall instruct the Indenture Trustee to invest any amounts
in the Acquisition Account in excess of such amount in any Permitted
Investments, other than (x) any investments set forth in clauses (b) or (c) of
the definition of Permitted Investments that are held by or at the Indenture
Trustee or (y) any investments set forth in clause (e) of the definition
thereof. If (i) the Servicer fails to give investment instructions for any
funds in the Collection Account, the Acquisition Account, the Reserve Account or
the Negative Carry Account to the Indenture Trustee by 11:00 a.m. New York time
(or other time as may be agreed by the Indenture Trustee) on the Business Day
before a Payment Date or (ii) the Qualified Institution receives notice from the
Indenture Trustee that a Default or Event of Default has occurred and is
continuing, the Qualified Institution will invest and reinvest funds in such
Bank Account according to the last investment instructions received, if any. If
no prior investment instructions have been received or if the instructed
investments are no longer available or permitted, the Indenture Trustee will
notify the Servicer and request new investment instructions, and the funds will
remain uninvested until new investment instructions are received. The Servicer
may direct the Indenture Trustee to consent, vote, waive or take any other
action, or not to take any action, on any matters available to the holder of the
Permitted Investments. If Cellco is not the Servicer, funds on deposit in the
Collection Account, the Acquisition Account, the Reserve Account and the
Negative Carry Account will remain uninvested. Notwithstanding anything to the
contrary in this Section 4.2(a) or in the Transaction Documents, the Servicer
shall not allow amounts held in the Collection Account or the Acquisition
Account to be invested unless it is able to maintain records on a daily basis as
to the amounts realized from the investment of Collections received on each
Originator’s Receivables.
(b) Maturity of Investments. For so long as Cellco is the Servicer,
any Permitted Investments of funds in the Collection Account and the Reserve
Account (or any reinvestments of the Permitted Investments) for a Collection
Period must mature, if applicable, and be available no later than the second
Business Day before the related Payment Date and any Permitted Investments of
funds in the Acquisition Account and the Negative Carry Account (or any
reinvestments of the Permitted Investments) for a Collection Period must mature
or be available overnight. Any Permitted Investments with a maturity date will
be held to their maturity, except
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that such Permitted Investments may be sold or disposed of before their maturity
in connection with the sale or liquidation of the Collateral under Section 5.6
of the Indenture.
(c) No Liability for Investments. None of the Depositor, the
Servicer, the Indenture Trustee, the Note Paying Agent or the Qualified
Institution maintaining any Bank Account will be liable for the selection of
Permitted Investments or for investment losses incurred on Permitted Investments
(other than in the capacity as obligor, if applicable).
(d) Continuation of Liens in Investments. The Servicer will not
direct the Indenture Trustee or the Note Paying Agent to make any investment of
funds or to sell any investment held in the Bank Accounts unless the security
interest Granted and perfected in the account in favor of the Indenture Trustee
will continue to be perfected in the investment or the proceeds of the sale
without further action by any Person.
(e) Investment Earnings. Investment earnings (net of losses and
investment expenses) on the Collection Account, the Acquisition Account, the
Reserve Account and the Negative Carry Account will be deposited into the
Certificate Distribution Account for distribution to the Certificateholders in
the priority set forth in Section 4.1(b) of the Trust Agreement.
Section 4.3 Deposits and Payments.
(a) Closing Date and Acquisition Date Deposit. On the Closing Date
and on each Acquisition Date, the Servicer will deposit into the Collection
Account all amounts received and applied as interest or principal on the Initial
Receivables or the Additional Receivables, as applicable, during the period from
the related Cutoff Date to two (2) Business Days before the Closing Date or
Acquisition Date, as applicable.
(b) Deposit of Collections.
(i) If Cellco is the Servicer and (x) Verizon’s long-term unsecured
debt is rated equal to or higher than “Baa2” by Moody’s and “A” by S&P (the
“Monthly Deposit Required Ratings”), (y) Verizon guarantees certain payment
obligations of Cellco, as Servicer, as provided in the Parent Support Agreement
and (z) no Servicer Termination Event has occurred, the Servicer may deposit
Collections into the Collection Account on the second Business Day before each
Payment Date.
(ii) For as long as (x) Verizon’s long-term unsecured debt is not
rated at least the Monthly Deposit Required Ratings, (y) Verizon does not
guaranty certain payment obligations of Cellco, as Servicer or (z) a Servicer
Termination Event occurs, the Servicer will (1) deposit into the Collection
Account all amounts received and applied as interest or principal on the
Receivables within two (2) Business Days after identification of receipt of good
funds and (2) provide a written report (which may be electronically submitted)
to the Indenture Trustee and the Note Paying Agent regarding such deposit set
forth in clause (1) above, as required by Section 3.5(d).
(c) Reconciliation of Deposits. If Cellco is the Servicer and for
any Payment Date, the sum of (i) Collections for the Collection Period, plus
(ii) Acquisition Amounts for the
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Payment Date, exceeds the amounts deposited under Section 4.3(b) for the
Collection Period, Cellco will deposit an amount equal to the excess into the
Collection Account on the second Business Day before the Payment Date. If, for
any Payment Date, the amounts deposited under Section 4.3(b) for the Collection
Period exceed the sum of (i) Collections for the Collection Period, plus (ii)
Acquisition Amounts for the Payment Date, the Indenture Trustee or the Note
Paying Agent will pay to Cellco from Available Funds in the Collection Account
an amount equal to the excess within two (2) Business Days after Cellco’s
direction, but no later than the Payment Date. If requested by the Indenture
Trustee, Cellco will provide reasonable supporting details for its calculation
of the amounts to be deposited or paid under this Section 4.3(c).
(d) Net Deposits. Cellco may make the deposits and payments required
by Section 4.3(b) net of Servicing Fees to be paid to Cellco for the Collection
Period and amounts the Servicer is permitted to retain under Section 3.8 and be
reimbursed for under Section 3.9. The Servicer will account for all deposits
and payments in the Monthly Investor Report as if the amounts were deposited
and/or paid separately.
(e) No Segregation. Pending deposit in the Collection Account, the
Servicer is not required to segregate Collections from its own funds.
(f) Negative Carry Account Deposits. Any Certificateholder may, at
its option, deposit funds into the Negative Carry Account on any date.
(g) Deposit of Upgrade Payments. If any Upgrade Offer has not been
terminated and an Obligor satisfies all of the terms and conditions of such
Upgrade Offer in respect of a Receivable, the Marketing Agent shall deposit, or
shall cause the related Originator to deposit, into the Collection Account the
related Upgrade Payment, within two (2) Business Days after the identification
that all of the terms and conditions related to such Upgrade Offer have been
satisfied by the related Obligor in respect of a Receivable; provided, that if
the conditions set forth in Section 4.3(b)(i) are satisfied, the Marketing Agent
shall deposit, or shall cause the related Originators to deposit, such amounts
into the Collection Account on the second Business Day before the Payment Date
related to the Collection Period in which the related Obligor has satisfied all
of the terms and conditions (for the avoidance of doubt, other than the required
prepayment) related to such Upgrade Offer in respect of a Receivable. The
parties acknowledge that the failure of the Marketing Agent to deposit, or to
cause the related Originator to deposit, into the Collection Account the related
Upgrade Payment or otherwise to pay off the Receivable would constitute a breach
by the related Originator of its obligation to the Obligor under the Upgrade
Contract and that this breach would adversely affect the value of the
Receivables, and give the Obligor a claim in recoupment against the related
Originator and a right to offset that claim against the amounts that the Obligor
would owe to the related Originator under the new device payment plan agreement
(each such agreement, a “New Upgrade DPP”) entered into by the related
Originator (or its agent, on its behalf) pursuant to the Upgrade Contract. The
parties hereto intend that the payment by the Marketing Agent or the related
Originator of the Upgrade Payment as provided in this Section 4.3(g) shall
extinguish such Obligor’s claim in recoupment against the related Originator and
the Obligor’s right to offset the amount of that claim against the amounts that
the Obligor would owe under the New Upgrade DPP contemporaneously with such
Upgrade Payment by the Marketing Agent or the related Originator. The parties
hereto also intend that the payment by the Marketing Agent or the related
Originator of the Upgrade
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Payment as provided in Section 2.2.1 of the Marketing Agent Agency Agreement
shall extinguish each Obligor’s claim in recoupment against the “Verizon
Originator” described in that Section and the Obligor’s right to offset the
amount of that claim against the amounts that the Obligor would owe under the
new device payment plan agreement entered into by such Verizon Originator (or
its agent, on its behalf) pursuant to the Upgrade Contract as described in that
Section 2.2.1 contemporaneously with such Upgrade Payment by the Marketing Agent
or the related Originator.
(h) Deposit of Credit Payments. If an Obligor is granted a Credit
and the application of such Credit to the related Obligor’s account results in a
shortfall in Collections for the related Collection Period, the Marketing Agent
shall deposit, or shall cause the related Originator to deposit, into the
Collection Account the related Credit Payment within two (2) Business Days after
identification that such Credit was applied to an Obligor account; provided,
that if the conditions set forth in Section 4.3(b)(i) are satisfied, the
Marketing Agent shall deposit, or shall cause the related Originator to deposit,
such amounts into the Collection Account on the second Business Day before the
Payment Date related to the Collection Period in which such Credit was applied
to an Obligor account.
(i) Deposit of Assumption of Liability Payments. If an Originator or
the Servicer allows a device payment plan agreement that is a Receivable to be
transferred to a new Obligor, the Marketing Agent shall acquire such Receivable
and deposit, or cause the related Originator to acquire and deposit, into the
Collection Account an amount equal to the applicable Acquisition Amount for the
related Receivable on or prior to the second Business Day before the Payment
Date related to the Collection Period in which such transfer occurred.
Section 4.4 Reserve Account; Negative Carry Account; Acquisition Account.
(a) Initial Reserve Account Deposit. On the Closing Date, the
Depositor will deposit or cause to be deposited the Required Reserve Amount into
the Reserve Account from the net proceeds of the sale of the Notes.
(b) Reserve Account Draw Amount. On or before two (2) Business Days
before a Payment Date, the Servicer will calculate the Reserve Account Draw
Amount for the Payment Date and will direct the Note Paying Agent to withdraw
from the Reserve Account and deposit into the Collection Account on or before
the Payment Date (x) the Reserve Account Draw Amount and (y) any amount in
excess of the Required Reserve Amount for such Payment Date, after giving effect
to the withdrawal of the Reserve Account Draw Amount with respect to such
Payment Date.
(c) Negative Carry Account Amounts.
(i) To the extent that the Class A Certificateholder, solely at its
option, deposits any amounts into the Acquisition Account, pursuant to Section
4.4(d)(i), the Class A Certificateholder will deposit into the Negative Carry
Account an amount equal to the Required Negative Carry Amount related to such
amount deposited into the Acquisition Account on such date.
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(ii) On or before two (2) Business Days before a Payment Date, the
Servicer will calculate the Negative Carry Account Draw Amount for the Payment
Date and will instruct the Note Paying Agent to withdraw from the Negative Carry
Account and deposit the Negative Carry Account Draw Amount into the Collection
Account on or before the Payment Date.
(iii) On each Payment Date, any amounts in the Negative Carry Account
in excess of the Required Negative Carry Amount, after giving effect to any
acquisition of Receivables on such Payment Date, shall be withdrawn from the
Negative Carry Account and deposited into the Certificate Distribution Account,
for distribution to the Certificateholders in the priority set forth in Section
4.1(b) of the Trust Agreement.
(iv) On or before the first Payment Date during the Amortization
Period, the Servicer will direct the Note Paying Agent to withdraw all funds in
the Negative Carry Account and deposit the funds into the Collection Account.
(d) Acquisition Account Amounts.
(i) From time to time, the Class A Certificateholder may, solely at
its option, deposit amounts into the Acquisition Account, as set forth in
Section 2.5 of the Trust Agreement.
(ii) On or before two (2) Business Days before an Acquisition Date,
the Issuer, or the Servicer on its behalf, will direct the Note Paying Agent to
withdraw the Additional Receivables Cash Transfer Amount from the Acquisition
Account and pay that amount to the Depositor on the Acquisition Date in
consideration for the acquisition of Additional Receivables by the Issuer on the
Acquisition Date.
(iii) On each Payment Date, any amounts in the Acquisition Account in
excess of the Required Acquisition Deposit Amount, after giving effect to any
acquisition of Receivables on such Payment Date, shall be withdrawn from the
Acquisition Account and deposited into the Certificate Distribution Account, for
distribution to the Certificateholders in the priority set forth in Section
4.1(b) of the Trust Agreement.
(iv) On or before the first Payment Date during the Amortization
Period, the Servicer will direct the Note Paying Agent to withdraw all funds in
the Acquisition Account and deposit the funds into the Collection Account.
(e) Release of Funds. The Indenture Trustee shall, at such time as
there are no Notes outstanding, release any remaining portion of the Collection
Account from the Lien of the Indenture and release to or to the order of the
Issuer or, in the case of the Reserve Account, to the Depositor.
Section 4.5 Direction to Indenture Trustee for Distributions. On or about
the 15th day of each month, and in no case later than at least two (2) Business
Days before each Payment Date, the Servicer will direct the Indenture Trustee or
Note Paying Agent (based on the most recent Monthly Investor Report) to make the
withdrawals, deposits, distributions and payments
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required to be made on the Payment Date under Section 8.2 of the Indenture and
Section 4.3(c) of this Agreement.
ARTICLE V
DEPOSITOR
Section 5.1 Depositor’s Representations and Warranties. The Depositor
represents and warrants to the Issuer as of the Closing Date and as of each
Acquisition Date, on which representations and warranties the Issuer is relying
in purchasing the Depositor Transferred Property and which will survive the
transfer and assignment of the Depositor Transferred Property by the Depositor
to the Issuer under this Agreement and the pledge of the Depositor Transferred
Property by the Issuer to the Indenture Trustee under the Indenture:
(a) Organization and Good Standing. The Depositor is a validly
existing limited liability company in good standing under the laws of the State
of Delaware and has full power and authority to own its properties and conduct
its business as presently owned or conducted, and to execute, deliver and
perform its obligations under this Agreement and each other Transaction Document
to which it is a party.
(b) Due Qualification. The Depositor is duly qualified to do
business, is in good standing as a foreign limited liability company (or is
exempt from such requirements) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its business requires
such qualification, licenses or approvals, except where the failure to so
qualify or obtain licenses or approvals would not reasonably be expected to have
a Material Adverse Effect.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement and each other Transaction Document to which it is a party, have
been duly authorized by the Depositor by all necessary limited liability company
action on the part of the Depositor.
(d) No Proceedings. There are no actions, suits, investigations or
other proceedings pending, or to its knowledge threatened, against the Depositor
or any of its properties: (i) asserting the invalidity of this Agreement or any
other Transaction Document to which it is a party; (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document to which it is a party; or (iii) seeking any
determination or ruling that might have a Material Adverse Effect on the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Document to which it
is a party.
(e) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority required to
be obtained, effected or given to it, if any, in connection with the execution
and delivery of this Agreement and each other Transaction Document to which it
is a party and the performance of the transactions contemplated by this
Agreement or any other Transaction Document by the Depositor, in each case, have
been duly obtained, effected or given and are in full force and effect, except
for those which the failure to obtain would not reasonably be expected to have a
Material Adverse Effect.
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(f) Binding Obligation. This Agreement and each other Transaction
Document to which it is a party constitutes, when duly executed and delivered by
each other party hereto and thereto, a legal, valid and binding obligation of
the Depositor, enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or other similar Laws
affecting creditors’ rights generally or by general principles of equity.
(g) No Conflict. The execution and delivery of this Agreement or any
other Transaction Document to which it is a party by the Depositor, and the
performance by it of the transactions contemplated by the Transaction Documents
and the fulfillment of the terms hereof and thereof applicable to the Depositor,
(i) do not contravene (A) its limited liability company agreement, (B) any
contractual restriction binding on or affecting it or its property, or (C) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, except, in each case of (A), (B) or (C), where such contravention
would not reasonably be expected to have a Material Adverse Effect and (ii) do
not result in or require the creation of any Adverse Claim upon or with respect
to any of its properties.
(h) No Violation. The execution and delivery of this Agreement by the
Depositor, the performance by the Depositor of the transactions contemplated by
this Agreement or any other Transaction Document to which it is a party and the
fulfillment of the terms hereof and thereof applicable to the Depositor will not
violate any Law applicable to the Depositor, except where such violation would
not reasonably be expected to have a Material Adverse Effect.
Section 5.2 Liability of Depositor.
(a) Liability for Specific Obligations. The Depositor will be liable
under this Agreement only for its specific obligations under this Agreement.
All other liability is expressly waived and released as a condition of, and
consideration for, the execution of this Agreement by the Depositor and the
issuance of the Notes. The Depositor will be liable for its willful misconduct,
bad faith or gross negligence in performing its obligations under this
Agreement.
(b) No Liability of Others. The Depositor’s obligations under this
Agreement are corporate obligations. No Person will have recourse, directly or
indirectly, to any member, manager, officer, director, employee or agent of the
Depositor for the Depositor’s obligations under this Agreement.
(c) Legal Proceedings. The Depositor will not be required to start,
pursue or participate in any legal proceeding that is unrelated to its
obligations under this Agreement and that, in its opinion, may result in
liability or cause it to pay or risk funds or incur financial liability.
(d) Payment of Taxes. The Depositor will pay all taxes levied or
assessed on the Trust Property.
(e) Reliance by Depositor. The Depositor may rely in good faith on
the advice of counsel or on any document believed to be genuine and to have been
executed by the proper party for any matters under this Agreement.
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Section 5.3 Merger, Consolidation, Succession or Assignment. Any Person
(a) into which the Depositor is merged or consolidated, (b) resulting from a
merger or consolidation to which the Depositor is a party, (c) succeeding to the
Depositor’s business or (d) that is an Affiliate of the Depositor to whom the
Depositor has assigned this Agreement, will be the successor to the Depositor
under this Agreement. Within fifteen (15) Business Days after the merger,
consolidation, succession or assignment, such Person will (i) execute an
agreement to assume the Depositor’s obligations under this Agreement and each
Transaction Document to which the Depositor is a party (unless the assumption
happens by operation of Law), (ii) deliver to the Issuer, the Owner Trustee and
the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each
stating that the merger, consolidation, succession or assignment and the
assumption agreement comply with this Section 5.3, (iii) deliver to the Issuer,
the Owner Trustee and the Indenture Trustee an Opinion of Counsel stating that
the security interest in favor of the Issuer in the Depositor Transferred
Property and the Indenture Trustee in the Collateral is or will be perfected and
(iv) notify the Rating Agencies of the merger, consolidation, succession or
assignment.
Section 5.4 Depositor May Own Notes. The Depositor and any Affiliate of
the Depositor, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights as any other Person except as limited in
any Transaction Document. Notes owned by or pledged to the Depositor or any
Affiliate of the Depositor will have an equal and proportionate benefit under
the Transaction Documents, except as limited in any Transaction Document.
Section 5.5 Depositor’s Authorized and Responsible Persons. On or before
the Closing Date, the Depositor will notify the Indenture Trustee and the Owner
Trustee and provide specimen signatures of (i) each Person who is authorized to
give instructions and directions to the Indenture Trustee and the Owner Trustee
on behalf of the Depositor and (ii) each Person who is a Responsible Person for
the Depositor. The Depositor may change such Persons at any time by notifying
the Indenture Trustee and the Owner Trustee in writing.
Section 5.6 Company Existence. During the term of this Agreement, the
Depositor shall keep in full force and effect its existence, rights and
franchises as a limited liability company under the Laws of the jurisdiction of
its formation and shall obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Transaction Documents and each
other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
Section 5.7 No Division. Notwithstanding Section 18- 217 of the Delaware
Limited Liability Company Act or the Depositor’s limited liability company
agreement, for so long as the Notes remain Outstanding, the Depositor shall not
divide or enter into a plan of division within the meaning of Section 18- 217 of
the Delaware Limited Liability Company Act.
ARTICLE VI
SERVICER AND MARKETING AGENT
Section 6.1 Servicer’s and Marketing Agent’s Representations and
Warranties.
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(a) The Servicer represents and warrants to the Issuer as of the
Closing Date and as of each Acquisition Date, on which representations and
warranties the Issuer is relying in purchasing the Depositor Transferred
Property and which will survive the transfer and assignment of the Depositor
Transferred Property by the Depositor to the Issuer under this Agreement and the
pledge of the Depositor Transferred Property by the Issuer to the Indenture
Trustee under the Indenture:
(i) Organization and Good Standing. The Servicer is a validly
existing partnership in good standing under the laws of the State of Delaware
and has full power and authority to own its properties and conduct its servicing
business as presently owned or conducted, and to execute, deliver and perform
its obligations under this Agreement and each other Transaction Document to
which it is a party.
(ii) Due Qualification. The Servicer is duly qualified to do
business, is in good standing as a foreign entity (or is exempt from such
requirements) and has obtained all necessary licenses and approvals in each
jurisdiction in which the servicing of the Receivables requires such
qualification, licenses or approvals, except where the failure to so qualify or
obtain licenses or approvals would not reasonably be expected to have a Material
Adverse Effect.
(iii) Due Authorization. The execution, delivery, and performance of
this Agreement and each other Transaction Document to which it is a party, have
been duly authorized by the Servicer by all necessary partnership action on the
part of the Servicer.
(iv) No Proceedings. There are no actions, suits, investigations or
other proceedings pending, or to its knowledge threatened, against the Servicer
or any of its properties: (i) asserting the invalidity of this Agreement or any
other Transaction Document to which it is a party; (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document to which it is a party; or (iii) seeking any
determination or ruling that might have a Material Adverse Effect on the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Document to which it
is a party.
(v) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority required to
be obtained, effected or given to it, if any, in connection with the execution
and delivery of this Agreement and each other Transaction Document to which it
is a party and the performance of the transactions contemplated by this
Agreement or any other Transaction Document by the Servicer, in each case, have
been duly obtained, effected or given and are in full force and effect, except
for those which the failure to obtain would not reasonably be expected to have a
Material Adverse Effect.
(vi) Binding Obligation. This Agreement and each other Transaction
Document to which it is a party constitutes, when duly executed and delivered by
each other party hereto and thereto, a legal, valid and binding obligation of
the Servicer, enforceable against it in accordance with its terms, except as
such enforceability may be
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limited by applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar Laws affecting creditors’ rights
generally or by general principles of equity.
(vii) No Conflict. The execution and delivery of this Agreement or
any other Transaction Document to which it is a party by the Servicer, and the
performance by it of the transactions contemplated by the Transaction Documents
and the fulfillment of the terms hereof and thereof applicable to the Servicer,
(i) do not contravene (A) the organizational documents of the Servicer, (B) any
contractual restriction binding on or affecting it or its property, or (C) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, except, in each case of (A), (B) or (C), where such contravention
would not reasonably be expected to have a Material Adverse Effect and (ii) do
not result in or require the creation of any Adverse Claim upon or with respect
to any of its properties.
(viii) No Violation. The execution and delivery of this Agreement by
the Servicer, the performance by the Servicer of the transactions contemplated
by this Agreement or any other Transaction Document to which it is a party and
the fulfillment of the terms hereof and thereof applicable to the Servicer will
not violate any Law applicable to the Servicer, except where such violation
would not reasonably be expected to have a Material Adverse Effect.
(ix) Compliance with Law. It has complied with all Laws applicable to
the servicing of the Receivables, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(x) Servicing Procedures. It has complied in all material respects
with the Servicing Procedures with respect to the Receivables.
(b) The Marketing Agent represents and warrants to the Issuer as of
the Closing Date and as of each Acquisition Date, on which representations and
warranties the Issuer is relying in purchasing the Depositor Transferred
Property and which will survive the transfer and assignment of the Depositor
Transferred Property by the Depositor to the Issuer under this Agreement and the
pledge of the Depositor Transferred Property by the Issuer to the Indenture
Trustee under the Indenture:
(i) Organization and Good Standing. The Marketing Agent is a validly
existing partnership in good standing under the laws of the State of Delaware
and has full power and authority to own its properties and conduct its business
as presently owned or conducted, and to execute, deliver and perform its
obligations under this Agreement and each other Transaction Document to which it
is a party.
(ii) Due Qualification. The Marketing Agent is duly qualified to do
business, is in good standing as a foreign entity (or is exempt from such
requirements) and has obtained all necessary licenses and approvals in each
jurisdiction in which the conduct of its business requires such qualification,
licenses or approvals, except where the failure to
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so qualify or obtain licenses or approvals would not reasonably be expected to
have a Material Adverse Effect.
(iii) Due Authorization. The execution, delivery, and performance of
this Agreement and each other Transaction Document to which it is a party, have
been duly authorized by the Marketing Agent by all necessary partnership action
on the part of the Marketing Agent.
(iv) No Proceedings. There are no actions, suits, investigations or
other proceedings pending, or to its knowledge threatened, against the Marketing
Agent or any of its properties: (i) asserting the invalidity of this Agreement
or any other Transaction Document to which it is a party; (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or any other Transaction Document to which it is a party; or (iii)
seeking any determination or ruling that might have a Material Adverse Effect on
the performance by the Marketing Agent of its obligations under, or the validity
or enforceability of, this Agreement or any other Transaction Document to which
it is a party.
(v) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority required to
be obtained, effected or given to it, if any, in connection with the execution
and delivery of this Agreement and each other Transaction Document to which it
is a party and the performance of the transactions contemplated by this
Agreement or any other Transaction Document by the Marketing Agent, in each
case, have been duly obtained, effected or given and are in full force and
effect, except for those which the failure to obtain would not reasonably be
expected to have a Material Adverse Effect.
(vi) Binding Obligation. This Agreement and each other Transaction
Document to which it is a party constitutes, when duly executed and delivered by
each other party hereto and thereto, a legal, valid and binding obligation of
the Marketing Agent, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or other similar Laws
affecting creditors’ rights generally or by general principles of equity.
(vii) No Conflict. The execution and delivery of this Agreement or
any other Transaction Document to which it is a party by the Marketing Agent,
and the performance by it of the transactions contemplated by the Transaction
Documents and the fulfillment of the terms hereof and thereof applicable to the
Marketing Agent, (i) do not contravene (A) the organizational documents of the
Marketing Agent, (B) any contractual restriction binding on or affecting it or
its property, or (C) any order, writ, judgment, award, injunction or decree
binding on or affecting it or its property, except, in each case of (A), (B) or
(C), where such contravention would not reasonably be expected to have a
Material Adverse Effect and (ii) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties.
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(viii) No Violation. The execution and delivery of this Agreement by
the Marketing Agent, the performance by the Marketing Agent of the transactions
contemplated by this Agreement or any other Transaction Document to which it is
a party and the fulfillment of the terms hereof and thereof applicable to the
Marketing Agent will not violate any Law applicable to the Marketing Agent,
except where such violation would not reasonably be expected to have a Material
Adverse Effect.
Section 6.2 Liability of Servicer and Marketing Agent.
(a) Liability for Specific Obligations. Each of the Servicer and the
Marketing Agent, severally and not jointly, will be liable under this Agreement
only for its specific obligations under this Agreement. All other liability is
expressly waived and released as a condition of, and consideration for, the
execution of this Agreement by the Servicer or the Marketing Agent, as
applicable. Each of the Servicer and the Marketing Agent, severally and not
jointly, will be liable only for its own willful misconduct, bad faith or gross
negligence in performing its obligations under this Agreement.
(b) No Liability of Others. Each of the Servicer’s and the Marketing
Agent’s obligations under this Agreement are corporate obligations. No Person
will have recourse, directly or indirectly, to any member, manager, officer,
director, employee or agent of the Servicer for the Servicer’s obligations or
the Marketing Agent for the Marketing Agent’s obligations, as applicable, under
this Agreement.
(c) Legal Proceedings. The Servicer will not be required to start,
pursue or participate in any legal proceeding that is not incidental or related
to its obligations to service the Receivables under this Agreement and that in
its opinion may result in liability or cause it to pay or risk funds or incur
financial liability. The Servicer may in its sole discretion start or pursue
any legal proceeding to protect the interests of the Noteholders or the
Depositor under the Transaction Documents. The Servicer will be responsible for
the fees and expenses of legal counsel and any liability resulting from the
legal proceeding.
(d) Force Majeure. Neither the Servicer nor the Marketing Agent will
be responsible or liable for any failure or delay in performing its obligations
under this Agreement caused by, directly or indirectly, forces beyond its
control, including strikes, work stoppages, acts of war, terrorism, civil or
military disturbances, fire, flood, earthquakes, storms, hurricanes or other
natural disasters or failures of mechanical, electronic or communication
systems; provided, however that this provision shall not limit the right to
remove the Servicer for a Servicer Termination Event as provided in Section
7.2(a), other than with respect to the extension of the grace periods as
provided in Section 7.2(a). Each of the Servicer and the Marketing Agent, as
applicable, will use commercially reasonable efforts to resume performance as
soon as practicable in the circumstances.
(e) Reliance by Servicer and Marketing Agent. Each of the Servicer
and the Marketing Agent may rely in good faith on the advice of counsel or on
any document believed to be genuine and to have been executed by the proper
party for any matters under this Agreement.
Section 6.3 Indemnities of Servicer and the Marketing Agent.
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(a) Indemnification.
(i) The Servicer will indemnify the Issuer, the Owner Trustee and the
Indenture Trustee (including in its capacity as Note Paying Agent), and their
officers, directors, employees and agents (each, an “Indemnified Person”) for
all fees, expenses, losses, claims, actions, suits, damages and liabilities
(including reasonable legal fees and expenses) resulting from the Servicer’s
(including in its capacity as Custodian) willful misconduct, bad faith or gross
negligence in performing its obligations under the Transaction Documents
(including such amounts incurred by such parties in defending themselves against
any loss, damage or liability and any fees and expenses incurred in connection
with any proceedings brought by the Indemnified Person to enforce the Servicer’s
indemnification or other obligations under this Agreement).
(ii) The Marketing Agent will indemnify the Indemnified Persons for
all fees, expenses, losses, claims, actions, suits, damages and liabilities
(including reasonable legal fees and expenses) resulting from the Marketing
Agent’s willful misconduct, bad faith or gross negligence in performing its
obligations under the Transaction Documents (including such amounts incurred by
such parties in defending themselves against any loss, damage or liability and
any fees and expenses incurred in connection with any proceedings brought by the
Indemnified Person to enforce the Marketing Agent’s indemnification or other
obligations under this Agreement).
(b) Proceedings. If an Indemnified Person receives notice of a
Proceeding against it, the Indemnified Person will, if a claim for indemnity
will be made against the Servicer or the Marketing Agent, as applicable, under
this Section 6.3, promptly notify the Servicer or the Marketing Agent, as
applicable, of the Proceeding; provided, that the failure to give such notice
shall not affect the right of an Indemnified Person to indemnification hereunder
to the extent that such failure does not prejudice the rights of the Servicer,
the Marketing Agent or the Indemnified Person in such Proceeding. The Servicer
or the Marketing Agent, as applicable, may participate in and assume the defense
and settlement of a Proceeding at its expense. If the Servicer or the
Marketing Agent, as applicable, notifies the Indemnified Person of its intention
to assume the defense of the Proceeding, the Servicer or the Marketing Agent, as
applicable, will assume such defense with counsel reasonably satisfactory to the
Indemnified Person, and in a manner reasonably satisfactory to the Indemnified
Person, and the Servicer or the Marketing Agent, as applicable, and will not be
liable for fees and expenses of separate counsel to the Indemnified Person
unless there is a conflict between the interests of the Servicer or the
Marketing Agent, as applicable, and the Indemnified Person. If there is a
conflict or if the parties cannot reasonably agree as to the selection of
counsel, the Servicer or the Marketing Agent, as applicable, will pay the
reasonable fees and expenses of separate counsel to the Indemnified Person. No
settlement of the Proceeding in which a claim is brought against the Servicer or
the Marketing Agent may be settled in the name of, on behalf of, or in any
manner in which the Servicer or the Marketing Agent, as applicable, is
understood to acknowledge the validity of any claim without the approval of the
Servicer or the Marketing Agent, respectively, and the Indemnified Person, which
approvals will not be unreasonably withheld.
(c) Survival of Obligations. Each of the Servicer’s and the
Marketing Agent’s obligations under this Section 6.3, for the period it was the
Servicer or the Marketing Agent,
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respectively, will survive the Servicer’s or the Marketing Agent’s, as
applicable, resignation or termination, the termination of this Agreement, the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of the Issuer.
(d) Repayment. If the Servicer or the Marketing Agent makes a
payment to an Indemnified Person under this Section 6.3 and the Indemnified
Person later collects from others any amounts for which the payment was made,
the Indemnified Person will promptly repay those amounts to the Servicer or the
Marketing Agent, as applicable.
Section 6.4 Delegation and Contracting. If Cellco is not the Servicer or
the Custodian, the Servicer or the Custodian, as applicable, may not delegate to
any Person its obligations under this Agreement without the consent of the
Issuer. However, no notice or consent will be required for any delegation if
Cellco is the Servicer or the Custodian. No notice or consent will be required
for any delegation by the Marketing Agent of its obligations under this
Agreement. Any of the Servicer, the Custodian or the Marketing Agent may
contract with other Persons to perform its obligations under this Agreement. No
delegation or contracting will relieve the Servicer, the Custodian or the
Marketing Agent, as applicable, of its responsibilities, and the Servicer, the
Custodian or the Marketing Agent, respectively, will remain responsible for
those obligations. Each of the Servicer, the Custodian and the Marketing Agent
will be responsible for the fees of its delegates and contractors, as
applicable.
Section 6.5 Servicer May Own Notes. The Servicer and any Affiliate of the
Servicer, may, in its individual or any other capacity, become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Servicer or an Affiliate of the Servicer, except as otherwise stated in any
Transaction Document.
Section 6.6 Annual Statement as to Compliance. Within ninety (90) days
after the end of each fiscal year for which a report on Form 10-K is required to
be filed with the Commission by or on behalf of the Issuer (commencing with the
fiscal year ended December 31, 2020), the Servicer will deliver an Officer’s
Certificate to the Administrator, the Depositor, the Owner Trustee and the
Indenture Trustee to the effect that (A) a review of the Servicer’s activities
during the prior fiscal year (or since the Closing Date in the case of the first
such Officer’s Certificate) and of its performance under this Agreement has been
made under the supervision of the officer executing such Officer’s Certificate
and (B) to the best of his or her knowledge, based on the review, the Servicer
has fulfilled in all material respects its obligations under this Agreement, or,
if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and
status of the failure.
Section 6.7 Assessment of Compliance and Accountants’ Attestation.
(a) Within ninety (90) days after the end of each fiscal year for
which a report on Form 10-K is required to be filed with the Commission by or on
behalf of the Issuer (commencing with the fiscal year ended December 31, 2020),
the Servicer will:
(i) deliver to the Issuer, the Depositor, the Administrator, the
Owner Trustee, the Indenture Trustee and the Rating Agencies a report regarding
the Servicer’s assessment of compliance with the Servicing Criteria during the
immediately preceding
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calendar year, including disclosure of any material instance of non-compliance
identified by the Servicer, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB. Such report shall be addressed to
the Issuer and signed by an authorized officer of the Servicer, and shall
address each of the Servicing Criteria applicable to the Servicer;
(ii) deliver to the Issuer, the Depositor, the Administrator, the
Owner Trustee, the Indenture Trustee and the Rating Agencies a report of a
registered public accounting firm reasonably acceptable to the Issuer and the
Administrator that attests to, and reports on, the assessment of compliance made
by the Servicer and delivered pursuant to the preceding paragraph. This
attestation shall be delivered in accordance with Rules 1-02(a)(3) and 2-02(g)
of Regulation S‑X under the Securities Act and the Exchange Act;
(iii) cause each Subservicer and each Subcontractor, if any,
determined by the Servicer to be “participating in the servicing function”
within the meaning of Item 1122 of Regulation AB, to deliver to the Issuer, the
Depositor, the Administrator, the Owner Trustee and the Indenture Trustee an
assessment of compliance and accountants’ attestation as and when provided in
paragraphs (i) and (ii) of this Section; and
(iv) if requested by the Administrator, acting on behalf of the
Issuer, deliver to the Issuer, the Depositor and the Administrator and any other
Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an
asset-backed issuer with respect to a securitization transaction a certification
in the form attached hereto as Exhibit B.
The Servicer acknowledges that the parties identified in clause (a)(iv) above
may rely on the certification provided by the Servicer pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. The
Administrator, acting on behalf of the Issuer, will not request delivery of a
certification under clause (a)(iv) above unless the Depositor is required under
the Exchange Act to file an annual report on Form 10‑K with respect to an
asset-backed issuer whose asset pool includes receivables.
(b) Each assessment of compliance provided by a Subservicer pursuant
to Section 6.7(a)(iii) shall address each of the Servicing Criteria specified on
a certification to be delivered by such Subservicer to the Servicer, the Issuer,
the Depositor and the Administrator on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant
to Section 6.7(a)(iii) need not address any elements of the Servicing Criteria
other than those specified by the Servicer and the Issuer on the date of such
appointment.
ARTICLE VII
SERVICER RESIGNATION AND TERMINATION; SUCCESSOR SERVICER
Section 7.1 No Resignation. The Servicer will not resign as Servicer under
this Agreement unless it determines it is legally unable to perform its
obligations under this Agreement. The Servicer will notify the Issuer, the
Parent Support Provider, the Owner Trustee and the Indenture Trustee of its
resignation as soon as practicable after it determines it is required to resign,
together with an Opinion of Counsel supporting its determination. The Issuer
will
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promptly notify the Rating Agencies of any resignation of the Servicer.
Notwithstanding anything to the contrary in this Agreement or in any other
Transaction Document, immediately upon the resignation of Cellco as Servicer
pursuant to this Section 7.1, Cellco, in its individual capacity, will be
required to assume the obligations of the Servicer to acquire Receivables as set
forth in Sections 3.4 and 4.7 of the Master Trust Receivables Transfer Agreement
and Sections 2.5 and 2.6 of this Agreement without further action.
Section 7.2 Servicer Termination Events.
(a) Servicer Termination Events. The following events will each be a
“Servicer Termination Event”:
(i) (x) the Servicer fails to deposit, or deliver to the Owner
Trustee or the Indenture Trustee for deposit, any Collections required to be
delivered under this Agreement; (y) so long as Cellco is the Servicer, the
Marketing Agent fails to deposit, or to cause the related Originators to
deposit, into the Collection Account any Upgrade Payments required to be
delivered under this Agreement, or (z) so long as Cellco is the Servicer, the
Parent Support Provider fails to make any payments with respect to the items set
forth in clause (x) or clause (y) above, to the extent the Servicer, or the
Marketing Agent or any related Originator, respectively, fails to do so, and, in
each case, which such failure continues for five (5) Business Days after the
Servicer, the Marketing Agent or the Parent Support Provider, as applicable,
receives written notice of the failure from the Owner Trustee or the Indenture
Trustee, or a Responsible Person of the Servicer, the Marketing Agent or the
Parent Support Provider, as applicable, obtains actual knowledge of the failure;
or
(ii) the Servicer (including in its capacity as Custodian) fails to
observe or to perform any obligation under this Agreement, other than as set
forth in clause (i) or (iii), which failure has a material adverse effect on the
Noteholders and continues for ninety (90) days after the Servicer receives
written notice of the failure from the Owner Trustee, the Indenture Trustee or
the Noteholders of at least a majority of the Note Balance of the Controlling
Class; or
(iii) so long as Cellco is the Servicer, the failure by (x) the
Marketing Agent to make, or to cause the related Originators to make, (i) any
payments required to be paid by the Marketing Agent, including without
limitation Credit Payments or (ii) payments relating to the acquisition by the
Marketing Agent or the related Originators of Receivables that are subject to
certain transfers, but not including Upgrade Payments, or (y) the Parent Support
Provider to make any payments set forth in clause (x) above, to the extent that
the Marketing Agent or any related Originator fails to do so, and in either
case, that continues for ten (10) Business Days after the Marketing Agent or
Parent Support Provider, as applicable, receives written notice of the failure
from the Owner Trustee or the Indenture Trustee, or a Responsible Person of the
Marketing Agent or the Parent Support Provider, as applicable, obtains actual
knowledge of the failure; or
(iv) an Insolvency Event of the Servicer occurs;
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provided, however, that a delay or failure of performance referred to in clauses
(i), (ii) or (iii) above for an additional period of sixty (60) days will not
constitute a Servicer Termination Event if such delay or failure was caused by
force majeure or other similar occurrence, as further described in Section
6.2(d).
(b) Notice of Servicer Termination Event. The Servicer will notify
the Issuer, the Owner Trustee and the Indenture Trustee of any Servicer
Termination Event or any event that with the giving of notice or passage of
time, or both, would become a Servicer Termination Event, no later than five (5)
Business Days after a Responsible Person of the Servicer has received written
notice of or has actual knowledge of the event. If a Servicer Termination Event
occurs, the Issuer will promptly notify the Rating Agencies and the Asset
Representations Reviewer.
(c) Removal. If a Servicer Termination Event occurs and is
continuing, the Indenture Trustee may and, if directed by the Noteholders of a
majority of the Note Balance of the Controlling Class, must remove the Servicer
and terminate its rights and obligations under this Agreement by notifying the
Servicer, the Issuer, the Parent Support Provider, the Owner Trustee, and the
Secured Parties. The notice of termination will state the date the termination
will be effective. On receipt of the notice, the Issuer will promptly notify
the Rating Agencies, and the Owner Trustee will promptly notify the
Certificateholders. Notwithstanding anything to the contrary in this Agreement
or in any other Transaction Document, immediately upon the removal of Cellco as
Servicer pursuant to this Section 7.2, Cellco, in its individual capacity, shall
assume the obligations of the Servicer to acquire Receivables as set forth in
Sections 3.4 and 4.7 of the Master Trust Receivables Transfer Agreement and
Sections 2.5 and 2.6 of this Agreement without further action.
(d) Waiver of Servicer Termination Events. The Noteholders of a
majority of the Note Balance of the Controlling Class or, if no Notes are
Outstanding, the Owner Trustee, at the direction of the Class A
Certificateholder, may direct the Indenture Trustee to waive a Servicer
Termination Event, except with respect to a failure to make required deposits to
or payment from any of the Bank Accounts, and the consequences thereof. Upon
the waiver, the Servicer Termination Event will be deemed not to have occurred.
No waiver will extend to any other Servicer Termination Event or impair a right
relating to any other Servicer Termination Event. The Issuer will promptly
notify the Rating Agencies of any waiver.
Section 7.3 Continue to Perform. If the Servicer resigns under Section
7.1, it will continue to perform its obligations as Servicer under this
Agreement until the earlier to occur of (a) a Successor Servicer accepting its
engagement as Servicer under Section 7.4 or (b) the date the Servicer is legally
unable to act as Servicer. If the Servicer is terminated under this Agreement,
it will continue to perform its obligations as Servicer under this Agreement
until the date stated in the notice of termination. If Cellco is the resigning
or removed Servicer, Cellco shall (x) remit any amounts due on the Receivables
that are remitted to Cellco in error, rather than to the Successor Servicer as
set forth in the notice sent to Obligors under Section 3.13, and provide the
Successor Servicer with any necessary information regarding the amount remitted
to the Successor Servicer by Cellco and the Receivable for which such amount was
remitted and (y) continue to perform its remittance obligations set forth in
Section 3.12(b) for as long as any
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Receivable continues to have a Principal Balance or until this Agreement is
terminated as set forth in Section 8.3.
Section 7.4 Successor Servicer.
(a) Engagement of Successor Servicer; Indenture Trustee to Act.
(i) If the Servicer resigns or is terminated under this Agreement,
the Indenture Trustee will promptly engage an institution having a net worth of
not less than $50,000,000 whose regular business and operations includes the
servicing of consumer receivables and can accommodate the servicing of device
payment plan agreements, as the successor to the Servicer under this Agreement
(the “Successor Servicer”) and successor to the Administrator under Section 3.4
of the Administration Agreement.
(ii) If no Person has accepted the engagement as Successor Servicer
when the Servicer stops performing its obligations, the Indenture Trustee,
without further action, will be automatically appointed the Successor Servicer
to perform the obligations of the Servicer (other than any obligations
specifically excluded) until such time as another Successor Servicer shall
accept engagement as Successor Servicer. If the Indenture Trustee becomes the
Successor Servicer, it (A) will do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, Article VI of the Indenture will
be inapplicable to the Indenture Trustee solely in its capacity as Successor
Servicer and (B) may appoint as Servicer any one of its Affiliates, but the
Indenture Trustee, in its capacity as Successor Servicer, will be liable for the
actions and omissions of such Affiliate. If the Indenture Trustee is unwilling
or legally unable to act as Successor Servicer, it will appoint, or petition a
court of competent jurisdiction to appoint, an institution having a net worth of
not less than $50,000,000 whose regular business and operations includes the
servicing of consumer receivables and can accommodate the servicing of device
payment plan agreements, as successor to the Servicer under this Agreement. The
Indenture Trustee will be released from its obligations as Successor Servicer on
the date that a new Servicer accepts its engagement as Successor Servicer.
(b) Acceptance of Engagement. The Successor Servicer will accept its
engagement by assuming the Servicer’s obligations under this Agreement or
entering into an amendment to this Agreement or a new servicing agreement on
substantially the same terms as this Agreement, in a form acceptable to the
Owner Trustee and the Indenture Trustee. The Successor Servicer will deliver a
copy of the assumption, amendment or new servicing agreement to the other
parties and the Indenture Trustee. The Successor Servicer (other than the
Indenture Trustee as Successor Servicer) will accept its engagement as
Administrator according to Section 3.5 of the Administration Agreement.
Promptly following a Successor Servicer’s acceptance of its engagement, the
Indenture Trustee will notify the Issuer, the Owner Trustee and the Secured
Parties of the engagement. On receipt of a notice of engagement, the Issuer
will promptly notify the Rating Agencies and the Asset Representations Reviewer,
and the Owner Trustee will promptly notify the Certificateholders. Any
Successor Servicer will agree to provide to Cellco any information relating to
payments received from Obligors (including any payments received on a Receivable
that was the subject of an upgrade for which none of the Marketing Agent, the
related Originator or the Parent Support Provider deposited a required Upgrade
Payment),
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delinquencies in payments by Obligors, any Written-Off Receivables and any other
information related to the Obligors and the Receivables required by Cellco to
service the accounts of which any Receivables are a part, including, but not
limited to, granting and applying credits to any account for which none of the
Marketing Agent, the related Originator or the Parent Support Provider remitted
an Upgrade Payment, as set forth in Section 3.12(b). Any Successor Servicer
will agree to be bound by the terms and conditions of the legal, regulatory,
privacy and data protection policies set forth in Exhibit A attached hereto to
the extent such Successor Servicer receives information from Cellco or any of
its Affiliates relating to the Receivables. For the avoidance of doubt, no
Successor Servicer will be required to assume or undertake the obligations of
Cellco, as Servicer, under Sections 3.4 and 4.7 of the Master Trust Receivables
Transfer Agreement or Sections 2.5 and 2.6 of this Agreement. No Successor
Servicer shall have any liability for the acts or omissions of any predecessor
Servicer.
(c) Compensation of Successor Servicer. The Indenture Trustee may
make arrangements for the compensation of the Successor Servicer out of
Collections as it and the Successor Servicer may agree. In addition to the
Servicing Fee, on the date of its appointment as Successor Servicer, such
Successor Servicer will receive a fee of $150,000 payable pursuant to Section
8.2(c) or 8.2(e) of the Indenture, as applicable, and thereafter, will be
entitled to the Additional Successor Servicer Fee, which will be paid in
accordance with the priorities set forth in Section 8.2(c) or 8.2(e) of the
Indenture, as applicable.
(d) Transfer of Authority. On the effective date of the Servicer’s
resignation or termination or the later date that the Servicer stops performing
its obligations, and solely to the extent the Successor Servicer is an entity
other than the Indenture Trustee, all rights and obligations of the Servicer
under this Agreement and of the Administrator under the Administration Agreement
will become the rights and obligations of the Successor Servicer, including as
successor Administrator. For the avoidance of doubt, (x) the resignation or
removal of Cellco as Servicer will not result in the termination of Cellco’s
duties as Marketing Agent and (y) if the Indenture Trustee is the Successor
Servicer, Cellco will continue to act as Administrator under the Administration
Agreement, to the extent it is able to continue to perform thereunder pursuant
to the terms of the Administration Agreement.
(e) Authority of Issuer and Indenture Trustee. The Issuer and the
Indenture Trustee are authorized to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents, and to do all other
acts or things necessary or advisable to effect the termination and replacement
of the Servicer.
Section 7.5 Transition of Servicing.
(a) Cooperation on Termination. On its resignation or termination,
the Servicer will cooperate with the Issuer, the Owner Trustee, the Indenture
Trustee and the Successor Servicer in effecting (i) the termination of its
rights and obligations under this Agreement and (ii) an orderly transition of
such rights and obligations to the Successor Servicer.
(b) Transfer of Cash, Receivable Files and Records. As soon as
practicable after the effective date of its resignation or termination, the
predecessor Servicer will (i) transfer to the Successor Servicer all funds
relating to the Receivables that are held or later received by the
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predecessor Servicer and (ii) deliver to the Successor Servicer the Receivable
Files and the accounts and records maintained by the Servicer. The Servicer
will not be obligated to provide, license or assign its processes, procedures,
models, servicing software or other applications to any Successor Servicer or
any third party, or provide anything covered by a restriction on transfer or
assignment or a confidentiality agreement or otherwise restricted by legal,
regulatory, privacy or data protection policies.
(c) Expenses of Servicing Transition. All reasonable expenses
incurred by the Issuer, the Owner Trustee, the Indenture Trustee and the
Successor Servicer in connection with (i) the transition of servicing rights and
obligations to the Successor Servicer and (ii) amending this Agreement or
entering into an assumption agreement or new agreement to reflect a succession
of the Servicer will be paid by the resigning or terminated Servicer on receipt
of an invoice in reasonable detail.
Section 7.6 Merger, Consolidation, Succession or Assignment. Any Person
(a) into which the Servicer is merged or consolidated, (b) resulting from a
merger or consolidation to which the Servicer is a party, (c) succeeding to the
Servicer’s business or (d) that is an Affiliate of the Servicer to whom the
Servicer has assigned this Agreement, will be the successor to the Servicer
under this Agreement. Within fifteen (15) Business Days after the merger,
consolidation, succession or assignment, such Person will (i) execute an
agreement to assume the Servicer’s obligations under this Agreement and each
Transaction Document to which the Servicer is a party (unless the assumption
happens by operation of Law), (ii) deliver to the Issuer, the Owner Trustee and
the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each
stating that the merger, consolidation, succession or assignment and the
assumption agreement comply with this Section 7.6 and (iii) notify the Rating
Agencies of the merger, consolidation, succession or assignment.
ARTICLE VIII
TERMINATION
Section 8.1 Optional Acquisition of Receivables; Clean-Up Redemption of
Notes.
(a) Optional Acquisition. On each Payment Date following the last
day of a Collection Period as of which the aggregate Principal Balance of the
Receivables shall be equal to or less than 10% of the aggregate Principal
Balance of the Receivables as of the Closing Date, the Class A Certificateholder
(for as long as the Class A Certificateholder is an Originator or an Affiliate
of the Originators), with the consent of the Administrator, on behalf of the
Issuer, shall have the option to acquire, as of the end of the immediately
preceding Collection Period, any Receivables remaining in the Trust Property on
such date by transferring to the Issuer an amount equal to the Optional
Acquisition Amount (the “Optional Acquisition”), and to redeem the Notes, in
whole but not in part (the “Clean-Up Redemption”) without any Make-Whole Payment
(other than any Make-Whole Payments already due and payable on such date).
(b) Exercise of Optional Acquisition and Clean-Up Redemption of
Notes. The Class A Certificateholder may exercise its option set forth in
Section 8.1(a) by notifying the Issuer, the Servicer, the Indenture Trustee, the
Owner Trustee and the Rating Agencies, in writing, at least ten (10) days before
the Payment Date on which the Optional Acquisition is to be exercised,
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After receiving such notice, the Indenture Trustee will promptly notify the
Noteholders of the resulting Clean-Up Redemption and provide instructions for
surrender of the Notes for final payment including all accrued and unpaid
interest and any applicable Make-Whole Payments already due and payable on the
Notes, as set forth in Section 10.1(a) of the Indenture.
On the Payment Date related to the Collection Period in which the Optional
Acquisition is exercised, the Class A Certificateholder will deposit into the
Collection Account the acquisition amount for such remaining Receivables as set
forth in Section 8.1(a) equal to the fair market value of such Receivables as of
the last day of the Collection Period immediately preceding such Payment Date as
agreed upon by the Class A Certificateholder and the Issuer (the “Optional
Acquisition Amount”); provided that the transfer may only occur if the Optional
Acquisition Amount, together with any amounts on deposit in the Bank Accounts,
is greater than or equal to the sum of (A) the Note Balance of the Notes, any
accrued but unpaid interest and any unpaid Make-Whole Payments and (B) all other
amounts payable by the Issuer under the Transaction Documents including, but not
limited to, all fees, expenses and indemnities owed to the Indenture Trustee and
the Owner Trustee under the Transaction Documents as of such date. For the
avoidance of doubt, if the Class A Certificateholder and the Issuer cannot agree
on the Optional Acquisition Amount, the Class A Certificateholder will not be
permitted to exercise its option set forth in Section 8.1(a). On the Payment
Date on which the Optional Acquisition is to be exercised, the Indenture Trustee
shall transfer any amounts on deposit in the Reserve Account, the Acquisition
Account and the Negative Carry Account into the Collection Account. Upon the
exercise of the Optional Acquisition, the Notes will be redeemed and paid in
full.
Section 8.2 Optional Redemption of Notes.
(a) Optional Redemption. On any Payment Date on and after the
Payment Date in February 2021, the Class A Certificateholder (for as long as the
Class A Certificateholder is an Originator or an Affiliate of the Originators),
with the consent of the Administrator, on behalf of the Issuer, shall have the
option to redeem the Notes, in whole but not in part (the “Optional
Redemption”), with a required Make-Whole Payment.
(b) Exercise of Optional Redemption. The Class A Certificateholder
may exercise its option set forth in Section 8.2(a) by notifying the Issuer, the
Servicer, the Indenture Trustee, the Owner Trustee and the Rating Agencies, in
writing, at least ten (10) days before the Payment Date on which the Optional
Redemption is to be exercised. After receiving such notice, the Indenture
Trustee will promptly notify the Noteholders of the Optional Redemption and
provide instructions for surrender of the Notes for final payment including all
accrued and unpaid interest and any applicable Make-Whole Payments due and
payable on the Notes, as set forth in Section 10.1(a) of the Indenture.
On the Payment Date on which the Optional Redemption is to be exercised, the
Issuer shall transfer the entire pool of Receivables to another Verizon special
purpose entity or a third-party purchaser and the party receiving the
Receivables shall cause the acquisition amount received by the Issuer for the
Receivables to be deposited by the Issuer (or the Servicer, on its behalf) into
the Collection Account, which amount shall be equal to the fair market value of
such Receivables as of the last day of the Collection Period immediately
preceding such Payment Date as agreed upon by the Class A Certificateholder and
the Issuer; provided that the transfer
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may only occur if the amount received in connection with any such transfer,
together with any amounts on deposit in the Bank Accounts, is greater than or
equal to the sum of (A) the Note Balance of the Notes, any accrued but unpaid
interest and any unpaid Make-Whole Payments and (B) all other amounts payable by
the Issuer under the Transaction Documents including, but not limited to, all
fees, expenses and indemnities owed to the Indenture Trustee and the Owner
Trustee under the Transaction Documents as of such date. On the Payment Date on
which the Optional Redemption is to be exercised, the Indenture Trustee shall
transfer any amounts on deposit in the Reserve Account, the Acquisition Account
and the Negative Carry Account into the Collection Account. Upon the exercise
of the Optional Redemption, the Notes will be redeemed and paid in full.
Section 8.3 Termination. This Agreement will terminate on the earlier to
occur of (a) the date upon which the last remaining Receivable is paid in full,
settled, sold or written off and any amounts received are applied and (b) the
Issuer is terminated under Section 8.1 of the Trust Agreement.
ARTICLE IX
OTHER AGREEMENTS
Section 9.1 Financing Statements.
(a) Filing of Financing Statements. The Depositor will file
financing and continuation statements, and amendments to the statements, in the
jurisdictions and with the filing offices necessary to perfect the Issuer’s
interest in the Depositor Transferred Property. The Depositor will promptly
deliver to the Issuer and the Indenture Trustee file-stamped copies of, or
filing receipts for, any financing statement, continuation statement and
amendment to a previously filed financing statement.
(b) Issuer and Indenture Trustee Authorized to File Financing
Statements. The Depositor authorizes the Issuer and the Indenture Trustee (but
the Indenture Trustee will not be required to do so) to file financing and
continuation statements, and amendments to the statements, in the jurisdictions
and with the filing offices as the Issuer or the Indenture Trustee may determine
are necessary or advisable to perfect the Issuer’s interest in the Depositor
Transferred Property. The financing and continuation statements may describe
the Depositor Transferred Property as the Issuer or the Indenture Trustee may
reasonably determine to perfect the Issuer’s interest in the Depositor
Transferred Property. The Issuer or the Indenture Trustee (with respect to the
Indenture Trustee, solely to the extent it has elected to make such filing) will
promptly deliver to the Depositor file-stamped copies of, or filing receipts
for, any financing statement, continuation statement and amendment to a
previously filed financing statement. The permissive right of the Indenture
Trustee to file any financing statement shall not be construed as a duty or
obligation.
(c) Relocation of Depositor. The Depositor will notify the Owner
Trustee and the Indenture Trustee at least ten (10) days before a relocation of
its chief executive office or change in its corporate structure, form of
organization or jurisdiction of organization if it could require the filing of a
new financing statement or an amendment to a previously filed financing
statement under Section 9-307 of the UCC. If required, the Depositor will
promptly file new
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financing statements or amendments to all previously filed financing
statements. The Depositor will maintain its chief executive office within the
United States and will maintain its jurisdiction of organization in only one
State.
(d) Change of Depositor’s Name. The Depositor will notify the Owner
Trustee and the Indenture Trustee at least ten (10) days before any change in
the Depositor’s name that could make a financing statement filed under this
Section 9.1 seriously misleading under Section 9-506 of the UCC. If required,
the Depositor will promptly file amendments to all previously filed financing
statements.
Section 9.2 No Transfer or Lien by Depositor. Except for the transfer and
assignment under this Agreement, the Depositor will not transfer or assign any
Depositor Transferred Property to another Person or Grant or allow a Lien, other
than a Permitted Lien, on an interest in any Depositor Transferred Property.
The Depositor will defend the Issuer’s interest in the Depositor Transferred
Property against claims of third parties claiming through the Depositor.
Section 9.3 Expenses. The Depositor will pay the expenses to perform its
obligations under this Agreement and the Issuer’s and the Indenture Trustee’s
reasonable expenses to perfect the Issuer’s interest in the Depositor
Transferred Property and to enforce the Depositor’s obligations under this
Agreement.
Section 9.4 Receivables Information.
(a) Servicer’s Receivables Systems. On and after the Closing Date or
Acquisition Date, as applicable, until a Receivable has been paid in full,
acquired or sold to a third party under Section 3.4, the Servicer will mark its
receivables systems to indicate clearly that the Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee under the Indenture.
(b) List of Receivables. If requested by the Owner Trustee or the
Indenture Trustee, the Servicer will furnish a list of Receivables (by loan
number) to the Owner Trustee and the Indenture Trustee.
Section 9.5 No Petition. The parties agree that, before the date that is
one year and one day (or, if longer, any applicable preference period) after the
payment in full of (a) all securities issued by the Depositor or by a trust for
which the Depositor was a depositor or (b) the Notes, it will not start or
pursue against, or join any other Person in starting or pursuing against, (i)
the Depositor or (ii) the Issuer, respectively, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
any bankruptcy or similar Law. This Section 9.5 will survive the termination of
this Agreement.
Section 9.6 Limited Recourse. Each party agrees that any claim that it may
seek to enforce against the Depositor or the Issuer under this Agreement is
limited to the Depositor Transferred Property only and is not a claim against
the Depositor’s or the Issuer’s assets as a whole or against assets other than
the Depositor Transferred Property.
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Section 9.7 Limitation of Liability.
(a) Owner Trustee. This Agreement has been signed on behalf of the
Issuer by Wilmington Trust, National Association not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer. In no event will
Wilmington Trust, National Association in its individual capacity or as a
beneficial owner of the Issuer be liable for the representations, warranties,
covenants, agreements or other obligations of the Issuer under this Agreement.
For all purposes under this Agreement, the Owner Trustee is subject to, and
entitled to the benefits of, the Trust Agreement. Neither the Issuer nor the
Owner Trustee will have any liability for any act or failure to act of the
Servicer, including any action taken under a power of attorney given under this
Agreement.
(b) Indenture Trustee. This Agreement has been signed by U.S. Bank
National Association not in its individual capacity but solely in its capacity
as Indenture Trustee. In performing its obligations under this Agreement, the
Indenture Trustee is subject to, and entitled to the benefits of, the
Indenture. The Indenture Trustee will not have any liability for any act or
failure to act of the Servicer, the Custodian, the Marketing Agent, the Issuer
or any other Person.
Section 9.8 Tax Treatment of Notes. Each of the Depositor and the Servicer
agree to treat the Notes as indebtedness for U.S. federal, State and local
income and franchise tax purposes.
Section 9.9 Regulation RR Risk Retention. Cellco, as Sponsor, agrees that
(i) each of the Sponsor, the Master Trust, each Originator and the nominee of
the Originators is under the common control of Verizon and therefore, the
nominee of the Originators (which nominee is also the sole equityholder of the
Master Trust) is a “majority-owned affiliate” of the Sponsor as defined in the
U.S. Credit Risk Retention Rules, (ii) the Sponsor will cause the nominee of the
Originators to, and the nominee of the Originators will, retain the Residual
Interest on the Closing Date and (iii) the Sponsor will not, and will not permit
the Master Trust, the Originators or the nominee of the Originators to, sell,
transfer, finance or hedge the Residual Interest except as permitted by the U.S.
Credit Risk Retention Rules.
Section 9.10 Cap Collateral Account. If the Cap Counterparty is required
to post collateral under the terms of the Cap Agreement, upon written direction
and notification of such requirement, the Servicer shall establish a segregated
account (the “Cap Collateral Account”) at a Qualified Institution that (i) is
not affiliated with the Cap Counterparty and (ii) has total assets of at least
$10,000,000,000 (the “Cap Custodian”), titled as an account of the Cap
Counterparty as depositor and entitlement holder. In the event that the Cap
Custodian no longer satisfies the requirements set forth in the immediately
preceding sentence, the Issuer, the Servicer and the Cap Counterparty shall use
their reasonable best efforts to move the Cap Collateral Account and any
collateral posted therein to another financial institution satisfying the
requirements set forth in the immediately preceding sentence within sixty (60)
calendar days. The Cap Collateral Account shall be subject to a tri-party
account control agreement to be entered into among the Cap Counterparty, the
Issuer and the Cap Custodian (the “Control Agreement”). The Control Agreement
shall provide, among other customary matters, that (x) the Cap Counterparty
shall be entitled to originate entitlement orders and instructions, and receive
interest and distributions, with respect to the Cap Collateral Account so long
as the Issuer has not delivered a notice to the
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Cap Custodian and the Cap Counterparty to the effect that the Issuer shall have
exclusive control over the Cap Collateral Account, (y) following delivery of
such notice of exclusive control the Cap Custodian shall comply with
instructions and entitlement orders originated by the Issuer without further
consent by the Cap Counterparty, and (z) the Control Agreement shall terminate
on the fifth Business Day following delivery of a notice from the Cap
Counterparty to the Cap Custodian and the Issuer that the Cap Counterparty has
designated an “Early Termination Date” (as defined in the Cap Agreement) in
respect of all “Transactions” (as defined in the Cap Agreement) for the reason
that the Issuer is the “Defaulting Party” (as defined in the Cap Agreement) or
the sole “Affected Party” (as defined in the Cap Agreement) with respect to a
“Termination Event” (as defined in the Cap Agreement), unless such notice is
contested by the Issuer within such period of five (5) Business Days. The Issuer
agrees that it shall not assert exclusive control over, or originate entitlement
orders or instructions for the disposition of funds with respect to, the Cap
Collateral Account unless the conditions for the exercise of its rights and
remedies pursuant to the Cap Agreement are met and such assertion of exclusive
control or origination of instructions or entitlement orders is for the purpose
of exercising such rights and remedies. The only permitted withdrawal from or
application of funds on deposit in, or otherwise to the credit of, the Cap
Collateral Account shall be (i) for application to obligations of the Cap
Counterparty to the Issuer under the Cap Agreement in accordance with the terms
of the Cap Agreement or (ii) to return collateral to the Cap Counterparty when
and as required by the Cap Agreement or applicable law. Investment earnings on
the Cap Collateral Account, if any, will be distributed to the Cap Counterparty.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments.
(a) Amendments to Clarify and Correct Errors and Defects. The
parties may amend this Agreement (including Appendix A) to clarify an ambiguity,
correct an error or correct or supplement any term of this Agreement that may be
defective or inconsistent with the other terms of this Agreement, or to make
Benchmark Replacement Conforming Changes, in each case, without the consent of
the Noteholders, the Certificateholders or any other Person. The parties may
amend any term or provision of this Agreement (including Appendix A) from time
to time for the purpose of conforming the terms of this Agreement (including
Appendix A) to the description thereof in the Prospectus, without the consent of
Noteholders, the Certificateholders or any other Person. The Administrator may
amend any term or provision of this Agreement (including Appendix A) from time
to time for the purpose of making Benchmark Replacement Conforming Changes,
without the consent of Noteholders, the Certificateholders, any party to this
Agreement or any other Person. Notice of the occurrence of a Benchmark
Transition Event and its related Benchmark Replacement Date, the determination
of a Benchmark Replacement and the making of any Benchmark Replacement
Conforming Changes will be delivered in writing by the Administrator to the
Issuer, the Owner Trustee, a Responsible Person of the Indenture Trustee, the
Parent Support Provider, the Sponsor, the Depositor and the Servicer and
included in the Monthly Investor Report. Notwithstanding anything in the
Transaction Documents to the contrary, upon the delivery of notice to a
Responsible Person of the Indenture Trustee and the inclusion of such
information in the Monthly Investor Report, the relevant Transaction Documents
will be deemed to have been amended to reflect the new Unadjusted
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Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark
Replacement Conforming Changes without further compliance with the amendment
provisions of the relevant Transaction Documents.
(b) Other Amendments. Other than as set forth in Section 10.1(c),
the parties may amend this Agreement (including Appendix A) to add any
provisions to, or change in any manner or eliminate any provisions of, this
Agreement or for the purpose of modifying in any manner the rights of the
Noteholders under this Agreement, with the consent of the Certificateholders,
either (1) without the consent of the Noteholders if (x) the Issuer or the
Administrator delivers an Officer’s Certificate to the Indenture Trustee and the
Owner Trustee stating that the amendment will not have a material adverse effect
on the Noteholders, or (y) the Rating Agency Condition is satisfied with respect
to such amendment or (2) if the interests of the Noteholders are materially and
adversely affected, with the consent of the holders of a majority of the Note
Balance of the Controlling Class.
(c) Amendments Requiring Consent of all Affected Noteholders and
Certificateholders. No amendment to this Agreement (including Appendix A) may,
without the consent of all adversely affected Noteholders and
Certificateholders, (i) change the applicable Final Maturity Date on a Note or
change the principal amount of or interest rate or Make-Whole Payment on a Note;
(ii) modify the percentage of the Note Balance of the Notes or the Controlling
Class required for any action; (iii) modify or alter the definition of
“Outstanding,” “Controlling Class” or “Amortization Events”, or (iv) change the
Required Reserve Amount, the Required Acquisition Deposit Amount or the Required
Negative Carry Amount.
(d) Consent of Indenture Trustee and Owner Trustee. The consent of
the Indenture Trustee will be required for any amendment under Sections 10.1(b)
or (c) that has a material adverse effect on the rights, obligations, immunities
or indemnities of the Indenture Trustee. The consent of the Owner Trustee will
be required for any amendment under Sections 10.1(b) or (c) that has a material
adverse effect on the rights, obligations, immunities or indemnities of the
Owner Trustee, which consent will not be unreasonably withheld.
(e) Opinion of Counsel. Before executing any amendment to this
Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to
receive and conclusively rely upon, and the Depositor will deliver, an Opinion
of Counsel stating that the execution of the amendment is permitted by this
Agreement and all conditions precedent thereto have been satisfied.
(f) Notice of Amendments. Promptly after the execution of an
amendment, the Depositor will deliver, or will cause the Administrator to
deliver, a copy of the amendment to the Indenture Trustee and the Rating
Agencies, and the Indenture Trustee will notify the Noteholders of the substance
of the amendment.
(g) Noteholder Consent. For any amendment to this Agreement (or
Appendix A) requiring the consent of any Noteholders, the Indenture Trustee
will, when directed by Issuer Order, notify the Noteholders to request consent
and follow its reasonable procedures to obtain consent. It shall not be
necessary for the consent of the Noteholders to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall
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approve the substance thereof. For the avoidance of doubt, any Noteholder
consenting to any amendment shall be deemed to agree that such amendment does
not have a material adverse effect on such Noteholder.
Section 10.2 Assignment; Benefit of Agreement; Third-Party Beneficiary.
(a) Assignment. Except as stated in Sections 5.3, 7.4 and 7.6, this
Agreement may not be assigned by the Depositor or the Servicer without the
consent of the Owner Trustee, the Indenture Trustee, the Certificateholders and
the Noteholders of at least 66-2/3% of the Note Balance of the Controlling
Class.
(b) Benefit of Agreement; Third-Party Beneficiaries. This Agreement
is for the benefit of and will be binding on the parties and their permitted
successors and assigns. The Owner Trustee and the Indenture Trustee, for the
benefit of the Secured Parties, will be third-party beneficiaries of this
Agreement and may enforce this Agreement against the Depositor and the
Servicer. No other Person will have any right or obligation under this
Agreement.
Section 10.3 Notices.
(a) Notices to Parties. All notices, requests, directions, consents,
waivers or other communications to or from the parties must be in writing and
will be considered received by the recipient:
(i) for personally delivered, express or certified mail or courier,
when received;
(ii) for a fax, when receipt is confirmed by telephone, reply email
or reply fax from the recipient;
(iii) for an email, when receipt is confirmed by telephone or reply
email from the recipient; and
(iv) for an electronic posting to a password-protected website to
which the recipient has access, on delivery of an email (without the requirement
of confirmation of receipt) stating that the electronic posting has been made.
(b) Notice Addresses. A notice, request, direction, consent, waiver
or other communication must be addressed to the recipient at its address stated
in Schedule B, which address the party may change at any time by notifying the
other parties.
(c) Notices to Noteholders. Notices to a Noteholder will be
considered received by the Noteholder:
(i) for Definitive Notes, for overnight mail, on delivery or, for
registered first class mail, postage prepaid, three (3) days after deposit in
the mail properly addressed to the Noteholder at its address in the Note
Register; or
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(ii) for Book-Entry Notes, when delivered under the procedures of the
Clearing Agency, whether or not the Noteholder actually receives the notice.
Section 10.4 Agent for Service.
(a) Depositor. The agent for service of the Depositor for this
Agreement will be the person holding the office of Secretary of the Depositor at
the following address:
Verizon ABS LLC
One Verizon Way
Basking Ridge, New Jersey 07920
(b) Servicer. The agent for service of the Servicer for this
Agreement will be the person holding the office of Secretary of the Servicer at
the following address:
Cellco Partnership d/b/a Verizon Wireless
One Verizon Way
Basking Ridge, New Jersey 07920
(c) Marketing Agent. The agent for service of the Marketing Agent
for this Agreement will be the person holding the office of Secretary of the
Marketing Agent at the following address:
Cellco Partnership d/b/a Verizon Wireless
One Verizon Way
Basking Ridge, New Jersey 07920
Section 10.5 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND
5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT
REGARD TO ANY OTHERWISE APPLICABLE CONFLICTS OF LAW PRINCIPLES). FOR PURPOSES
OF THE UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY’S
JURISDICTION, AND THE LAW OF THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES
SPECIFIED IN ARTICLE 2(1) OF THE HAGUE SECURITIES CONVENTION. NOTWITHSTANDING
SECTION 10.1 OF THIS AGREEMENT, THE PARTIES WILL NOT AGREE TO AMEND THIS
AGREEMENT TO CHANGE THE GOVERNING LAW TO ANY LAW OTHER THAN THE LAWS OF THE
STATE OF NEW YORK.
Section 10.6 Submission to Jurisdiction. Each party submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State Court sitting in New York, New
York for legal proceedings relating to this Agreement. Each party irrevocably
waives, to the fullest extent permitted by Law, any objection that it may now or
in the future have to the venue of a proceeding brought in such a court and any
claim that the proceeding was brought in an inconvenient forum.
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Section 10.7 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY MATTER ARISING THEREUNDER WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.
Section 10.8 No Waiver; Remedies. No party’s failure or delay in
exercising a power, right or remedy under this Agreement will operate as a
waiver. No single or partial exercise of a power, right or remedy will preclude
any other or further exercise of the power, right or remedy or the exercise of
any other power, right or remedy. The powers, rights and remedies under this
Agreement are in addition to any powers, rights and remedies under Law.
Section 10.9 Severability. If a part of this Agreement is held invalid,
illegal or unenforceable, then it will be deemed severable from the remaining
Agreement and will not affect the validity, legality or enforceability of the
remaining Agreement.
Section 10.10 Headings. The headings in this Agreement are included for
convenience and will not affect the meaning or interpretation of this Agreement.
Section 10.11 Counterparts. This Agreement may be executed in multiple
counterparts. Each counterpart will be an original and all counterparts will
together be one document.
Section 10.12 Limitation of Rights of the Cap Counterparty. All of the
rights of the Cap Counterparty in, to and under this Agreement or any other
Transaction Document, other than the Cap Agreement (including, but not limited
to, the Cap Counterparty’s rights to receive notice of any action hereunder or
under any other Transaction Document and to give or withhold consent to any
action hereunder or under any other Transaction Document), shall terminate upon
the termination of the Cap Agreement in accordance with the terms thereof.
Section 10.13 Intent of the Parties; Reasonableness. The Depositor, the
Servicer and the Issuer acknowledge and agree that the purpose of Sections 6.6
and 6.7 of this Agreement is to facilitate compliance by the Issuer and the
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. None of the Depositor, the Administrator nor the Issuer
shall exercise its right to request delivery of information or other performance
under these provisions other than in good faith, or for purposes other than
compliance with the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder. The Servicer acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Issuer or
the Administrator in good faith for delivery of information under these
provisions on the basis of evolving interpretations of Regulation AB. In
connection with this transaction, the Servicer shall cooperate fully with the
Administrator and the Issuer to deliver to the Administrator or Issuer, as
applicable (including any of its assignees or designees), any and all
statements, reports, certifications, records and any other information necessary
in the good faith determination of the Issuer or the Administrator to permit the
Issuer or Administrator (acting on behalf of the Issuer) to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Servicer, any Subservicer and
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the Receivables, or the servicing of the Receivables, reasonably believed by the
Issuer or the Administrator to be necessary in order to effect such compliance.
ARTICLE XI
ASSET REPRESENTATIONS REVIEW; DISPUTE RESOLUTION
Section 11.1 Asset Representations Review.
(a) Upon the occurrence of a Delinquency Trigger with respect to any
Collection Period, the Servicer will promptly send to the Administrator, the
Indenture Trustee and each Noteholder (and to each applicable Clearing Agency
for distribution to Note Owners in accordance with the rules of such Clearing
Agency) as of the most recent Record Date a notice describing (i) the occurrence
of the Delinquency Trigger, and including reasonably detailed calculations
thereof, and (ii) the rights of the Noteholders and Note Owners regarding an
Asset Representations Review (including a description of the method by which
Noteholders and Note Owners may contact the Indenture Trustee in order to
request a Noteholder vote in respect of an Asset Representations Review). In
connection with the foregoing, upon request from the Servicer, the Indenture
Trustee shall provide a list of the Noteholders of record as of the most recent
Record Date. The notice provided under this Section 11.1 (a) and the related
10-D that is filed are the only notices that will be provided to Noteholders
concerning whether the Delinquency Trigger has occurred.
(b) If the Indenture Trustee notifies the Servicer pursuant to 14.2
of the Indenture that sufficient Noteholders have voted within the required time
to initiate an Asset Representations Review of all 60-Day Delinquent Receivables
by the Asset Representations Reviewer pursuant to the Asset Representations
Review Agreement, then the Servicer shall:
(i) promptly notify the Asset Representations Reviewer and the
Indenture Trustee of the number of 60-Day Delinquent Receivables;
(ii) within sixty (60) days after receipt by the Servicer of that
notice from the Indenture Trustee, render reasonable assistance, including
granting access to copies of any underlying documents and Receivable Files and
all other relevant documents, to the Asset Representations Reviewer to
facilitate the performance of a review of all 60-Day Delinquent Receivables,
pursuant to Section 3.3(a) of the Asset Representations Review Agreement, in
order to verify compliance with the representations and warranties made to the
Issuer by the Depositor; provided, that the Servicer shall use its best efforts
to redact any materials provided to the Asset Representations Reviewer in order
to remove any Personally Identifiable Information without changing the meaning
or usefulness of the Review Materials; and
(iii) provide such other reasonable assistance to the Asset
Representations Reviewer as it requests in order to facilitate its Asset
Representations Review of the 60-Day Delinquent Receivables pursuant to the
Asset Representations Review Agreement.
Section 11.2 Dispute Resolution.
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(a) If (i) the Issuer or the Indenture Trustee (acting on behalf of
the Noteholders) or (ii) any Noteholder or Verified Note Owner requests, by
written notice to (x) the Indenture Trustee (which will be forwarded to the
related Originator or the Servicer as applicable) or (y) the related Originator
or the Servicer (in the case of Receivables transferred by the Master Trust)
(any such party making a request, the “Requesting Party”), that a Receivable be
reacquired or acquired due to an alleged breach of the Eligibility
Representation with respect to that Receivable as set forth in Section 3.3 of
the Originator Receivables Transfer Agreement or Section 3.3 of the Master Trust
Receivables Transfer Agreement, respectively, and the request has not been
fulfilled or otherwise resolved to the reasonable satisfaction of the Requesting
Party within one-hundred eighty (180) days of the receipt of such request by the
related Originator or the Servicer (in the case of Receivables transferred by
the Master Trust), then the Requesting Party will have the right to refer the
matter, at its discretion, to either mediation (including non-binding
arbitration) or third-party binding arbitration pursuant to this Section 11.2.
Dispute resolution to resolve reacquisition or acquisition requests will be
available regardless of whether Noteholders and Note Owners voted to direct an
Asset Representations Review or whether the Delinquency Trigger occurred. The
Depositor will provide written direction to the Indenture Trustee instructing it
to notify the Requesting Party (directly if the Requesting Party is a Noteholder
and through the applicable Clearing Agency for distribution to such Requesting
Party, if the Requesting Party is a Note Owner, in accordance with the rules of
such Clearing Agency) no later than five (5) Business Days after the end of the
180-day period of the date when the 180-day period ends without resolution by
the appropriate party, which written direction will specify the identity of the
Requesting Party and the date as of which that 180-day period shall have ended;
provided, that the Indenture Trustee shall have no other obligation whatsoever
to participate in any dispute resolution, mediation or arbitration to determine
if a reacquisition or acquisition request has been resolved within the
applicable 180-day period. The Requesting Party must provide notice of its
intention to refer the matter to mediation, to refer the matter to arbitration,
or to institute a legal proceeding, to the Depositor within thirty (30) days
after the delivery of notice of the end of the 180-day period. The Depositor
will participate in the resolution method selected by the Requesting Party. For
the avoidance of doubt, the Owner Trustee shall have no obligation whatsoever to
participate in any dispute resolution, mediation or arbitration to determine if
a reacquisition or acquisition request has been resolved within the applicable
180-day period. For the avoidance of doubt, if the Indenture Trustee does not
agree to pursue or otherwise be involved in resolving any reacquisition or
acquisition request or dispute resolution proceeding, the related Noteholders or
Verified Note Owners may independently pursue dispute resolution in respect of
such reacquisition or acquisition. If the Indenture Trustee brings a dispute
resolution action based on Noteholder direction to do so, the “Requesting Party”
shall be deemed to be the requesting Note Owners (or the party to the
arbitration) for purposes of the dispute resolution proceeding, including
allocation of fees and expenses. The Indenture Trustee shall not be liable for
any costs, expenses and/or liabilities allocated to a Requesting Party as part
of the dispute resolution proceeding. Further, the Indenture Trustee shall be
under no obligation under this Agreement, any other Transaction Document or
otherwise to monitor reacquisition or acquisition activity or to independently
determine which reacquisition or acquisition requests remain unresolved after
one-hundred eighty (180) days.
(b) If the Requesting Party selects mediation (including non-binding
arbitration) as the resolution method, the following provisions will apply:
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(i) The mediation will be administered by JAMS pursuant to its
Mediation Procedures in effect on the date the arbitration is filed.
(ii) The mediator will be impartial, knowledgeable about and
experienced with the laws of the State of New York and an attorney specializing
in commercial litigation with at least 15 years of experience and who will be
appointed from a list of neutrals maintained by JAMS. Upon being supplied a
list of at least 10 potential mediators by JAMS each party will have the right
to exercise two peremptory challenges within fourteen (14) days and to rank the
remaining potential mediators in order of preference JAMS will select the
mediator from the remaining attorneys on the list respecting the preference
choices of the parties to the extent possible.
(iii) The parties will use commercially reasonable efforts to begin
the mediation within thirty (30) days of the selection of the mediator and to
conclude the mediation within sixty (60) days of the start of the mediation.
(iv) The fees and expenses of the mediation will be allocated as
mutually agreed by the parties as part of the mediation.
(c) If the Requesting Party selects binding arbitration as the
resolution method, the following provisions will apply:
(i) The arbitration will be administered by the AAA pursuant its
Arbitration Rules in effect on the date the arbitration is filed.
(ii) The arbitral panel will consist of three members, (i) one to be
appointed by the Requesting Party within five (5) Business Days of providing
notice to the Depositor of its selection of arbitration, (ii) one to be
appointed by the Depositor within five (5) Business Days of that appointment and
(iii) the third, who will preside over the panel, to be chosen by the two
party-appointed arbitrators within five (5) Business Days of the second
appointment. If any party fails to appoint an arbitrator or the two
party-appointed arbitrators fail to appoint the third within the stated time
periods, then the appointments will be made by AAA pursuant to the Arbitration
Rules. In each such case, each arbitrator will be impartial, knowledgeable
about and experienced with the laws of the State of New York and an attorney
specializing in commercial litigation with at least 15 years of experience.
(iii) Each arbitrator will be independent and will abide by the Code
of Ethics for Arbitrators in Commercial Disputes in effect as of the date of
this Agreement. Prior to accepting an appointment, each arbitrator must
promptly disclose any circumstances likely to create a reasonable inference of
bias or conflict of interest or likely to preclude completion of the hearings
within the prescribed time schedule. Any arbitrator may be removed by AAA for
cause consisting of actual bias, conflict of interest or other serious potential
for conflict.
(iv) After consulting with the parties, the arbitral panel will
devise procedures and deadlines for the arbitration, to the extent not already
agreed to by the parties, with the goal of expediting the proceeding and
completing the arbitration within ninety (90)
49
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days after appointment. The arbitral panel will have the authority to schedule,
hear, and determine any and all motions, including dispositive and discovery
motions, in accordance with then-prevailing New York law (including prehearing
and post hearing motions), and will do so on the motion of any party to the
arbitration.
(v) Notwithstanding whatever other discovery may be available under
the Rules, unless otherwise agreed by the parties, each party to the arbitration
will be presumptively limited to the following discovery in the arbitration: (A)
four witness depositions not to exceed five hours, and (B) one set of
interrogations, document requests, and requests for admissions; provided that
the arbitral panel will have the ability to grant the parties, or either of
them, additional discovery to the extent that the arbitral panel determines good
cause is shown that such additional discovery is reasonable and necessary.
(vi) The arbitral panel will make its final determination no later
than ninety (90) days after appointment. The arbitral panel will resolve the
dispute in accordance with the terms of this Agreement, and may not modify or
change this Agreement in any way. The arbitral panel will not have the power to
award punitive damages or consequential damages in any arbitration conducted by
them. In its final determination, the arbitral panel will determine and award
the costs of the arbitration (including the fees of the arbitral panel, cost of
any record or transcript of the arbitration, and administrative fees) and
reasonable attorneys’ fees to the parties as determined by the arbitral panel in
its reasonable discretion. The determination in any binding arbitration of the
arbitral panel will be in writing and counterpart copies will be promptly
delivered to the parties. The determination will be final and non-appealable
and may be enforced in any court of competent jurisdiction.
(vii) By selecting binding arbitration, the selecting party is giving
up the right to sue in court, including the right to a trial by jury.
(viii) No person may bring class or collective claims in arbitration
even if the Arbitration Rules would allow them. Notwithstanding anything herein
to the contrary, the arbitral panel may award money or injunctive relief in
favor of the individual party seeking relief and only to the extent necessary to
provide relief warranted by that party’s individual claim.
(d) The following provisions will apply to both mediations and
arbitrations:
(i) Any mediation or arbitration will be held in New York, New York;
and
(ii) The details and/or existence of any unfulfilled reacquisition or
acquisition request, any informal meetings, mediations or arbitration
proceedings conducted under this Section 11.2, including all offers, promises,
conduct and statements, whether oral or written, made in the course of the
parties’ attempt to informally resolve an unfulfilled reacquisition or
acquisition request, and any discovery taken in connection with any arbitration,
will be confidential, privileged and inadmissible for any purpose, including
impeachment, in any mediation, arbitration or litigation, or other proceeding
(including
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any proceeding under this Section 11.2). This information will be kept strictly
confidential and will not be disclosed or discussed with any third party
(excluding a party’s attorneys, experts, accountants and other agents and
representatives, as reasonably required in connection with any resolution
procedure under this Section 11.2), except as otherwise required by law,
regulatory requirement or court order. If any party to a resolution procedure
receives a subpoena or other request for information from a third party (other
than a governmental regulatory body) for such confidential information, the
recipient will promptly notify the other party to the resolution procedure and
will provide the other party with the opportunity to object to the production of
its confidential information.
[Remainder of Page Left Blank]
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by
its duly authorized officer as of the date and year first above written.
VERIZON ABS LLC,
as Depositor
By:
/s/ Kee Chan Sin
Name: Kee Chan Sin
Title: Chief Financial Officer
VERIZON OWNER TRUST 2020-A,
as Issuer
By:
Wilmington Trust, National Association, not in its individual capacity but
solely as Owner Trustee of Verizon Owner Trust 2020-A
By:
/s/ Clarice Wright
Name: Clarice Wright
Title: Assistant Vice President
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS,
as Servicer, Marketing Agent and Custodian
By:
/s/ Kee Chan Sin
Name: Kee Chan Sin
Title: Vice President and Assistant Treasurer
--------------------------------------------------------------------------------
AGREED AND ACCEPTED BY:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee
By:
/s/ Matthew M. Smith
Name:
Matthew M. Smith
Title:
Vice President
Solely with respect to Section 4.1(f):
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities Intermediary
By:
/s/ Matthew M. Smith
Name:
Matthew M. Smith
Title:
Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Owner Trustee
By:
/s/ Clarice Wright
Name:
Clarice Wright
Title:
Assistant Vice President
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS,
solely with respect to the obligations set forth in Section 7.1,
in its individual capacity
By:
/s/ Kee Chan Sin
Name:
Kee Chan Sin
Title:
Vice President and Assistant Treasurer
--------------------------------------------------------------------------------
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS,
as Sponsor, solely with respect to the obligations set forth in
Section 3.5(a)(ii) and Section 9.9
By:
/s/ Kee Chan Sin
Name:
Kee Chan Sin
Title:
Vice President and Assistant Treasurer
--------------------------------------------------------------------------------
Schedule A
Schedule of Initial Receivables
Delivered Electronically to Indenture Trustee at Closing
SA-1
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Schedule B
Notice Addresses
1.
If to Cellco, in its individual capacity or as Servicer, Marketing Agent,
Custodian or Administrator:
Cellco Partnership
One Verizon Way
Basking Ridge, New Jersey 07920
Attention: Assistant Treasurer
Telephone: 908-559-5870
Email: kee.chan.sin@verizon.com
2.
If to the Depositor:
Verizon ABS LLC
One Verizon Way
Basking Ridge, New Jersey 07920
Attention: Chief Financial Officer
Telephone: 908-559-5870
Email: kee.chan.sin@verizon.com
With a copy to:
Cellco Partnership
One Verizon Way
Basking Ridge, New Jersey 07920
Attention: Assistant Treasurer
Telephone: 908-559-5870
Email: kee.chan.sin@verizon.com
3.
If to the Issuer:
c/o the Owner Trustee at the Corporate Trust Office of the Owner Trustee
With copies to:
Cellco Partnership
One Verizon Way
Basking Ridge, New Jersey 07920
Attention: Assistant Treasurer
Telephone: 908-559-5870
Email: kee.chan.sin@verizon.com
SB-1
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4.
If to the Parent Support Provider:
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
Attn: Assistant Treasurer
Telephone: 908-559-5870
Email: kee.chan.sin@verizon.com
5.
If to the Owner Trustee, at the Corporate Trust Office of the Owner Trustee
6.
If to the Indenture Trustee, at the Corporate Trust Office of the Indenture
Trustee
7.
If to S&P:
S&P Global Ratings
55 Water Street
New York, New York 10041
Attention: Asset Backed Surveillance Department
Telephone: (212) 438-1000
Fax: (212) 438-2649
8.
If to Moody’s:
Moody’s Investors Service, Inc.
ABS Monitoring Department
7 World Trade Center
250 Greenwich Street
New York, New York 10007
Email: abssurveillance@moodys.com
9. If to the Cap Counterparty:
Bank of America Merrill Lynch
1133 Avenue of the Americas
42nd Floor, NY1-533-42-01
New York, NY 10036-6710
Attention: Agreements & Documentation
Facsimile No.: (212) 548-8622
With a copy to: dg.dg_gmg_cid_fax_notices@bofasecurities.com
10. If to the Asset Representations Reviewer:
Pentalpha Surveillance LLC
375 N French Rd Suite 100
Amherst NY 14228
SB-2
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Attention: VZOT 2020-A Transaction Manager
Telephone: (716) 418-1634
Fax: (716) 204-5902
Email: notices@pentalphasurveillance.com (with VZOT 2020-A in the subject line)
SB-3
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Appendix A
Usage and Definitions
Verizon Owner Trust 2020-A
Usage
The following usage rules apply to this Appendix, any document that incorporates
this Appendix and any document delivered under any such document:
(a) The term “document” includes any document, agreement, instrument,
certificate, notice, report, statement or other writing, whether in electronic
or physical form.
(b) Accounting terms not defined or not completely defined in this
Appendix will have the meanings given to them under generally accepted
accounting principles, international financial reporting standards or other
applicable accounting principles in effect in the United States on the date of
the document that incorporates this Appendix.
(c) References to “Article,” “Section,” “Exhibit,” “Schedule,”
“Appendix” or another subdivision of or to an attachment are, unless otherwise
stated, to an article, section, exhibit, schedule, appendix or subdivision of or
an attachment to the document in which the reference appears.
(d) Any document defined or referred to in this Appendix or in any
document that incorporates this Appendix means the document as amended,
modified, supplemented, restated or replaced, including by waiver or consent,
and includes all attachments to and instruments incorporated in the document.
(e) Any statute defined or referred to in this Appendix or in any
document that incorporates this Appendix means the statute as amended, modified,
supplemented, restated or replaced, including by succession of comparable
successor statute, and includes any rules and regulations under the statute and
any judicial and administrative interpretations of the statute.
(f) References to “law” or “applicable law” in this Appendix or in
any document that incorporates this Appendix include all rules and regulations
enacted under such law.
(g) The calculation of any amount as of a Cutoff Date or any other
day, unless otherwise stated, will be determined as of the end of that calendar
day after the application or processing of any funds, payments and other
transactions on that day.
(h) References to deposits, transfers and payments of any funds refer
to deposits, transfers or payments of such funds in immediately available funds.
(i) The terms defined in this Appendix apply to the singular and
plural forms of those terms.
A-1
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(j) The term “including” means “including without limitation.”
(k) References to a Person are also to its permitted successors and
assigns, whether in its individual or representative capacity.
(l) In the computation of periods of time from one date to or through
a later date, the word “from” means “from and including,” the word “to” means
“to but excluding,” and the word “through” means “to and including.”
(m) Except where “not less than zero” or similar language is
indicated, amounts determined by reference to a mathematical formula may be
positive or negative.
(n) References to a month, quarter or year are, unless otherwise
stated, to a calendar month, calendar quarter or calendar year.
(o) No Person will be deemed to have “knowledge” of a particular
event or occurrence for purposes of any document that incorporates this
Appendix, unless either (i) a Responsible Person of the Person has actual
knowledge of the event or occurrence or (ii) the Person has received notice of
the event or occurrence according to any Transaction Document.
Definitions
“60-Day Delinquent Receivable” means, for any date of determination, a
Receivable for which there are unpaid charges remaining on the account sixty
(60) days after the bill’s date due; provided that a Written-Off Receivable is
not considered a 60-Day Delinquent Receivable.
“AAA” means the American Arbitration Association.
“Account Control Agreement” means the Account Control Agreement, dated as of the
Closing Date, among the Issuer, as grantor, the Indenture Trustee, as secured
party, and U.S. Bank National Association, in its capacity as both a “securities
intermediary” as defined in Section 8-102 of the UCC and a “bank” as defined in
Section 9-102 of the UCC, as amended, restated, supplemented or modified from
time to time.
“Accrued Note Interest” means, for a Class and a Payment Date, the sum of the
Note Monthly Interest and the Note Interest Shortfall.
“Acquired Receivable” means, for a Collection Period, a Receivable (a) acquired
by the Servicer under Section 3.3 of the Transfer and Servicing Agreement, (b)
acquired by the Marketing Agent under Section 4.3(i) of the Transfer and
Servicing Agreement, (c) reacquired by an Originator under Section 3.4 or 4.6 of
the Originator Receivables Transfer Agreement, or (d) acquired by the Servicer
under Section 3.4 or 4.7 of the Master Trust Receivables Transfer Agreement and
for which, in each case, the acquisition or reacquisition is effective during
the Collection Period and the Acquisition Amount is included in Available Funds
for the related Payment Date.
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“Acquisition Account” means the subaccount of the Collection Account established
under Section 4.1(a) of the Transfer and Servicing Agreement.
“Acquisition Amount” means, for an Acquired Receivable for which the Acquisition
Amount is to be included in Available Funds for a Payment Date, the excess of
(i) the present value of the Principal Balance of the Receivable as of the last
day of the Collection Period immediately preceding the related Collection Period
(calculated using the Discount Rate on the basis of a 360-day year of twelve
30-day months and assuming each amount is received at the end of the Collection
Period in which the amount is scheduled to be received) over (ii) all cash
collections and any other cash proceeds received by the Issuer on the related
Receivable from (but excluding) the last day of the Collection Period
immediately preceding the related Collection Period to the day on which such
Receivable becomes an Acquired Receivable.
“Acquisition Date” means each date during the Revolving Period on which the
Issuer acquires Additional Receivables under Section 2.1(b) of the Transfer and
Servicing Agreement and the Depositor acquires Additional Receivables under
Section 2.1(b) of the Originator Receivables Transfer Agreement or Section
2.1(a) of the Master Trust Receivables Transfer Agreement; provided that there
shall be no more than five (5) Acquisition Dates in any calendar month.
“Acquisition Date Supplement” means, for any Collection Period that includes an
Acquisition Date, the supplement (which may be incorporated into the Monthly
Investor Report) delivered by the Servicer setting forth (a) the aggregate
Principal Balance as of the Cutoff Date for the Additional Receivables
transferred by the Issuer, (b) the Additional Receivables Transfer Amount for
such Acquisition Date, (c) the amount in the Acquisition Account on such
Acquisition Date, (d) the Yield Supplement Overcollateralization Amount for such
Acquisition Date and (e) the results of the Credit Enhancement Test, the Pool
Composition Tests and the Floor Credit Enhancement Composition Tests as of such
Acquisition Date.
“Acquisition Deposit Amount” means, for any Payment Date during the Revolving
Period, an amount equal to (a) the Required Acquisition Deposit Amount minus (b)
the amount on deposit in the Acquisition Account on such Payment Date (before
payments under Section 8.2(c) of the Indenture on that Payment Date).
“Additional Originator” has the meaning stated in Section 6.11 of the Originator
Receivables Transfer Agreement.
“Additional Receivable” means any device payment plan agreement acquired by the
Issuer on an Acquisition Date and listed on the Schedule of Receivables attached
to a Transfer Notice delivered to the Issuer and the Indenture Trustee in
connection with such Acquisition Date.
“Additional Receivables Cash Transfer Amount” means, for an Acquisition Date,
the lesser of (x) the Additional Receivables Transfer Amount and (y) the amount
on deposit in the Acquisition Account on such Acquisition Date.
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“Additional Receivables Transfer Amount” means, for an Acquisition Date, an
amount equal to the discounted present value of the remaining payments (after
the end of the calendar day on the related Cutoff Date) for the remaining term
of such Additional Receivable discounted using the Discount Rate.
“Additional Successor Servicer Fee” means, for any Payment Date, the excess, if
any, of (x) $425,000 over (y) the Servicing Fee.
“Additional Trust Property” means, for any Acquisition Date, (a) the Depositor
Transferred Property for that Acquisition Date, (b) all present and future
claims, demands, causes of action and choses in action for any of the foregoing,
and (c) all payments on or under and all proceeds for any of the foregoing.
“Adjusted Pool Balance” means, on the Closing Date, an amount equal to:
(a)
the Initial Pool Balance; minus
(b)
the Yield Supplement Overcollateralization Amount for the Closing Date;
and means, on a Payment Date or Acquisition Date, an amount (not less than zero)
equal to:
(a) the Pool Balance as of the last day of the Collection Period immediately
preceding such Payment Date or Acquisition Date; minus
(b) the Yield Supplement Overcollateralization Amount for such Payment Date or
Acquisition Date.
“Administration Agreement” means the Administration Agreement, dated as of the
Closing Date, between the Administrator and the Issuer, as amended, restated,
supplemented or modified from time to time.
“Administrator” means Cellco, in its capacity as administrator under the
Administration Agreement.
“Adverse Claim” means any Lien other than a Permitted Lien.
“Affiliate” means, for a specified Person (other than a natural Person), (a)
another Person controlling, controlled by or under common control with the
specified Person, (b) any other Person beneficially owning or controlling more
than fifty percent (50%) of the outstanding voting securities or rights of or
interest in the capital, distributions or profits of the specified Person or (c)
any controlling shareholder of, or partner in, the specified Person. For the
purposes of this definition, “control” when used with respect to any Person
means the direct or indirect possession of the power to direct or cause the
direction of the management or policies of the Person, whether through
ownership, by contract, arrangement or understanding, or otherwise.
“Amortization Event” means the occurrence of any of the following:
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(a) the Issuer fails on a Payment Date during the Revolving Period
to (i) pay the Accrued Note Interest on the Notes, (ii) have the Required
Reserve Amount on deposit in the Reserve Account or (iii) have the Required
Negative Carry Amount on deposit in the Negative Carry Account;
(b) for any Payment Date, the sum of the fractions, expressed as
percentages for each of the three Collection Periods immediately preceding such
Payment Date, calculated by dividing the aggregate Principal Balance of
Written-Off Receivables during each of those Collection Periods by the Pool
Balance as of the first day of each of those Collection Periods, multiplied by
four, exceeds 10.00%, as determined by the Servicer at least two (2) Business
Days before each Payment Date;
(c) for any Payment Date, the sum of the fractions, expressed as
percentages for each of the three Collection Periods immediately preceding such
Payment Date, calculated by dividing the aggregate Principal Balance of all
Receivables that are ninety-one (91) days or more Delinquent at the end of each
of those Collection Periods by the Pool Balance as of the last day of each of
those Collection Periods, divided by three, exceeds 2.00%, as determined by the
Servicer at least two (2) Business Days before each Payment Date;
(d) the Adjusted Pool Balance is less than 50.00% of the aggregate
Note Balance of the Notes;
(e) on any Payment Date, after giving effect to all payments to be
made on such Payment Date pursuant to Section 8.2 of the Indenture and the
acquisition of Additional Receivables on that date, the amount of
Overcollateralization for the Notes is not at least equal to the
Overcollateralization Target Amount; provided, that if the Overcollateralization
Target Amount is not reached on any Payment Date solely due to a change in the
percentage used to calculate such Overcollateralization Target Amount, such an
event will not constitute an “Amortization Event” unless the
Overcollateralization Target Amount is not reached by the end of the third month
after the related Payment Date;
(f) a Servicer Termination Event has occurred and is continuing; or
(g) an Event of Default has occurred and is continuing.
“Amortization Period” means the Payment Date beginning on the earlier of (i) the
Payment Date in February 2022 or (ii) the Payment Date on or immediately
following the date on which an Amortization Event occurs and ending on the
earlier of (a) the Payment Date on which each Class of Notes have been paid in
full and (b) the Final Maturity Date.
“Amount Financed” means, for a Receivable, the amount of credit provided to the
Obligor for the purchase of the related Device.
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“Annual Percentage Rate” or “APR” of a Receivable means the annual rate of
finance charges stated in the Receivable or in any federal Truth-in-Lending Act
correction notice related to the Receivable.
“Annual Upgrade Offer” means the annual upgrade offer extended by Verizon
Wireless as of the date hereof to an existing Obligor under which such Obligor
can upgrade certain specified Devices that are the subject of a device payment
plan agreement if the following terms and conditions specified in such offer are
satisfied:
•
The customer may be able to upgrade an eligible device for a new qualifying
device after thirty (30) days provided that such customer has paid at least 50%
of the retail price of the eligible device under the related device payment plan
agreement and returns such eligible device to Verizon Wireless in good working
condition with no significant damage as determined by Verizon Wireless;
•
The customer is required to purchase a new qualifying device under a new device
payment plan agreement. New device purchases are subject to then-available
offers and any associated wireless service requirements;
•
A customer’s account must be in good standing and such customer must satisfy
Verizon Wireless’ eligibility requirements for a new device payment plan
agreement;
•
Upon entering into a device payment plan agreement for a new qualifying device,
and after returning the eligible device to Verizon Wireless within fourteen (14)
days, Verizon Wireless will agree, for the benefit of such customer and for the
express benefit of any assignee of such customer’s original device payment plan
agreement, to acquire such customer’s eligible device for the remaining balance
of the related customer’s original device payment plan agreement and pay off and
settle that remaining balance. After Verizon Wireless does that, such
customer’s only remaining obligations will be under the new device payment plan
agreement and for associated wireless service;
•
If a customer does not return an eligible device when upgrading, or if it is not
returned to Verizon Wireless in good working condition, in each case the
remaining balance under such customer’s original device payment plan agreement
will be due on such customer’s next bill. Good working condition requires,
among other things, that the customer’s returned device powers on and off, does
not have a cracked screen, has no significant damage as determined by Verizon
Wireless, and has all password-protected security features (e.g., Find My
iPhone) turned off;
•
The Annual Upgrade Offer and the related terms and conditions may be modified or
terminated by Verizon Wireless at any time. A customer’s upgrade eligibility
will be determined in the sole discretion of Verizon Wireless. If the Annual
Upgrade Offer is terminated or the related terms and conditions are not
satisfied, a customer will remain responsible for the remaining balance due
under the original device payment plan agreement.
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“Applicable Anti-Money Laundering Law” has the meaning stated in Section 6.8 of
the Trust Agreement.
“Arbitration Rules” means the AAA’s Commercial Arbitration Rules and Mediation
Procedures.
“Asset Representations Review” means, following the occurrence of a Delinquency
Trigger, the review of 60-Day Delinquent Receivables to be undertaken by the
Asset Representations Reviewer pursuant to the terms of the Asset
Representations Review Agreement.
“Asset Representations Review Agreement” means the Asset Representations Review
Agreement, dated as of the Closing Date, among the Asset Representations
Reviewer, the Issuer, the Servicer and the Administrator.
“Asset Representations Reviewer” means Pentalpha Surveillance LLC, or any
successor Asset Representations Reviewer under the Asset Representations Review
Agreement.
“Asset Representations Reviewer Fee” means (i) a monthly fee equal to $416.67
per month, payable on each Payment Date, and (ii) the amount of any fee payable
to the Asset Representations Reviewer in connection with its review of 60-Day
Delinquent Receivables in accordance with the terms of the Asset Representations
Review Agreement.
“Assumed Amortization Schedule” means, for each class of Notes, an amortization
that results in the Note Balance for such class on any future Payment Date being
equal to the percentage of the initial Note Balance of such class shown in the
decrement table for such class set forth under “Maturity and Prepayment
Considerations—Weighted Average Life” in the Prospectus, using a prepayment
assumption percentage of 100% and assuming exercise of the Optional Acquisition
on the earliest applicable Payment Date.
“Authenticating Agent” has the meaning stated in Section 2.14(a) of the
Indenture.
“Available Funds” means, for a Payment Date, the sum of the following amounts
for the
Payment Date (without duplication):
(a) Collections on the Receivables (other than Temporarily Excluded
Receivables) for the related Collection Period in the Collection Account; plus
(b) Acquisition Amounts received on Receivables that became Acquired
Receivables during the related Collection Period and any amounts in respect of
Acquisition Amounts paid by the Parent Support Provider; plus
(c) Credit Payments received on Receivables from the Marketing Agent
or the related Originators during the related Collection Period and any amounts
in respect of Credit Payments paid by the Parent Support Provider; plus
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(d) Upgrade Payments received from the Marketing Agent or the related
Originators on Receivables subject to an Upgrade Offer during the related
Collection Period and any amounts in respect of Upgrade Payments paid by the
Parent Support Provider; plus
(e) any amounts deposited by the Class A Certificateholder to acquire
the Receivables on the Payment Date under Section 8.1 of the Transfer and
Servicing Agreement or any amounts received by the Issuer from a transferee of
the Receivables under Section 8.2 of the Transfer and Servicing Agreement; plus
(f) the Negative Carry Account Draw Amount, if any; plus
(g) the Reserve Account Draw Amount, if any, and, after withdrawing
the Reserve Account Draw Amount from the Reserve Account, any amount in excess
of the Required Reserve Amount remaining on deposit in the Reserve Account; plus
(h) the amount, if any, deposited into the Collection Account from
the Negative Carry Account and, on the first Payment Date during the
Amortization Period, the entire amount on deposit in the Negative Carry Account
and the Acquisition Account; plus
(i) any Cap Payment paid by the Cap Counterparty to the Issuer under
the Cap Agreement and deposited into the Collection Account.
“Bank Accounts” means the Collection Account, the Reserve Account, the
Acquisition Account and the Negative Carry Account.
“Bankruptcy Action” has the meaning stated in Section 5.5 of the Trust
Agreement.
“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. 101 et seq.
“Bankruptcy Surrendered Receivable” means any Receivable that is secured by the
related Device and is not a Written-Off Receivable for which (i) the related
Obligor has entered into a bankruptcy proceeding and (ii) the Servicer has
accepted the surrender of the related Device in satisfaction of the Receivable.
“Benchmark” means, initially, One-Month LIBOR; provided that if a Benchmark
Transition Event and its related Benchmark Replacement Date have occurred with
respect to One-Month LIBOR or the then-current Benchmark, then “Benchmark” means
the applicable Benchmark Replacement.
“Benchmark Administrator” means, (1) with respect to One-Month LIBOR, the ICE
Benchmark Administration Limited, (2) with respect to SOFR, the Federal Reserve
Bank of New York and (3) with respect to any other Benchmark, the entity
responsible for administration of such Benchmark (or in each case, any successor
administrator).
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“Benchmark Replacement” means the first alternative set forth in the order below
that can be determined by the Administrator as of the Benchmark Replacement
Date:
(1)
the sum of (a) Term SOFR and (b) the Benchmark Replacement Adjustment, provided
that there has been no official public statement or publication of information
by the Benchmark Administrator or the regulatory supervisor for the Benchmark
Administrator announcing that Term SOFR is not yet representative that has not
been either withdrawn or superseded by a similar official public statement or
publication that Term SOFR has become representative,
(2)
the sum of (a) Compounded SOFR and (b) the Benchmark Replacement Adjustment,
(3)
the sum of (a) the ISDA Fallback Rate and (b) the Benchmark Replacement
Adjustment,
(4)
the sum of (a) the alternate rate of interest that has been selected or
recommended by the Relevant Governmental Body as the replacement for the
then-current Benchmark for the applicable Corresponding Tenor and (b) the
Benchmark Replacement Adjustment, and
(5)
the sum of (a) the alternate rate of interest that has been selected by the
Administrator in its reasonable discretion as the replacement for the
then-current Benchmark for the applicable Corresponding Tenor and (b) the
Benchmark Replacement Adjustment.
“Benchmark Replacement Adjustment” means the first alternative set forth in the
order below that can be determined by the Administrator as of the Benchmark
Replacement Date:
(1)
the spread adjustment, or method for calculating or determining such spread
adjustment (which may be a positive or negative value or zero), that has been
selected or recommended by the Relevant Governmental Body for the applicable
Unadjusted Benchmark Replacement,
(2)
if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA
Fallback Rate, then the ISDA Fallback Adjustment, and
(3)
the spread adjustment (which may be a positive or negative value or zero) that
has been selected by the Administrator in its reasonable discretion for the
replacement of the then-current Benchmark with the applicable Unadjusted
Benchmark Replacement.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the timing and frequency of determining rates and making payments of
interest, and other administrative matters) that the Administrator decides in
its reasonable discretion may be appropriate to reflect the adoption of such
Benchmark Replacement in a manner substantially consistent with market practice
(or, if the Administrator decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrator determines
that no
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market practice for use of the Benchmark Replacement exists, in such other
manner as the Administrator determines in its reasonable discretion is
reasonably necessary).
“Benchmark Replacement Date” means:
(1)
in the case of clause (1) or (2) of the definition of “Benchmark Transition
Event”, the later of (a) the date of the related official public statement or
publication of information referenced therein and (b) the date on which the
applicable Benchmark Administrator permanently or indefinitely ceases to provide
the Benchmark, or
(2)
in the case of clause (3) of the definition of “Benchmark Transition Event”, the
date of the official public statement or publication of information.
For the avoidance of doubt, if the event giving rise to the Benchmark
Replacement Date occurs on the same day as, but earlier than, the Reference Time
in respect of any determination, the Benchmark Replacement Date shall be deemed
to have occurred prior to the Reference Time for such determination.
“Benchmark Transition Event” means the occurrence of one or more of the
following events with respect to the then-current Benchmark:
(1)
an official public statement or publication of information by or on behalf of
the Benchmark Administrator announcing that such Benchmark Administrator has
ceased or will cease to provide the Benchmark, permanently or indefinitely;
provided, that, at the time of such statement or publication, there is no
successor Benchmark Administrator that will continue to provide the Benchmark,
(2) an official public statement or publication of information by the
regulatory supervisor for the Benchmark Administrator, the central bank for the
currency of the Benchmark, an insolvency official with jurisdiction over the
Benchmark Administrator, a resolution authority with jurisdiction over the
Benchmark Administrator or a court or an entity with similar insolvency or
resolution authority over the Benchmark Administrator, which states that the
Benchmark Administrator has ceased or will cease to provide the Benchmark
permanently or indefinitely; provided, that, at the time of such statement or
publication, there is no successor Benchmark Administrator that will continue to
provide the Benchmark, or
(3) an official public statement or publication of information by the
regulatory supervisor for the Benchmark Administrator announcing that the
Benchmark is no longer representative.
“Beneficiary” has the meaning stated in the Parent Support Agreement.
“Benefit Plan” means an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to the provisions of Title I of ERISA, a “plan”
described in and subject to
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Section 4975 of the Code, an entity whose underlying assets include “plan
assets” by reason of an employee benefit plan’s or plan’s investment in the
entity or any other employee benefit plan that is subject to any Similar Law.
“Book-Entry Note” means any of the Notes issued in book-entry form under Section
2.12 of the Indenture.
“Business Day” means any day other than (a) a Saturday, Sunday or other day on
which banks in New York, New York or any jurisdiction in which the Corporate
Trust Office of the Indenture Trustee or the Owner Trustee is located are
authorized or required to close or (b) a holiday on the Federal Reserve
calendar.
“Cap Agreement” means the interest rate cap agreement relating to the Class A-1b
Notes consisting of the 2002 ISDA Master Agreement (Multicurrency Cross-Border),
schedule and credit support annex, each dated as of January 23, 2020, and the
confirmation, dated on or about January 24, 2020, in each case, between the
Issuer and the Cap Counterparty, as such agreement may be amended and
supplemented from time to time in accordance with its terms.
“Cap Collateral Account” means the account or accounts, if any, established
under Section 9.10 of the Transfer and Servicing Agreement as required by the
terms of the Cap Agreement.
“Cap Counterparty” means Bank of America, N.A., or any Eligible Replacement Cap
Counterparty, to the extent such Eligible Replacement Cap Counterparty replaces
the existing Cap Counterparty under the Cap Agreement or any replacement
interest rate cap agreement.
“Cap Custodian” has the meaning stated in Section 9.10 of the Transfer and
Servicing Agreement.
“Cap Payment” means, for any Interest Period in which One-Month LIBOR
(calculated in accordance with the Cap Agreement) exceeds 3.00%, an amount equal
to the product of (x) the excess, if any, of One-Month LIBOR (calculated in
accordance with the Cap Agreement) for the related Payment Date over 3.00%, (y)
the notional amount of the cap for such Payment Date, as set forth in the Cap
Agreement, and (z) a fraction, the numerator of which is the actual number of
days elapsed in such Interest Period and the denominator of which is 360, which
payment shall be deposited into the Collection Account by the Cap Counterparty
on or before the second Business Day preceding the related Payment Date.
“Cellco” means Cellco Partnership d/b/a Verizon Wireless, a Delaware general
partnership, doing business as Verizon Wireless.
“Certificate” means either the Class A Certificate or the Class B Certificate,
as the context requires.
“Certificate Distribution Account” means the account established and maintained
as such pursuant to Section 4.1 of the Trust Agreement.
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“Certificate of Trust” means the Certificate of Trust of Verizon Owner Trust
2020-A.
“Certificate Paying Agent” means initially the Owner Trustee and any other
Person appointed as Certificate Paying Agent under Section 3.11 of the Trust
Agreement.
“Certificateholder” means the registered holder of a Certificate.
“Class” means the Class A-1a Notes, the Class A-1b Notes, the Class B Notes and
the Class C Notes, as applicable.
“Class A Certificate” means the Class A Certificate executed by the Issuer and
authenticated by the Owner Trustee, evidencing a portion of the Equity Interest
in the Issuer, substantially in the form attached as Exhibit B-1 to the Trust
Agreement.
“Class A Certificateholder” means collectively, the Originators or their
designee.
“Class A Notes” means, collectively, the Class A-1a Notes and the Class A-1b
Notes.
“Class A-1a Notes” means the $1,325,700,000 Class A-1a 1.85% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit A to the Indenture.
“Class A-1b Notes” means the $100,000,000 Class A-1b One-Month LIBOR (or, upon
the occurrence of a Benchmark Transition Event, the appropriate Benchmark
Replacement) + 0.27% Asset Backed Notes issued by the Issuer, substantially in
the form of Exhibit A to the Indenture.
“Class B Certificate” means the variable funding certificate executed by the
Issuer and authenticated by the Owner Trustee, substantially in the form
attached as Exhibit B-2 to the Trust Agreement.
“Class B Certificate Principal Balance” means (i) on the Closing Date, $0, (ii)
on any Acquisition Date, an amount equal to the excess, if any, of the
Additional Receivables Transfer Amount for the Additional Receivables to be
acquired by the Issuer on such Acquisition Date over the Additional Receivables
Cash Transfer Amount for such Additional Receivables, and (iii) during the
Amortization Period, $0; provided, that, with respect to clause (ii),
immediately following the acquisition by the Depositor of Additional Receivables
from the Originators on any Acquisition Date, and upon distribution by the
Depositor to the Originators of the amounts set forth in Section 2.2(b) of the
Originator Receivables Transfer Agreement, the Class B Certificate Principal
Balance will be decreased to zero for such date.
“Class B Certificateholder” means the Depositor or its designee.
“Class B Notes” means the $98,300,000 Class B 1.98% Asset Backed Notes issued by
the Issuer, substantially in the form of Exhibit A to the Indenture.
“Class C Notes” means the $76,000,000 Class C 2.06% Asset Backed Notes issued by
the Issuer, substantially in the form of Exhibit A to the Indenture.
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“Clean-Up Redemption” has the meaning stated in Section 8.1(a) of the Transfer
and Servicing Agreement.
“Clearing Agency” means an organization registered as a “clearing agency” under
Section 17A of the Exchange Act.
“Closing Date” means January 29, 2020.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means (a) the Trust Property, (b) all present and future claims,
demands, causes of action and choses in action relating to the Trust Property
and (c) all payments on or under and all proceeds of the Trust Property.
“Collection Account” means the account or accounts established under Section
4.1(a) of the Transfer and Servicing Agreement.
“Collection Period” means each calendar month. For a Payment Date, the related
Collection Period means (i) for any Payment Date other than the initial Payment
Date, the Collection Period immediately preceding the month in which the Payment
Date occurs, or (ii) for the initial Payment Date, the period from the end of
the calendar day on the Initial Cutoff Date and ending on and including the last
day of the month immediately preceding the initial Payment Date. For purposes of
determining the Principal Balance, Pool Balance or Note Pool Factor, the related
Collection Period is the month in which the Principal Balance, Pool Balance or
Note Pool Factor is determined.
“Collections” means, for a Collection Period, all cash collections received from
Obligors and any other cash proceeds (whether in the form of cash, wire transfer
or check) in respect of the Receivables received and applied by the Servicer to
the payment of the Receivables during that Collection Period, but excluding:
(i)
the Supplemental Servicing Fee;
(ii)
amounts on any Receivable for which the Acquisition Amount is included in the
Available Funds for the related Payment Date; and
(iii)
any Recoveries or cash collections received with respect to Written-Off
Receivables that were written-off before or during such Collection Period.
“Commission” means the U.S. Securities and Exchange Commission, and any
successor thereto.
“Comparable Treasury Issue” means the United States Treasury security selected
by the Independent Investment Banker as having a maturity comparable to the
remaining term, referred to as the Remaining Life, of the Notes to be redeemed
that would be utilized, at the time of
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selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
“Comparable Treasury Price” means (1) the average of three Reference Treasury
Dealer Quotations for that date of redemption, or (2) if the Independent
Investment Banker is unable to obtain three Reference Treasury Dealer
Quotations, the average of all quotations obtained.
“Compounded SOFR” means the compounded average of SOFRs for the applicable
Corresponding Tenor, with the rate, or methodology of this rate, and conventions
of this rate (which, for example, may be compounded in arrears with a lookback
and/or suspension period as a mechanism to determine the interest amount payable
prior to the end of each Collection Period or compounded in advance) being
established by the Administrator in accordance with:
(1)
the rate, or methodology of this rate, and conventions of this rate selected or
recommended by the Relevant Governmental Body for determining compounded SOFR;
provided that
(2)
if, and to the extent that, the Administrator determines that Compounded SOFR
cannot be determined in accordance with clause (1) above, then the rate, or
methodology of this rate, and conventions of this rate that have been selected
by the Administrator in its reasonable discretion.
“Control Agreement” has the meaning stated in Section 9.10 of the Transfer and
Servicing Agreement.
“Controlling Class” means (a) the Outstanding Class A Notes, voting together as
a single class, (b) if no Class A Notes are Outstanding, the Outstanding Class B
Notes and (c) if no Class B Notes are Outstanding, the Outstanding Class C
Notes.
“Corporate Trust Office” means,
(a) for the Owner Trustee:
Rodney Square North, 1100 North Market Street
Wilmington, Delaware 19890-1600
Attn: Corporate Trust Administration
Telephone: 302-636-6704
Fax: 302-636-4141
or at another address in the State of Delaware as the Owner Trustee may notify
the Indenture Trustee, the Administrator and the Depositor,
(b) for the Indenture Trustee, the office of the Indenture Trustee at which at
any particular time its corporate trust business shall be administered which
office on the date of the execution of the Indenture is located at:
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(i) solely for the purposes of transfer, surrender, exchange or presentation for
final payment:
EP-MN-WS2N
111 Fillmore Avenue East
St. Paul, MN 55107,
Attn: Bondholder Services/VZOT 2020-A
and (ii) for all other purposes:
MK-IL-SL7C
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Global Structured Finance/VZOT 2020-A
Fax: (312) 332-7992
or at such other address as the Indenture Trustee may designate from time to
time by notice to the Noteholders, the Servicer, and the Owner Trustee, or the
principal corporate trust office of any successor Indenture Trustee (the address
of which the successor Indenture Trustee will notify the Noteholders, the
Servicer and the Owner Trustee), and
(c) for the Master Trust Owner Trustee:
Rodney Square North, 1100 North Market Street
Wilmington, Delaware 19890-1600
Attn: Corporate Trust Administration
Telephone: 302-636-6704
Fax: 302-636-4141
or at another address in the State of Delaware as the Master Trust Owner Trustee
may notify the Indenture Trustee, the Administrator, the Owner Trustee and the
Depositor.
“Corresponding Tenor” means a tenor (including overnight) having approximately
the same length (disregarding business day adjustment) as the applicable tenor
for the then-current Benchmark.
“Covered Entity” and “Covered Entities” have the meanings stated in Section 1(a)
of the Parent Support Agreement.
“Credit” means any payment credit (including one-time upfront credits and
contingent, recurring credits), including the application of a returned security
deposit, allocated to the account of an Obligor that is applied by the Servicer
against amounts due on the Obligor’s related invoice.
“Credit Enhancement Test” means the test that will be satisfied on the Closing
Date and on each Acquisition Date, after giving effect to all payments required
to be made under Section 8.2(c) of the Indenture and the acquisition of
Additional Receivables on the Acquisition Date, if
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(a) (i) the Adjusted Pool Balance as of the end of the Collection Period
immediately preceding the Closing Date or such Acquisition Date, as applicable,
plus (ii) any amounts on deposit in the Acquisition Account minus (iii) the
Overcollateralization Target Amount, is equal to or greater than (b) the
aggregate Note Balance on that date.
“Credit Payment” means, with respect to any Collection Period, an amount equal
to the reduction in the amount owed by an Obligor under a Receivable due to the
application of any Credits to such Obligor’s account that would have otherwise
constituted Collections during such Collection Period.
“Custodian” means Cellco, in its capacity as custodian of the Receivable Files.
“Customer Tenure” means the number of months an Obligor has had a Verizon
Wireless account based on the oldest active account establishment date for such
Obligor, inclusive of any periods of up to fifty (50) days of disconnected
service, up to ninety (90) days of suspended service or longer service
suspensions in connection with the Servicemembers Civil Relief Act, as amended.
“Cutoff Date” means (a) for the Initial Receivables, the Initial Cutoff Date and
(b) for any Additional Receivables, the end of the calendar day on the last day
of the month immediately preceding the month in which such Acquisition Date
occurs.
“Default” means any event that with notice or the passage of time or both would
become an Event of Default.
“Definitive Notes” has the meaning stated in Section 2.13 of the Indenture.
“Delaware Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware
Code.
“Delinquent” means an account on which an Obligor has unpaid charges remaining
on the related account on the day immediately following the related date due as
indicated on the Obligor’s bill.
“Delinquency Trigger” means, with respect to a Collection Period, the aggregate
Principal Balance of 60-Day Delinquent Receivables as a percentage of the
aggregate Principal Balance of Receivables as of the end of such Collection
Period exceeds the Delinquency Trigger Percentage for such Collection Period.
“Delinquency Trigger Percentage” equals (i) during the Revolving Period, 5.0%
and (ii) during the Amortization Period, 5.5%.
“Depositor” means Verizon ABS LLC, a Delaware limited liability company.
“Depositor Transferred Property” means, for the Closing Date and any Acquisition
Date, (a) the Originator Transferred Property, (b) the Master Trust Transferred
Property, (c) the Depositor’s rights under the Receivables Transfer Agreements,
(d) all present and future claims,
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demands, causes of action and choses in action relating to any of the property
described above and (e) all payments on or under and all proceeds of the
property described above.
“Depository Agreement” means the letter of representations for the Notes, dated
January 29, 2020, by the Issuer in favor of The Depository Trust Company.
“Device” means the wireless device that is the subject of a device payment plan
agreement that is a Receivable.
“Discount Rate” means, with respect to a Receivable, the greater of (i) the APR
with respect to such Receivable, and (ii) 7.65%.
“Eligibility Representation” has the meaning stated in Section 3.3 of the
related Receivables Transfer Agreement.
“Eligible Receivable” means a Receivable that satisfies the characteristics set
forth in Section 3.3 of the related Receivables Transfer Agreement.
“Eligible Replacement Cap Counterparty” means a counterparty that meets the
eligibility requirements set forth in the Cap Agreement.
“Equity Interest” means a beneficial ownership interest in the Issuer, as
recorded on the Trust Register.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Event of Default” has the meaning stated in Section 5.1(a) of the Indenture.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FATCA Information” has the meaning stated in Section 3.3(e) of the Indenture.
“FATCA Withholding Tax” has the meaning stated in Section 3.3(e) of the
Indenture.
“FICO® Score 8” means the FICO® Score 8 calculated on or about the date on which
such Receivable was originated.
“Final Maturity Date” means, for (i) the Class A-1a Notes, the Payment Date in
July, 2024, (ii) the Class A-1b Notes, the Payment Date in July, 2024, (iii) the
Class B Notes, the Payment Date in July, 2024, and (iv) the Class C Notes, the
Payment Date in July, 2024.
“First Priority Principal Payment” means, for a Payment Date, the greater of:
(a) an amount (not less than zero) equal to the aggregate Note
Balance of the Class A Notes as of the immediately preceding Payment Date (or,
for the initial Payment Date, as of the Closing Date) minus the Adjusted Pool
Balance; and
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(b) on and after the Final Maturity Date for the Class A Notes, the
aggregate Note Balance of the Class A Notes until paid in full.
“Floor Credit Enhancement Composition Tests” means, for any Payment Date and the
pool of Receivables (excluding any Temporarily Excluded Receivables) held by the
Issuer as of such date, each of the following tests calculated as of the end of
the month preceding the month in which such date occurs:
(a) the weighted average FICO® Score 8 of the Obligors with respect
to the Receivables is at least 700 (excluding Receivables with Obligors for whom
FICO® Score 8s are not available),
(b) Receivables with Obligors for whom FICO® Score 8s are not
available represent no more than 4.50% of the Pool Balance,
(c) Receivables with Obligors that have less than 12 months of
Customer Tenure with Verizon Wireless represent no more than 22.00% of the Pool
Balance,
(d) Receivables with Obligors that have 7 months or more, but less
than 24 months of Customer Tenure with Verizon Wireless represent no more than
12.00% of the Pool Balance,
(e) Receivables with Obligors that have 60 months or more of Customer
Tenure with Verizon Wireless represent at least 55.00% of the Pool Balance,
(f) Receivables with Obligors that have less than 12 months of
Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not
available or (ii) that have FICO® Score 8s below 650, represent no more than
10.00% of the Pool Balance,
(g) Receivables with Obligors that have 12 months or more, but less
than 60 months of Customer Tenure with Verizon Wireless and (i) for whom FICO®
Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent
no more than 50.00% of the aggregate Principal Balance of all Receivables with
Obligors that have 12 months or more, but less than 60 months of Customer Tenure
with Verizon Wireless, and
(h) Receivables with Obligors that have 60 months or more of Customer
Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available
or (ii) that have FICO® Score 8s below 650, represent no more than 27.50% of the
aggregate Principal Balance of all Receivables with Obligors that have 60 months
or more of Customer Tenure with Verizon Wireless.
“Governmental Authority” means any government or political subdivision or any
agency, authority, bureau, regulatory body, central bank, commission, department
or instrumentality of any such government or political subdivision, or any other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government or any
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court, tribunal, grand jury or arbitrator, or any accounting board or authority
(whether or not part of a government) which is responsible for the establishment
or interpretation of national or international accounting principles, in each
case whether foreign or domestic.
“Grant” means to mortgage, pledge, assign and to grant a lien on and a security
interest in the relevant property.
“Guaranteed Obligations” has the meaning stated in Section 1(a) of the Parent
Support Agreement.
“Hague Securities Convention” means The Convention on the Law Applicable to
Certain Rights in Respect of Securities Held with an Intermediary (Concluded 5
July 2006), which became effective in the United States of America on April 1,
2017.
“Indemnified Person” has the meaning stated in Section 6.7(b) of the Indenture,
Section 6.3(a) of the Transfer and Servicing Agreement and Section 7.2(a) of the
Trust Agreement, as applicable.
“Indenture” means the Indenture, dated as of the Closing Date, between the
Issuer and the Indenture Trustee.
“Indenture Trustee” means U.S. Bank National Association, a national banking
association, not in its individual capacity but solely as Indenture Trustee
under the Indenture.
“Indenture Trustee Fee” means a monthly fee equal to 1/12th of $12,000, payable
on each Payment Date.
“Independent” means that the relevant Person (a) is independent of the Issuer,
the Depositor and their Affiliates, (b) does not have any direct financial
interest or any material indirect financial interest in the Issuer, the
Depositor or their Affiliates and (c) is not an officer, employee, underwriter,
trustee, partner, director or person performing similar functions of or for the
Issuer, the Depositor or their Affiliates.
“Independent Certificate” means a certificate or opinion to be delivered to the
Indenture Trustee under the circumstances described in Section 11.3 of the
Indenture, made by an Independent appraiser, a firm of certified public
accountants of national reputation or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of “Independent” in this Indenture and that the signer is Independent within the
meaning thereof.
“Independent Investment Banker” means an independent investment banking or
commercial banking institution of national standing appointed by Verizon.
“Initial Cutoff Date” means the end of the calendar day on December 31, 2019.
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“Initial Pool Balance” means $1,917,450,478.10 which is the aggregate Principal
Balance of the Initial Receivables as of the Initial Cutoff Date.
“Initial Receivable” means any device payment plan agreement acquired by the
Issuer on the Closing Date and listed on the Schedule of Receivables delivered
on the Closing Date.
“Initial Trust Property” means (a) the Depositor Transferred Property for the
Closing Date, (b) the Issuer’s rights under the Transfer and Servicing
Agreement, (c) the Issuer’s rights under the Cap Agreement, (d) all security
entitlements relating to the Bank Accounts and the property deposited in or
credited to any of the Bank Accounts, (e) all present and future claims,
demands, causes of action and choses in action for any of the foregoing and (f)
all payments on or under and all proceeds for any of the foregoing.
“Insolvency Event” means, for a Person, that (1) (a) such Person admits in
writing its inability to pay its debts generally as they become due, or makes a
general assignment for the benefit of creditors, or (b) any proceeding is
instituted by or against such Person seeking to adjudicate it bankrupt or
insolvent, or seeking the liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its
property, or (c) such Person generally does not pay its debts as such debts
become due and, in the case of any proceeding instituted against such Person,
such proceeding remains unstayed for more than sixty (60) days or an order or
decree approving or ordering any of the foregoing shall be entered or (2) such
person takes any corporate action to authorize any such action.
“Interest Period” means for any Payment Date and (a) the Class A-1a Notes, Class
B Notes and Class C Notes, the period from and including the 20th day of the
calendar month immediately preceding the Payment Date to but excluding the 20th
day of the month in which the Payment Date occurs (or from and including the
Closing Date to but excluding March 20, 2020 for the first Payment Date) or (b)
the Class A-1b Notes, the period from and including the Payment Date immediately
preceding the current Payment Date to but excluding the current Payment Date (or
from and including the Closing Date to but excluding March 20, 2020 for the
first Payment Date).
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“ISDA Definitions” means the 2006 ISDA Definitions published by the
International Swaps and Derivatives Association, Inc. or any successor thereto,
as amended or supplemented from time to time, or any successor definitional
booklet for interest rate derivatives published from time to time.
“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive
or negative value or zero) that would apply for derivatives transactions
referencing the ISDA Definitions to be determined upon the occurrence of an
index cessation event with respect to the Benchmark for the applicable tenor.
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“ISDA Fallback Rate” means the rate that would apply for derivatives
transactions referencing the ISDA Definitions to be effective upon the
occurrence of an index cessation date with respect to the Benchmark for the
applicable tenor excluding the applicable ISDA Fallback Adjustment.
“Issuer” means Verizon Owner Trust 2020-A, a Delaware statutory trust.
“Issuer Order” and “Issuer Request” has the meaning stated in Section 11.3(a) of
the Indenture.
“Law” means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, executive order, order, court order, injunction,
writ, decree, directive, judgment, injunction, award or similar item of or by a
Governmental Authority or any interpretation, implementation or application
thereof.
“LIBOR Determination Date” means, (i) with respect to the first Payment Date,
the second London Business Day prior to the Closing Date and (ii) with respect
to each subsequent Payment Date, the second London Business Day prior to the
immediately preceding Payment Date.
“Lien” means a security interest, lien, charge, pledge or encumbrance.
“London Business Day” means any day other than a Saturday, Sunday or day on
which banking institutions in London, England are authorized or obligated by law
or government decree to be closed.
“Make-Whole Payment” means, for any payment of principal of the Notes on any
Payment Date:
(a) for any Make-Whole Payment due, other than with respect to an
Optional Redemption,
(i) for each Class of Notes other than the Class A-1b Notes, the
excess of (a) the present value of (i) the amount of all future interest
payments that would otherwise accrue on the principal payment until the Payment
Date in February 2022 and (ii) the principal payment, each such payment
discounted from the Payment Date in February 2022 to such Payment Date monthly
on a 30/360 day basis at 0.15% plus the higher of (1) zero and (2) the
then-current maturity matched Treasury Rate to such payment over (b) the
principal payment; or
(ii) for the Class A-1b Notes, the excess of (a) the present value of
(i) the amount of all future interest payments that would otherwise accrue on
the principal payment at an interest rate of One-Month LIBOR applicable to such
Payment Date plus 0.27% until the Payment Date in February 2022 and (ii) the
principal payment, each such payment discounted from the Payment Date in
February 2022 to such Payment Date monthly on an actual/360 day basis at One-
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Month LIBOR applicable to such Payment Date over (b) the principal payment; and
(b) for any Make-Whole Payment due with respect to an Optional
Redemption,
(i) for each Class of Notes other than the Class A-1b Notes, the
excess of (a) the present value of (i) the amount of all future interest
payments that would otherwise accrue on such Class of Notes assuming principal
payments on such Class are made based on the Assumed Amortization Schedule for
such Class and (ii) the amount of all future principal payments that would
otherwise be paid on such Class of Notes assuming principal payments on such
Class are paid based on the Assumed Amortization Schedule for such Class, each
such amount discounted from the Payment Date on which such payment would be made
in accordance with the Assumed Amortization Schedule to the Payment Date on
which the Optional Redemption occurs, monthly on a 30/360 day basis at 0.15%
plus the higher of (1) zero and (2) the then-current maturity matched Treasury
Rate to such payment over (b) the Note Balance of such Class of Notes
immediately prior to the Optional Redemption; or
(ii) for the Class A-1b Notes, the excess of (a) the present value of
(i) the amount of all future interest payments that would otherwise accrue on
the Class A-1b Notes at an interest rate of One-Month LIBOR applicable to such
Payment Date plus 0.27% assuming principal payments on the Class A-1b Notes are
made based on the Assumed Amortization Schedule for the Class A-1b Notes and
(ii) the amount of all future principal payments that would otherwise be paid on
the Class A-1b Notes assuming principal payments on the Class A-1b Notes are
paid based on the Assumed Amortization Schedule for the Class A-1b Notes, each
such amount discounted from the Payment Date on which such payment would be made
in accordance with the Assumed Amortization Schedule to the Payment Date on
which the Optional Redemption occurs, monthly on an actual/360 day basis at
One-Month LIBOR applicable to such Payment Date over (b) the Note Balance of the
Class A-1b Notes immediately prior to the Optional Redemption;
provided, that, upon the occurrence of a Benchmark Transition Event, One-Month
LIBOR used in the calculation of Make-Whole Payments will be replaced by the
appropriate Benchmark Replacement as set forth in Section 2.16 of the Indenture.
“Marketing Agent” means Cellco.
“Marketing Agent Agency Agreement” means the Amended and Restated Marketing
Agent Agency Agreement, dated as of September 27, 2016, between the Marketing
Agent and the Verizon Originators, as amended, restated, supplemented or
modified from time to time.
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“Marketing Agent Remittance Obligation” has the meaning stated in the Parent
Support Agreement.
“Master Collateral Agency Agreement” means the Amended and Restated Master
Collateral Agency and Intercreditor Agreement, dated as of May 8, 2019, among
the Master Trust, U.S. Bank National Association, as master collateral agent,
Cellco, as servicer, and each creditor representative from time to time party
thereto, as amended, restated, supplemented or modified from time to time.
“Master Trust” means Verizon DPPA Master Trust, a Delaware statutory trust,
created and existing pursuant to the Master Trust Agreement.
“Master Trust Administrator” means Cellco.
“Master Trust Agreement” means the Second Amended and Restated Trust Agreement,
dated as of May 8, 2019, between Verizon ABS II LLC, as depositor, and the
Master Trust Owner Trustee, as amended, restated, supplemented or modified from
time to time.
“Master Trust Owner Trustee” means Wilmington Trust, National Association, a
national banking association, not in its individual capacity but solely as
Master Trust Owner Trustee under the Master Trust Agreement.
“Master Trust Receivables Transfer Agreement” means the Master Trust Receivables
Transfer Agreement, dated as of the Closing Date, among the Master Trust, the
Servicer and the Depositor, as amended, restated, supplemented or modified from
time to time.
“Master Trust Transferred Property” means, for the Closing Date and any
Acquisition Date, (a) the Initial Receivables or the Additional Receivables, as
applicable, transferred by the Master Trust, (b) all amounts received and
applied on such Receivables after the end of the calendar day on the related
Cutoff Date, (c) all present and future claims, demands, causes of action and
choses in action relating to any of the property described above and (d) all
payments on or under and all proceeds of the property described above.
“Material Adverse Effect” means, with respect to any event or circumstance, a
material adverse effect on the ability of the applicable Person to perform its
obligations under any Transaction Document.
“Monthly Deposit Required Ratings” has the meaning stated in Section 4.3(b)(i)
of the Transfer and Servicing Agreement.
“Monthly Investor Report” has the meaning stated in Section 3.5(a)(i) of the
Transfer and Servicing Agreement.
“Moody’s” means Moody’s Investors Service, Inc.
“Negative Carry Account” means the account or accounts established under Section
4.1(a) of the Transfer and Servicing Agreement.
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“Negative Carry Deposit Amount” means, for a Payment Date during the Revolving
Period on which amounts are in the Acquisition Account, an amount equal to (a)
the Required Negative Carry Amount for that Payment Date minus (b) the amount in
the Negative Carry Account on that Payment Date (before payments under Section
8.2(c) of the Indenture on that Payment Date).
“Negative Carry Account Draw Amount” means, for a Payment Date during the
Revolving Period:
(a) if that Payment Date is not an Acquisition Date, the lesser of:
(i) an amount (not less than zero) equal to the Total Required
Payment, plus the Reserve Deposit Amount, plus the Acquisition Deposit Amount,
minus the Available Funds determined without regard to the Negative Carry
Account Draw Amount or the Reserve Account Draw Amount; and
(ii) the amount in the Negative Carry Account; and
(b) if the Payment Date is an Acquisition Date, the amount in the
Negative Carry Account in excess of the Required Negative Carry Amount.
“New Upgrade DPP” has the meaning stated in Section 4.3(g) of the Transfer and
Servicing Agreement.
“Note Balance” means, for a Note or Class, the initial aggregate principal
balance of the Note or Class minus all amounts distributed on the Note or Class
that is applied to principal.
“Note Interest Rate” means a per annum rate equal to, for: (i) the Class A-1a
Notes, 1.85% (computed on the basis of a 360 day year consisting of twelve 30
day months), (ii) the Class A-1b Notes, One-Month LIBOR (or, upon the occurrence
of a Benchmark Transition Event, the appropriate Benchmark Replacement) + 0.27%
(computed on the basis of the actual number of days elapsed during the relevant
Interest Period and a 360 day year), (iii) the Class B Notes, 1.98% (computed on
the basis of a 360 day year consisting of twelve 30 day months), and (iv) the
Class C Notes, 2.06% (computed on the basis of a 360 day year consisting of
twelve 30 day months).
“Note Interest Shortfall” means, for a Class and a Payment Date, an amount equal
to the excess, if any, of the Accrued Note Interest for the Payment Date
immediately preceding such Payment Date for the Class over the amount of
interest that was paid to the Noteholders of that Class on the Payment Date
immediately preceding such Payment Date, together with interest on the excess
amount, to the extent lawful, at the Note Interest Rate for the Class for that
Interest Period.
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“Note Monthly Interest” means, for a Class and a Payment Date, the aggregate
amount of interest accrued on the Note Balance of the Class at the Note Interest
Rate for the Class for the related Interest Period.
“Note Owner” means, for a Book-Entry Note, the Person who is the beneficial
owner of a Book-Entry Note as reflected on the books of the Clearing Agency or
on the books of a Person maintaining an account with the Clearing Agency (as a
direct participant or as an indirect participant, in each case according to the
rules of the Clearing Agency).
“Note Paying Agent” means initially the Indenture Trustee and any other Person
appointed as Note Paying Agent under Section 2.15 of the Indenture.
“Note Pool Factor” means, for a Class and a Payment Date, a seven-digit decimal
figure equal to the Note Balance of the Class after giving effect to any
payments of principal of the Class on that Payment Date divided by the initial
Note Balance of the Class.
“Note Register” and “Note Registrar” have the meanings stated in Section 2.4 of
the Indenture.
“Noteholder” means the Person in whose name a Note is registered on the Note
Register.
“Noteholder Tax Identification Information” means properly completed and signed
tax certifications (generally with respect to U.S. Federal Income Tax, IRS Form
W-9 (or applicable successor form) in the case of a person that is a “United
States Person” within the meaning of Section 7701(a)(30) of the Code or the
appropriate IRS Form W-8 (or applicable successor form) in the case of a person
that is not a “United States Person” within the meaning of Section 7701(a)(30)
of the Code).
“Notes” or “Note” means, collectively or individually, as the context may
require, the Class A-1a Notes, the Class A-1b Notes, the Class B Notes and the
Class C Notes.
“Obligor” means the Person that has signed the account agreement of which the
device payment plan agreement that constitutes the Receivable is a part and who
owes payments under the Receivable.
“Officer’s Certificate” means (a) for the Issuer, a certificate signed by a
Responsible Person of the Issuer, (b) for the Depositor, the Administrator, the
Marketing Agent, the Parent Support Provider, any Originator or the Servicer, a
certificate signed by any officer of such entity, as applicable, (c) for the
Master Trust, a certificate signed by a Responsible Person of the Master Trust
and (d) for the Indenture Trustee, a certificate signed by a Responsible Person
of the Indenture Trustee.
“One-Month LIBOR” means, with respect to any Interest Period for which One-Month
LIBOR is the Benchmark, the London interbank offered rate for deposits in U.S.
Dollars having a maturity of one month commencing on the related LIBOR
Determination Date which appears on the Reuters Screen LIBOR01 Page as of 11:00
a.m., London time, on such LIBOR
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Determination Date; provided, however, that for the first Interest Period,
One-Month LIBOR shall mean an interpolated rate for deposits based on London
interbank offered rates for deposits in U.S. Dollars for a period that
corresponds to the actual number of days in the first Interest Period. If the
rates used to determine One-Month LIBOR do not appear on the Reuters Screen
LIBOR01 Page, the rates for that day will be determined on the basis of the
rates at which deposits in U.S. Dollars, having a maturity of one month and in a
principal balance of not less than U.S. $1,000,000 are offered at approximately
11:00 a.m., London time, on such LIBOR Determination Date to prime banks in the
London interbank market by the Reference Banks. The Administrator will request
the principal London office of each Reference Bank to provide a quotation of its
rate to the Administrator and the Indenture Trustee. If at least two such
quotations are provided, the Indenture Trustee will calculate the rate for that
day as the arithmetic mean of such quoted rates to the nearest 1/100,000 of
1.00% (0.0000001), with five one-millionths of a percentage point rounded
upward, of all such quotations. If fewer than two such quotations are provided,
the Indenture Trustee will calculate the rate for that day as the arithmetic
mean to the nearest 1/100,000 of 1.00% (0.0000001), with five one-millionths of
a percentage point rounded upward, of the offered per annum rates that one or
more major banks in New York City, selected by the Administrator, are quoting as
of approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date to leading European banks for United States Dollar deposits for that
maturity; provided that if the Administrator is not able to identify any major
banks in New York City that are quoting as described in this sentence and for
the avoidance of doubt, regardless of whether others in similar transactions are
using a different index, it shall direct the Indenture Trustee to use One-Month
LIBOR in effect for the applicable Interest Period which will be One-Month LIBOR
in effect for the previous Interest Period, and any such direction will be
deemed to apply to all subsequent LIBOR Determination Dates unless otherwise
directed by the Administrator. In no event shall the Indenture Trustee be
responsible for determining One-Month LIBOR or any substitute for One-Month
LIBOR if such rate does not appear on Reuters Screen LIBOR01 Page.
“Opinion of Counsel” means a written opinion of counsel (which may be internal
counsel) which counsel is reasonably acceptable to the Indenture Trustee, the
Owner Trustee and the Rating Agencies, as applicable.
“Optional Acquisition” has the meaning stated in Section 8.1(a) of the Transfer
and Servicing Agreement.
“Optional Acquisition Amount” has the meaning stated in Section 8.1(b) of the
Transfer and Servicing Agreement.
“Optional Redemption” has the meaning stated in Section 8.2(a) of the Transfer
and Servicing Agreement.
“Originator” means (i) with respect to the Initial Receivables or the Additional
Receivables, any of Cellco or certain Affiliates of Verizon listed on Schedule B
to the Originator Receivables Transfer Agreement and (ii) with respect to the
Additional Receivables transferred to the Depositor pursuant to the Originator
Receivables Transfer Agreement, any additional Affiliate of Verizon not listed
on Schedule B to the Originator Receivables Transfer Agreement
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that executes an Additional Originator Joinder Agreement substantially in the
form of Exhibit B to the Originator Receivables Transfer Agreement; provided,
that with respect to any amounts remitted by, or caused to be remitted by, the
Marketing Agent pursuant to Sections 4.3(g), (h) and (i) of the Transfer and
Servicing Agreement, the term “Originator” shall also mean, with respect to the
Additional Receivables transferred to the Depositor pursuant to the Master Trust
Receivables Transfer Agreement, any additional Affiliate of Verizon not listed
on Schedule B to the Originator Receivables Transfer Agreement that originated
any such Receivables.
“Originator Reacquisition Obligation” has the meaning stated in the Parent
Support Agreement.
“Originator Receivables Transfer Agreement” means the Originator Receivables
Transfer Agreement, dated as of the Closing Date, between the Originators party
thereto and the Depositor, as amended, restated, supplemented or modified from
time to time.
“Originator Transferred Property” means, for the Closing Date and any
Acquisition Date, (a) the Initial Receivables or the Additional Receivables, as
applicable, transferred by the Originators, (b) all amounts received and applied
on such Receivables after the end of the calendar day on the related Cutoff
Date, (c) all present and future claims, demands, causes of action and choses in
action relating to any of the property described above and (d) all payments on
or under and all proceeds of the property described above.
“Other Assets” means any assets (other than the Trust Property) sold, assigned
or conveyed or intended to be sold, assigned or conveyed by the Depositor to any
Person other than the Issuer, whether by way of a sale, capital contribution,
pledge or otherwise.
“Outstanding” means, as of a date, all Notes authenticated and delivered under
the Indenture on or before that date except (a) Notes that have been cancelled
by the Note Registrar or delivered to the Note Registrar for cancellation, (b)
Notes to the extent the amount necessary to pay the Notes has been deposited
with the Indenture Trustee or Note Paying Agent in trust for the Noteholders
and, if those Notes are to be redeemed, notice of the redemption has been given
under the Indenture, and (c) Notes in exchange for or in place of which other
Notes have been authenticated and delivered under the Indenture unless proof
satisfactory to the Indenture Trustee is presented that the Notes are held by a
bona fide purchaser. In determining whether Noteholders of the required Note
Balance have made or given a request, demand, authorization, direction, notice,
consent or waiver under any Transaction Document, Notes owned by the Issuer, the
Depositor, the Servicer or their Affiliates will not be considered to be
Outstanding. However, Notes owned by the Issuer, the Depositor, the Servicer or
their Affiliates will be considered to be Outstanding if (A) no other Notes
remain Outstanding, or (B) the Notes have been pledged in good faith and the
pledgee establishes to the reasonable satisfaction of the Indenture Trustee the
pledgee’s right to act for the Notes and that the pledgee is not the Issuer, the
Depositor, the Servicer or their Affiliates.
“Overcollateralization” means, for any date of determination other than the
Closing Date, the amount by which (x) the sum of (i) the Adjusted Pool Balance
as of the last day of the related
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Collection Period, and (ii) the amount on deposit in the Acquisition Account
after giving effect to the acquisition of Receivables on that date exceeds (y)
the aggregate Note Balance.
“Overcollateralization Target Amount” means an amount equal to:
(i)
on the Closing Date, 10.50% of the Adjusted Pool Balance as of the Initial
Cutoff Date;
(ii)
for any date of determination (other than the Closing Date), prior to the
Amortization Period, on which the pool of Receivables meets all of the Floor
Credit Enhancement Composition Tests, the greater of (x) the result of (a)(i)
the aggregate Note Balance, divided by (ii) 1 minus 0.1050, minus (b) the
aggregate Note Balance, and (y) 1.00% of the Adjusted Pool Balance as of the
Closing Date;
(iii)
for any date of determination (other than the Closing Date), prior to the
Amortization Period, on which the pool of Receivables does not meet all of the
Floor Credit Enhancement Composition Tests, the greater of (x) the result of
(a)(i) the aggregate Note Balance, divided by (ii) 1 minus 0.1350, minus (b) the
aggregate Note Balance, and (y) 1.00% of the Adjusted Pool Balance as of the
Closing Date;
(iv)
for any date of determination, during the Amortization Period, on which the pool
of Receivables meets all of the Floor Credit Enhancement Composition Tests, the
greater of (x) 14.50% of the Adjusted Pool Balance as of the end of the calendar
month immediately preceding such date of determination, and (y) 1.00% of the
Adjusted Pool Balance as of the Closing Date; or
(v)
for any date of determination, during the Amortization Period, on which the pool
of Receivables does not meet all of the Floor Credit Enhancement Composition
Tests, the greater of (x) 17.50% of the Adjusted Pool Balance as of the end of
the calendar month immediately preceding such date of determination, and (y)
1.00% of the Adjusted Pool Balance as of the Closing Date.
“Owner Trustee” means Wilmington Trust, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement.
“Owner Trustee Fee” means a monthly fee equal to 1/12th of $15,000, payable on
each Payment Date.
“Parent Support Agreement” means the guaranty, dated as of the Closing Date,
among the Parent Support Provider, the Depositor, the Issuer and the Indenture
Trustee, as amended, restated, supplemented or modified from time to time.
“Parent Support Provider” means Verizon.
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“Payment Date” means the 20th day of each month or, if not a Business Day, the
next Business Day, starting in March 2020. For a Collection Period, the related
Payment Date means the Payment Date following the end of the Collection Period.
“Percentage Interest” shall mean, with respect to each Certificate, the
percentage interest in the Issuer represented by such Certificate.
“Permitted Activities” has the meaning stated in Section 2.3(a) of the Trust
Agreement.
“Permitted Investments” means book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form that
evidence:
(a) (x) direct or fully guaranteed United States treasury
obligations, (y) U.S. Department of Housing and Urban Development public agency
bonds, Federal Housing Administration debentures, Government National Mortgage
Association guaranteed mortgage-backed securities or participation certificates,
RefCorp debt obligations, SBA-guaranteed participation certificates and
guaranteed pool certificates or (z) Farm Credit System consolidated systemwide
bonds and notes, Federal Home Loan Banks’ consolidated debt obligations, Federal
Home Loan Mortgage Corp. debt obligations and Federal National Mortgage
Association debt obligations, if, with respect to the investments listed in
clause (z), they meet the criteria of S&P for collateral for securities having
ratings equivalent to the respective ratings of the Notes in effect at the
Closing Date;
(b) demand deposits, time deposits, certificates of deposit or
bankers’ acceptances of any depository institution or trust company (i)
incorporated under the laws of the United States or any State or any United
States branch or agency of a foreign bank, (ii) subject to supervision and
examination by federal or State banking or depository institution authorities
and (iii) where the commercial paper or other short-term unsecured debt
obligations (other than obligations with a rating based on the credit of a
Person other than the depository institution or trust company) of such
depository institution or trust company have the Required Rating;
(c) commercial paper, including asset-backed commercial paper, having
the Required Rating;
(d) investments in money market funds having a rating in the highest
investment grade category from each of S&P and Moody’s (including funds for
which the Indenture Trustee or the Owner Trustee or any of their Affiliates is
investment manager or advisor); and
(e) any other investment that is acceptable to each Rating Agency.
“Permitted Lien” means a Lien that attaches by operation of law, or any security
interest of the Depositor in the Originator Transferred Property and the Master
Trust Transferred Property under the related Receivables Transfer Agreement, the
Issuer in the Depositor
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Transferred Property under the Transfer and Servicing Agreement or the Indenture
Trustee in the Collateral under the Indenture.
“Person” means a legal person, including a corporation, natural person, joint
venture, limited liability company, partnership, trust, business trust,
association, government, a department or agency of a government or any other
entity.
“Personally Identifiable Information” has the meaning stated in the Asset
Representations Review Agreement.
“Pool Balance” means, for any Collection Period, an amount equal to (i) the
aggregate Principal Balance of the Receivables on the last day of the Collection
Period immediately preceding such Collection Period (excluding Acquired
Receivables), plus the aggregate Principal Balance on the related Cutoff Date of
any Additional Receivables transferred during the Collection Period less (ii)
the aggregate Principal Balance of any Temporarily Excluded Receivables as of
the last day of the Collection Period immediately preceding such Collection
Period.
“Pool Composition Tests” means, for the Closing Date, each Payment Date and any
Acquisition Date and with respect to the pool of Receivables held by the Issuer
as of the related Cutoff Date, including any Additional Receivables acquired by
the Issuer on an Acquisition Date, each of the following tests calculated as of
the end of the month preceding the month in which such date occurs:
(a)
the weighted average FICO® Score 8 of the Obligors with respect to the
Receivables is at least 685 (excluding Receivables with Obligors for whom FICO®
Score 8s are not available),
(b)
Receivables with Obligors for whom FICO® Score 8s are not available represent no
more than 5.00% of the Pool Balance,
(c)
Receivables with Obligors that have less than 12 months of Customer Tenure with
Verizon Wireless represent no more than 28.00% of the Pool Balance,
(d)
Receivables with Obligors that have 7 months or more, but less than 24 months of
Customer Tenure with Verizon Wireless represent no more than 15.00% of the Pool
Balance,
(e)
Receivables with Obligors that have 60 months or more of Customer Tenure with
Verizon Wireless represent at least 50.00% of the Pool Balance,
(f)
Receivables with Obligors that have less than 12 months of Customer Tenure with
Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that
have FICO® Score 8s below 650, represent no more than 10.00% of the Pool
Balance,
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(g) Receivables with Obligors that have 12 months or more, but less
than 60 months of Customer Tenure with Verizon Wireless and (i) for whom FICO®
Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent
no more than 55.00% of the aggregate Principal Balance of all Receivables with
Obligors that have 12 months or more, but less than 60 months of Customer Tenure
with Verizon Wireless, and
(h) Receivables with Obligors that have 60 months or more of Customer
Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available
or (ii) that have FICO® Score 8s below 650, represent no more than 30.00% of the
aggregate Principal Balance of all Receivables with Obligors that have 60 months
or more of Customer Tenure with Verizon Wireless.
“Principal Balance” means, for a Receivable as of the last day of a month, an
amount (not less than zero) equal to, without duplication:
(a) the Amount Financed; minus
(b) the portion of the amounts paid by the related Obligor
applied on or before that date allocable to principal; minus
(c) any Credits allocated to such Receivable;
provided that, the Principal Balance for any Written-Off Receivable will be
deemed to be zero.
“Proceeding” means a suit in equity, action at law or other judicial or
administrative proceeding, or governmental investigation.
“Prospectus” means the prospectus dated as of January 21, 2020, relating to the
offering of the Notes.
“Qualified Institution” means U.S. Bank National Association, Wilmington Trust,
National Association, or a trust company or a bank or depository institution
organized under the laws of the United States or any State or any United States
branch or agency of a foreign bank or depository institution that (i) is subject
to supervision and examination by federal or State banking authorities, (ii) has
a short-term deposit rating of “P-1” from Moody’s, if rated by Moody’s, and
“A-1+” from S&P, if rated by S&P, (iii) if the institution holds any Bank
Accounts, has a long-term unsecured debt rating or issuer rating of at least
“Aa3” from Moody’s, if rated by Moody’s, and at least “A” from S&P, if rated by
S&P and (iv) if the institution is organized under the laws of the United
States, whose deposits are insured by the Federal Deposit Insurance Corporation.
“Rating Agency” means each of Moody’s and S&P.
“Rating Agency Condition” means, for an action or request and with respect to a
Rating Agency, that, according to the then-current policies of the relevant
Rating Agency for that action
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or request, the Rating Agency has notified the Depositor, the Servicer, the
Owner Trustee and the Indenture Trustee that the proposed action or request will
not result in a downgrade or withdrawal of its then-current rating on any of the
Notes.
“Receivable” means, for a Collection Period, an Initial Receivable or an
Additional Receivable, excluding any device payment plan agreement that became
an Acquired Receivable during a prior Collection Period or was a Written-Off
Receivable sold under Section 3.4 of the Transfer and Servicing Agreement during
a prior Collection Period.
“Receivable File” has the meaning stated in Section 3.10(b) of the Transfer and
Servicing Agreement.
“Receivables Transfer Agreements” or “Receivables Transfer Agreement” means,
collectively or individually, the Originator Receivables Transfer Agreement and
the Master Trust Receivables Transfer Agreement, as the context may require.
“Record Date” means, for a Payment Date and a Book-Entry Note, the close of
business on the day before the Payment Date and, for a Payment Date and a
Definitive Note, the last day of the calendar month immediately preceding the
month in which the Payment Date occurs and with respect to any notice, vote or
consent, the most recently occurring Record Date for a Payment Date.
“Recoveries” means, for any Written-Off Receivable and a Collection Period, an
amount equal to:
(a)
all amounts received and applied by the Servicer during the Collection Period
for the Receivable after the date on which it became a Written-Off Receivable,
including any proceeds from the sale of a Device securing any Receivable; minus
(b)
any amounts paid by the Servicer for the account of the related Obligor,
including collection expenses and other amounts paid to third parties, if any,
in connection with collections on the Written-Off Receivable; minus
(c)
amounts, if any, required by Law or under the Servicing Procedures to be paid to
the Obligor.
“Redemption Date” has the meaning stated in Section 10.1 of the Indenture.
“Reference Banks” means, for any LIBOR Determination Date, the four major banks
in the London interbank market selected by the Administrator.
“Reference Time” with respect to any determination of the Benchmark means (1) if
the Benchmark is One-Month LIBOR, 11:00 a.m. (London time) on the day that is
two (2) London banking days preceding the date of such determination, and (2) if
the Benchmark is not One-Month LIBOR, the time determined by the Administrator
in accordance with the Benchmark Replacement Conforming Changes.
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“Reference Treasury Dealer” means (1) any independent investment banking or
commercial banking institution of national standing and any of its successors
appointed by Verizon; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in the United States,
referred to as a “Primary Treasury Dealer,” another Primary Treasury Dealer
substituted therefor, and (2) any other Primary Treasury Dealer selected by an
Independent Investment Banker and approved in writing by Verizon.
“Reference Treasury Dealer Quotations” means, with respect to each Reference
Treasury Dealer and any date of determination, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker at 3:30 p.m., New York
City time, on the third Business Day preceding the date of determination.
“Regular Priority Principal Payment” means, for a Payment Date, an amount equal
to the greater of (A) an amount (not less than zero) equal to the excess, if
any, of (a) the aggregate Note Balance of the Class A Notes, the Class B Notes
and the Class C Notes as of the immediately preceding Payment Date (or, for the
initial Payment Date, as of the Closing Date), minus the sum of the First
Priority Principal Payment, the Second Priority Principal Payment and the Third
Priority Principal Payment for the current Payment Date, over (b) the Adjusted
Pool Balance as of the last day of the related Collection Period minus the
Overcollateralization Target Amount, and (B) on and after the Final Maturity
Date for any Class of Notes, the amount that is necessary to reduce the
principal amount of each such Class, as applicable, to zero (after the
application of any First Priority Principal Payment, Second Priority Principal
Payment and Third Priority Principal Payment).
“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation
AB), 17 C.F.R. §§229.1100-229.1125, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting releases (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005) and Asset-Backed
Securities Disclosure and Registration, Securities Act Release No. 33-9638, 79
Fed. Reg. 57,184 (Sept. 24, 2014)) or by the staff of the Commission, or as may
be provided by the Commission or its staff from time to time.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York, or any
successor thereto.
“Requesting Noteholders” has the meaning stated in Section 14.1 of the
Indenture.
“Requesting Party” has the meaning stated in Section 11.2 of the Transfer and
Servicing Agreement.
“Required Acquisition Deposit Amount” means, for any Payment Date during the
Revolving Period, an amount equal to the excess, if any, of (x) the aggregate
Note Balance of the Notes over (y) (i) the Adjusted Pool Balance as of the end
of the related Collection Period minus
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(ii) the Overcollateralization Target Amount, after giving effect to any
acquisition of Additional Receivables on such date.
“Required Negative Carry Amount” means, for any Payment Date during the
Revolving Period, an amount equal to the product of (i) the amount in the
Acquisition Account on the Payment Date (after giving effect to all payments
under Section 8.2(c) of the Indenture and the acquisition of Additional
Receivables, if any, on the Payment Date), (ii) the weighted average Note
Interest Rate and (iii) 1/12.
“Required Rating” means, for short-term unsecured debt obligations, a rating of
(a) “P-1” from Moody’s and (b) “A-1+” from S&P.
“Required Reserve Amount” means $17,877,097.97, or approximately 1% of the
Adjusted Pool Balance as of the Initial Cutoff Date.
“Reserve Account” means the account established under Section 4.1(a) of the
Transfer and Servicing Agreement.
“Reserve Account Draw Amount” means:
(a) for each Payment Date before the Amortization Period, the lesser
of:
(i) an amount (not less than zero) equal to the Total Required
Payment minus the Available Funds determined without regard to the Reserve
Account Draw Amount; and
(ii) the amount in the Reserve Account; and
(b) for each Payment Date during the Amortization Period, an amount
equal to the amount in the Reserve Account, if that amount together with
Available Funds for that Payment Date is sufficient to pay the entire Note
Balance of the Notes, all accrued and unpaid interest and any unpaid Make-Whole
Payments and all other amounts to be distributed to the Secured Parties under
the Indenture and the Transfer and Servicing Agreement in full.
“Reserve Deposit Amount” means, for a Payment Date, an amount equal to (a) the
Required Reserve Amount minus (b) the amount in the Reserve Account on the
Payment Date (before payments under Section 8.2(c) of the Indenture on that
Payment Date).
“Residual Interest” means an “eligible horizontal residual interest” (as defined
in the U.S. Credit Risk Retention Rules) equal to at least 5% of the fair value
of all of the “ABS interests” (as defined in the U.S. Credit Risk Retention
Rules) in the Issuer issued as part of the transactions contemplated by the
Transaction Documents, determined as of the Closing Date using a fair value
measurement framework under United States generally accepted accounting
principles.
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“Responsible Person” means:
(a) for the Administrator, the Depositor, the Sponsor, the Servicer,
the Marketing Agent, the Parent Support Provider or any Originator, a Person
designated in an Officer’s Certificate of the Person or other notice signed by
an officer of the Person authorized to act for the Person or any treasurer,
assistant treasurer or corporate secretary of such Person that has
responsibility for the matter;
(b) for the Issuer, an officer in the Corporate Trust Office of the
Owner Trustee, any officer of the Owner Trustee to whom any matter is referred
because of the officer’s knowledge of and familiarity with the matter, and a
Responsible Person of the Administrator;
(c) for the Master Trust, an officer in the Corporate Trust Office of
the Master Trust Owner Trustee, any officer of the Master Trust Owner Trustee to
whom any matter is referred because of the officer’s knowledge of and
familiarity with the matter, and a Responsible Person of the Master Trust
Administrator; and
(d) for the Indenture Trustee or the Owner Trustee, an officer in the
Corporate Trust Office of the Indenture Trustee or the Owner Trustee, as
applicable, including each vice president, assistant vice president, secretary,
assistant secretary or other officer customarily performing functions similar to
those performed by those officers listed above, and any officer of the Indenture
Trustee or the Owner Trustee, as applicable, to whom any matter is referred
because of the officer’s knowledge of and familiarity with the matter, and in
each case, having direct responsibility for the administration of the
Transaction Documents.
“Review” has the meaning stated in the Asset Representations Review Agreement.
“Review Materials” has the meaning stated in the Asset Representations Review
Agreement.
“Review Notice” has the meaning stated in the Asset Representations Review
Agreement.
“Review Receivable” has the meaning stated in the Asset Representations Review
Agreement.
“Review Report” means, for an Asset Representations Review, the report of the
Asset Representations Reviewer described in Section 3.5 of the Asset
Representations Review Agreement.
“Revolving Period” means the period from the Closing Date to the start of the
Amortization Period.
“S&P” means S&P Global Ratings.
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“Sarbanes Certification” has the meaning stated in Section 6.7(a)(iv) of the
Transfer and Servicing Agreement.
“Schedule of Receivables” means (a) the schedule identifying the Initial
Receivables attached as Schedule A to each Receivables Transfer Agreement and
Schedule A to each of the Transfer and Servicing Agreement and the Indenture or
the electronic file with respect thereto delivered on the Closing Date, and (b)
each schedule identifying any Additional Receivables attached as Schedule A to
any Transfer Notice or the electronic file with respect thereto delivered by the
Depositor, or the Administrator on its behalf, to the Issuer and the Indenture
Trustee for an Acquisition Date.
“Second Priority Principal Payment” means, for a Payment Date, the greater of:
(a) an amount (not less than zero) equal to:
(i) the aggregate Note Balances of the Class A Notes and the Class B
Notes as of the immediately preceding Payment Date (or, for the initial Payment
Date, as of the Closing Date); minus
(ii) the Adjusted Pool Balance; minus
(iii) the First Priority Principal Payment; and
(b) on and after the Final Maturity Date for the Class B Notes, the
Note Balance of the Class B Notes until paid in full.
“Secured Parties” means the Indenture Trustee, for the benefit of the
Noteholders.
“Securities Account” means each Bank Account subject to the terms of the Account
Control Agreement.
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Intermediary” means U.S. Bank National Association.
“Servicer” means Cellco or any Successor Servicer engaged under Section 7.4 of
the Transfer and Servicing Agreement.
“Servicer Acquisition Obligation” has the meaning stated in the Parent Support
Agreement.
“Servicer Deposit Obligation” has the meaning stated in the Parent Support
Agreement.
“Servicer Representation Obligation” has the meaning stated in the Parent
Support Agreement.
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“Servicer Termination Event” has the meaning stated in Section 7.2 of the
Transfer and Servicing Agreement.
“Servicer’s Certificate” means an Officer’s Certificate of the Servicer
delivered pursuant to Section 6.6 of the Transfer and Servicing Agreement.
“Servicing Criteria” means the “servicing criteria” set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
“Servicing Fee” means, for a Collection Period, the fee payable to the Servicer
in an amount equal to the product of:
(a) one-twelfth of the Servicing Fee Rate; times
(b) the Adjusted Pool Balance at the beginning of the full calendar
month immediately preceding such Payment Date;
provided, that the Servicing Fee for the initial Payment Date will equal the
product of (i) a fraction, the numerator of which is the number of days from and
including the Closing Date to and including the last day of the first Collection
Period and the denominator of which is 360, and (ii) the Servicing Fee Rate
times the Adjusted Pool Balance as of the Closing Date.
“Servicing Fee Rate” means 0.75%.
“Servicing Procedures” means the servicing procedures of Cellco relating to
device payment plan agreements originated by the Originators, as amended or
modified from time to time.
“Similar Law” means any federal, State, local or non-U.S. law or regulation that
is substantially similar to Title I of ERISA or Section 4975 of the Code.
“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the Benchmark
Administrator for SOFR (or a successor Benchmark Administrator).
“Solvent” means, with respect to any Person and as of any particular date, that
(i) the present fair market value (or present fair saleable value) of the assets
of such Person is not less than the total amount required to pay the probable
liabilities of such Person on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured, (ii)
such Person is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and become
due in the normal course of business and (iii) such Person is not incurring
debts or liabilities beyond its ability to pay such debts and liabilities as
they mature.
“Sponsor” means Cellco.
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“State” means a state or commonwealth of the United States of America, or the
District of Columbia.
“Subcontractor” means any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as “servicing” is commonly understood by
participants in the asset-backed securities market) of the Receivables but
performs one or more discrete functions identified in the Servicing Criteria
with respect to the Receivables under the direction or authority of the Servicer
or a Subservicer.
“Subservicer” means any Person that services Receivables on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement that are identified in the Servicing Criteria.
“Successor Servicer” has the meaning stated in Section 7.4(a)(i) of the Transfer
and Servicing Agreement.
“Supplemental Servicing Fee” means, for a Collection Period, all net Recoveries,
late fees, prepayment charges, extension fees and other administrative fees or
similar charges on the Receivables.
“Temporarily Excluded Receivables” means any Receivable deemed to be temporarily
excluded by the Administrator from any calculation required to be made by the
Administrator or the Servicer pursuant to and in accordance with the terms of
the Transaction Documents.
“Temporarily Excluded Receivables Servicing Fee” means, for a Collection Period,
the fee payable to the Servicer in an amount equal to the product of:
(a) one-twelfth of the Servicing Fee Rate; times
(b) the aggregate Principal Balance of all Temporarily Excluded
Receivables at the beginning of the calendar month immediately preceding such
Collection Period.
“Term SOFR” means the forward-looking term rate for the applicable Corresponding
Tenor based on SOFR that has been selected or recommended by the Relevant
Governmental Body.
“Third Priority Principal Payment” means, for a Payment Date, the greater of:
(a) an amount (not less than zero) equal to:
(i) the aggregate Note Balances of the Class A Notes, the Class B
Notes and the Class C Notes as of the immediately preceding Payment Date (or,
for the initial Payment Date, as of the Closing Date); minus
(ii) the Adjusted Pool Balance; minus
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(iii) the First Priority Principal Payment; minus
(iv) the Second Priority Principal Payment; and
(b) on and after the Final Maturity Date for the Class C Notes, the
Note Balance of the Class C Notes until paid in full.
“Total Required Payment” means,
(a) for a Payment Date and the Reserve Account Draw Amount, the sum
of the amounts set forth in Sections 8.2(c)(i) through (viii) of the Indenture;
and
(b) for a Payment Date and the Negative Carry Account Draw Amount,
the sum of the amounts set forth in Sections 8.2(c)(i) through (xiii) of the
Indenture.
Following an Event of Default and an acceleration of the Notes or an Insolvency
Event or dissolution of the Depositor, until the Note Balances of each Class of
Notes have been paid in full, the Total Required Payment will also include the
aggregate Note Balances of all Notes.
“Transaction Documents” means the Certificate of Trust, the Trust Agreement, the
Receivables Transfer Agreements, the Transfer and Servicing Agreement, the
Indenture, the Administration Agreement, the Asset Representations Review
Agreement, the Parent Support Agreement, the Underwriting Agreement, the
Marketing Agent Agency Agreement, the Depository Agreement, the Cap Agreement
and the Account Control Agreement.
“Transfer and Servicing Agreement” means the Transfer and Servicing Agreement,
dated as of the Closing Date, among the Issuer, the Depositor and Cellco as
Servicer, Marketing Agent and Custodian, as amended, restated, supplemented or
modified from time to time.
“Transfer Notice” means the notice to the Issuer, the Depositor and the
Indenture Trustee regarding the acquisition of Additional Receivables under
Section 2.1(d) of each of the Receivables Transfer Agreements, substantially in
the form of Exhibit A to each such Receivables Transfer Agreement.
“Treasury Rate” means, for any Payment Date on which a Make-Whole Payment is to
be made, the rate determined on the third Business Day preceding such Payment
Date equal to:
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release published by the Board of Governors of the Federal Reserve System
designated as “Statistical Release H. 15(519)” or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption “Treasury Constant
Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining Life (as
defined in the definition of Comparable Treasury Issue), yields for the two
published
A-39
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maturities most closely corresponding to the Comparable Treasury Issue will be
determined and the Treasury Rate will be interpolated or extrapolated from those
yields on a straightline basis, rounding to the nearest month), or
(ii) if that release (or any successor release) is not published
during the week preceding the calculation date or does not contain those yields,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for the date of redemption.
“Treasury Regulations” shall mean regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
“True Up Trust” means Verizon DPPA True Up Trust, a Delaware statutory trust, or
its successors or assigns.
“Trust Agreement” means the Amended and Restated Trust Agreement, dated as of
the Closing Date, between the Depositor and the Owner Trustee, as amended,
restated, supplemented or modified from time to time.
“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as in force
on the date hereof, unless otherwise specifically provided.
“Trust Property” means the Initial Trust Property and any Additional Trust
Property.
“Trust Register” has the meaning stated in Section 3.3(a) of the Trust
Agreement.
“Trust Registrar” has the meaning stated in Section 3.3(a) of the Trust
Agreement.
“U.S. Credit Risk Retention Rules” means Regulation RR, 17 C.F.R. §246.1, et
seq.
“UCC” means the Uniform Commercial Code as in effect in any relevant
jurisdiction.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the
Benchmark Replacement Adjustment.
“Underwriting Agreement” means the Underwriting Agreement, dated as of January
21, 2020, by and among the Depositor, Cellco and each of BofA Securities, Inc.,
Mizuho Securities USA LLC, MUFG Securities Americas Inc. and Wells Fargo
Securities, LLC, each on its own behalf and as a representative of the several
underwriters identified therein.
“Underwriting Procedures” means the underwriting procedures of the Originators,
as established by Cellco, relating to device payment plan agreements originated
by the Originators, as such underwriting procedures may be amended or modified
from time to time.
A-40
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“Upgrade Contract” has the meaning stated in the Glossary of the Marketing Agent
Agency Agreement.
“Upgrade Offer” means the Annual Upgrade Offer or any other upgrade offer
extended by Verizon Wireless to an existing Obligor under which such Obligor can
upgrade a Device that is the subject of a device payment plan agreement if the
terms and conditions specified in such offer are satisfied.
“Upgrade Payment” means a prepayment amount equal to the remaining unpaid
Principal Balance of the related Receivable determined as of the date of the
relevant upgrade, after giving effect to any prepayment made by the related
Obligor in connection with the related Upgrade Offer.
“Verified Note Owner” has the meaning stated in Section 14.1 of the Indenture.
“Verizon” means Verizon Communications Inc., a Delaware corporation.
“Verizon Originators” means the various subsidiaries and Affiliates of Cellco
listed on Schedule I to the Marketing Agent Agency Agreement.
“Verizon Wireless” means the wireless business of Verizon, operated by Cellco
and various other subsidiaries of Verizon, including the Originators, under the
Verizon Wireless brand.
“Written-Off Receivable” means any Receivable that in accordance with the
Servicing Procedures has been charged off or written off by the Servicer.
“Yield Amount” means, for each Receivable on the Closing Date, on each Payment
Date and on each Acquisition Date other than a Payment Date, the amount by which
(x) the Principal Balance as of the last day of the related Collection Period or
as of the applicable Cutoff Date, as applicable, for such Receivable exceeds (y)
the present value of the future scheduled payments on the Receivable as of the
last day of the related Collection Period (or as of the applicable Cutoff Date,
for the first Payment Date for the Receivables) calculated using the Discount
Rate. For purposes of this calculation, the future scheduled payments on each
Receivable are the equal monthly payments that would reduce the Receivable’s
Principal Balance as of the related Cutoff Date to zero on the Receivable’s
final scheduled payment date, at an interest rate equal to the APR of the
Receivable, which payments are received at the end of each month without any
delays, defaults or prepayments.
“Yield Supplement Overcollateralization Amount” means, for the Closing Date, for
each Payment Date and for each Acquisition Date other than a Payment Date, an
amount calculated as the sum of the Yield Amounts for all Receivables owned by
the Issuer with an APR as stated in the related device payment plan agreement of
less than 7.65%.
A-41
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Exhibit A
Custodian’s Security Requirements
(See Attached)
EA-1
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Successor Servicer Information Security Requirements
The following information security requirements (the "Requirements") are
generally applicable to any successor Servicer appointed under the terms and
conditions of the Transfer and Servicing Agreement (the "Servicer"). Capitalized
terms used herein are defined as set forth below or if not defined herein as set
forth in Appendix A to the Transfer and Servicing Agreement.
1.
Information Security Generally
One or more qualified Servicer employees must be designated with responsibility
to protect Cellco Confidential Information against Loss or Misuse:
a.
Documented information security policies and standards ("Servicer's lnfoSec
Standards") must be established that meet these Requirements and conform to all
applicable data protection laws and regulations. Servicer's lnfoSec Standards
must include provisions that require assessments of various information security
related risks, vulnerabilities and threats, and the management of those risks,
vulnerabilities and threats then consistent with these Requirements.
b.
Servicer must require all permitted subcontractors to comply in writing with
these Requirements.
2.
Representations and Warranties
Servicer must represent and warrant that it and its directors, shareholders,
officers, employees, agents and all permitted subcontractors are in compliance,
and will continue to be in compliance, with all Laws pertaining to the
safeguarding, protection, privacy, security, encryption, unauthorized
disclosure, breach notification and disposal of personal or similar information
used, maintained, and/or accessed on Cellco's behalf.
3.
Basic Data Protection
Servicer shall protect all Cellco Confidential Information as follows
(additional controls are required for Cellco Highly Confidential Information):
a.
Data Labeling: Servicer shall maintain any labeling or other designations
applied by Cellco on electronic and physical copies of data, and to any data set
containing Cellco Confidential Information (or Cellco Highly Confidential
Information).
b.
Least Privilege: Servicer must apply the "Principle of Least Privilege" (or
"PLP") model for access to Cellco Confidential Information, enabling access only
to such information as are necessary for person or process to perform a
legitimate business function. Periodic review of PLP is required.
c.
Authentication: Servicer shall ensure that authentication meeting these
Requirements is required prior to granting access to Cellco Confidential
Information stored in a system, application or database. Authentication
resulting in access to a system, application or database containing Cellco
Confidential Information must be logged consistent with these Requirements.
d.
Encrypted Portable Media: Any Cellco Confidential Information stored on portable
media (such as DVD, CD, magnetic tape media, removable hard drives, USB drives
or similar portable storage), must meet Storage Encryption requirements.
e.
Network Protection: Servicer shall use Industry Standard measures, including
encryption, for preventing interception of or access to Cellco Confidential
Information transiting networks. Transit over the public internet and other
externally accessible networks requires Transport Encryption.
f.
Controlled Spaces: Cellco Confidential Information contained in paper form or
unencrypted electronic media must be stored in a controlled space (e.g.,
individual office with a door) with standard, after-business-hours locking; or
in
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Successor Servicer Information Security Requirements
locked storage containers (e.g., locked drawer, cabinet).
g.
Prohibiting Unintended Viewing: Cellco Confidential Information must be
protected against casual, unintended viewing by unauthorized persons.
h.
Document Disposal: Sanitization of Servicer Devices containing Cellco
Confidential Information must meet these Requirements. All hardcopy documents
must be cross-cut shredded.
i.
Secure Physical Media Transport: When physically transporting digital media
containing Cellco Confidential Information, that information must be protected
using Storage Encryption. If approved by Cellco, transport using a qualified
courier, with tracking and in a physically secure container. Physical transport
of paper documents or other physical media containing Cellco Confidential
Information must be protected against casual observation of the information and
sent using reliable means which includes tracking.
j.
Datacenter/Server/Cloud Facilities: If Cellco Confidential Information is stored
in or processed in server or datacenter facilities, those facilities must meet
the facility standards set out in these Requirements for the particular class of
Information.Cellco Confidential Information must not be (i) processed on a
Public Cloud or the Public Cloud portion of a Hybrid Cloud solution (see
definition of "Cloud Environments" below), nor (ii) stored on a Public Cloud or
the Public Cloud portion of a Hybrid Cloud solution unless there is Transport
Encryption for communications with and among Cloud Environment elements, and
Sensitive Personal Information has Storage Encryption when stored.
k.
Cloud Environments: For all Cloud Environments, Servicer shall validate
compliance, at least once annually, with either (i) the latest version of the
Cloud Security Alliance Cloud Controls Matrix (CCM) at
https://cloudsecurityalliance.org, or (ii) a Cellco-approved equivalent set of
security, privacy, and business continuity controls, which will meet Cellco's
external and internal compliance requirements for protecting Cellco Confidential
Information or Cellco Highly Confidential Information.
4.
Cellco Highly Confidential Information Control Requirements
In addition to all of the Basic Data Protection requirements above for Cellco
Confidential Information, Cellco Highly Confidential Information must be further
protected using the following controls:
a.
Encrypted Storage: All Cellco Highly Confidential Information must be stored
only using Storage Encryption.
b.
Key Management. Servicer shall document, implement, and maintain
enterprise-class Industry Standard encryption key and seed management procedures
to ensure the integrity, security, and retrieval of any applicable Cellco
encryption keys or Cellco encrypted data. These procedures should include
generating, distributing, storing, changing, recovering, archiving, and
destroying encryption keys and the implementation of periodic key rotation,
revocation (at least annually or in the event of compromise), and dual knowledge
(such that one person does not have the full key for any data encrypted at
rest).
c.
Verified Least Privilege: In addition to initial and periodic determinations of
least privileged access undertaken for Cellco Confidential Information, with
respect to Cellco Highly Confidential Information, Servicer shall verify
continued entitlement to access consistent with PLP at least annually (and at
least every ninety (90) days for elevated privilege or administrator accounts
for applications/systems/databases subject to Sarbanes Oxley 404
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Successor Servicer Information Security Requirements
requirements or Payment Card Industry (PCI) requirements or equivalent non- USA
international requirements), using processes that provide independent assurance.
d.
Logging and Log Review: In addition to the logging and monitoring described
elsewhere in these Requirements, Servicer must implement logging systems and log
reviews reasonably sufficient to detect Loss or Misuse of Cellco Highly
Confidential Information. At a minimum, this includes:
i.
logging and log reviews of operations that export or copy Cellco Highly
Confidential Information
ii.
developing a baseline of expected export/copy activity and
iii.
logging to detect activity exceeding baseline thresholds.
e.
Display Controls: To prevent disclosure of Cellco Highly Confidential
Information when unnecessary to perform a required business function and when
required by law, Servicer shall mask or truncate data in display.
f.
System Segmentation. Except as otherwise approved by Cellco, systems or devices
storing, processing or transmitting Cellco Highly Confidential Information must
be logically isolated from systems that handle other companies' information. For
example, Servicer must use separate database server instances for the processing
of Cellco Highly Confidential Information or must use separate virtual operating
system images than those used or accessed by other companies serviced by the
Servicer.
5.
Security Logging and Monitoring
Servicer must utilize logging and monitoring controls for all Servicer Systems:
a.
Servicer must maintain electronic logs of all access to Cellco Highly
Confidential Information, depicting the details of the access, as well as
general logs related to systems housing Cellco Confidential Information and user
access to systems. The approach to creating, maintaining and analyzing these
electronic logs should be materially similar to NIST SP 800-92.
b.
At a minimum logs shall capture sufficient information to identify specific
personnel accessing data, time stamps, and specific data accessed for all access
to Cellco Highly Confidential Information.
c.
Logs shall be regularly (with the period commensurate with risk) reviewed by
Servicer, either manually or using log parsing tools.
d.
Servicer Systems must generate event logs for the following events at a minimum:
i.
User systems access events (logons, logoffs, authentication failures),
ii.
Additions, Deletions and Changes in user accounts and permissions,
iii.
Mass data modification, movement, deletion, and
iv.
Events related to system and log integrity, including malware detection
e.
Logs must be retained for a minimum of six (6) months.
f.
Logs must be protected from unauthorized access, modification and accidental or
deliberate destruction.
g.
Log reviews must be undertaken by a designated trained individual or group of
individuals, manually or through the use of tools, in order to detect
unauthorized activity.
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Successor Servicer Information Security Requirements
6.
Access Control
Servicer must utilize logical access controls for all access to Cellco
Confidential Information, as follows:
a.
Use of PLP, such that Servicer enables access to only such information as are
necessary to perform a legitimate business function for the role assigned to an
authorized user. Servicer must also employ a secure and reliable method of
enforcing authorization controls to limit access consistent with PLP. Compliance
with PLP also requires a process which will promptly terminate access by an
employee or contractor who no longer requires access to perform under the
Transfer and Servicing Agreement (e.g., a terminated or reassigned
employee/contractor).
b.
A process of controlling User IDs and other identifiers to ensure they are
unique among users and are not shared.
c.
Servicer Staff or Cellco SPI must not be used as an authentication or
authorization mechanism.
d.
Industry Standard password selection and aging procedures to limit opportunities
for compromise of password security must be utilized. Such password procedures
must substantially align with NIST SP 800-63:
e.
Administrative or elevated privileged access to servers must be encrypted in
accordance with Transport Encryption.
f.
Shared or elevated privileged account activity must be monitored, including
recordation of failed access attempts and changes to user rights.
g.
Shared or elevated privileged accounts shall not be used unless the usage can be
reliably tracked back to an individual Servicer Staff person.
h.
When any user's access privileges are removed or disabled, all related
privileges must be purged from the application to avoid inheritance of
privileges.
i.
When an error occurs during logon, it must not allow circumvention or breaking
out of login process and access must be denied.
7.
Security Incident Management and Response
a.
Servicer must have a plan for security incident management and response in the
event of an actual or suspected (i) Security Compromise with respect to Cellco
Confidential Information, (ii) Loss or Misuse of Cellco Confidential/Highly
Confidential Information, or (iii) malware posing a significant threat to Cellco
Confidential Information (collectively "Security Incident").
b.
Servicer's Security Incident management and response plan must have documented
formal procedures that comply with Industry Standards and applicable laws
addressing investigation and response to Security Incidents, including without
limitation, government mandated notifications in the event of privacy breaches.
c.
Servicer must provide notification via electronic mail to
security.issues@verizon.com of a Security Incident described in a(i) and (ii) as
soon as practicable after, but no later than twenty-four (24) hours, following
awareness of the Security Incident. Servicer shall provide notification to the
above address of a Security Incident meeting the criteria of a(iii) within three
(3) days after discovery of same, and continue to cooperate with Cellco and
provide regular updates thereafter.
d.
In addition, after a Security Incident Servicer shall (i) use best efforts to
re-secure its systems immediately, and (ii) cooperate with Cellco in the
investigation and remediation of any such occurrence. At Cellco's discretion,
such remediation may include, but is not limited to, (a) the provision and
distribution of notice letters by Cellco or Servicer (if, by Servicer, subject
to Cellco's approval) concerning such
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Successor Servicer Information Security Requirements
occurrence to any person affected or potentially affected thereby and domestic
and international, is necessary, authorities (collectively, "Notifications");
and (b) with respect to any Security Incident that poses a risk of identity
theft, including without limitation a Security Incident involving a social
security number, driver's license or similar personal identification number, the
provision of daily credit monitoring, access to credit reports and identity
theft insurance for a period of two (2) years (collectively, "Credit
Monitoring") to any person affected or potentially affected as a result of a
Security Breach.
e.
Servicer agrees that it shall assume or reimburse Cellco for all reasonable and
documented remediation costs, including, but not limited to, any governmental
fees or fines, costs for Notifications, costs for Credit Monitoring, and
customer reimbursements incurred by Cellco or any of its affiliates in
connection with a Security Incident.
8.
Communications Management
Servicer must ensure that the following communications management controls are
applied for communications pertaining to Cellco Confidential Information:
a.
Servicer must implement Industry Standard security requirements for Electronic
Data Interchange (EDI) connections, when Servicer interacts with Cellco (or
others on Cellco's behalf) using EDI. Any other electronic data interchange must
also comply with applicable Industry Standards and be approved by Cellco.
b.
Servicer must use Industry Standard methods to prevent interception of, or
improper access to (i) voice, email, voicemail and data communications,
including collaboration and conferencing sessions, pertaining to Cellco
Confidential Information, and (ii) Cellco operations or communications with
Cellco.
c.
Servicer must take appropriate measures to prevent the use of external personal
email accounts, personal websites and social media in handling Cellco
Confidential Information and that electronic mail is not utilized as archival
storage for Cellco Confidential Information.
d.
Servicer must ensure retention and restoral of electronic mail when directed by
Cellco in connection with actual or anticipated legal proceedings.
e.
Servicer must ensure general purpose fax communications are secured through
appropriate administrative procedures.
9.
Privacy
Servicer must adhere to and abide by the following privacy related requirements:
a.
SPI must be treated consistent with these Requirements and applicable law.
b.
SPI data must never be posted, displayed or made available on an unsecured
public website.
c.
If SPI data is among the data types relevant to a service for which Cellco
approval is sought or where notification to Cellco is required under the
Transfer and Servicing Agreement or these Requirements, the fact that SPI is
involved in the request or notification must be prominently noted in the request
or notification, together with identification of the specific SPI.
d.
Servicer must undertake required action to verify that SPI of Cellco or its
customer is used only for permitted business purposes and shall provide a
written notice by an authorized Servicer employee confirming the foregoing.
e.
Servicer must support removal of SPI from any Servicer Systems, datacenters,
facilities when no longer needed.
f.
Where advised by Cellco or where Servicer is otherwise made aware that SPI is
contained in a particular dataset, Servicer must continue to track that SPI
throughout Servicer's processes and operations.
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Successor Servicer Information Security Requirements
10.
Proof of Compliance; Audit Assistance
a.
Servicer must develop and retain documentation demonstrating compliance with
these Requirements and upon request from Cellco, Servicer must produce that
documentation for Cellco review.
b.
Servicer shall reasonably cooperate with Cellco's efforts to verify Servicer's
compliance with these Requirements, which efforts may include periodic audits of
Servicer's operations by Cellco or a third party at Cellco request and on
reasonable notice. Servicer will address in a timely manner, security issues
that are uncovered in such assessments.
Cellco shall have the right to amend these Requirements on thirty (30) days'
prior notice to Servicer. If Servicer is unable or unwilling to comply with the
revised Requirements, Servicer must notify Cellco at the notice address provided
by Cellco for such purpose.
General Definitions
1.
Cellco Confidential Information
means non-public information received from Cellco in connection with the
Transfer and Servicing Agreement.
2.
Cellco Highly Confidential Information
means Cellco Confidential Information that also fits the following criteria:
•
Information related to personally identifiable information of Cellco customers,
as defined in NIST SP 800-122,
•
Financial/bank information of Cellco customers, and
•
any other SPI not specifically described above.
3.
Cloud Environment
means a set of systems and processes acting together to provide services in a
manner that is disassociated with the underlying specific hardware or software
used for such purpose, and includes Hybrid Clouds, Private Clouds, Public Clouds
and Community Clouds, as defined by NIST Special Publication 800-145.
4.
days
means calendar days unless otherwise specified.
5.
Industry Standard
means any of the following:
(1)
actually used or adopted by a substantial number of companies comparable in
size, stature, function to Cellco;
(2)
prescribed for use by an applicable nationally recognized standards body; or
(3)
assessed by a significant number of recognized experts in the field as
acceptable and reasonable, except where a recent disclosure/public finding
uncovers a significant flaw/vulnerability in such standard.
6.
Loss
means the loss of control over Cellco Confidential Information, such that one or
more actors may further disclose or Misuse.
7.
Misuse
means the inappropriate or wrongful exercise of a right or privilege, such as a
right or privilege to access information, the wrongful disclosure of that
information or the malicious or otherwise improper execution of a function or
operation.
8.
Secure
means a process that destroys media on which information is located and thereby
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Successor Servicer Information Security Requirements
Destruction
makes recovery of such information impossible, consistent with Guidelines for
Media Sanitization, National Institute of Standards and Technology, NIST Special
Publication 800-88 (NIST 800-88). Incineration, shredding and pulverizing are
all permissible physical destruction methods in accordance with minimum
standards specified in NIST 800-88. Media that have been subject to such
destruction are "Destroyed" and have achieved "Sanitization" under these
Requirements.
9.
Sensitive Personal Information (SPI)
means the following subset of Cellco Highly Confidential Information, where
identifiable to an individual:
•
Social Security number (SSN), as well as the last four (4) digits of SSN,
•
Driver's license number or other federal or state government issued
identification number, including state issued ID, work visa, passport, and
military ID numbers,
•
Health or medical information,
•
Credit Card/ Debit Card Information, bank or other financial account
information, such as account numbers and ACH information,
•
Access codes, pins, passwords, challenge responses,
•
Mother's maiden name, and date of birth.
10.
Requirements
means the requirements set out in this document.
11
Storage Encryption
means data encryption using a non-proprietary Industry Standard algorithm
approved by Cellco. This includes:
File/Data TypeCipher
Encryption Algorithm
Strength
Flat (ASCII) files
Symmetric Block
Symmetric Block
Triple DES
AES
168 bits
256 bits
Database Tables
Symmetric Block
Symmetric Block
Triple DES
AES
168 bits
256 bits
Backup/Tape1
Symmetric Block
Symmetric Block
Triple DES
AES
168 bits
256 bits
Other2
Symmetric Block
Symmetric Block
Triple DES
AES
168 bits
256 bits
12.
Sanitization
means a process that removes information from media or that renders such
information irretrievable, such that data recovery is not possible, and means to
a level no less effective than as specified in NIST 800-88.
13.
Secure Transportation
means transport utilizing a licensed, bonded, secure carrier that implements and
adheres to an Industry Standard "chain of custody program", for tracking the
movement and disposition of storage media or other equipment from receipt to
final disposition, including tracking ownership of the media, the serial number
of the media,
--------------------------------------------------------------------------------
1 Full tape encryption not required if all Confidential Information is already
encrypted and if the process to move to backup preserves prior encryption
2 Any other stored file/data type not specifically mentioned herein
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verification at collection/pick-up location (owner/end user), driver name, date
and time stamp, and receipt at Servicer's location (date and time stamp).
14.
Security Compromise
means the acquisition or use of data, or execution of operations or function,
without authorization and through an actual or suspected contravention of
security measures.
15.
Servicer Devices
means devices (computing, storage, telecommunications or networking equipment)
provided by Servicer that process, store, or transmit Cellco Confidential
Information or are used to perform services under the Transfer and Servicing
Agreement.
16.
Servicer Systems
means any Servicer or third party systems or applications, alone or used with
Servicer Devices, that process, store, or transmit Cellco Confidential
Information or to perform services under the Transfer and Servicing Agreement.
17.
Servicer Staff
means employees, contract employees, and temporary staff of Servicer and any
authorized subcontractors with access to Cellco Confidential Information or
performing under the Transfer and Servicing Agreement.
18.
Transport Encryption
means transport encryption that meets current Cellco-approved requirements,
presently no less secure than encryption utilizing the then current IETF
(www.ietf.org) ratified version of Transport Layer Security (TLS) protected by a
minimum of 128 bit encryption with a 1024 bit keys using Cellco approved digital
certificates.
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Exhibit B
FORM OF ANNUAL CERTIFICATION
Re:
The Transfer and Servicing Agreement, dated as of January 29, 2020 (the
“Agreement”), among Verizon Owner Trust 2020-A (the “Issuer”), Verizon ABS LLC
(the “Depositor”), and Cellco Partnership d/b/a Verizon Wireless (“Cellco”), as
servicer (in such capacity, the “Servicer”), as marketing agent and as
custodian.
I, ________________________________, the _____________of __________ [NAME OF
COMPANY] (the “Company”), certify to the Issuer, the Administrator and the
Depositor, and their officers, with the knowledge and intent that they will rely
upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the “Compliance
Statement”), the report on assessment of the Company’s compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing
Criteria”), provided in accordance with Rules 13a-18 and 15d-18 under Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and Item 1122 of
Regulation AB (the “Servicing Assessment”), the registered public accounting
firm’s attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB (the “Attestation
Report”), and all servicing reports, officer’s certificates and other
information relating to the servicing of the Receivables by the Company during
20[__] that were delivered by the Company to the Issuer and the Depositor
pursuant to the Agreement (collectively, the “Company Servicing Information”);
(2) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to
the Issuer and the Depositor;
(4) I am responsible for reviewing the activities performed by the
Company as Servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement [and except as
disclosed in the Compliance Statement, the Servicing Assessment or the
Attestation Report,] the Company has fulfilled its obligations under the
Agreement in all material respects; and
(5) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and each Servicing Assessment and Attestation Report
required to be provided by the Company and by any Subservicer or Subcontractor
pursuant to the Agreement, have been provided to the Issuer, the Administrator,
the Depositor, the Indenture Trustee and the Owner Trustee. Any material
instances of
EB-1
--------------------------------------------------------------------------------
noncompliance with the Servicing Criteria have been disclosed in such reports
and have been disclosed to the Issuer, the Administrator and the Depositor.
Capitalized terms used herein and not otherwise defined have the meaning given
to such terms in the Agreement.
Date: _________________________
By: ___________________________
Name:
Title:
EB-2 |
Exhibit 10.1
Execution Version
Published CUSIP Numbers:
Deal: 54865PAN5
364-Day Revolver: 54865PAP0
CREDIT AGREEMENT
Dated as of March 23, 2020
among
lowesgraphicimage01.jpg [lowesgraphicimage01.jpg]
LOWE’S COMPANIES, INC.,
as the Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender
and an L/C Issuer,
U.S. BANK NATIONAL ASSOCIATION,
as Syndication Agent and an L/C Issuer,
CITIBANK, N.A.,
GOLDMAN SACHS BANK USA,
JPMORGAN CHASE BANK, N.A. and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents,
and
The Other Lenders Party Hereto
BofA SECURITIES, INC.,
BARCLAYS BANK PLC,
CITIBANK, N.A.,
GOLDMAN SACHS BANK USA,
JPMORGAN CHASE BANK, N.A.,
U.S. BANK NATIONAL ASSOCIATION, and
WELLS FARGO SECURITIES, LLC,
as Joint Lead Arrangers and Joint Bookrunners
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section
Page
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01
Defined Terms
1
1.02
Other Interpretive Provisions
25
1.03
Accounting Terms
26
1.04
Rounding
26
1.05
Exchange Rates; Currency Equivalents
26
1.06
Additional Alternative Currencies
27
1.07
Change of Currency
27
1.08
Times of Day
28
1.09
Letter of Credit Amounts
28
1.10
Interest Rates
28
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01
Committed Loans
28
2.02
Borrowings, Conversions and Continuations of Committed Loans
28
2.03
[Reserved.]
30
2.04
Letters of Credit
30
2.05
Swing Line Loans
39
2.06
Prepayments
41
2.07
Termination or Reduction of Commitments
42
2.08
Repayment of Loans
43
2.09
Interest
43
2.10
Fees
44
2.11
Computation of Interest and Fees
44
2.12
Evidence of Debt
44
2.13
Payments Generally; Administrative Agent’s Clawback
45
2.14
Sharing of Payments by Lenders
46
2.15
Increase in Commitments
47
2.16
Cash Collateral
48
2.17
Defaulting Lenders
49
2.18
Extension of Maturity Date
51
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01
Taxes
52
3.02
Illegality
57
3.03
Inability to Determine Rates
57
3.04
Increased Costs; Reserves on Eurocurrency Rate Loans
59
3.05
Compensation for Losses
61
3.06
Mitigation Obligations; Replacement of Lenders
61
3.07
Survival
62
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section
Page
ARTICLE IV.
CONDITIONS PRECEDENT TO EFFECTIVENESS
4.01
Conditions of Effectiveness
62
4.02
Conditions to all Credit Extensions
63
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
5.01
Existence, Qualification and Power
64
5.02
Authorization; No Contravention
64
5.03
Governmental Authorization; Other Consents
65
5.04
Binding Effect
65
5.05
Financial Statements; No Material Adverse Effect
65
5.06
Litigation
65
5.07
No Default
65
5.08
Ownership of Property; Liens
65
5.09
Beneficial Ownership
65
5.10
Taxes
66
5.11
ERISA Compliance
66
5.12
Margin Regulations; Investment Company Act
66
5.13
Disclosure
66
5.14
Compliance with Laws
67
5.15
Senior Debt Designation
67
5.16
OFAC
67
5.17
Affected Financial Institutions
67
5.18
Anti-Corruption Laws
67
5.19
Covered Entity
67
ARTICLE VI.
AFFIRMATIVE COVENANTS
6.01
Financial Statements
67
6.02
Certificates; Other Information
68
6.03
Notices
69
6.04
Payment of Taxes
70
6.05
Preservation of Existence, Etc
70
6.06
Maintenance of Properties
70
6.07
Maintenance of Insurance
70
6.08
Compliance with Laws
70
6.09
Inspection Rights
70
6.10
Use of Proceeds
71
6.11
Anti-Corruption Laws; Sanctions
71
ARTICLE VII.
NEGATIVE COVENANTS
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section
Page
7.01
Liens
71
7.02
Anti-Corruption Laws
72
7.03
Indebtedness
72
7.04
Fundamental Changes
73
7.05
Transactions with Affiliates
73
7.06
Use of Proceeds
74
7.07
Ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR
74
7.08
Sanctions
74
7.09
Anti-Corruption Laws
74
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01
Events of Default
74
8.02
Remedies Upon Event of Default
76
8.03
Application of Funds
76
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01
Appointment and Authority
77
9.02
Rights as a Lender
77
9.03
Exculpatory Provisions
77
9.04
Reliance by Administrative Agent
78
9.05
Delegation of Duties
79
9.06
Resignation of Administrative Agent; L/C Issuer
79
9.07
Non-Reliance on the Administrative Agent, the Arrangers and the Other Lenders
80
9.08
No Other Duties, Etc
80
9.09
Administrative Agent May File Proofs of Claim
81
9.10
No Lender is an Employee Benefit Plan
81
ARTICLE X.
MISCELLANEOUS
10.01
Amendments, Etc
82
10.02
Notices; Effectiveness; Electronic Communication
84
10.03
No Waiver; Cumulative Remedies; Enforcement
85
10.04
Expenses; Indemnity; Damage Waiver
86
10.05
Payments Set Aside
87
10.06
Successors and Assigns
88
10.07
Treatment of Certain Information; Confidentiality
92
10.08
Right of Setoff
93
10.09
Interest Rate Limitation
93
10.10
Counterparts; Integration; Effectiveness
94
10.11
Survival of Representations and Warranties
94
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section
Page
10.12
Severability
94
10.13
Replacement of Lenders
94
10.14
Governing Law; Jurisdiction; Etc
95
10.15
Waiver of Jury Trial
97
10.16
No Advisory or Fiduciary Responsibility
97
10.17
Electronic Execution of Assignments and Certain Other Documents
98
10.18
USA PATRIOT Act Notice
98
10.19
No Lenders Will Be “Public Side” Lenders
98
10.20
Judgment Currency
99
10.21
Acknowledgement and Consent to Bail-In of Affected Financial Institutions
99
10.22
Acknowledgement Regarding Any Supported QFCs
99
“QFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C
100
SIGNATURES
S-1
SCHEDULES
2.01
Commitments and Applicable Percentages
7.03
Existing Subsidiary Indebtedness
10.02
Administrative Agent’s Office; Certain Addresses for Notices
SCHEDULES Form of
A
Committed Loan Notice
B
Swing Line Loan Notice
C
Note
D
Compliance Certificate
E
Assignment and Assumption
F
Opinion
G
Letters of Credit Report
H
U.S. Tax Compliance Certificates
I
Notice of Loan Prepayment
--------------------------------------------------------------------------------
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 23] 2020 (this “Agreement”), is made by
and among LOWE’S COMPANIES, INC., a North Carolina corporation (the “Borrower”),
each lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent,
Swing Line Lender and an L/C Issuer.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders provide a revolving credit
facility in an original amount of up to $1,020,000,000, which includes a
multicurrency subfacility, a letter of credit subfacility and a subfacility for
swing line loans, and the Lenders are willing to do so on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Borrower, the Lenders and the Administrative Agent hereby agree
as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:
“Act” means USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)).
“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.
“Adjustment” has the meaning set forth in Section 3.03(c).
“Administrative Agent’s Office” means, with respect to any currency, the
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.02 with respect to such currency, or such other address or account
with respect to such currency as the Administrative Agent may from time to time
notify to the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
“Agent Parties” has the meaning specified in Section 10.02(c).
“Aggregate Commitments” means the Commitments of all the Lenders.
“Agreement” means this Credit Agreement.
“Alternative Currency” means each of the following currencies: Euro, Sterling,
and Canadian Dollars, together with each other currency (other than Dollars)
that is approved in accordance with Section 1.06.
--------------------------------------------------------------------------------
“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or the applicable
L/C Issuer, as the case may be, at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
such Alternative Currency with Dollars.
“Alternative Currency Sublimit” means an amount equal to the lesser of the
Aggregate Commitments and $250,000,000. The Alternative Currency Sublimit is
part of, and not in addition to, the Aggregate Commitments.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such
Person or to which such a Person is subject.
“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time, subject to adjustment as
provided in Section 2.17. If the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the
Applicable Percentage of each Lender shall be determined based on the Applicable
Percentage of such Lender most recently in effect, giving effect to any
subsequent assignments and to any Lender’s status as a Defaulting Lender at the
time of determination. The initial Applicable Percentage of each Lender is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Applicable Rate” means, from time to time, the following percentages per annum,
based upon the Debt Rating as set forth below:
Applicable Rate
Pricing Level
Debt Ratings S&P/Moody’s
Facility
Fee
Eurocurrency Rate and Letters of Credit
Base Rate Loans
1
≥ A / A2
0.060%
0.690%
0.000%
2
A- / A3
0.080%
0.795%
0.000%
3
BBB+ / Baa1
0.090%
0.910%
0.000%
4
BBB / Baa2
0.110%
1.015%
0.015%
5
≤ BBB- / Baa2
0.150%
1.100%
0.100%
Initially, the Applicable Rate shall be based on the Borrower’s Debt Rating on
the Closing Date. Thereafter, each change in the Applicable Rate resulting from
a publicly announced change in the Debt Rating shall be effective during the
period commencing on the date of the public announcement thereof and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of Moody’s or S&P shall change, or if either such rating
agency shall cease to be in the business of rating corporate debt obligations,
the Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
“Applicable Time” means, with respect to any borrowings and payments in any
Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by
2
--------------------------------------------------------------------------------
the Administrative Agent or the applicable L/C Issuer, as the case may be, to be
necessary for timely settlement on the relevant date in accordance with normal
banking procedures in the place of payment.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
“Arrangers” means, collectively, BofA Securities, Inc., Barclays Bank PLC,
Citibank, N.A., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., U.S. Bank
National Association and Wells Fargo Securities, LLC, each in its capacity as
joint lead arranger and joint bookrunner.
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit E or any other form (including electronic
documentation generated by use of an electronic platform) approved by the
Administrative Agent.
“Attributable Indebtedness” means, on any date (without duplication), (a) in
respect of any Capital Lease of any Person, the capitalized amount thereof that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP if such lease were accounted for as a Capital Lease and (c)
in respect of any Securitization Transaction, the outstanding principal amount
of such financing, after taking into account reserve accounts and making
appropriate adjustments, determined by the Administrative Agent in its
reasonable judgment.
“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended January 31, 2019,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.
“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.07, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.02.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable Resolution Authority in respect of any liability of an Affected
Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, rule, regulation or
requirement for such EEA Member Country from time to time which is described in
the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom,
Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and
any other law, regulation or rule applicable in the United Kingdom relating to
the resolution of unsound or failing banks, investment firms or other financial
institutions or their affiliates (other than through liquidation, administration
or other insolvency proceedings).
“Bank of America” means Bank of America, N.A. and its successors.
3
--------------------------------------------------------------------------------
“Base Rate” means for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate,” and (c) the Eurocurrency Rate plus 1.00%. The “prime rate” is a
rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such prime rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change. If the Base Rate is
being used as an alternate rate of interest pursuant to Section 3.03 hereof,
then the Base Rate shall be the greater of clauses (a) and (b) above and shall
be determined without reference to clause (c) above.
“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All
Base Rate Loans shall be denominated in Dollars.
“Beneficial Ownership Certification” means a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA)
that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to
Section 4975 of the Code or (c) any Person whose assets include (for purposes of
ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section
4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Borrower” has the meaning specified in the introductory paragraph hereto.
“Borrower Materials” has the meaning specified in Section 6.02.
“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office with respect to
Obligations denominated in Dollars is located and:
(a) if such day relates to any interest rate settings as to a Eurocurrency
Rate Loan denominated in Dollars, any fundings, disbursements, settlements and
payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other
dealings in Dollars to be carried out pursuant to this Agreement in respect of
any such Eurocurrency Rate Loan, means any such day that is also a London
Banking Day;
(b) if such day relates to any interest rate settings as to a Eurocurrency
Rate Loan denominated in Euro, any fundings, disbursements, settlements and
payments in Euro in respect of any such Eurocurrency Rate Loan, or any other
dealings in Euro to be carried out pursuant to this Agreement in respect of any
such Eurocurrency Rate Loan, means a TARGET Day;
(c) if such day relates to any interest rate settings as to a Eurocurrency
Rate Loan denominated in a currency other than Dollars or Euro, means any such
day on which dealings in
4
--------------------------------------------------------------------------------
deposits in the relevant currency are conducted by and between banks in the
London or other applicable offshore interbank market for such currency; and
(d) if such day relates to any fundings, disbursements, settlements and
payments in a currency other than Dollars or Euro in respect of a Eurocurrency
Rate Loan denominated in a currency other than Dollars or Euro, or any other
dealings in any currency other than Dollars or Euro to be carried out pursuant
to this Agreement in respect of any such Eurocurrency Rate Loan (other than any
interest rate settings), means any such day on which banks are open for foreign
exchange business in the principal financial center of the country of such
currency.
“Canadian Dollar” and “C$” mean the lawful currency of Canada.
“Capital Lease” means each lease that has been or is required to be, in
accordance with GAAP, classified and accounted for as a capital lease or
financing lease.
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, the
applicable L/C Issuer or Swing Line Lender (as applicable) and the Lenders, as
collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or
obligations of Lenders to fund participations in respect of either thereof (as
the context may require), cash or deposit account balances or, if the applicable
L/C Issuer or Swing Line Lender benefitting from such collateral shall agree in
its sole discretion, other credit support, in each case pursuant to
documentation in form and substance satisfactory to (a) the Administrative Agent
and (b) the applicable L/C Issuer or the Swing Line Lender (as applicable).
“Cash Collateral” shall have a meaning correlative to the foregoing and shall
include the proceeds of such cash collateral and other credit support.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith or in the implementation thereof and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of the Borrower or its Subsidiaries, including but not limited to the
Lowe’s Companies, Inc. 401K Plan, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of 50% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and
5
--------------------------------------------------------------------------------
taking into account all such securities that such person or group has the right
to acquire pursuant to any option right); or
(b) during any period of 12 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of the Borrower cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.
“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.
“Code” means the Internal Revenue Code of 1986.
“Commitment” means, as to each Lender, its obligation to (a) make Committed
Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in
L/C Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.
“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans of the same Type, in the same currency and, in the case of Eurocurrency
Rate Loans, having the same Interest Period made by each of the Lenders pursuant
to Section 2.01.
“Committed Loan” has the meaning specified in Section 2.01.
“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which, shall be
substantially in the form of Exhibit A or such other form as may be approved by
the Administrative Agent (including any form on an electronic platform or
electronic transmission system as shall be approved by the Administrative
Agent), appropriately completed and signed by a Responsible Officer of the
Borrower.
“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.
“Consolidated Adjusted Funded Debt” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
total amount of Consolidated Funded Debt, plus (b) the Debt Equivalent of
Operating Leases.
“Consolidated EBITDAR” means, for any Measurement Period, with respect to the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a)
Consolidated Net Income for such Measurement Period plus, to the extent deducted
in determining such Consolidated Net Income, the sum of (i) income tax
provision, (ii) interest net, (iii) depreciation, (iv) amortization, (v) any
extraordinary, non-recurring or unusual non-cash charges or losses of the
Borrower and its Subsidiaries incurred or charged in such Measurement Period,
(vi) non-cash charges of the Borrower and its Subsidiaries incurred or charged
in such Measurement Period, (vii) non-cash losses arising from the sale of
assets other than in the ordinary course
6
--------------------------------------------------------------------------------
of business of the Borrower and its Subsidiaries incurred or charged in such
Measurement Period, (viii) any actual transaction expenses or related costs paid
in cash in such Measurement Period in connection with (1) permitted acquisitions
or investments and (2) store closings so long as the Borrower provides the
Administrative Agent with a detailed summary of such actual costs and expenses
within 120 days of closing such acquisition, investment, or store closing, (ix)
any extraordinary, non-recurring or unusual cash charges or losses of the
Borrower or its Subsidiaries incurred during such Measurement Period, (x) any
cash losses arising from the sale of assets other than in the ordinary course of
business, (xi) stock based compensation expense (applied consistently with the
application set forth in the Audited Financial Statements), (xii) rental
payments made or required to be made during such Measurement Period, and (xiii)
cash and non-cash charges or losses associated with extinguishment of
Indebtedness or other non-recurring financing activity of the Borrower or any of
its Subsidiaries in such Measurement Period and (b) minus, to the extent
included in calculating such Consolidated Net Income, (i) all extraordinary,
non-recurring or unusual non-cash income or gains and (ii) non-cash gains
arising from the sale of assets other than in the ordinary course of business
increasing Consolidated Net Income (in each case of or by the Borrower and its
Subsidiaries for such Measurement Period).
For the purpose of calculating Consolidated EBITDAR for any Measurement Period,
if during such period the Borrower or any Subsidiary shall have made an
acquisition, investment or a Disposition permitted hereunder, Consolidated
EBITDAR for such period shall be calculated after giving pro forma effect
thereto as if such acquisition, investment or Disposition, as the case may be,
occurred on the first day of such period.
“Consolidated Funded Debt” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct obligations to
reimburse amounts paid under standby letters of credit, bankers’ acceptances,
bank guaranties, surety bonds and similar instruments (for the avoidance of
doubt, excluding commercial letters of credit and commitments related to certain
marketing and information technology programs and purchases of merchandise
inventory (as set forth in the financial statements of the Borrower and its
Subsidiaries)), (d) all obligations in respect of the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business), (e) Attributable Indebtedness in respect of capital or financing
leases, Synthetic Lease Obligations and Securitization Transactions, (f) without
duplication, all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (e) above of Persons other than the
Borrower or any Subsidiary and (g) all Indebtedness of the types referred to in
clauses (a) through (f) above of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability company) in
which the Borrower or a Subsidiary is a general partner or joint venturer,
unless such Indebtedness is expressly made non-recourse to the Borrower or such
Subsidiary.
“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income, in accordance with GAAP,
of the Borrower and its Subsidiaries (excluding extraordinary gains and
extraordinary losses) for that period.
“Consolidated Total Assets” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the total assets of the
Borrower and its Subsidiaries as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Subsidiaries, prepared in
accordance with GAAP.
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“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Covered Entity” has the meaning specified in Section 10.22(b).
“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.
“Debt Equivalent of Operating Leases” means, as of any date of determination,
for the Borrower and its Subsidiaries on a consolidated basis, the higher of (a)
the product of (i) rental payments made or required to be made for the four
consecutive fiscal quarters of the Borrower ending on such date multiplied by
(ii) six (6) and (b) GAAP Operating Lease Liability. For purposes of this
definition “GAAP Operating Lease Liability” means the operating lease liability
on the balance sheet in accordance with GAAP and FASB accounting standards (ASC
842) then in effect as of the last date on each fiscal quarter end of the
Borrower.
“Debt Rating” means, as of any date of determination, the rating as determined
by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s
non-credit-enhanced, senior unsecured long-term debt; provided that (with the
Debt Rating for Pricing Level 1 being the highest and the Debt Rating for
Pricing Level 5 being the lowest), (a) if the respective Debt Ratings issued by
the foregoing rating agencies differ by one level, then the Pricing Level for
the higher of such Debt Ratings shall apply; (b) if there is a split in Debt
Ratings of more than one level, then the Pricing Level that is one level lower
than the Pricing Level of the higher Debt Rating shall apply; (c) if the
Borrower has only one Debt Rating, the Pricing Level of such Debt Rating shall
apply; and (d) if the Borrower does not have any Debt Rating, Pricing Level 5
shall apply.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.
“Default Rate” means (a) when used with respect to Obligations other than
Eurocurrency Rate Loans and Letter of Credit Fees, an interest rate equal to (i)
the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate
Loans plus (iii) 2% per annum; provided that with respect to a Eurocurrency Rate
Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus 2% per
annum; and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate plus 2% per annum.
“Defaulting Lender” means, subject to Section 2.17(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to (i) perform any of its
funding obligations hereunder, including in respect of its Loans or
participations in respect of Letters of Credit or Swing Line Loans, within one
Business Day of the date required to be funded by it hereunder unless such
Lender notifies the Administrative Agent and the Borrower in writing that such
failure is the result of such Lender’s good faith determination that one or more
conditions precedent to funding (each of which conditions precedent,
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together with any applicable default, shall be specifically identified in such
writing) has not been satisfied, or (ii) pay to the Administrative Agent, any
L/C Issuer, the Swing Line Lender or any other Lender any other amount required
to be paid by it hereunder (including in respect of its participation in Letters
of Credit or Swing Line Loans) within two Business Days of the date when due,
(b) has notified the Borrower or the Administrative Agent that it does not
intend to comply with its funding obligations or has made a public statement to
that effect with respect to its funding obligations hereunder or under other
agreements generally in which it commits to extend credit, (c) has failed,
within one Business Day after request by the Administrative Agent, to confirm in
a manner reasonably satisfactory to the Administrative Agent that it will comply
with its funding obligations (provided that such Lender shall cease to be a
Defaulting Lender pursuant to this clause (c) upon receipt of such written
confirmation by the Administrative Agent and the Borrower), or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, (ii) had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or a custodian
appointed for it, (iii) taken any action in furtherance of, or indicated its
consent to, approval of or acquiescence in any such proceeding or appointment,
or (iv) become the subject of a Bail-In Action; provided that a Lender shall not
be a Defaulting Lender solely by virtue of the ownership or acquisition of any
equity interest in that Lender or any direct or indirect parent company thereof
by a Governmental Authority so long as such ownership interest does not result
in or provide such Lender with immunity from the jurisdiction of courts within
the United States or from the enforcement of judgments or writs of attachment on
its assets or permit such Lender (or such governmental authority or
instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made with such Lender.
“Designated Jurisdiction” means any country, region or territory to the extent
that such country, region or territory itself is the subject of any
comprehensive Sanction.
“Disposition” or “Dispose” means the sale, transfer, license, liquidation, lease
or other disposition (in one transaction or in a series of transactions and
whether effected pursuant to a Division or otherwise) of any property by any
Person (including any sale and leaseback transaction of any property), long
lived asset, or line of business, including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith; provided that “Disposition” shall
not include any Dispositions relating to activities under the Borrower’s credit
card program.
“Dividing Person” has the meaning assigned to it in the definition of
“Division.”
“Division” means the division of the assets, liabilities and/or obligations of a
Person (the “Dividing Person”) among two or more Persons (whether pursuant to a
“plan of division” or similar arrangement), which may or may not include the
Dividing Person and pursuant to which the Dividing Person may or may not
survive.
“Dollar” and “$” mean lawful money of the United States.
“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent or the applicable L/C Issuer,
as the case may be, at such time on the basis of the Spot Rate (determined in
respect of the most recent Revaluation Date) for the purchase of Dollars with
such Alternative Currency.
“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this
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definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (a) or (b)
of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.
“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, each L/C Issuer (but not including any L/C
Issuer that has been removed or has resigned as such) and the Swing Line Lender,
and (ii) unless an Event of Default has occurred and is continuing, the Borrower
(each such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan
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year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is insolvent or in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Pension Plan or Multiemployer Plan
amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC (or an event or circumstance that could
reasonably be expected to cause the PBGC to institute proceedings under Title IV
of ERISA) to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.
“Euro” and “€” mean the single currency of the Participating Member States.
“Eurocurrency Rate” means:
(a) With respect to any Credit Extension:
(i) denominated in a LIBOR Quoted Currency, the rate per annum equal to the
London Interbank Offered Rate as administered by ICE Benchmark Administration
(or any other Person that takes over the administration of such rate) for a
period equal in length to such Interest Period (“LIBOR”) as published on the
applicable Bloomberg screen page (or such other commercially available source
providing such quotations as may be designated by the Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, for deposits in the relevant
currency (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period;
(ii) denominated in Canadian Dollars, the rate per annum equal to the
Canadian Dealer Offered Rate (“CDOR”), or a comparable or successor rate which
rate is approved by the Administrative Agent, as published on the applicable
Bloomberg screen page (or such other commercially available source providing
such quotations as may be designated by the Administrative Agent from time to
time) at or about 10:00 a.m. (Toronto, Ontario time) on the Rate Determination
Date with a term equivalent to such Interest Period; and
(iii) denominated in any other Non-LIBOR Quoted Currency, the rate per annum
as designated with respect to such Alternative Currency at the time such
Alternative Currency is approved by the Administrative Agent and the Lenders
pursuant to Section 1.06(a);
(b) for any rate calculation with respect to a Base Rate Loan on any date,
the rate per annum equal to LIBOR, at or about 11:00 a.m., London time
determined two Business Days prior to such date for U.S. Dollar deposits with a
term of one month commencing that day; and
(c) if the Eurocurrency Rate shall be less than zero, such rate shall be
deemed zero for purposes of this Agreement.
“Eurocurrency Rate Loan” means a Committed Loan that bears interest at a rate
based on clause (a) of the definition of “Eurocurrency Rate.” Eurocurrency Rate
Loans may be denominated in Dollars or
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in an Alternative Currency. All Committed Loans denominated in an Alternative
Currency must be Eurocurrency Rate Loans.
“Event of Default” has the meaning specified in Section 8.01.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the Laws of, or having its principal
office or, in the case of any Lender, its applicable Lending Office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a Law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by the
Borrower under Section 10.13) or (ii) such Lender changes its Lending Office,
except in each case to the extent that, pursuant to Section 3.01(a)(ii),
(a)(iii) or (c), amounts with respect to such Taxes were payable either to such
Lender’s assignor immediately before such Lender became a party hereto or to
such Lender immediately before it changed its Lending Office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 3.01(e) and (d)
any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Extended Commitment” means any class of Commitments the maturity of which shall
have been extended pursuant to Section 2.18.
“Extended Committed Loans” means any Committed Loans made pursuant to the
Extended Commitments.
“Extension” has the meaning set forth in Section 2.18(a).
“Extension Amendment” means an amendment to this Agreement (which may, at the
option of the Administrative Agent and the Borrower, be in the form of an
amendment and restatement of this Agreement) among the Borrower, the applicable
extending Lenders, the Administrative Agent and, to the extent required by
Section 2.18, the L/C Issuers and/or the Swing Line Lender implementing an
Extension in accordance with Section 2.18.
“Extension Offer” has the meaning set forth in Section 2.18(a).
“FASB ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among Governmental Authorities entered into in
connection with the implementation of the foregoing.
“Federal Funds Rate” means, for any day, the rate per annum calculated by the
Federal Reserve Bank of New York based on such day’s federal funds transactions
by depository institutions (as determined in such manner as the Federal Reserve
Bank of New York shall set forth on its public website from time to time) and
published on the next succeeding Business Day by the Federal Reserve Bank of New
York as the
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federal funds effective rate; provided that if the Federal Funds Rate as so
determined would be less than zero, such rate shall be deemed to be zero for
purposes of this Agreement.
“Fee Letter” means that certain fee letter agreement, dated March 5, 2020, among
the Borrower, Bank of America and BofA Securities, Inc.
“Foreign Lender” means a Lender that is not a U.S. Person (including such a
Lender when acting in the capacity of the L/C Issuer).
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to each L/C Issuer, such Defaulting Lender’s Applicable Percentage of
the outstanding L/C Obligations with respect to Letters of Credit issued by such
L/C Issuer other than L/C Obligations as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof, and (b) with respect to the
Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line
Loans other than Swing Line Loans as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof.
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount
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equal to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Honor Date” has the meaning specified in Section 2.04(c)(i).
“Impacted Loans” has the meaning specified in Section 3.03(a).
“Increase Effective Date” has the meaning specified in Section 2.15(d).
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
(b) all direct or contingent obligations of such Person arising under standby
letters of credit, bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(f) Capital Leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any Capital Lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.
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“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Loan Document and (b) to the extent not otherwise described
in clause (a), Other Taxes.
“Indemnitee” has the meaning specified in Section 10.04(b).
“Information” has the meaning specified in Section 10.07.
“Intangible Assets” means assets that are considered to be intangible assets
under GAAP.
“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurocurrency Rate
Loan exceeds three months, the respective dates that fall every three months
after the beginning of such Interest Period shall also be Interest Payment
Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last
Business Day of each March, June, September and December commencing on the first
such date to occur after the Closing Date and the Maturity Date.
“Interest Period” means, as to each Eurocurrency Rate Loan, the period
commencing on the date such Eurocurrency Rate Loan is disbursed or converted to
or continued as a Eurocurrency Rate Loan and ending on the date one, two, three
or six months thereafter (in each case, subject to availability), as selected by
the Borrower in its Committed Loan Notice, or such other period that is twelve
months or less requested by the Borrower and consented to by all the Lenders;
provided that:
(i) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless, in
the case of a Eurocurrency Rate Loan, such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day;
(ii) any Interest Period pertaining to a Eurocurrency Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
“IRS” means the United States Internal Revenue Service.
“ISP” means the International Standby Practices, International Chamber of
Commerce Publication No. 590 (or such later version thereof as may be in effect
at the applicable time).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the
L/C Issuer and relating to any such Letter of Credit.
“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
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“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Committed Borrowing.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.
“L/C Issuer” means Bank of America and U.S. Bank or any of their respective
Affiliates designated by Bank of America and U.S Bank, respectively, in their
capacities as issuers of Letters of Credit hereunder, and any other Lender
selected by the Borrower, approved by the Administrative Agent and such Lender
agreeing to be an L/C Issuer hereunder pursuant to a joinder or similar
agreement joining such Lender in such limited capacity as provided by the
Administrative Agent, which agreement must be reasonably acceptable to the
Borrower, in each case, with the commitments of each L/C Issuer as set forth in
Schedule 2.01; provided, however, that there shall be no more than two (2) L/C
Issuers at any one time; provided, further, that for all Letters of Credit
issued in an Alternative Currency Bank of America shall be the sole L/C Issuer.
All references to the L/C Issuer shall mean any L/C Issuer, the L/C Issuer
issuing the applicable Letter of Credit, or all L/C Issuers, as the context may
imply.
“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with Section
1.09. For all purposes of this Agreement, if on any date of determination a
Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Article 29(a) of the UCP or Rule 3.13
or Rule 3.14 of the ISP or similar terms of the Letter of Credit itself, or if
compliant documents have been presented but not yet honored, such Letter of
Credit shall be deemed to be “outstanding” and “undrawn” in the amount so
remaining available to be paid, and the obligations of the Borrower and each
Lender shall remain in full force and effect until the L/C Issuer and the
Lenders shall have no further obligations to make any payments or disbursements
under any circumstances with respect to any Letter of Credit.
“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the Swing Line Lender.
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent, which office may include any Affiliate of such Lender or
any domestic or foreign branch of such Lender or such Affiliate. Unless the
context otherwise requires, each reference to a Lender shall include its
applicable Lending Office.
“Letter of Credit” means any letter of credit issued hereunder. A Letter of
Credit may be a commercial letter of credit or a standby letter of credit.
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.
“Letter of Credit Expiration Date” means the day that is three days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).
“Letter of Credit Fee” has the meaning specified in Section 2.04(h).
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“Letter of Credit Sublimit” means an amount equal to the lesser of (a)
$250,000,000 and (b) the Aggregate Commitments. The Letter of Credit Sublimit is
part of, and not in addition to, the Aggregate Commitments.
“LIBOR” has the meaning specified in the definition of “Eurocurrency Rate”.
“LIBOR Quoted Currency” means each of the following currencies: Dollars; Euro;
and Sterling; in each case as long as there is a published LIBOR rate with
respect thereto.
“LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the
Administrative Agent designates to determine LIBOR (or such other commercially
available source providing such quotations as may be designated by the
Administrative Agent from time to time).
“LIBOR Successor Rate” has the meaning specified in Section 3.03(c).
“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed
LIBOR Successor Rate, any conforming changes to the definition of Base Rate,
Interest Period, timing and frequency of determining rates and making payments
of interest and other technical, administrative or operational matters as may be
appropriate, in the discretion of the Administrative Agent, to reflect the
adoption and implementation of such LIBOR Successor Rate and to permit the
administration thereof by the Administrative Agent in a manner substantially
consistent with market practice (or, if the Administrative Agent determines that
adoption of any portion of such market practice is not administratively feasible
or that no market practice for the administration of such LIBOR Successor Rate
exists, in such other manner of administration as the Administrative Agent
determines is reasonably necessary in connection with the administration of this
Agreement).
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
“Loan” means an extension of credit by a Lender to the Borrower under Article II
in the form of a Committed Loan or a Swing Line Loan.
“Loan Documents” means this Agreement, including schedules and exhibits hereto,
each Note, each Issuer Document, the Fee Letter, any Extension Amendment and any
other agreement, instrument or document designated by its terms as a “Loan
Document”.
“London Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar market.
“Material Adverse Effect” means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon any of (a) the financial
condition, operations, business or properties of the Borrower and its
Subsidiaries taken as a whole; (b) the rights and remedies of the Administrative
Agent or the Lenders under the Loan Documents or the ability of the Borrower to
perform its obligations under any Loan Document; or (c) the legality, validity,
or enforceability of any Loan Document.
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“Material Subsidiary” means, at any time of determination, any Subsidiary having
at such time 5% or more of the consolidated total (gross) revenues of the
Borrower and its Subsidiaries for the preceding four fiscal quarter period, in
each case, based upon the Borrower’s most recent annual or quarterly financial
statements delivered to the Lenders under Section 6.01.
“Maturity Date” means the later of (a) March 23, 2025 and (b) if maturity is
extended pursuant to Section 2.18, such extended maturity date as determined
pursuant to such Section; provided, however, that, in each case, if such date is
not a Business Day, the Maturity Date shall be the next preceding Business Day.
“Measurement Period” means a period of four consecutive fiscal quarters of the
Borrower.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
“Non-Consenting Lender” means any Lender that does not approve any consent,
waiver or amendment that (a) requires the approval of all or all affected
Lenders in accordance with the terms of Section 10.01 and (b) has been approved
by the Required Lenders (and, in the case of amendments that require the
approval of all or all affected Lenders of a particular class, Lenders with a
majority of the loans and commitments in such class).
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Non-LIBOR Quoted Currency” means any currency other than a LIBOR Quoted
Currency.
“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit C.
“Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan,
which shall be substantially in the form of Exhibit I or such other form as may
be approved by the Administrative Agent (including any form on an electronic
platform or electronic transmission system as shall be approved by the
Administrative Agent), appropriately completed and signed by a Responsible
Officer.
“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, the Borrower arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit or Related Credit
Arrangement, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against the Borrower or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.
“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation
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or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising solely from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar Taxes arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to
Section 3.06).
“Outstanding Amount” means (a) with respect to Committed Loans on any date, the
Dollar Equivalent amount of the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of such
Committed Loans occurring on such date; (b) with respect to Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving effect
to any borrowings and prepayments or repayments of such Swing Line Loans
occurring on such date; and (c) with respect to any L/C Obligations on any date,
the Dollar Equivalent amount of the aggregate outstanding amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts.
“Overnight Rate” means, for any day, (a) with respect to any amount denominated
in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate
determined by the Administrative Agent, the applicable L/C Issuer, or the Swing
Line Lender, as the case may be, in accordance with banking industry rules on
interbank compensation, and (b) with respect to any amount denominated in an
Alternative Currency, the rate of interest per annum at which overnight deposits
in the applicable Alternative Currency, in an amount approximately equal to the
amount with respect to which such rate is being determined, would be offered for
such day by a branch or Affiliate of Bank of America in the applicable offshore
interbank market for such currency to major banks in such interbank market.
“Participant” has the meaning specified in Section 10.06(d).
“Participant Register” has the meaning specified in Section 10.06(d).
“Participating Member State” means any member state of the European Union that
has the Euro as its lawful currency in accordance with legislation of the
European Union relating to Economic and Monetary Union.
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Act” means the Pension Protection Act of 2006.
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“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by the Borrower or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
“Platform” has the meaning specified in Section 6.02.
“PTE” means a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.
“Rate Determination Date” means two Business Days prior to the commencement of
such Interest Period (or such other day as is generally treated as the rate
fixing day by market practice in such interbank market, as determined by the
Administrative Agent; provided that to the extent such market practice is not
administratively feasible for the Administrative Agent, such other day as
otherwise reasonably determined by the Administrative Agent).
“Recipient” means the Administrative Agent, any Lender, and any L/C Issuer.
“Register” has the meaning specified in Section 10.06(c).
“Related Credit Arrangements” means, collectively, Related Swap Contracts and
Related Treasury Management Arrangements.
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.
“Related Swap Contract” means a Swap Contract which is entered into or
maintained by the Borrower or any of its Subsidiaries with a Lender or an
Affiliate of a Lender.
“Related Treasury Management Arrangement” means an arrangement for the delivery
of treasury management services to or for the benefit of the Borrower or any of
its Subsidiaries which is entered into or maintained with a Lender or Affiliate
of a Lender and which is not prohibited by the express terms of the Loan
Documents.
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“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York for the
purpose of recommending a benchmark rate to replace LIBOR in loan agreements
similar to this Agreement.
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than an event for which the notice requirement under Section
4043(a) of ERISA has been waived by regulation.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to
an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to
a Swing Line Loan, a Swing Line Loan Notice.
“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the Aggregate Commitments or, if the commitment of each Lender to
make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions
have been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any
UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means any of the Chief Executive Officer, President, Chief
Operating Officer, Chief Financial Officer, Executive Vice President, Senior
Vice President, Vice President (including without limitation Vice President
Tax), General Counsel, Secretary, Chief Compliance Officer, Chief Accounting
Officer, Treasurer or Assistant Treasurer of the Borrower and, solely for
purposes of notices given pursuant to Article II, any other officer or employee
of the Borrower so designated by any of the foregoing officers in a notice to
the Administrative Agent or any other officer or employee of the Borrower
designated in or pursuant to an agreement between the Borrower and the
Administrative Agent. Any document delivered hereunder that is signed by a
Responsible Officer of the Borrower shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of the Borrower and such Responsible Officer shall be conclusively presumed
to have acted on behalf of the Borrower.
“Restatement” has the meaning specified in the recitals hereto.
“Revaluation Date” means (a) with respect to any Loan, each of the following:
(i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in an
Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate
Loan denominated in an Alternative Currency pursuant to Section 2.02, and
(iii) such additional dates as the Administrative Agent shall determine or the
Required Lenders shall require; and (b) with respect to any Letter of Credit,
each of the following: (i) each date of issuance of a Letter of Credit
denominated in an Alternative Currency, (ii) each date of an amendment of any
such Letter of Credit having the effect of increasing the amount thereof,
(iii) each date of any payment by the applicable L/C Issuer under any Letter of
Credit denominated in an Alternative Currency, and (iv) such additional dates as
the Administrative Agent or the applicable L/C Issuer shall determine or the
Required Lenders shall require.
“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global
Inc., and any successor thereto.
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“Same Day Funds” means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in an Alternative Currency, same day or other funds as may be
determined by the Administrative Agent or the applicable L/C Issuer, as the case
may be, to be customary in the place of disbursement or payment for the
settlement of international banking transactions in the relevant Alternative
Currency.
“Sanction(s)” means any published international economic sanction administered
or enforced by the United States Government (including without limitation,
OFAC), the United Nations Security Council, the European Union, Her Majesty’s
Treasury (“HMT”) or other relevant sanctions authority, applicable to the
respective Lenders or the Borrower.
“Scheduled Unavailability Date” has the meaning specified in Section 3.03(c).
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
“Securitization Transaction” means, with respect to any Person, any financing
transaction or series of financing transactions (including factoring
arrangements) pursuant to which such Person or any Subsidiary of such Person may
sell, convey or otherwise transfer, or grant a security interest in, accounts,
payments, receivables, rights to future lease payments or residuals or similar
rights to payment to a special purpose subsidiary or affiliate of such Person.
“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Borrower and its Subsidiaries as of that date
determined in accordance with GAAP.
“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark (or a successor administrator) on the Federal
Reserve Bank of New York’s website (or any successor source) and, in each case,
that has been selected or recommended by the Relevant Governmental Body.
“SOFR-Based Rate” means SOFR or Term SOFR.
“Special Notice Currency” means at any time an Alternative Currency, other than
the currency of a country that is a member of the Organization for Economic
Cooperation and Development at such time located in North America or Europe.
“Spot Rate” for a currency means the rate determined by the Administrative Agent
or the applicable L/C Issuer, as applicable, to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of such
currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m. on the date two Business Days prior to the
date as of which the foreign exchange computation is made; provided that the
Administrative Agent or the applicable L/C Issuer may obtain such spot rate from
another financial institution designated by the Administrative Agent or such L/C
Issuer if the Person acting in such capacity does not have as of the date of
determination a spot buying rate for any such currency; and provided further
that the applicable L/C Issuer may use such spot rate quoted on the date as of
which the foreign exchange computation is made in the case of any Letter of
Credit denominated in an Alternative Currency.
“Sterling” and “£” mean the lawful currency of the United Kingdom.
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary
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voting power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
“Swing Line” means the revolving credit facility made available by the Swing
Line Lender pursuant to Section 2.05.
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.05.
“Swing Line Commitment” means (a) the amount set forth opposite the Swing Line
Lender’s name on Schedule 2.01 hereof or (b) if a successor Swing Line Lender
has entered into an Assignment and Assumption or has otherwise assumed a Swing
Line Commitment after the Closing Date, the amount set forth for such Lender as
its Swing Line Commitment in the Register maintained by the Administrative Agent
pursuant to Section 10.06(c).
“Swing Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans hereunder, or any successor swing line lender hereunder, in an amount
up to the Swing Line Commitment.
“Swing Line Loan” has the meaning specified in Section 2.05(a).
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.05(b), which shall be substantially in the form of Exhibit B or such
other form as approved by the Administrative Agent (including any form on an
electronic platform or electronic transmission system as shall be approved by
the Administrative Agent), appropriately completed and signed by a Responsible
Officer of the Borrower.
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“Swing Line Sublimit” means an amount equal to the lesser of (a) $125,000,000
and (b) the Aggregate Commitments. The Swing Line Sublimit is part of, and not
in addition to, the Aggregate Commitments.
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases
to be operative, such other payment system, if any, determined by the
Administrative Agent to be a suitable replacement) is open for the settlement of
payments in Euro.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto arising from any payment made hereunder or under
any other Loan Document or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.
“Term SOFR” means the forward-looking term rate for any period that is
approximately (as determined by the Administrative Agent) as long as any of the
Interest Period options set forth in the definition of “Interest Period” and
that is based on SOFR and that has been selected or recommended by the Relevant
Governmental Body, in each case as published on an information service as
selected by the Administrative Agent from time to time in its reasonable
discretion.
“Threshold Amount” means $200,000,000.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.
“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a Eurocurrency Rate Loan.
“UCP” means the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce Publication No. 600 (or such later version
thereof as may be in effect at the applicable time).
“UK Financial Institution” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended form time to time) promulgated by the United
Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of
the FCA Handbook (as amended from time to time) promulgated by the United
Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or
investment firms.
“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK
Financial Institution.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.04(c)(i).
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“U.S. Bank” means U.S. Bank National Association and its successors.
“U.S. Person” means any Person that is a “United States person” as defined in
Section 7701(a)(30) of the Code.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule, and (b) with respect to the United Kingdom, any powers of
the applicable Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution
or any contract or instrument under which that liability arises, to convert all
or part of that liability into shares, securities or obligations of that person
or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation
that are related to or ancillary to any of those powers.
1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:
(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “hereto,” “herein,”
“hereof” and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law, rule or regulation shall,
unless otherwise specified, refer to such law, rule or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.
(d) Any reference herein to a merger, amalgamation, consolidation,
assignment, sale, disposition or transfer, or similar term, shall be deemed to
apply to a division of or by a limited liability company, or an allocation of
assets to a series of a limited liability company (or the unwinding of such a
division or allocation), as if it were a merger, amalgamation, consolidation,
assignment, sale, disposition or
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transfer, or similar term, as applicable, to, of or with a separate Person. Any
division of a limited liability company shall constitute a separate Person
hereunder (and each division of any limited liability company that is a
Subsidiary, joint venture or any other like term shall also constitute such a
Person or entity).
1.03 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements (except
for changes concurred in by the Borrower’s independent public accountants or
otherwise required by a change in GAAP). Notwithstanding the foregoing, for
purposes of determining compliance with any covenant (including the computation
of any financial covenant) contained herein, Indebtedness of the Borrower and
its Subsidiaries shall be deemed to be carried at 100% of the outstanding
principal amount thereof, and the effects of FASB ASC 825 on financial
liabilities shall be disregarded.
(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower, the Administrative Agent or the Required
Lenders shall so request, the Administrative Agent, the Lenders and the Borrower
shall negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Required Lenders); provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP. Any amendment of this Agreement or any other Loan
Document, at any time, solely in connection with and covering only such change
in GAAP shall be effected without, in connection therewith, (a) the Borrower
being obligated to pay any fee, (b) any increase in the Applicable Rate or (c)
any other increase in the consideration then payable by the Borrower pursuant to
this Agreement or any other Loan Document.
1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).
1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent or
the L/C Issuer(s), as applicable, shall determine the Spot Rates as of each
Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit
Extensions and Outstanding Amounts denominated in Alternative Currencies. Such
Spot Rates shall become effective as of such Revaluation Date and shall be the
Spot Rates employed in converting any amounts between the applicable currencies
until the next Revaluation Date to occur. Except for purposes of financial
statements delivered by the Borrower hereunder or calculating financial
covenants hereunder or except as otherwise provided herein, the applicable
amount of any currency (other than Dollars) for purposes of the Loan Documents
shall be such Dollar Equivalent amount as so determined by the Administrative
Agent or the L/C Issuer(s), as applicable.
(b) Wherever in this Agreement in connection with a Committed Borrowing,
conversion, continuation or prepayment of a Eurocurrency Rate Loan or the
issuance, amendment or extension of a Letter of Credit, an amount, such as a
required minimum or multiple amount, is expressed in Dollars, but such Committed
Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an
Alternative
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Currency, such amount shall be the relevant Alternative Currency Equivalent of
such Dollar amount (rounded to the nearest unit of such Alternative Currency,
with 0.5 of a unit being rounded upward), as determined by the Administrative
Agent or the L/C Issuer, as the case may be.
1.06 Additional Alternative Currencies. (a) The Borrower may from time to
time request that Eurocurrency Rate Loans be made and/or Letters of Credit be
issued in a currency other than those specifically listed in the definition of
“Alternative Currency;” provided that such requested currency is a lawful
currency (other than Dollars) that is readily available and freely transferable
and convertible into Dollars. In the case of any such request with respect to
the making of Eurocurrency Rate Loans, such request shall be subject to the
approval of the Administrative Agent and the Lenders; and in the case of any
such request with respect to the issuance of Letters of Credit, such request
shall be subject to the approval of the Administrative Agent and the applicable
L/C Issuer.
(b) Any such request shall be made to the Administrative Agent not later than
11:00 a.m., 20 Business Days prior to the date of the desired Credit Extension
(or such other time or date as may be agreed by the Administrative Agent and, in
the case of any such request pertaining to Letters of Credit, the applicable L/C
Issuer, in its or their sole discretion). In the case of any such request
pertaining to Eurocurrency Rate Loans, the Administrative Agent shall promptly
notify each Lender thereof; and in the case of any such request pertaining to
Letters of Credit, the Administrative Agent shall promptly notify the applicable
L/C Issuer thereof. Each Lender (in the case of any such request pertaining to
Eurocurrency Rate Loans) or the applicable L/C Issuer (in the case of a request
pertaining to Letters of Credit) shall notify the Administrative Agent, not
later than 11:00 a.m., ten Business Days after receipt of such request whether
it consents, in its sole discretion, to the making of Eurocurrency Rate Loans or
the issuance of Letters of Credit, as the case may be, in such requested
currency.
(c) Any failure by a Lender or any L/C Issuer, as the case may be, to respond
to such request within the time period specified in the preceding sentence shall
be deemed to be a refusal by such Lender or such L/C Issuer, as the case may be,
to permit Eurocurrency Rate Loans to be made or Letters of Credit to be issued
in such requested currency. If the Administrative Agent and all the Lenders
consent to making Eurocurrency Rate Loans in such requested currency, the
Administrative Agent shall so notify the Borrower and such currency shall
thereupon be deemed for all purposes to be an Alternative Currency hereunder for
purposes of any Committed Borrowings of Eurocurrency Rate Loans; and if the
Administrative Agent and the applicable L/C Issuer consent to the issuance of
Letters of Credit in such requested currency, the Administrative Agent shall so
notify the Borrower and such currency shall thereupon be deemed for all purposes
to be an Alternative Currency hereunder for purposes of any Letter of Credit
issuances. If the Administrative Agent shall fail to obtain consent to any
request for an additional currency under this Section 1.06, the Administrative
Agent shall promptly so notify the Borrower.
1.07 Change of Currency.
(a) Each obligation of the Borrower to make a payment denominated in the
national currency unit of any member state of the European Union that adopts the
Euro as its lawful currency after the date hereof shall be redenominated into
Euro at the time of such adoption. If, in relation to the currency of any such
member state, the basis of accrual of interest expressed in this Agreement in
respect of that currency shall be inconsistent with any convention or practice
in the London interbank market for the basis of accrual of interest in respect
of the Euro, such expressed basis shall be replaced by such convention or
practice with effect from the date on which such member state adopts the Euro as
its lawful currency; provided that if any Committed Borrowing in the currency of
such member state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Committed Borrowing, at the
end of the then current Interest Period.
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(b) Each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect the adoption of the Euro by any member
state of the European Union and any relevant market conventions or practices
relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.
1.08 Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern time (daylight or standard, as
applicable).
1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of
the stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the
terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the Dollar Equivalent of the maximum stated amount of such
Letter of Credit after giving effect to all such increases, whether or not such
maximum stated amount is in effect at such time.
1.10 Interest Rates. The Administrative Agent does not warrant, nor accept
responsibility, nor shall the Administrative Agent have any liability with
respect to the administration, submission or any other matter related to the
rates in the definition of “Eurocurrency Rate” or with respect to any rate that
is an alternative or replacement for or successor to any of such rate
(including, without limitation, any LIBOR Successor Rate) or the effect of any
of the foregoing, or of any LIBOR Successor Rate Conforming Changes.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans in Dollars or in one or more
Alternative Currencies (each such loan, a “Committed Loan”) to the Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect to any
Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, (ii) the aggregate Outstanding Amount of the Committed Loans of any
Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and
(iii) the aggregate Outstanding Amount of all Committed Loans denominated in
Alternative Currencies shall not exceed the Alternative Currency Sublimit.
Within the limits of each Lender’s Commitment, and subject to the other terms
and conditions hereof, the Borrower may borrow under this Section 2.01, prepay
under Section 2.06, and reborrow under this Section 2.01. Committed Loans may be
Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans.
(a) Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of Eurocurrency Rate Loans shall be
made upon the Borrower’s irrevocable
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notice to the Administrative Agent, which may be given by (A) telephone or (B) a
Committed Loan Notice; provided that any telephonic notice must be confirmed
promptly by delivery to the Administrative Agent of a Committed Loan Notice.
Each such Committed Loan Notice must be received by the Administrative Agent not
later than 11:00 a.m. (i) three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurocurrency Rate Loans
denominated in Dollars or of any conversion of Eurocurrency Rate Loans
denominated in Dollars to Base Rate Committed Loans, (ii) four Business Days (or
five Business Days in the case of a Special Notice Currency) prior to the
requested date of any Borrowing or continuation of Eurocurrency Rate Loans
denominated in Alternative Currencies, and (iii) on the requested date of any
Borrowing of Base Rate Committed Loans; provided, however, that if the Borrower
wishes to request Eurocurrency Rate Loans having an Interest Period other than
one, two, three or six months in duration as provided in the definition of
“Interest Period,” the applicable notice must be received by the Administrative
Agent not later than 11:00 a.m. (i) four Business Days prior to the requested
date of such Borrowing, conversion or continuation of Eurocurrency Rate Loans
denominated in Dollars, or (ii) five Business Days (or six Business days in the
case of a Special Notice Currency) prior to the requested date of such
Borrowing, conversion or continuation of Eurocurrency Rate Loans denominated in
Alternative Currencies, whereupon the Administrative Agent shall give prompt
notice to the Lenders of such request and determine whether the requested
Interest Period is acceptable to all of them. Not later than 11:00 a.m.,
(i) three Business Days before the requested date of such Borrowing, conversion
or continuation of Eurocurrency Rate Loans denominated in Dollars, or (ii) four
Business Days (or five Business days in the case of a Special Notice Currency)
prior to the requested date of such Borrowing, conversion or continuation of
Eurocurrency Rate Loans denominated in Alternative Currencies, the
Administrative Agent shall notify the Borrower (which notice may be by
telephone) whether or not the requested Interest Period (other than an Interest
Period of one, two, three or six months in duration) has been consented to by
all the Lenders. Each Borrowing of, conversion to or continuation of
Eurocurrency Rate Loans shall be in a principal amount of $10,000,000 or a whole
multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.04(c)
and 2.05(c), each Borrowing of or conversion to Base Rate Committed Loans shall
be in a principal amount of $2,000,000 or a whole multiple of $1,000,000 in
excess thereof. Each Committed Loan Notice shall specify (i) whether the
Borrower is requesting a Committed Borrowing, a conversion of Committed Loans
from one Type to the other, or a continuation of Eurocurrency Rate Loans,
(ii) the requested date of the Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of
Committed Loans to be borrowed, converted or continued, (iv) the Type of
Committed Loans to be borrowed or to which existing Committed Loans are to be
converted, (v) if applicable, the duration of the Interest Period with respect
thereto, and (vi) the currency of the Committed Loans to be borrowed. If the
Borrower fails to specify a currency in a Committed Loan Notice requesting a
Borrowing, then the Committed Loans so requested shall be made in Dollars. If
the Borrower fails to specify a Type of Committed Loan in a Committed Loan
Notice or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Committed Loans shall be made as, or
converted to, Base Rate Loans; provided, however, that in the case of a failure
to timely request a continuation of Committed Loans denominated in an
Alternative Currency, such Loans shall be continued as Eurocurrency Rate Loans
in their original currency with an Interest Period of one month. Any automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurocurrency Rate
Loans. If the Borrower requests a Borrowing of, conversion to, or continuation
of Eurocurrency Rate Loans in any such Committed Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month. No Committed Loan may be converted into or continued as a
Committed Loan denominated in a different currency, but instead must be prepaid
in the original currency of such Committed Loan and reborrowed in the other
currency.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount (and currency) of its Applicable
Percentage of the applicable Committed Loans, and if no timely notice of a
conversion or continuation is provided by the Borrower, the
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Administrative Agent shall notify each Lender of the details of any automatic
conversion to Base Rate Loans or continuation of Committed Loans denominated in
a currency other than Dollars, in each case as described in the preceding
subsection. In the case of a Committed Borrowing, each Lender shall make the
amount of its Committed Loan available to the Administrative Agent in Same Day
Funds at the Administrative Agent’s Office for the applicable currency not later
than 1:00 p.m., in the case of any Committed Loan denominated in Dollars, and
not later than the Applicable Time specified by the Administrative Agent in the
case of any Committed Loan in an Alternative Currency, in each case on the
Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the
Administrative Agent shall make all funds so received available to the Borrower
in like funds as received by the Administrative Agent either by (i) crediting
the account of the Borrower on the books of Bank of America with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative Agent
by the Borrower; provided, however, that if, on the date the Committed Loan
Notice with respect to such Borrowing denominated in Dollars is given by the
Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Borrowing, first, shall be applied to the payment in full of any such L/C
Borrowings, and second, shall be made available to the Borrower as provided
above.
(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurocurrency Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurocurrency Rate Loans (whether in
Dollars or any Alternative Currency) without the consent of the Required
Lenders, and the Required Lenders may demand that any or all of the then
outstanding Eurocurrency Rate Loans denominated in an Alternative Currency be
prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent
thereof, on the last day of the then current Interest Period with respect
thereto.
(d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurocurrency
Rate Loans upon determination of such interest rate. At any time that Base Rate
Loans are outstanding, the Administrative Agent shall notify the Borrower and
the Lenders of any change in Bank of America’s prime rate used in determining
the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than ten Interest Periods in
effect with respect to Committed Loans.
(f) Notwithstanding anything to the contrary in this Agreement, any Lender
may exchange, continue or rollover all of the portion of its Loans in connection
with any refinancing, extension, loan modification or similar transaction
permitted by the terms of this Agreement, pursuant to a cashless settlement
mechanism approved by the Borrower, the Administrative Agent, and such Lender.
2.03 [Reserved.]
2.04 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer
agrees, in reliance upon the agreements of the Lenders set forth in this
Section 2.04, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit denominated in Dollars or in one or more Alternative Currencies
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for the account of the Borrower or its Subsidiaries, and to amend or extend
Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrower or its Subsidiaries and any drawings thereunder
(however, except as set forth in Section 2.04(a)(iii) below, any Lender’s
failure to so participate shall not affect the L/C Issuer’s obligation to issue
any Letters of Credit); provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Total Outstandings shall
not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of
the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations
shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for
the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed.
(ii) No L/C Issuer shall issue any Letter of Credit, if:
(A) subject to Section 2.04(b)(iii), the expiry date of such requested Letter
of Credit would occur more than twelve months after the date of issuance or last
extension, unless the Required Lenders have approved such expiry date; or
(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless L/C Obligations relating to such
proposed Letter of Credit and all Letter of Credit fees to accrue while such
Letter of Credit is to be outstanding are Cash Collateralized on the date of
issuance of such Letter of Credit in the manner described in Section 2.16.
(iii) No L/C Issuer shall be under any obligation to issue any Letter of
Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;
(B) except as otherwise agreed by the Administrative Agent and the applicable
L/C Issuer, the Letter of Credit is to be denominated in a currency other than
Dollars or an Alternative Currency;
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(C) the issuance of such Letter of Credit would violate one or more policies
of the L/C Issuer applicable to letters of credit generally;
(D) except as otherwise agreed by the Administrative Agent and the applicable
L/C Issuer, such Letter of Credit is in an initial stated amount less than
$100,000, in the case of a commercial Letter of Credit, or $500,000, in the case
of a standby Letter of Credit;
(E) such Letter of Credit contains any provision for automatic reinstatement
of the stated amount after any drawing thereunder; or
(F) any Lender is at that time a Defaulting Lender, unless the L/C Issuer has
entered into arrangements, including the delivery of Cash Collateral,
satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or
such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure
(after giving effect to Section 2.17(a)(iv)) with respect to the Defaulting
Lender arising from either the Letter of Credit then proposed to be issued or
that Letter of Credit and all other L/C Obligations as to which the L/C Issuer
has actual or potential Fronting Exposure, as it may elect in its sole
discretion.
(iv) No L/C Issuer shall amend any Letter of Credit if the L/C Issuer would
not be permitted at such time to issue such Letter of Credit in its amended form
under the terms hereof.
(v) No L/C Issuer shall be under any obligation to amend any Letter of Credit
if (A) such L/C Issuer would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.
(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and each
L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Article IX
included such L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to such L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of the Borrower delivered to the applicable L/C Issuer (with a
copy to the Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such Letter of Credit Application may be sent by facsimile or e-mail, by United
States mail, by overnight courier, by electronic transmission using the system
provided by the applicable L/C Issuer, by personal delivery or by any other
means acceptable to such L/C Issuer. Such Letter of Credit Application must be
received by the applicable L/C Issuer and the Administrative Agent not later
than 10:00 a.m. at least two Business Days (or such later date and time as the
Administrative Agent and such L/C Issuer may agree in a particular instance in
their sole discretion) prior to the proposed issuance date or date of amendment,
as the case may be. In the case of a request for an initial issuance of a Letter
of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the applicable L/C Issuer: (A) the
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proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount and currency thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) the purpose and nature of the requested Letter of
Credit; and (H) such other matters as such L/C Issuer may reasonably require. In
the case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the applicable L/C Issuer (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as such L/C Issuer
may reasonably require. Additionally, the Borrower shall furnish to the
applicable L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or amendment,
including any Issuer Documents, as such L/C Issuer or the Administrative Agent
may reasonably require.
(ii) Promptly after receipt of any Letter of Credit Application, the
applicable L/C Issuer will confirm with the Administrative Agent (by telephone
or in writing) that the Administrative Agent has received a copy of such Letter
of Credit Application from the Borrower and, if not, the applicable L/C Issuer
will provide the Administrative Agent with a copy thereof. Unless the applicable
L/C Issuer has received written notice from any Lender, the Administrative Agent
or the Borrower, at least one Business Day prior to the requested date of
issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in Section 4.02 shall not then be satisfied,
then, subject to the terms and conditions hereof, such L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower or the
applicable Subsidiary or enter into the applicable amendment, as the case may
be, in each case in accordance with such L/C Issuer’s usual and customary
business practices. Immediately upon the issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the applicable L/C Issuer a risk participation in such Letter of
Credit in an amount equal to the product of such Lender’s Applicable Percentage
times the amount of such Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the applicable L/C Issuer may, in its sole and absolute discretion,
agree to issue a standby Letter of Credit that has automatic extension
provisions (each, an “Auto-Extension Letter of Credit”); provided that any such
Auto-Extension Letter of Credit must permit such L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of
issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof not later than a day (the “Non-Extension Notice Date”) in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower
shall not be required to make a specific request to such L/C Issuer for any such
extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders
shall be deemed to have authorized (but may not require) the applicable L/C
Issuer to permit the extension of such Letter of Credit at any time to an expiry
date not later than the Letter of Credit Expiration Date; provided, however,
that such L/C Issuer shall not permit any such extension if (A) such L/C Issuer
has determined that it would not be permitted, or would have no obligation, at
such time to issue such Letter of Credit in its revised form (as extended) under
the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section
2.04(a) or otherwise), or (B) it has received notice (which may be by telephone
or in writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from the Administrative
Agent, any Lender or the Borrower that one or more
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of the applicable conditions specified in Section 4.02 is not then satisfied,
and in each such case directing such L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to
a Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the applicable L/C Issuer will also deliver to the Borrower
and the Administrative Agent a true and complete copy of such Letter of Credit
or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, the applicable L/C Issuer shall
immediately notify the Borrower and the Administrative Agent thereof. In the
case of a Letter of Credit denominated in an Alternative Currency, the Borrower
shall reimburse the applicable L/C Issuer in such Alternative Currency, unless
(A) such L/C Issuer (at its option) shall have specified in such notice that it
will require reimbursement in Dollars, or (B) in the absence of any such
requirement for reimbursement in Dollars, the Borrower shall have notified such
L/C Issuer promptly following receipt of the notice of drawing that the Borrower
will reimburse such L/C Issuer in Dollars. In the case of any such reimbursement
in Dollars of a drawing under a Letter of Credit denominated in an Alternative
Currency, such L/C Issuer shall notify the Borrower of the Dollar Equivalent of
the amount of the drawing promptly following the determination thereof. Not
later than 11:00 a.m. on the next succeeding Business Day following the date of
any payment by the applicable L/C Issuer under a Letter of Credit to be
reimbursed in Dollars, or the Applicable Time on the date of any payment by such
L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency,
the Borrower shall reimburse such L/C Issuer through the Administrative Agent in
an amount equal to the amount of such drawing and in the applicable currency
(the date of any payment by the applicable L/C Issuer under a Letter of Credit
to be reimbursed in Dollars, or the Applicable Time on the date of any payment
by the applicable L/C Issuer under a Letter of Credit to be reimbursed in an
Alternative Currency, the “Honor Date”). In the event that (A) a drawing
denominated in an Alternative Currency is to be reimbursed in Dollars pursuant
to the second sentence in this Section 2.04(c)(i) and (B) the Dollar amount paid
by the Borrower, whether on or after the Honor Date, shall not be adequate on
the date of that payment to purchase in accordance with normal banking
procedures a sum denominated in the Alternative Currency equal to the drawing,
the Borrower agrees, as a separate and independent obligation, to indemnify the
applicable L/C Issuer for the loss resulting from its inability on that date to
purchase the Alternative Currency in the full amount of the drawing.
Notwithstanding the above, if the Borrower fails to reimburse such L/C Issuer on
the Honor Date (but instead reimburses such L/C Issuer on the date following the
Honor Date or any date thereafter), the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(expressed in Dollars in the amount of the Dollar Equivalent thereof in the case
of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such
event, the Borrower shall be deemed to have requested a Committed Borrowing of
Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Aggregate Commitments, the proviso to
Section 2.01 and the conditions set forth in Section 4.02 (other than the
delivery of a Committed Loan Notice). Any notice given by any L/C Issuer or the
Administrative Agent pursuant to this Section 2.04(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
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(ii) Each Lender shall upon any notice pursuant to Section 2.04(c)(i) make
funds available (and the Administrative Agent may apply Cash Collateral provided
for this purpose) for the account of the applicable L/C Issuer, in Dollars, at
the Administrative Agent’s Office for Dollar-denominated payments in an amount
equal to its Applicable Percentage of the Unreimbursed Amount not later than
1:00 p.m. on the Business Day specified in such notice by the Administrative
Agent, whereupon, subject to the provisions of Section 2.04(c)(iii), each Lender
that so makes funds available shall be deemed to have made a Base Rate Committed
Loan to the Borrower in such amount. The Administrative Agent shall remit the
funds so received to the applicable L/C Issuer in Dollars.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by
a Committed Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the
amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on the next Business Day following the Honor Date
(together with interest) and shall bear interest at the Default Rate. In such
event, each Lender’s payment to the Administrative Agent for the account of the
applicable L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.04.
(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to
this Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Lender’s Applicable Percentage of
such amount shall be solely for the account of the applicable L/C Issuer.
(v) Each Lender’s obligation to make Committed Loans or L/C Advances to
reimburse the applicable L/C Issuer for amounts drawn under Letters of Credit,
as contemplated by this Section 2.04(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against such L/C Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice).
No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrower to reimburse any L/C Issuer for the amount of any
payment made by such L/C Issuer under any Letter of Credit, together with
interest as provided herein.
(vi) If any Lender fails to make available to the Administrative Agent for
the account of any L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.04(c) by the time
specified in Section 2.04(c)(ii), then, without limiting the other provisions of
this Agreement, such L/C Issuer shall be entitled to recover from such Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to such L/C Issuer at a rate per
annum equal to the applicable Overnight Rate from time to time in effect, plus
any administrative, processing or similar fees customarily charged by such L/C
Issuer in connection with the foregoing. If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Committed Loan included in the relevant Committed Borrowing or L/C
Advance in respect of the relevant L/C
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Borrowing, as the case may be. A certificate of applicable L/C Issuer submitted
to any Lender (through the Administrative Agent) with respect to any amounts
owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the applicable L/C Issuer has made a payment under any
Letter of Credit and has received from any Lender such Lender’s L/C Advance in
respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of such L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Borrower or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Applicable Percentage thereof (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender’s L/C Advance was outstanding) in Dollars and in the same funds as those
received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of
the applicable L/C Issuer pursuant to Section 2.04(c)(i) is required to be
returned under any of the circumstances described in Section 10.05 (including
pursuant to any settlement entered into by such L/C Issuer in its discretion),
each Lender shall pay to the Administrative Agent for the account of such L/C
Issuer its Applicable Percentage thereof on demand of the Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is
returned by such Lender, at a rate per annum equal to the applicable Overnight
Rate from time to time in effect. The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.
(e) Obligations Absolute. The obligation of the Borrower to reimburse each
L/C Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), any L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;
(iv) waiver by any L/C Issuer of any requirement that exists for such L/C
Issuer’s protection and not the protection of the Borrower or any waiver by such
L/C Issuer which does not in fact materially prejudice the Borrower;
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(v) honor of a demand for payment presented electronically even if such
Letter of Credit requires that demand be in the form of a draft;
(vi) any payment made by such L/C Issuer in respect of an otherwise complying
item presented after the date specified as the expiration date of, or the date
by which documents must be received under such Letter of Credit if presentation
after such date is authorized by the Uniform Commercial Code, the ISP or the
UCP, as applicable;
(vii) any payment by such L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by such L/C Issuer under
such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;
(viii) any adverse change in the relevant exchange rates or in the
availability of the relevant Alternative Currency to the Borrower or any
Subsidiary or in the relevant currency markets generally; or
(ix) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any
Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the applicable L/C Issuer. The Borrower shall
be conclusively deemed to have waived any such claim against such L/C Issuer and
its correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying
any drawing under a Letter of Credit, the applicable L/C Issuer shall not have
any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document (other
than to determine that such document appears on its face to be in compliance
with the terms of such Letter of Credit) or the authority of the Person
executing or delivering any such document. None of the L/C Issuers, the
Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuers shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the L/C Issuers, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of the L/C Issuers shall
be liable or responsible for any of the matters described in clauses (i) through
(ix) of Section 2.04(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the applicable
L/C Issuer, and the applicable L/C Issuer may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower which the Borrower proves were
caused by such L/C Issuer’s willful misconduct or gross
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negligence or such L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, each L/C Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and no L/C Issuer shall be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason. Each L/C Issuer may send a Letter of
Credit or conduct any communication to or from the beneficiary via the Society
for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or
overnight courier, or any other commercially reasonable means of communicating
with a beneficiary.
(g) Applicability of ISP and UCP; Limitation of Liability. Unless otherwise
expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of
Credit is issued, the rules of the ISP shall apply to each Letter of Credit.
Notwithstanding the foregoing, no L/C Issuer shall be responsible to the
Borrower for, and no L/C Issuer’s rights and remedies against the Borrower shall
be impaired by, any action or inaction of any L/C Issuer required or permitted
under any law, order, or practice that is required or permitted to be applied to
any Letter of Credit or this Agreement, including the Law or any order of a
jurisdiction where such L/C Issuer or the beneficiary is located, the practice
stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice
statements, or official commentary of the ICC Banking Commission, the Bankers
Association for Finance and Trade - International Financial Services Association
(BAFT-IFSA), or the Institute of International Banking Law & Practice, whether
or not any Letter of Credit chooses such law or practice.
(h) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Applicable Percentage a
Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit
equal to the Applicable Rate times the Dollar Equivalent of the daily maximum
amount available to be drawn under such Letter of Credit; provided, however, any
Letter of Credit Fees otherwise payable for the account of a Defaulting Lender
with respect to any Letter of Credit as to which such Defaulting Lender has not
provided Cash Collateral reasonably satisfactory to the L/C Issuer shall be
payable, to the maximum extent permitted by Applicable Law, to the other Lenders
in accordance with the upward adjustments in their respective Applicable
Percentages allocable to such Letter of Credit pursuant to Section 2.16(a)(iv),
with the balance of such fee, if any, payable to the L/C Issuer for its own
account. For purposes of computing the daily maximum amount available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.09. Letter of Credit Fees shall be (i)
computed on a quarterly basis in arrears and (ii) due and payable on the first
Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Rate during any quarter, the daily maximum
amount of each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect. Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to each L/C Issuer for its own account,
in Dollars, a fronting fee with respect to each Letter of Credit, at the rate
per annum specified by each L/C Issuer pursuant to a separate letter or
agreement, computed on the Dollar Equivalent of the daily amount available to be
drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting
fee shall be due and payable on the first Business Day after the end of each
March, June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date
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to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.09. In
addition, the Borrower shall pay directly to each applicable L/C Issuer for its
own account, in Dollars, the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of such L/C Issuer
relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.
(j) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.
(k) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter
of Credit issued or outstanding hereunder is in support of any obligations of,
or is for the account of, a Subsidiary, the Borrower shall be obligated to
reimburse the applicable L/C Issuer hereunder for any and all drawings under
such Letter of Credit. The Borrower hereby acknowledges that the issuance of
Letters of Credit for the account of Subsidiaries inures to the benefit of the
Borrower, and that the Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.
(l) Letters of Credit Reports. For so long as any Letter of Credit issued by
an L/C Issuer is outstanding, such L/C Issuer shall deliver to the
Administrative Agent on the last Business Day of each calendar month, and on
each date that an L/C Credit Extension occurs with respect to any such Letter of
Credit, a report in the form of Exhibit G, appropriately completed with the
information for every outstanding Letter of Credit issued by such L/C Issuer.
2.05 Swing Line Loans.
(a) The Swing Line. Subject to the terms and conditions set forth herein, the
Swing Line Lender agrees, in reliance upon the agreements of the other Lenders
set forth in this Section 2.05, to make loans in Dollars (each such loan, a
“Swing Line Loan”) to the Borrower from time to time on any Business Day during
the Availability Period in an aggregate amount not to exceed at any time
outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that
such Swing Line Loans, when aggregated with the Applicable Percentage of the
Outstanding Amount of Committed Loans and L/C Obligations of the Lender acting
as Swing Line Lender, may exceed the amount of such Lender’s Commitment;
provided, however, that after giving effect to any Swing Line Loan, (i) the
Total Outstandings shall not exceed the Aggregate Commitments, and (ii) except
for the Swing Line Lender, the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.05, prepay under
Section 2.06, and reborrow under this Section 2.05. Each Swing Line Loan shall
be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Swing Line Lender a risk participation in such Swing Line Loan
in an amount equal to the product of such Lender’s Applicable Percentage times
the amount of such Swing Line Loan.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the
Borrower’s irrevocable notice to the Swing Line Lender and the Administrative
Agent, which may be given by (A) telephone or (B) a Swing Line Loan Notice;
provided that any telephonic notice must be confirmed promptly by delivery to
the Swing Line Lender and the Administrative Agent of a Swing Line Loan Notice.
Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the requested borrowing date,
and shall specify (i) the amount to be borrowed, which shall be a
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minimum of $1,000,000 or a whole multiple of $500,000 in excess thereof, and
(ii) the requested borrowing date, which shall be a Business Day. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof. Unless the Swing Line
Lender has received notice (by telephone or in writing) from the Administrative
Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of
the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to
make such Swing Line Loan as a result of the limitations set forth in the
proviso to the first sentence of Section 2.05(a), or (B) that one or more of the
applicable conditions specified in Article IV is not then satisfied, then,
subject to the terms and conditions hereof, the Swing Line Lender will, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available to the Borrower at its
office by crediting the account of the Borrower on the books of the Swing Line
Lender in Same Day Funds.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the Borrower (which hereby irrevocably authorizes the
Swing Line Lender to so request on its behalf), that each Lender make a Base
Rate Committed Loan in an amount equal to such Lender’s Applicable Percentage of
the amount of Swing Line Loans then outstanding. Such request shall be made in
writing (which written request shall be deemed to be a Committed Loan Notice for
purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.02. The Swing
Line Lender shall furnish the Borrower with a copy of the applicable Committed
Loan Notice promptly after delivering such notice to the Administrative Agent.
Each Lender shall make an amount equal to its Applicable Percentage of the
amount specified in such Committed Loan Notice available to the Administrative
Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral
available with respect to the applicable Swing Line Loan) for the account of the
Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated
payments not later than 1:00 p.m. on the day specified in such Committed Loan
Notice, whereupon, subject to Section 2.05(c)(ii), each Lender that so makes
funds available shall be deemed to have made a Base Rate Committed Loan to the
Borrower in such amount. The Administrative Agent shall remit the funds so
received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a
Committed Borrowing in accordance with Section 2.05(c)(i), the request for Base
Rate Committed Loans submitted by the Swing Line Lender as set forth herein
shall be deemed to be a request by the Swing Line Lender that each of the
Lenders fund its risk participation in the relevant Swing Line Loan and each
Lender’s payment to the Administrative Agent for the account of the Swing Line
Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such
participation.
(iii) If any Lender fails to make available to the Administrative Agent for
the account of the Swing Line Lender any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.05(c) by the time
specified in Section 2.05(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing
Line Lender at a rate per annum equal to the applicable Overnight Rate from time
to time in effect, plus any administrative, processing or similar fees
customarily charged by the Swing Line Lender in connection with the foregoing.
If such Lender pays such amount (with interest and fees as aforesaid), the
amount so
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paid shall constitute such Lender’s Committed Loan included in the relevant
Committed Borrowing or funded participation in the relevant Swing Line Loan, as
the case may be. A certificate of the Swing Line Lender submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.
(iv) Each Lender’s obligation to make Committed Loans or to purchase and fund
risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right which
such Lender may have against the Swing Line Lender, the Borrower or any other
Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to
make Committed Loans pursuant to this Section 2.05(c) is subject to the
conditions set forth in Section 4.02. No such funding of risk participations
shall relieve or otherwise impair the obligation of the Borrower to repay Swing
Line Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will promptly
distribute to such Lender its Applicable Percentage of such payment
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s risk participation was funded) in the same
funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal
or interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 10.05 (including
pursuant to any settlement entered into by the Swing Line Lender in its
discretion), each Lender shall pay to the Swing Line Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the applicable Overnight Rate. The Administrative Agent will make
such demand upon the request of the Swing Line Lender. The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations
and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Borrower for interest on the Swing Line Loans.
Until each Lender funds its Base Rate Committed Loan or risk participation
pursuant to this Section 2.05 to refinance such Lender’s Applicable Percentage
of any Swing Line Loan, interest in respect of such Applicable Percentage shall
be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.
2.06 Prepayments.
(a) The Borrower may, upon notice to the Administrative Agent pursuant to
delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time
or from time to time voluntarily prepay Committed Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior
to any date of prepayment of Eurocurrency Rate Loans denominated in Dollars,
(B) four Business Days (or five, in the
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case of prepayment of Loans denominated in Special Notice Currencies) prior to
any date of prepayment of Eurocurrency Rate Loans denominated in Alternative
Currencies, and (C) on the date of prepayment of Base Rate Committed Loans; (ii)
any prepayment of Eurocurrency Rate Loans shall be in a principal amount of
$10,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any
prepayment of Base Rate Committed Loans shall be in a principal amount of
$2,000,000 or a whole multiple of $1,000,000 in excess thereof or, in each case,
if less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid and, if Eurocurrency Rate Loans are to be prepaid,
the Interest Period(s) of such Loans. The Administrative Agent will promptly
notify each Lender of its receipt of each such notice, and of the amount of such
Lender’s share of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment of
a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the
amount prepaid, together with any additional amounts required pursuant to
Section 3.05. Subject to Section 2.17, each such prepayment shall be applied to
the Committed Loans of the Lenders ratably in accordance with their respective
Commitments.
(b) The Borrower may, upon notice to the Swing Line Lender pursuant to
delivery to the Swing Line Lender of a Notice of Loan Prepayment (with a copy to
the Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $100,000. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
(c) If for any reason the Total Outstandings at any time exceed the Aggregate
Commitments then in effect, the Borrower shall immediately prepay Loans and/or
Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that the Borrower shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.06(c) unless after
the prepayment in full of the Committed Loans and Swing Line Loans the Total
Outstandings exceed the Aggregate Commitments then in effect. The Administrative
Agent may, at any time and from time to time after the initial deposit of such
Cash Collateral, request that additional Cash Collateral be provided in order to
protect against the results of exchange rate fluctuations.
(d) If the Administrative Agent notifies the Borrower at any time that the
Outstanding Amount of all Loans denominated in Alternative Currencies at such
time exceeds an amount equal to 105% of the Alternative Currency Sublimit then
in effect, then, within two Business Days after receipt of such notice, the
Borrower shall prepay Loans in an aggregate amount sufficient to reduce such
Outstanding Amount as of such date of payment to an amount not to exceed 100% of
the Alternative Currency Sublimit then in effect.
2.07 Termination or Reduction of Commitments. The Borrower may, upon notice
to the Administrative Agent, terminate the Aggregate Commitments, or from time
to time permanently reduce the Aggregate Commitments; provided that (i) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m.
five Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate
or reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments, and (iv) if, after giving effect to any reduction of the
Aggregate Commitments, the Alternative Currency Sublimit, the Letter of Credit
Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate
Commitments, such Sublimit shall be automatically reduced by the amount of
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such excess. The Administrative Agent will promptly notify the Lenders of any
such notice of termination or reduction of the Aggregate Commitments. The amount
of any such Aggregate Commitment reduction shall not be applied to the
Alternative Currency Sublimit or the Letter of Credit Sublimit unless otherwise
specified by the Borrower. Any reduction of the Aggregate Commitments shall be
applied ratably to the Commitments of the Lenders. All fees accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on
the effective date of such termination.
2.08 Repayment of Loans.
(a) The Borrower shall repay to the Lenders on the Maturity Date the
aggregate principal amount of Committed Loans outstanding on such date.
(b) The Borrower shall repay each Swing Line Loan on the earlier to occur of
(i) the date ten Business Days after such Loan is made and (ii) the Maturity
Date. At any time that there shall exist a Defaulting Lender, immediately upon
the request of the Swing Line Lender, the Borrower shall repay the outstanding
Swing Line Loans made by the Swing Line Lender in an amount sufficient to
eliminate any Fronting Exposure in respect of such Swing Line Loans.
2.09 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurocurrency Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate Committed Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate.
(b) (i) If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by Applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by the Borrower
under any Loan Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, then
upon the request of the Required Lenders, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by Applicable Laws.
(iii) Upon the request of the Required Lenders, while any Event of Default
exists, the Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
Applicable Laws.
(iv) Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
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(d) For the purposes of the Interest Act (Canada), (i) whenever a rate of
interest or fee rate hereunder is calculated on the basis of a year (the “deemed
year”) that contains fewer days than the actual number of days in the calendar
year of calculation, such rate of interest or fee rate shall be expressed as a
yearly rate by multiplying such rate of interest or fee rate by the actual
number of days in the calendar year of calculation and dividing it by the number
of days in the deemed year, (ii) the principle of deemed reinvestment of
interest shall not apply to any interest calculation hereunder and (iii) the
rates of interest stipulated herein are intended to be nominal rates and not
effective rates or yields.
2.10 Fees. In addition to certain fees described in subsections (h) and (i)
of Section 2.04:
(a) Facility Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a facility
fee (the “Facility Fee”), in Dollars, equal to the Applicable Rate times the
actual daily amount of the Aggregate Commitments (or, if the Aggregate
Commitments have terminated, on the Outstanding Amount of all Committed Loans,
Swing Line Loans and L/C Obligations), regardless of usage, subject to
adjustment as provided in Section 2.17. The Facility Fee shall accrue at all
times during the Availability Period (and thereafter so long as any Committed
Loans, Swing Line Loans or L/C Obligations remain outstanding), including at any
time during which one or more of the conditions in Article IV is not met, and
shall be due and payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on the first such date to occur
after the Closing Date, and on the Maturity Date (and, if applicable, thereafter
on demand). The Facility Fee shall be calculated quarterly in arrears, and if
there is any change in the Applicable Rate during any quarter, the actual daily
amount shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees. (i) The Borrower shall pay to the Arrangers and the
Administrative Agent for their own respective accounts, in Dollars, fees in the
amounts and at the times specified in the Fee Letter. Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any
reason whatsoever.
2.11 Computation of Interest and Fees. All computations of interest for Base
Rate Loans (including Base Rate Loans determined by reference to the
Eurocurrency Rate) shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year or, in the case of interest in respect
of Committed Loans denominated in Alternative Currencies as to which market
practice differs from the foregoing, in accordance with such market practice.
Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid; provided that any Loan that is repaid on the same
day on which it is made shall, subject to Section 2.14, bear interest for one
day. Each determination by the Administrative Agent of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
2.12 Evidence of Debt.
(a) The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by such Lender in the ordinary course of
business. The Administrative Agent shall maintain the Register in accordance
with Section 10.06(c). The accounts or records maintained by each Lender shall
be conclusive absent manifest error of the amount of the Credit Extensions made
by the
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Lenders to the Borrower and the interest and payments thereon. Any failure to so
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to
the Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the Register, the Register shall control in the
absence of manifest error. Upon the request of any Lender made through the
Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender’s
Loans in addition to such accounts or records. Each Lender may attach schedules
to its Note and endorse thereon the date, Type (if applicable), amount, currency
and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection (a)
above, each Lender and the Administrative Agent shall maintain in accordance
with its usual practice accounts or records evidencing the purchases and sales
by such Lender of participations in Letters of Credit and Swing Line Loans. In
the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error.
2.13 Payments Generally; Administrative Agent’s Clawback.
(a) General. Except as otherwise set forth in Section 3.01, all payments to
be made by the Borrower shall be made free and clear of and without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein and except with respect to principal of and
interest on Loans denominated in an Alternative Currency, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account of
the respective Lenders to which such payment is owed, at the applicable
Administrative Agent’s Office in Dollars and in Same Day Funds not later than
2:00 p.m. on the date specified herein. Except as otherwise expressly provided
herein, all payments by the Borrower hereunder with respect to principal and
interest on Loans denominated in an Alternative Currency shall be made to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the applicable Administrative Agent’s Office in such
Alternative Currency and in Same Day Funds not later than the Applicable Time
specified by the Administrative Agent on the dates specified herein. Without
limiting the generality of the foregoing, the Administrative Agent may require
that any payments due under this Agreement be made in the United States. If, for
any reason, the Borrower is prohibited by any Law from making any required
payment hereunder in an Alternative Currency, such Borrower shall make such
payment in Dollars in the Dollar Equivalent of the Alternative Currency payment
amount. The Administrative Agent will promptly distribute to each Lender its
Applicable Percentage (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending
Office. All payments received by the Administrative Agent (i) after 2:00 p.m.,
in the case of payments in Dollars, or (ii) after the Applicable Time specified
by the Administrative Agent in the case of payments in an Alternative Currency,
shall in each case be deemed received on the next succeeding Business Day and
any applicable interest or fee shall continue to accrue. If any payment to be
made by the Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Committed Borrowing of Eurocurrency Rate Loans (or, in the
case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the
date of such Committed Borrowing) that such Lender will not make available to
the Administrative Agent such Lender’s share of such Committed Borrowing of
Eurocurrency Rate Loans or Base Rate Loans, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with
Section 2.02 and may, in reliance upon such assumption, make available
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to the Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Committed Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount in Same Day Funds with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (A) in the case of a payment to be
made by such Lender, the Overnight Rate, plus any administrative, processing or
similar fees customarily charged by the Administrative Agent in connection with
the foregoing, and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Committed Loan included in such Committed Borrowing. Any payment by the Borrower
shall be without prejudice to any claim the Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.
(ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuer hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the
amount due. In such event, if the Borrower has not in fact made such payment,
then each of the Lenders or the L/C Issuer, as the case may be, severally agrees
to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in Same Day Funds with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
Overnight Rate.
A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this subsection (b) shall be conclusive, absent
manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest to the extent returned on the same Business Day
and thereafter at the Federal Funds Rate.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder
to make Committed Loans, to fund participations in Letters of Credit and Swing
Line Loans and to make payments pursuant to Section 10.04(c) are several and not
joint. The failure of any Lender to make any Committed Loan, to fund any such
participation or to make any payment under Section 10.04(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Committed Loan, to purchase its participation or to
make its payment under Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
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2.14 Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Committed Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it resulting in
such Lender’s receiving payment of a proportion of the aggregate amount of such
Committed Loans or participations and accrued interest thereon greater than its
pro rata share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Committed Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
or subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x)
any payment made by or on behalf of the Borrower pursuant to and in accordance
with the express terms of this Agreement (including the application of funds
arising from the existence of a Defaulting Lender), (y) the application of Cash
Collateral provided for in Section 2.16, or (z) any payment obtained by a Lender
as consideration for the assignment of or sale of a participation in any of its
Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to
any assignee or participant, other than an assignment to the Borrower or any
Subsidiary thereof (as to which the provisions of this Section shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under Applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.
2.15 Increase in Commitments.
(a) Request for Increase. Provided there exists no Default and the Borrower
has made no voluntary reduction of the Aggregate Commitments pursuant to Section
2.07, upon notice to the Administrative Agent, the Borrower may from time to
time, request an increase in the Aggregate Commitments by an amount (for all
such requests) not exceeding $250,000,000; provided that (i) any such request
for an increase shall be in a minimum amount of $25,000,000, and (ii) the
Borrower may make a maximum of three such requests.
(b) Notification by Administrative Agent; Additional Lenders. The
Administrative Agent shall notify the Borrower and each Lender of each request
made hereunder. To achieve the full amount of a requested increase, and subject
to the approval of the Administrative Agent and the L/C Issuers (which approvals
shall not be unreasonably withheld), the Borrower may, at its option, request
that the existing Lenders provide for any such increase in the Aggregate
Commitments or invite additional Eligible Assignees to become Lenders pursuant
to a joinder agreement in form and substance satisfactory to the Administrative
Agent and its counsel. To the extent the Borrower seeks any increase from
existing Lenders, it shall (in consultation with the Administrative Agent)
specify the time period within which each Lender is requested to respond (which
shall in no event be less than ten Business Days from the date of delivery of
such notice to the Lenders).
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(c) Lender Elections to Increase. Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less than
its Applicable Percentage of such requested increase. Any Lender not responding
within such time period shall be deemed to have declined to increase its
Commitment.
(d) Effective Date and Allocations. If the Aggregate Commitments are
increased in accordance with this Section, the Administrative Agent and the
Borrower shall determine the effective date (the “Increase Effective Date”) and
the final allocation of such increase. The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase and
the Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, (i) the Borrower shall deliver to the Administrative Agent such
information as may be requested pursuant to Section 4.01(a)(viii), and a
certificate dated as of the Increase Effective Date (in sufficient copies for
each Lender) signed by a Responsible Officer (x) certifying and attaching the
resolutions adopted by the Borrower approving or consenting to such increase,
and (y) certifying that, before and after giving effect to such increase, (A)
the representations and warranties contained in Article V and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Section 2.15, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01, and (B) no Default exists and (ii) (x) upon
the reasonable request of any Lender made at least ten days prior to the
Increase Effective Date, the Borrower shall have provided to such Lender, and
such Lender shall be reasonably satisfied with, the documentation and other
information so requested in connection with applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
Act, in each case at least five days prior to the Increase Effective Date and
(y) at least five days prior to the Increase Effective Date, if the Borrower
qualifies as a “legal entity customer” under the Beneficial Ownership Regulation
it shall have delivered, to each Lender that so requests, a Beneficial Ownership
Certification in relation to it. The Borrower shall prepay any Committed Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep the
outstanding Committed Loans ratable with any revised Applicable Percentages
arising from any nonratable increase in the Commitments under this Section.
(f) Conflicting Provisions. This Section shall supersede any provisions in
Sections 2.14 or 10.01 to the contrary.
2.16 Cash Collateral.
(a) Certain Credit Support Events. Upon the request of the Administrative
Agent or the L/C Issuer (i) if the L/C Issuer has honored any full or partial
drawing request under any Letter of Credit and such drawing has resulted in an
L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C
Obligation for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations. At any time that there shall exist a Defaulting Lender, immediately
upon the request of the Administrative Agent, the L/C Issuer or the Swing Line
Lender, the Borrower shall deliver to the Administrative Agent Cash Collateral
in an amount sufficient to cover all Fronting Exposure (after giving effect to
Section 2.17(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
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(b) Grant of Security Interest. All Cash Collateral (other than credit
support not constituting funds subject to deposit) shall be maintained in
blocked, interest bearing deposit accounts at Bank of America. The Borrower, and
to the extent provided by any Lender, such Lender, hereby grants to (and
subjects to the control of) the Administrative Agent, for the benefit of the
Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line
Lender), and agrees to maintain, a first priority security interest in all such
cash, deposit accounts and all balances therein, and all other property so
provided as collateral pursuant hereto, and in all proceeds of the foregoing,
all as security for the obligations to which such Cash Collateral may be applied
pursuant to Section 2.16(c). If at any time the Administrative Agent determines
that Cash Collateral is subject to any right or claim of any Person other than
the Administrative Agent as herein provided, or that the total amount of such
Cash Collateral is less than the applicable Fronting Exposure and other
obligations secured thereby, the Borrower or the relevant Defaulting Lender
will, promptly upon demand by the Administrative Agent, pay or provide to the
Administrative Agent additional Cash Collateral in an amount sufficient to
eliminate such deficiency.
(c) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 2.16 or Sections
2.04, 2.05, 2.06, 2.17 or 8.02 in respect of Letters of Credit or Swing Line
Loans shall be held and applied to the satisfaction of the specific L/C
Obligations, Swing Line Loans, obligations to fund participations therein
(including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) and other obligations for which the Cash Collateral
was so provided, prior to any other application of such property as may be
provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to
reduce Fronting Exposure or other obligations shall be released promptly
following (i) the elimination of the applicable Fronting Exposure or other
obligations giving rise thereto (including by the termination of Defaulting
Lender status of the applicable Lender (or, as appropriate, its assignee
following compliance with Section 10.06(b)(vi))) or (ii) the Administrative
Agent’s good faith determination that there exists excess Cash Collateral;
provided, however, (x) that Cash Collateral furnished by or on behalf of the
Borrower or any of its Subsidiaries shall not be released during the continuance
of a Default or Event of Default (and following application as provided in this
Section 2.16 may be otherwise applied in accordance with Section 8.03), and (y)
the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as
applicable, may agree that Cash Collateral shall not be released but instead
held to support future anticipated Fronting Exposure or other obligations.
2.17 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
Applicable Law:
(i) Waivers and Amendments. That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in Section 10.01.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of that
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise, and including any amounts made available to the
Administrative Agent by that Defaulting Lender pursuant to Section 10.08), shall
be applied at such time or times as may be determined by the Administrative
Agent as follows: first, to the payment of any amounts owing by that Defaulting
Lender to the
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Administrative Agent hereunder; second, to the payment on a pro rata basis of
any amounts owing by that Defaulting Lender to an L/C Issuer or Swing Line
Lender hereunder; third, if so determined by the Administrative Agent or
requested by the applicable L/C Issuer or Swing Line Lender, to be held as Cash
Collateral for future funding obligations of that Defaulting Lender of any
participation in any Swing Line Loan or Letter of Credit; fourth, as the
Borrower may request (so long as no Default or Event of Default exists), to the
funding of any Loan in respect of which that Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in an interest bearing deposit account and released pro
rata in order to (x) satisfy obligations of that Defaulting Lender to fund Loans
under this Agreement and (y) Cash Collateralize each L/C Issuer’s future
Fronting Exposure with respect to such Defaulting Lender with respect to future
Letters of Credit issued under this Agreement, in accordance with Section 2.16;
sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or
Swing Line Lender as a result of any judgment of a court of competent
jurisdiction obtained by any Lender, any L/C Issuer or Swing Line Lender against
that Defaulting Lender as a result of that Defaulting Lender’s breach of its
obligations under this Agreement; seventh, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against that Defaulting Lender as a result of that Defaulting Lender’s breach of
its obligations under this Agreement; and eighth, to that Defaulting Lender or
as otherwise directed by a court of competent jurisdiction; provided that if (x)
such payment is a payment of the principal amount of any Loans or L/C Borrowings
in respect of which that Defaulting Lender has not fully funded its appropriate
share and (y) such Loans or L/C Borrowings were made at a time when the
conditions set forth in Section 4.02 were satisfied or waived, such payment
shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all
Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment
of any Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post
Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and
redirected by that Defaulting Lender, and each Lender irrevocably consents
hereto.
(iii) Certain Fees. That Defaulting Lender (x) shall be entitled to receive
any facility fee pursuant to Section 2.10(a) for any period during which that
Lender is a Defaulting Lender only to extent allocable to the sum of (1) the
Outstanding Amount of the Committed Loans funded by it and (2) its Applicable
Percentage of the stated amount of Letters of Credit and Swing Line Loans for
which it has provided Cash Collateral pursuant to Section 2.04, Section 2.05,
Section 2.16, or Section 2.17(a)(ii), as applicable (and the Borrower shall (A)
be required to pay to each of the L/C Issuer and the Swing Line Lender, as
applicable, the amount of such fee allocable to its Fronting Exposure arising
from that Defaulting Lender and (B) not be required to pay the remaining amount
of such fee that otherwise would have been required to have been paid to that
Defaulting Lender) and (y) shall be limited in its right to receive Letter of
Credit Fees as provided in Section 2.04(h).
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure.
During any period in which there is a Defaulting Lender, for purposes of
computing the amount of the obligation of each Non-Defaulting Lender to acquire,
refinance or fund participations in Letters of Credit or Swing Line Loans
pursuant to Sections 2.04 and 2.05, the “Applicable Percentage” of each
Non-Defaulting Lender shall be computed without giving effect to the Commitment
of that Defaulting Lender; provided that, (i) each such reallocation shall be
given effect only if, at the time of such reallocation, no Default or Event of
Default exists; and (ii) the aggregate obligation of each Non-Defaulting Lender
to acquire, refinance or fund participations in Letters of Credit and Swing Line
Loans shall not exceed the positive difference, if any, of (1) the Commitment of
that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the
Committed Loans of that
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Lender. Subject to Section 10.21, no reallocation hereunder shall constitute a
waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swing Line Loans. If the reallocation
described in clause (a)(iv) above cannot, or can only partially, be effected,
the Borrower shall, without prejudice to any right or remedy available to it
hereunder or under Applicable Law, (x) first, prepay Swing Line Loans in an
amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash
Collateralize the L/C Issuers’ Fronting Exposure in accordance with the
procedures set forth in Section 2.16.
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swing
Line Lender and each L/C Issuer agree in writing in their sole discretion that a
Defaulting Lender should no longer be deemed to be a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase that portion of outstanding
Loans of the other Lenders or take such other actions as the Administrative
Agent may determine to be necessary to cause the Committed Loans and funded and
unfunded participations in Letters of Credit and Swing Line Loans to be held on
a pro rata basis by the Lenders in accordance with their Applicable Percentages
(without giving effect to Section 2.17(a)(iv)), whereupon that Lender will cease
to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.
(c) New Swing Line Loans/Letters of Credit. So long as any Lender is a
Defaulting Lender, (i) the Swing Line Lender shall not be required to fund any
Swing Line Loans unless it is satisfied that it will have no Fronting Exposure
after giving effect to such Swing Line Loan and (ii) the L/C Issuer shall not be
required to issue, extend, increase, reinstate or renew any Letter of Credit
unless it is satisfied that it will have no Fronting Exposure after giving
effect thereto.
2.18 Extension of Maturity Date.
(a) The Borrower may, by written notice to the Administrative Agent from time
to time, request an extension (each, an “Extension”) of the Maturity Date of any
class of Loans and Commitments to the extended maturity date specified in such
notice. Such notice shall (i) set forth the amount of the applicable class of
Loans and Commitments that will be subject to the Extension (which shall be in
minimum increments of $100,000,000 and a minimum amount of $500,000,000), (ii)
set forth the date on which such Extension is requested to become effective
(which shall be not less than ten (10) Business Days nor more than sixty (60)
days after the date of such Extension notice (or such longer or shorter periods
as the Administrative Agent shall agree in its sole discretion)) and (iii)
identify the relevant class of Commitments to which such Extension relates. Each
Lender of the applicable class shall be offered (an “Extension Offer”) an
opportunity to participate in such Extension on a pro rata basis and on the same
terms and conditions as each other Lender of such class pursuant to procedures
established by, or reasonably acceptable to, the Administrative Agent and the
Borrower. Each Lender shall make a determination (in its sole and absolute
discretion) as to whether or not it will agree to extend the Maturity Date as
requested; provided, however, that failure by any Lender to make a timely
response to the Borrower’s request for an Extension shall be deemed to
constitute a refusal by such Lender to extend the Maturity Date. If the
aggregate principal amount of Loans and Commitments in respect of which Lenders
shall have accepted
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the relevant Extension Offer shall exceed the maximum aggregate principal amount
of Commitments subject to the Extension Offer as set forth in the Extension
notice, then the Commitments of Lenders of the applicable class shall be
extended ratably up to such maximum amount based on the respective principal
amounts with respect to which such Lenders have accepted such Extension Offer.
(b) The following shall be conditions precedent to the effectiveness of any
Extension: (i) no Default or Event of Default shall have occurred and be
continuing immediately prior to and immediately after giving effect to such
Extension, (ii) the representations and warranties set forth in Article V and in
each other Loan Document shall be deemed to be made and shall be true and
correct in all material respects on and as of the effective date of such
Extension, (iii) the L/C Issuers and the Swing Line Lender shall have consented
to any Extension of the Commitments, to the extent that such Extension provides
for the issuance or extension of Letters of Credit or making of Swingline Loans
at any time during the extended period and (iv) the terms of such Extended
Commitments shall comply with paragraph (c) of this Section.
(c) The terms of each Extension shall be determined by the Borrower and the
applicable extending Lenders and set forth in an Extension Amendment; provided
that (i) the final maturity date of any Extended Commitment shall be no earlier
than the Maturity Date, respectively, (ii) there shall be no scheduled
amortization of the loans or reductions of commitments under any Extended
Commitments, (iii) the Extended Loans will rank pari passu in right of payment
and with respect to security with the existing Revolving Loans and the borrower
of the Extended Commitments shall be the same as the Borrower with respect to
the existing Loans, (iv) the interest rate margin, rate floors, fees, original
issue discount and premium applicable to any Extended Commitment (and the
Extended Loans thereunder) shall be determined by the Borrower and the
applicable extending Lenders, (v) borrowing and prepayment of Extended Loans, or
reductions of Extended Commitments, and participation in Letters of Credit and
Swingline Loans, shall be on a pro rata basis with the other Loans and
Commitments (other than upon the maturity of the non-extended Loans and
Commitments) and (vi) the terms of the Extended Commitments shall be
substantially identical to the terms set forth herein (except as set forth in
clauses (i) through (v) above).
(d) In connection with any Extension, the Borrower, the Administrative Agent
and each applicable extending Lender shall execute and deliver to the
Administrative Agent an Extension Amendment and such other documentation as the
Administrative Agent shall reasonably specify to evidence the Extension. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Extension. Any Extension Amendment may, without the consent of any other
Lender, effect such amendments to this Agreement and the other Loan Documents as
may be necessary or appropriate, in the reasonable opinion of the Administrative
Agent and the Borrower, to implement the terms of any such Extension, including
any amendments necessary to establish Extended Commitments or Extended Loans as
a new class or tranche of Commitments or Loans, as applicable, and such other
technical amendments as may be necessary or appropriate in the reasonable
opinion of the Administrative Agent and the Borrower in connection with the
establishment of such new class or tranche (including to preserve the pro rata
treatment of the extended and non-extended classes or tranches and to provide
for the reallocation of revolving credit exposure upon the expiration or
termination of the commitments under any class or tranche), in each case on
terms consistent with this Section.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
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(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.
(i) Any and all payments by or on account of any obligation of the Borrower
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by Applicable Laws. If any Applicable Laws (as
determined in the good faith discretion of the Administrative Agent or Borrower,
as applicable) require the deduction or withholding of any Tax from any such
payment by the Administrative Agent or the Borrower, then the Administrative
Agent or the Borrower shall be entitled to make such deduction or withholding,
upon the basis of the information and documentation to be delivered pursuant to
subsection (e) below.
(ii) If the Borrower or the Administrative Agent shall be required by the
Code to withhold or deduct any Taxes, including both United States Federal
backup withholding and withholding Taxes, from any payment, then (A) the
Administrative Agent shall withhold or make such deductions as are determined by
the Administrative Agent to be required based upon the information and
documentation it has received pursuant to subsection (e) below, (B) the
Administrative Agent shall timely pay the full amount withheld or deducted to
the relevant Governmental Authority in accordance with the Code, and (C) to the
extent that the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the Borrower shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section
3.01) the applicable Recipient receives an amount equal to the sum it would have
received had no such withholding or deduction been made.
(iii) If the Borrower or the Administrative Agent shall be required by any
Applicable Laws other than the Code to withhold or deduct any Taxes from any
payment, then (A) the Borrower or the Administrative Agent, as required by such
Laws, shall withhold or make such deductions as are determined by it to be
required based upon the information and documentation it has received pursuant
to subsection (e) below, (B) the Borrower or the Administrative Agent, to the
extent required by such Laws, shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with such Laws,
and (C) to the extent that the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the Borrower shall be increased as
necessary so that after any required withholding or the making of all required
deductions (including deductions applicable to additional sums payable under
this Section 3.01) the applicable Recipient receives an amount equal to the sum
it would have received had no such withholding or deduction been made.
(b) Payment of Other Taxes by the Borrower. Without limiting the provisions
of subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with Applicable Law, or at the
option of the Administrative Agent timely reimburse it for the payment of any
Other Taxes.
(c) Indemnification by the Borrower. (i) The Borrower shall indemnify each
Recipient, and shall make payment in respect thereof within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 3.01) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the L/C
Issuer (with a copy to the Administrative Agent), or by
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the Administrative Agent on its own behalf or on behalf of a Lender or the L/C
Issuer, shall be conclusive absent manifest error. The Borrower shall, and does
hereby, indemnify the Administrative Agent, and shall make payment in respect
thereof within 10 days after written demand therefor, for any amount which a
Lender or the L/C Issuer for any reason fails to pay indefeasibly to the
Administrative Agent as required pursuant to Section 3.01(c)(ii) below.
(ii) Each Lender and the L/C Issuer shall, and does hereby, severally
indemnify, and shall make payment in respect thereof within 10 days after demand
therefor, (x) the Administrative Agent against any Indemnified Taxes
attributable to such Lender or the L/C Issuer (but only to the extent that the
Borrower has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Borrower to do so),
(y) the Administrative Agent and the Borrower, as applicable, against any Taxes
attributable to such Lender’s failure to comply with the provisions of Section
10.06(d) relating to the maintenance of a Participant Register and (z) the
Administrative Agent and the Borrower, as applicable, against any Excluded Taxes
attributable to such Lender or the L/C Issuer, in each case, that are payable or
paid by the Administrative Agent or the Borrower in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender and the L/C Issuer hereby
authorizes the Administrative Agent to set off and apply any and all amounts at
any time owing to such Lender or the L/C Issuer, as the case may be, under this
Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii).
(d) Evidence of Payments. As soon as practicable after any payment of Taxes
by the Borrower or by the Administrative Agent to a Governmental Authority as
provided in this Section 3.01, the Borrower shall deliver to the Administrative
Agent or the Administrative Agent shall deliver to the Borrower, as the case may
be, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return required by Laws to
report such payment or other evidence of such payment reasonably satisfactory to
the Borrower or the Administrative Agent, as the case may be.
(e)
Status of Lenders; Tax Documentation.
(i) Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by Applicable Law or reasonably requested by the Borrower or
the Administrative Agent, such properly completed and executed documentation
prescribed by Applicable Law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be
required if in the Lender’s reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender.
(ii) Without limiting the generality of the foregoing, in the event that the
Borrower is a U.S. Person:
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(A) any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
federal backup withholding Tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or
W-8BEN-E, as applicable (or any successor form) establishing an exemption from,
or reduction of, U.S. federal withholding Tax pursuant to the “interest” article
of such tax treaty and (y) with respect to any other applicable payments under
any Loan Document, IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor
form) establishing an exemption from, or reduction of, U.S. federal withholding
Tax pursuant to the “business profits” or “other income” article of such tax
treaty;
(II) executed originals of IRS Form W-8ECI (or any successor form);
(III) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit H-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed
originals of IRS Form W-8BEN or W-8BEN-E, as applicable (or any successor form);
or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
W-8BEN-E, as applicable (or any successor form), a U.S. Tax Compliance
Certificate substantially in the form of Exhibit H-2 or Exhibit H-3, IRS Form
W-9, and/or other certification documents from each beneficial owner, as
applicable; provided that if the Foreign Lender is a partnership and one or more
direct or indirect partners of such Foreign Lender are claiming the portfolio
interest exemption, such Foreign Lender may provide a U.S. Tax Compliance
Certificate substantially in the form of Exhibit H-4 on behalf of each such
direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form
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prescribed by Applicable Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by Applicable Law to permit the
Borrower or the Administrative Agent to determine the withholding or deduction
required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by Law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by Applicable Law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. For avoidance of doubt,
solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement. To the extent that the relevant
documentation provided pursuant to this Section 3.01(e)(ii)(D) is rendered
obsolete or inaccurate in any material respect as a result of changes in
circumstances with respect to the status of a Lender, such Lender shall, to the
extent permitted by Laws, deliver to the Borrower and the Administrative Agent
revised and/or updated documentation sufficient for the Borrower and the
Administrative Agent to confirm such Lender’s compliance with its respective
obligations under FATCA.
(iii) Each Lender shall promptly (A) update any previously delivered form or
certification that expires or becomes obsolete or inaccurate in any respect or
promptly notify the Borrower and the Administrative Agent in writing of its
legal inability to do so, and (B) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of Applicable Laws of any jurisdiction that the Borrower
or the Administrative Agent make any withholding or deduction for Taxes from
amounts payable to such Lender.
(f) Treatment of Certain Refunds. Unless required by Applicable Laws, at no
time shall the Administrative Agent have any obligation to file for or otherwise
pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to
any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from
funds paid for the account of such Lender or the L/C Issuer, as the case may be.
If any Recipient determines, in its reasonable discretion, that it has received
a refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to
such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 3.01 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) incurred by such Recipient, and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Recipient, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Recipient
in the event the Recipient is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this subsection, in no
event will the applicable Recipient be required to pay any amount to the
Borrower pursuant to this subsection the payment of which would place the
Recipient in a less favorable net after-Tax position than such Recipient would
have been in if the Tax
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subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. This subsection shall not
be construed to require any Recipient to make available its tax returns (or any
other information relating to its Taxes that it deems confidential) to the
Borrower or any other Person.
(g) Survival. Each party’s obligations under this Section 3.01 shall survive
the resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender or the L/C Issuer, the termination of
the Commitments and the repayment, satisfaction or discharge of all other
Obligations.
(h) Defined Terms. For purposes of this Section 3.01, the term “Applicable
Law” includes FATCA.
3.02 Illegality. If any Lender determines that any Law has made it unlawful,
or that any Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to make, maintain or fund Loans whose
interest is determined by reference to the Eurocurrency Rate, or to determine or
charge interest rates based upon the Eurocurrency Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars or any Alternative Currency in
the applicable interbank market, then, on notice thereof by such Lender to the
Borrower through the Administrative Agent, (i) any obligation of such Lender to
make or continue Eurocurrency Rate Loans or to convert Base Rate Committed Loans
to Eurocurrency Rate Loans shall be suspended, and (ii) if such notice asserts
the illegality of such Lender making or maintaining Base Rate Loans the interest
rate on which is determined by reference to the Eurocurrency Rate component of
the Base Rate, the interest rate on which Base Rate Loans of such Lender shall,
if necessary to avoid such illegality, be determined by the Administrative Agent
without reference to the Eurocurrency Rate component of the Base Rate, in each
case until such Lender notifies the Administrative Agent and the Borrower that
the circumstances giving rise to such determination no longer exist. Upon
receipt of such notice, (x) the Borrower shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or, if applicable, convert all
Eurocurrency Rate Loans of such Lender to Base Rate Loans (the interest rate on
which Base Rate Loans of such Lender shall, if necessary to avoid such
illegality, be determined by the Administrative Agent without reference to the
Eurocurrency Rate component of the Base Rate), either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such
Eurocurrency Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurocurrency Rate Loans and (y) if such
notice asserts the illegality of such Lender determining or charging interest
rates based upon the Eurocurrency Rate, the Administrative Agent shall during
the period of such suspension compute the Base Rate applicable to such Lender
without reference to the Eurocurrency Rate component thereof until the
Administrative Agent is advised in writing by such Lender that it is no longer
illegal for such Lender to determine or charge interest rates based upon the
Eurocurrency Rate. Upon any such prepayment or conversion, the Borrower shall
also pay accrued interest on the amount so prepaid or converted.
3.03 Inability to Determine Rates.
(a) If in connection with any request for a Eurocurrency Rate Loan or a
conversion to or continuation thereof, (i) the Administrative Agent determines
that (A) deposits (whether in Dollars or an Alternative Currency) are not being
offered to banks in the interbank market for such currency for the applicable
amount and Interest Period of such Eurocurrency Rate Loan, or (B) (x) adequate
and reasonable means do not exist for determining the Eurocurrency Rate for any
requested Interest Period with respect to a proposed Eurocurrency Rate Loan or
in connection with an existing or proposed Base Rate Loan (whether denominated
in Dollars or an Alternative Currency) and (y) the circumstances described in
Section 3.03(c)(i) do not apply (in each case with respect to this clause (i),
“Impacted Loans”), or (ii) the
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Administrative Agent or the Required Lenders determine that for any reason the
Eurocurrency Rate for any requested Interest Period with respect to a proposed
Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Eurocurrency Rate Loan, the Administrative Agent will
promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation
of the Lenders to make or maintain Eurocurrency Rate Loans in the affected
currency or currencies shall be suspended (to the extent of the affected
Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a
determination described in the preceding sentence with respect to the
Eurocurrency Rate component of the Base Rate, the utilization of the
Eurocurrency Rate component in determining the Base Rate shall be suspended, in
each case until the Administrative Agent (or, in the case of a determination by
the Required Lenders described in clause (ii) of Section 3.03(a), until the
Administrative Agent upon instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending request
for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in
the affected currency or currencies (to the extent of the affected Eurocurrency
Rate Loans or Interest Periods) or, failing that, will be deemed to have
converted such request into a request for a Committed Borrowing of Base Rate
Loans in the amount specified therein.
(b) Notwithstanding the foregoing, if the Administrative Agent has made the
determination described in clause (i) of Section 3.03(a), the Administrative
Agent, in consultation with the Borrower, may establish an alternative interest
rate for the Impacted Loans, in which case, such alternative rate of interest
shall apply with respect to the Impacted Loans until (1) the Administrative
Agent revokes the notice delivered with respect to the Impacted Loans under
clause (i) of the first sentence of this Section, (2) the Required Lenders
notify the Administrative Agent and the Borrower that such alternative interest
rate does not adequately and fairly reflect the cost to such Lenders of funding
the Impacted Loans, or (3) any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for such Lender or its applicable Lending Office to make, maintain or fund Loans
whose interest is determined by reference to such alternative rate of interest
or to determine or charge interest rates based upon such rate or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to do any of the foregoing and provides the Administrative Agent and
the Borrower written notice thereof.
(c) Notwithstanding anything to the contrary in this Agreement or any other
Loan Documents, if the Administrative Agent determines (which determination
shall be conclusive absent manifest error), or the Borrower or Required Lenders
notify the Administrative Agent (with, in the case of the Required Lenders, a
copy to the Borrower) that the Borrower or Required Lenders (as applicable) have
determined that:
(i) adequate and reasonable means do not exist for ascertaining LIBOR for any
requested Interest Period, including, without limitation, because the LIBOR
Screen Rate is not available or published on a current basis and such
circumstances are unlikely to be temporary; or
(ii) the administrator of the LIBOR Screen Rate or a Governmental Authority
having jurisdiction over the Administrative Agent has made a public statement
identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no
longer be made available, or used for determining the interest rate of loans,
provided that, at the time of such statement, there is no successor
administrator that is satisfactory to the Administrative Agent that will
continue to provide LIBOR after such specific date (such specific date, the
“Scheduled Unavailability Date”); or
(iii) syndicated loans currently being executed, or that include language
similar to that contained in this Section, are being executed or amended (as
applicable) to incorporate or adopt a new benchmark interest rate to replace
LIBOR;
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then, reasonably promptly after such determination by the Administrative Agent
or receipt by the Administrative Agent of such notice, as applicable, the
Administrative Agent and the Borrower may amend this Agreement solely for the
purpose of replacing LIBOR in accordance with this Section 3.03 with (x) for
Loans denominated in Dollars, one or more SOFR-Based Rates or (y) another
alternate benchmark rate giving due consideration to any evolving or then
existing convention for similar syndicated credit facilities (whether in Dollars
or an Alternative Currency) for such alternative benchmarks and, in each case,
including any mathematical or other adjustments to such benchmark giving due
consideration to any evolving or then existing convention for similar syndicated
credit facilities (whether in Dollars or an Alternative Currency) for such
benchmarks, which adjustment or method for calculating such adjustment shall be
published on an information service as selected by the Administrative Agent from
time to time in its reasonable discretion and may be periodically updated (the
“Adjustment;” and any such proposed rate, a “LIBOR Successor Rate”), and any
such amendment shall become effective at 5:00 p.m. on the fifth Business Day
after the Administrative Agent shall have posted such proposed amendment to all
Lenders and the Borrower unless, prior to such time, Lenders comprising the
Required Lenders have delivered to the Administrative Agent written notice that
such Required Lenders (A) in the case of an amendment to replace LIBOR with a
rate described in clause (x), object to the Adjustment; or (B) in the case of an
amendment to replace LIBOR with a rate described in clause (y), object to such
amendment; provided that for the avoidance of doubt, in the case of clause (A),
the Required Lenders shall not be entitled to object to any SOFR-Based Rate
contained in any such amendment. Such LIBOR Successor Rate shall be applied in a
manner consistent with market practice; provided that to the extent such market
practice is not administratively feasible for the Administrative Agent, such
LIBOR Successor Rate shall be applied in a manner as otherwise reasonably
determined by the Administrative Agent.
If no LIBOR Successor Rate has been determined and the circumstances under
clause (i) above exist or the Scheduled Unavailability Date has occurred (as
applicable), the Administrative Agent will promptly so notify the Borrower and
each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain
Eurocurrency Rate Loans shall be suspended (to the extent of the affected
Eurocurrency Rate Loans or Interest Periods), and (y) the Eurocurrency Rate
component shall no longer be utilized in determining the Base Rate. Upon receipt
of such notice, the Borrower may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurocurrency Rate Loans in the affected
currency or currencies (to the extent of the affected Eurocurrency Rate Loans or
Interest Periods) or, failing that, will be deemed to have converted such
request into a request for a Committed Borrowing of Base Rate Loans (subject to
the foregoing clause (y)) in the amount specified therein.
Notwithstanding anything else herein, any definition of LIBOR Successor Rate
shall provide that in no event shall such LIBOR Successor Rate be less than zero
for purposes of this Agreement.
In connection with the implementation of a LIBOR Successor Rate, the
Administrative Agent will have the right to make LIBOR Successor Rate Conforming
Changes from time to time and, notwithstanding anything to the contrary herein
or in any other Loan Document, any amendments implementing such LIBOR Successor
Rate Conforming Changes will become effective without any further action or
consent of any other party to this Agreement; provided that, with respect to any
such amendment effected, the Administrative Agent shall post each such amendment
implementing such LIBOR Successor Rate Conforming Changes to the Lenders
reasonably promptly after such amendment becomes effective.
3.04 Increased Costs; Reserves on Eurocurrency Rate Loans.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or
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credit extended or participated in by, any Lender (except any reserve
requirement contemplated by Section 3.04(e) hereof) or any L/C Issuer;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes and
(B) Excluded Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto; or
(iii) impose on any Lender or the L/C Issuer or the London interbank market
any other condition, cost or expense (other than Taxes) affecting this Agreement
or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making, converting to, continuing or maintaining any Loan the interest
on which is determined by reference to the Eurocurrency Rate (or of maintaining
its obligation to make any such Loan), or to increase the cost to such Lender or
the L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C Issuer, the Borrower will
pay to such Lender or the L/C Issuer, as the case may be, such additional amount
or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines that any
Change in Law affecting such Lender or the L/C Issuer or any Lending Office of
such Lender or such Lender’s or the L/C Issuer’s holding company, if any,
regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on
the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit or Swing Line Loans held by, such
Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that
which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the L/C Issuer’s policies and the policies of
such Lender’s or the L/C Issuer’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s
holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender
or the L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section, together with reasonable supporting
calculations, and containing an officer’s certification that such costs have not
been imposed on the Borrower disproportionately from other similarly situated
borrowers under comparable credit facilities, and delivered to the Borrower
shall be conclusive absent manifest error. The Borrower shall pay such Lender or
the L/C Issuer, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right
to demand such compensation, provided that the Borrower shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more than
nine months prior to the date that such Lender or the L/C Issuer, as the case
may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim
compensation
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therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the nine-month period referred to above shall
be extended to include the period of retroactive effect thereof).
(e) Reserves on Eurocurrency Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency Liabilities”), additional interest
on the unpaid principal amount of each Eurocurrency Rate Loan equal to the
actual costs of such reserves allocated to such Loan by such Lender (as
determined by such Lender in good faith, which determination shall be
conclusive), which shall be due and payable on each date on which interest is
payable on such Loan; provided the Borrower shall have received at least 10 days
prior notice (with a copy to the Administrative Agent) of such additional
interest from such Lender. If a Lender fails to give notice 10 days prior to the
relevant Interest Payment Date, such additional interest shall be due and
payable 10 days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower;
(c) any failure by the Borrower to make payment of any Loan or drawing under
any Letter of Credit (or interest due thereon) denominated in an Alternative
Currency on its scheduled due date or any payment thereof in a different
currency; or
(d) any assignment of a Eurocurrency Rate Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the Borrower
pursuant to Section 10.13;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency
Rate Loan made by it at the Eurocurrency Rate for such Loan by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurocurrency
Rate Loan was in fact so funded.
3.06 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. Each Lender may make any
Credit Extension to the Borrower through any Lending Office, provided that the
exercise of this option shall not affect the obligation of the Borrower to repay
the Credit Extension in accordance with the terms of this Agreement. If any
Lender requests compensation under Section 3.04, or the Borrower is required to
pay any Indemnified
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Taxes or additional amount to any Lender, any L/C Issuer or any Governmental
Authority for the account of any Lender or any L/C Issuer pursuant to Section
3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender
or such L/C Issuer shall, as applicable, use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender or such L/C Issuer, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the
need for the notice pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender or such L/C Issuer, as the case may be, to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender or such L/C Issuer, as the case may be. The Borrower hereby agrees
to pay all reasonable costs and expenses incurred by any Lender or any L/C
Issuer in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any Indemnified Taxes or additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, and, in each case, such Lender has declined or is
unable to designate a different lending office in accordance with Section
3.06(a), the Borrower may replace such Lender in accordance with Section 10.13.
3.07 Survival. All of the Borrower’s obligations under this Article III shall
survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder, and resignation of the Administrative Agent.
ARTICLE IV.
CONDITIONS PRECEDENT TO EFFECTIVENESS
4.01 Conditions of Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 10.01):
(a) The Administrative Agent’s receipt of the following, each of which shall
be originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;
(ii) a Note executed by the Borrower in favor of each Lender requesting a
Note;
(iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers as the
Administrative Agent may require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Agreement and the other Loan Documents;
(iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that the Borrower is duly organized, and that the
Borrower is validly existing, in good standing and qualified to engage in
business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, except to
the extent that failure to do so is not reasonably likely to have a Material
Adverse Effect;
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(v) a favorable opinion of Moore & Van Allen, PLLC, counsel to the Borrower,
addressed to the Administrative Agent and each Lender in the form of Exhibit F;
(vi) a certificate of a Responsible Officer either (A) attaching copies of
all consents, licenses and approvals required in connection with the execution,
delivery and performance by and the validity against the Borrower of the Loan
Documents to which it is a party, and such consents, licenses and approvals
shall be in full force and effect, or (B) stating that no such consents,
licenses or approvals are so required;
(vii) a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 4.02(a) and (b) have
been satisfied; (B) that there has been no event or circumstance since the date
of the Audited Financial Statements that has had or could be reasonably expected
to have, either individually or in the aggregate, a Material Adverse Effect; and
(C) the current Debt Ratings;
(viii) (A) upon the reasonable request of any Lender made at least ten
days prior to the Closing Date, the Borrower shall have provided to such Lender
the documentation and other information so requested in connection with
applicable “know your customer” and anti-money-laundering rules and regulations,
including the Act, in each case at least five days prior to the Closing Date;
and
(B) at least five days prior to the Closing Date, if the Borrower qualifies
as a “legal entity customer” under the Beneficial Ownership Regulation, the
Borrower shall deliver a Beneficial Ownership Certification;
(ix) such evidence (A) that the commitments under the Borrower’s 364-Day
Credit Agreement dated as of September 9, 2019 (the “364-Day Facility”) have
been terminated in full and all obligations thereunder have been satisfied and
(B) of payment of all facility fees and other fees and expenses, if any, due
through the Closing Date under the 364-Day Facility; and
(x) such other assurances, certificates, documents, consents or opinions as
the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required
Lenders reasonably may require.
(b) Any and all fees required to be paid on or before the Closing Date shall
have been paid.
(c) Unless waived by the Administrative Agent, the Borrower shall have paid
all fees, charges and disbursements of counsel to the Administrative Agent
(directly to such counsel if requested by the Administrative Agent) to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
such fees, charges and disbursements as shall constitute its reasonable estimate
of such fees, charges and disbursements incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between the Borrower and the
Administrative Agent).
Without limiting the generality of the provisions of Section 9.03, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.
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4.02 Conditions to all Credit Extensions. The obligation of each Lender and
each L/C Issuer to honor any Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Committed Loans to the
other Type, or a continuation of Eurocurrency Rate Loans) is subject to the
following conditions precedent:
(a) The representations and warranties of the Borrower contained in Article V
(other than in Sections 5.05(c), 5.06, 5.10, 5.11 and 5.14) or any other Loan
Document, or which are contained in any document furnished at any time under or
in connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in subsections
(a) and (b) of Section 5.05 shall be deemed to include the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section
6.01.
(b) No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing
Line Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.
(d) In the case of a Credit Extension to be denominated in an Alternative
Currency, there shall not have occurred any change in national or international
financial, political or economic conditions or currency exchange rates or
exchange controls which in the reasonable opinion of the Administrative Agent,
the Required Lenders (in the case of any Loans to be denominated in an
Alternative Currency) or the applicable L/C Issuer (in the case of any Letter of
Credit to be denominated in an Alternative Currency) would make it impracticable
for such Credit Extension to be denominated in the relevant Alternative
Currency.
Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Committed Loans to the other Type or a continuation of
Eurocurrency Rate Loans) submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders
that:
5.01 Existence, Qualification and Power. The Borrower (a) is duly organized,
validly existing and in good standing under the laws of North Carolina, (b) has
all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business and (ii) execute, deliver and perform its obligations under this
Agreement, and (c) is duly qualified and is licensed and in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license, except, in each case referred to in clause (b)(i), or (c), to the
extent that failure to do so is not reasonably likely to have a Material Adverse
Effect.
5.02 Authorization; No Contravention. The execution, delivery and performance
by the Borrower of this Agreement, the Notes and the other Loan Documents (i)
are within Borrower’s corporate
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powers, (ii) have been duly authorized by all necessary corporate action, or
(iii) do not contravene, or constitute a default under, any provision of
Applicable Law or regulation or of the certificate of incorporation or bylaws of
Borrower, or of any agreement, judgment, injunction, order, decree or other
instrument binding upon Borrower or result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries.
5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by the Borrower of this
Agreement.
5.04 Binding Effect. This Agreement has been duly executed and delivered by
the Borrower. This Agreement constitutes, a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms;
provided that the enforceability hereof is subject to general principles of
equity and to bankruptcy, insolvency and similar laws affecting the enforcement
of creditors’ rights generally.
5.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (ii) fairly present the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein.
(b) The unaudited consolidated balance sheet of the Borrower and its
Subsidiaries dated January 31, 2020 and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.
(c) Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
is reasonably likely to have a Material Adverse Effect.
5.06 Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of the Borrower, threatened, at law, in equity, in arbitration or
before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries that (a) purport to call into question the validity or
enforceability of this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the aggregate
are reasonably likely to have a Material Adverse Effect.
5.07 No Default. (a) Neither the Borrower nor any Subsidiary is in default
under or with respect to any Contractual Obligations that, either individually
or in the aggregate, are reasonably likely to have a Material Adverse Effect.
(b) No Default has occurred and is continuing under this Agreement.
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5.08 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has title to and/or a leasehold interest in its properties sufficient for the
conduct of its business, and none of such property is subject to any Lien except
as permitted in Section 7.01.
5.09 Beneficial Ownership. As of the Closing Date, the information included
in the Beneficial Ownership Certification, if applicable, is true and correct in
all respects.
5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP.
5.11 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have
fulfilled their obligations under the Pension Funding Rules and no waiver of the
minimum funding standards under the Pension Funding Rules has been applied for
or obtained with respect to each Pension Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or to a Pension Plan under
Title IV of ERISA.
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that is reasonably likely to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or is reasonably
likely to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability under Title IV of ERISA or to the PBGC or to any
Multiemployer Plan with respect to any Pension Plan or Multiemployer Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iii) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Sections 4069 or 4212(c) of ERISA; and (iv) except as could not
reasonably be expected to result in a material liability for the Borrower or any
ERISA Affiliate, no Pension Plan or Multiemployer Plan is considered an at-risk
plan or a plan in endangered or critical status within the meaning of Sections
430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA.
(d) The Borrower represents and warrants as of the Closing Date that the
Borrower is not and will not be using “plan assets” (within the meaning of 29
CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit
Plans in connection with the Loans, the Letters of Credit or the Commitments.
5.12 Margin Regulations; Investment Company Act.
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(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.
(b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.
5.13 Disclosure. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of the
Borrower to the Administrative Agent, any L/C Issuer or any Lender in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or delivered hereunder (in each case, as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
5.14 Compliance with Laws. Each of the Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws (including
Environmental Laws) and all orders, writs, injunctions and decrees applicable to
it or to its properties, except in such instances in which (a) such requirement
of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings or (b) the failure to comply therewith, either
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.
5.15 Senior Debt Designation. No indenture or other loan documentation to
which the Borrower is a party contains a requirement that the Obligations be
designated as “senior debt” in order to be treated as such under such indenture
or other loan documentation.
5.16 OFAC. Neither the Borrower, nor any of its Subsidiaries, nor, to the
knowledge of the Borrower, any director, officer, employee, agent, affiliate or
representative thereof, is an individual or entity that is, or is owned or
controlled by any individuals or entities that are (a) currently the subject or
target of any Sanctions or (b) located, organized or resident in a Designated
Jurisdiction or (c) included on OFAC’s List of Specially Designated Nationals,
HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban
List.
5.17 Affected Financial Institutions. The Borrower is not an Affected
Financial Institution.
5.18 Anti-Corruption Laws. The Borrower and its Subsidiaries have conducted
their businesses in compliance in all material respects with the United States
Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other
applicable anti-corruption laws in jurisdictions where the Borrower or any of
its Subsidiaries does business. The Borrower has instituted and maintained
policies and procedures designed to promote and achieve compliance with such
laws.
5.19 Covered Entity. The Borrower is not a Covered Entity.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligations shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:
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6.01 Financial Statements. Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower (or, if earlier, 15 days after the date
required to be filed with the SEC (without giving effect to any extension
permitted by the SEC)), a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or exception or any qualification or exception as
to the scope of such audit; and
(b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower (or,
if earlier, 15 days after the date required to be filed with the SEC (without
giving effect to any extension permitted by the SEC)), a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated statements of income or operations and cash flows
for such fiscal quarter and for the portion of the Borrower’s fiscal year then
ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, certified by a
Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations, shareholders’ equity and cash flows of the
Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section
6.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.
6.02 Certificates; Other Information. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:
(a) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of its independent certified public accountants
certifying such financial statements and stating that in making the examination
necessary therefor no knowledge was obtained of any Default or, if any such
Default shall exist, stating the nature and status of such event;
(b) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;
(c) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;
(d) promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of the Borrower or any Subsidiary
thereof relating to any default or event of default
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under such indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to Section 6.01 or any other
clause of this Section 6.02;
(e) promptly, and in any event within ten Business Days after receipt thereof
by the Borrower or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation (excluding routine comment
letters) by such agency regarding financial or other operational results of the
Borrower or any Subsidiary thereof;
(f) promptly following any request therefor, information and documentation
reasonably requested by the Administrative Agent or any Lender for purposes of
compliance with applicable “know your customer” requirements under the Act, the
Beneficial Ownership Regulation or other applicable anti-money laundering laws;
and
(g) promptly, such additional information regarding the business, financial
or corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Administrative Agent or any Lender may from
time to time reasonably request.
Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section
6.02(c) or (d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.02; or (ii)
on which such documents are posted on the Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that, upon the request of the Administrative
Agent, the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender. Notwithstanding anything contained
herein (but subject to the proviso to the immediately preceding sentence), in
every instance the obligation of the Borrower to deliver documents required
pursuant to Sections 6.02(a), (b), (e) and (f) to the Administrative Agent and
each Lender shall be deemed satisfied by the Borrower providing to the
Administrative Agent either paper copies of such documents or if the Borrower
otherwise elects (provided that the Administrative Agent or any Lender has not
asked the Borrower to deliver paper copies thereof), electronic mail electronic
versions (i.e., soft copies) of such documents. The Administrative Agent shall
have no obligation to request the delivery of or to maintain paper copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request by a Lender for
delivery, and each Lender shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents.
The Borrower hereby acknowledges that the Administrative Agent and/or the
Arrangers will make available to the Lenders and the L/C Issuers materials
and/or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on Debt
Domain, IntraLinks, SyndTrak, ClearPar, or another similar electronic system
(the “Platform”).
6.03 Notices. Promptly notify the Administrative Agent and each Lender:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or is reasonably likely to result in a
Material Adverse Effect, including but not limited to (i) any dispute,
litigation, investigation, or proceeding between the Borrower or any Subsidiary
and any Governmental Authority; or (ii) the commencement of, or any material
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development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;
(c) of the occurrence of any ERISA Event, or if the Borrower and/or any ERISA
Affiliate commences participation in one or more Multiemployer Plans which will
provide retirement benefits to an aggregate of more than 500 employees of
Borrower or the ERISA Affiliates; and
(d) of any change in the information provided in the Beneficial Ownership
Certification that would result in a change to the list of beneficial owners
identified in such certification.
Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached. Notwithstanding anything contained
herein, in every instance the obligation of the Borrower to deliver documents
required pursuant to Section 6.03 to the Administrative Agent and each Lender
shall be deemed satisfied by the Borrower providing to the Administrative Agent
either paper copies of such documents or if the Borrower otherwise elects,
electronic versions (i.e., soft copies) of such documents.
6.04 Payment of Taxes. Pay and discharge as the same shall become due and
payable all federal, state and other material Taxes, unless the same are being
contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by the Borrower
or such Subsidiary.
6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect the Borrower’s legal existence and good standing under the Laws
of the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) maintain the legal existence and good standing of each
Subsidiary under the Laws of the jurisdiction of its organization, except to the
extent that failure to do so is not reasonably likely to have a Material Adverse
Effect; (c) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct of
its business, except to the extent that failure to do so is not reasonably
likely to have a Material Adverse Effect; and (d) preserve or renew all of its
registered patents, trademarks, trade names and service marks, the
non-preservation of which is reasonably likely to have a Material Adverse
Effect.
6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; (b) make all
necessary and desirable repairs thereto and renewals and replacements thereof,
except in the case of both (a) and (b) above, where the failure to do so is not
reasonably likely to have a Material Adverse Effect.
6.07 Maintenance of Insurance. Maintain insurance (including self-insurance)
with respect to its properties and business as necessary and appropriate in the
good faith business judgment of the Borrower.
6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings; or (b) the failure to comply
therewith is not reasonably likely to have a Material Adverse Effect.
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6.09 Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and without advance notice.
6.10 Use of Proceeds. Use the proceeds of the Credit Extensions (a) to
refinance the Borrower’s 364-Day Facility and (b) for working capital and
general corporate purposes not in contravention of any Law or of any Loan
Document.
6.11 Anti-Corruption Laws; Sanctions. Conduct its businesses in compliance in
all material respects with the United States Foreign Corrupt Practices Act of
1977, the UK Bribery Act 2010, and other applicable anti-corruption legislation
in jurisdictions where the Borrower or any of its Subsidiaries does business and
with all applicable Sanctions, and maintain policies and procedures designed to
promote and achieve compliance with such laws and Sanctions.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligations shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly:
7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens securing Indebtedness in an aggregate amount not exceeding $10
million;
(c) Liens existing on any asset of a corporation at the time such corporation
becomes a Subsidiary and not created in contemplation of such event;
(d) Liens securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring, improving or constructing an
asset, provided that such Lien attaches to such asset, concurrently with or
within twelve months after the acquisition or completion of construction or
improvement thereof and such Indebtedness secured thereby does not exceed the
cost or fair market value, whichever is lower, of the asset so acquired,
improved or constructed;
(e) Liens on an asset of a corporation existing at the time such corporation
is merged or consolidated with or into the Borrower or a Subsidiary and not
created in contemplation of such event;
(f) Liens existing on an asset prior to the acquisition thereof by the
Borrower or a Subsidiary and not created in contemplation of such acquisition;
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(g) Liens securing Indebtedness owing by any Subsidiary to the Borrower;
(h) Liens arising out of the refinancing, renewal or refunding of any
Indebtedness secured by any Lien permitted by the foregoing clauses of this
Section; provided that (i) such Indebtedness is not secured by any additional
assets, and (ii) the amount of such Indebtedness secured by any such Lien is not
increased;
(i) Liens for taxes not yet delinquent or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
(j) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;
(k) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
(l) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(m) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;
(n) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 8.01(g) or securing appeal or other surety bonds
related to such judgments;
(o) Liens incidental to the conduct of its business or ownership of its
property that (i) do not secure Indebtedness and (ii) do not in the aggregate
materially detract from the value of its property or materially impair the use
thereof in the operation of its business;
(p) Liens on margin stock;
(q) any Lien on the accounts and accounts receivable of the Borrower arising
out of the securitization of such accounts and accounts receivable or a secured
borrowing of money that requires the pledge of or a security interest on such
accounts and accounts receivable provided that: (i) such Lien encumbers only the
accounts and accounts receivable subject to the securitization, and (ii) in the
case of a secured borrowing of money any such Lien shall at all times be
confined solely to such accounts and accounts receivable that are required to
secure such borrowing; and
(r) Liens not otherwise permitted by the foregoing clauses of this Section
7.01 which secure Indebtedness, that, when aggregated with all other
Indebtedness secured by Liens permitted by clause (q) above, does not exceed 10%
of Consolidated Total Assets.
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7.02 Anti-Corruption Laws. Directly or, to the Borrower’s knowledge,
indirectly use the proceeds of any Credit Extension for any purpose which would
breach the United States Foreign Corrupt Practice Act of 1977, the UK Bribery
Act 2010, or other applicable anti-corruption laws in jurisdictions where the
Borrower or any of its Subsidiaries does business.
7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
in each case, of a Subsidiary, except:
(a) Current accounts payable arising in the ordinary course of business;
(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03
and any refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder;
(c) Indebtedness of a Subsidiary owing to the Borrower or another Subsidiary;
(d) Guarantees by any Subsidiary in respect of Indebtedness of the Borrower
or of another Subsidiary otherwise permitted hereunder;
(e) obligations (contingent or otherwise) of any Subsidiary existing or
arising under any Swap Contract, provided that (i) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person, and not for
purposes of speculation or taking a “market view;” and (ii) such Swap Contract
does not contain any provision exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the defaulting party;
(f) Indebtedness in respect of capital or financing leases, Synthetic Lease
Obligations and purchase money obligations for fixed or capital assets within
the limitations set forth in Section 7.01(d);
(g) Indebtedness of the Borrower incurred pursuant to that certain Second
Amended and Restated Credit Agreement dated as of September 10, 2018 by and
among the Borrower, Bank of America, N.A., as administrative agent, and the
lenders from time to time party thereto; and
(h) Other secured or unsecured Indebtedness not otherwise permitted by the
foregoing clauses of this Section 7.03, so long as the aggregate principal
amount of such Indebtedness does not exceed 10% of Consolidated Total Assets.
7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person (including, in each case,
pursuant to a Division), provided, that so long as no Default exists or would
result therefrom:
(a) the Borrower may merge with another Person if (i) such Person is
organized under the laws of the United States of America or one of its states,
and (ii) the Borrower is the surviving corporation;
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(b) any Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries; and
(c) any Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or to another
Subsidiary.
For purposes of calculating under this Section 7.04, the aggregate assets
transferred by the Borrower or its Subsidiaries, such calculation shall not
include accounts receivable that have been transferred after the Closing Date in
connection with a securitization of such accounts receivable.
7.05 Transactions with Affiliates. Enter into any transaction of any kind
with any Affiliate of the Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
the Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall not apply
to transactions between or among the Borrower and any of its wholly-owned
Subsidiaries or between and among any wholly-owned Subsidiaries.
7.06 Use of Proceeds. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose.
7.07 Ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR. As
of the end of each fiscal quarter, permit the ratio of Consolidated Adjusted
Funded Debt on such date to Consolidated EBITDAR for the Measurement Period
ending on such date to exceed 4.00 to 1.00.
7.08 Sanctions. Directly or, to the Borrower’s knowledge, indirectly use the
proceeds of any Credit Extension, or lend, contribute or otherwise make
available such proceeds to any Subsidiary, joint venture partner or other
individual or entity, to fund any activities of or business with any individual
or entity, or in any Designated Jurisdiction, that, at the time of such funding,
is the subject of Sanctions, or in any other manner that will result in a
violation by any individual or entity (including any individual or entity
participating in the transaction, whether as Lender, Arranger, Administrative
Agent, L/C Issuer, Swing Line Lender, or otherwise) of Sanctions.
7.09 Anti-Corruption Laws. Directly or, to the Borrower’s knowledge,
indirectly use the proceeds of any Credit Extension for any purpose which would
breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery
Act 2010, and other anti-corruption legislation in other jurisdictions.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an event of
default (each an “Event of Default”):
(a) Non-Payment. The Borrower fails to pay (i) when and as required to be
paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii)
within three days after the same becomes due, any interest on any Loan or on any
L/C Obligation, or any fee due hereunder, or (iii) within five days after the
same becomes due, any other amount payable hereunder or under any other Loan
Document; or
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(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.03 (to the extent that,
other than with respect to subsection (a) thereof, the event for which notice
was not given is reasonably likely to result in a Material Adverse Effect),
6.05(a), 6.09, 7.01, 7.03, 7.04, 7.06, 7.07, 7.08, or 7.09; or
(c) Other Defaults. The Borrower fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above or otherwise
in this Section 8.01, but including Section 6.03 to the extent that, other than
with respect to subsection (a) thereof, the event for which notice was not given
is not reasonably likely to result in a Material Adverse Effect) contained in
any Loan Document on its part to be performed or observed and such failure
continues for 30 days from the earlier of (i) the first day on which the
Borrower has knowledge of such failure and (ii) written notice thereof has been
given to the Borrower by the Administrative Agreement at the request of any
Lender; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by the Borrower herein,
or in any document delivered in connection herewith or therewith shall be false,
incorrect or misleading in any material respect when made or deemed made; or
(e) Cross-Default. (i) The Borrower or any Material Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), prior to its stated maturity,
or such Guarantee to become payable or cash collateral in respect thereof to be
demanded, if the amount of such Indebtedness or Guarantee is more than the
Threshold Amount; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which the Borrower or any Material
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Material Subsidiary is an Affected Party (as so defined) and, in
either event, the Swap Termination Value owed by the Borrower or such Subsidiary
as a result thereof is greater than the Threshold Amount; or
(f) Insolvency Proceedings, Etc. The Borrower or any of its Material
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or
(g) Judgments. There is entered against the Borrower or any Material
Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
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coverage), or (ii) any one or more non-monetary final judgments that have, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect and, in either case, (A) enforcement proceedings are commenced by any
creditor upon such judgment or order, or (B) there is a period of 10 consecutive
days during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or is reasonably likely to result in
liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(i) Change of Control. There occurs any Change of Control.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of
each L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
each L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.
8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall, subject to the provisions of
Sections 2.16 and 2.17, be applied by the Administrative Agent in the following
order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;
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Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders and the L/C Issuer (including fees, charges and disbursements of counsel
to the respective Lenders and the L/C Issuer (including fees and time charges
for attorneys who may be employees of any Lender or any L/C Issuer) and amounts
payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other
Obligations, ratably among the Lenders and the L/C Issuers in proportion to the
respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C
Issuers in proportion to the respective amounts described in this clause Fourth
held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit; to the extent not otherwise Cash Collateralized by
the Borrower pursuant to Sections 2.04 and 2.16;
Sixth, to payment of Obligations consisting of liabilities under any Related
Credit Arrangement with any Lender or any Affiliate of a Lender party to a
Related Credit Arrangement and as to which the Administrative Agent has received
notice of the amounts owed thereunder from the applicable Lender or any
Affiliate of a Lender party to a Related Credit Arrangement, such payments under
this clause Sixth to be allocated on a pro rata basis according to such amounts
owed as to which the Administrative Agent has received such notice; and
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.
Subject to Sections 2.04(c) and 2.16, amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above
shall be applied to satisfy drawings under such Letters of Credit as they occur.
If any amount remains on deposit as Cash Collateral after all Letters of Credit
have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and the Borrower shall not
have rights as a third party beneficiary of any of such provisions. It is
understood and agreed that the use of the term “agent” herein or in any other
Loan Documents (or any other similar term) with reference to the Administrative
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any Applicable Law. Instead such
term is used as a matter of market custom, and is intended to create or reflect
only an administrative relationship between contracting parties.
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9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions. The Administrative Agent or the Arrangers, as
applicable, shall not have any duties or obligations except those expressly set
forth herein and in the other Loan Documents, and its duties hereunder shall be
administrative in nature. Without limiting the generality of the foregoing, the
Administrative Agent or the Arrangers, as applicable:
(a) shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or Applicable Law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) shall not have any duty or responsibility to disclose, and shall not be
liable for the failure to disclose, to any Lender or any L/C Issuer, any credit
or other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of any of the Loan Parties or
any of their Affiliates, that is communicated to, obtained by or in the
possession of, the Administrative Agent, Arrangers or any of their Related
Parties in any capacity, except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
herein;
(d) shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent
shall believe in good faith shall be necessary, under the circumstances as
provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction by final and nonappealable judgment. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given in writing to the Administrative Agent by the
Borrower, a Lender or an L/C Issuer; and
(e) shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence
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of any Default, (iv) the validity, enforceability, effectiveness or genuineness
of this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent
9.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance, extension, renewal or increase of a
Letter of Credit, that by its terms must be fulfilled to the satisfaction of a
Lender or the L/C Issuer, the Administrative Agent may presume that such
condition is satisfactory to such Lender or the L/C Issuer unless the
Administrative Agent shall have received notice to the contrary from such Lender
or the L/C Issuer prior to the making of such Loan or the issuance of such
Letter of Credit. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent. The Administrative
Agent shall not be responsible for the negligence or misconduct of any
sub-agents except to the extent that a court of competent jurisdiction
determines in a final and nonappealable judgment that the Administrative Agent
acted with gross negligence or willful misconduct in the selection of such
sub-agents.
9.06 Resignation of Administrative Agent; L/C Issuer. Each of the
Administrative Agent and any L/C Issuer may at any time give notice of its
resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrower so long as no Event of Default exists, to appoint
a successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the L/C Issuer, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders or
the L/C Issuer under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and each L/C
Issuer directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such
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successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section). The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.
Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as L/C Issuer and Swing Line
Lender. Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line
Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged
from all of their respective duties and obligations hereunder or under the other
Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit
in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit.
In the event of any dismissal or resignation by an L/C Issuer, any Letters of
Credit issued by such retiring L/C Issuer shall remain outstanding until
termination pursuant to their terms and such retiring L/C Issuer shall retain
all the rights and obligations of an L/C Issuer hereunder with respect to all
such Letters of Credit and all L/C Obligations with respect thereto (including
the right to require the Lenders to make Base Rate Committed Loans or fund risk
participations in Unreimbursed Amounts pursuant to Section 2.04(c)), but
excluding the right to consent to Eligible Assignees and the obligation to issue
new Letters of Credit.
9.07 Non-Reliance on the Administrative Agent, the Arrangers and the Other
Lenders. Each Lender and each L/C Issuer expressly acknowledges that none of the
Administrative Agent nor any Arranger has made any representation or warranty to
it, and that no act by the Administrative Agent or any Arranger hereafter taken,
including any consent to, and acceptance of any assignment or review of the
affairs of any Loan Party of any Affiliate thereof, shall be deemed to
constitute any representation or warranty by the Administrative Agent or any
Arranger to any Lender or any L/C Issuer as to any matter, including whether the
Administrative Agent or any Arranger have disclosed material information in
their (or their Related Parties’) possession. Each Lender and each L/C Issuer
represents to the Administrative Agent and the Arrangers that it has,
independently and without reliance upon the Administrative Agent, the Arrangers,
any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis of,
appraisal of, and investigation into, the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties
and their Subsidiaries, and all applicable bank or other regulatory Laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower hereunder. Each
Lender and each L/C Issuer also acknowledges that it will, independently and
without reliance upon the Administrative Agent, any Arranger, any other Lender
or any of their Related Parties and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties. Each Lender and each L/C Issuer represents and warrants that (i) the
Loan Documents set forth the
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terms of a commercial lending facility and (ii) it is engaged in making,
acquiring or holding commercial loans in the ordinary course and is entering
into this Agreement as a Lender or L/C Issuer for the purpose of making,
acquiring or holding commercial loans and providing other facilities set forth
herein as may be applicable to such Lender or L/C Issuer, and not for the
purpose of purchasing, acquiring or holding any other type of financial
instrument, and each Lender and each L/C Issuer agrees not to assert a claim in
contravention of the foregoing. Each Lender and each L/C Issuer represents and
warrants that it is sophisticated with respect to decisions to make, acquire
and/or hold commercial loans and to provide other facilities set forth herein,
as may be applicable to such Lender or such L/C Issuer, and either it, or the
Person exercising discretion in making its decision to make, acquire and/or hold
such commercial loans or to provide such other facilities, is experienced in
making, acquiring or holding such commercial loans or providing such other
facilities.
9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the Bookrunners, Arrangers, Syndication Agent or Co-Documentation Agents
listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except
in its capacity, as applicable, as the Administrative Agent, a Lender or an L/C
Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim. In case of the pendency
of any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to the Borrower, the Administrative Agent (irrespective of whether the
principal of any Loan or L/C Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuers and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuers and the Administrative Agent
under Sections 2.04(h) and (i), 2.10 and 10.04) allowed in such judicial
proceeding; and
(b) to collect and receive any monies 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 Lender and each L/C Issuer to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and L/C Issuers, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.10
and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or an L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.
9.10 No Lender is an Employee Benefit Plan.
(a) Each Lender (x) represents and warrants, as of the date such Person
became a Lender party hereto, to, and (y) covenants, from the date such Person
became a Lender party hereto to the date such
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Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, and not, for the avoidance of doubt, to or for the benefit
of the Borrower or any other Loan Party, that at least one of the following is
and will be true:
(i) such Lender is not using “plan assets” (within the meaning of
Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect
to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments or this
Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE
84-14 (a class exemption for certain transactions determined by independent
qualified professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable with respect
to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B)
such Qualified Professional Asset Manager made the investment decision on behalf
of such Lender to enter into, participate in, administer and perform the Loans,
the Letters of Credit, the Commitments and this Agreement, (C) the entrance
into, participation in, administration of and performance of the Loans, the
Letters of Credit, the Commitments and this Agreement satisfies the requirements
of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best
knowledge of such Lender, the requirements of subsection (a) of Part I of PTE
84-14 are satisfied with respect to such Lender’s entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.
(b) In addition, unless either (1) clause (i) in the immediately preceding
clause (a) is true with respect to a Lender or (2) a Lender has provided another
representation, warranty and covenant in accordance with clause (iv) in the
immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and (y)
covenants, from the date such Person became a Lender party hereto to the date
such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent and not, for the avoidance of doubt, to or for the benefit
of the Borrower or any other Loan Party, that the Administrative Agent is not a
fiduciary with respect to the assets of such Lender involved in such Lender’s
entrance into, participation in, administration of and performance of the Loans,
the Letters of Credit, the Commitments and this Agreement (including in
connection with the reservation or exercise of any rights by the Administrative
Agent under this Agreement, any Loan Document or any documents related hereto or
thereto).
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ARTICLE X.
MISCELLANEOUS
10.01 Amendments, Etc. Subject to Section 3.03(c), Section 2.18 and the last
paragraph of this Section 10.01, or otherwise expressly provided herein, no
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower therefrom, shall be
effective unless in writing signed by the Required Lenders and the Borrower and
acknowledged by the Administrative Agent, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document for
any payment or mandatory prepayment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined
term used therein) even if the effect of such amendment would be to reduce the
rate of interest on any Loan or L/C Borrowing or to reduce any fee payable
hereunder;
(e) change Section 2.07, Section 2.14 or Section 8.03 in a manner that would
alter the pro rata sharing of commitment reductions or payments required thereby
without the written consent of each Lender; or modify Section 2.04(a)(ii)(C),
except in a way consistent with the provisions of Section 2.18 in connection
with an Extension, without the written consent of each of the Lenders directly
affected thereby;
(f) amend Section 1.06 or the definition of “Alternative Currency” without
the written consent of each Lender; or
(g) change any provision of this Section or the definition of “Applicable
Percentage,” “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to amend, waive or otherwise modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this
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Agreement or any other Loan Document; and (iv) the Fee Letters may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder (and any amendment, waiver or consent which by its terms
requires the consent of all Lenders or each affected Lender may be effected with
the consent of the applicable Lenders other than Defaulting Lenders), except
that (x) the Commitment of any Defaulting Lender may not be increased or
extended without the consent of such Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that
by its terms affects any Defaulting Lender more adversely (and
disproportionately) than other affected Lenders shall require the consent of
such Defaulting Lender.
Notwithstanding any provision herein to the contrary, if the Administrative
Agent and the Borrower acting together identify any ambiguity, omission,
mistake, typographical error or other defect in any provision of this Agreement
or any other Loan Document (including the schedules and exhibits thereto), then
the Administrative Agent and the Borrower shall be permitted to amend, modify or
supplement such provision to cure such ambiguity, omission, mistake,
typographical error or other defect, and such amendment shall become effective
without any further action or consent of any other party to this Agreement;
provided that the Administrative Agent shall provide each such amendment
implementing such changes to the Lenders reasonably promptly after such
amendment becomes effective.
10.02 Notices; Effectiveness; Electronic Communication.
(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile or electronic mail
as follows, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:
(i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing
Line Lender, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, facsimile number, electronic
mail address or telephone number specified in its Administrative Questionnaire
(including, as appropriate, notices delivered solely to the Person designated by
a Lender on its Administrative Questionnaire then in effect for the delivery of
notices that may contain material non-public information relating to the
Borrower).
Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by facsimile shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
(b) Electronic Communications. Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail, FpML messaging and Internet or intranet
websites) pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or any L/C Issuer
pursuant to Article II if such Lender or any L/C Issuer, as applicable, has
notified the Administrative Agent that it is incapable
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of receiving notices under such Article by electronic communication. The
Administrative Agent, the Swing Line Lender, each L/C Issuer or the Borrower may
each, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Lender, the L/C Issuer
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s or
the Administrative Agent’s transmission of Borrower Materials or notices through
the Platform, any other electronic platform or electronic messaging service, or
through the Internet, except to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by a
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Agent Party; provided, however, that in no event
shall any Agent Party have any liability to the Borrower, any Lender, the L/C
Issuer or any other Person for indirect, special, incidental, consequential or
punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc. Each of the Borrower, the Administrative Agent,
the L/C Issuers and the Swing Line Lender may change its address, facsimile or
telephone number for notices and other communications hereunder by notice to the
other parties hereto. Each other Lender may change its address, facsimile or
telephone number for notices and other communications hereunder by notice to the
Borrower, the Administrative Agent, the L/C Issuers and the Swing Line Lender.
In addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, facsimile number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.
(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely
and act upon any notices (including telephonic notices, Committed Loan Notices,
Letter of Credit Applications and Swing Line Loan Notices) purportedly given by
or on behalf of the Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
the Administrative Agent, each L/C Issuer, each Lender and the Related Parties
of each of them
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from all losses, costs, expenses and liabilities resulting from the reliance by
such Person on each notice purportedly given by or on behalf of the Borrower.
All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender,
any L/C Issuer or the Administrative Agent to exercise, and no delay by any such
Person in exercising, any right, remedy, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided, and provided under each other Loan Document, are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Borrower shall be vested exclusively in, and
all actions and proceedings at law in connection with such enforcement shall be
instituted and maintained exclusively by, the Administrative Agent in accordance
with Section 8.02 for the benefit of all the Lenders and the L/C Issuers;
provided that the foregoing shall not prohibit (a) the Administrative Agent from
exercising on its own behalf the rights and remedies that inure to its benefit
(solely in its capacity as Administrative Agent) hereunder and under the other
Loan Documents, (b) each L/C Issuer or the Swing Line Lender from exercising the
rights and remedies that inure to its benefit (solely in its capacity as an L/C
Issuer or Swing Line Lender, as the case may be) hereunder and under the other
Loan Documents, (c) any Lender from exercising setoff rights in accordance with
Section 10.08 (subject to the terms of Section 2.14), or (d) any Lender from
filing proofs of claim or appearing and filing pleadings on its own behalf
during the pendency of a proceeding relative to the Borrower under any Debtor
Relief Law; and provided, further, that if at any time there is no Person acting
as Administrative Agent hereunder and under the other Loan Documents, then (i)
the Required Lenders shall have the rights otherwise ascribed to the
Administrative Agent pursuant to Section 8.02 and (ii) in addition to the
matters set forth in clauses (b), (c) and (d) of the preceding proviso and
subject to Section 2.14, any Lender may, with the consent of the Required
Lenders, enforce any rights and remedies available to it and as authorized by
the Required Lenders.
10.04 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C
Issuer in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
L/C Issuer (including the fees, computed on an hourly basis, and disbursements
of any counsel for the Administrative Agent, any Lender or the L/C Issuer) in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
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(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Arranger, each Lender and
the L/C Issuer, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the reasonable fees, computed on an hourly basis, and
disbursements of any counsel for any Indemnitee), and shall indemnify and hold
harmless each Indemnitee from all fees and time charges and disbursements for
attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or
asserted against any Indemnitee by any third party (other than such Indemnitee
and its Related Parties) or by the Borrower arising out of, in connection with,
or as a result of (i) the execution or delivery of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby or, in the case of the Administrative Agent (and any sub-agent thereof)
and its Related Parties only, the administration of this Agreement and the other
Loan Documents (including in respect of any matters addressed in Section 3.01),
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by the L/C Issuer to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), (iii)
any actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by the Borrower, and
regardless of whether any Indemnitee is a party thereto, in all cases, whether
or not caused by or arising, in whole or in part, out of the comparative,
contributory or sole negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y) result
from a claim brought by the Borrower against an Indemnitee for material breach
of such Indemnitee’s obligations hereunder or under any other Loan Document, if
the Borrower has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction. Without limiting
the provisions of Section 3.01(c), this Section 10.04(b) shall not apply with
respect to Taxes other than any Taxes that represent losses, claims, damages,
etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of
the foregoing, each Lender severally agrees to pay to the Administrative Agent
(or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related
Party, as the case may be, such Lender’s pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent (or any such sub-agent), the L/C
Issuer or the Swing Line Lender in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent), the L/C Issuer or the Swing Line Lender in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject
to the provisions of Section 2.13(d).
(d) Waiver of Consequential Damages, Etc. The Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.
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No Indemnitee referred to in subsection (b) above shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby, except
in the event of gross negligence or willful misconduct by such Indemnitee, as
determined by a court of competent jurisdiction in a final and nonappealable
judgment.
(e) Payments. All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.
(f) Survival. The agreements in this Section and the indemnity provisions of
Section 10.02(e) shall survive the resignation of the Administrative Agent, the
L/C Issuer and the Swing Line Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.
10.05 Payments Set Aside. To the extent that any payment by or on behalf of
the Borrower is made to the Administrative Agent, the L/C Issuer or any Lender,
or the Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and the L/C Issuer severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
applicable Overnight Rate from time to time in effect, in the applicable
currency of such recovery or payment. The obligations of the Lenders and the L/C
Issuer under clause (b) of the preceding sentence shall survive the payment in
full of the Obligations and the termination of this Agreement.
10.06 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of subsection
(f) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this subsection (b), participations in L/C Obligations and in
Swing Line Loans) at the time owing to it); provided that
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(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund, no minimum amount need be assigned, and
(B) in any case not described in subsection (b)(i)(A) of this Section, with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) or, if the Commitment is not then
in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each
of the Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to rights in respect of
the Swing Line Lender’s rights and obligations in respect of Swing Line Loans.
(iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in
addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld
or delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall
be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within ten (10) Business
Days after having received notice thereof except where such consent to any such
assignment would cause the Borrower to incur additional costs under Section
3.01(a);
(B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender;
(C) the consent of each L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding); and
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(D) the consent of the Swing Line Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment if such assignment is
to a Person that is not a Lender, an Affiliate of such Lender or an Approved
Fund with respect to such Lender.
(iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount of $3,500; provided,
however, that the Administrative Agent may, in its sole discretion, elect to
waive such processing and recordation fee in the case of any assignment. The
Eligible Assignee, if it is not a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a
Lender hereunder, would constitute any of the foregoing Persons described in
this clause (B), or (C) to a natural person (or a holding company, investment
vehicle or trust owned and operated for the primary benefit of one or more
natural persons).
(vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (A) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer,
any Lender or the Borrower hereunder (and interest accrued thereon) and (B)
acquire (and fund as appropriate) its full pro rata share of all Loans and
participations in Letters of Credit and Swing Line Loans in accordance with its
Applicable Percentage. Notwithstanding the foregoing, in the event that any
assignment of rights and obligations of any Defaulting Lender hereunder shall
become effective under Applicable Law without compliance with the provisions of
this paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance
occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment; provided, that except to the extent otherwise expressly agreed by
the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender. Upon request, the Borrower (at its expense)
shall execute and deliver a Note to the assignee Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this subsection shall be treated for purposes
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of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower (and such agency being solely for tax purposes), shall
maintain at the Administrative Agent’s Office a copy of each Assignment and
Assumption delivered to it (or the equivalent thereof in electronic form) and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts (and stated interest) of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive absent
manifest error, and the Borrower, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. In addition, the Administrative Agent shall maintain on
the Register information regarding the designation, and revocation of
designation, of any Lender as a Defaulting Lender. The Register shall be
available for inspection by each of the Borrower and the L/C Issuer and each
Lender at any reasonable time and from time to time upon reasonable prior
notice. In addition, at any time that a request for a consent for a material or
substantive change to the Loan Documents is pending, any Lender wishing to
consult with other Lenders in connection therewith may request and receive from
the Administrative Agent a copy of the Register.
(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural Person, or a holding company, investment vehicle or
trust for, or owned and operated for the primary benefit of one or more natural
Persons, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender’s participations in L/C
Obligations and/or Swing Line Loans) owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. For the avoidance of doubt, each Lender shall be responsible for
the indemnity under Section 10.04(c) without regard to the existence of any
participation.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section (it being understood that the documentation required under Section
3.01(e) shall be delivered to the Lender who sells the participation). To the
extent permitted by law, each Participant also shall be entitled to the benefits
of Section 10.08 as though it were a Lender, provided such Participant agrees to
be subject to Section 2.13 as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
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obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.
(e) Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(e) as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank or other
central bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
(g) Resignation as L/C Issuer or Swing Line Lender after Assignment. Subject
to Section 9.06, if at any time Bank of America assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30
days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii)
upon 30 days’ notice to the Borrower, resign as Swing Line Lender. In the event
of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall
be entitled to appoint from among the Lenders a successor L/C Issuer or Swing
Line Lender hereunder; provided, however, that no failure by the Borrower to
appoint any such successor shall affect the resignation of Bank of America as
L/C Issuer or Swing Line Lender, as the case may be; provided, further, however,
that the Lender so selected must consent to its appointment as successor L/C
Issuer, or Swing Line Lender, as applicable. If Bank of America resigns as L/C
Issuer, it shall retain all the rights and obligations of the L/C Issuer
hereunder with respect to all Letters of Credit issued by it and outstanding as
of the effective date of its resignation as L/C Issuer and all L/C Obligations
with respect thereto (including the right to require the Lenders to make Base
Rate Committed Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.04(c)). If Bank of America resigns as Swing Line Lender,
it shall retain all the rights of the Swing Line Lender provided for hereunder
with respect to Swing Line Loans made by it and outstanding as of the effective
date of such resignation, including the right to require the Lenders to make
Base Rate Committed Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring L/C
Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C
Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations of
the retiring L/C Issuer with respect to such Letters of Credit.
10.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed
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to keep such Information confidential), (b) to the extent required or requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by Applicable Laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap,
derivative or other transaction under which payments are to be made by reference
to the Borrower and its obligations, this Agreement or payments hereunder (g)
with the consent of the Borrower, (h) on a confidential basis to (i) any rating
agency in connection with rating the Borrower or its Subsidiaries or the credit
facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar
agency in connection with the issuance and monitoring of CUSIP numbers or other
market identifiers with respect to the credit facilities provided hereunder, or
(i) to the extent such Information (x) becomes publicly available other than as
a result of a breach of this Section or (y) becomes available to the
Administrative Agent, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower. In
addition, the Administrative Agent and the Lenders may disclose the existence of
this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry and service providers to the
Administrative Agent and the Lenders in connection with the administration of
this Agreement, the other Loan Documents, and the Commitments. Each of the
Lenders agrees to use its best efforts to insure that no material non-public
information provided to it by or on behalf of the Borrower will be utilized by
any of its affiliates, agents, advisors or representatives to trade in
securities of the Borrower.
For purposes of this Section, “Information” means all information received from
the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any
of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, and
other than information pertaining to this Agreement routinely provided by
arrangers to data service providers, including league table providers, that
serve the lending industry; provided that, in the case of information received
from the Borrower or any Subsidiary after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, the L/C Issuer or any such Affiliate to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer or their respective Affiliates, irrespective of whether
or not such Lender, L/C Issuer or Affiliate shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrower may be contingent or unmatured or are owed to a branch, office or
Affiliate of such Lender or the L/C Issuer different from the branch, office or
Affiliate holding such deposit or obligated on such indebtedness; provided, that
in the event that any Defaulting Lender shall exercise any such right of setoff,
(x) all amounts so set off shall be paid over immediately to the Administrative
Agent for further application in accordance with the provisions of Section 2.17
and, pending such payment, shall be segregated by such
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Defaulting Lender from its other funds and deemed held in trust for the benefit
of the Administrative Agent, the L/C Issuer and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff. The rights of each Lender, the
L/C Issuer and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender,
the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C
Issuer agrees to notify the Borrower and the Administrative Agent promptly after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by Applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
Applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.
10.10 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile or other
electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of
a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this Section
10.12, if and to the extent that the enforceability of any provisions in this
Agreement relating
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to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender,
as applicable, then such provisions shall be deemed to be in effect only to the
extent not so limited.
10.13 Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Defaulting Lender or a Non-Consenting
Lender, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 10.06), all of its interests,
rights (other than its existing rights to payments pursuant to Sections 3.01 and
3.04) and obligations under this Agreement and the related Loan Documents to an
assignee procured by the Borrower that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:
(a) the Borrower shall have paid to the Administrative Agent the assignment
fee (if any) specified in Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter;
(d) such assignment does not conflict with Applicable Laws; and
(e) in the case of an assignment resulting from a Lender becoming a
Non-Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this
Section 10.13 may be effected pursuant to an Assignment and Assumption executed
by the Borrower, the Administrative Agent and the assignee and (b) the Lender
required to make such assignment need not be a party thereto in order for such
assignment to be effective and shall be deemed to have consented to an be bound
by the terms thereof; provided that, following the effectiveness of any such
assignment, the other parties to such assignment agree to execute and deliver
such documents necessary to evidence such assignment as reasonably requested by
the applicable Lender; provided, further that any such documents shall be
without recourse to or warranty by the parties thereto.
Notwithstanding anything in this Section to the contrary, (i) any Lender that
acts as an L/C Issuer may not be replaced hereunder at any time it has any
Letter of Credit outstanding hereunder unless arrangements satisfactory to such
Lender (including the furnishing of a backstop standby letter of credit in form
and substance, and issued by an issuer, reasonably satisfactory to such L/C
Issuer or the depositing of cash collateral into a cash collateral account in
amounts and pursuant to arrangements reasonably
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satisfactory to such L/C Issuer) have been made with respect to such outstanding
Letter of Credit and (ii) the Lender that acts as the Administrative Agent may
not be replaced hereunder except in accordance with the terms of Section 9.06.
10.14 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY
CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR
OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH
THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
(b) SUBMISSION TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION,
PROCEEDING TO COMPEL ARBITRATION OR OTHER PROCEEDING OF ANY KIND OR DESCRIPTION,
WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST
THE ADMINISTRATIVE AGENT, ANY LENDER, ANY L/C ISSUER OR ANY RELATED PARTY OF THE
FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS
OF THE STATE OF NORTH CAROLINA SITTING IN MECKLENBURG COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA, AND ANY
APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION, PROCEEDING TO COMPEL
ARBITRATION OR OTHER PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NORTH
CAROLINA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION, LITIGATION, PROCEEDING TO COMPEL ARBITRATION OR OTHER
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.
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NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(e) Arbitration.
(i) This Section 10.14(e) concerns the resolution of any controversies or
claims between the Parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or relate
to: (A) this Agreement (including any renewals, extensions or modifications); or
(B) any document related to this Agreement (collectively a “Claim”). For the
purposes of this Section 10.14(e), the term “Parties” means the Borrower and
each of the Lenders, including the Administrative Agent; provided that for the
purposes of this Section 10.14(e) only “Administrative Agent” shall include any
parent corporation, subsidiary or Affiliate of the Administrative Agent involved
in the servicing, management or administration of any obligation described or
evidenced by this Agreement.
(ii) At the request of (A) the Borrower or (B) the Required Lenders and the
Administrative Agent, any Claim shall be resolved by binding arbitration in
accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the
“Arbitration Act”). The Arbitration Act will apply even though this Agreement
provides that it is governed by the law of a specified state.
(iii) The arbitration proceedings will be conducted in accordance with the
Arbitration Act, the then-current Commercial Financial Disputes Arbitration
Rules of the American Arbitration Association or any successor thereof (“AAA”),
and the terms of this Section 10.14(e). In the event of any inconsistency, the
terms of this Section 10.14(e) shall control.
(iv) The language of arbitration shall be English. The place of arbitration
shall be Charlotte, North Carolina. The Borrower and the Lenders shall attempt
to agree upon one arbitrator, but if they are unable to agree, the Borrower
shall appoint an arbitrator and the Lenders shall appoint an arbitrator, and the
two arbitrators so appointed shall appoint a third arbitrator. The members of
the arbitration panel, including the Party appointed arbitrators, shall not be
advocates but shall remain impartial and independent throughout the conduct of
the arbitration proceeding.
(v) Pre-hearing discovery shall be available to all Parties and shall be
governed by the Federal Rules of Civil Procedure. Such discovery may be used as
evidence in the arbitration hearing to the same extent as if it were a court
proceeding. All Parties shall make their agents and employees available upon
reasonable notice at reasonable times and places for pre-hearing depositions
without the necessity of subpoenas or other court orders. The arbitrators may
issue orders to compel the attendance of, and production of documents by, an
agent or employee of a Party. In addition, the arbitrators may issue subpoenas
to compel the attendance of, or the production of documents by, third party
witnesses at depositions or at the arbitration hearing.
(vi) The arbitration panel shall pass finally upon all questions, both of law
and fact, and its findings and award shall be conclusive subject to the
Arbitration Act. The arbitration panel shall provide a concise written statement
of the reason for its award. The arbitration award may be submitted to any court
of competent jurisdiction to be confirmed, judgment entered and enforced.
(vii) To the extent that any Party requests arbitration pursuant hereto, the
procedures specified in this Section 10.14(e) shall be the sole and exclusive
procedures for the resolution of disputes between or among the Parties arising
out of or relating to this Agreement; provided,
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however, that a Party, without prejudice to the mandatory procedures of this
Section 10.14(e) may file a complaint to seek injunctive relief.
10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
the Borrower acknowledges and agrees that: (i) (A) the arranging and other
services regarding this Agreement provided by the Administrative Agent, the
Lenders and the Arrangers are arm’s-length commercial transactions between the
Borrower, on the one hand, and the Administrative Agent, the Lenders and the
Arrangers, on the other hand, (B) the Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (C) the Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) the Administrative Agent, the Lenders and the
Arrangers each is and has been acting solely as a principal and, except as
expressly agreed in writing by the relevant parties, has not been, is not, and
will not be acting as an advisor, agent or fiduciary for the Borrower or any
other Person and (B) neither the Administrative Agent, nor any Lender nor any
Arranger has any obligation to the Borrower with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents and (iii) the Administrative Agent, the Lenders and the
Arrangers and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower, and
neither the Administrative Agent, nor any Lender nor any Arranger has any
obligation to disclose any of such interests to the Borrower. To the fullest
extent permitted by law, the Borrower hereby waives and releases any claims that
it may have against the Administrative Agent, the Lenders and the Arrangers with
respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated hereby.
10.17 Electronic Execution of Assignments and Certain Other Documents. The
words “execute,” “execution,” “signed,” “signature,” and words of like import in
or related to any document to be signed in connection with this Agreement and
the transactions contemplated hereby (including without limitation Assignment
and Assumptions, amendments or other modifications, Committed Loan Notices,
Swing Line Loan Notices, waivers and consents) shall be deemed to include
electronic signatures, the electronic matching of assignment terms and contract
formations on electronic platforms approved by the Administrative Agent, or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any Applicable Law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act; provided that notwithstanding anything contained herein to the
contrary, the Administrative Agent is under no obligation to agree to accept
electronic signatures in any form or in any format unless expressly agreed
98
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to by the Administrative Agent pursuant to procedures approved by it; and
provided, further, without limiting the foregoing, upon the request of any
party, any electronic signature shall be promptly followed by such manually
executed counterpart.
10.18 USA PATRIOT Act Notice. Each Lender that is subject to the Act and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act. The Borrower
shall, promptly following a request by the Administrative Agent or any Lender,
provide all documentation and other information that the Administrative Agent or
such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and regulations,
including the Act.
10.19 No Lenders Will Be “Public Side” Lenders. The Borrower acknowledges and
the Administrative Agent, the Arrangers and the Lenders agree that none of the
Lenders will be “public side” Lenders (i.e. Lenders that do not wish to receive
material non-public information with respect to the Borrower or its securities)
(each a “Public Lender”). The Borrower, the Administrative Agent, the Arrangers
and the Lenders hereby agree that (x) all Borrower Materials shall be treated as
private and may contain material non-public information with respect to the
Borrower or its securities for purposes of United States federal and state
securities laws and (y) the Administrative Agent and the Arrangers shall treat
all Borrower Materials as being suitable only for posting on a portion of the
Platform not designated “Public Lender” or “Public Investor”. Notwithstanding
the foregoing, the Borrower shall be under no obligation to mark any Borrower
Materials “PUBLIC”.
10.20 Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan Document
in one currency into another currency, the rate of exchange used shall be that
at which in accordance with normal banking procedures the Administrative Agent
could purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the Borrower
in respect of any such sum due from it to the Administrative Agent or any Lender
hereunder or under the other Loan Documents shall, notwithstanding any judgment
in a currency (the “Judgment Currency”) other than that in which such sum is
denominated in accordance with the applicable provisions of this Agreement (the
“Agreement Currency”), be discharged only to the extent that on the Business Day
following receipt by the Administrative Agent or such Lender, as the case may
be, of any sum adjudged to be so due in the Judgment Currency, the
Administrative Agent or such Lender, as the case may be, may in accordance with
normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Administrative Agent or any Lender from the Borrower
in the Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or such
Lender, as the case may be, against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the
Administrative Agent or any Lender in such currency, the Administrative Agent or
such Lender, as the case may be, agrees to return the amount of any excess to
the Borrower (or to any other Person who may be entitled thereto under
Applicable Law).
10.21 Acknowledgement and Consent to Bail-In of Affected Financial
Institutions
. Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any Lender or L/C Issuer that is an
Affected Financial Institution arising under any Loan Document, to the extent
such liability is unsecured, may be subject to the Write-Down and Conversion
Powers of the applicable Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:
99
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(a) the application of any Write-Down and Conversion Powers by the applicable
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any Lender or L/C Issuer that is an Affected Financial
Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if
applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such Affected Financial Institution, its
parent undertaking, or a bridge institution that may be issued to it or
otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of the applicable Resolution
Authority.
10.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the
Loan Documents provide support, through a guarantee or otherwise, for any Swap
Contract or any other agreement or instrument that is a QFC (such support, “QFC
Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge
and agree as follows with respect to the resolution power of the Federal Deposit
Insurance Corporation under the Federal Deposit Insurance Act and Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in
respect of such Supported QFC and QFC Credit Support (with the provisions below
applicable notwithstanding that the Loan Documents and any Supported QFC may in
fact be stated to be governed by the laws of the State of New York and/or of the
United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a
“Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution
Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United
States or a state of the United States. In the event a Covered Party or a BHC
Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under the Loan Documents that might
otherwise apply to such Supported QFC or any QFC Credit Support that may be
exercised against such Covered Party are permitted to be exercised to no greater
extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United States. Without
limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a Defaulting Lender shall in no event
affect the rights of any Covered Party with respect to a Supported QFC or any
QFC Credit Support.
(b) As used in this Section 10.22, the following terms have the following
meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
100
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“Covered Entity” means any of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a
“covered bank” as that term is defined in, and interpreted in accordance with,
12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
[Remainder of page left blank intentionally; signature pages follow.]
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
LOWE'S COMPANIES, INC.
By:
/s/ Akinjide O. Falaki
Name:
Akinjide O. Falaki
Title:
Treasurer
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
BANK OF AMERICA, N.A., as Administrative Agent
By:
/s/ Kyle D Harding
Name:
Kyle D Harding
Title:
VP
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender
By:
/s/ Anthony Hoye
Name:
Anthony Hoye
Title:
Director
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as a Lender, L/C Issuer and as Syndication Agent
By:
/s/ Max Redic
Name:
Max Redic
Title:
Sr. VP
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
CITIBANK, N.A., as a Lender and as a Co-Documentation Agent
By:
/s/ Carolyn A. Kee
Name:
Carolyn A. Kee
Title:
Vice President
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
GOLDMAN SACHS BANK USA, as a Lender and as a Co-Documentation Agent
By:
/s/ Annie Carr
Name:
Annie Carr
Title:
Authorized Signatory
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
JPMORGAN CHASE BANK, N.A., as a Lender and as a Co-Documentation Agent
By:
/s/ Heather Hoopingarner
Name:
Heather Hoopingarner
Title:
Authorized Signer
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and as a Co-Documentation
Agent
By:
/s/ Carl Hinrichs
Name:
Carl Hinrichs
Title:
Director
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
BARCLAYS BANK PLC, as a Lender
By:
/s/ Ritam Bhalla
Name:
Ritam Bhalla
Title:
Director
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
MIZUHO BANK, LTD., as a Lender
By:
/s/ Tracy Rahn
Name:
Tracy Rahn
Title:
Executive Director
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
ROYAL BANK OF CANADA, as a Lender
By:
/s/ Julia Ivanova
Name:
Julia Ivanova
Title:
Authorized Signatory
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
TRUIST BANK, as a Lender
By:
/s/ Max N Greer III
Name:
Max N Greer III
Title:
Senior Vice President
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
MUFG BANK, LTD., as a Lender
By:
/s/ Henry Schwarz
Name:
Henry Schwarz
Title:
Authorized Signatory
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
BANK OF MONTREAL, as a Lender
By:
/s/ Joan Murphy
Name:
Joan Murphy
Title:
Managing Director
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
BANK OF CHINA, NEW YORK BRANCH, as a Lender
By:
/s/ Raymond Qiao
Name:
Raymond Qiao
Title:
Executive Vice President
Credit Agreement
Lowe’s Companies, Inc.
Signature Page
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
Lender
Commitment
Applicable
Percentage
Letter of Credit Sublimit
Swing Line Sublimit
Bank of America, N.A.
$
105,000,000
10.29411765
%
$125,000,000
$125,000,000
Citibank, N.A.
$
105,000,000
10.29411765
%
Goldman Sachs Bank USA
$
105,000,000
10.29411765
%
JPMorgan Chase Bank, N.A.
$
105,000,000
10.29411765
%
U.S. Bank National Association
$
105,000,000
10.29411765
%
$125,000,000
Wells Fargo Bank, National Association
$
105,000,000
10.29411765
%
Barclays Bank PLC
$
76,250,000
7.475490196
%
Mizuho Bank, Ltd.
$
71,875,000
7.046568627
%
Royal Bank of Canada
$
71,875,000
7.046568627
%
MUFG Bank, Ltd.
$
50,000,000
4.901960784
%
Truist Bank
$
50,000,000
4.901960784
%
Bank of China, New York Branch
$
35,000,000
3.431372549
%
Bank of Montreal
$
35,000,000
3.431372549
%
Total
$
1,020,000,000
100.000000000
%
$250,000,000
$125,000,000
--------------------------------------------------------------------------------
SCHEDULE 7.03
EXISTING SUBSIDIARY INDEBTEDNESS
Type of Indebtedness
Location
Subsidiary
Amount as of 1/31/2020
($ in Thousands)
Mortgage Notes
Various
Various
$
5,350
Letter of Credit
Various
Various
$
9,861
Surety Bond
Various
Various
$
497,717
Guarantee
Canada
Rona Inc.
$
26,934
Equity Interest Obligation
Various
Various
$
108
$
539,970
--------------------------------------------------------------------------------
SCHEDULE 10.02
ADMINISTRATIVE AGENT’S OFFICE;
CERTAIN ADDRESSES FOR NOTICES
BORROWER
LOWE’S COMPANIES, INC.
1000 Lowe’s Boulevard, NB3TIR
Mooresville, NC 28117
Attention: Akinjide Falaki, Vice President, Corporate Finance & Treasurer
Telephone: 704-758-0178
Telecopier: 704-757-0576
E- Mail: jide.falaki@lowes.com
Website Address: www.lowes.com
U.S. Taxpayer Identification Number: 56-0578072
ADMINISTRATIVE AGENT and SWING LINE LENDER
Administrative Agent’s Office
(for payments and Requests for Credit Extensions):
Bank of America, N.A., as Administrative Agent
Building C
2380 Performance Dr.
TX2-984-03-23
Richardson, TX, 75082
Attention: Gita Pandey
Telephone: 214-290-8350
Facsimile: 214-290-8350
Email: gita.pandey@bofa.com
Remittance Instructions-
US Dollars:
Bank of America, N.A.
New York, NY
ABA# 026009593
Account No.: 1366072250600
Account Name: Wire Clearing Acct for Syn Loans-LIQ
Ref: Lowes Companies Inc.
CAD:
Beneficiary Bank: Bank of America Canada (BOFACATT)
Beneficiary Account Number: 711465090227
Beneficiary: Bank of America NA
GBP:
Beneficiary Bank: Bank of America NT and SA (BOFAGB22)
Beneficiary Account Number: GB90BOFA16505095687011
Beneficiary: Bank of America NA
--------------------------------------------------------------------------------
EUR:
Beneficiary Bank: Bank of America NT and SA (BOFAGB22)
Beneficiary Account Number: GB89BOFA16505095687029
Beneficiary: Bank of America NA
Other Notices as Administrative Agent:
Bank of America, N.A., as Administrative Agent
900 W. Trade St., 6th Floor
NC1-026-06-03
Charlotte, NC 28255
Attention: Kyle Harding
Telephone: 980-275-6132
Facsimile: 704-719-5215
Email: kyle.d.harding@bofa.com
L/C ISSUERS:
BANK OF AMERICA, N.A.
Trade Operations
1 Fleet Way
Mail Code: PA6-580-02-30
Scranton, PA 18507
Attention: Trade Operations
Telephone: 570-496-9619
Facsimile: 800-755-8740
Email: tradeclientserviceteamus@bofa.com
Remittance Instructions:
Bank of America, N.A.
New York, NY
ABA #: 026-009-593
Account #: 04535-883980
Attn: Scranton Standby
Ref: Lowes Companies Inc.
U.S. BANK NATIONAL ASSOCIATION
Telephone: 920-237-7601
Facsimile: 920-237-7993
Email: clssyndicationservicesteam@usbank.com
Remittance Instructions:
U.S. Bank
St. Louis, MO
ABA #091000022
Account #00068542160600
Account Name: Syndication Services
Ref: Lowes
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT A
FORM OF COMMITTED LOAN NOTICE
Date: ___________, _____
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 23, 2020
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among Lowe’s Companies, Inc., a North Carolina corporation
(the “Borrower”), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
The undersigned hereby requests (select one):
☐ A Borrowing of Committed Loans ☐ A conversion or continuation of
Committed Loans
1. On ____________________ (a Business Day).
2. In the amount of $____________________.
3. Comprised of ______________________________.
[Type of Committed Loan requested]
4. In the following currency: ________________________
5. For Eurocurrency Rate Loans: with an Interest Period of ______ months.
The Committed Borrowing, if any, requested herein complies with the proviso to
the first sentence of Section 2.01 of the Agreement.
LOWE’S COMPANIES, INC.
By: _________________________________
Name: _______________________________
Title: ________________________________
A-1
Form of Committed Loan Notice
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF SWING LINE LOAN NOTICE
Date: ___________, _____
To: Bank of America, N.A., as Swing Line Lender
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 23, 2020
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among Lowe’s Companies, Inc., a North Carolina corporation
(the “Borrower”), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
The undersigned hereby requests a Swing Line Loan:
1. On ____________________ (a Business Day).
2. In the amount of $_______________.
The Swing Line Borrowing requested herein complies with the requirements of the
proviso to the first sentence of Section 2.05(a) of the Agreement.
LOWE’S COMPANIES, INC.
By: _____________________________________
Name: __________________________________
Title: ___________________________________
B-1
Form of Swing Line Loan Notice
--------------------------------------------------------------------------------
EXHIBIT C
FORM OF NOTE
____________________
FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to
_____________________ or registered assigns (the “Lender”), in accordance with
the provisions of the Agreement (as hereinafter defined), the principal amount
of each Loan from time to time made by the Lender to the Borrower under that
certain Credit Agreement, dated as of March 23, 2020 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among the Borrower, the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
The Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates and at such times as provided in the Agreement. Except as
otherwise provided in Section 2.05(f) of the Agreement with respect to Swing
Line Loans, all payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.
C-1
Form of Note
--------------------------------------------------------------------------------
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA.
LOWE’S COMPANIES, INC.
By: _____________________________________
Name: ___________________________________
Title: ____________________________________
C-2
Form of Note
--------------------------------------------------------------------------------
LOANS AND PAYMENTS WITH RESPECT THERETO
Date
Type of Loan Made
Amount of Loan Made
End of Interest Period
Amount of Principal or Interest Paid This Date
Outstanding Principal Balance This Date
Notation Made By
C-3
Form of Note
--------------------------------------------------------------------------------
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: _______________, _______
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 23, 2020
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among Lowe’s Companies, Inc., a North Carolina corporation
(the “Borrower”), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the _____________________________________________ of the Borrower, and
that, as such, he/she is authorized to execute and deliver this Compliance
Certificate to the Administrative Agent on the behalf of the Borrower, and that:
[Use following paragraph 1 for fiscal year-end financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
the Borrower ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.
[Use following paragraph 1 for fiscal quarter-end financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of the
Borrower ended as of the above date. Such financial statements fairly present
the financial condition, results of operations and cash flows of the Borrower
and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by the attached financial
statements.
3. A review of the activities of the Borrower during such fiscal period has
been made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and
[select one:]
D-1
Form of Compliance Certificate
--------------------------------------------------------------------------------
[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it, and no Default has occurred and is continuing.]
--or--
[to the best knowledge of the undersigned during such fiscal period, the
following covenants or conditions have not been performed or observed and the
following is a list of each such Default and its nature and status:]
4. The representations and warranties of the Borrower contained in Article V
(other than in Sections 5.05(c), 5.06, 5.10, 5.11 and 5.14) of the Agreement,
and any representations and warranties of the Borrower that are contained in any
document furnished at any time under or in connection with the Loan Documents,
are true and correct on and as of the date hereof, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date, and except that
for purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01 of the Agreement, including the
statements in connection with which this Compliance Certificate is delivered.
5. [Since the date of the most recently delivered Compliance Certificate,
there have been no changes in GAAP that affect the computation of any financial
ratio or requirement contained in the Agreement.] [Since the date of the most
recently delivered Compliance Certificate, there have occurred the following
changes in GAAP, which affect the computation of a financial ratio or
requirement of the Agreement in the following manner:
_______________________________.]
6. The financial covenant analysis and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Compliance
Certificate.
☐
Check for distribution to PUBLIC and Private side Lenders.1
IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of _______________, __________.
LOWE’S COMPANIES, INC.
By: _____________________________________
Name: ___________________________________
Title: ____________________________________
______________________________
1 If this is not checked, this certificate will only be posted to Private side
Lenders.
D-2
Form of Compliance Certificate
--------------------------------------------------------------------------------
For the Measurement Period beginning ____________, _____ and ended ____________,
_____
SCHEDULE 2
to the Compliance Certificate
($ in 000’s)
I. Section 7.07 - Consolidated Adjusted Funded Debt to Consolidated EBITDAR
A.
Consolidated Adjusted Funded Debt as of the end of the
applicable Measurement Period:
$
(i)
Consolidated Funded Debt
$
(ii)
Debt Equivalent of Operating Leases
$
B.
Consolidated EBITDAR for the applicable Measurement Period
(sum of I.B(i) through I.B(xiii) less I.B(xiv) less I.B (xv))
$
(i)
Consolidated Net Income
$
(ii)
Provision for income taxes
$
(iii)
Interest net
$
(iv)
Depreciation and Amortization expenses
$
(v)
Extraordinary, non-recurring or unusual non-cash charges or losses
of the Borrower and its Subsidiaries incurred or charged
$
(vi)
Non-cash charges of the Borrower and its Subsidiaries incurred
or charged
$
(vii)
Non-cash losses arising from the sale of assets other than in the
ordinary course of business of the Borrower and its Subsidiaries
incurred or charged
$
(viii)
Actual transaction expenses or related costs paid in cash in connection
with (1) permitted acquisitions or investments and (2) store closings
(subject to the limitations set forth in the definition of “Consolidated
EBITDAR” in Section 1.01 of the Credit Agreement”)
$
(ix)
Extraordinary, non-recurring or unusual cash charges or losses of the
Borrower or its Subsidiaries (subject to the limitations set forth in the
definition of “Consolidated EBITDAR” in Section 1.01 of the
Credit Agreement”)
$
D-3
Form of Compliance Certificate
--------------------------------------------------------------------------------
(x)
Cash losses arising from the sale of assets other than in the ordinary
course of business (subject to the limitations set forth in the definition
of “Consolidated EBITDAR” in Section 1.01 of the Credit Agreement”)
$
(xi)
Stock based compensation expense
$
(xii)
Rental payments made or required to be made
$
(xiii)
Cash and non-cash charges or losses associated with extinguishment of
Indebtedness or other non-recurring financing activity of the Borrower
or any of its Subsidiaries
$
(xiv)
Extraordinary, non-recurring or unusual non-cash income or gains
increasing Consolidated Net Income of or by the Borrower and its
Subsidiaries (the extent included in calculating such Consolidated
Net Income)
$
(xv)
Non-cash gains arising from the sale of assets other than in the
ordinary course of business increasing Consolidated Net Income
of or by the Borrower and its Subsidiaries (the extent included in
calculating such Consolidated Net Income)
$
C.
Ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR
(Line I.A ÷ Line I.B as calculated above)
_______ to 1
Required: Not greater than 4.00 to 1.00
D-3
Form of Compliance Certificate
--------------------------------------------------------------------------------
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]2 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]3 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignor][the Assignors][the Assignee][the Assignees]4 hereunder are
several and not joint.]5 Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement identified below (the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the respective facilities identified below (including, without limitation,
the Letters of Credit and the Swing Line Loans included in such facilities6) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of [the Assignor (in its capacity as
a Lender)][the respective Assignors (in their respective capacities as Lenders)]
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being
referred to herein collectively as [the][an] “Assigned Interest”). Each such
sale and assignment is without recourse to [the][any] Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by [the][any] Assignor.
1. Assignor[s]: ______________________________
Assignor[s]: ______________________________
2.
Assignee[s]: ______________________________
Assignee[s]: ______________________________
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]
3.
Borrower[s]: Lowe’s Companies, Inc.
4.
Administrative Agent: Bank of America, N.A., as the administrative agent under
the Credit Agreement
______________________________
2 For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.
3 For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
4 Select as appropriate.
5 Include bracketed language if there are either multiple Assignors or multiple
Assignees.
6 Include all applicable subfacilities.
--------------------------------------------------------------------------------
5.
Credit Agreement: Credit Agreement, dated as of March 23, 2020, among Lowe’s
Companies, Inc., the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer
6.
Assigned Interest[s]:
Assignor[s]7
Assignee[s]8
Aggregate
Amount of
Commitment
for all Lenders9
Amount of
Commitment
Assigned
Percentage
Assigned of
Commitment10
CUSIP
Number
$___________
$___________
____________%
$___________
$___________
____________%
$___________
$___________
____________%
7.
Not an Employee Benefit Plan. [The][Each] Assignee represents and warrants as
of the Effective Date to the Administrative Agent, [the][each] Assignor and the
respective Affiliates of each, and not, for the avoidance of doubt, for the
benefit of the Borrower, that [the][such] Assignee is not and will not be (1) an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”); (2) a plan or account subject to
Section 4975 of the Internal Revenue Code of 1986 (the “Code”); (3) an entity
deemed to hold “plan assets” of any such plans or accounts for purposes of ERISA
or the Code; or (4) a “governmental plan” within the meaning of ERISA.
[8.
Trade Date: __________________] 11
Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
______________________________
7 List each Assignor, as appropriate.
8 List each Assignee, as appropriate.
9 Amounts in this column and in the column immediately to the right to be
adjusted by the counterparties to take into account any payments or prepayments
made between the Trade Date and the Effective Date.
10 Set forth, to at least 9 decimals, as a percentage of the Commitment of all
Lenders thereunder.
11 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.
--------------------------------------------------------------------------------
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
Title:
[Consented to and] 12 Accepted:
BANK OF AMERICA, N.A., as
Administrative Agent
By: _________________________________
Title:
[Consented to:]
[LOWE’S COMPANIES, INC.]
[L/C ISSUER]
[SWING LINE LENDER] 13
By: _________________________________
Title:
______________________________
12 To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
13 To be added only if the consent of the Borrower and/or other parties (e.g.
Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement.
--------------------------------------------------------------------------------
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of [the][[the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.
1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an Eligible Assignee (subject to such consents,
if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement),
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of [the][the
relevant] Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it is sophisticated with respect to decisions to acquire assets of the type
represented by [the][such] Assigned Interest and either it, or the Person
exercising discretion in making its decision to acquire [the][such] Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received a
copy of the Credit Agreement, and has received or has been accorded the
opportunity to receive copies of the most recent financial statements delivered
pursuant to Section 6.01 thereof, as applicable, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this Assignment and Assumption and to purchase [the][such]
Assigned Interest, (vi) it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached
hereto is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by [the][such] Assignee;
and (b) agrees that (i) it will, independently and without reliance upon the
Administrative Agent, [the][any] Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of North Carolina.
--------------------------------------------------------------------------------
EXHIBIT F
OPINION
See attached.
--------------------------------------------------------------------------------
exhibit101_03232020001.jpg [exhibit101_03232020001.jpg]
March 23, 2020
Bank of America, N.A.,
as Administrative Agent
620 South Tryon Street
Charlotte, North Carolina 28202
The Lenders party to the Credit
Agreement on the date hereof
Re: Credit Agreement
Ladies and Gentlemen:
We have acted as counsel to Lowe’s Companies, Inc., a North Carolina corporation
(the “Borrower”), in connection with that certain Credit Agreement dated as of
the date hereof (the “Credit Agreement”) among the Borrower, the various
financial institutions party thereto as lenders and Bank of America, N.A., as
administrative agent, and the transactions and other documents described
therein. This opinion letter is delivered to you at the Borrower’s request under
Section 4.01(a)(v) of the Credit Agreement. All capitalized terms used in this
opinion letter that are not defined herein have the meanings given to them in
the Credit Agreement.
In connection with this opinion, we have reviewed originals or copies, certified
or otherwise identified to our satisfaction, of the Credit Agreement and the
Notes, each dated of even date herewith, executed in favor of Bank of America,
N.A. and Bank of Montreal (collectively, the “Loan Documents”).
We have examined the originals, or copies certified or otherwise identified to
our satisfaction, of such other records of the Borrower, certificates of public
officials, officers of the Borrower and other persons, and agreements,
instruments and other documents, and have made such other investigation, as we
have deemed necessary as a basis for the opinions expressed below. As to various
questions of fact material to our opinion, we have relied upon, and assumed
without independent investigation the accuracy of, the representations made by
the parties to the Loan Documents (other than those which are expressed as our
opinions).
In rendering the opinions expressed herein, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
conformed or photostatic copies and the authenticity of the originals of such
copies. For the purposes of the opinions hereinafter expressed, we have further
assumed (i) the legal capacity of all natural persons executing any Loan
Document; (ii) that there is no oral or written statement or agreement, course
of performance, course of dealing or usage of trade that modifies, amends or
varies any of the terms of any Loan Document; (iii) that as to factual matters
any certificate, representation or other document upon which we have relied and
which was given or dated earlier than the date of this letter, continues to
remain accurate, insofar as relevant to the opinions contained herein, from such
earlier date through and including the date hereof; (iv) that there has been no
mutual mistake of fact, or
Charlotte, NC
Charleston, SC
--------------------------------------------------------------------------------
misrepresentation, fraud or deceit in connection with the execution, delivery,
performance under, or transactions contemplated by, the Loan Documents; (v) due
authorization, execution and delivery of the Loan Documents by all parties
thereto other than the Borrower, and that each such document is valid, binding
and enforceable against all parties thereto other than the Borrower; (vi) that
each of the parties to the Loan Documents other than the Borrower has the power
and authority to execute and deliver the Loan Documents to which it is party,
and to perform its obligations thereunder; (vii) that the execution and delivery
by the Borrower of the Loan Documents and the performance by the Borrower of its
obligations thereunder will not violate any of the terms, conditions or
provisions of any law or regulation (other than any law or regulation of the
State of North Carolina or federal law or regulation of the United States),
order, writ, injunction or decree of any governmental authority or any
agreement, document or instrument to which the Borrower is a party, by which it
or its property is bound or to which it is subject (except we have not made such
assumption with respect to agreements or instruments as to which we express our
opinion in paragraph 5(iv) below); (viii) that all parties to the Loan Documents
are in material compliance with all applicable laws, rules and regulations
governing the conduct of their business with respect to the transactions
contemplated by the Loan Documents; (ix) that with respect to any obligation
(including any guaranty) with respect to any “swap” (as defined in the Commodity
Exchange Act), the Borrower will be an “eligible contract participant” (as
defined in the Commodity Exchange Act) at the time such obligation is incurred;
and (x) that if any party to any Loan Document other than the Borrower seeks to
enforce its rights thereunder, such enforcement shall occur only under
circumstances which are consistent with applicable law and provisions of the
relevant Loan Document.
The opinions set forth herein are limited to matters governed by the laws of
North Carolina and the federal laws of the United States, and no opinion is
expressed herein as to the laws of any other jurisdiction. We express no opinion
concerning any matter respecting or affected by any laws other than laws that a
lawyer admitted to practice law in North Carolina exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Borrower or the transactions contemplated in the Loan Documents. Without
limiting the generality of the foregoing, we express no opinion concerning the
following legal issues or the application of any such laws or regulations to the
matters on which our opinions are referenced:
(i) federal and state securities laws and regulations;
(ii) pension and employee benefit laws and regulations;
(iii) federal and state antitrust and unfair competition laws and
regulations, including without limitation the Hart-Scott-Rodino Antitrust
Improvements Act of 1976;
(iv) federal and state laws and regulations concerning document filing
requirements and notice other than Chapter 55 of the North Carolina General
Statutes;
(v) compliance with fiduciary duty requirements;
(vi) the statutes, administrative decisions, and rules and regulations of
county, municipal and special political subdivisions, whether state-level,
regional or otherwise;
(vii) fraudulent transfer laws;
(viii) federal and state environmental laws and regulations;
(ix) federal and state tax laws and regulations;
--------------------------------------------------------------------------------
(x) federal and state land use and subdivision laws and regulations;
(xi) federal patent, copyright and trademark, state trademark, and other
federal and state intellectual property laws and regulations;
(xii) federal and state laws, regulations and policies concerning national
and local emergency;
(xiii) state and federal regulatory laws or regulations specifically
applicable to any entity solely because of the business in which it is engaged;
(xiv) federal and state laws and regulations concerning the condition of
title to any property, the priority of any lien or security interest or the
perfection of a lien or security interest in any property;
(xv) the Foreign Investment Risk Review Modernization Act and the Committee
on Foreign Investment in the United States, and rules and regulations related
thereto;
(xvi) laws, rules and regulations relating to money laundering and terrorist
groups, including without limitation the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (the “USA Patriot Act”), Public Law 107‑56, 115 Stat. 380 (October 26,
2001), as amended, Executive Order 13224, the Trading with the Enemy Act,
50 App. U.S.C. 1, et. seq., any similar or related law and the rules and
regulations (temporary or permanent) promulgated under the foregoing or by the
Office of Foreign Assets Control of the United States Department of Treasury, as
each is amended from time to time;
(xvi) Federal Reserve Board margin regulations;
(xvii) the rules and regulations of the Financial Industry Regulatory
Authority, Inc.;
(xviii) the Wall Street Transparency and Accountability Act of 2010, Title
VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law
No. 111-203, 124 Stat. 1376 (2010) and the rules and regulations issued in
connection therewith; or
(xix) the effectiveness, validity or enforceability of any provision of the
Loan Documents which relates to European Union Directive 2014/59/EU, the
associated EU implementing legislation, or any law or regulation of any relevant
member of the European Economic Area which implements such directive.
Based upon the assumptions set forth above and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
1. Based solely on a certificate of existence issued by the Secretary of
State of the State of North Carolina dated March 18, 2020, the Borrower is a
corporation existing under the laws of the State of North Carolina.
2. The Borrower (a) has the corporate power to execute, deliver, and perform
its obligations under the Loan Documents, (b) has taken all corporate action
necessary to authorize
--------------------------------------------------------------------------------
the execution, delivery and performance of the Loan Documents, and (c) has duly
executed and delivered the Loan Documents.
3. The Loan Documents are the valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms.
4. The Borrower is not required to obtain any consent, approval,
authorization, or make any filing with, any United States federal or State of
North Carolina governmental or regulatory agency to authorize its execution and
delivery of, or to make valid and binding, the Loan Documents, except for those
(i) obtained or made prior to the date hereof and (ii) specified in the Loan
Documents.
5. The execution and delivery of the Loan Documents and the payment and
performance of the Borrower’s obligations under the Loan Documents do not (i)
violate the articles of incorporation or bylaws of the Borrower, (ii) violate
any North Carolina statute, rule or regulation or any federal statute, rule or
regulation, in each case applicable to the Borrower, (iii) violate any order,
writ, judgment, award, injunction or decree identified to us in the Officer’s
Certificate (as defined below) or (iv) constitute a default under any agreement
or other document listed on Schedule 1 (except that we express no opinion with
respect to matters which require the performance of a mathematical calculation
or the making of a financial or accounting determination), except in each case
in the foregoing subsections (i) through (iv) for such violations or defaults
that would not individually or in the aggregate have a Material Adverse Effect.
6. Based solely on the factual certifications in the officer’s certificate
attached as Schedule 2 (the “Officer’s Certificate”) delivered to our firm in
connection with this letter and the representations and warranties in the Loan
Documents, the Borrower is not an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
The opinions set forth herein are subject to the following qualifications:
(a) enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws affecting the
enforcement of creditors’ rights generally;
(b) enforcement of the Loan Documents is subject both to general principles
of equity and to considerations of public policy, including the requirement that
the parties thereto act with commercial reasonableness and in good faith to the
extent required by applicable law, the application of which may deny certain
rights and may be applied by a court of proper jurisdiction, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
For purposes of this paragraph, the terms “general principles of equity” and
“considerations of public policy” may include, but are not limited to, issues
related to the right to or obligation of the appointment of a receiver in
certain circumstances; the ability of an entity to appoint an attorney‑in-fact;
fiduciary obligations of attorneys-in-fact; the enforceability of usury savings
clauses; waiver of procedural, substantive, or constitutional rights;
disclaimers or limitations of liability; waiver of defenses; waiver of
acceleration rights through historical acceptance of late payments; the exercise
of self-help or other remedies without judicial process; accounting for rent or
sale proceeds; requirements of mitigation of damages; and enforcement of default
interest provisions;
--------------------------------------------------------------------------------
(c) the enforceability and availability of certain remedies, rights and
waiver provisions may be limited or rendered ineffective by applicable law,
although the inclusion of such provisions does not affect the validity of any
Loan Document as a whole, and subject to the other exceptions noted herein,
there exist legally adequate remedies for the practical realization of the
principal benefits afforded thereby;
(d) we call to your attention that N.C. Gen. Stat. § 6-21.2 sets forth the
procedures and limitations applicable to the collection of attorneys’ fees and
accordingly, any provision in the Loan Documents relating to the ability to
collect attorneys’ fees upon default are subject to those limitations;
(e) we express no opinion as to the right to obtain a receiver, which
determination is subject to equitable principles;
(f) we express no opinion with respect to any provision of the Loan Documents
providing that the acceptance by any Lender of a past due installment or other
performance by a party shall not be deemed a waiver of its right to accelerate
the loan or other payment obligation. A North Carolina Court of Appeals has held
that when the holder of a promissory note regularly accepted late payments, such
holder is deemed to have waived its right to accelerate the debt because of late
payments until it notifies the maker that prompt payments are again required.
Driftwood Manor Investors v. City Federal Savings & Loan Association, 63 N.C.
App. 459, 305 S.E. 2d 204 (1983);
(g) we express no opinion with respect to any provision in the Loan Documents
which requires that any amendments or waivers to the Loan Documents must be in
writing;
(h) we express no opinion with respect to any consent to venue, jurisdiction
or service of process provisions;
(i) we express no opinion with respect to any choice of law provision;
(j) we express no opinion with respect to any severability provision;
(k) we express no opinion with respect to any provision in the Loan Documents
purporting to require a party to pay or reimburse attorneys’ fees incurred by
another party or to indemnify another party therefor which may be limited by
applicable law and public policy;
(l) we express no opinion with respect to any waiver of the statute of
limitations contained in the Loan Documents;
(m) we express no opinion as to the enforceability of any provision in the
Loan Documents that purports to excuse a party for liability for its own acts;
(n) we express no opinion as to the enforceability of any provision in the
Loan Documents that purports to make void any act done in contravention thereof;
(o) we express no opinion with respect to any provision purporting to
prohibit, restrict, or condition the assignment of rights to the extent such
restriction on assignability is governed by the Uniform Commercial Code;
--------------------------------------------------------------------------------
(p) we express no opinion as to the enforceability of any provision in the
Loan Documents that purports to authorize a party to act in its sole discretion,
that imposes liquidated damages, penalties, late payment charges or an increase
in interest rate after default or that relates to evidentiary standards or other
standards by which any of the Loan Documents is to be construed;
(q) we express no opinion as to the enforceability of provisions in the Loan
Documents providing for the indemnification of or contribution to a party with
respect to such party’s own negligence or willful misconduct or where such
indemnification or contribution is otherwise contrary to public policy;
(r) we express no opinion as to the enforceability of any provision that
purports to create rights of setoff otherwise than in accordance with applicable
law;
(s) we express no opinion with respect to any guaranty of, or any grant of a
security interest to secure, obligations under any agreement, contract or
transaction that constitutes a “swap” within the meaning of Section la(47) of
the Commodity Exchange Act (as defined below) provided by any person or entity
that is not an “eligible contract participant” within the meaning of Section
la(18) of the Commodity Exchange Act (as interpreted by the Commodity Futures
Trading Commission in its regulations, rules, orders, letters or other
announcements);
(t) we have made no inquiry as to whether the Borrower is an “eligible
contract participant” under the Commodity Exchange Act (7 U.S.C. Sections 1 et
seq.), as amended, and the regulations promulgated thereunder (the “Commodity
Exchange Act”), and we express no opinion (i) as to the extent to which the
Borrower’s obligations under any Loan Document might constitute excluded swap
obligations, (ii) as to the effect of Section 2(e) of the Commodity Exchange Act
(7 U.S.C. § 2) upon the rights or obligations of the parties to the Loan
Documents arising under or related to any Loan Document, and (iii) regarding
whether the Borrower will be an “eligible contract participant” as required by
Dodd-Frank (as defined below), the Commodity Exchange Act or any other
applicable rules or regulations at the time that at the time such obligations
are incurred;
(u) we express no opinion as to the enforceability of provisions in the Loan
Documents providing for the waiver of jury trial; and
(v) we express no opinion as to the enforceability of any provision intended
to act as a savings clause.
Our opinion is rendered solely in connection with the transactions contemplated
under the Credit Agreement and may not be relied upon for any other purpose or
in any manner by any Person other than the addressees hereof, except that we
hereby consent to reliance hereon by any future assignee (collectively, the
“Reliance Parties”) of your rights and obligations under the Credit Agreement
pursuant to an assignment that is made and consented to in accordance with the
express provisions of Section 10.06(b) of the Credit Agreement, on the condition
and understanding that (i) this opinion letter speaks only as of the date
hereof, (ii) we have no responsibility or obligation to update this opinion
letter, to consider its applicability or correctness to any person other than
its addressee(s), or to take into account changes in law, facts or any other
developments of which we may later become aware, (iii) any such reliance by a
Reliance Party must be actual and reasonable under the circumstances existing at
the time of assignment, including any changes in law, facts or any other
developments known to or reasonably knowable by the Reliance Party at such time,
(iv) in no event shall any such assignee have any greater
--------------------------------------------------------------------------------
rights with respect hereto than did the addressee, and (v) our consent to such
reliance shall in no event constitute a reissuance of the opinions expressed
herein or otherwise extend any statute of limitations applicable hereto on the
date hereof.
No copies of this opinion letter may be delivered or furnished to any other
party other than a Reliance Party or a prospective Reliance Party, nor may all
or portions of this opinion be quoted, circulated or referred to in any other
document without our prior written consent, except that copies of this opinion
letter may be provided to any regulatory agency having supervisory authority
over you or a Reliance Party and except that this opinion letter may be used in
connection with the assertion of a defense as to which this opinion letter is
relevant and necessary or in response to a court order or other legal process.
The opinions expressed in this opinion letter are rendered as of the date hereof
and we express no opinion as to, and expressly disclaim any responsibility to
advise you of, circumstances or events or change in applicable law that may
occur subsequent to such date.
Very truly yours,
/s/ MOORE & VAN ALLEN PLLC
MOORE & VAN ALLEN PLLC
--------------------------------------------------------------------------------
Distribution List
Bank of America, N.A.
Citibank, N.A.
Goldman Sachs Bank USA
JPMorgan Chase Bank, N.A.
U.S. Bank National Association
Wells Fargo Bank, National Association
Barclays Bank PLC
Mizuho Bank, Ltd.
Royal Bank of Canada
MUFG Bank, Ltd.
Truist Bank
Bank of China, New York Branch
--------------------------------------------------------------------------------
Schedule 1
Agreements and Instruments that are the subject of the No Conflicts Opinion set
forth in Paragraph 5
1.
$255,478,000 Aggregate Principal Amount of 6.875% Debentures Due 2028.
2.
$310,741,000 Aggregate Principal Amount of 6.500% Debentures Due 2029.
3.
$5,000,000 Aggregate Principal Amount of 8.200% Medium Term Notes -- Series A
Due 2022.
4.
$5,000,000 Aggregate Principal Amount of 8.190% Medium Term Notes -- Series A
Due 2022.
5.
$5,000,000 Aggregate Principal Amount of 8.200% Medium Term Notes -- Series A
Due 2023.
6.
$15,000,000 Aggregate Principal Amount of 7.610% Medium Term Notes -- Series B
Due 2027.
7.
$10,000,000 Aggregate Principal Amount of 7.590% Medium Term Notes -- Series B
Due 2027.
8.
$10,000,000 Aggregate Principal Amount of 7.590% Medium Term Notes -- Series B
Due 2027.
9.
$8,000,000 Aggregate Principal Amount of 7.580% Medium Term Notes -- Series B
Due 2027.
10.
$75,000,000 Aggregate Principal Amount of 7.200% Medium Term Notes -- Series B
Due 2027.
11.
$40,820,000 Aggregate Principal Amount of 7.110% Medium Term Notes -- Series B
Due 2037
12.
$500,000,000 Aggregate Principal Amount of 4.625% Senior Notes Due 2020.
13.
$525,000,000 Aggregate Principal Amount of 3.750% Senior Notes Due 2021.
14.
$500,000,000 Aggregate Principal Amount of 3.800% Senior Notes Due 2021.
15.
$750,000,000 Aggregate Principal Amount of 3.120% Senior Notes Due 2022.
16.
$500,000,000 Aggregate Principal Amount of 3.875% Senior Notes Due 2023.
17.
$450,000,000 Aggregate Principal Amount of 3.125% Senior Notes Due 2024.
18.
$750,000,000 Aggregate Principal Amount of 3.375% Senior Notes Due 2025.
19.
$1,350,000,000 Aggregate Principal Amount of 2.500% Senior Notes Due 2026.
20.
$1,500,000,000 Aggregate Principal Amount of 3.100% Senior Notes Due 2027.
21.
$343,915,000 Aggregate Principal Amount of 5.500% Senior Notes Due 2035.
22.
$290,106,000 Aggregate Principal Amount of 5.800% Senior Notes Due 2036.
23.
$229,960,000 Aggregate Principal Amount of 6.650% Senior Notes Due 2037.
24.
$229,908,000 Aggregate Principal Amount of 5.800% Senior Notes Due 2040.
25.
$152,135,000 Aggregate Principal Amount of 5.125% Senior Notes Due 2041.
26.
$750,000,000 Aggregate Principal Amount of 4.650% Senior Notes Due 2042.
--------------------------------------------------------------------------------
27.
$296,951,000 Aggregate Principal Amount of 5.000% Senior Notes Due 2043.
28.
$350,000,000 Aggregate Principal Amount of 4.250% Senior Notes Due 2044.
29.
$750,000,000 Aggregate Principal Amount of 4.375% Senior Notes Due 2045.
30.
$1,350,000,000 Aggregate Principal Amount of 3.700% Senior Notes Due 2046.
31.
$1,500,000,000 Aggregate Principal Amount of 4.050% Senior Notes Due 2047.
32.
$1,500,000,000 Aggregate Principal Amount of 3.65% Senior Notes Due 2029.
33.
$1,500,000,000 Aggregate Principal Amount of 4.55% Senior Notes Due 2049.
--------------------------------------------------------------------------------
Schedule 2
OFFICER’S CERTIFICATE
March 23, 2020
The undersigned, being the duly elected and acting Treasurer of Lowe’s
Companies, Inc., a North Carolina corporation (“Lowe’s”), does hereby certify to
Moore & Van Allen PLLC as follows:
1. As Treasurer of Lowe’s, I am familiar with the business and affairs of
Lowe’s and its affiliates and with the proceedings taken in connection with the
transactions contemplated by that certain Credit Agreement dated as of the date
hereof (the “Credit Agreement”), among Lowe’s, the various financial
institutions party thereto as lenders and Bank of America, N.A., as
administrative agent, and the transactions and other documents described
therein. I have either personal knowledge of the matters and things hereinbelow
set forth or have obtained the information with respect thereto from officers
and employees of Lowe’s in whom I have confidence and whose duties require them
to have personal knowledge thereof. All capitalized terms used, but not defined
herein, shall have the meanings given to such terms in the Credit Agreement.
“Loan Documents” shall mean the Credit Agreement and the Notes.
2. I am familiar with the terms of the Credit Agreement and the other Loan
Documents and make this certificate with the intent that it shall be relied upon
by Moore & Van Allen PLLC as a basis for its opinion to be rendered with respect
to the transactions contemplated by the Credit Agreement.
3. Lowe’s is not an entity which (a) is or holds itself out as being engaged
primarily, or proposes to engage primarily, in the business of investing,
reinvesting or trading in securities; (b) is engaged or proposes to engage in
the business of issuing face-amount certificates of the installment type, or has
been engaged in such business and has any such certificate outstanding; or (c)
is engaged or proposes to engage in the business of investing, reinvesting,
owning, holding or trading in securities, and owns or proposes to acquire
“investment securities” having a value exceeding 40 per centum of the value of
its total assets (exclusive of government securities and cash items) on an
unconsolidated basis. As used in this paragraph, “investment securities”
includes all securities except (i) government securities, (ii) securities issued
by employees’ securities companies, and (iii) securities issued by
majority-owned subsidiaries of the owner which are not investment companies. As
used in this paragraph, “government securities” means any security issued or
guaranteed as to principal or interest by the United States, or by a person
controlled or supervised by and acting as an instrumentality of the Government
of the United States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the foregoing.
4. None of the proceeds under the Credit Agreement will be used for the
purpose (whether immediate, incidental, or ultimate) of purchasing or carrying
“margin stock” or for the purpose of maintaining, reducing or retiring
indebtedness used for the purpose of purchasing or carrying margin stock. As
used herein, “margin stock” means:
(i) any equity security registered or having unlisted trading privileges on a
national securities exchange;
(ii) any equity security not traded on a national securities exchange but as
to which the Federal Reserve Board has determined to have the degree of national
investor interest, the depth and breadth of market, the availability of
information respecting the security and its issuer, and the permanence of the
issuer to warrant being treated like an equity security traded on a national
securities exchange and which has been further identified by publications by the
Federal Reserve Board as an “OTC margin stock”;
(iii) any OTC security designated as qualified for trading in the National
Market Systems under a designation plan approved by the Securities and Exchange
Commission;
--------------------------------------------------------------------------------
(iv) any debt security convertible into a margin stock or carrying a warrant
or right to subscribe to or purchase a margin stock;
(v) any warrant or right to subscribe to or purchase a margin stock; or
(vi) any security issued by an investment company registered under Section 8
of the Investment Company Act of 1940.
5. To my knowledge, there is no order, writ, judgment, award, injunction or
decree that names Lowe’s or is specifically directed to Lowe’s or its
properties.
[remainder of page intentionally left blank]
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has duly executed this Officer’s Certificate
on behalf of Lowe’s as of the date first above written.
LOWE’S COMPANIES, INC.
By: /s/ Akinjide O. Falaki
Akinjide O. Falaki
Treasurer
F-1
Opinion
--------------------------------------------------------------------------------
EXHIBIT G
FORM OF LETTERS OF CREDIT REPORT
To:
Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 23, 2020
(the “Agreement”) among Lowe’s Companies, Inc., a North Carolina corporation
(the “Borrower”), the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer. All
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
This report is being delivered pursuant to Section 2.04(l) of the Agreement. Set
forth in the table below is a description of each Letter of Credit issued by the
undersigned and outstanding on the date hereof.
L/C No.
Maximum Face Amount
Current Face Amount
Beneficiary Name
Issuance Date
Expiry Date
Auto Renewal
Date of Amendment
Amount of Amendment
[APPLICABLE L/C ISSUER]
By: _______________________________
Name: ____________________________
Title: _____________________________
G-1
Form of Letters of Credit Report
--------------------------------------------------------------------------------
EXHIBIT H-1
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships
For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement, dated as of March 23, 2020 (as
extended, renewed, amended or restated from time to time, the “Credit
Agreement”), among Lowe’s Companies, Inc., a North Carolina corporation (the
“Borrower”), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (iv)
it is not a controlled foreign corporation related to the Borrower as described
in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN, IRS Form W-8BEN-E
or any successor form. By executing this certificate, the undersigned agrees
that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Borrower and the Administrative Agent,
and (2) the undersigned shall have at all times furnished the Borrower and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By: __________________________________
Name:
Title:
Date: ______________, _____
H-1
Form of U.S. Tax Compliance Certificate
--------------------------------------------------------------------------------
EXHIBIT H-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships
For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement, dated as of March 23, 2020 (as
extended, renewed, amended or restated from time to time, the “Credit
Agreement”), among Lowe’s Companies, Inc., a North Carolina corporation (the
“Borrower”), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate, (ii)
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii)
it is not a ten percent shareholder of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN, IRS Form W-8BEN-E or any successor
form. By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall promptly
so inform such Lender in writing, and (2) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By: __________________________________
Name:
Title:
Date: ______________, _____
H-2
Form of U.S. Tax Compliance Certificate
--------------------------------------------------------------------------------
EXHIBIT H-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships
For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement, dated as of March 23, 2020 (as
extended, renewed, amended or restated from time to time, the “Credit
Agreement”), among Lowe’s Companies, Inc., a North Carolina corporation (the
“Borrower”), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect to such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN, IRS Form
W-8BEN-E or any successor form or (ii) an IRS Form W-8IMY accompanied by an IRS
Form W-8BEN, IRS Form W-8BEN-E or any successor form from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest
exemption. By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall promptly
so inform such Lender and (2) the undersigned shall have at all times furnished
such Lender with a properly completed and currently effective certificate in
either the calendar year in which each payment is to be made to the undersigned,
or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By: __________________________________
Name:
Title:
Date: ______________, _____
H-3
Form of U.S. Tax Compliance Certificate
--------------------------------------------------------------------------------
EXHIBIT H-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships
For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement, dated as of March 23, 2020 (as
extended, renewed, amended or restated from time to time, the “Credit
Agreement”), among Lowe’s Companies, Inc., a North Carolina corporation (the
“Borrower”), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Borrower within
the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN, IRS Form W-8BEN-E or any successor form or (ii) an IRS Form W-8IMY
accompanied by an IRS Form W-8BEN, IRS Form W-8BEN-E or any successor form from
each of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform the Borrower and the Administrative Agent, and (2) the
undersigned shall have at all times furnished the Borrower and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By: __________________________________
Name:
Title:
Date: ______________, _____
H-4
Form of U.S. Tax Compliance Certificate
--------------------------------------------------------------------------------
EXHIBIT I
FORM OF NOTICE OF LOAN PREPAYMENT
TO: Bank of America, N.A., as Administrative Agent (the “Administrative
Agent”)
RE:
Reference is made to that certain Credit Agreement, dated as of March 23, 2020
(as extended, renewed, amended or restated from time to time, the “Credit
Agreement”; the terms defined therein being used herein as therein defined),
among Lowe’s Companies, Inc., a North Carolina corporation (the “Borrower”), the
Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent, Swing Line Lender and an L/C Issuer.
DATE: [Date]
The Borrower hereby provides notice to the Administrative Agent that it shall
repay the following Loans as more specifically set forth below:
The Loan(s) to be prepaid consist of: [check each applicable box]
☐
Optional prepayment of Loans in the amount of $___________ 14 [with an Interest
Period of _______ months] 15
The Borrower shall repay the above-referenced Loans on the following Business
Day: _______________. (Complete with a date no earlier than (i) the same
Business Day as the date of this Notice of Prepayment with respect to any Base
Rate Loan, (ii) three (3) Business Days subsequent to the date of this Notice of
Prepayment with respect to Eurocurrency Rate Loans denominated in Dollars, (iii)
four (4) Business Days prior to the date of this Notice of Prepayment with
respect to Eurocurrency Rate Loans denominated in Alternative Currencies other
than Special Notice Currencies and (iv) five (5) Business Days prior to the date
of this Notice of Prepayment with respect to Eurocurrency Rate Loans denominated
in Special Notice Currencies).
Delivery of an executed counterpart of a signature page of this notice by fax
transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall
be effective as delivery of a manually executed counterpart of this notice.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
______________________________
14 Complete with an amount in accordance with Section 2.06 of the Credit
Agreement.
15 For Eurocurrency Rate Loans only.
I-1
Form of Notice of Loan Prepayment
--------------------------------------------------------------------------------
BORROWER:
LOWE’S COMPANIES, INC.
By: ____________________________________
Name: __________________________________
Title: ___________________________________
I-1
Form of Notice of Loan Prepayment
|
FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND LIMITED
WAIVER
THIS FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND LIMITED
WAIVER (this “Amendment”) dated as of November 16, 2020 between SEQUENTIAL
BRANDS GROUP, INC., a Delaware corporation (the “Borrower”), the Guarantors
party hereto, the Lenders party hereto, and WILMINGTON TRUST, NATIONAL
ASSOCIATION, as administrative agent and collateral agent (the “Agent”), in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent are party to
that certain Third Amended and Restated Credit Agreement dated as of July 1,
2016 (as amended, restated, supplemented or modified and in effect as of the
date hereof, the “Existing Credit Agreement”; the Existing Credit Agreement as
amended hereby, the “Amended Credit Agreement”);
WHEREAS, the Borrower has requested that the Lenders temporarily waive
(collectively, the “Requested Waiver”) the Acknowledged Events of Default set
forth on Schedule 1 hereof and waive compliance with the Maximum Consolidated
Total Leverage Ratio required by Section 7.15(a) of the Amended Credit Agreement
for the Fiscal Quarter ending September 30, 2020 (collectively, the “Specified
Events of Default”), in each case on the terms and for the period set forth
herein;
WHEREAS, the Borrower, the Guarantors, the Required Lenders and the Agent (at
the direction of the Required Lenders) have agreed to amend the Existing Credit
Agreement and waive the Acknowledged Events of Default, in each case, as set
forth herein.
NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained, the parties hereto hereby agree as follows:
1.Incorporation of Terms. All capitalized terms not otherwise defined herein
shall have the same meaning as in the Amended Credit Agreement.
2.Representations and Warranties. The Borrower hereby represents and warrants
that (i) no Default or Event of Default exists under the Existing Credit
Agreement or under any other Loan Document on and as of the date hereof, and
(ii) after giving effect to this Amendment, all representations and warranties
contained in the Amended Credit Agreement and the other Loan Documents are true
and correct, in all material respects, on and as of the date hereof, except (i)
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date, and (ii) in the case of any representation and warranty qualified by
materiality, they shall be true and correct in all respects.
3.Amendments to Existing Credit Agreement.
--------------------------------------------------------------------------------
a.Section 1.01 of the Existing Credit Agreement is hereby amended by adding the
following new definitions in appropriate alphabetical order:
“13-Week Cash Flow Forecast” means each 13-week rolling cash flow forecast
delivered pursuant to Section 6.02(o) on a bi-weekly basis, which shall (i) show
cash receipts and cash disbursements of the Loan Parties and track accounts
receivable, accounts payable and sales performance, in each case, projected
through the period of 13 consecutive weeks including the week in which such
forecast is delivered by the Borrower to the Agent (for distribution to the
Lenders) and (ii) otherwise be in form and substance, and with such detail, as
is reasonably acceptable to the KKR Representative.
“Fifth Amendment” means that certain Fifth Amendment to Third Amended and
Restated Credit Agreement dated as of November 16, 2020.
“Fifth Amendment Effective Date” means the date that all conditions precedent as
set forth in Section 5 of the Fifth Amendment have been satisfied.
b.Section 1.01 of the Existing Credit Agreement is hereby amended by adding the
following new paragraph at the end of the definition of “Permitted Disposition”:
Notwithstanding the foregoing, from and after the Fifth Amendment Effective
Date, (i) no such Permitted Dispositions specified in clauses (a), (b), (d),
(e), (f) or (h) above shall be permitted without the prior express written
consent of the KKR Representative and (ii) no single or series of related
Permitted Dispositions specified in clause (c) above in an aggregate amount of
$100,000 or greater shall be permitted without the prior express written consent
of the KKR Representative; provided, that the Loan Parties or their Subsidiaries
shall be permitted to enter into licenses and sublicenses in the ordinary course
of business and consistent with past practice, so long as each such each such
license or sublicense (i) generates royalty revenue, (ii) includes minimum
guaranteed payments, (iii) is for a term not longer than five years, and (iv)
does not include any option for the licensee to (a) extend the term of the
license or (b) purchase the licensed property.
c.Section 2.04(c) of the Existing Credit Agreement is hereby amended and
restated in its entirety as follows:
(c)In connection with (i) any Disposition of any Collateral (other than
Permitted Dispositions of the type referred to in clauses (d), (e) and (f) of
the definition thereof, other than with respect to Dispositions of Intellectual
Property as set forth in clause (b) above and other than with respect to the
MSLO Disposition as set forth in subclause (ii) below) in any Fiscal Year in
excess of the Threshold Amount, the Borrower shall apply the aggregate Net
Proceeds received in excess of the Threshold Amount to prepay the Loans
(including L/C Borrowings) up to an amount which is equal to 100% of the Net
Proceeds from the Disposition of such Collateral and (ii) the receipt of the Net
Proceeds of the MSLO Disposition, the Borrower shall apply such Net Proceeds (x)
received on the Second Amendment Effective Date (in each case in an amount as
was separately agreed in writing by the Borrower and the Agent (at the direction
of the Required Lenders)) as follows:
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(1) first, to the BoA Agent, with such Net Proceeds being used to repay
Revolving Loans (as defined in the BoA Credit Agreement), (2) second, to BoA
Agent, with such Net Proceeds being used to repay Tranche A-1 Term Loans (as
defined in the BoA Credit Agreement) and (3) third, to the Borrower and (y)
received after the Second Amendment Effective Date, within one Business Day of
receipt thereof, to BoA Agent, with such Net Proceeds being used to repay
Tranche A-1 Term Loans (as defined in the BoA Credit Agreement).
d.Article V of the Existing Credit Agreement is hereby amended by adding the
following new Section 5.26:
Section 5.26. Excluded Subsidiaries.
As of the Fifth Amendment Effective Date and at all times thereafter, no
Subsidiary constitutes an Excluded Subsidiary and no Loan Party shall form or
otherwise acquire any Excluded Subsidiary.
e.Section 6.02 of the Existing Credit Agreement is hereby amended by adding the
following new subsections (o) and (p):
(o) commencing on the first week following the Fifth Amendment Effective
Date and on a bi-weekly basis thereafter (by 5:00 p.m. New York City time no
later than the third (3rd) Business Day of each second week), furnish to the
Agent (for distribution to the Lenders), (i) a 13-Week Cash Flow Forecast, (ii)
a report setting forth the accounts receivables and aging accounts payable of
the Loan Parties and their Subsidiaries for the previous two week period, (iii)
if any payments are received from licensees more frequently than quarterly, a
sales pacing report of the Loan Parties and their Subsidiaries prepared by the
Borrower for the previous two week period; and
(p) commencing on the first week following the Fifth Amendment Effective Date
and on a weekly basis thereafter (by 5:00 p.m. New York City time no later than
the Friday of each week), furnish to the Agent (for distribution to the Lenders)
a copy of each license agreement entered into in the prior week.
f.Article VI of the Existing Credit Agreement is hereby amended by adding the
following new Section 6.18:
Section 6.18Lender Meetings. The Loan Parties shall cause their senior
management and their advisors (including any investment banker and/or financial
advisor) to make themselves available (a) each Tuesday from and after the Fifth
Amendment Effective Date at 11:00 a.m. prevailing Eastern Time, and (b) at such
other dates and times requested by the Required Lenders (which dates and times
shall be reasonably satisfactory to the Required Lenders and the Loan Parties),
in each case, for a conference call with the KKR Representative and the Lenders
for purposes of discussing (x) any updates concerning the Loan Parties’ ongoing
strategic initiatives, (y) any information contained in any 13-Week Cash Flow
Forecast and any other report delivered pursuant to Section 6.02(o), and (z) any
--------------------------------------------------------------------------------
other information regarding the Loan Parties’ business results and operations
reasonably requested by the KKR Representative or the Lenders.
g.Section 7.01 of the Existing Credit Agreement is hereby amended and restated
in its entirety as follows:
Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired or sign or file or
suffer to exist under the UCC or any similar Law or statute of any jurisdiction
a financing statement that names any Loan Party as debtor; sign or suffer to
exist any security agreement authorizing any Person thereunder to file such
financing statement; sell any of its property or assets subject to an
understanding or agreement (contingent or otherwise) to repurchase such property
or assets with recourse to it; or assign or otherwise transfer any accounts or
other rights to receive income, other than, as to all of the above, Permitted
Encumbrances; provided, that from and after the Fifth Amendment Effective Date,
no Loan Party shall nor shall it permit any of its Subsidiaries to create,
incur, assume or suffer to exist any Permitted Encumbrance pursuant to clauses
(i), (o) or (s) thereof without the prior express written consent of the KKR
Representative.
h.Section 7.02 of the Existing Credit Agreement is hereby amended and restated
in its entirety as follows:
Make any Investments, except Permitted Investments; provided, that from and
after the Fifth Amendment Effective Date, no Loan Party nor any Subsidiary
shall be permitted to make any Permitted Investment pursuant to clauses
(g)(iii), (g)(iv), (i), (j), (l), (m) or (v) of the definition thereof without
the prior express written consent of the KKR Representative.
i.Section 7.03 of the Existing Credit Agreement is hereby amended by adding the
following new paragraph at the end of such section:
Notwithstanding the foregoing, from and after the Fifth Amendment Effective
Date, no Loan Party shall nor shall it permit any Subsidiary to incur any new
Indebtedness (other than Indebtedness outstanding under the BoA Facility (as in
effect on the Fifth Amendment Effective Date) or any other Indebtedness
outstanding on the Fifth Amendment Effective Date) without the prior express
written consent of the KKR Representative.
j.Section 7.04 of the Existing Credit Agreement is hereby amended by adding the
following new paragraph at the end of such section:
Notwithstanding the foregoing or anything to the contrary contained herein, from
and after the Fifth Amendment Effective Date, no Loan Party shall nor shall any
Subsidiary form or otherwise acquire any Excluded Subsidiary.
k.Section 7.06 of the Existing Credit Agreement is hereby amended by adding the
following new paragraph at the end of such section:
--------------------------------------------------------------------------------
Notwithstanding the foregoing, from and after the Fifth Amendment Effective
Date, no such Restricted Payments specified in clauses (c), (e), (f), (g), (h)
and (j) above shall be permitted without the prior express written consent of
the KKR Representative.
l.Section 7.07 of the Existing Credit Agreement is hereby amended and restated
in its entirety as follows:
Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner any Indebtedness for borrowed money, except with
the prior express written consent of the KKR Representative (other than with
respect to clause (a)(ii) below, which for the avoidance of doubt shall not
require prior express written consent of the KKR Representative): (a) (i) as
long as no Default or Event of Default then exists, regularly scheduled or
mandatory repayments, repurchases, redemptions or defeasances of Permitted
Indebtedness (other than the BoA Facility), (ii) regularly scheduled payments
and mandatory prepayments under the BoA Facility, and so long as no Default or
Event of Default then exists, prepayment and other repurchases, redemptions or
defeasances under the BoA Facility and any Permitted Refinancing thereof, in
each case not in violation of the Intercreditor Agreement, (b) the purchase,
redemption, defeasance or other acquisition or retirement of any Indebtedness of
the Borrower or any Subsidiary or of any Equity Interests of the Borrower or any
Subsidiary in exchange for, or out of the net cash proceeds of a contribution to
the common equity of the Borrower or any Subsidiary, or a substantially
concurrent sale of, Equity Interests (other than Disqualified Stock) of the
Borrower or any Subsidiary and (c) the purchase, redemption, defeasance or other
acquisition or retirement of Indebtedness with the net cash proceeds from an
incurrence of any Permitted Refinancing thereof.
m.Section 8.01 of the Existing Credit Agreement is hereby amended by amending
and restating the clause (b) thereof in its entirety as follows:
(b) Specific Covenants. Any Loan Party fails to perform or observe any term,
covenant or agreement contained in any of (i) Sections 6.03(a), 6.05(a) (solely
with respect to the Borrower), 6.06(b)(i)(A), 6.07, 6.17, 6.18 or Article VII,
(ii) Section 6.02(o) and such failure continues for 2 Business Days, (iii)
Section 6.02(p) and such failure continues for 5 days, (iv) Sections 6.01, 6.02
(other than 6.02(o) and 6.02(p)), or 6.03 (other than 6.03(a)) and such failure
continues for 10 days, (v) Section 6.06(b)(i)(B) and (ii) – (iv) and such
failure continues for 10 days or (vi) Section 6.11 or 6.13 and such failure
continues for 15 days; or
4.Limited Waiver. Subject to the satisfaction of the conditions precedent set
forth in Section 5 of this Amendment, Agent and the Lenders party hereto hereby
grant the Requested Waiver through December 31, 2020 unless the Requested Waiver
is extended as set forth below; provided, that the foregoing waiver shall be
effective only to the extent specifically set forth herein and shall not (a) be
construed as a consent to or waiver of (i) any breach, Default or Event of
Default other than as specifically waived herein, or (ii) any breach, Default or
Event of Default of which Agent or any of the Lenders have not been informed by
any Loan Party, (b) affect the right of Agent or any of
--------------------------------------------------------------------------------
the Lenders to demand strict compliance by each Loan Party with all terms and
conditions of the Credit Agreement and the Loan Documents, except as
specifically consented to, modified or waived by the terms hereof, (c) be deemed
a consent to or waiver of any future transaction or action on the part of any
Loan Party requiring the Lenders’ or the Required Lenders’ consent or approval
under the Credit Agreement or the Loan Documents, or (d) diminish, prejudice or
waive any of Agent’s or any Lender’s rights and remedies under the Credit
Agreement, any of the other Loan Documents, or applicable law, whether arising
as a consequence of any Default or Event of Default which may now exist or
otherwise, and Agent and each of the Lenders hereby reserve all of such rights
and remedies. It is understood and agreed that the Requested Waiver is temporary
and shall expire on December 31, 2020 unless extended by the Agent (at the
direction of the Required Lenders in their sole discretion). Upon the
expiration of the Requested Waiver, the Specified Events of Defaults shall
constitute an immediate Event of Default under the Credit Agreement. For the
avoidance of doubt and notwithstanding anything herein to the contrary, during
the period in which the Requested Waiver is in effect, to the extent any
provision of the Credit Agreement or any other Loan Document is qualified by, or
requires the absence of, any Default or Event of Default, a Default or Event of
Default shall be deemed to have occurred for purposes of such provisions as a
result of the Specified Events of Default notwithstanding the Requested Waiver.
5.Conditions to Effectiveness. This Amendment shall not be effective until each
of the following conditions precedent has been fulfilled to the satisfaction of
the Agent (at the direction of the Required Lenders):
a.This Amendment shall have been duly executed and delivered by the Borrower,
the other Loan Parties, and the Required Lenders, and the Agent shall have
received evidence thereof.
b.The Agent shall have received a duly executed Amendment to Fourth Amendment to
Third Amended and Restated Credit Agreement Side Letter, dated as of the date
hereof, by and among the Borrower, the Agent and the Lenders party thereto (the
“Side Letter Amendment”).
c.All action on the part of the Borrower and the other Loan Parties necessary
for the valid execution, delivery and performance by the Borrower and the other
Loan Parties of this Amendment and the other Loan Documents shall have been duly
and effectively taken.
d.After giving effect to this Amendment, no Default or Event of Default shall
have occurred and be continuing.
e.The Borrower shall have paid in full all fees and expenses of the Agent
(including the reasonable and documented fees and expenses of counsel for the
Agent) and the KKR Representative (including those of King & Spalding LLP and
Province Inc.) due and payable on or prior to the Fifth Amendment Effective
Date, and in the case of expenses, to the extent invoiced at least one (1)
Business Day prior to the Fifth Amendment Effective Date.
f.The Borrower shall have delivered an updated Information Certificate and other
customary corporate documents as the KKR Representative shall reasonably
request.
g.The Borrower shall have filed (or caused to have been filed) a UCC-3
continuation statement with the Secretary of State of the State of Delaware for
each of (1) the original UCC-1 financing statement filed on December 4, 2015
naming the Borrower as debtor and
--------------------------------------------------------------------------------
the Agent as secured party (Filing no. 20155810014) and (2) the original UCC-1
financing statement filed on January 6, 2016 naming Heeling Sports Limited as
debtor and the Agent as secured party (Filing no. 20160102093).
6.Binding Effect. The terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their heirs, representatives,
successors and assigns.
7.Reaffirmation of Obligations. The Borrower hereby ratifies the Loan Documents
and acknowledges and reaffirms (a) that it is bound by all terms of the Loan
Documents applicable to it and (b) that it is responsible for the observance and
full performance of its respective Obligations.
8.Loan Document. This Amendment shall constitute a Loan Document under the
terms of the Amended Credit Agreement.
9.Multiple Counterparts. This Amendment may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Delivery of an executed counterpart of a signature page of
this Amendment by telecopy, pdf or other electronic transmission shall be as
effective as delivery of a manually executed counterpart of this Amendment.
10.Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE
OF ACTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE
BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
11.Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The
jurisdiction, service of process and waiver of jury trial provisions set forth
in Sections 10.14 and 10.15 of the Amended Credit Agreement are hereby
incorporated by reference, mutatis mutandis.
12.Agent Authorization. Each of the undersigned Lenders hereby authorizes Agent
to execute and deliver this Amendment and the Side Letter Amendment on its
behalf and, by its execution below, each of the undersigned Lenders agrees to be
bound by the terms and conditions of this Amendment.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each
of the parties hereto as of the date first above written.
BORROWER:
SEQUENTIAL BRANDS GROUP, INC.
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
GUARANTORS:
SQBG, INC.
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
SEQUENTIAL LICENSING, INC.
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
WILLIAM RAST LICENSING, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
HEELING SPORTS LIMITED
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
--------------------------------------------------------------------------------
B®AND MATTER, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
SBG FM, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
SBG UNIVERSE BRANDS, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
GALAXY BRANDS LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
The Basketball Marketing Company, Inc.
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
AMERICAN SPORTING GOODS CORPORATION
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
LNT BRANDS LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
--------------------------------------------------------------------------------
JOE’S HOLDINGS LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
GAIAM BRAND HOLDCO, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
GAIAM AMERICAS, INC.
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
SBG-GAIAM HOLDINGS, LLC
By: /s/ William Sweedler
Name: William Sweedler
Title: Executive Chairman
--------------------------------------------------------------------------------
wilmington trust, national association, as Agent
By: /s/ David Bergstrom
Name: David Bergstrom
Title: Vice President
--------------------------------------------------------------------------------
LENDERS:
FS KKR CAPITAL CORP.
By: __/s/ Jessica Woolf____________________
Name: Jessica Woolf
Title: Authorized Signatory
FS KKR MM CLO 1 LLC
By: __/s/ Jessica Woolf____________________
Name: Jessica Woolf
Title: Authorized Signatory
DARBY CREEK LLC
By: __/s/ Jessica Woolf_____________________
Name: Jessica Woolf
Title: Authorized Signatory
FS KKR CAPITAL CORP. II
By: __/s/ Jessica Woolf____________________
Name: Jessica Woolf
Title: Authorized Signatory
--------------------------------------------------------------------------------
DUNLAP FUNDING LLC
By: __/s/ Jessica Woolf__________________
Name: Jessica Woolf
Title: Authorized Signatory
--------------------------------------------------------------------------------
Schedule 1
Existing Events of Default
(i)The Event of Default that has arisen under Section 6.01(b) of the Credit
Agreement due to the failure of the Borrower to deliver the audited financial
statements of the Borrower and its Subsidiaries for the Fiscal Quarter ended
March 31, 2020 (“Q1 Financials”) in accordance with the provisions set forth in
Section 6.01(b) of the Credit Agreement and which such failure to deliver the Q1
Financials has continued for more than 10 days after the delivery date required
under the Credit Agreement (“Q1 Financials EOD”).
(ii)The Event of Default that has arisen under Section 6.02(b) of the Credit
Agreement due to the failure of the Borrower to deliver the Compliance
Certificate for the Fiscal Quarter ended March 31, 2020 (“Q1 Compliance
Certificate”) in accordance with the provisions set forth in Section 6.02(b) of
the Credit Agreement, which such failure to deliver the Q1 Compliance
Certificate has continued for more than 10 days after the delivery date required
under the Credit Agreement (the “Q1 Compliance Certificate EOD”).
(iii)The Event of Default that has arisen under Section 6.01(f) of the Credit
Agreement due to the failure of the Borrower to deliver the updated report of
the royalty revenue summary by brand and related licensing detail with respect
to the Material Licenses of the Loan Parties and any subsidiary for the Fiscal
Quarter ended March 31, 2020 (“Q1 Royalty Report”) in accordance with the
provisions set forth in Section 6.01(f) of the Credit Agreement and which such
failure to deliver the Q1 Royalty Report has continued for more than 15 days
after the delivery date required under the Credit Agreement (“Q1 Royalty Report
EOD”).
(iv)The Event of Default that has arisen under Section 2 of the Fourth Amendment
to Third Amended and Restated Credit Agreement Side Letter (the “Side Letter”)
due to the failure of the Borrower to deliver the amendment fee to the Agent,
for the benefit of the Lenders, by May 31, 2020 (“Fourth Amendment Fee”)
required pursuant to the provisions set forth in Section 2 of the Side Letter
(“Fourth Amendment EOD”).
(v)The Event of Default that has arisen under Section 8.01(e) of the Credit
Agreement due to the failure of the Borrower to (x) deliver the audited
financial statements of the Borrower and its Subsidiaries for the Fiscal Quarter
ended March 31, 2020 in accordance with the provisions set forth in Section
8.01(e) of the BoA Credit Agreement (the “BoA Financials EOD”), (y) deliver the
Compliance Certificate for the Fiscal Quarter ended March 31, 2020 (“BoA
Compliance Certificate”) in accordance with the provisions set forth in Section
6.02(b) of the Credit Agreement, which such failure to deliver the BoA
Compliance Certificate has continued for more than 10 days after the delivery
date required under the BoA Credit Agreement (the “BoA Compliance Certificate
EOD”), and (z) deliver the updated report of the royalty revenue summary by
brand and related licensing detail with respect to the Material Licenses of the
Loan Parties and any subsidiary for the Fiscal Quarter ended March 31, 2020
(“BoA Royalty Report”) in accordance with the provisions set forth in Section
6.01(f) of the BoA Credit Agreement and which such failure to deliver the BoA
Royalty Report has continued for more than 15 days after the delivery date
required under the BoA Credit Agreement (“BoA Royalty Report EOD”, and together
with the Q1 Financials EOD, the Q1 Compliance Certificate EOD,
--------------------------------------------------------------------------------
the Q1 Royalty Report EOD, the Fourth Amendment EOD, the BoA Financials EOD, and
the BoA Compliance Certificate EOD, collectively, the “Acknowledged Events of
Default”).
-------------------------------------------------------------------------------- |
EXHIBIT 10.2
SETTLEMENT AND RELEASE AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT (this “Agreement”), dated January 9, 2020
is made and entered into by and between Irma Velazquez (“Employee”) and Energy
and Water Development Corp. f/k/a Eurosport Active World Corp. (the “Company”).
Employee and Company are each referred to herein as a “Party” and are
collectively referred to herein as the “Parties.”
BACKGROUND
WHEREAS, the Company and Employee entered into that certain Employment Contract
dated January 1, 2012 (the “Employment Contract”); and
WHEREAS, as of December 31, 2019, the Company has accrued but has not paid
$1,063,000.00 in compensation due to Employee pursuant to Section 4 of the
Employment Contract (the “Accrued Payment Amount”); and
WHEREAS, as soon as practicable following the execution of this Agreement, the
Company shall amend its Articles of Incorporation to designate a new class of
Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred
Stock”).
NOW, THEREFORE, to avoid the costs and uncertainties of litigation, to promote
the common interests among the Parties, and without admission of any liability
or wrongdoing on the part of any Party, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the Parties hereby agree as follows:
AGREED TERMS
1.
Settlement Payment. In consideration of Employee’s execution of and compliance
with this Agreement, including Employee’s waiver and release of claims in
Section 2, and in full satisfaction of all claims Employee may have against the
Company relating to the Accrued Payment Amount, the Company agrees to issue to
Employee (i) 1,022,095 shares of its Common Stock, par value $0.001 per share
and (ii) 1,778,488 shares of its Series A Preferred Stock (collectively, the
“Shares”).
a.
Employee agrees and acknowledges that the Company and its counsel have not made
any representations to Employee regarding the tax consequences of any payments
or amounts received by Employee pursuant to this Agreement. Employee agrees to
indemnify the Company against the payment of any taxes, interest, penalties, and
other liabilities or costs that may be assessed on the settlement payment
described above.
2.
Release and Waiver of Claims. In exchange for the consideration provided by the
Company in this Agreement, Employee and Employee’s heirs, executors,
representatives, administrators, agents, and assigns (collectively the
“Releasors”) irrevocably and unconditionally fully and forever waive, release,
and discharge the Company, including the Company’s parents, subsidiaries,
affiliates, predecessors, successors, and assigns, and each of its and their
respective officers, directors, employees, shareholders, representatives, and
agensts in their corporate and individual capacities (collectively, the
“Released Parties”), from any and all claims, demands, actions, causes of
actions, judgments, rights, fees, damages, debts, obligations, liabilities, and
expenses (inclusive of attorneys’ fees) of any kind whatsoever, whether known or
unknown (collectively, “Claims”), that Releasors may have or have ever had
against the
--------------------------------------------------------------------------------
Released Parties, or any of them, arising out of, or in any way related to
Accrued Payment Amount. This release and waiver of Claims excludes, and
Employee does not waive, release, or discharge any claims which cannot be waived
by law.
3.
Representations. Employee represents that no promise or inducement has been
made or offered by the Company, except as set forth herein, and that this
Agreement is not executed in reliance upon any statement or representation of
the Company or its representatives, not otherwise reflected herein. Employee
has not assigned, pledged, or otherwise in any manner whatsoever sold or
transferred, either by instrument or otherwise, any right, title interest,
demand, cause of action, or claim that is the subject of the releases set forth
in Section 2. Each signatory to this Agreement has full and complete
authorization and power to execute this Agreement in the capacity herein stated,
and on behalf of the Party for which the signatory is listed.
a.
Each party hereby warrants and represents that it has full power and authority
to enter into and perform this Agreement, and that its entry into and full
performance of this Agreement will not violate the rights of any third parties,
including, without limitation, any third party’s rights under any
non-solicitation, non-compete, restrictive or other similar covenant or
agreement by which Employee is or may be bound.
b.
Employee understands and accepts that the Shares involve various risks and
acknowledges that it is able to bear any loss associated with an investment in
the Shares or receipt of Shares as payment hereunder.
c.
Employee confirms that it is not relying on any communication (written or oral)
of the Company or any of its affiliates, as investment advice or as a
recommendation to accept the Shares as payment hereunder. It is understood that
information and explanations related to the terms and conditions of the Shares
by the Company or any of its affiliates shall not be considered investment
advice or a recommendation to accept the Shares as payment hereunder, and that
neither the Company nor any of its affiliates is acting or has acted as an
advisor to Employee in deciding to invest in or receive the Shares as payment
hereunder. Employee acknowledges that neither the Company nor any of its
affiliates has made any representation regarding the proper characterization of
the Shares for purposes of determining Employee’s authority to invest in or
receive the Shares as payment hereunder.
d.
Employee is familiar with the business and financial condition and operations of
the Company and has had access to such information concerning the Company and
the Shares as it deems necessary to enable it to make an informed investment
decision concerning the Shares.
e.
Employee has such knowledge, skill and experience in business, financial and
investment matters that it is capable of evaluating the merits and risks of an
investment in or receipt of the Shares as payment hereunder and it has made its
own legal, tax, accounting, and financial evaluation of the merits and risks of
an investment in or receipt of the Shares as payment hereunder and the
consequences of this Agreement.
f.
Employee is an “accredited investor” as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the “Securities Act”) and agrees to furnish
any additional information requested by the Company or any of its affiliates to
assure compliance with applicable U.S. federal securities laws and/or “blue sky”
or other similar laws of any applicable jurisdiction (collectively referred to
as the “State Securities Laws”) in connection with the issuance of the Shares.
Any information that has been furnished or that will be furnished by Employee
to evidence its status as an accredited investor is accurate and complete, and
does not contain any misrepresentation or material omission.
2
--------------------------------------------------------------------------------
g.
Employee is acquiring the Shares solely for its own beneficial account, for
investment purposes, and not with a view to, or for resale in connection with,
any distribution of the Shares. Employee understands that the Shares have not
been registered under the Securities Act or any State Securities Laws by reason
of specific exemptions under the provisions thereof which depend in part upon
Employee’s investment intent and of its other representations made in this
Agreement. Employee understands that the Company is relying upon the
representations and agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets the
requirements for such exemptions.
h.
Employee understands that the Shares are “restricted securities” under
applicable federal securities laws and that the Securities Act and the rules of
the U.S. Securities and Exchange Commission (the “Commission”) provide in
substance that Employee may dispose of the Shares only pursuant to an effective
registration statement under the Securities Act or an exemption therefrom, and
Employee understands that the Company has no obligation or intention to register
any of the Shares, or to take action so as to permit sales pursuant to the
Securities Act (including Rule 144 thereunder). Accordingly, Employee
understands that under the Commission’s rules, Employee may dispose of the
Shares principally only in “private placements” which are exempt from
registration under the Securities Act, in which event the transferee will
acquire “restricted securities” subject to the same limitations as in Employee’s
hands. Consequently, Employee understands that it must bear the economic risks
of the investment in the Shares for an indefinite period of time.
i.
Employee agrees: (A) that it will not sell, assign, pledge, give, transfer, or
otherwise dispose of the Shares or any interest therein, or make any offer or
attempt to do any of the foregoing, except pursuant to a registration of the
Shares under the Securities Act and all applicable State Securities Laws, or in
a transaction which is exempt from the registration provisions of the Securities
Act and all applicable State Securities Laws; (B) that the certificates (if any)
representing the Shares will bear a legend making reference to the foregoing
restrictions; and (C) that Company and its transfer agent shall not be required
to give effect to any purported transfer of the Shares except upon compliance
with the foregoing restrictions.
j.
Employee acknowledges that neither the Company nor any other person offered to
sell the Shares to Employee by means of any form of general solicitation or
advertising, including but not limited to (A) any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or (B) any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
k.
The Company and Employee (each sometimes referred to herein as the “Indemnifying
Party”) will indemnify and hold harmless each other and each other’s respective
officers, directors, employees, agents, and representatives (each sometimes
referred to herein as the “Indemnified Party”) from and against any and all
liability, loss, damage, cost, or expense (including reasonable outside
attorneys’ fees) arising from any claim made as a result of the Indemnifying
Party’s failure to comply with any of the warranties, representations, or
covenants made by the applicable Indemnifying Party in this Agreement. The
applicable Indemnifying Party agrees to reimburse the applicable Indemnified
Party on demand for any payment made or incurred by such Indemnified Party with
respect to any liability or claim to which the foregoing indemnity applies.
4.
No Admission of Liability. The Parties acknowledge that the terms set forth
herein were agreed upon as a compromise and final settlement of all of the
disputes relating to the Accrued Payment Amounts and are not, and may not be
construed as, an admission of liability by the Company and is not to be
construed as an admission that the Company engaged in any wrongful, tortious, or
unlawful activity.
3
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5.
Attorneys’ Fees. The Parties acknowledge and agree that they are solely
responsible for paying any attorneys’ fees and costs they have incurred and that
neither Party nor its attorney(s) shall seek any award of attorneys’ fees or
costs from the other Party, except as provided herein.
6.
Further Assurances. The Parties agree to take all actions and to make, deliver,
and/or sign any other documents and instruments that are necessary to carry out
the terms, provisions, purpose, and intent of this Agreement.
7.
Legally Binding Agreement. The Parties intend that this Agreement be legally
binding upon and shall inure to the benefit of each of them and their respective
successors, assigns, executors, administrators, heirs, and estates.
8.
Entire Agreement. Any recitals set forth at the beginning of this Agreement are
incorporated by reference and made a part of this Agreement. This Agreement
constitutes the entire agreement and understanding of the Parties and supersedes
all prior negotiations and/or agreements, proposed or otherwise, written or
oral, concerning the subject matter hereof. No modification of this Agreement
shall be binding unless in writing and signed by each of the Parties hereto.
9.
New or Different Facts: No Effect. Except as provided herein, this Agreement
shall be, and remain, in effect despite any alleged breach of this Agreement or
the discovery or existence of any new or additional fact, or any fact different
from that which either Party now knows or believes to be true. Notwithstanding
the foregoing, nothing in this Agreement shall be construed as, or constitute, a
release of any Party’s rights to enforce the terms of this Agreement.
10.
Interpretation. Should any provision of this Agreement be declared or be
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms, or provisions shall not be affected thereby and said illegal or
invalid part, term, or provision shall be deemed stricken from this Agreement.
The headings within this Agreement are purely for convenience and are not to be
used as an aid in interpretation. This Agreement shall not be construed against
either Party as the author or drafter of the Agreement.
11.
Governing Law and Choice of Forum. This Agreement and all related documents
and all matters arising out of or relating to this Agreement, whether sounding
in contract, tort, or statute are governed by, and construed in accordance with,
the laws of Florida, without giving effect to the conflict of law provisions
thereof to the extent such principles or rules would require or permit the
application of the laws of any jurisdiction other than those of Florida. Each
Party irrevocably and unconditionally agrees that it will not commence any
action, litigation, or proceeding of any kind whatsoever against any other Party
in any way arising from or relating to this Agreement and all contemplated
transactions, including, but not limited to, contract, equity, tort, fraud, and
statutory claims, in any forum other than the state or federal courts of
Florida. Each Party irrevocably and unconditionally submits to the exclusive
jurisdiction of such courts. Each Party agrees that a final judgment in any such
action, litigation, or proceeding is conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
12.
Counterparts. This Agreement may be executed by the Parties in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The Parties agree that PDF or electronic
signatures to this Agreement are authentic and have the same force and effect as
original, manual signatures.
-SIGNATURE PAGE FOLLOWS-
4
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IN WITNESS WHEREOF, and intending to be legally bound, each of the Parties
hereto has caused this Settlement and Release Agreement to be executed as of the
date last written above.
COMPANY:
Energy and Water Development Corp.
f/k/a Eurosport Active World Corp.
By: /s/ Ralph Hofmeier
Ralph Hofmeier, Chief Executive Officer
EMPLOYEE:
/s/ Irma Velazquez
Irma Velazquez
5
|
Exhibit 10.1
March 16, 2020
Hillary P. Hai
Re:Separation Agreement and Release
Dear Hillary:
This Separation Agreement and Release (“Agreement”) sets forth the agreement
reached concerning the separation of your employment with Essential Properties
Realty Trust, Inc., including its current and former parents, subsidiaries and
affiliates, and their respective current and former successors, predecessors,
assigns, representatives, agents, attorneys, stockholders, partners, officers,
directors and employees, both individually and in their official capacities
(collectively, the “Company”).
1.Separation Date. Your service as the Chief Financial Officer and Treasurer of
the Company and one of its Executive Vice Presidents will end immediately, and
your employment with the Company will end on April 30, 2020 (the “Separation
Date”). The Company will pay you, in a lump-sum on, or no later than the
payroll date following, the Separation Date (a) any base salary payable to you
pursuant to the Employment Agreement between you and the Company dated as of
June 25, 2018 (the “Employment Agreement”), accrued up to and including the
Separation Date, less applicable withholdings and deductions, (b) any accrued
but unused vacation or other paid time off, (c) any other employee benefits to
which you are entitled upon termination of your employment with the Company in
accordance with the terms and conditions of the applicable plans of the Company
and applicable law, and (d) reimbursement for any unreimbursed business expenses
incurred by you prior to the Separation Date, ((a)-(d), collectively, the
“Accrued Amounts”). You acknowledge and agree that your employment with the
Company ends for all purposes on the Separation Date.
2.Additional Benefits. In addition to payment of the Accrued Amounts as set
forth in Section 1 of this Agreement, in consideration for signing this
Agreement and in exchange for the promises, covenants and waivers set forth
herein, generally as if your employment had been terminated by the Company
without Cause (as defined in the Employment Agreement), (a) the Company will pay
you severance benefits equal to 12 months of your current base salary (i.e.,
$275,000), payable in a lump sum in accordance with the Company's regular
payroll practices, (b) a pro rata target bonus for 2020 (i.e., $110,000) and
awarded but unpaid performance bonus for the year ended December 31, 2019 (i.e.,
$50,000), (c) during the 12-month period commencing immediately after the
Separation Date and subject to your timely and proper election of COBRA
benefits, monthly reimbursement to you for the costs of maintaining coverage for
health benefits at the current levels of benefits in effect for you immediately
prior to the Separation Date (including family coverage, if such coverage was in
effect immediately prior to the Separation Date), (d) any outstanding unvested
time-based restricted stock units previously
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March 16, 2020
Page 2 – Hillary P. Hai
granted to you by the Company will become vested as of the Separation Date and
will be settled in accordance with their terms, and (e) any outstanding unvested
performance-based restricted stock units previously granted to you by the
Company will become vested based on the actual performance of the Company
through the Separation Date (as determined by the Compensation Committee of the
Company) and will be settled in accordance with their terms. The severance
benefits described in clause (a) will be paid on the first regular payroll date
of the Company after the Separation Date.
3.Mutual Release of Claims. Except for breaches by the Company of this
Agreement and/or claims by you that this Agreement was not entered into
knowingly and voluntarily, for and in consideration of the benefits described in
Section 2, and the other promises, agreements and undertakings contained herein,
you, and anyone claiming through you, including your spouse, issue, agents,
representatives, guardians, assigns, dependents, heirs, executors,
administrators, and attorneys, do hereby irrevocably waive, release, and
discharge the Company, from any and all claims that you now have, including, but
not limited to, all claims arising from, growing out of, or in any way connected
with, directly or indirectly, your employment relationship with the Company, or
the separation of that relationship, or otherwise. Specifically, you agree and
acknowledge that by signing this Agreement, you forever relinquish and waive all
rights that you have had or now have (except any claims that cannot be waived by
law), and arising through the date that you sign this Agreement with respect to
any and all actual or potential:
a.claims against the Company based on the Employment Agreement, any other
contract, express or implied, and any other Company program, policy or plan
unless specifically preserved in this Agreement;
b.claims against the Company based upon alleged violation(s) of any statute,
regulation, or ordinance, whether federal, state or local, or based on any other
federal, state or local law, including but not limited to, any and all claims
under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
§1001, et seq.; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
§2000e, et seq.; the Civil Rights Act of 1991, P.L. 102-166, 105 Stat. 1071, et
seq.; 42 U.S.C. §1981; the Americans with Disabilities Act, 42 U.S.C. §12101, et
seq.; the Family and Medical Leave Act, 29 U.S.C. §2601, et seq.; the Equal Pay
Act, 29 U.S.C. §206(d), et seq.; and any other federal, state, or local laws
touching upon the employment relationship;
c.claims against the Company based upon the U.S. Constitution or any State
Constitution;
d.claims against the Company based on the common law, including, but not limited
to, claims of personal injury, emotional and mental distress, injury to personal
reputation, defamation (including libel or slander), denial or termination of
employment in contravention of the common law or any federal, state, local or
public policy, law or regulation; and
e.claims against the Company based upon any theory of alleged equitable
entitlement to relief.
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March 16, 2020
Page 3 – Hillary P. Hai
You further agree and acknowledge that you have received (or will receive under
the express provisions of this Agreement) all wages, benefits, vacation pay,
bonuses, and other compensation that the Company owes because of your
employment, and that you have no claims, complaints, charges or other
proceedings pending in court, administrative agency, commission or other forum
relating directly or indirectly to your employment.
Nothing in this Agreement is intended to limit or restrict any rights you may
have to challenge the validity of this Agreement or whether this Agreement was
entered into knowingly and voluntarily. You waive, however, your right to any
monetary recovery should any agency or third party pursue any claims on your
behalf.
Except for (i) breaches by you of this Agreement, (ii) breaches by you of any
provisions of your Employment Agreement that survive your termination of
employment (including, without limitation, the confidential information,
non-competition, non-solicitation and non-disparagement covenants therein),
and/or (iii) conduct by you that constitutes Cause for termination under the
Employment Agreement, for and in consideration of your release of claims
described above, and the other promises, agreements and undertakings contained
herein, the Company does hereby irrevocably waive, release, and discharge you
from any and all claims that it now has arising from, growing out of, or in any
way connected with, directly or indirectly, your employment relationship with
the Company, or the separation of that relationship.
4.Confidentiality.
a.Notwithstanding the foregoing or anything to the contrary in this Agreement or
the Employment Agreement, nothing in this Agreement shall prohibit or impede you
from communicating, cooperating or filing a complaint with any U.S. federal,
state or local governmental or law enforcement branch, agency or entity
(collectively, a “Governmental Entity”) with respect to possible violations of
any U.S. federal, state or local law or regulation, or otherwise making
disclosures to any Governmental Entity, in each case, that are protected under
the whistleblower provisions of any such law or regulation, provided that in
each case such communications and disclosures are consistent with applicable
law. Notwithstanding the foregoing, under no circumstance are you authorized to
disclose any information covered by the Company’s or its affiliates’
attorney-client privilege or attorney work product without prior written consent
of the Company’s General Counsel.
b.In accordance with the Defend Trade Secrets Act of 2016, you understand that
notwithstanding the foregoing or anything to the contrary in this Agreement or
the Employment Agreement, an individual may not be held criminally or civilly
liable under any Federal or State trade secret law for the disclosure of a trade
secret that (i) is made in confidence to a Federal, State, or local government
official, either directly or indirectly, or to an attorney, solely for the
purpose of reporting or investigating a suspected violation of law; or (ii) is
made in a complaint or other document filed in a lawsuit or other proceeding, if
such filing is made under seal.
5.No Admission of Liability. You and the Company mutually understand and agree
that this Agreement, any payments made and benefits provided hereunder, and any
covenants contained herein, are not to be construed and do not constitute any
admission of fault,
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March 16, 2020
Page 4 – Hillary P. Hai
wrongdoing, responsibility, or liability on the part of the Company. It is
expressly understood and agreed between the parties that the consideration
provided to you pursuant to this Agreement is made solely for the purpose of
settling and compromising any actual and/or possible claims of injuries you may
have arising from your employment relationship with the Company, the termination
thereof and the circumstances surrounding the separation of your employment
relationship with the Company, and it is further agreed that the Company is not
otherwise obligated to provide such consideration.
6.Entire Agreement. You acknowledge and agree that no promise or inducement has
been offered to you for signing this Agreement other than the promises contained
herein and the consideration described in Section 2, above; that this Agreement
is signed by you without reliance upon any statement or representation of the
Company, its attorneys or representatives, concerning the nature and extent of
any possible claim(s); that this Agreement and the provisions of your Employment
Agreement that survive your termination of employment, contain the entire
agreement between you and the Company and supersedes any prior or
contemporaneous oral or written statements or understandings; that the terms of
this Agreement are contractual in nature and not a mere recital; and that you
are legally competent to sign this Agreement and accept your full responsibility
under it.
7.Time to Consider. You warrant, represent and agree that you know and
understand the terms of this Agreement and the obligations and rights you are
waiving and releasing under this Agreement; that you have had sufficient time to
consider it before signing it; and that you know and understand the meaning and
consequences of your signature on this Agreement.
8.Return of Company Property. You will, no later than the Separation Date,
return all Company property in accordance with the Employment Agreement.
9.Future Cooperation. You agree that you will assist and cooperate with the
Company in connection with the defense or prosecution of any claim that may be
made against or by the Company, or in connection with any ongoing or future
investigation or dispute or claim of any kind involving the Company, including
any proceeding before any arbitral, administrative, judicial, legislative, or
other body or agency, including testifying truthfully in any proceeding to the
extent such claims, investigations or proceedings relate to services performed
or required to be performed by you, pertinent knowledge possessed by you, or any
act or omission by you.
10.Choice of Law. This Agreement is expressly made subject to the provisions of
the applicable and valid laws, rules, regulations, and judicial and
administrative decisions of the United States of America and the State of New
Jersey (excluding the conflict-of-law principles thereof), and if any
provision(s) of this Agreement shall ever be invalidated or struck down because
of a conflict with any such laws, rules, regulations, or decisions, the
invalidation shall affect said provision(s) only, and any and all provisions of
this Agreement that are not so invalidated or struck down shall continue in full
force and effect.
11.Miscellaneous. This Agreement may be modified or amended only by a written
instrument executed by you and the Company. It may not be amended, modified,
changed or added to in any manner or fashion by oral statements, acts or
conduct.
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March 16, 2020
Page 5 – Hillary P. Hai
12.Knowledge and Understanding. You acknowledge that:
a.You have been advised to consult with an attorney prior to executing this
Agreement;
b.If you have chosen not to consult with an attorney, or neglect to do so, you
will be deemed to have knowingly and voluntarily waived this right;
c.You have carefully read and fully understand all provisions of this Agreement
prior to executing it;
d.You acknowledge receipt of consideration in exchange for waiver of the rights
and claims enumerated within this Agreement, excluding any rights or claims that
may arise after the date you execute this Agreement; and
e.You are fully aware of the rights you are waiving and releasing by executing
this Agreement.
13.Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
shall be interpreted and construed consistently with such intent. The payments
to you pursuant to this Agreement are also intended to be exempt from Section
409A of the Code to the maximum extent possible. In the event the terms of this
Agreement would subject you to taxes or penalties under Section 409A of the Code
(“409A Penalties”), the Company and you shall cooperate diligently to amend the
terms of the Agreement to avoid such 409A Penalties, to the extent possible;
provided that in no event shall the Company be responsible for any 409A
Penalties that arise in connection with any amounts payable under this
Agreement.
14.Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
YOU ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT, AND YOU DECLARE THAT, BY
PLACING YOUR SIGNATURE BELOW, YOU FULLY UNDERSTAND AND ACCEPT ITS PROVISIONS IN
THEIR ENTIRETY AND WITHOUT RESERVATION.
YOU EXPRESSLY ACKNOWLEDGE, REPRESENT, AND WARRANT THAT YOU HAVE READ THIS WAIVER
AND RELEASE CAREFULLY; THAT YOU FULLY UNDERSTAND THE TERMS, CONDITIONS, AND
SIGNIFICANCE OF THIS WAIVER AND RELEASE; THAT THE COMPANY HAS ADVISED YOU TO
CONSULT WITH AN ATTORNEY CONCERNING THIS WAIVER AND RELEASE; THAT YOU HAVE HAD A
FULL OPPORTUNITY TO REVIEW THIS WAIVER AND RELEASE WITH AN ATTORNEY; THAT YOU
UNDERSTAND THAT THIS WAIVER AND RELEASE HAS BINDING LEGAL EFFECT; AND THAT YOU
HAVE EXECUTED THIS WAIVER AND RELEASE FREELY, KNOWINGLY AND VOLUNTARILY.
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March 16, 2020
Page 6 – Hillary P. Hai
PLEASE READ CAREFULLY. THIS WAIVER AND RELEASE HAS IMPORTANT LEGAL
CONSEQUENCES.
/s/ Hillary P. Hai
Hillary P. Hai
Date: March 16, 2020
Essential Properties Realty Trust, Inc.,
/s/ Peter M. Mavoides
Peter M. Mavoides
Its: President and Chief Executive Officer
Date: March 16, 2020
|
EXHIBIT 10.9
FIRST-CITIZENS BANK & TRUST COMPANY
LONG-TERM INCENTIVE PLAN
Long-Term Incentive Plan Award Agreement
Name of Participant:
________________________________
Grant Date:
________________________________
Performance Period:
________________________________
THIS AGREEMENT (“Agreement”), made effective the ___ day of ______________,
______, between First-Citizens Bank & Trust Company (the “Company”), and
________________________, an employee of the Company or an affiliate (the
“Participant”).
RECITALS:
In furtherance of the purposes of the First-Citizens Bank & Trust Company
Long-Term Incentive Performance Plan, as it may be hereafter amended (the
“Plan”), and in consideration of the services of the Participant and such other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Participant hereby agree as follows:
1.Incorporation of Plan. The rights and duties of the Company and the
Participant under this Agreement shall in all respects be subject to and
governed by the provisions of the Plan, a copy of which is delivered herewith or
has been previously provided to the Participant and the terms of which are
incorporated herein by reference. In the event of any conflict between the
provisions in the Agreement and those of the Plan, the provisions of the Plan
shall govern. Unless otherwise defined herein, capitalized terms in this
Agreement shall have the same definitions as set forth in the Plan.
2.Performance Award. Subject to the terms of this Agreement and the Plan, the
Company hereby grants the Participant a long-term incentive compensation
opportunity (the “Award”) in accordance with the following provisions:
(a)The Award shall equal the annualized rate of salary of the Participant in
effect on the Grant Date, multiplied by the percentage (the “Award Percentage”)
determined in accordance with the following table based upon the rate of growth
(the “TBV+D Growth Rate”) in Tangible Book Value per share of the Company
(“TBV”) plus cumulative dividends per share paid during the Performance Period:
TBV+D Growth Rate
Award Percentage
Threshold Level: [ ]%
[ ]%
Target Level: [ ]%
[ ]%
Stretch Level: [ ]%
[ ]%
(b)For this purpose, the TBV+D Growth Rate for the Performance Period shall be
determined by the Committee in accordance with the following formula:
(Ending TBV minus Beginning TBV) plus cumulative Dividends
Beginning TBV
(c) The TBV at the beginning and ending of the Performance Period shall be
determined by reference to the audited financial statements of the Company. If
the TBV+D Growth Rate does not at least equal the Threshold Level, no Award will
be earned by the Participant for the Performance Period. If the TBV+D Growth
Rate exceeds the Threshold Level but not the Target Level, or exceeds the Target
Level but not the Stretch Level, then the Award Percentage earned will be
interpolated by the Committee from the table above. A TBV+D Growth Rate in
excess of the Stretch Level will not result in an increase in the Award
Percentage.
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3.Vesting of Award. Subject to the terms of the Plan and the Agreement, the
Award shall be 100% vested and earned on January 1 following the ending of the
Performance Period (the “Vesting Date”). The Committee has sole authority to
determine whether and to what degree the Award has vested and is payable and to
interpret the terms and conditions of this Agreement and the Plan.
4.Forfeiture of Award. Except as may otherwise be provided in the Plan or this
Agreement (including but not limited to the provisions of Section 5(b) herein),
in the event that the employment of the Participant with the Company or an
affiliate terminates for any reason and the Award has not vested pursuant to
Section 3, then the Award shall be forfeited immediately upon such termination,
and the Participant shall have no further right with respect to the Award. The
Committee (or its designee, to the extent permitted under the Plan) shall have
the sole discretion to determine if a Participant’s rights have terminated
pursuant to the Plan and this Agreement, including but not limited to the
authority to determine the basis for the Participant’s termination of
employment. The Participant expressly acknowledges and agrees that, except as
otherwise provided in this Agreement, the termination of the Participant’s
employment shall result in forfeiture of the Award and any underlying payout to
the extent the Award has not vested as of the Participant’s termination of
employment date.
5.Award Payout.
(a)The Award shall be paid in cash following the determination of the amount, if
any, of the Award earned by the Participant during the Performance Period, but
in no event later than 90 days following the last day of the Performance Period.
(b)If the Participant dies, retires, becomes disabled, is assigned to a
different position, is granted a leave of absence, or if the Participant's
employment is otherwise terminated (except for cause) by the Company during the
Performance Period, a pro rata share of the Participant's Award based on the
period of actual participation may, at the Committee's discretion, be paid after
the end of the Performance Period if and to the extent that it would have become
earned and payable had the Participant's employment status not changed during
the Performance Period.
6.No Right of Continued Employment. Neither the Plan, this Agreement, nor the
Award shall confer upon the Participant any right to continue in the employment
of the Company or an affiliate or to interfere in any way with the right of the
Company or an affiliate to terminate the Participant’s employment at any time.
Except as otherwise expressly provided in the Plan or this Agreement, or as
determined by the Committee, all rights of the Participant with respect to the
Award shall terminate upon termination of the employment of the Participant with
the Company or an affiliate.
7.Nontransferability of Award. The Award, and any Award payout, shall not be
transferable (including by sale, assignment, pledge or hypothecation) other than
by will or the laws of intestate succession. The designation of a beneficiary in
accordance with the Plan procedures does not constitute a transfer.
8.Superseding Agreement; Binding Effect. This Agreement supersedes any
statements, representations or agreements of the Company with respect to the
grant of the Award or any related rights, and the Participant hereby waives any
rights or claims related to any such statements, representations or agreements.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective executors, administrators, next-of-kin,
successors and assigns. This Agreement does not supersede or amend any
non-competition agreement, non-solicitation agreement, employment agreement,
consulting agreement or any other similar agreement between the Participant and
the Company, including, but not limited to, any restrictive covenants contained
in such agreements.
9.Governing Law. Except as otherwise provided in the Plan or herein, this
Agreement shall be construed and enforced according to the State of North
Carolina, without regard to conflicts of laws provisions of any state, and in
accordance with applicable federal laws of the United States.
10.Amendment and Termination. Subject to the terms of the Plan, this Agreement
may be amended, altered and/or terminated only by written agreement of the
parties hereto. Notwithstanding the foregoing, the Committee shall have
unilateral authority to amend the Plan and this Agreement, without the consent
of Participant, to the extent necessary to comply with applicable laws or
changes to applicable laws (including but not limited to Code Sections 162(m)
and 409A, and federal securities laws), or to reduce or eliminate the amount of
the Award as provided in Section 13 of this Agreement.
--------------------------------------------------------------------------------
11.Withholding; Tax Matters.
(a)The Company shall report all income and withhold all required, local, state,
federal, foreign income and other taxes and any other amounts required to be
withheld by any governmental authority or law from any amount payable in cash
with respect to the Award.
(b)The Company has made no representations or warranties to the Participant with
respect to the tax consequences (including but not limited to the income tax
consequences) related to the Award or the payout, if any, pursuant to the Award,
and the Participant is in no manner relying on the Company or its
representatives for an assessment of such tax consequences. The Participant
acknowledges that there may be adverse tax consequences with respect to the
Award and that the Participant should consult a tax advisor. The Participant
acknowledges that the Participant has been advised that the Participant should
consult with the Participant’s own attorney, accountant and/or tax advisor
regarding the decision to enter into this Agreement and the consequences
thereof. The Participant also acknowledges that the Company has no
responsibility to take or refrain from taking any actions in order to achieve a
certain tax result for the Participant.
12.Administration. The authority to construe and interpret this Agreement and
the Plan, and to administer all aspects of the Plan, shall be vested in the
Committee, and the Committee shall have all powers with respect to this
Agreement as are provided in the Plan. Any interpretation of the Agreement by
the Committee and any decision made by it with respect to the Agreement shall be
final and binding.
13.Adjustment of Award. The Committee shall have the unilateral discretion to
reduce or eliminate the amount of the Award, including an Award otherwise earned
and payable pursuant to the terms of the Plan.
14.Clawback. At the discretion of the Committee and based upon the terms of the
Incentive Compensation Policy, a Participant may be obligated to forfeit future
incentives or to repay the Bank all or any portion, of any performance based
compensation previously paid if a) an accounting restatement occurred due to a
material non-compliance of any financial reporting requirement under the Federal
securities laws, through intentional misconduct or if incorrectly calculated
without misconduct or b) a discovery was made that a performance metric or
calculation used in determining performance-based compensation was materially
inaccurate or c) a significant violation of the Bank's Code of Ethics, as
determined by the Independent Directors of the Committee resulted in financial
or reputational impact for the Bank. The Incentive Compensation Policy may be
amended from time to time, or as otherwise required by law or applicable stock
exchange listing standards. Each Participant, by accepting an Award pursuant to
the Plan, agrees to repay the full amount required under this Section 14 at
such time and in such manner as the Committee shall determine in its sole
discretion and consistent with applicable law.
15.Notices. Except as may be otherwise provided by the Plan or determined by the
Committee, any written notices provided for in this Agreement or the Plan shall
be in writing and shall be deemed sufficiently given if either hand delivered or
if sent by fax or overnight courier, or by postage paid first class mail.
Notices sent by mail shall be deemed received three business days after mailed
but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant's address indicated by the
Company's records, or if to the Company, at the Company's principal office.
16.Severability. The provisions of this Agreement are severable and if any one
or more provisions may be determined to be illegal or otherwise unenforceable,
in whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.
17.Right of Offset. Notwithstanding any other provision of the Plan or the
Agreement, the Company may reduce the amount of any payment or benefit otherwise
payable to or on behalf of the Participant by the amount of any obligation of
the Participant to the Company or an affiliate, and the Participant shall be
deemed to have consented to such reduction.
18.Counterparts; Further Instruments. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties hereto agree
to execute such further instruments and to take such further action as may be
reasonably necessary to carry out the purposes and intent of this Agreement.
[Signatures on the following page.]
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, this Agreement has been executed in behalf of the Company
and by the Participant effective as of the day and year first above written.
FIRST-CITIZENS BANK & TRUST COMPANY
By: ________________________________________
Printed Name: _______________________________
Title: _______________________________________
PARTICIPANT
Signed: _____________________________________
Printed Name: ________________________________
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Exhibit 10.2
Execution Version
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of April 30,
2020, by and between ACER THERAPEUTICS INC., a Delaware corporation (the
“Company”), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability
company (together with its permitted assigns, the “Buyer”). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
set forth in the Purchase Agreement by and between the parties hereto, dated as
of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, the “Purchase Agreement”).
WHEREAS:
The Company has agreed, upon the terms and subject to the conditions of the
Purchase Agreement, to sell to the Buyer up to Fifteen Million Dollars
($15,000,000) of Purchase Shares and to induce the Buyer to enter into the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively, the “Securities Act”), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:
1.DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a.“Investor” means the Buyer, any transferee or assignee thereof to whom the
Buyer assigns its rights under this Agreement in accordance with Section 9 and
who agrees to become bound by the provisions of this Agreement, and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement in accordance with Section 9 and who agrees to
become bound by the provisions of this Agreement.
b.“Person” means any individual or entity including but not limited to any
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
c.“Register,” “registered,” and “registration” refer to a registration effected
by preparing and filing one or more registration statements of the Company in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis (“Rule 415”), and the declaration or ordering of effectiveness of such
registration statement(s) by the United States Securities and Exchange
Commission (the “SEC”).
d.“Registrable Securities” means all of the Commitment Shares and all of the
Purchase Shares that may, from time to time, be issued or become issuable to the
Investor under the Purchase Agreement (without regard to any limitation or
restriction on purchases), and any and all shares of capital stock issued or
issuable with respect to the Purchase Shares or the Commitment Shares or the
Purchase Agreement as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitation on purchases under the Purchase Agreement.
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e.“Registration Statement” means one or more registration statements of the
Company covering only the resale of the Registrable Securities.
2.REGISTRATION.
a.Mandatory Registration. The Company shall use reasonable best efforts to file
with the SEC, within twenty (20) Business Days after the date hereof, an initial
Registration Statement covering the maximum number of Registrable Securities as
shall be permitted to be included thereon in accordance with applicable SEC
rules, regulations and interpretations so as to permit the resale of such
Registrable Securities by the Investor under Rule 415 under the Securities Act
at then prevailing market prices (and not fixed prices), as mutually determined
by both the Company and the Investor in consultation with their respective legal
counsel, subject to the aggregate number of authorized shares of the Company’s
Common Stock then available for issuance in its Certificate of Incorporation.
The initial Registration Statement shall register only the Registrable
Securities. The Investor and its counsel shall have a reasonable opportunity to
review and comment upon such Registration Statement and any amendment or
supplement to such Registration Statement and any related prospectus prior to
its filing with the SEC, and the Company shall give due consideration to all
such comments. The Investor acknowledges that it will be identified in the
initial Registration Statement as an underwriter within the meaning of Section
2(a)(11) of the Securities Act and shall furnish all information reasonably
requested by the Company for inclusion therein. The Company shall use its
reasonable best efforts to have the Registration Statement and any amendment
declared effective by the SEC at the earliest possible date. The Company shall
use reasonable best efforts to keep the Registration Statement effective
pursuant to Rule 415 promulgated under the Securities Act and available for the
resale by the Investor of all of the Registrable Securities covered thereby at
all times until the date on which the Investor shall have resold all the
Registrable Securities covered thereby and no Available Amount remains under the
Purchase Agreement (the “Registration Period”). The Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
b.Rule 424 Prospectus. The Company shall, as required by applicable securities
regulations, from time to time file with the SEC, pursuant to Rule 424
promulgated under the Securities Act, the prospectus and prospectus supplements,
if any, to be used in connection with sales of the Registrable Securities under
the Registration Statement. The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such prospectus prior to its
filing with the SEC, and the Company shall give due consideration to all such
comments. The Investor shall use its reasonable best efforts to comment upon
such prospectus within one (1) Business Day from the date the Investor receives
the final pre-filing version of such prospectus.
c.Sufficient Number of Shares Registered. In the event the number of shares
available under the Registration Statement is insufficient to cover all of the
Registrable Securities, the Company shall amend the Registration Statement or
file a new Registration Statement (a “New Registration Statement”), so as to
cover all of such Registrable Securities (subject to the limitations set forth
in Section 2(a)) as soon as reasonably practicable, but in any event not later
than ten (10) Business Days after the necessity therefor arises, subject to any
limits that may be imposed by the SEC pursuant to Rule 415 under the Securities
Act. The Company shall use its reasonable best efforts to cause such amendment
and/or New Registration Statement to become effective as soon as reasonably
practicable following the filing thereof.
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d. Offering. If the staff of the SEC (the “Staff”) or the SEC seeks
to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities that does not permit
such Registration Statement to become effective and be used for resales by the
Investor under Rule 415 at then-prevailing market prices (and not fixed prices),
or if after the filing of the initial Registration Statement with the SEC
pursuant to Section 2(a), the Company is otherwise required by the Staff or the
SEC to reduce the number of Registrable Securities included in such initial
Registration Statement, then the Company shall reduce the number of Registrable
Securities to be included in such initial Registration Statement (with the prior
consent, which shall not be unreasonably withheld, of the Investor and its legal
counsel as to the specific Registrable Securities to be removed therefrom) until
such time as the Staff and the SEC shall so permit such Registration Statement
to become effective and be used as aforesaid. In the event of any reduction in
Registrable Securities pursuant to this paragraph, the Company shall file one or
more New Registration Statements in accordance with Section 2(c) until such time
as all Registrable Securities have been included in Registration Statements that
have been declared effective and the prospectuses contained therein is available
for use by the Investor. Notwithstanding any provision herein or in the
Purchase Agreement to the contrary, the Company’s obligations to register
Registrable Securities (and any related conditions to the Investor’s
obligations) shall be qualified as necessary to comport with any requirement of
the SEC or the Staff as addressed in this Section 2(d).
3.RELATED OBLIGATIONS.
With respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2 including on any New
Registration Statement, the Company shall use its reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
a.The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep the Registration Statement or any New Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the
Registration Statement or any New Registration Statement until such time as all
of such Registrable Securities shall have been disposed of in accordance with
the intended methods of disposition by the Investor as set forth in such
Registration Statement.
b.The Company shall permit the Investor to review and comment upon the
Registration Statement or any New Registration Statement and all amendments and
supplements thereto at least two (2) Business Days prior to their filing with
the SEC, and not file any such document in a form to which Investor reasonably
objects. The Investor shall use its reasonable best efforts to comment upon the
Registration Statement or any New Registration Statement and any amendments or
supplements thereto within two (2) Business Days from the date the Investor
receives the final version thereof. The Company shall furnish to the Investor,
without charge any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to the Registration Statement or any New
Registration Statement.
c.Upon request of the Investor, the Company shall furnish to the Investor, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents
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incorporated therein by reference and all exhibits, (ii) upon the effectiveness
of any Registration Statement, a copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as the Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus, as the
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by the Investor. For the
avoidance of doubt, any filing available to the Investor via the SEC’s live
EDGAR system shall be deemed “furnished to the Investor” hereunder.
d.The Company shall use reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be reasonably necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
e.As promptly as practicable after becoming aware of such event or facts, the
Company shall notify the Investor in writing of the happening of any event or
existence of such facts as a result of which the prospectus included in any
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain any material, non-public information regarding the Company), and
promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission, and deliver a copy of such supplement
or amendment to the Investor (or such other number of copies as the Investor may
reasonably request). The Company shall also promptly notify the Investor in
writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by email or facsimile on the
same day of such effectiveness and by overnight mail), (ii) of any request by
the SEC for amendments or supplements to any Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
f.The Company shall use its reasonable best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement, or the suspension of the qualification of any Registrable Securities
for sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investor of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
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g.The Company shall (i) cause all the Registrable Securities to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3.
h.The Company shall cooperate with the Investor to facilitate the timely
preparation and delivery of DWAC Shares (not bearing any restrictive legend
other than as set forth in the Purchase Agreement) representing the Registrable
Securities to be offered pursuant to any Registration Statement and enable such
DWAC Shares to be in such denominations or amounts as the Investor may
reasonably request and registered in such names as the Investor may request.
i.The Company shall at all times provide a transfer agent and registrar with
respect to its Common Stock.
j.If reasonably requested by the Investor, the Company shall (i) as soon as
practicable after receipt of written notice from the Investor, incorporate in a
prospectus supplement or post-effective amendment such information as the
Investor reasonably requests should be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities; (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable upon notification
of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any
Registration Statement.
k.The Company shall use its reasonable best efforts to cause the Registrable
Securities covered by any Registration Statement to be registered with or
approved by such other governmental agencies or authorities in the United States
as may be necessary to consummate the disposition of such Registrable
Securities.
l.On or before the date the Registration Statement is declared effective by the
SEC, the Company shall issue to the Transfer Agent the Commencement Irrevocable
Transfer Agent Instructions in the form attached hereto as Exhibit A, and on the
date any Registration Statement which includes the Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and agrees to cause its
legal counsel for the Company to deliver, to the Transfer Agent for such
Registrable Securities (with copies to the Investor) confirmation that such
registration statement has been declared effective by the SEC substantially in
the form attached as an exhibit to the Commencement Irrevocable Transfer Agent
Instructions. Thereafter, if requested by the Buyer at any time, the Company
agrees to cause its legal counsel to deliver to the Buyer a written confirmation
whether or not the effectiveness of such Registration Statement has lapsed at
any time for any reason (including, without limitation, the issuance of a stop
order) and whether or not the Registration Statement is current and available to
the Buyer for sale of all of the Registrable Securities.
m.The Company agrees to take all other reasonable actions as necessary and
reasonably requested in writing by the Investor to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to any
Registration Statement.
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4.OBLIGATIONS OF THE INVESTOR.
a.
The Company shall notify the Investor in writing of the information the Company
reasonably requires from the Investor in connection with any Registration
Statement hereunder. The Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
b.The Investor agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of any Registration
Statement hereunder and any amendments and supplements thereof.
c.The Investor agrees that, upon receipt of any notice from the Company of the
happening of any event or existence of facts of the kind described in Section
3(f) or the first sentence of 3(e), the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e). Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to promptly deliver DWAC Shares of Common Stock
without any restrictive legend (other than as set forth in the Purchase
Agreement) in accordance with the terms of the Purchase Agreement in connection
with any sale of Registrable Securities with respect to which an Investor has
entered into a contract for sale prior to the Investor’s receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(f) or the first sentence of Section 3(e) and for which the Investor has not
yet settled.
5.EXPENSES OF REGISTRATION.
All reasonable expenses of the Company, other than sales or brokerage
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.
6.INDEMNIFICATION.
a.To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, each Person, if any, who
controls the Investor, the members, the directors, officers, partners,
employees, agents, members, managers representatives of the Investor and each
Person, if any, who controls the Investor within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement (with the consent of the Company, such consent
not to be unreasonably withheld) or reasonable expenses (collectively, “Claims”)
reasonably incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in the
Registration Statement, any New Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of
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any jurisdiction in which Registrable Securities are offered (“Blue Sky
Filing”), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement or any New Registration
Statement or (iv) any material violation by the Company of this Agreement (the
matters in the foregoing clauses (i) through (iv) being, collectively,
“Violations”). The Company shall reimburse each Indemnified Person promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information about the Investor furnished in writing to the Company by the
Investor or such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement, any New Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with
respect to any superseded prospectus, shall not inure to the benefit of any such
Person from whom the Person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any other
Indemnified Person) if the untrue statement or omission of material fact
contained in the superseded prospectus was corrected in the revised prospectus,
as then amended or supplemented, if such revised prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it; (iii) shall not be available to
the extent such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investor pursuant to Section 9.
b.In connection with the Registration Statement or any New Registration
Statement or prospectus, the Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement or any New Registration Statement, each Person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information about the Investor set forth on Exhibit B attached hereto or updated
from time to time in writing by the Investor and furnished to the Company by the
Investor expressly for use in connection with such Registration Statement or
prospectus any New Registration Statement or from the failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c) or Section 3(e); and, subject to Section 6(d), the Investor will
reimburse any legal or other expenses reasonably incurred by them in
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connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld, delayed or conditioned; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to the Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investor pursuant to
Section 9.
c.Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of
any action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
d.The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are
incurred. Any Person receiving a payment pursuant to this Section 6 that is
later determined not to be entitled to such payment shall return such payment to
the person making it.
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e.The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to applicable law.
7.CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
8.REPORTS AND DISCLOSURE UNDER THE SECURITIES ACT.
With a view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the
Company to the public without registration (“Rule 144”), the Company agrees, at
the Company’s sole expense, to:
a.make and keep public information available, as those terms are understood and
defined in Rule 144;
b.file with the SEC in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act so long as the
Company remains subject to such requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule 144;
c.furnish to the Investor so long as the Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting and or disclosure provisions of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration; and
d.take such additional action as is reasonably requested by the Investor to
enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions and instructions to the Company’s Transfer Agent as
may be reasonably requested from time to time by the Investor and otherwise
fully cooperate with Investor and Investor’s broker to effect such sale of
securities pursuant to Rule 144.
The Company agrees that damages may be an inadequate remedy for any breach of
the terms and provisions of this Section 8 and that Investor shall, whether or
not it is pursuing any remedies at law, be entitled to seek equitable relief in
the form of a preliminary or permanent injunction, without having to post any
bond or other security, upon any breach or threatened breach of any such terms
or provisions.
9
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9.
ASSIGNMENT OF REGISTRATION RIGHTS.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investor; provided, however,
that any transaction, whether by merger, reorganization, restructuring,
consolidation, financing or otherwise, whereby the Company remains the surviving
entity immediately after such transaction shall not be deemed an
assignment. The Investor may not assign its rights under this Agreement without
the prior written consent of the Company, other than to an affiliate of the
Investor controlled by Jonathan Cope or Josh Scheinfeld, in which case the
assignee must agree in writing to be bound by the terms and conditions of this
Agreement.
10.AMENDMENT OF REGISTRATION RIGHTS.
No provision of this Agreement may be amended or waived by the parties from and
after the date that is one (1) Business Day immediately preceding the initial
filing of the Registration Statement with the SEC. Subject to the immediately
preceding sentence, no provision of this Agreement may be (i) amended other than
by a written instrument signed by both parties hereto or (ii) waived other than
in a written instrument signed by the party against whom enforcement of such
waiver is sought. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
11.MISCELLANEOUS.
a.A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two or more
Persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.
b.
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile or email (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one (1) Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
Acer Therapeutics Inc.
One Gateway Center
300 Washington Street, Suite 351
Newton, MA 02458
Telephone: 844.902.6100
E-mail:hpalmin@acertx.com
Attention: Harry Palmin
With a copy to (which shall not constitute notice or service of process):
Pillsbury Winthrop Shaw Pittman LLP
12255 El Camino Real, Suite 300
San Diego, CA 92130
Telephone: 858.509.4000
10
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Facsimile:858.509.4010
E-mail:mike.hird@pillsburylaw.com/patty.degaetano@pillsburylaw.com
Attention: Mike Hird, Esq./Patty M. DeGaetano, Esq.
Donald R. Joseph, Chief Legal Officer
Acer Therapeutics Inc.
One Gateway Center
300 Washington Street, Suite 351
Newton, MA 02458
Telephone: 844.902.6100
E-mail:djoseph@acertx.com
If to the Investor:
Lincoln Park Capital Fund, LLC
440 North Wells, Suite 410
Chicago, IL 60654
Telephone:312.822.9300
Facsimile:312.822.9301
E-mail:jscheinfeld@lpcfunds.com/jcope@lpcfunds.com
Attention:Josh Scheinfeld/Jonathan Cope
With a copy to (which shall not constitute notice or service of process):
K&L Gates, LLP
200 S. Biscayne Blvd., Suite 3900
Miami, FL 33131
Telephone:305.539.3306
Facsimile: 305.358.7095
E-mail: clayton.parker@klgates.com
Attention:Clayton E. Parker, Esq.
or at such other address, email address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party at least three (3) Business Days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine or
email account containing the time, date, recipient facsimile number or email
address, as applicable, and an image of the first page of such transmission or
(C) provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile, email or receipt
from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.
c.The corporate laws of the State of Delaware shall govern all issues concerning
the relative rights of the Company and its stockholders.All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement 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. Each party hereby irrevocably submits to the exclusive jurisdiction of
and venue in the U.S. District Court for the Southern District of New York or,
if that court does not have subject matter jurisdiction, in any state court
located in the City and County of New York 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
11
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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. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
d.This Agreement, the Purchase Agreement and the other Transaction Documents
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Purchase Agreement and the other Transaction
Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
e.Subject to the requirements of Section 9, this Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties hereto.
f.The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
g.This Agreement may be executed in identical counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission or by e-mail in a “.pdf” format
data file of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
h.Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
i.The language used in this Agreement will be deemed to be the language chosen
by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.
j.This Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.
12.TERMINATION.
12
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The obligations of the Company contained in Sections 2, 3, 5 and 8 of this
Agreement shall terminate in their entirety upon the earlier of (i) the date on
which the Investor shall have sold all the Securities and no Available Amount
remains under the Purchase Agreement and (ii) 180 days following the earlier of
(A) the Maturity Date and (B) the date of termination of the Purchase Agreement;
provided that as long as any Securities remain unsold by the Investor, the
Company must make available “current public information” pursuant to Rule 144
promulgated under the Securities Act until the Investor may sell the Securities
thereunder without any restrictions (including any restrictions under Rule
144(c) or Rule 144(i)).
* * * * * *
13
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.
THE COMPANY:
ACER THERAPEUTICS INC.
By: /s/ Chris Schelling
Name: Chris Schelling
Title: President and Chief Executive Officer
BUYER:
LINCOLN PARK CAPITAL FUND, LLC
BY: LINCOLN PARK CAPITAL, LLC
BY: Alex Noah Investors, Inc.
By: /s/ Jonathan Cope
Name: Jonathan Cope
Title: President
14
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EXHIBIT A
FORM OF
TRANSFER AGENT INSTRUCTIONS
[________], 2020
VIA EMAIL TO: saqui@continentalstock.com
Continental Stock Trust & Transfer Company
1 State Street, 30th Floor
New York, New York 10004-1561
Telephone:212.845.3299
Attention:Stacy Aqui
Re:ACER THERAPEUTICS INC.
Ladies and Gentlemen:
Reference is made to that certain Purchase Agreement (the “Purchase Agreement”),
dated as of April 30, 2020, by and between ACER THERAPEUTICS INC., a Delaware
corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the
“Investor”), pursuant to which the Company may sell to the Investor up to
Fifteen Million Dollars ($15,000,000) of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”). In connection with the transactions
contemplated by the Purchase Agreement, the Company has filed a registration
statement on Form S-1 (File no. 333-[__________]) (the “Registration Statement”)
(with the U.S. Securities & Exchange Commission (the “SEC”)) to register for
resale under the Securities Act of 1933, as amended, the following shares of
Common Stock:
(1)
Up to [__________] shares of Common Stock to be issued upon purchase from the
Company by the Buyer from time to time (the “Purchase Shares”).
(2)
148,148 shares of Common Stock which have been issued to the Buyer as a
commitment fee (the “Commitment Shares”).
We have delivered to you herewith a true and correct copy of resolutions adopted
by the Company’s Board of Directors authorizing the issuances of Common Stock
described herein. No further consent or authorization is required by the
Company, its Board of Directors or its stockholders in connection with the
transactions contemplated by the Purchase Agreement.
Promptly after the SEC declares effective the Registration Statement, the
Company’s counsel shall deliver to you a notice that the Registration Statement
has been declared effective by the SEC in the form of Exhibit I hereto (the
“Notice of Effectiveness”). Provided that the Company’s counsel has delivered
to you the Notice of Effectiveness set forth in Exhibit I attached hereto, this
letter shall serve as our irrevocable authorization and direction to:
--------------------------------------------------------------------------------
(1)
remove any restricted stock transfer legend on the Commitment Shares and credit
via the Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program, 148,148 shares of Common Stock as Commitment Shares to the Investor’s
balance account with DTC through its Deposit Withdrawal At Custodian (“DWAC”)
The information that shall be used for the transfer of shares is as follows:
•
Broker Name:
•
Broker DTC Participant Code:
•
Account Number:
•
Account Name: Lincoln Park Capital Fund, LLC
(2)
issue Purchase Shares without any restricted stock transfer legend, to the
Investor from time to time upon surrender to you of a properly completed and
duly executed Purchase Confirmation, in the form attached hereto as Exhibit II.
Specifically, upon receipt by the Company of a copy of a Purchase Confirmation,
the Company shall as soon as practicable, but in no event later than one (1)
Business Day (as defined below) after receipt of such Purchase Confirmation,
send, via facsimile, a copy of the Purchase Confirmation to you, which Purchase
Confirmation shall constitute an irrevocable instruction to you to process such
Purchase Confirmation in accordance with the terms of these instructions and the
Purchase Confirmation. Upon your receipt of a copy of the executed Purchase
Confirmation, you shall use your best efforts to, within one (1) Business Day
following the date of your receipt of the Purchase Confirmation, credit via the
DTC Fast Automated Securities Transfer Program, upon the request of the
Investor, such aggregate number of shares of Common Stock to which the Investor
shall be entitled to the Investor’s balance account with DTC through its DWAC
system for the number of shares of Common Stock to which the Investor shall be
entitled as set forth in the Purchase Confirmation provided the Investor causes
its bank or broker to initiate the DWAC transaction. (“Business Day” shall mean
any day on which the Company’s principle trading market is open for customary
trading.)
Provided that the Company’s counsel has delivered to you the Notice of
Effectiveness set forth in Exhibit I attached hereto, the Company hereby
confirms to you and the Investor that the Purchase Shares and the Commitment
Shares shall not bear any legend restricting transfer of the Purchase Shares and
Commitment Shares thereby and should not be subject to any stop-transfer
restrictions and shall otherwise be freely transferable on the books and records
of the Company; provided however, that if for any reason the Company is required
to issue Purchase Shares and Commitment Shares which have not been registered
under the Securities Act of 1933, as amended, then the certificates for such
Purchase Shares and Commitment Shares shall bear the following legend and no
other legend whatsoever:
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 HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE
144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS.
--------------------------------------------------------------------------------
The Company hereby confirms to you and the Investor that no instructions other
than as contemplated herein will be given to you by the Company with respect to
the Purchase Shares and the Commitment Shares.
Please be advised that the Investor is relying upon this letter as an inducement
to purchase shares of Common Stock under the Purchase Agreement and,
accordingly, the Investor is a party to the agreements set forth in this letter.
* * * * *
--------------------------------------------------------------------------------
Very truly yours,
ACER THERAPEUTICS INC.
By:______________________
Name: Harry S. Palmin
Title: Chief Operating Officer and Chief Financial Officer
ACKNOWLEDGED AND AGREED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:
Name:
Title:
LINCOLN PARK CAPITAL FUND, LLC
By: LINCOLN PARK CAPITAL, LLC
By:
By:_______________________
Name:
Title: President
--------------------------------------------------------------------------------
EXHIBIT I
FORM OF
NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[________], 2020
VIA EMAIL TO: saqui@continentalstock.com
Continental Stock Trust & Transfer Company
1 State Street, 30th Floor
New York, New York 10004-1561
Telephone:212.845.3299
Attention:Stacy Aqui
Re: ACER THERAPEUTICS INC.
Ladies and Gentlemen:
We are counsel to ACER THERAPEUTICS INC., a Delaware corporation (the
“Company”), and have represented the Company in connection with that certain
Purchase Agreement, dated as of April 30, 2020, (the “Purchase Agreement”),
entered into by and between the Company and Lincoln Park Capital Fund, LLC (the
“Investor”) pursuant to which the Company has agreed to issue to the Investor
shares of the Company’s Common Stock, par value $0.0001 per share (the “Common
Stock”), in an amount up to Fifteen Million Dollars ($15,000,000) in accordance
with the terms of the Purchase Agreement. Pursuant to the Purchase Agreement,
the Company also has entered into a Registration Rights Agreement, dated as of
April 30, 2020, with the Investor (the “Registration Rights Agreement”) pursuant
to which the Company agreed, among other things, to register with the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended (the “Securities Act”) the shares of Common Stock described below.
On [_______], 2020, the Company filed a Registration Statement (File No.
333-[_______]) (the “Registration Statement”) with the SEC to register for
resale the following securities:
(1)
Up to [__________] shares of Common Stock to be issued upon purchase from the
Company by the Investor from time to time (the “Purchase Shares”).
(2)
148,148 shares of Common Stock which have been issued to the Investor as a
commitment fee (the “Commitment Shares”).
In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [_____] [A.M./P.M.]
on [__________], 2020 and we have no knowledge, based solely on our review of
the Commission’s “Stop Orders”
web page (http://sec.gov/litigation/stoporders.shtml), that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Purchase Shares
and the Commitment Shares are
--------------------------------------------------------------------------------
available for resale under the Securities Act pursuant to the Registration
Statement and may be issued without any restrictive legend.
Very truly yours,
[Company Counsel]
By:____________________
CC:Lincoln Park Capital Fund, LLC
--------------------------------------------------------------------------------
EXHIBIT II
FORM OF PURCHASE CONFIRMATION
Reference is made to the Purchase Agreement (the “Purchase Agreement”) between
ACER THERAPEUTICS INC. (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC
(“LPC”) dated April 30, 2020. In accordance with and pursuant to the Purchase
Agreement, LPC hereby purchases shares of common stock, $0.0001 par value per
share (the “Common Stock”), of the Company for the Purchase Amount indicated
below as of the date specified below.
Regular, Accelerated or Additional Accelerated Purchase
Purchase
Date:
_____________________
Purchase Amount:
$____________________
Price: ___ Low Sale Price on date hereof
___ Average of the lowest 3 Closing Sale Prices
for the previous 10 Trading Days
Accelerated Purchase Price
_ 97% of Applicable VWAP
___ Closing Sale Price
Additional Accelerated Purchase Price
_ 97% of Applicable VWAP
___ Closing Sale Price
$____________________
Purchase Amount (No. Shares):
_____________________
TOTAL SHARES TO BE ISSUED:
_____________________
After this purchase:
Aggregate Purchase Shares purchased to date:
___________________
Remaining Registered Purchase Shares:
___________________
Aggregate Purchase Amount for all purchases to
date:
$____________________
Remaining Available Amount:
$____________________
The above referenced shares shall not bear any legend restricting transfer and
should be immediately sent to LPC via:
_ __ DWAC (Broker DTC Participant Code: _______, LPC’s Account Number
__________)
____ Physical delivery of Certificate via overnight delivery
Issue to:Lincoln Park Capital Fund, LLC
440 North Wells, Suite 410
Chicago, IL 60654
Attention: Josh Scheinfeld/Jonathan Cope
Lincoln Park Capital Fund, LLC
Authorized Signature: ______________________________
Name:______________________________
--------------------------------------------------------------------------------
Confirmation of Purchase by Company:
The undersigned, on behalf of the Company, hereby confirms the information set
forth herein and hereby authorizes the issuance of shares of Common Stock to LPC
in accordance with the information set forth above and further confirms:
(i)
As of the date hereof, (a) the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, (b) the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (c) no event has occurred as a
result of which it is necessary to amend or supplement the Registration
Statement or the Prospectus in order to make the statements therein not untrue
or misleading for clauses (a) and (b) above, respectively, to be true and
correct.
(ii)
The effectiveness of the Registration Statement has not lapsed, and the
Registration Statement and the Prospectus are current and available to LPC for
the resale of any or all of the Purchase Shares and Commitment Shares to be
issued to LPC under the Purchase Agreement.
(iii)
The Company confirms that neither it nor any other person acting on its behalf
has provided LPC or its agents or counsel with any information that constitutes
or could reasonably be expected to constitute material, nonpublic information.
ACER THERAPEUTICS INC.
Authorized Signature: _____________________
Name: _______________________________
Title: _______________________________
Phone #: _______________________________
--------------------------------------------------------------------------------
EXHIBIT B
TO REGISTRATION RIGHTS AGREEMENT
Information About The Investor Furnished To The Company By The Investor
Expressly For Use In Connection With The Registration Statement
Information With Respect to Lincoln Park Capital
As of the date of the Purchase Agreement, Lincoln Park Capital Fund, LLC,
beneficially owned 0 shares of Acer Therapeutics Inc. common stock. Josh
Scheinfeld and Jonathan Cope, the Managing Members of Lincoln Park Capital, LLC,
the manager of Lincoln Park Capital Fund, LLC, are deemed to be beneficial
owners of all of the shares of common stock owned by Lincoln Park Capital Fund,
LLC. Messrs. Cope and Scheinfeld have shared voting and investment power over
the shares being offered under the prospectus to be filed with the SEC in
connection with the transactions contemplated under the Purchase Agreement.
Lincoln Park Capital, LLC is not a licensed broker dealer or an affiliate of a
licensed broker dealer.
|
Exhibit 10.2
WESTELL TECHNOLOGIES, INC.
SUMMARY OF DIRECTOR COMPENSATION
The quarterly retainer for all non-employee directors is $7,500. There is not
separate compensation for meeting attendance or for chairpersons, including the
Chairman of the Board, or members of committees. In addition, all directors may
be reimbursed for certain expenses incurred in connection with attendance at
Board and committee meetings. Directors who are employees of the Company do not
receive additional compensation for service as directors. In addition,
non-employee directors are eligible to receive awards under the 2019 Omnibus
Incentive Compensation Plan. On a director’s initial appointment date,
non-employee directors are each granted 2,500 restricted shares with an annual
grant thereafter based on a target grant date value of $5,000 to be granted upon
election to the Board of Directors at the Annual Meeting of Stockholders, with
the award vesting on the first anniversary date of the grant.
|
Exhibit 10.13
Targa Resources Corp.
2010 Stock Incentive Plan
Restricted Stock Unit Agreement
(Bonus Grant)
Grantee:
______________
Date of Grant:
______________
Number of Restricted Stock Units Granted:
______________
1.Grant of Restricted Stock Units. I am pleased to inform you that you have
been granted the above number of Restricted Stock Units with respect to the
common stock, par value $0.001 per share (“Common Stock”), of Targa Resources
Corp., a Delaware corporation (the “Company”), under the Targa Resources Corp.
2010 Stock Incentive Plan (the “Plan”). Each Restricted Stock Unit awarded
hereby represents the right to receive one share of Common Stock subject to the
terms and conditions of this Restricted Stock Unit Agreement (this
“Agreement”). Each Restricted Stock Unit also includes a tandem dividend
equivalent right (“DER”), which is a right to receive an amount equal to the
cash dividends made with respect to a share of Common Stock during the period
the Restricted Stock Units are outstanding, as described in Section 4. This
award of Restricted Stock Units constitutes a “Phantom Stock Award” under the
Plan and shall be subject to all of the terms and provisions of the Plan,
including future amendments thereto, if any, pursuant to the terms thereof.
2.Forfeiture Restrictions and Vesting.
a.The Restricted Stock Units may not be sold, assigned, pledged, exchanged,
hypothecated, or otherwise transferred, encumbered, or disposed of, and in the
event of termination of your employment with the Company and its Affiliates
(collectively, the “Company Group”) (as determined in accordance with Section 5
hereof) for any reason other than death or Disability, or a Change in Control
Termination, you shall, for no consideration, forfeit to the Company all
Restricted Stock Units to the extent then subject to the Forfeiture
Restrictions. The prohibition against transfer and the obligation to forfeit
and surrender Restricted Stock Units to the Company upon termination of
employment as provided in this Section 2(a) are herein referred to as the
“Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon
and enforceable against any transferee of Restricted Stock Units.
For purposes of this Agreement, the following terms shall be defined below:
(i) “Cause” shall include any of the following events: (A) your gross negligence
or willful misconduct in the performance of your duties; (B) your conviction of
a felony or other crime involving moral turpitude; (C) your willful refusal,
after 15 days’ written notice from the Chief Executive Officer or President of
the Company, to perform the material lawful duties or responsibilities required
of you; (D) your willful and material
--------------------------------------------------------------------------------
breach of any corporate policy or code of conduct; or (E) your willfully
engaging in conduct that is known or should be known to be materially injurious
to the Company or any of its subsidiaries.
(ii) “Disability” shall mean a disability that entitles you to disability
benefits under the Company’s long-term disability plan (or that would entitle
you to disability benefits under the Company’s long-term disability plan if you
were an active employee).
(iii)“Good Reason” shall be defined as any of the following: (A) a material
diminution in your base compensation; (B) a material diminution in your
authority, duties or responsibilities; or (C) a material change in the
geographical location at which you must perform services. In order to terminate
employment for Good Reason, you must, within 90 days of the initial existence of
the circumstances constituting Good Reason, notify the Company in writing of the
existence of such circumstances, and the Company shall then have 30 days to
remedy the circumstances. If the circumstances have not been fully remedied by
the Company, you shall have 60 days following the end of such 30-day period to
exercise the right to terminate for Good Reason. The initial existence of the
circumstances constituting Good Reason shall be conclusively deemed to have
occurred on the date of any written notice to the Company concerning such
circumstances. If you do not timely notify the Company in writing of the
existence of the circumstances constituting Good Reason, the right to terminate
for Good Reason shall lapse and be deemed waived, and you shall not thereafter
have the right to terminate for Good Reason unless further circumstances occur
which themselves give rise to a right to terminate for Good Reason.
b.Provided that you have been continuously employed by the Company Group (as
determined in accordance with Section 5 hereof) from the Date of Grant through
the Lapse Date set forth in the following schedule, the Forfeiture Restrictions
shall lapse, and the Restricted Stock Units will vest, with respect to a
percentage of the Restricted Stock Units determined in accordance with the
following schedule:
Percentage of Total Number
of RSUs as to Which
Lapse (Vesting) DateForfeiture Restrictions Lapse
1st Anniversary of Date of Grant100%
Notwithstanding the schedule set forth above, (i) if your employment with the
Company Group (as determined in accordance with Section 5 hereof) is terminated
by reason of death or Disability, then the Forfeiture Restrictions shall lapse
with respect to 100% of the Restricted Stock Units effective as of the date of
such termination of employment, and (ii) if your employment with the Company
Group (as determined in accordance with Section 5 hereof) is terminated by the
Company without Cause, or by you for Good Reason, in either case within the
18-month period immediately following a Change in Control (a “Change in Control
Termination”), then the Forfeiture Restrictions shall lapse with
-2-
--------------------------------------------------------------------------------
respect to 100% of the Restricted Stock Units on the date upon which such Change
in Control Termination occurs; provided, however, notwithstanding the foregoing,
if you are considered to be in the employment of the Company Group by reason of
Retirement as of the date upon which a Change in Control occurs, then the
Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock
Units on the date upon which such Change in Control occurs. Any Restricted Stock
Units with respect to which the Forfeiture Restrictions do not lapse in
accordance with the preceding provisions of this Section 2(b) (and any
associated unvested DERs) shall be forfeited to the Company for no consideration
as of the date of the termination of your employment with the Company Group.
3.
Payments. Subject to Section 12 hereof, as soon as reasonably practicable after
the lapse of the Forfeiture Restrictions with respect to the specified number of
Restricted Stock Units as provided in Section 2(b) hereof (but in no event later
than the end of the calendar year in which the Forfeiture Restrictions so
lapse), the Company shall deliver to you with respect to each such Restricted
Stock Unit one share of the Common Stock. Notwithstanding the foregoing and in
accordance with applicable provisions of the Plan, in the case of vesting in
connection with termination of your employment due to Disability or a Change in
Control Termination, the payment described in this Section 3 shall be made as
soon as reasonably practicable (but no later than 60 days) following, the date
of your “separation from service” (within the meaning of Code Section 409A) with
the Company Group; provided, that, if you are a “specified employee” (within the
meaning of Code Section 409A), such payment shall instead be made on the date
that is 6 months and 1 day following your separation from service or, if
earlier, on the date of your death. The Company shall deliver the shares of
Common Stock in electronic, book-entry form, with such legends or restrictions
thereon as the Committee may determine to be necessary or advisable in order to
comply with applicable securities laws. You hereby agree to complete and sign
any documents and take any additional action that the Company may request to
enable it to deliver shares of Common Stock on your behalf.
4.Dividend Equivalents. In the event the Company declares and pays a dividend
in respect of its Common Stock and, on the record date for such dividend, you
hold Restricted Stock Units granted pursuant to this Agreement that have not
been settled in accordance with Section 3 hereof (or forfeited), within 60 days
following payment of such cash dividend, the Company shall pay to you an amount
equal to the cash dividends you would have received if you were the holder of
record, as of such record date, of the number of shares of Common Stock related
to the portion of the Restricted Stock Units that have not been settled or
forfeited as of such record date.
5.Employment Relationship. For purposes of this Agreement, you shall be
considered to be in the employment of the Company Group as long as (a) you
remain an employee of either the Company or an Affiliate, or (b) (i) you remain
a Consultant to either the Company or an Affiliate or (ii) you are deemed to
have satisfied the requirements for Retirement (defined below). Nothing in the
adoption of the Plan, nor the award of the Restricted Stock Units thereunder
pursuant to this Agreement, shall confer upon you the right to continued
employment by or service with the Company Group or affect in any way the right
of the Company Group to terminate such employment or service at any
time. Unless otherwise provided in a written employment or consulting agreement
or by applicable law, your employment by or service with the Company Group shall
be on an at-will basis, and the employment or service relationship may be
terminated
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at any time by either you or the Company Group for any reason whatsoever, with
or without cause or notice. Any question as to whether and when there has been
a termination of such employment or service, the cause of such termination, or
your eligibility for Retirement shall be determined by the Committee or its
delegate (the delegate may include the Chief Executive Officer for participants
who are not subject to section 16 of the Exchange Act, in which case references
to the “Committee” shall mean the Chief Executive Officer), in its sole
discretion and its determination shall be final. You may be deemed eligible for
“Retirement” if each of the following conditions are satisfied:
(A) your separation from service is due to a normal retirement from your career;
(B) you provide written notice to the Company of your intent to retire at least
twelve (12) full calendar months prior to your separation from service pursuant
to a normal retirement; provided, however, that such notice may be waived or
shortened by the Committee;
(C) you have provided at least seven (7) years of continuous service to one or
more members of the Company Group immediately prior to your separation from
service pursuant to a normal retirement;
(D) you are in “good standing” as determined by the Committee at the time of
your separation from service pursuant to a normal retirement; and
(E) you have not accepted other employment with, or will be providing services
to, any competitor of the Company, or any other organization if the employment
or services to be provided thereto are in a substantially similar capacity,
role, or function as has been provided to the Company or its Affiliates;
however, permitted exceptions include employment or services such as becoming a
board member of another entity that is not a competitor of the Company, teaching
positions, services provided to non-profit organizations, retail positions or
other employment or service that the Committee determines will not alter your
normal retirement status with the Company.
Notwithstanding anything to the contrary above, the Committee shall retain the
authority to determine whether your separation from service meets the conditions
for a Retirement set forth above. The Committee’s determination that you have
met the requirements for a Retirement may be revoked at any time following your
separation from service if the Committee determines that your retirement status
has changed or was determined based upon incorrect information.
6.
Corporate Acts. The existence of the Restricted Stock Units shall not affect in
any way the right or power of the Board or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization, or other
change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange, or other
disposition of all or any part of its assets or business, or any other corporate
act or proceeding.
7.
Notices. Any notices or other communications provided for in this Agreement
shall be sufficient if in writing. In the case of the Grantee, such notices or
communications shall be effectively delivered if hand delivered to you at your
principal place of employment or if sent by
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registered or certified mail to you at the last address you have filed with the
Company. In the case of the Company, such notices or communications shall be
effectively delivered if sent by registered or certified mail to the Company at
its principal executive offices.
8.
Nontransferability of Agreement. This Agreement may not be transferred,
assigned, encumbered or pledged by you in any manner otherwise than by will or
by the laws of descent or distribution. The terms of the Plan and this
Agreement shall be binding upon your executors, administrators, heirs,
successors and assigns.
9.
Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and, except as expressly
provided in this Agreement, supersede in their entirety all prior undertakings
and agreements between you and any member of the Company Group with respect to
the same. This Agreement is governed by the internal substantive laws, but not
the choice of law rules, of the State of Delaware.
10.
Binding Effect; Survival. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
you. The provisions of Section 14 shall survive the lapse of the Forfeiture
Restrictions without forfeiture.
11.
No Rights as Shareholder. The Restricted Stock Units represent an unsecured and
unfunded right to receive a payment in shares of Common Stock and associated
DERs, which right is subject to the terms, conditions, and restrictions set
forth in this Agreement and the Plan. Accordingly, you shall have no rights as
a shareholder of the Company, including, without limitation, voting rights or
the right to receive dividends and distributions as a shareholder, with respect
to the shares of Common Stock subject to the Restricted Stock Units, unless and
until such shares of Common Stock (if any) are delivered to you as provided
herein.
12.
Withholding of Tax. To the extent that the receipt of the Restricted Stock
Units (or any DERs related thereto) or the lapse of any Forfeiture Restrictions
results in the receipt of compensation by you with respect to which any member
of the Company Group has a tax withholding obligation pursuant to applicable
law, the Company or Affiliate shall withhold from the cash and from the shares
of Common Stock otherwise to be delivered to you, that amount of cash and that
number of shares of Common Stock having a Fair Market Value equal to the
Company’s or Affiliate’s tax withholding obligations with respect to such cash
and shares of Common Stock, respectively, unless you deliver to the Company or
Affiliate (as applicable) at the time such cash or shares of Common Stock are
delivered to you, such amount of money as the Company or Affiliate may require
to meet such tax withholding obligations. No payments with respect to
Restricted Stock Units or DERs shall be made pursuant to this Agreement until
the applicable tax withholding requirements with respect to such event have been
satisfied in full. The Company is making no representation or warranty as to
the tax consequences that may result from the receipt of the Restricted Stock
Units, the treatment of DERs, the lapse of any Forfeiture Restrictions, or the
forfeiture of any Restricted Stock Units pursuant to the Forfeiture
Restrictions.
13.
Amendments. This Agreement may be modified only by a written agreement signed
by you and an authorized person on behalf of the Company who is expressly
authorized to execute such document; provided, however, notwithstanding the
foregoing, the Company may
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make any change to this Agreement without your consent if such change is not
materially adverse to your rights under this Agreement.
14.
Clawback. Notwithstanding any provisions in the Plan and this Agreement to the
contrary, any portion of the payments and benefits provided under this Agreement
or pursuant to the sale of any shares of Common Stock issued hereunder shall be
subject to any clawback or other recovery by the Company to the extent necessary
to comply with applicable law, including without limitation, the requirements of
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any
Securities and Exchange Act rule.
15.
Section 409A Compliance. Notwithstanding any provision of this Agreement to the
contrary, all provisions of this Agreement are intended to comply with Section
409A of the Code, and the applicable Treasury regulations and administrative
guidance issued thereunder (collectively, “Section 409A”), or an exemption
therefrom, and shall be interpreted, construed and administered in accordance
with such intent. Any payments under this Agreement that may be excluded from
Section 409A (due to qualifying as a short-term deferral or otherwise) shall be
excluded from Section 409A to the maximum extent possible. No payment shall be
made under this Agreement if such payment would give rise to taxation under
Section 409A to any person, and any amount payable under such provision shall be
paid on the earliest date permitted with respect to such provision by Section
409A and not before such date. Notwithstanding the foregoing, the Company makes
no representations that the payments and benefits provided under this Agreement
are exempt from, or compliant with, Section 409A and in no event shall the
Company be liable for all or any portion of any taxes, penalties, interest or
other expenses that may be incurred by you on account of non-compliance with
Section 409A.
16.
Plan Controls. By accepting this grant, you agree that the Restricted Stock
Units and DERs are granted under and governed by the terms and conditions of the
Plan and this Agreement. In the event of any conflict between the Plan and this
Agreement, the terms of the Plan shall control. Unless otherwise defined
herein, capitalized terms used and defined in the Plan shall have the same
defined meanings in this Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, as of the date first above written.
TARGA RESOURCES CORP.
By:____________________________________
Name: Joe Bob Perkins
Title: Chief Executive Officer
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|
Exhibit 10-g
2005 SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Adopted: November 19, 2004
Effective: November 18, 2005
Amended and Restated: December 12, 2019
1 PURPOSE.
The purpose of the 2005 Supplemental Employee Retirement Plan (the “SERP” or the
"Plan") is to provide Participants with retirement benefits to supplement
benefits payable pursuant to qualified group pension plans sponsored by AT&T or
an affiliate of AT&T. The Plan is a successor to the AT&T Supplemental
Retirement Income Plan (“SRIP”) that was effective January 1, 1984 and which was
amended, effective December 31, 2004, to cease accruals so that the benefits
payable under the SRIP shall be grandfathered and administered in accordance
with the provisions of the SRIP in a manner that does not invoke Section 409A of
the Code.
2 DEFINITIONS.
For purposes of this Plan, the following words and phrases shall have the
meanings indicated, unless the context clearly indicates otherwise:
Administrative Committee. "Administrative Committee" means a Committee,
consisting of the SEVP-HR and two or more other members designated by the
SEVP-HR, which shall administer the Plan.
Agreement. "Agreement" means the written agreement entered into between AT&T by
its SEVP-HR and a Participant prior to January 1, 2009 to carry out the Plan
with respect to such Participant. No Agreements are necessary for Participants
who become eligible to participate in the Plan on or after January 1, 2009.
AT&T. "AT&T" means AT&T Inc.
Beneficiary. "Beneficiary" shall mean any beneficiary or beneficiaries
designated by the Participant pursuant to the AT&T Rules for Employee
Beneficiary Designations as may hereafter be amended from time-to-time
("Rules"). If a Participant fails to execute a Beneficiary designation form
with respect to Plan benefits, his or her Beneficiary designation form with
respect to his SRIP benefits shall apply with respect to his Plan benefits. If
a Participant fails to execute a Beneficiary designation form with respect to
Plan benefits and with respect to SRIP benefits, the default provisions in the
Rules shall apply.
CEO or Chief Executive Officer. “CEO” or “Chief Executive Officer” shall mean
the Chief Executive Officer of AT&T.
Disabled or Disability. “Disabled” or "Disability" means the Participant’s (i)
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3)
months under an accident or health plan covering employees of the Participant’s
employer. The Administrative Committee, in its complete and sole discretion,
determines whether a Participant is Disabled. The Administrative Committee may
require that the Participant submit to an examination by a competent physician
or medical clinic selected by the Administrative Committee. On the basis of
such medical evidence, the determination of the Administrative Committee as to
whether or not a Participant is Disabled shall be conclusive.
Earnings. "Earnings" means for a given calendar year the Participant's: (1)
bonus earned as a short term award during the calendar year but not exceeding
200% of the target amount of such bonus (or such other portion of the bonus or
target bonus as may be determined by the Human Resources Committee of the Board
of AT&T), plus (2) base salary before reduction due to any contribution pursuant
to any deferred compensation plan or agreement sponsored by AT&T or an AT&T
affiliate, including but not limited to compensation deferred in accordance with
Sections 401(k), 125, or 132(f) of the Internal Revenue Code.
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Final Average Earnings. "Final Average Earnings" means the average of the
Participant's Monthly Earnings for the thirty-six (36) consecutive months out of
the one hundred twenty (120) months next preceding the Participant's Termination
of Employment which yields the highest average earnings. If the Participant has
fewer than thirty-six (36) months of employment, the average shall be taken over
his or her period of employment.
GAAP Rate. For a referenced calendar year, "GAAP Rate" means the interest rate
used for valuing Plan liabilities on December 31 of the immediately preceding
calendar year and for calculating periodic pension expense for the referenced
calendar year, both for purposes of AT&T's financial statement reporting
requirements.
Human Resources Committee. “Human Resources Committee” means the Human
Resources Committee of the AT&T Inc. Board of Directors.
Immediate Annuity Value of any AT&T or affiliate Qualified Pensions. “Immediate
Annuity Value of any AT&T or affiliate Qualified Pensions” shall have the
meaning as provided in Attachment B.
Immediate Annuity Value of SRIP. "Immediate Annuity Value of SRIP" shall have
the meaning as provided in Attachment C.
Immediate Annuity Value of any other AT&T or affiliate Non-Qualified Pensions
other than SERP. "Immediate Annuity Value of any AT&T or affiliate Non-Qualified
Pensions other than SERP" shall have the meaning as provided in Attachment D.
Mid-Career Hire. “Mid-Career Hire” means an individual whose Service
Commencement Date is on or after the individual’s thirty-fifth (35th) birthday.
Monthly Earnings. "Monthly Earnings" means one-twelfth (1/12) of Earnings.
Mortality Tables. "Mortality Tables" means the mortality tables as defined by
Code Section 417(e) for valuing minimum lump sum benefits payable from qualified
pension plans for the referenced period.
Officer. "Officer" shall mean an individual who is designated as an officer
level employee for compensation purposes on the records of AT&T.
Participant. "Participant" means:
(a) Any person who, as of close of business on December 31, 2004, was
employed by an AT&T affiliate and was a participant in the SRIP; or
(b) Any person who was a participant in the SRIP, terminated employment in
2004 and receives Earnings in 2005; or
(c) An Officer of AT&T or an AT&T affiliate who is designated by the Human
Resources Committee as eligible to participate in the Plan.
Notwithstanding the foregoing definition of Participant, the Human Resources
Committee, may, at any time and from time to time, exclude any person or group
of persons from being a “Participant” under this plan.
An individual’s participation in SERP shall commence as of his or her SERP
Effective Date.
Retire or Retirement. "Retire" or "Retirement" shall mean the Termination of
Employment of a Participant for reasons other than death, on or after the
earlier of the following dates: (1) the date the Participant is Retirement
Eligible or (2) the date the Participant has attained one of the following
combinations of age and service at Termination of Employment:
Years of
Service
Age
25 years or
more 50 or
older
30 years or
more Any age
Retirement Eligible. "Retirement Eligible" or "Retirement Eligibility" means
that a Participant has attained age 55 and has at least five (5) Years of
Service.
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Retirement Percent. "Retirement Percent" means the percent specified in the
Agreement with the Participant (if any) which establishes a Target Retirement
Benefit (see Section 3.1) as a percentage of Final Average Earnings. For an
individual who becomes a Participant on or after January 1, 2006, "Retirement
Percent" means 50 percent unless otherwise provided by the Human Resources
Committee of the Board of Directors of AT&T.
SERP Effective Date. “SERP Effective Date” means the date of the written
designation of the Participant’s eligibility to participate in SERP, signed by
the CEO or authorized by the Human Resources Committee, as required by the Plan.
SEVP-HR. “SEVP-HR” means AT&T’s Senior Executive Vice President responsible for
Human Resources matters.
Supplemental Retirement Income Plan or SRIP. "Supplemental Retirement Income
Plan” or “SRIP" means the AT&T Inc. Supplemental Retirement Income Plan
effective January 1, 1984.
Service Commencement Date. “Service Commencement Date” means the Participant’s
employment commencement date with AT&T or any AT&T affiliate, as such date may
be adjusted from time-to-time in accordance with rules, policies and procedures
generally applied by AT&T to adjust for breaks in service or other periods of
time, as reflected in AT&T’s or an AT&T affiliate’s records, all as determined
in the discretion of the SEVP-HR.
Service Factor. "Service Factor" means, unless otherwise agreed in writing by
the Participant and AT&T, either (a) a deduction of 1.43 percent, or .715
percent for Mid-Career Hires, multiplied by the number by which (i) thirty-five
(or thirty in the case of a Participant who is an Officer) exceeds (ii) the
number of Years of Service of the Participant, or (b) a credit of 0.715 percent
multiplied by the number by which (i) the number of Years of Service of the
Participant exceeds (ii) thirty-five (or thirty in the case of a Participant who
is an Officer). For purposes of the above computation, a deduction shall result
in the Service Factor being subtracted from the Retirement Percent whereas a
credit shall result in the Service Factor being added to the Retirement Percent.
Termination of Employment. "Termination of Employment" means the ceasing of the
Participant's employment from the AT&T controlled group of companies for any
reason whatsoever, whether voluntarily or involuntarily. A Participant will be
deemed to have realized a Termination of Employment at any time that a
Participant and the Administrative Committee reasonably anticipate that the bona
fide level of services the Participant will perform (whether as an employee or
an independent contractor) will be permanently reduced to a level that is less
than fifty percent (50%) of the average level of bona fide services the
Participant performed during the immediately preceding thirty-six (36) months
(or the entire period the Participant has provided services if the Participant
has been providing services to the AT&T controlled group of companies less than
thirty-six (36) months).
Year. A "Year" is a period of twelve (12) consecutive calendar months.
Years of Participation. "Years of Participation" means the number of each
complete Years beginning with the Participant’s SERP Effective Date through each
annual anniversary of such date.
Years of Service. "Years of Service" means the number of each complete Years of
full-time service as an employee of AT&T or an AT&T affiliate beginning with the
Participant’s Service Commencement Date through each annual anniversary of such
date, including service prior to the adoption of this Plan. “Years of Service”
shall also include, without duplication, (i.) a Participant’s Years of service
that are recognized for purposes of the BellSouth Corporation Supplemental
Employee Retirement Plan, or (ii.) a Participant’s years of service on the
Cingular Wireless payroll during the period beginning on 10/28/01 and ending on
or prior to 12/31/04 that were recognized for purposes of the Cingular Wireless
SBC Executive Transition Supplemental Retirement Income Plan, but that are not
otherwise included pursuant to the immediately preceding sentence.
3 PLAN ("SERP") BENEFITS.
3.1 SERP Benefit Formula.
With respect to (1) a Participant who was a participant in the SRIP prior to
January 1, 1998, or (2) a Participant who, prior to January 1, 1998, was an
officer of a Pacific Telesis Group ("PTG") company and became a participant in
the SRIP after January 1, 1998, the amount of such Participant’s SERP Benefit is
calculated as follows:
Final Average Earnings
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x Revised Retirement
Percentage
= Target Retirement Benefit
- Immediate Annuity Value of any AT&T or affiliate Qualified Pensions
- Immediate Annuity Value of any other AT&T or affiliate Non-Qualified Pensions
other than the SERP
= Target Benefit
- Age
Discount
= Annual Value of Life with 10 Year Certain SERP Benefit payable as a result of
Termination of Employment Before SRIP Reduction
- Immediate Annuity Value of
SRIP
= Annual Value of Life with 10 Year Certain SERP Benefit payable as a result of
Termination of Employment
With respect to all other Participants, subject to the provisions of Attachment
E, the amount of such Participant’s SERP Benefit is calculated as follows:
Final Average Earnings
X Revised Retirement
Percentage
= Target Retirement Benefit
- Age
Discount
= Discounted Target Benefit
- Immediate Annuity Value of any AT&T or affiliate Qualified Pensions
- Immediate Annuity Value of SRIP
- Immediate Annuity Value of any other AT&T or affiliate Non-Qualified
Pensions other than SERP
= Annual Value of Life with 10 Year Certain SERP Benefit payable as a result
of Termination of Employment
Where in both of the above cases the following apply:
(a) Revised Retirement Percentage = Retirement Percent + Service
Factor
(b) For purposes of determining the Service Factor, the Participant's
actual Years of Service as of the date of Termination of Employment, to the day,
shall be used.
(c) For purposes of determining the Final Average Earnings, the
Participant's Earnings history as of the date of Termination of Employment shall
be used.
(d) Age Discount means the Participant's SERP Benefit shall be
decreased by five-tenths of one percent (.5%) for each month that the date of
the Participant’s Termination of Employment precedes the date on which the
Participant will attain age 60.
Notwithstanding the foregoing, if at the time of Termination of Employment the
Participant is, or has been within the one year period immediately preceding the
Participant's Termination of Employment, an Officer with 30 or more Years of
Service such Participant's Age Discount shall be zero.
Except to true up for an actual short term award paid following Termination of
Employment, there shall be no recalculation of the value of a Participant's SERP
Benefit hereunder following a Participant's Termination of Employment.
3.2. Vesting.
Notwithstanding any other provision of this Plan:
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(a) upon any Termination of Employment of the Participant for a
reason other than death or Disability, AT&T shall have no obligation to the
Participant under this Plan if the Participant has less than five (5) Years of
Service or, for Participants who are informed, in writing, of their SERP
eligibility on or after September 28, 2006, less than four (4) Years of
Participation, at the time of Termination of Employment; provided, however, for
any Participant whose Termination of Employment occurs on September 30,2010 and
who timely executes and does not revoke a Release and Waiver in favor of the
Company, shall be deemed to satisfy the Years of Service and Years of
Participation vesting requirements of this Section as of their Termination of
Employment; and
(b) the terms and conditions set forth in Section 8.2 shall
apply to any benefits accrued on or after January 1, 2010, and in order for a
Participant to accrue (or collect) such Plan benefits on or after January 1,
2010, the Participant must comply with the terms and conditions set forth in
Section 8.2.
4 ELECTION AND FORM OF DISTRIBUTION OF SERP BENEFITS.
4.1 Normal Form.
The normal form of a Participant's benefits hereunder shall be a Life with
10-Year Certain Benefit as described in Section 4.2(a).
4.2 Election Alternatives.
Notwithstanding the normal form for distribution of a Participant’s SERP
Benefits, a Participant may elect one of the following Benefit Payout
Alternatives:
(a) Life with a 10-Year Certain Benefit. An annuity payable during
the longer of (i) the life of the Participant or (ii) the 10-year period
commencing on the Participant’s Termination of Employment and ending on the day
next preceding the tenth anniversary of such date (the "Life With 10-Year
Certain Benefit"). If a Participant who is receiving a Life with 10-Year
Certain Benefit dies prior to the expiration of the 10-year period described in
this Section 4.2(a), the Participant's Beneficiary shall be entitled to receive
the remaining Life With 10-Year Certain Benefit installments which would have
been paid to the Participant had the Participant survived for the entire such
10-year period.
(b) Joint and 100% Survivor Benefit. A joint and one hundred percent
(100%) survivor annuity payable for life to the Participant and at his or her
death to his or her Beneficiary, in an amount equal to one hundred percent
(100%) of the amount payable during the Participant's life, for life (the "Joint
and 100% Survivor Benefit").
(c) Joint and 50% Survivor Benefit. A joint and fifty percent (50%)
survivor annuity payable for life to the Participant and at his or her death to
his or her Beneficiary, in an amount equal to fifty percent (50%) of the amount
payable during the Participant's life, for life (the "Joint and 50% Survivor
Benefit").
(d) Lump Sum Benefit. A lump sum benefit, which shall apply only if
the Participant has attained the age of fifty-five (55) years as of his or her
Termination of Employment. If a Participant elects a lump sum benefit but
realizes a Termination of Employment prior to attaining age fifty-five (55), the
Participant’s SERP Benefit shall be paid as provided in Section 4.2(a), 4.2(b)
or 4.2(c), as elected or deemed elected by the Participant.
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The Benefit Payout Alternatives described in Section 4.2(b), 4.2(c) and 4.2(d)
shall be the actuarially determined equivalent (using the same reasonable
actuarial assumptions and methods for valuing each Benefit Payout Alternative as
determined by the SEVP-HR in his or her complete and sole discretion) of the
Life With 10-Year Certain Benefit that is converted by such election. The
amount of a Participant's lump sum benefit shall be calculated as of the
Participant's Termination of Employment by applying the Mortality Tables and the
GAAP Rate, both as in effect for the calendar year immediately preceding the
calendar year of the Participant’s Termination of Employment, but using the
Participant’s age, Years of Service and other factors as of the Participant’s
Termination of Employment.
4.3 Distribution Election.
(a) Individual Who Is A Participant On or Before December 31, 2008.
An individual who was a Participant on or before December 31, 2008 may make an
irrevocable election of a Benefit Payout Alternative before the earlier of
December 31 of the year immediately preceding his or her Termination of
Employment or December 31, 2008 by delivery of such election, in writing,
telecopy, email or in another electronic format, pursuant to or as instructed by
the SEVP-HR (as determined by the SEVP-HR in his or her sole and absolute
discretion).
(b) Individual Who Becomes A Participant After December 31, 2008. An
individual who becomes a Participant after December 31, 2008 may make an
irrevocable election of a Benefit Payout Alternative no later than the thirtieth
(30th) day immediately following the Participant’s SERP Effective Date by
delivery of such election in writing, telecopy, email or in another electronic
format, pursuant to or as instructed by the SEVP-HR (as determined by the
SEVP-HR in his or her sole and absolute discretion).
(c) Failure to Timely Make a Distribution Election. If a Participant
fails to make a timely election of a Benefit Payout Alternative as provided in
Section 4.3(a) or 4.3(b), such Participant shall be deemed to have elected and
such Participant's form of benefit shall be the Life With 10-Year Certain
Benefit described in Section 4.2(a).
(d) Death of or Divorce from Annuitant During Participant’s Lifetime.
Notwithstanding any other provision of this Plan to the contrary, in the event
of the death of a designated annuitant during the life of the Participant, the
Participant's election to have a Benefit Payout Alternative described in Section
4.2(b) or 4.2(c) shall, without any action by the Participant, be revoked, and
the Participant’s benefit, or remaining benefit, under the Plan, as the case may
be, shall be paid as provided in Section 4.2(a). Any conversion of benefit from
one form to another pursuant to the provisions of this paragraph shall use the
same reasonable actuarial assumptions and methods for valuing each annuity form
of benefit before and after the death of the designated annuitant and shall be
subject to actuarial adjustment (as determined by the SEVP-HR in his or her
complete and sole discretion) such that the Participant's new benefit is the
actuarial equivalent of the Participant's remaining prior form of benefit.
Payments pursuant to Participant's new form of benefit shall be effective
commencing with the first monthly payment for the month following the death of
the annuitant.
Notwithstanding any other provision of this Plan to the contrary, in the event
of the divorce or legal separation of the Participant, the Participant’s
election to have a Benefit Payout Alternative described in Section 4.2(b) or
4.2(c), with a survivor annuity for the benefit of the Participant's former
spouse as Beneficiary, shall, without any action by the Participant, be revoked,
and the Participant's benefit, or remaining benefit, under the Plan, as the case
may be, shall be paid as provided in Section 4.2(a) (using the same reasonable
actuarial assumptions and methods for valuing each annuity form of benefit
before and after the divorce or legal separation and shall be subject to
actuarial adjustment (as determined by the SEVP-HR in his or her complete and
sole discretion). In such event, the 10-Year period as described in Section
4.2(a) shall be the same 10-year period as if such form of benefit was the form
of benefit originally selected and the expiration date of such period shall not
be extended beyond its original expiration date. Payments pursuant to
Participant’s new form of benefit shall be effective commencing with the first
monthly payment following notice from the Participant to the SEVP-HR after the
divorce (or legal separation) becomes final.
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(e) Special Provisions for Lump Sum Benefit Election. A Participant
who elects a lump sum benefit under Section 4.2(d) must, contemporaneous with
such Lump Sum Benefit election, elect a specific number of year(s), not to
exceed twenty (20) years, following his or her Termination of Employment upon
which the lump sum benefit (including any interest accrued thereon) shall be
distributed; provided, however,
(i) the Participant may not receive more than thirty percent (30%) of
his or her lump sum benefit (excluding any interest thereon) until the third
(3rd) anniversary of his or her Termination of Employment; provided, however, if
the Participant is age sixty (60) or older as of his or her Termination of
Employment, the Participant, if elected in his or her timely filed election of a
Benefit Payout Alternative, may receive one hundred percent (100%) of his or her
lump sum benefit upon the day that is six (6) months following his or her
Termination of Employment if he or she agrees, in writing, substantially in the
form provided in Attachment A, not to compete with an Employer Business within
the meaning of Section 8.2 for a period of three (3) years from such
Participant’s Termination of Employment and further agrees that if he or she
fails to abide by such agreement, the non-compete agreement is challenged, or
the non-compete agreement is unenforceable, he or she shall forfeit all benefits
hereunder and repay the lump sum benefit to AT&T; and
(ii) prior to distribution of the Participant’s lump sum benefit,
interest on such lump sum benefit shall accrue and shall be added to the
Participant’s lump sum benefit or distributed monthly, as elected by the
Participant in his or her election of a Benefit Payout Alternative.
A Participant’s lump sum benefit payment schedule must comply with the rules for
payment schedules as adopted by the SEVP-HR (as determined by the SEVP-HR in his
or her sole and absolute discretion), which, for example, may require payment of
principal to be made no more frequently than once per calendar year.
If the payment schedule elected by a Participant does not comply with the rules
for payment schedules, (i) thirty percent (30%) of such Participant’s lump sum
benefit shall be paid to the Participant upon the date that is six (6) months
following the Participant’s Termination of Employment, and (ii) the remaining
seventy percent (70%) shall be paid to the Participant on the third (3rd)
anniversary of such Participant’s Termination of Employment.
(f) Lump Sum Benefit or Frozen Account Balance. From and after a
Participant’s Termination of Employment, the SEVP-HR shall maintain records of a
lump sum benefit account balance for each Participant who elected a lump sum
benefit. During such period of time that all or any portion of a Participant’s
lump sum benefit is not paid, interest shall be credited using the same
methodology used by AT&T for financial accounting purposes using the GAAP Rate
that was used to calculate such Participant’s lump sum benefit. Payments of
principal and interest shall be deducted from the lump sum benefit account
balance.
A Participant whose employment has not terminated may change a prior
distribution election at any time on or before December 31, 2008, provided,
however, if the Participant’s employment terminates for any reason in the
calendar year in which the new distribution election is filed, such new election
shall be null and void. In the event the Participant’s new election is null and
void, the Participant’s prior election, if any, shall apply. If there is no
prior election, the Plan’s default distribution provisions shall apply.
5 DEATH OR DISABILITY BENEFITS.
5.1 Death Following Termination of Employment.
If a Participant who has commenced payment of his or her SERP benefit hereunder
dies, his or her Beneficiary shall be entitled to receive the remaining SERP
benefit in accordance with the Benefit Payout Alternative elected or deemed
elected by the Participant.
5.2 Death Prior to Termination of Employment
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If a Participant dies prior to his or her Termination of Employment, a
pre-retirement death benefit will be calculated and paid as though the
Participant had Retired (determined without regard to the 5 Years of Service or
the 4 Years of Participation requirements) on the day prior to the date of
death. The pre-retirement death benefit shall be paid at such time and in such
form as timely elected or deemed elected by the Participant; provided, if the
Participant elected or is deemed to have elected any form of an annuity, such
pre-retirement death benefit shall be paid as a Beneficiary Life Annuity (as
such term is hereinafter described) based on the life expectancy of the
Beneficiary, and, if the Participant elected or is deemed to have elected a Life
with a 10-Year Certain Benefit, such Beneficiary Life Annuity shall continue for
the longer of (i) the Beneficiary’s life, or (ii) the 10 year period commencing
on the Participant’s death. If paid as a Beneficiary Life Annuity, such benefit
shall be the actuarially determined equivalent using the same reasonable
actuarial assumptions and methods (as determined by the SEVP-HR in his or her
complete and sole discretion) of the Life With 10-Year Certain Benefit that
would have been paid to the Participant had he or she Retired on the day
immediately prior to his or her death. If the Participant had timely elected
and qualified to receive a Lump Sum Benefit, it shall be calculated in the same
manner as provided in Section 4.2 as if the Participant were alive; e.g.,
calculated as of the Participant's death applying the Mortality Tables and the
GAAP Rate, both as in effect for the calendar year immediately preceding the
calendar year of the Participant’s death, but using the Participant’s age, Years
of Service and other factors as of the Participant’s date of death.
5.3 Disability.
Upon a Participant's Termination of Employment and contemporaneous qualification
for receipt of long term disability benefits under an AT&T or AT&T affiliate
sponsored long term disability benefit plan in which the Participant
participates prior to being Retirement Eligible (without regard to the 5 Years
of Service or 4 Years of Participation requirements), the Participant will
continue to accrue Years of Service during such disability until the earliest of
his or her:
(a) Recovery from Disability,
(b) Retirement (determined without regard to the 5 Years of Service or
4 Years of Participation requirements), or
(c) Death.
Upon the occurrence of either (a) Participant's recovery from Disability prior
to his or her Retirement Eligibility if Participant does not return to
employment, or (b) Participant's Retirement (determined without regard to the 5
Years of Service or 4 Years of Participation requirements), the Participant
shall be entitled to receive a SERP Benefit as if he or she realized a
Termination of Employment as of the date of such occurrence.
For purposes of calculating the foregoing benefit, the Participant's Final
Average Earnings shall be determined using his or her Earnings history as of the
date of his or her Disability.
If a Participant who continues to have a Disability dies prior to his or her
Retirement Eligibility (without regard to the 5 Years of Service or 4 Years of
Participation requirements), the Participant will be treated in the same manner
as if he or she had died while in employment (See Section 5.2).
6. PAYMENT OF BENEFITS.
6.1 Commencement of Payments.
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(a) Except as provided in Section 5.3, benefit payments shall commence
pursuant to the Benefit Payout Alternative elected by the Participant in his or
her Agreement on the date that is six (6) months following his or her
Termination of Employment; provided, however, if the Participant dies after
Termination of Employment and prior to the lapse of such six (6) month period,
benefit payments shall commence upon the Participant’s death. If a Participant
elected (or is deemed to have elected) an annuity form of benefit under Section
4.2(a), 4.2(b) or 4.2(c), the aggregate monthly amount that would be paid
between the Participant’s Termination of Employment through the date that
benefit payments actually commence, shall be paid in a lump sum on the date that
benefit payments actually commence hereunder. In addition, during the period of
time between a Participant’s Termination of Employment and the date that annuity
payments hereunder actually commence, interest shall be credited on the withheld
annuity amounts for such period of time that each annuity payment is withheld.
The credited interest shall be paid in a lump sum on the date that payments
hereunder actually commence. Interest shall be credited using the GAAP Rate in
effect for the calendar year immediately preceding the calendar year of the
Participant’s Termination of Employment.
(b) Notwithstanding the designation of a specific date for
commencement of payment of a distribution hereunder, commencement of payments
under this Plan may be delayed for administrative reasons in the discretion of
the SEVP-HR, but shall begin not later than sixty (60) days following the date
upon which payment(s) would otherwise commence under this Plan. A Participant
shall not have the right to designate or participate in the decision as to the
taxable year of benefit commencement.
6.2 Withholding; Unemployment Taxes.
(a) A payment may be made from the Plan to reflect the payment of
state, local, or foreign tax obligations arising from participation in the Plan
that apply to an amount deferred under the Plan before the amount is paid or
made available to a Participant (the “State, Local, or Foreign Tax Amount”).
Such payment may not exceed the amount of such taxes due as a result of
participation in the Plan. Such payment may be made by distributions to the
Participant in the form of withholding pursuant to provisions of applicable
state, local, or foreign law or by distribution directly to the Participant.
Additionally, a payment may be made from the Plan to pay the income tax at
source on wages imposed under Code Section 3401 as a result of the payment of
the State, Local, or Foreign Tax Amount and to pay the additional income tax at
source on wages attributable to such additional Code Section 3401 wages and
taxes. However, the total payment under this Section 6.2(a) shall not exceed
the aggregate of the State, Local, or Foreign Tax Amount and the income tax
withholding related to such State, Local, or Foreign Tax Amount.
(b) A payment may be made from the Plan to pay the Federal Insurance
Contributions Act tax imposed by Code Sections 3101, 3121(a), and 3121(v)(2) on
compensation deferred under the Plan (the “FICA Amount”). Additionally, a
payment may be made from the Plan to pay the income tax at source on wages
imposed under Code Section 3401 or the corresponding withholding provisions of
applicable state, local or foreign tax laws as a result of the payment of the
FICA Amount and to pay the additional income tax at source on wages attributable
to the pyramiding section 3401 wages and taxes. However, the total payment
under this Section 6.2(b) shall not exceed the aggregate of the FICA Amount and
the income tax withholding related to such FICA Amount.
6.3 Recipients of Payments; Designation of Beneficiary.
All payments to be made under the Plan shall be made to the Participant during
his or her lifetime, provided that if the Participant dies prior to the
completion of such payments, then all subsequent payments under the Plan shall
be made to the Participant's Beneficiary or Beneficiaries.
--------------------------------------------------------------------------------
In the event of the death of a Participant, distributions/benefits under this
Plan shall pass to the Beneficiary (ies) designated by the Participant in
accordance with this Plan and the Rules.
6.4 No Other Benefits.
No benefits shall be paid hereunder to the Participant or his or her Beneficiary
except as specifically provided herein.
6.5 Small Benefit.
Notwithstanding any election made by the Participant, the SEVP-HR in his or her
sole discretion may pay any benefit in the form of a lump sum payment if (A) the
lump sum equivalent amount is or would be less than the applicable dollar amount
under Code Section 402(g)(1)(B) when payment of such benefit would otherwise
commence, and (B) the payment of the lump sum equivalent amount results in the
termination and liquidation of the entirety of the Participant’s interest under
the Plan and under any other plan that is considered a single nonqualified
deferred compensation plan under Treasury Regulations Section 1.409A-1(c)(2).
7. CONDITIONS RELATED TO BENEFITS.
7.1 Administration of Plan.
The Administrative Committee and the SEVP-HR with respect to specific functions
identified in the Plan, shall be the sole administrators of the Plan and will,
in their discretion, administer, interpret, construe and apply the Plan in
accordance with its terms. The Administrative Committee or the SEVP-HR shall
further establish, adopt or revise such rules and regulations as each may deem
necessary or advisable for the administration of the Plan. The Administrative
Committee shall serve as the Plan’s “administrator” within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, and regulations
thereunder (“ERISA”). All decisions of the Administrative Committee or the
SEVP-HR shall be final and binding unless the Board of Directors should
determine otherwise.
7.2 No Right to AT&T Assets.
Neither a Participant nor any other person shall acquire by reason of the Plan
any right in or title to any assets, funds or property of any AT&T company
whatsoever including, without limiting the generality of the foregoing, any
specific funds or assets which AT&T, in its sole discretion, may set aside in
anticipation of a liability hereunder, nor in or to any policy or policies of
insurance on the life of a Participant owned by AT&T. No trust shall be created
in connection with or by the execution or adoption of this Plan or any
Agreement, and any benefits which become payable hereunder shall be paid from
the general assets of AT&T. A Participant shall have only a contractual right
to the amounts, if any, payable hereunder unsecured by any asset of AT&T.
7.3 Trust Fund.
AT&T shall be responsible for the payment of all benefits provided under the
Plan. At its discretion, AT&T may establish one or more trusts, for the purpose
of providing for the payment of such benefits. Such trust or trusts may be
irrevocable, but the assets thereof shall be subject to the claims of AT&T's
creditors. To the extent any benefits provided under the Plan are actually paid
from any such trust, AT&T shall have no further obligation with respect thereto,
but to the extent not so paid, such benefits shall remain the obligation of, and
shall be paid by AT&T.
7.4 No Employment Rights.
Nothing herein shall constitute a contract of continuing employment or in any
manner obligate any AT&T company to continue the service of a Participant, or
obligate a Participant to continue in the service of any AT&T company and
nothing herein shall be construed as fixing or regulating the compensation paid
to a Participant.
7.5 Modification or Termination of Plan.
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This Plan may be modified or terminated at any time in accordance with the
provisions of AT&T's Schedule of Authorizations. A modification may affect
present and future Participants, provided that any prospective amendment or
restatement of the Plan shall not apply to any benefits accrued prior to such
amendment or restatement. AT&T also reserves the sole right to terminate at
any time any or all Agreements. In the event of termination of the Plan or of a
Participant's Agreement, a Participant shall be entitled to benefits hereunder,
if prior to the date of termination of the Plan or of his or her Agreement, such
Participant has attained 5 Years of Service and, if applicable, 4 Years of
Participation, in which case, regardless of the termination of the
Plan/Participant's Agreement, such Participant shall be entitled to benefits at
such time as provided in and as otherwise in accordance with the Plan and his or
her Agreement, provided, however, a Participant's benefit shall be computed as
if the Participant had realized a Termination of Employment as of the date of
termination of the Plan or of his or her Agreement; provided further, however, a
Participant's service subsequent to Plan/Agreement termination shall be
recognized for purposes of reducing or eliminating the Age discount provided for
by Section 3.1(d). No amendment, including an amendment to this Section 7.5,
shall be effective, without the written consent of a Participant, to alter, to
the detriment of such Participant, the benefits described in this Plan as
applicable to such Participant as of the effective date of such amendment. For
purposes of this Section 7.5, an alteration to the detriment of a Participant
shall mean a reduction in the amount payable hereunder to a Participant to which
such Participant would be entitled if such Participant realized a Termination of
Employment at such time, or any change in the form of benefit payable hereunder
to a Participant to which such Participant would be entitled if such Participant
realized a Termination of Employment at such time. Any amendment which reduces
a Participant's benefit hereunder to adjust for a change in his or her pension
benefit resulting from an amendment to any company-sponsored defined benefit
pension plan which changes the pension benefits payable to all employees, shall
not require the Participant's consent. Written notice of any amendment shall be
given to each Participant.
7.6 Offset.
If at the time payments or installments of payments are to be made hereunder, a
Participant or his or her Beneficiary or both are indebted to AT&T or any AT&T
affiliate as a result of debt incurred in the ordinary course of the employment
relationship between the Participant and the AT&T company, then, annually, up to
$5,000 of the payments remaining to be made to the Participant or his or her
Beneficiary or both, may, at the discretion of the SEVP-HR, be reduced by the
amount of such indebtedness; provided, however, that the reduction must be made
at the same time and in the same amount as the debt otherwise would have been
due and collected from the Participant or his or her Beneficiary; provided,
further, however, that an election by the Board of Directors not to reduce any
such payment or payments shall not constitute a waiver of such AT&T company's
claim for such indebtedness.
7.7 Change in Status.
In the event of a change in the employment status of a Participant to a status
in which he is no longer an Participant, the Participant shall immediately cease
to be eligible for any benefits under this Plan except such benefits as had
previously vested. Only Participant's Years of Service and Earnings history
prior to the change in his employment status shall be taken into account for
purposes of determining Participant's vested benefits hereunder.
7.8 Special Provisions.
This Plan shall be subject to the special provisions contained in Attachments F,
G, H, and I.
8. MISCELLANEOUS.
8.1 Nonassignability.
Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt of the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
8.2 Non-Competition.
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AT&T would be unwilling to provide Plan benefits but for the loyalty conditions
and covenants set forth in this Section 8.2, and the conditions and covenants
herein are a material inducement to AT&T’s willingness to sponsor the Plan and
to offer Plan benefits for the Participants on or after January 1, 2010.
Accordingly, as a condition of accruing and/or receiving any Plan benefits on or
after January 1, 2010, each Participant is deemed to agree that he shall not,
without obtaining the written consent of AT&T in advance, participate in
activities that constitute engaging in competition with AT&T or engaging in
conduct disloyal to AT&T, as those terms are defined in this Section 8.2.
Further, notwithstanding any other provision of this Plan, all benefits provided
under the Plan with respect to a Participant shall be subject to the enforcement
provisions of this Section 8.2 if the Participant, without the consent of AT&T,
participates in an activity that constitutes engaging in competition with AT&T
or engaging in conduct disloyal to AT&T, as so defined below. Furthermore, for
benefits accrued before January 1, 2010, the provisions of this Section 8.2 as
in effect immediately before such date shall also be applicable to the
Participant’s Plan benefits, with such provisions and those herein being each
separately applicable and effective.
(a) Definitions. For purposes of this Section 8.2 and of the Plan
generally:
(i) an “Employer Business” shall mean AT&T, any subsidiary of AT&T, or any
business in which AT&T or a subsidiary or affiliated company of AT&T has a
substantial interest or joint venture interest;
(ii) “engaging in competition with AT&T” shall mean, while employed by an
Employer Business or within two (2) years after the Participant’s Termination of
Employment, engaging by the Participant in any business or activity in all or
any portion of the same geographical market where the same or substantially
similar business or activity is being carried on by an Employer business.
“Engaging in competition with AT&T” shall not include owning a nonsubstantial
publicly traded interest as a shareholder in a business that competes with an
Employer Business. However, “engaging in competition with AT&T shall include
representing or providing consulting services to, or being an employee or
director of, any person or entity that is engaged in competition with any
Employer Business or that takes a position adverse to any Employer Business.
(iii) “engaging in disloyal conduct disloyal to AT&T” means, while employed by
an Employer Business or within two (2) years after the Participant’s
Termination of Employment, (i) soliciting for employment or hire, whether as an
employee or as an independent contractor, for any business in competition with
an Employer Business, any person employed by AT&T or its affiliates during the
one (1) year prior to Participant’s Termination of Employment, whether or not
acceptance of such position would constitute a breach of such person’s
contractual obligations to AT&T and its affiliates; (ii) soliciting,
encouraging, or inducing any vendor or supplier with which Participant had
business contact on behalf of any Employer Business during the two (2) years
prior to Participant’s Termination of Employment, to terminate, discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or
its affiliate; or (iii) soliciting, encouraging, or inducing any customer or
active prospective customer with whom Participant had business contact, whether
in person or by other media (“Customer”), on behalf of any Employer Business
during the two (2) years prior to Participant’s Termination of Employment, to
terminate, discontinue, renegotiate, reduce, or otherwise cease or modify its
relationship with any Employer Business, or to purchase competing goods or
services from a business competing with any Employer Business, or accepting or
servicing business from such Customer on behalf of himself or any other
business. “Engaging in conduct disloyal to AT&T” also means, disclosing
Confidential Information to any third party or using Confidential Information,
other than for an Employer Business, or failing to return any Confidential
Information to the Employer Business following termination of employment.
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(iv) “Confidential Information” shall mean all information belonging to, or
otherwise relating to, an Employer Business, which is not generally known,
regardless of the manner in which it is stored or conveyed to Participant, and
which the Employer Business has taken reasonable measures under the
circumstances to protect from unauthorized use or disclosure. Confidential
Information includes trade secrets as well as other proprietary knowledge,
information, know-how, and non-public intellectual property rights, including
unpublished or pending patent applications and all related patent rights,
formulae, processes, discoveries, improvements, ideas, conceptions, compilations
of data, and data, whether or not patentable or copyrightable and whether or not
it has been conceived, originated, discovered, or developed in whole or in part
by Participant. For example, Confidential Information includes, but is not
limited to, information concerning the Employer Business’ business plans,
budgets, operations, products, strategies, marketing, sales, inventions,
designs, costs, legal strategies, finances, employees, customers, prospective
customers, licensees, or licensors; information received from third parties
under confidential conditions; or other valuable financial, commercial,
business, technical or marketing information concerning the Employer Business,
or any of the products or services made, developed or sold by the Employer
Business. Confidential Information does not include information that (i) was
generally known to the public at the time of disclosure; (ii) was lawfully
received by Participant from a third party; (iii) was known to Participant prior
to receipt from the Employer Business; or (iv) was independently developed by
Participant or independent third parties; in each of the foregoing
circumstances, this exception applies only if such public knowledge or
possession by an independent third party was without breach by Participant or
any third party of any obligation of confidentiality or non-use, including but
not limited to the obligations and restrictions set forth in this Plan.
(b) Forfeiture of Benefits. A Participant’s right to receive benefits
accrued on or after January 1, 2010 shall terminate and no benefits accrued on
or after January 1, 2010 shall be provided under this Plan if the Administrative
Committee determines that, within the time period and without the written
consent specified, Participant has been either engaging in competitive activity
with AT&T or engaging in conduct disloyal to AT&T.
(c) Equitable Relief. The parties recognize (i) that any
Participant’s breach of any of the covenants in this Section 8.2 will cause
irreparable injury to AT&T, and will represent a failure of the consideration
under which AT&T (in its capacity as creator and sponsor of the Plan) agreed to
provide the Participant with the opportunity to accrue or receive Plan benefits
on and after January 1, 2010, and (ii) that monetary damages would not provide
AT&T with an adequate or complete remedy that would warrant AT&T’s continued
sponsorship of the Plan and payment of Plan benefits for all Participants.
Accordingly, in the event of a Participant’s actual or threatened breach of
covenants in this Section 8.2, the Administrative Committee, in addition to all
other rights and acting as a fiduciary under ERISA on behalf of all
Participants, shall have a fiduciary duty (in order to assure that AT&T receives
fair and promised consideration for its continued Plan sponsorship and funding)
to seek an injunction restraining the Participant from breaching the covenants
in this Section 8.2. To enforce its repayment rights with respect to a
Participant, the Plan shall have a first priority, equitable lien on all Plan
benefits that are paid to the Participant. In addition, AT&T shall pay for any
Plan expenses that the Administrative Committee incurs hereunder, and shall be
entitled to recover from the Participant its reasonable attorneys’ fees and
costs incurred in obtaining such injunctive remedies. In the event the
Administrative Committee succeeds in enforcing the terms of this Section through
a written settlement with the Participant or a court order granting an
injunction hereunder, the Participant shall be entitled to collect Plan benefits
prospectively, if the Participant is otherwise entitled to such benefits, net of
any fees and costs assessed pursuant hereto (which fees and costs shall be paid
to AT&T as a repayment on behalf of the Participant), provided that the
Participant complies with said settlement or injunction.
(d) Uniform Enforcement. In recognition of AT&T’s need for
nationally uniform standards for the Plan administration, it is an absolute
condition in consideration of any Participant’s accrual or receipt of benefits
under the Plan on or after January 1, 2010 that each and all of the following
conditions apply to all Participants and to any benefits that are accrued on or
after January 1, 2010 and that are thereafter paid or are payable under the
Plan:
(i)
ERISA shall control all issues and controversies hereunder, and the
Administrative Committee shall serve for purposes hereof as a “fiduciary” of the
Plan and as its “named fiduciary” within the meaning of ERISA.
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(ii)
All litigation between the parties relating to this Section shall occur in
federal court, which shall have exclusive jurisdiction, any such litigation
shall be held in the United States District Court for the Northern District of
Texas, and the only remedies available with respect to the Plan shall be those
provided under ERISA.
(iii)
If the Administrative Committee determines in its sole discretion either (I)
that AT&T or its affiliate that employed the Participant terminated the
Participant’s employment for cause, or (II) that equitable relief enforcing the
Participant’s covenants under this Section 8.2 is either not reasonably
available, not ordered by a court of competent jurisdiction, or circumvented
because the Participant has sued in state court, or has otherwise sought
remedies not available under ERISA, then in any and all of such instances the
Participant shall not be entitled to collect any Plan benefits accrued on or
after January 1, 2010, and if any such Plan benefits have been paid to the
Participant, the Participant shall immediately repay all such Plan benefits to
the Plan (which shall be used to pay Plan administrative expenses or Plan
benefits) upon written demand from the Administrative Committee. Furthermore,
the Participant shall hold AT&T and its affiliates harmless from any loss,
expense, or damage that may arise from any of the conduct described in clauses
(I) and (II) hereof.
8.3 Notice.
Any notice required or permitted to be given to the Administrative Committee or
the SEVP-HR under the Plan shall be sufficient if in writing and hand delivered,
or sent by certified mail, to the principal office of AT&T, directed to the
attention of the SEVP-HR. Any notice required or permitted to be given to a
Participant shall be sufficient if in writing and hand delivered, or sent by
certified mail, to Participant at Participant's last known mailing address as
reflected on the records of his or her employing company or the company from
which the Participant incurred a Termination of Employment, as applicable.
Notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark or on the receipt for
certification.
8.4 Validity.
In the event any provision of this Plan is held invalid, void or unenforceable,
the same shall not affect, in any respect whatsoever, the validity of any other
provision of this plan.
8.5 Applicable Law.
This Plan shall be governed and construed in accordance with ERISA, and the laws
of the State of Texas to the extent not preempted by ERISA.
9. CLAIMS AND APPEAL.
9.1 Claims.
A person who believes that he or she is being denied a benefit to which he or
she is entitled under this Plan (hereinafter referred to as a “Claimant”) may
file a written request for such benefit with the Executive Compensation
Administration Department, setting forth his or her claim. The request must be
addressed to the AT&T Executive Compensation Department at its then principal
place of business.
9.2 Claim Decision.
Upon receipt of a claim, the AT&T Executive Compensation Department shall review
the claim and provide the Claimant with a written notice of its decision within
a reasonable period of time, not to exceed ninety (90) days, after the claim is
received. If the AT&T Executive Compensation Department determines that special
circumstances require an extension of time beyond the initial ninety (90)-day
claim review period, the AT&T Executive Compensation Department shall notify the
Claimant in writing within the initial ninety (90)-day period and explain the
special circumstances that require the extension and state the date by which the
AT&T Executive Compensation Department expects to render its decision on the
claim. If this notice is provided, the AT&T Executive Compensation Department
may take up to an additional ninety (90) days (for a total of one hundred eighty
(180) days after receipt of the claim) to render its decision on the claim.
--------------------------------------------------------------------------------
If the claim is denied by the AT&T Executive Compensation Department, in whole
or in part, the AT&T Executive Compensation Department shall provide a written
decision using language calculated to be understood by the Claimant and setting
forth: (i) the specific reason or reasons for such denial; (ii) specific
references to pertinent provisions of this Plan on which such denial is based;
(iii) a description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation of why such material or
such information is necessary; (iv) a description of the Plan’s procedures for
review of denied claims and the steps to be taken if the Claimant wishes to
submit the claim for review; (v) the time limits for requesting a review of a
denied claim under Section 9.3 and for conducting the review under Section 9.4;
and (vi) a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA if the claim is denied following review under Section
9.4.
9.3 Request for Review.
Within sixty (60) days after the receipt by the Claimant of the written decision
on the claim provided for in Section 9.2, the Claimant may request in writing
that the Administrative Committee review the determination of the AT&T Executive
Compensation Department. Such request must be addressed to the Administrative
Committee at the address for giving notice pursuant to Section 8.3. To assist
the Claimant in deciding whether to request a review of a denied claim or in
preparing a request for review of a denied claim, a Claimant shall be provided,
upon written request to the Administrative Committee and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim. The Claimant or his or her duly authorized
representative may, but need not, submit a statement of the issues and comments
in writing, as well as other documents, records or other information relating to
the claim for consideration by the Administrative Committee. If the Claimant
does not request a review of the AT&T Executive Compensation Department’s
decision by the Administrative Committee within such sixty (60)-day period, the
Claimant shall be barred and estopped from challenging the determination of the
AT&T Executive Compensation Department.
9.4 Review of Decision.
Review of Decision. Within sixty (60) days after the Administrator’s receipt of
a request for review, the Administrative Committee will review the decision of
the AT&T Executive Compensation Department. If the Administrative Committee
determines that special circumstances require an extension of time beyond the
initial sixty (60)-day review period, the Administrative Committee shall notify
the Claimant in writing within the initial sixty (60)-day period and explain the
special circumstances that require the extension and state the date by which the
Administrative Committee expects to render its decision on the review of the
claim. If this notice is provided, the Administrative Committee may take up to
an additional sixty (60) days (for a total of one hundred twenty (120) days
after receipt of the request for review) to render its decision on the review of
the claim.
During its review of the claim, the Administrative Committee shall:
(a) Take into account all comments, documents, records, and
other information submitted by the Claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial
review of the claim conducted pursuant to Section 9.2;
(b) Follow reasonable procedures to verify that its benefit
determination is made in accordance with the applicable Plan documents; and
(c) Follow reasonable procedures to ensure that the applicable
Plan provisions are applied to the Participant to whom the claim relates in a
manner consistent with how such provisions have been applied to other
similarly-situated Participants.
After considering all materials presented by the Claimant, the Administrative
Committee will render a decision, written in a manner designed to be understood
by the Claimant. If the Administrative Committee denies the claim on review, the
written decision will include (i) the specific reasons for the decision; (ii)
specific references to the pertinent provisions of this Plan on which the
decision is based; (iii) a statement that the Claimant is entitled to receive,
upon request to the Administrative Committee and free of charge, reasonable
access to, and copies of, all documents, records, and other information relevant
to the claim; and (iv) a statement of the Claimant’s right to bring a civil
action under Section 502(a) of ERISA.
--------------------------------------------------------------------------------
The Administrative Committee shall serve as the final review committee under the
Plan and shall have sole and complete discretionary authority to administer,
interpret, construe and apply the Plan provisions, and determine all questions
of administration, interpretation, construction, and application of the Plan,
including questions and determinations of eligibility, entitlement to benefits
and the type, form and amount of any payment of benefits, all in its sole and
absolute discretion. The Committee shall further have the authority to determine
all relevant facts and related issues, and all documents, records and other
information relevant to a claim conclusively for all parties, and in accordance
with the terms of the documents or instruments governing the Plan. Decisions by
the Administrative Committee shall be conclusive and binding on all parties and
not subject to further review.
In any case, a Participant or Beneficiary may have further rights under ERISA.
The Plan provisions require that Participants or Beneficiary pursue all claim
and appeal rights described in this Section 9 before they seek any other legal
recourse regarding claims for benefits. In any case, a Participant or
Beneficiary may have further rights under ERISA. The Plan provisions require
that Participants or Beneficiary pursue all claim and appeal rights described in
this Section 9 before they seek any other legal recourse regarding claims for
benefits.
--------------------------------------------------------------------------------
LUMP SUM DISTRIBUTION AGREEMENT
This Lump Sum Distribution Agreement is made as of the ____ day of
______________, ____ by and between AT&T Inc. (“AT&T” or the “Company”) and
_______________(“Participant”). Unless otherwise indicated herein, capitalized
words used herein shall have the same meaning ascribed to such words in the 2005
Supplemental Employee Retirement Plan (the “Plan” or “SERP”).
WHEREAS, Participant is a Participant in the Plan, which is sponsored by the
Company;
WHEREAS, pursuant to the Plan, Participant executed an Agreement, governing
Participant’s benefits in the Plan;
WHEREAS, Participant’s Agreement provides for the distribution of his benefits
in the form of a lump sum, payable one hundred percent (100%) upon the six (6)
month anniversary of his Termination of Employment provided that Participant is
age sixty (60) or older as of the date of his Termination of Employment and
Participant agrees not to compete with an Employer Business;
NOW, THEREFORE, the parties hereto, for good and valuable consideration, the
sufficiency of which is hereby acknowledged, hereby agree as follows:
1. If Participant is age sixty (60) or over as of the date of
his Termination of Employment, Company shall pay to
Participant his benefits under the Plan in the form of a lump sum distribution,
one hundred percent (100%) of which shall be paid upon the six (6) month
anniversary of Participant’s Termination of Employment.
2. In exchange for the right to receive the payment described
in Paragraph 1, above, Participant acknowledges and agrees to the terms and
conditions of Section 8.2 of the Plan in the form attached hereto.
3. Participant acknowledges and agrees that he shall promptly
return to the Company and forfeit all consideration previously received pursuant
to this Lump Sum Distribution Agreement, specifically the payment referred to in
Paragraph 1, if he violates the provisions of Paragraph 2.
4. Participant may submit a description of any proposed
activity that could arguably violate Section 8.2 of the Plan in writing to AT&T
and AT&T shall advise Participant in writing within fifteen (15) business days
whether such proposed activity would constitute engaging in competition with an
Employer business, within the meaning of this Lump Sum Distribution Agreement.
5. It is hereby specifically agreed that the terms of this
Lump Sum Distribution Agreement shall be kept strictly confidential and that
neither party shall, except as necessary for performance of the terms hereof or
as specifically required by law, disclose the existence of this Lump Sum
Distribution Agreement or any of its terms to third persons without the express
consent of the other party.
6. Participant agrees that for any breach or threatened
breach of any of the provisions of this Lump Sum Distribution Agreement by
Participant, including but not limited to the provisions in Section 8.2 of the
Plan, incorporated herein pursuant to Paragraph 2 of this Lump Sum Distribution
Agreement, the Company shall have no adequate legal remedy, and in addition to
any other remedies available, including the repayment and forfeiture remedies
described in Paragraph 3, a restraining order and/or an injunction may be issued
against Participant to prevent or restrain any such breach.
7. Any notice required hereunder to be given by either party
will be in writing and will be deemed effectively given upon personal delivery
to the party to be notified, or five (5) days after deposit with the United
States Post Office by certified mail, postage prepaid, to the other party at the
address set forth below, or to such other address as either party may from time
to time designate by ten (10) days advance written notice pursuant to this
Paragraph.
8. In the event any provision of this Lump Sum Distribution
Agreement is held invalid, void, or unenforceable, the same shall not affect in
any respect whatsoever the validity of any other provision of this Lump Sum
Distribution Agreement, except that should any part of the non-compete
provisions of Paragraph 2 of this Agreement be held invalid, void, or
unenforceable as applicable to and as asserted by Participant, this Lump Sum
Distribution Agreement, at the Company's option, may be declared by the Company
null and void. If this Lump Sum Distribution Agreement is declared null and
void by Company pursuant to the provisions of this Paragraph, Participant shall
return to Company all consideration previously received pursuant to this Lump
Sum Distribution Agreement.
--------------------------------------------------------------------------------
AT&T INC.
By: Senior Executive
Vice
President-Human Resources
208 S. Akard
Dallas, Texas 75202
Date
Date
--------------------------------------------------------------------------------
“Immediate Annuity Value of any AT&T or affiliate Qualified Pensions” shall
mean:
The annual amount of annuity payments that would be paid out of the qualified
defined benefit pension plan sponsored by AT&T or an AT&T affiliate in which the
Participant participates on a single life, level payment annuity basis assuming
payment of such qualified defined benefit pension plan benefit commenced
immediately upon the Participant’s Termination of Employment, notwithstanding
the form of payment of such qualified defined benefit pension plan’s benefit
actually made to the Participant (i.e., joint and survivor annuity, lump sum,
etc.) and notwithstanding the actual commencement date of the payment of such
qualified defined benefit pension plan benefit.
--------------------------------------------------------------------------------
Immediate Annuity Value of SRIP. "Immediate Annuity Value of SRIP" shall mean
An objectively determined amount as of December 31, 2008 equal to the annual
amount of a level payment, single life with 10 year certain annuity benefit that
would be paid to the Participant pursuant to the SRIP as it exists on December
31, 2008 assuming the Participant became eligible to receive a distribution of
benefit payments under the SRIP on December 31, 2008, applying the Participant’s
Final Average Earnings and Years of Service (both as defined in the SRIP) as of
December 31, 2004 and the Participant’s age as of December 31, 2008,
notwithstanding the form of payment of the SRIP benefit that would actually be
made to the Participant (i.e., joint and survivor annuity, lump sum, etc.) and
notwithstanding the actual commencement date of the payment of such SRIP
benefit.
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Attachment D to the AT&T 2005 Supplemental Employee Retirement Plan
Immediate Annuity Value of any AT&T or AT&T affiliate Non-Qualified Pensions
other than SERP. "Immediate Annuity Value of any AT&T or AT&T affiliate
Non-Qualified Pensions other than SERP" shall mean with respect to a
Participant, any one or more of the following, as applicable:
1. For a Participant who is a participant in (or otherwise has a
benefit in) the AT&T Pension Benefit Make Up Plan No. 1 (“PBMU No. 1”), the
AT&T Pension Benefit Make Up Plan No. 2 (“PBMU No. 2”), the AT&T Inc. Management
Mid-Career Hire Plan (the “Mid-Career Plan”), the Cingular Wireless SBC
Executive Transition Pension Make Up Plan (the “Cingular Plan”) and/or the
Pacific Telesis Group Executive Supplemental Cash Balance Pension Plan (“PTG
Plan”) and is a Participant in the Plan on December 31, 2008:
An objectively determined amount as of December 31, 2008 equal to the annual
amount of a level payment, single life annuity benefit that would be paid to the
Participant pursuant to the PBMU No. 1, the PBMU No. 2, the Mid-Career Plan, the
Cingular Plan, and/or the PTG Plan, as applicable, as they exist on December 31,
2008 assuming the Participant became eligible to receive a distribution of
benefit payments under the PBMU No. 1, the PBMU No. 2, the Mid-Career Plan, the
Cingular Plan, and/or the PTG Plan, as applicable, on December 31, 2008,
notwithstanding the form of payment of the benefit that would actually be made
to the Participant pursuant to the PBMU No. 1, the PBMU No. 2, the Mid-Career
Plan, the Cingular Plan, and/or the PTG Plan, (i.e., 10-year certain annuity,
lump sum, etc.) and notwithstanding the actual commencement date of the payment
of such PBMU No. 1, PBMU No. 2, the Mid-Career Plan, the Cingular Plan, and/or
PTG Plan benefit.
2. For a Participant who is a participant in (or otherwise has a
benefit in) the PBMU No. 1, the PBMU No. 2, the Mid-Career Plan, the Cingular
Plan, and/or the PTG Plan and has a SERP Effective Date after December 31, 2008:
An objectively determined amount as of the Participant’s SERP Effective Date
equal to the annual amount of a level payment, single life annuity benefit that
would be paid to the Participant pursuant to the PBMU No. 1, the PBMU No. 2, the
Mid-Career Plan, the Cingular Plan, and/or the PTG Plan, as applicable, as they
exist on the Participant’s SERP Effective Date assuming the Participant became
eligible to receive a distribution of benefit payments under the PBMU No. 1, the
PBMU No. 2, the Mid-Career Plan, the Cingular Plan, and/or the PTG Plan, on his
or her SERP Effective Date, notwithstanding the form of payment of the benefit
that would actually be made to the Participant pursuant to the PBMU No. 1, the
PBMU No. 2, the Mid-Career Plan, the Cingular Plan, and/or the PTG Plan (i.e.,
10-year certain annuity, lump sum, etc.) and notwithstanding the actual
commencement date of the payment of such PBMU No. 1, PBMU No. 2, the Mid-Career
Plan, the Cingular Plan, and/or PTG Plan benefit.
3. For a Participant who is a participant in (or otherwise has a
benefit in) the BellSouth Corporation Supplemental Executive Retirement Plan
(the “BellSouth Plan”) and is a Participant in the Plan on December 31, 2008:
An objectively determined amount as of December 31, 2008 equal to the annual
amount of a level payment, single life annuity benefit that would be paid to the
Participant pursuant to the BellSouth Plan as it exists on December 31, 2008
assuming the Participant became eligible to receive a distribution of benefit
payments under the BellSouth Plan on December 31, 2008, but applying the
Participant’s age and years of service as if the Participant remained employed
through the fourth anniversary of his or her SERP Effective Date and the
Participant’s Included Earnings (as defined in the BellSouth Plan) as of
December 31, 2008, notwithstanding the form of payment of the BellSouth Plan’s
benefit that would actually be made to the Participant (i.e., joint and survivor
annuity, lump sum, etc.) and notwithstanding the actual commencement date of the
payment of such BellSouth Plan benefit.
4. For a Participant who is a participant in (or otherwise has a
benefit in) the BellSouth Plan and has a SERP Effective Date after December 31,
2008:
An objectively determined amount as of the Participant’s SERP Effective Date
equal to the annual amount of a level payment, single life annuity benefit that
would be paid to the Participant pursuant to the BellSouth Plan as it exists on
the Participant’s SERP Effective Date assuming the Participant became eligible
to receive a distribution of benefit payments under the BellSouth Plan on his or
her SERP Effective Date (applying the Participant’s age, years of service and
Included Earnings (as defined in the BellSouth Plan) as of the Participant’s
SERP Effective Date), notwithstanding the form of payment of the BellSouth
Plan’s benefit that would actually be made to the Participant (i.e., joint and
survivor annuity, lump sum, etc.) and notwithstanding the actual commencement
date of the payment of such BellSouth Plan benefit.
--------------------------------------------------------------------------------
5. For a Participant who is a participant in (or otherwise has a
benefit in) the AT&T Corp. Long Term Disability and Survivor Protection Plan
(“LTDSPP”) and is entitled to a nonqualified defined benefit from the LTDSPP,
the AT&T Corp. Excess Benefit and Compensation Plan, (“Excess Plan”), and/or the
AT&T Corp. Non-Qualified Pension Plan (“NQPP”) and is a Participant in the Plan
on December 31, 2008 (the Participant’s election as to the time and form of
benefits under these plans is identical to such election under this Plan):
The benefit payments paid pursuant to the LTDSPP (nonqualified defined benefit
only), Excess Plan, and/or the NQPP, as applicable, commencing at the actual
time and pursuant to the actual form such benefit payments are made from the
LTDSPP, Excess Plan, and/or the NQPP, as applicable.
6. For a Participant who is a participant in (or otherwise has a
benefit in) the LTDSPP and is entitled to a nonqualified defined benefit from
the LTDSPP, the Excess Plan, and/or the NQPP and has a SERP Effective Date after
December 31, 2008:
An objectively determined amount as of the Participant’s SERP Effective Date
equal to the annual amount of a level payment, single life annuity benefit that
would be paid to the Participant pursuant to the LTDSPP (nonqualified defined
benefit only), the Excess Plan, and/or the NQPP, as applicable, as they exist on
the Participant’s SERP Effective Date assuming the Participant became eligible
to receive a distribution of benefit payments under the AT&T Corp. LTDSPP
(nonqualified defined benefit only), the Excess Plan, and/or the NQPP, on his or
her SERP Effective Date, notwithstanding the form of payment of the benefit that
would actually be made to the Participant pursuant to the LTDSPP (nonqualified
defined benefit only), the Excess Plan, and/or the NQPP (i.e., 10-year certain
annuity, lump sum, etc.) and notwithstanding the actual commencement date of the
payment of such the AT&T Corp. LTDSPP (nonqualified defined benefit only), the
Excess Plan, and/or the NQPP benefit.
--------------------------------------------------------------------------------
Attachment E applies with respect to any Participant who:
· Became a Participant in the 2005 AT&T Supplemental Executive
Retirement Plan on or before December 31, 2008;
· Is a participant in the BellSouth Corporation Supplemental Executive
Retirement Plan; and
· Attained the age of fifty-four (54) on or before March 1, 2007; and
· Realizes a Termination of Employment on or after January 1, 2009.
Upon Termination of Employment, such Participant’s Plan benefit shall equal the
greater of his or her benefit determined in accordance with Section 3 of the
Plan or this Attachment E.
A. Definitions. Solely for purposes of this Attachment E, the
following words shall have the meanings as provided in this Attachment E. Any
other capitalized word, not otherwise defined in this Attachment E, shall have
the meaning as provided in Section 2 of the Plan.
1. The term "Annual Bonus Award" shall mean the bonus amount paid
annually to an Attachment E Participant that is included in the calculation of
pension benefits under the Pension Plan.
2. The term “Attachment E Participant” shall mean any Participant to
whom Attachment E applies as described in the first paragraph of this Attachment
E.
3. The terms "BellSouth Corporation" and "Company" shall mean
BellSouth Corporation, a Georgia corporation, or its successors.
4. The term "Included Earnings" shall mean the 12 month average of
the sum of (1) the last sixty (60) months of base pay, plus (2) the Annual Bonus
Awards payable during or after that sixty (60) month period; provided, however,
Included Earnings shall not include base pay or Annual Bonus Awards earned after
March 1, 2011. The amounts of base pay and other payments used to determine
Included Earnings as described above include all amounts during the specified
period including those amounts previously deferred pursuant to other plans. If
an Attachment E Participant terminates employment while eligible for a benefit
under this Attachment E and thereafter receives Included Earnings, these
additional Included Earnings shall be deemed to have been paid as of the date of
the Attachment E Participant’s Termination of Employment, and the amount of
benefit payable under this Attachment E shall be corrected accordingly.
5. The term “Merger” shall mean the merger, pursuant to the
Agreement and Plan of Merger dated as of March 4, 2006 (the “Merger Agreement”),
by and among BellSouth, AT&T Inc. (“AT&T”), and ABC Consolidation Corp., a
Georgia corporation and wholly-owned subsidiary of AT&T (“Merger Sub”), pursuant
to which, at the “Effective Time” (as defined in the Merger Agreement),
BellSouth was merged with and into the Merger Sub.
6. The term "Pension Plan" shall mean the BellSouth Personal
Retirement Account Pension Plan as in effect on the date of the Merger.
7. The term "Standard Annual Bonus" shall mean the Attachment E
Participant’s Target Award under the AT&T 2006 Incentive Plan or the AT&T Short
Term Incentive Plan and for periods of time prior to the Attachment E
Participant’s participation in the AT&T 2006 Incentive Plan or the AT&T Short
Term Incentive Plan, Standard Annual Bonus shall mean an amount determined by
applying a target percentage of an Attachment E Participant’s base pay rate as
determined by the annual compensation plan and the Attachment E Participant’s
job or pay grade.
8. The term "Vesting Service Credit", except as expressly limited or
otherwise provided in this Attachment E or under an individual Attachment E
Participant’s employment-related agreement with the Company, shall have the same
meaning as is attributed to such term under the Pension Plan and shall be
interpreted in the same manner as that term is interpreted for purposes of the
Pension Plan; provided, however, Vesting Service Credit shall not include any
period of time on or after March 1, 2011.
B. Benefit Amount. An Attachment E Participant’s benefit under this
Attachment E shall be determined as follows:
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The aggregate annualized benefit of each Attachment E Participant shall be
determined by adding the sum of two percent (2%) of Included Earnings for each
year of the Attachment E Participant's Vesting Service Credit for the first
twenty years, plus one and one-half percent (1.5%) of Included Earnings for each
year of the Attachment E Participant's Vesting Service Credit for the next ten
years, plus one percent (1%) of Included Earnings for each year of the
Attachment E Participant's Vesting Service Credit for each additional year up to
the month in which the Attachment E Participant retires less (1) 100% of the
Primary Social Security benefit payable at age 65, (2) 100% of the retirement
benefit (unreduced for survivor annuity) payable from the Pension Plan (as
defined below), and (3) 100% of the benefit payable from the BellSouth
Corporation Supplemental Executive Retirement Plan (as defined below).
a. The benefit reduction to be applied for the benefit payable from
the Pension Plan shall be the amount of such benefit that would be payable on
the date that benefits are eligible to be paid (or become payable) under the
Plan, or, if earlier, March 1, 2011 (regardless of the Attachment E
Participant’s actual pension commencement date under the Pension Plan) and
determined assuming that the Attachment E Participant elected a single life
annuity (regardless of the actual form of benefit elected under the Pension
Plan).
The benefit reduction to be applied for the benefit payable from the BellSouth
Corporation Supplemental Executive Retirement Plan shall be an objectively
determined amount as of December 31, 2008 equal to the annual amount of a level
payment, single life annuity benefit that would be paid to the Attachment E
Participant pursuant to the BellSouth Supplemental Executive Retirement Plan as
it exists on December 31, 2008 assuming the Attachment E Participant became
eligible to receive a distribution of benefit payments under the BellSouth
Supplemental Executive Retirement Plan on December 31, 2008, but applying the
Attachment E Participant’s age and years of service as of March 1, 2011 and the
Attachment E Participant’s Included Earnings as of December 31, 2008,
notwithstanding the form of payment of the BellSouth Supplemental Executive
Retirement Plan’s benefit that would actually be made to the Attachment E
Participant (i.e., joint and survivor annuity, lump sum, etc.) and
notwithstanding the actual commencement date of the payment of such BellSouth
Supplemental Executive Retirement Plan benefit.
b. The benefit amount determined in accordance with this Attachment
E (expressed as an annuity) at the time of the Attachment E Participant’s
Termination of Employment shall not be less than the benefit that would have
been payable to the Attachment E Participant if the Attachment E Participant had
a Termination of Employment on any prior December 31 (using pay, service,
offsets and all factors applicable on the previous dates and assuming an
immediate benefit commencement).
c. The benefit amount determined in accordance with this Attachment E shall
be reduced (before the offset for benefits under the Pension Plan) by
one-quarter percent (0.25%) for each calendar month or part thereof by which the
Attachment E Participant’s Termination of Employment precedes his or her 62nd
birthday.
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SPECIAL PROVISIONS APPLICABLE TO NAMED PARTICIPANTS
I.
SCOPE OF ATTACHMENT
1.1 The provisions of this Attachment apply to specifically
named Participants (a “Named Participant”). To the extent the provisions of
this Attachment conflict with other provisions of the Plan, this Attachment will
control with respect to the named Participants.
1.2 Capitalized terms used in this Attachment shall have the
meaning assigned to such terms in the Plan, unless defined otherwise in this
Attachment F or the context clearly indicates to the contrary.
1.3 As of the Determination Date, a Named Participant’s Target
Retirement Benefit shall be converted to a lump sum amount (“Target Retirement
Cash Balance Account”), to which interest credits shall be applied. At the
Named Participant’s Termination of Employment, the lump sum account balance
(including interest credits) shall be converted to a Life with 10 Year Certain
SERP Benefit for purposes of applying any applicable offsets and the net benefit
shall then be converted, as applicable, to the Benefit Payout Alternative
elected by the Named Participant.
II.
2.1 Target Retirement Cash Balance Account. The SERP Benefit
formula of Plan Section 3.1 shall be applied using the following elements for
the Named Participant as of the Determination Date, except in the case of the
named Participant’s earlier Termination of Employment, to determine the Named
Participant’s Target Retirement Cash Balance Account:
Named Participant:
Determination Date
Service Factor Determined as of:
Final Average Earnings Determined as of:
Age Discount Determined as of:
Applicable Interest Rate and Mortality Table
Randall Stephenson
December 31, 2012
December 31, 2012
June 30, 2010
December 31, 2012
5.8%; 2011 Applicable PPA Mortality Rates
2.2 Interest Credits. From and after the Determination Date,
the SEVP-HR shall maintain a record of each Named Participants’ Target
Retirement Cash Balance Account. During such period of time that all or any
portion of a Named Participant’s Target Retirement Cash Balance Account is not
paid, interest shall be credited at the Applicable Interest Rate.
2.3 Action at Named Participant’s Termination of Employment.
Upon Termination of Employment:
(a) a Named Participant’s Target Retirement Cash Balance Account,
as adjusted for interest credits, shall be converted to an equivalent Life with
a 10-Year Certain Benefit (as described in Plan Section 4.2(a)). For purposes
of such conversion, the Applicable Interest Rate and Mortality Table in the
table above shall apply; provided, however, the Named Participant’s age on his
or her Termination of Employment date shall apply.
(b) The resulting Life with a 10-Year Certain Benefit shall be
offset by the amounts described in Plan Section 3.1 (such as other pension
values and age discount) to obtain the Annual Value of Life with 10 Year Certain
SERP Benefit payable as a result of Termination of Employment.
(c) The Named Participant’s Annual Value of Life with 10 Year
Certain SERP Benefit payable as a result of Termination of Employment shall be
converted, as necessary, to the actuarial equivalent of the Benefit Payout
Alternative elected by the Named Participant using the Applicable Interest Rate
and Mortality Table in the table above; provided, however, the Named
Participant’s age on his Termination of Employment date shall apply.
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PROVISIONS APPLICABLE TO NAMED PARTICIPANTS
TRANSFERRING TO EMPLOYMENT WITH YP HOLDINGS LLC
I.
SCOPE OF ATTACHMENT
1.1 On April 7, 2012, AT&T reached an agreement to sell its
Advertising Solutions (AS) business to Cerberus Capital Management, L.P.
pursuant to an agreement entitled the “Purchase Agreement by and between AT&T
Inc. and Congo Buyer LLC” (with this transaction known as the “YP Transaction”).
The closing of the YP Transaction shall be referred to as the “Closing.” The
provisions of this Attachment G apply to specifically named Participants (see
section 1.3, below) who, as part of the YP Transaction, cease employment at an
AT&T controlled group company and transfer employment to YP Holdings LLC (“YP
Holdings”) at Closing. A Participant specifically named in Section 1.3, below
shall be referred to herein as a “Named YP Participant”. To the extent the
provisions of this Attachment G conflict with other provisions of the Plan, this
Attachment will control with respect to a Named YP Participant.
1.2 Capitalized terms used in this Attachment shall have the
meaning assigned to such terms in the Plan, unless defined otherwise in this
Attachment G or the context clearly indicates to the contrary.
1.3 Named YP Participant shall mean Gale Wickham.
II.
PROVISIONS FOR NAMED YP PARTICIPANTS
2.1 In compliance with Code section 409A, a Termination of Employment
will not occur for a Named YP Participant as a result of the Closing for
purposes of Plan Section 6, “Payment of Benefits.” However, a Named YP
Participant realizes a Termination of Employment at Closing for other purposes
under the Plan, including for purposes of determining the Named YP Participant’s
Final Average Earnings and, absent the provisions of this Attachment G, Years of
Service.
2.2 Years of Service under the Plan shall include a Named YP
Participant’s actual years of service with YP Holdings, up to a maximum of four
years from the Closing.
2.3 Furthermore, if the Plan Administrator determines that a Named YP
Participant’s employment was involuntarily terminated by YP Holdings for any
reason other than for cause within the four year period immediately following
the Closing, then the Named YP Participant shall be deemed to have completed 30
Years of Service under the Plan. For purposes of clarity, if the Named YP
Participant is involuntarily terminated for cause or voluntarily terminates his
employment (as determined by the Plan Administrator), then his actual service
with YP Holdings through the time of such termination will be recognized by the
Plan for the purposes described above in Section 2.2.
2.4 The Named YP Participant’s age upon his actual termination of
employment from YP Holdings will be used to determine the Age Discount, if any,
as well as eligibility for the Named YP Participant’s elected Benefit Payout
Alternatives.
--------------------------------------------------------------------------------
SPECIAL PROVISIONS APPLICABLE TO NAMED PARTICIPANTS
I.
SCOPE OF ATTACHMENT
1.4 The provisions of this Attachment apply to specifically
named Participants (a “Named Participant”). To the extent the provisions of
this Attachment conflict with other provisions of the Plan, this Attachment will
control with respect to the Named Participants.
1.5 Capitalized terms used in this Attachment shall have the
meaning assigned to such terms in the Plan, unless defined otherwise in this
Attachment F or the context clearly indicates to the contrary.
1.6 As of the Determination Date, a Named Participant’s Target
Retirement Benefit shall be converted to a lump sum amount (“Target Retirement
Cash Balance Account”), to which interest credits shall be applied. At the
Named Participant’s Termination of Employment, the lump sum account balance
(including interest credits) shall be converted to a Life with 10 Year Certain
SERP Benefit for purposes of applying any applicable offsets and the net benefit
shall then be converted, as applicable, to the Benefit Payout Alternative
elected by the Named Participant.
II.
2.4 Target Retirement Cash Balance Account. The SERP Benefit
formula of Plan Section 3.1 shall be applied using the following elements for
the Named Participant as of the Determination Date, to determine the Named
Participant’s Target Retirement Cash Balance Account:
Named Participant
Determination Date
Service Factor Determined as of:
Final Average Earnings Determined as of:
Age Discount Determined as of:
Applicable Interest Rate and Mortality Table
Ralph de la Vega
12/31/2014
12/31/2014
12/31/2014
12/31/2014
4.3%; 2013 Applicable PPA Mortality Rates
Wayne Watts
12/31/2014
12/31/2014
12/31/2014
12/31/2014
4.3%; 2013 Applicable PPA Mortality Rates
John Stankey
12/31/2019
12/31/2019
12/31/2019
12/31/2019
3.7%; 2018 Applicable PPA Mortality Rates
John Stephens
12/31/2019
12/31/2019
12/31/2019
12/31/2019
3.7%; 2018 Applicable PPA Mortality Rates
The Committee may designate additional Named Participants whose Target
Retirement Benefit shall be converted to a Target Retirement Cash Balance
Account with a Determination Date as of December 31 of the calendar year in
which such Named Participant is designated by the Committee; provided, if the
Named Participant’s Termination of Employment precedes the Determination Date,
no conversion to a Target Retirement Cash Balance Account shall apply. For
purposes of converting the Named Participant’s Target Retirement Benefit to a
Target Retirement Cash Balance Account, the Applicable Interest Rate and
Mortality Table shall be those in effect under the Plan for a Termination of
Employment that occurs on the day preceding the Determination Date.
2.5 Interest Credits. From and after the Determination Date,
the SEVP-HR shall maintain a record of each Named Participants’ Target
Retirement Cash Balance Account. During such period of time that all or any
portion of a Named Participant’s Target Retirement Cash Balance Account is not
paid, interest shall be credited at the Applicable Interest Rate that was used
for purposes of converting the Named Participant’s Target Retirement Benefit to
a Target Retirement Cash Balance Account.
2.6 Action at Named Participant’s Termination of Employment.
Upon Termination of Employment:
--------------------------------------------------------------------------------
(d) a Named Participant’s Target Retirement Cash Balance Account,
as adjusted for interest credits, shall be converted to an equivalent Life with
a 10-Year Certain Benefit (as described in Plan Section 4.2(a)). For purposes
of such conversion, the Applicable Interest Rate and Mortality Table that were
used for purposes of the converting the Named Participant’s Target Retirement
Benefit to a Target Retirement Cash Balance Account shall apply; provided,
however, the Named Participant’s age on his or her Termination of Employment
date shall apply.
(e) The resulting Life with a 10-Year Certain Benefit shall be
offset by the amounts described in Plan Section 3.1 (such as other pension
values and age discount) to obtain the Annual Value of Life with 10 Year Certain
SERP Benefit payable as a result of Termination of Employment.
(f) The Named Participant’s Annual Value of Life with 10 Year
Certain SERP Benefit payable as a result of Termination of Employment shall be
converted, as necessary, to the actuarial equivalent of the Benefit Payout
Alternative elected by the Named Participant using the Applicable Interest Rate
and Mortality Table that were used for purposes of the converting the Named
Participant’s Target Retirement Benefit to a Target Retirement Cash Balance
Account; provided, however, the Named Participant’s age on his Termination of
Employment date shall apply.
--------------------------------------------------------------------------------
2017 SPECIAL PROVISIONS APPLICABLE TO NAMED PARTICIPANTS
I.
SCOPE OF ATTACHMENT
1.7 The provisions of this Attachment apply to specifically
named Participants (a “Named Participant”). To the extent the provisions of
this Attachment conflict with other provisions of the Plan, this Attachment will
control with respect to the Named Participants.
1.8 Capitalized terms used in this Attachment shall have the
meaning assigned to such terms in the Plan, unless defined otherwise in this
Attachment I or the context clearly indicates to the contrary.
1.9 A Named Participant’s Earnings will be defined by this
Attachment I.
II.
EARNINGS
2.7 On and after the Earnings Effective Dates in the table
below, the Named Participant’s Earnings for purposes of calculating Final
Average Earnings shall be an annual rate as shown in the table below:
Named Participant
Earnings Effective Date
Earnings
John Donovan
September 1, 2017
$3,000,000
John Stankey
The first day of the payroll period following close of the AT&T/Time Warner
merger
John Stephens
The above Earnings rate will apply regardless of actual base salary and bonuses
paid to the Named Participants.
Before the Earnings Effective Date, the Named Participant’s Earnings for
purposes of calculating Final Average Earnings shall be an annual rate equal to
the sum of (1) bonus earned as a short term award during the calendar year but
not exceeding 200% of the target amount of such bonus (or such other portion of
the bonus or target bonus as may be determined by the Human Resources Committee
of the Board of AT&T), plus (2) base salary before reduction due to any
contribution pursuant to any deferred compensation plan or agreement sponsored
by AT&T or an AT&T affiliate, including but not limited to compensation deferred
in accordance with Sections 401(k), 125, or 132(f) of the Internal Revenue Code.
--------------------------------------------------------------------------------
CLAIMS AND APPEALS PROCEDURES
(related to “Disability” or Being “Disabled” under the Plan”)
Claims Regarding “Disability” or Being “Disabled”
When you make a claim based on a “Disability” or being “Disabled” under the
Plan, the Plan’s claims administrator will notify you of the decision regarding
your claim within 45 days of the date your claim is received by the claims
administrator. The claims administrator may extend this 45-day period for up to
30 days (plus an additional 30 days if needed) if it determines that special
circumstances outside of the Plan’s control require more time to determine your
claim. You will be notified within the initial 45-day period (and within the
first 30-day extension period if an additional 30 days are needed) whether
additional time is needed and what special circumstances require the extra time.
If extensions are required because the claims administrator needs additional
information from you, you will have 45 days from the claims administrator’s
notification to provide that information. Once you have provided the
information, the claims administrator will decide your claim within the time
remaining within either the initial or the extended review period. If you do not
receive a written response within the time limits described in this paragraph,
your claim will be deemed denied and you will have the right to file an appeal.
If your claim for benefits is denied in whole or in part, the claims
administrator will provide you with a written or electronic notification of the
denial that will include:
• Information sufficient to identify the claim (including the health care
provider or vocational expert whose opinion was relied on in denying your
claim), the claim amount (if applicable), a statement describing the
availability, upon request, of the diagnosis code and its corresponding meaning
and the treatment code and its corresponding meaning.
• Specific reasons for the denial.
• A full description of why the Plan denied the claim, including, if applicable,
why the claims administrator disagreed with the disability determination made by
your treating physician, a Social Security Administration disability
determination or a third-party disability payer.
• Specific reference(s) to the Plan provisions, or applicable law upon which the
denial is based, where applicable.
• If applicable, a statement that an internal rule, guideline, protocol or other
similar criterion was relied upon in making the determination and that a copy of
the rule, guideline, protocol or criterion will be provided free of charge upon
request.
• An explanation of the scientific or clinical judgment for the determination
and how the terms of the Plan were applied to your medical circumstances if the
determination is based on medical necessity, experimental treatment or a similar
exclusion or limit and that a copy of this explanation will be provided free of
charge upon request.
• A statement that the entire claim file is available for your review and that
you can present evidence and testimony during the Appeal process.
• If applicable, a description of any additional information needed to make your
claim acceptable and the reason the information is needed.
• A description of the Plan’s appeal procedures.
• A statement that you have an opportunity to respond to any new evidence in
advance of any appeal decision. You will be given adequate notice and an
opportunity to respond to any new evidence in advance of a claim denial being
issued.
• A statement concerning your right to file a civil action under ERISA after the
required review and all appeals have been completed.
• A statement that if the Plan does not follow the claims procedures, except for
minor errors, you will be deemed to have exhausted your administrative remedies
and your claim is deemed denied.
• Where applicable, a statement in the relevant non-English language about the
availability of language services.
How to Appeal a Denial Related to a Claim of “Disability” or Being “Disabled”
When You May File an Appeal
If your claim of “Disability” or being “Disabled” under the Plan is denied in
whole or in part (or you have not received a decision or a notice of extension
within the applicable period) and you disagree with the decision, you or your
authorized representative may appeal the decision by filing a written request
for review. You or your authorized representative must make the request for
review within 180 days of receipt of the denial notice (or within 180 days after
the review period has expired).
Who Decides Your Appeal
--------------------------------------------------------------------------------
The Plan administrator has delegated discretion and authority to decide appeals
to the claims administrator. The claims administrator will have full and
exclusive authority and discretion to grant and deny appeals under the Plan. The
decision of the claims administrator regarding any appeal will be final and
conclusive.
How to Appeal a Denied Claim
If you or your authorized representative sends a written request for review of a
denied claim, you or your representative has the right to:
• Send a written statement of the issues and any other comments along with any
new or additional evidence or materials in support of your appeal.
• Upon request and free of charge, reasonable access to and copies of all
documents, records and other information relevant to your claim for benefits.
• Request and receive, free of charge, documents that bear on your claim, such
as any internal rule, guideline, protocol or other similar criterion relied on
in denying your claim. In your appeal, you should state as clearly and
specifically as possible any facts and/or reasons why you believe the claims
administrator’s action is incorrect. You should also include any new or
additional evidence or materials in support of your appeal that you wish the
claims administrator to consider. Such evidence or material must be submitted
along with your written statement at the time you file your appeal.
Your appeal will be assigned to a qualified individual or committee who has had
no involvement with the denial of your claim for benefits. This individual or
committee will decide the appeal based upon the evidence that was considered by
the claims administrator without regard to the information in the claims denial;
the issues, records and comments submitted by you; and such other evidence as
the individual or committee may independently discover.
If your claim was denied based upon medical judgment, the review will be done in
consultation with a health care professional with appropriate expertise in the
field and who was not involved in the initial determination. The claims
administrator may consult with, or seek the participation of, medical experts as
part of the appeal resolution process. When you file your appeal, you consent to
this referral and the sharing of pertinent information.
Your appeal may be decided entirely on the basis of evidence submitted in
writing. You are not entitled to a hearing, nor do you have the right to present
oral testimony or cross-examine authors of written evidence submitted. You will
be provided with the identity of any medical or vocational experts whose advice
the Plan obtained in connection with denial of your appeal, without regard to
whether the advice was relied upon in making the benefit determination.
Unless you are notified in writing that more time is needed, a review and
decision on your appeal must be made within 45 days after your appeal is
received. If special circumstances require more time to consider your appeal,
the claims administrator may take an additional 45 days to reach a decision, but
you must be notified in writing that there will be a delay.
If your appeal is denied in whole or in part, the claims administrator will
provide you with written or electronic notification that will contain:
• Information sufficient to identify the claim (including the health care
provider or vocational expert whose opinion was relied on in denying your
claim), the claim amount (if applicable), a statement describing the
availability, upon request, of the diagnosis code and its corresponding meaning
and the treatment code and its corresponding meaning.
• Specific reasons for the denial.
• A full description of why the Plan denied the claim, including, if applicable,
why the claims administrator disagreed with the disability determination made by
your treating physician, a Social Security Administration disability
determination or a third-party disability payer.
• Specific references to the Plan provisions on which the denial is based.
• A statement that you are entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to your claim.
• If applicable, a statement that an internal rule, guideline, protocol or other
similar criterion was relied upon in making the determination and that a copy of
the rule, guideline, protocol or criterion will be provided free of charge upon
request.
• An explanation of the scientific or clinical judgment for the determination
and how the terms of the Plan were applied to your medical circumstances if the
determination is based on medical necessity, experimental treatment or a similar
exclusion or limit and that a copy of the explanation will be provided free of
charge upon request.
• A statement that the entire claim file is available for your review and that
you can present evidence and testimony during the Appeal process.
• A description of any additional material or information required for payment
of benefits under the Plan.
--------------------------------------------------------------------------------
• A statement of your right to file a civil action under ERISA after you have
exhausted all opportunities to appeal under the Plan and the date on which the
contractual time limit to file a lawsuit will expire.
• The following statement:
You and your plan may have other voluntary alternative dispute resolution
options, such as mediation. One way to find out what may be available is to
contact your local U.S. Department of Labor Office and your State insurance
regulatory agency.
The appeal will take into account all comments, documents, records and other
information you submit relating to the claim for benefits, without regard to
whether such information was submitted or considered in the initial claim for
benefits determination. If you wish, you or your authorized representative may
review the appropriate Plan and Plan documents and submit written information
supporting your claim for benefits to the claims administrator or Plan
Administrator.
The process is intended to be interactive and you will be provided a reasonable
period of time to respond to any new evidence or information before a final
decision is made. Prior to denying your appeal, the claims administrator will
provide you with any new evidence it plans to rely upon in making a decision.
This information will be provided to you as soon as possible and provide you
with a reasonable amount of time to address the new evidence or rationale before
the decision on appeal is made. As part of this process, the claims
administrator must also consider any response made by you to this new
information as part of its decision-making process.
Contact the Plan administrator for information regarding the claims
administrator and the address or other contact information for the claims
administrator.
-------------------------------------------------------------------------------- |
EXHIBIT 10.32
DELPHI TECHNOLOGIES PLC
LONG-TERM INCENTIVE PLAN
NOTICE OF AWARD – TIME-BASED RSUS
(Annual Grant)
Subject to the terms and conditions of (1) Delphi Technologies PLC Long‑Term
Incentive Plan (the “Plan”), (2) this Notice of Award - Time-Based RSUs (the
“Award Notice”), (3) the Time-Based RSU Award Agreement (the “Agreement”) and
(4) the Confidentiality and Noninterference Agreement provided to you in
connection with this Award or, if no such agreement is provided with this Award,
the Confidentiality and Noninterference Agreement previously executed by you and
on file with the Company (as applicable, the “CNA”), the Company has granted you
(the “Participant”) an award of time-based RSUs (“Time-Based RSUs”) as reflected
below (the “Award”). Each Time-Based RSU represents the opportunity to receive
one (1) Share upon satisfaction of the terms and conditions as set forth in this
Award Notice, the Agreement and the CNA, subject to the terms of the Plan. For
the sake of clarity, if a CNA is provided to you in connection with this Award,
the Award is conditioned upon (and will not become effective unless and until)
you have executed and returned the CNA to your local HR business partner. A CNA
previously executed by the Participant and on file with the Company will
continue to be effective unless and until a new CNA is executed and returned to
the Company. Capitalized terms used herein but not defined in this Award Notice
or the Agreement shall have the meaning specified in the Plan. In the event of a
conflict among the provisions of the Award Notice, the Agreement, the Plan and
the CNA, the provisions of the Plan will prevail.
Participant
[•]
Grant Date
[•]
Number of Time-Based RSUs
[•]
Vesting Schedule
Vesting Date
Percentage of RSUs Vesting
February 28, 2021
33 1/3%
February 28, 2022
33 1/3%
February 28, 2023
33 1/3%
One-third of the Time-Based RSUs will vest on each of the first three
anniversaries of the Grant Date (each a “Time-Based Vesting Date”), except as
otherwise provided in the vesting schedule.
--------------------------------------------------------------------------------
EXHIBIT 10.32
DELPHI TECHNOLOGIES PLC
LONG-TERM INCENTIVE PLAN
TIME-BASED RSU AWARD AGREEMENT
The Time-Based RSUs with respect to Shares granted to you effective as of the
Grant Date are subject to (1) the Notice of Award - Time-Based RSUs (the “Award
Notice”), (2) this Time-Based RSU Award Agreement (the “Agreement”) and (3) the
Confidentiality and Noninterference Agreement (the “CNA”), along with all of the
terms and conditions of Delphi Technologies PLC Long-Term Incentive Plan (the
“Plan”), which are incorporated herein by reference. For the sake of clarity,
the Award is conditioned upon (and will not become effective unless and until)
the Participant's execution and return of the CNA to your local HR business
partner. Capitalized terms used herein but not defined in the Award Notice or
this Agreement shall have the meaning specified in the Plan. In the event of a
conflict among the provisions of the Award Notice, this Agreement, the Plan or
the CNA, the provisions of the Plan will prevail. For purposes of this
Agreement, “Employer” means the Company or any Affiliate that employs you on the
applicable date.
Section 1.Grant of Award. The Company has granted the Award to the Participant
effective as of the Grant Date and subject to the vesting provisions as set
forth in the Award Notice.
Section 2.Vesting. Subject to Sections 3 and 4 of the Agreement, one-third of
the Time-Based RSUs shall vest on each of the Time-Based Vesting Dates.
Section 3.Termination of Service.
(a)Death; Disability; Termination Without Cause; Resignation for Good Reason. If
the Participant experiences a Termination of Service after the first Time-Based
Vesting Date and prior to the final Time-Based Vesting Date due to (i) death,
(ii) Disability, (iii) termination by the Employer without Cause, or (iv)
resignation for Good Reason (each such circumstance being a “Qualifying
Termination”), the Participant shall become vested in the number of Time-Based
RSUs equal to (A) the number of unvested Time-Based RSUs as of such termination,
multiplied by (B) a fraction, the numerator of which shall be the number of full
months between the Time-Based Vesting Date that immediately precedes such
termination and the termination date and the denominator of which shall be the
number of full months between the Time-Based Vesting Date that immediately
precedes such termination and the final Time-Based Vesting Date; provided,
however, that, in the event of the Participant’s Termination of Service due to
the Participant’s death, subject to Section 18 of the Plan, the Company may
elect to vest this Award effective on the date of the Participant's death, in
which case the Time-Based RSUs shall be settled in Shares delivered to the
Participant's estate or legal representative in accordance with Section 5 of
this Agreement.
(b)Any Other Termination of Service. In the event of the Participant’s
Termination of Service (i) prior to the first Time-Based Vesting Date for any
reason or (ii) on or after the first Time-Based Vesting Date and prior to the
final Time-Based Vesting Date for any reason other than as described in Section
3(a) above, the Participant immediately shall forfeit the unvested portion of
Time-Based RSUs without any payment to the Participant.
--------------------------------------------------------------------------------
(c)Effective Date of Termination of Service. Notwithstanding anything to the
contrary in the Plan or the Agreement, and for purposes of clarity, if the
Participant is employed outside of the United States, any Termination of Service
shall be effective as of the date the Participant’s active employment with the
Employer ceases and shall not be extended by any statutory or common law notice
of termination period.
Section 4.Change in Control.
(a)Conditional Vesting. Upon a Change in Control prior to the final Time-Based
Vesting Date, except to the extent that another award meeting the requirements
of Section 4(b) (a “Replacement Award”) is provided to the Participant to
replace this Award (the “Replaced Award”), any unvested Time-Based RSUs shall
vest in full and be delivered to the Participant on the effective date of such
Change in Control. If a Replacement Award is provided, notwithstanding anything
in this Agreement to the contrary, any outstanding Time-Based RSUs covered by
this Agreement, which at the time of the Change in Control are not subject to a
“substantial risk of forfeiture” (within the meaning of Section 409A of the
Code), will be deemed to be vested at the time of such Change in Control and
shall be delivered to the Participant on the effective date of such Change in
Control subject to the provisions of Section 409A of the Code, if applicable.
(b)Replacement Awards. An award shall meet the conditions of this Section 4(b)
(and thereby qualify as a Replacement Award) if the following conditions are
met:
(i)The award has a value at least equal to the value of the Replaced Award;
(ii)The award relates to publicly-traded equity securities of the Company or its
successor following the Change in Control or another entity that is affiliated
with the Company or its successor following the Change in Control; and
(iii)The other terms and conditions of the award are not less favorable to the
Participant than the terms and conditions of the Replaced Award (including the
provisions that would apply in the event of a subsequent Change in Control and
the provisions of Section 4(c)).
Without limiting the generality of the foregoing, a Replacement Award may take
the form of a continuation of a Replaced Award if the requirements of the
preceding sentence are satisfied. The determination of whether the conditions of
this Section 4(b) are satisfied shall be made by the Committee, as constituted
immediately before the Change in Control, in its sole discretion.
(c)Qualifying Termination following a Change in Control. If the Participant
experiences a Qualifying Termination (for purposes of which the Company will
include a successor of the Company following the Change in Control or another
entity that is affiliated with the Company or its successor following the Change
in Control), in connection with or during a period of two (2) years after the
Change in Control, any Replacement Award that replaces this Award, to the extent
not vested as of such Termination of Service, shall vest in full. Any such
vested Replacement Award (including any portion previously vested but not yet
delivered) shall be delivered to the Participant within thirty (30) days
following the date of such Qualifying Termination, provided that if the
Qualifying Termination does not occur within two (2) years of a Change in
Control that qualifies
--------------------------------------------------------------------------------
as a permissible date of distribution under Section 409A(a)(2)(A) of the Code,
and the regulations thereunder, and where Section 409A of the Code applies to
such distribution, the vested Replacement Award (and any previously vested but
undelivered portion) will be delivered to the Participant at the times specified
in Section 5(a) of this Agreement as though the Participant had continued
employment through each Time-Based Vesting Date.
Section 5.Settlement of Time-Based RSUs.
(a)Delivery of Shares. Subject to Sections 3 and 4 of the Agreement, any
vested Time-Based RSUs shall be settled in the form of Shares delivered to the
Participant as soon as practicable following the Time-Based Vesting Date but in
no event later than 30 days following the Time-Based Vesting Date.
(b)Alternative Form of Settlement. Pursuant to Section 7(f) of the Plan and
notwithstanding any provision in the Agreement to the contrary, the Company may,
in its sole discretion, settle any Time-Based RSUs in the form of (i) a cash
payment to the extent settlement in Shares (1) is prohibited under local law,
(2) would require the Participant, the Company or the Employer to obtain the
approval of any governmental and/or regulatory body in the Participant’s country
of residence (or country of employment, if different), (3) would result in
adverse tax consequences for the Participant, the Company or the Employer, or
(4) is administratively burdensome; or (ii) Shares, but require the Participant
to sell such Shares immediately or within a specified period following the
Participant’s Termination of Service (in which case, the Participant hereby
expressly authorizes the Company to issue sales instructions in relation to such
Shares on the Participant’s behalf).
Section 6.Dividend Equivalents. If a dividend is paid on Shares underlying
Time-Based RSUs with respect to the period commencing on the Grant Date and
ending on the date on which the Shares in settlement of the Time-Based RSUs are
delivered to the Participant, the Participant shall be eligible to receive an
amount equal to the amount of the dividend that the Participant would have
received had the Shares attributable to Time-Based RSUs been held by the
Participant during the period with respect to which the dividend was paid, which
amount shall be calculated and reinvested in additional Time-Based RSUs as of
the time at which such dividend is paid. No such amount shall be payable with
respect to any portion of this Award that is forfeited pursuant to Section 3 of
the Agreement. Such amount shall be paid to the Participant in the form of
additional Shares on the date on which the Shares attributable to the related
original Time-Based RSUs are delivered to the Participant; provided that the
Committee retains the discretion to pay such amount in cash rather than
Time-Based RSUs in the event that an insufficient number of Shares are
authorized and available for issuance under the Plan. Any Shares attributable to
Time-Based RSUs that the Participant is eligible to receive pursuant to this
Section 6 are referred to herein as “Dividend Shares”.
Section 7.Withholding of Tax-Related Items.
(a)Responsibility for Taxes. The Participant acknowledges that, regardless of
any action taken by the Company or the Employer, the ultimate liability for the
all income tax, social insurance, payroll tax, fringe benefits tax, payment on
account other tax-related items related to the Participant’s participation in
the Plan (“Tax-Related Items”), is and remains the Participant’s responsibility
and
--------------------------------------------------------------------------------
may exceed the amount actually withheld by the Company or the Employer. The
Participant further acknowledges that the Company and the Employer (i) make no
representations or undertakings regarding the treatment of any Tax-Related Items
in connection with any aspect of this Award, including, but not limited to, the
grant, vesting or settlement of this Award, the subsequent sale of Shares
attributable to Time-Based RSUs (including, if applicable, any Dividend Shares)
acquired pursuant to such and the receipt of any dividends or dividend
equivalents, and (ii) do not commit to and are under no obligation to structure
the terms of the grant or any aspect of this Award to reduce or eliminate the
Participant’s responsibility for Tax-Related Items or achieve any particular tax
result. Further, if the Participant is subject to Tax-Related Items in more than
one jurisdiction between the Grant Date and the date of any relevant taxable or
tax withholding event, as applicable, the Participant acknowledges that the
Company and the Employer may be required to withhold or account for Tax-Related
Items in more than one jurisdiction.
(b)Tax Withholding. Prior to any relevant taxable or tax withholding event, as
applicable, the Participant agrees to make adequate arrangements satisfactory to
the Company and the Employer to satisfy all Tax-Related Items. In this regard,
the Participant authorizes the Company, the Employer or an agent of the Company
or the Employer to satisfy the obligations with regard to all Tax-Related Items
by one or a combination of the following:
(i) The Company may withhold a portion of the Shares otherwise issuable in
settlement of this Award (or, in the case of Awards settled in cash, a portion
of the cash proceeds) that have an aggregate fair market value sufficient to pay
the Tax-Related Items required to be withheld (as determined by the Company in
good faith and in its sole discretion) with respect to this Award. For purposes
of the foregoing, no fractional Shares will be withheld or issued pursuant to
the vesting of this Award and the issuance of Shares or cash thereunder.
(ii) The Company or the Employer may withhold a portion of the sales proceeds
from the sale of Shares acquired pursuant to this Award either through a
voluntary sale or through a mandatory sale arranged by the Company or the
Employer (on the Participant’s behalf pursuant to this authorization without
further consent).
(iii) The Company or the Employer may withhold any amount necessary to pay
the Tax-Related Items from the Participant’s salary or other amounts payable to
the Participant.
(iv) The Company or Employer may require or permit the Participant to submit
a cash payment equivalent to the Tax-Related Items required to be withheld with
respect to this Award.
(v) The Company or the Employer may satisfy the Tax-Related Items by such
other methods or combinations of methods as the Company or the Employer may make
available from time to time.
Depending on the withholding method, the Company or the Employer may withhold or
account for Tax-Related Items by considering applicable withholding rates (as
determined by the Company in good faith and its sole discretion), including
maximum applicable tax rates. If the obligation for
--------------------------------------------------------------------------------
Tax-Related Items is satisfied by withholding from the Shares to be delivered
upon settlement of this Award, for tax purposes, the Participant is deemed to
have been issued the full number of Shares notwithstanding that a number of
Shares are held back for the purpose of paying Tax-Related Items. In the event
the withholding requirements are not satisfied, no Shares or cash will be issued
to the Participant (or the Participant’s estate) in settlement of this Award
unless and until satisfactory arrangements (as determined by the Company in its
sole discretion) have been made by the Participant with respect to the payment
of any such Tax-Related Items. By accepting the grant of this Award, the
Participant expressly consents to the methods of withholding of Tax-Related
Items as provided hereunder. All other Tax-Related Items related to this Award
and any Shares or cash delivered in settlement thereof are the Participant’s
sole responsibility.
(c)Tax Withholding for Section 16 Officers. If the Participant is a Section 16
officer of the Company under the U.S. Securities Exchange Act of 1934, as
amended, the Company will withhold Shares upon the settlement of Time-Based RSUs
to cover any withholding obligations for Tax-Related Items unless the use of
such withholding method is prohibited or problematic under applicable laws or
otherwise may trigger adverse consequences to the Company or the Employer (in
each case, as determined by the Committee) or unless the Committee agrees to
permit the Participant to satisfy the withholding requirements in accordance
with the provisions of Section 7(b)(iv), in which case the obligation to
withhold Tax-Related Items shall be satisfied by the Participant submitting a
payment to the Company equal to the amount of the Tax-Related Items required to
be withheld.
Section 8.Additional Terms and Conditions.
(a) Issuance of Shares. Upon delivery of Shares in settlement of the
Time-Based RSUs (including, if applicable, any Dividend Shares), such Shares
shall be evidenced by book-entry registration; provided, however, that the
Committee may determine that such Shares shall be evidenced in such other manner
as it deems appropriate, including the issuance of a share certificate or
certificates. Any such fractional Shares shall be rounded up to the nearest
whole Share.
(b) Voting Rights. The Participant shall not have voting rights with respect
to the Shares underlying the Time-Based RSUs (including, if applicable, any
Dividend Shares) unless and until such Shares are delivered to the Participant.
Section 9.Data Privacy. Pursuant to applicable personal data protection laws,
the Company hereby notifies the Participant of the following in relation to the
Participant’s personally identifiable data (“Personal Data”) and the collection,
processing and transfer of such data in relation to the Company’s grant of this
Award and participation in the Plan. The collection, processing and transfer of
Personal Data is necessary for the Company’s administration of the Plan and the
Participant’s participation in the Plan, and although the Participant has the
right to deny or object to the collection, processing and transfer of Personal
Data, the Participant’s denial and/or objection to the collection, processing
and transfer of Personal Data may affect the Participant’s participation in the
Plan. As such, the Participant voluntarily acknowledges and consents (where
required under applicable law) to the collection, use, processing and transfer
of Personal Data as described herein:
--------------------------------------------------------------------------------
The Company and the Employer hold certain Personal Data about the Participant,
including (but not limited to) the Participant’s name, home address and
telephone number, date of birth, social security number (resident registration
number or tax identification number) or other employee identification number,
e-mail address, salary, nationality, job title, any shares or directorships held
in the Company, details of all entitlements to shares (or cash) awarded,
canceled, purchased, vested, unvested or outstanding in the Participant’s favor,
for the purpose of managing and administering the Plan. The Personal Data may be
provided by the Participant or collected, where lawful, from the Company, its
Affiliates and/or third parties, and the Company and the Employer will process
the Personal Data in this context for the exclusive purpose of implementing,
administering and managing the Participant’s participation in the Plan. The
Personal Data processing will take place through electronic and non-electronic
means correlated to the purposes for which Personal Data are collected and with
confidentiality and security provisions as set forth by applicable laws and
regulations in the Participant’s country of residence (or country of employment,
if different). Personal Data will be accessible within the organization only by
those persons requiring access for purposes of the implementation,
administration and operation of the Plan and for the participation in the Plan.
The Company and the Employer will transfer Personal Data internally as necessary
for the purpose of implementation, administration and management of the
Participant’s participation in the Plan, and the Company and the Employer may
further transfer Personal Data to any third parties assisting the Company in the
implementation, administration and management of the Plan. The third party
recipients of Personal Data may be any Affiliate of the Company or a
broker/administrator that the Company may engage to assist with the
implementation, administration and management of the Plan from time to time, and
any third party vendors with whom the broker/administrator has contracted to
provide services under the Plan. These recipients may be located in the European
Economic Area, or in in other countries, such as the United States, which may
not be considered to provide the same level of privacy protection to Personal
Data as that provided by the Participant’s country of residence (or country of
employment, if different). The Participant hereby authorizes (where required
under applicable law) such processing and transfer of Personal Data.
The Participant may, at any time, exercise the Participant's rights provided
under applicable personal data protection laws, which may include the right to
(i) obtain confirmation as to the existence of the Personal Data, (ii) verify
the content, origin and accuracy of the Personal Data, (iii) request the
integration, update, amendment, deletion or blockage (for breach of applicable
laws) of the Personal Data, (iv) oppose, for legal reasons, the collection,
processing or transfer of the Personal Data which is not necessary or required
for the implementation, administration and/or operation of the Plan and the
Participant’s participation in the Plan, and (v) withdraw consent to the
collection, processing or transfer of Personal Data as provided hereunder (in
which case, this Award will become null and void). The Participant may seek to
exercise these rights by contacting the Employer's HR department.
Section 10.Miscellaneous Provisions.
(a) Notices. All notices, requests and other communications under this
Agreement shall be in writing and shall be delivered in person (by courier or
otherwise), mailed by certified or registered mail, return receipt requested, or
sent by facsimile transmission, as follows:
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if to the Company, to:
Delphi Technologies PLC
One Angel Court, 10th Floor
London EC2R 7HJ, UK
Attention: Chief Human Resources Officer
if to the Participant, to the address that the Participant most recently
provided to the Company,
or to such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. on a business day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
received on the next succeeding business day in the place of receipt.
(b) Entire Agreement. This Agreement, the Plan and any other agreements
referred to herein and therein and any attachments referred to herein or
therein, constitute the entire agreement and understanding between the parties
in respect of the subject matter hereof and supersede all prior and
contemporaneous arrangements, agreements and understandings, both oral and
written, whether in term sheets, presentations or otherwise, between the parties
with respect to the subject matter hereof.
(c) Amendment; Waiver. No amendment or modification of any provision of this
Agreement shall be effective unless signed in writing by or on behalf of the
Company and the Participant, except that the Committee may amend or modify this
Agreement without the Participant’s consent in accordance with the provisions of
the Plan or as otherwise set forth in this Agreement. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature. Any
amendment or modification of or to any provision of this Agreement, or any
waiver of any provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made or given.
(d) Severability. This Agreement shall be enforceable to the fullest extent
allowed by law. In the event that any provision of this Agreement is determined
to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, then that provision shall be reduced, modified or
otherwise conformed to the relevant law, judgment or determination to the degree
necessary to render it valid and enforceable without affecting the validity,
legality or enforceability of any other provision of this Agreement or the
validity, legality or enforceability of such provision in any other
jurisdiction. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed
severable from the remainder of this Agreement, and the remaining provisions
contained in this Agreement shall be construed to preserve to the maximum
permissible extent the intent and purposes of this Agreement.
(e) Assignment. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by the
Participant.
--------------------------------------------------------------------------------
(f) Successors and Assigns; No Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the Company and the
Participant and their respective heirs, successors, legal representatives and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on anyone other than the Company and the Participant, and their
respective heirs, successors, legal representatives and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
(g) Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(h) Acknowledgement of Discretionary Nature of the Plan; No Vested Rights.
The Participant acknowledges and agrees that the Plan is established voluntarily
by the Company, is discretionary in nature and limited in duration, and may be
amended, cancelled, or terminated by the Company, in its sole discretion, at any
time. The grant of this Award under the Plan is a one-time benefit and does not
create any contractual or other right to receive an award or benefits in lieu of
an award in the future. Future awards, if any, will be at the sole discretion of
the Company, including, but not limited to, the form and timing of the award,
the number of Time-Based RSUs subject to the award, and the vesting provisions
applicable to the award.
(i) Extraordinary Item of Compensation. The Participant’s participation in
the Plan is voluntary. The value of this Award under the Plan is an
extraordinary item of compensation outside the scope of the Participant’s
employment (and the Participant’s employment contract, if any). As such, this
Award under the Plan is not part of normal or expected compensation for purposes
of calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension, or retirement benefits or similar
payments. The grant of this Award does not create a right to employment and
shall not be interpreted as forming an employment or service contract with the
Company or the Employer and shall not interfere with the ability of the Employer
to terminate the Participant’s employment or service relationship.
(j) Participant Undertaking. By accepting this Award, the Participant
acknowledges that the Participant has executed a CNA and agrees to take whatever
additional action and execute whatever additional documents the Company may deem
necessary or advisable to carry out or give effect to any of the obligations or
restrictions imposed on the Participant pursuant to the provisions of this
Agreement.
(k) Compliance with Law. As a condition to the Company's grant of this Award,
the Participant agrees to repatriate all payments attributable to the Shares and
cash acquired under the Plan in accordance with local foreign exchange rules and
regulations in the Participant’s country of residence (and country of
employment, if different). In addition, the Participant also agrees to take any
and all actions, and consent to any and all actions taken by the Company and its
Affiliates, as may be required to allow the Company and its Affiliates to comply
with local laws, rules and regulations in the Participant’s country of residence
(and country of employment, if different). Finally, the Participant agrees to
take any and all actions as may be required to comply with the Participant’s
personal legal, regulatory and tax obligations under local laws, rules and
regulations in the Participant’s country of residence (and country of
employment, if different).
--------------------------------------------------------------------------------
(l) Electronic Delivery. The Company may, in its sole discretion, elect to
deliver any documents related to this Award granted to the Participant by
electronic means. By accepting this Award, the Participant hereby consents to
receive such documents by electronic delivery and agrees to participate in the
Plan through an on-line or electronic system established and maintained by the
Company or a third party designated by the Company.
(m) EU Age Discrimination Rules. If the Participant is a local national of
and employed in a country that is a member of the European Union, the grant of
the Award and the terms and conditions governing the Award are intended to
comply with the age discrimination provisions of the EU Equal Treatment
Framework Directive, as implemented into local law (the “Age Discrimination
Rules”). To the extent that a court or tribunal of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable, in
whole or in part, under the Age Discrimination Rules, the Company, in its sole
discretion, shall have the power and authority to revise or strike such
provision to the minimum extent necessary to make it valid and enforceable to
the full extent permitted under local law.
(n) Insider Trading and Market Abuse Laws. Depending on the Participant’s
country of residence (or country of employment, if different), the Participant
may be subject to insider trading restrictions and/or market abuse laws, which
may affect the Participant’s ability to acquire or sell Shares under the Plan
during such times as the Participant is considered to have “inside information”
regarding the Company (as defined by the laws of the Participant’s country of
residence or employment, as applicable). Any restrictions under these laws or
regulations are separate from and in addition to any restrictions that may be
imposed under any applicable Company insider trading policy. The Participant
acknowledges that it is the Participant's responsibility to comply with any
applicable restrictions and that the Participant should consult with the
Participant's personal advisor on this matter.
(o) English Language. If the Participant is a resident or employed outside of
the United States, the Participant acknowledges and agrees that by accepting
this Award, it is the Participant’s express intent that this Agreement, the
Award Notice, the CNA, the Plan and all other documents, notices and legal
proceedings entered into, given or instituted pursuant to this Award, be drawn
up in English. If the Participant has received this Agreement, the Award Notice,
the CNA, the Plan or any other documents related to this Award translated into a
language other than English, and if the meaning of the translated version is
different than the English version, the English version will control.
(p) Plan. The Participant acknowledges and understands that material
definitions and provisions concerning this Award and the Participant’s rights
and obligations with respect thereto are set forth in the Plan. The Participant
has read carefully, and understands, the provisions of the Plan.
(q) Addendum. Notwithstanding any provisions of this Agreement to the
contrary, this Award shall be subject to any special terms and conditions for
the Participant’s country of residence (or country of employment, if different),
as are set forth in the applicable addendum to this Agreement (“Addendum”).
Further, if the Participant transfers residence and/or employment to another
country reflected in an Addendum to this Agreement, the special terms and
conditions for such country shall apply to the Participant to the extent the
Company determines, in its sole discretion,
--------------------------------------------------------------------------------
that the application of such terms and conditions is necessary or advisable in
order to comply with local law or to facilitate the operation and administration
of this Award and the Plan (or the Company may establish alternative terms or
conditions as may be necessary or advisable to accommodate the Participant’s
transfer). Any applicable Addendum shall constitute part of this Agreement.
(r) Additional Requirements. The Company reserves the right to impose other
requirements on this Award, any Shares acquired pursuant to this Award and the
Participant’s participation in the Plan to the extent the Company determines, in
its sole discretion, that such other requirements are necessary or advisable in
order to comply with local law or to facilitate the operation and administration
of this Award and the Plan. Such requirements may include (but are not limited
to) requiring the Participant to sign any agreements or undertakings that may be
necessary to accomplish the foregoing.
(s) Risk Statement. The Participant acknowledges and accepts that the future
value of the Shares is unknown and cannot be predicted with certainty and that
the value of this Award at the time when Shares are delivered in settlement of
this Award may be less than the value of this Award on the Grant Date. The
Participant understands that if the Participant is in any doubt as to whether
the Participant should accept this Award, the Participant should obtain
independent advice.
(t) No Advice Regarding Grant. No employee of the Company or the Employer is
permitted to advise the Participant regarding the Participant’s participation in
the Plan or the acquisition or sale of the Shares underlying this Award. The
Participant is hereby advised to consult with the Participant’s personal tax,
legal and financial advisors prior to taking any action related to the Plan.
(u) Private Placement. Outside of the United States, the grant of this Award
is not intended to be a public offering of securities in the Participant’s
country of residence (or country of employment, if different) but instead is
intended to be a private placement. As a private placement, the Company has not
submitted any registration statement, prospectus or other filings with the local
securities authorities (unless otherwise required under local law) at the time
of grant, and the grant of this Award is not subject to the supervision of the
local securities authorities.
(v) Governing Law. This Agreement shall be governed by the laws of the State
of New York, without application of the conflicts of law principles thereof.
(w) No Right to Continued Service. The granting of the Award evidenced hereby
and this Agreement shall impose no obligation on the Company or any Affiliate to
continue the service of the Participant and shall not lessen or affect the right
that the Company or any Affiliate may have to terminate the service of such
Participant (as may otherwise be permitted under local law).
(x) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
--------------------------------------------------------------------------------
DELPHI TECHNOLOGIES PLC
By:
Name:
Title:
PARTICIPANT
Name:
--------------------------------------------------------------------------------
EXHIBIT 10.32
DELPHI TECHNOLOGIES PLC
LONG-TERM INCENTIVE PLAN
ADDENDUM TO
TIME-BASED RSU AWARD AGREEMENT
In addition to the terms of the Award Notice, the Agreement, the CNA and the
Plan, the Performance-Based RSUs are subject to the following additional terms
and conditions (the “Addendum”). All capitalized terms as contained in this
Addendum shall have the same meaning as set forth in the Award Notice, the
Agreement and the Plan. Pursuant to Section 10(q) of the Agreement, if the
Participant transfers the Participant's residence and/or employment to another
country reflected in the Addendum at the time of transfer, the special terms and
conditions for such country will apply to the Participant to the extent the
Company determines, in its sole discretion, that the application of such terms
and conditions is necessary or advisable in order to comply with local law,
rules and regulations, or to facilitate the operation and administration of the
Award and the Plan (or the Company may establish alternative terms and
conditions as may be necessary or advisable to accommodate your transfer).
*** PARTICIPANTS IN FRANCE, MEXICO AND SPAIN ***
BY SIGNING BELOW, THE PARTICIPANT ACKNOWLEDGES, UNDERSTANDS AND AGREES TO THE
PROVISIONS OF THE AGREEMENT, INCLUDING THE ADDENDUM AND THE PLAN.
PLEASE SIGN AND RETURN THE ADDENDUM VIA EMAIL NO LATER THAN [•] TO YOUR LOCAL HR
BUSINESS PARTNER.
___________________________________ ______________________________
Participant Signature Participant Name (Printed)
_____________________
Date
ARGENTINA
1. Securities Law Information. The Award and the underlying Shares are not
publicly offered or listed on any stock exchange in Argentina. The offer is
private and not subject to the supervision of any Argentine governmental
authority.
2. Labor Law Acknowledgement. By accepting the Award, the Participant
acknowledges and agrees, for all legal purposes, that the grant of the Award is
made by the Company
--------------------------------------------------------------------------------
(and not by the Employer) in its sole discretion and that the value of the Award
or any Shares acquired under the Plan shall not constitute salary or wages for
any purpose under Argentine labor law, including, but not limited to, the
calculation of (a) any labor benefits including, but not limited to, vacation
pay, thirteenth salary, compensation in lieu of notice, annual bonus,
disability, and leave of absence payments, etc., or (b) any termination or
severance indemnities or similar payments.
AUSTRIA
None.
BELGIUM
None.
BRAZIL
1. Securities Law Information. The Award and the underlying Shares have not
been, and will not be, publicly issued, placed, distributed, offered or
negotiated in the Brazilian capital markets and, as a result, will not be
registered with the Brazilian Securities Commission (Comissão de Valores
Mobiliários, the CVM). Therefore, the Award and the underlying Shares may not be
offered or sold in Brazil, except in circumstances which do not constitute a
public offering, placement, distribution or negotiation under the Brazilian
capital markets regulation.
2. Compliance with Law. By accepting the Award, the Participant agrees to
comply with all applicable Brazilian laws and pay any and all applicable taxes
associated with the vesting of the Award and the sale of Shares acquired under
the Plan.
3. Labor Law Acknowledgment. By accepting this Award, the Participant
acknowledges and agrees, for all legal purposes, that (a) the benefits provided
under the Agreement and the Plan are the result of commercial transactions
unrelated to the Participant’s employment; (b) the Agreement and the Plan are
not a part of the terms and conditions of the Participant’s employment; and (c)
the income from this Award, if any, is not part of the Participant’s
remuneration from employment.
CHINA
1. Satisfaction of Regulatory Obligations. If the Participant is a People’s
Republic of China (“PRC”) national, the grant of this Award is conditioned upon
the Company securing all necessary approvals from the PRC State Administration
of Foreign Exchange to permit the operation of the Plan and the participation of
PRC nationals employed by the Employer, as determined by the Company in its sole
discretion.
2. Sale of Shares. Notwithstanding anything to the contrary in the Plan, upon
any termination of employment with the Employer, the Participant shall be
required to sell all Shares acquired under the Plan within such time period as
may be established by the PRC State Administration of Foreign Exchange, the
Company and/or the Employer.
--------------------------------------------------------------------------------
3. Exchange Control Restrictions. The Participant acknowledges and agrees
that the Participant will be required to immediately repatriate to the PRC the
proceeds from the sale of any Shares acquired under the Plan, as well as any
other cash amounts attributable to the Shares acquired under the Plan
(collectively, “Cash Proceeds”). Further, the Participant acknowledges and
agrees that the repatriation of the Cash Proceeds must be effected through a
special bank account established by the Employer, the Company or one of its
Affiliates, and the Participant hereby consents and agrees that the Cash
Proceeds may be transferred to such account by the Company on the Participant’s
behalf prior to being delivered to the Participant. The Cash Proceeds may be
paid to the Participant in U.S. dollars or local currency at the Company’s
discretion. If the Cash Proceeds are paid to the Participant in U.S. dollars,
the Participant understands that a U.S. dollar bank account must be established
and maintained in China by the Participant so that the proceeds may be deposited
into such account. If the Cash Proceeds are paid to the Participant in local
currency, the Participant acknowledges and agrees that the Company is under no
obligation to secure any particular exchange conversion rate and that the
Company may face delays in converting the Cash Proceeds to local currency due to
exchange control restrictions. The Participant agrees to bear any currency
fluctuation risk between the time the Earned Performance-Based RSUs or Dividend
Shares are sold and the Cash Proceeds are converted into local currency and
distributed to the Participant. The Participant further agrees to comply with
any other requirements that may be imposed by the Employer, the Company and its
Affiliates in the future in order to facilitate compliance with exchange control
requirements in the PRC.
4. Cancellation of Award; Mandatory Sale of Shares Following Termination
Date. Due to Chinese exchange control restrictions, to the extent that the Award
has not been settled and unless otherwise determined by the Company in its sole
discretion, the Award shall be cancelled six months following the date of the
Participant’s Termination of Service (or such earlier date as may be required by
the SAFE). Further, the Participant shall be required to sell all Shares
acquired upon settlement of the Award no later than six months following the
date of the Participant’s Termination of Service (or such earlier date as may be
required by the SAFE), in which case, this Addendum shall give the Company the
authority to issue sales instructions on the Participant’s behalf to any third
party broker/administrator engaged by the Company to administer the Time-Based
RSUs and the Plan. If any Shares remain outstanding six months following the
date of the Participant’s Termination of Service (or such earlier date as may be
required by SAFE), the Participant hereby directs, instructs and authorizes the
Company to issue sale instructions on the Participant’s behalf.
The Participant agrees to sign any additional agreements, forms and/or consents
that reasonably may be requested by the Company (or third party
broker/administrator) to effectuate the sale of the Shares (including, without
limitation, as to the transfer of the sale proceeds and other exchange control
matters noted below) and shall otherwise cooperate with the Company with respect
to such matters. The Participant acknowledges that neither the Company nor the
designated third party broker/administrator is under any obligation to arrange
for such sale of Shares at any particular price (it being understood that the
sale will occur in the market) and that broker’s fees and similar expenses may
be incurred in any such sale. In any event, when the Shares are sold, the sale
proceeds, less any tax withholding, any third party broker/administrator’s fees
or commissions, and any similar expenses of the sale will be remitted to the
Participant in accordance with applicable exchange control laws and regulations.
--------------------------------------------------------------------------------
5. Administration. Neither the Company nor any of its Affiliates shall be
liable for any costs, fees, lost interest or dividends or other losses the
Participant may incur or suffer resulting from the enforcement of the terms of
this Addendum or otherwise from the Company’s operation and enforcement of the
Plan, the Agreement and the Award in accordance with Chinese law including,
without limitation, any applicable SAFE rules, regulations and requirements.
CZECH REPUBLIC
None.
DENMARK
1. Treatment of Units upon Termination. Notwithstanding any provisions in the
Agreement to the contrary, if the Participant is determined to be an “Employee,”
as defined in section 2 of the Danish Act on the Use of Rights to Purchase or
Subscribe for Shares etc. in Employment Relationships (the “Stock Option Act”),
the treatment of the Award upon Termination of Service shall be governed by
Sections 4 and 5 of the Stock Option Act. However, if the provisions in the
Agreement or the Plan governing the treatment of the Award upon a Termination of
Service are more favorable, the provisions of the Agreement or the Plan will
govern. In accepting the Award, the Participant acknowledges having received an
“Employer Information Statement” in Danish as part of the grant materials
distributed or otherwise made available to the Participant.
FINLAND
1. Withholding of Tax-Related Items. Notwithstanding anything in Section 7(b)
of the Agreement to the contrary, if the Participant is a local national of
Finland, any Tax-Related Items shall be withheld only in cash from the
Participant’s regular salary/wages or other amounts payable to the Participant
in cash or such other withholding methods as may be permitted under the Plan and
allowed under local law.
FRANCE
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
2. Use of English Language. By accepting this Award, the Participant
acknowledges and agrees that it is the Participant’s wish that the Agreement,
including the Addendum, as well as all other documents, notices and legal
proceedings entered into, given or instituted pursuant to this Award, either
directly or indirectly, be drawn up in English.
Langue anglaise. Langue anglaise. En acceptant cette Attribution, le
Participant reconnaît et accepte que le Participant souhaite que le Contrat, y
compris l’Addendum, ainsi que tous les autres documents, avis et procédures
judiciaires entamés, donnés ou institués en vertu de l’Attribution, directement
ou indirectement, soient rédigés en anglais.
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GERMANY
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
HUNGARY
None.
INDIA
None.
IRELAND
None.
ITALY
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
2. Data Privacy. This following provision replaces Section 9 of the Agreement
in its entirety:
The Participant understands that the Company and its Affiliates may hold certain
personal information about the Participant, including, but not limited to, the
Participant’s name, home address and telephone number, date of birth, social
security number (or any other social or national identification number), salary,
nationality, job title, number of shares held and the details of any RSUs or any
other entitlement to shares awarded, cancelled, exercised, vested, unvested or
outstanding (“Data”) for the purpose of implementing, administering and managing
the Participant’s participation in the Plan. The Participant is aware that
providing the Company with the Participant's Data is necessary for the
performance of the Agreement and that the Participant’s refusal to provide such
Data would make it impossible for the Company to perform its contractual
obligations and may affect the Participant’s ability to participate in the Plan.
The Controller of Personal Data processing is Delphi Technologies PLC, Queensway
House, Hilgrove Street, St Heller, Jersey JE11ES. Delphi Powertrain Systems
Operations Luxembourg S.a.r.l is the Company's Representative for privacy
purposes pursuant to Legislative Decree no.
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196/2003. The Participant understands that the Data may be transferred to the
Company or its Affiliates, or to any third party assisting with the
implementation, administration and management of the Plan, including any
transfer required to the broker/administrator or any other third party with whom
the Earned Performance-Based RSUs or cash from the sale of Earned
Performance-Based RSUs acquired under the Plan may be deposited. Furthermore,
the recipients that may receive, possess, use, retain and transfer such Data for
the above mentioned purposes may be located in Italy or elsewhere, including
outside of the European Union, and a recipient's country (e.g., the United
States) may have different data privacy laws and protections from Italy. The
processing activity, including the transfer of the Participant’s Data abroad,
outside of the European Union, as herein specified and pursuant to applicable
Italian data privacy laws and regulations, does not require the Participant’s
consent thereto as the processing is necessary for the performance of
contractual obligations related to the implementation, administration and
management of the Plan. The Participant understands that Data processing
relating to the purposes above specified shall take place under automated or
non-automated conditions, anonymously when possible, that comply with the
purposes for which Data is collected and with confidentiality and security
provisions as set forth by applicable Italian data privacy laws and regulations,
with specific reference to D.lgs. 196/2003.
The Participant understands that Data will be held only as long as is required
by law or as necessary to implement, administer and manage the Participant’s
participation in the Plan. The Participant understands that pursuant to art.7 of
D.lgs 196/2003, the Participant has the right, including but not limited to,
access, delete, update, request the rectification of the Participant’s Data and
cease, for legitimate reasons, the Data processing. Furthermore, the Participant
is aware that the Participant’s Data will not be used for direct marketing
purposes. In addition, the Data provided can be reviewed and questions or
complaints can be addressed by contacting the Participant’s local human
resources representative.
3. Plan Document Acknowledgement. In accepting the Award, the Participant
acknowledges that the Participant has received a copy of the Plan and the
Agreement and has reviewed the Plan and the Agreement, including this Addendum,
in their entirety and fully understands and accepts all provisions of the Plan
and the Agreement, including this Addendum. The Participant further acknowledges
that the Participant has read and specifically and expressly approves the
following Sections of the Agreement: (a) Section 1 (Grant of the Award); (b)
Section 2 (Vesting); (b) Section 3 (Termination of Service); (c) Section 5
(Settlement of Performance-Based RSUs); and (d) the terms and conditions of this
Addendum.
JAPAN
None.
LUXEMBOURG
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
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MEXICO
1. Commercial Relationship. The Participant expressly recognizes that the
Participant's participation in the Plan and the Company’s grant of this Award do
not constitute an employment relationship between the Participant and the
Company. The Participant has been granted this Award as a consequence of the
commercial relationship between the Company and the Participant's Employer, and
such entity is the Participant’s sole employer. Based on the foregoing, (a) the
Participant expressly recognizes the Plan and the benefits the Participant may
derive from the Participant’s participation in the Plan does not establish any
rights between the Participant and the Employer, (b) the Plan and the benefits
the Participant may derive from the Participant's participation in the Plan are
not part of the employment conditions and/or benefits provided by the Employer,
and (c) any modification or amendment of the Plan by the Company, or a
termination of the Plan by the Company, shall not constitute a change or
impairment of the terms and conditions of the Participant’s employment with the
Employer.
2. Extraordinary Item of Compensation. The Participant expressly recognizes
and acknowledges that the Participant's participation in the Plan is a result of
the discretionary and unilateral decision of the Company, as well as the
Participant’s free and voluntary decision to participate in the Plan in accord
with the terms and conditions of the Plan and the Agreement, including the
Addendum. As such, the Participant acknowledges and agrees that the Company may,
in its sole discretion, amend and/or discontinue the Participant’s participation
in the Plan at any time and without any liability. The value of this Award is an
extraordinary item of compensation outside the scope of the Participant’s
employment contract, if any. This Award is not part of the Participant’s regular
or expected compensation for purposes of calculating any severance, resignation,
redundancy, end of service payments, bonuses, long-service awards, pension,
retirement benefits, or any similar payments, which are the exclusive
obligations of the Employer.
NETHERLANDS
1. Waiver of Termination Rights. As a condition to the grant of this Award,
the Participant hereby waives any and all rights to compensation or damages as a
result of the termination of the Participant’s employment with the Employer for
any reason whatsoever, insofar as those rights result or may result from (i) the
loss or diminution in value of such rights or entitlements under the Plan, or
(ii) the Participant ceasing to have rights under or ceasing to be entitled to
any Award or awards under the Plan as a result of such termination.
NORWAY
None.
POLAND
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
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In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
PORTUGAL
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
2. Language Consent. Participant hereby expressly declares that the
Participant has full knowledge of the English language and has read, understood
and freely accepted and agreed with the terms and conditions established in the
Plan and the Agreement.
Conhecimento da Língua. Pela presente, o Participante declara expressamente que
tem pleno conhecimento da língua inglesa e que leu, compreendeu e livremente
aceitou e concordou com os termos e condições estabelecidas no Plano e no
Acordo.
SINGAPORE
1. Qualifying Person Exemption. The following provision shall replace Section
10(u) of the Agreement:
The grant of this Award under the Plan is being made pursuant to the “Qualifying
Person” exemption” under section 273(1)(f) of the Securities and Futures Act
(Chapter 289, 2011 Ed.) (“SFA”). The Plan has not been lodged or registered as a
prospectus with the Monetary Authority of Singapore. The Participant should note
that, as a result, this Award is subject to section 257 of the SFA and the
Participant will not be able to make (a) any subsequent sale of the Earned
Performance-Based Shares or Dividend Shares in Singapore or (ii) any offer of
such subsequent sale of the Earned Performance-Based Shares or Dividend Shares
subject to this Award in Singapore, unless such sale or offer is made pursuant
to the exemptions under Part XIII Division (1) Subdivision (4) (other than
section 280) of the SFA (Chapter 289, 2011 Ed.).
2. Director Notification. If the Participant is a chief executive officer,
director, associate director or shadow director of an Affiliate in Singapore,
the Participant is subject to certain notification requirements under the
Singapore Companies Act, regardless of whether the Participant is a Singapore
resident or employed in Singapore. Among these requirements is an obligation to
notify the Affiliate in Singapore in writing of an interest (e.g., the Award,
Shares) in the Company or any Affiliate within two business days of (a)
acquiring or disposing of such interest, (b) any change in a previously
disclosed interest (e.g., sale of Shares), or (c) becoming a chief executive
officer, director, associate director or shadow director, if such interest
exists at the time.
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SOUTH AFRICA
1. Securities Law Information and Deemed Acceptance of this Award. Neither
this Award nor the underlying Shares shall be publicly offered or listed on any
stock exchange in South Africa. The offer is intended to be private pursuant to
Section 96 of the Companies Act and is not subject to the supervision of any
South African governmental authority. Pursuant to Section 96 of the Companies
Act, this Award offer must be finalized on or before the 60th day following the
grant date. If the Participant does not want to accept the grant of this Award,
the Participant is required to decline this Award no later than the 60th day
following the Grant Date. If the Participant does not reject the grant of this
Award on or before the 60th day following the Grant Date, the Participant will
be deemed to accept the grant of this Award.
SOUTH KOREA
1. Data Privacy. The following provision replaces Section 9 of the Agreement
in its entirety:
Pursuant to applicable personal data protection laws, the Company and the
Employer hereby notifies the Participant of the following in relation to the
Participant's personal data and the collection, processing and transfer of such
data in relation to the Company’s grant of RSUs and the Participant's
participation in the Plan. The collection, processing and transfer of the
Participant's personal data is necessary for the Company’s administration of the
Plan and the Participant's participation in the Plan, and although the
Participant has the right to deny or object to the collection, processing and
transfer of personal data, the Participant's denial and/or objection to the
collection, processing and transfer of personal data may affect the
Participant's participation in the Plan. As such, the Participant voluntarily
acknowledges and consents (where required under applicable law) to the
collection, use, processing and transfer of personal data as described herein.
The Company shall retain and use the Participant's personal data until the
purpose of the collection and use of the personal data is accomplished and shall
promptly destroy the personal data thereafter.
The Company and the Employer hold certain personal information about the
Participant, including the Participant's name, home address, email address, and
telephone number, date of birth, social security number (resident registration
number), passport number, or other employee identification number, e-mail
address, salary, nationality, job title, any Earned Performance-Based RSUs or
directorships held in the Company, details of all Awards, options or any other
entitlement to Earned Performance-Based RSUs awarded, canceled, purchased,
vested, unvested or outstanding in the Participant's favor, for the purpose of
managing and administering the Plan (“Data”). The Data may be provided by the
Participant or collected, where lawful, from third parties, and the Company and
the Employer will process the Data for the exclusive purpose of implementing,
administering and managing the Participant's participation in the Plan. The Data
processing will take place through electronic and non-electronic means according
to logics and procedures strictly correlated to the purposes for which Data are
collected and with confidentiality and security provisions as set forth by
applicable laws and regulations in the Participant's country of residence (and
country of employment, if different). Data processing operations will be
performed minimizing the use of personal and identification data when such
operations are unnecessary for the processing purposes sought. Data will be
accessible within the Company’s organization only by those persons requiring
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access for purposes of the implementation, administration and operation of the
Plan and for the Participant's participation in the Plan.
The Company and the Employer will transfer Data internally as necessary for the
purpose of implementation, administration and management of the Participant's
participation in the Plan, and the Company may further transfer Data to any
third parties assisting the Company in the implementation, administration and
management of the Plan. The third party recipients of Data may be any Affiliates
or subsidiaries of the Company and / or the Company's broker/administrator or
any successor or any other third party that the Company or the
broker/administrator (or its successor) may engage to assist with the
implementation, administration and management of the Plan from time to time.
These recipients may be located in the European Economic Area, or elsewhere
throughout the world, such as the United States. the Participant hereby
authorizes (where required under applicable law) them to receive, possess, use,
retain and transfer the Data, in electronic or other form, for purposes of
implementing, administering and managing the Participant's participation in the
Plan, including any requisite transfer of such Data as may be required for the
administration of the Plan and/or the subsequent holding of Earned
Performance-Based RSUs on the Participant's behalf to a broker/administrator or
other third party with whom the Participant may elect to deposit any Earned
Performance-Based RSUs acquired pursuant to the Plan. Such third parties to
which the Company will transfer the Participant's personal date shall retain and
use the Participant's personal data until the purpose of the collection and use
of the personal data is accomplished and shall promptly destroy such personal
data thereafter.
The Company and any third party recipient of the Data will use, process and
store the Data only to the extent they are necessary for the purposes described
above.
The Participant may, at any time, exercise the Participant's rights provided
under applicable personal data protection laws, which may include the right to
(a) obtain confirmation as to the existence of the Data, (b) verify the content,
origin and accuracy of the Data, (c) request the integration, update, amendment,
deletion, or blockage (for breach of applicable laws) of the Data, (d) to
oppose, for legal reasons, the collection, processing or transfer of the Data
which is not necessary or required for the implementation, administration and/or
operation of the Plan and the Participant's participation in the Plan, and (e)
withdraw the Participant's consent to the collection, processing or transfer of
Data as provided hereunder (in which case, the Participant's Award will be null
and void). The Participant may seek to exercise these rights by contacting the
Participant's local human resources manager or the Company’s human resources
department.
BY SIGNING AND CHECKING THE BOXES BELOW, PARTICIPANT ACKNOWLEDGES, UNDERSTANDS
AND AGREES TO THE PROVISIONS OF THE AGREEMENT, THE PLAN AND THIS ADDENDUM.
FURTHER, PARTICIPANT ACKNOWLEDGES, UNDERSTANDS AND AGREES TO (1) THE COLLECTION,
USE, PROCESSING AND TRANSFER OF THE DATA AS DESCRIBED ABOVE AND (2) THE
PROCESSING OF PARTICIPANT'S UNIQUE IDENTIFYING INFORMATION (RESIDENT
REGISTRATION NUMBER) AS DESCRIBED ABOVE.
[ ] I agree to the collection and use of my Personal Data.
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[ ] I agree to the provision of my Personal Data to a third party and transfer
of my Personal Data overseas.
[ ] I agree to the processing of my unique identifying information (resident
registration number).
___________________________________
Participant Signature
____________________________________
Participant Printed Name
_____________________
Date
PLEASE SIGN AND RETURN THE ADDENDUM VIA EMAIL NO LATER THAN [•] TO YOUR LOCAL HR
BUSINESS PARTNER.
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SPAIN
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
2. Securities Law Information. The Award and the Shares described in the
Agreement and this Addendum do not qualify under Spanish regulations as
securities. No “offer of securities to the public,” as defined under Spanish
law, has taken place or will take place in the Spanish territory. The Agreement
(including this Addendum) has not been nor will it be registered with the
Comisión Nacional del Mercado de Valores, and does not constitute a public
offering prospectus.
3. Acknowledgement of Discretionary Nature of the Plan; No Vested Rights. In
accepting the grant of this Award, the Participant acknowledges that the
Participant consents to participation in the Plan and has received a copy of the
Plan. The Participant understands that the Company has unilaterally,
gratuitously and in its sole discretion granted this Award under the Plan to
individuals who may be employees of the Company or its Affiliates throughout the
world. The decision is a limited decision that is entered into upon the express
assumption and condition that any grant will not economically or otherwise bind
the Company or any of its Affiliates on an ongoing basis. Consequently, the
Participant understands that this Award is granted on the assumption and
condition that this Award and the Shares acquired upon vesting of this Award
shall not become a part of any employment contract (either with the Company or
any of its Affiliates) and shall not be considered a mandatory benefit, salary
for any purposes (including severance compensation) or any other right
whatsoever. In addition, the Participant understands that this grant would not
be made to him or her but for the assumptions and conditions referenced above.
Thus, the Participant acknowledges and freely accepts that should any or all of
the assumptions be mistaken or should any of the conditions not be met for any
reason, the grant of this Award shall be null and void.
The Participant understands and agrees that, as a condition of the grant of this
Award, any unvested portion of this Award as of the date you cease active
employment will be forfeited without entitlement to the underlying Shares or to
any amount of indemnification in the event of the termination of employment by
reason of, but not limited to, (i) material modification of the terms of
employment under Article 41 of the Workers’ Statute or (ii) relocation under
Article 40 of the Workers’ Statute. The Participant acknowledges that the
Participant has read and specifically accepts the conditions referred to in the
Agreement regarding the impact of a termination of employment on this Award.
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SWEDEN
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
UNITED KINGDOM
1. Termination of Service. The following provision shall supplement Section
3(c) of the Agreement:
In case of Termination of Service of the Participant triggering the payment of
severance costs under applicable law, the Performance-Based RSUs shall not be
taken into account in the calculation of such severance costs, to the extent
permitted by applicable law.
2. Taxes. The following provision supplements Section 7 of the Agreement:
The Participant hereby agrees that the Participant is liable for all Tax-Related
Items and hereby covenants to pay all such Tax-Related Items, as and when
requested by the Company or (if different) the Employer or by Her Majesty
Revenue & Customs (“HMRC”) (or any other tax authority or any other relevant
authority). The Participant also hereby agrees to indemnify and keep
indemnified the Company and (if different) Employer against any Tax-Related
Items that they are required to pay or withhold or have paid or will pay on the
Participant’s behalf to HMRC (or any other tax authority or any other relevant
authority).
3. Exclusion of Claim. The Participant acknowledges and agrees that the
Participant will have no entitlement to compensation or damages insofar as such
entitlement arises or may arise from the Participant ceasing to have rights
under or to be entitled to the Award, whether or not as a result of termination
of employment (whether the termination is in breach of contract or otherwise),
or from the loss or diminution in value of the Award. Upon the grant of the
Award, the Participant will be deemed to have waived irrevocably any such
entitlement.
UNITED STATES
None.
**************************
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|
Exhibit 10.3
NEITHER THIS WARRANT NOR THE SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
The number of shares of common stock issuable upon exercise of this warrant may
be less than the amounts set forth on the face hereof.
This Warrant is issued pursuant to that certain Securities Purchase Agreement
dated June 29, 2020, by and between the Company and the Holder (as defined
below) (the “Purchase Agreement”). Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for such terms in the Purchase
Agreement. Receipt of this Warrant by the Holder shall constitute acceptance and
agreement to all of the terms contained herein.
No. 2020-3
bio-key international, INC.
COMMON STOCK PURCHASE WARRANT
BIO-key International, Inc., a Delaware corporation (together with any
corporation which shall succeed to or assume the obligations of BIO-key
International, Inc. hereunder, the “Company”), hereby certifies that, for value
received, Lind Global Macro Fund, LP, a Delaware limited partnership (the
“Holder”), is entitled, subject to the terms set forth below, to purchase from
the Company at any time during the Exercise Period (as defined in Section 9) up
to One Million Four Hundred Twenty Five Thousand (1,425,000) fully paid and
non-assessable shares of Common Stock (as defined in Section 9), at a purchase
price per share equal to the Exercise Price (as defined in Section 9). The
number of shares of Common Stock for which this Common Stock Purchase Warrant
(this “Warrant”) is exercisable and the Exercise Price are subject to adjustment
as provided herein.
1. DEFINITIONS. Certain terms are used in this Warrant as specifically
defined in Section 9.
2. EXERCISE OF WARRANT.
2.1. Exercise. This Warrant may be exercised prior to its expiration
pursuant to Section 2.5 hereof by the Holder at any time or from time to time
during the Exercise Period, by submitting the form of subscription attached
hereto (the “Exercise Notice”) duly executed by the Holder, to the Company at
its principal office, indicating whether the Holder is electing to purchase a
specified number of shares by paying the Aggregate Exercise Price as provided in
Section 2.2 or is electing to exercise this Warrant as to a specified number of
shares pursuant to the net exercise provisions of Section 2.3. On or before the
first Trading Day following the date on which the Company has received the
Exercise Notice, the Company shall transmit by electronic mail an
acknowledgement of confirmation of receipt of the Exercise Notice. Subject to
Section 2.4, this Warrant shall be deemed exercised for all purposes as of the
close of business on the day on which the Holder has delivered the Exercise
Notice to the Company. The Aggregate Exercise Price, if any, shall be paid by
wire transfer to the Company within five (5) Business Days of the date of
exercise and prior to the time the Company issues the certificates evidencing
the shares issuable upon such exercise. In the event this Warrant is not
exercised in full, the Company may, at its expense, require the Holder, after
such partial exercise, to promptly return this Warrant to the Company and the
Company will forthwith issue and deliver to or upon the order of the Holder a
new Warrant or Warrants of like tenor, in the name of the Holder or as the
Holder (upon payment by the Holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment therein)
to the number of such shares called for on the face of this Warrant minus the
number of such shares (without giving effect to any adjustment therein) for
which this Warrant shall have been exercised.
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2.2. Payment of Exercise Price by Wire Transfer. If the Holder elects to
purchase a specified number of shares by paying the Aggregate Exercise Price,
the Holder shall pay such amount by wire transfer of immediately available funds
to the account designated by the Company in its acknowledgement of receipt of
such Exercise Notice pursuant to Section 2.1.
2.3. Net Exercise. Commencing October 31, 2020, if a registration statement
covering the shares of Common Stock that are the subject of the Notice of
Exercise is not available for resale of such shares or the sale of such shares
cannot occur under Rule 144(b) without volume restrictions or adequate current
public information available pursuant to Rule 144 (the “Unavailable Warrant
Shares”) upon exercise of this Warrant in connection with a Fundamental
Transaction, the Holder may elect to exercise this Warrant by receiving shares
of Common Stock equal to the number of shares determined pursuant to the
following formula:
X = Y (A - B)
A
where,
X =
the number of shares of Common Stock to be issued to Holder;
Y =
the number of shares of Common Stock as to which this Warrant is to be exercised
(as indicated on the Exercise Notice);
A =
VWAP for the Trading Day immediately preceding the date of exercise; and
B =
the Exercise Price.
2.4. Antitrust Notification. If the Holder determines, in its sole judgment
upon the advice of counsel, that the issuance of any Warrant Shares pursuant to
the terms hereof would be subject to the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Company
shall file as soon as practicable after the date on which the Company receives
notice from the Holder of the applicability of the HSR Act and a request to so
file with the United States Federal Trade Commission and the United States
Department of Justice the notification and report form required to be filed by
it pursuant to the HSR Act in connection with such issuance.
2.5. Termination. This Warrant shall terminate upon the earlier to occur of
(i) exercise in full or (ii) the expiration of the Exercise Period.
3. REGISTRATION RIGHTS. The Holder of this Warrant has certain rights
to require the Company to register its resale of the Warrant Shares under the
Securities Act and any blue sky or securities laws of any jurisdictions within
the United States at the time and in the manner specified in the Purchase
Agreement.
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4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
4.1. Delivery of Exercise Shares. As soon as practicable after any exercise
of this Warrant and in any event within three (3) Trading Days thereafter (such
date, the “Exercise Share Delivery Date”), the Company shall, at its expense
(including the payment by it of any applicable issue or stamp taxes), cause to
be issued in the name of and delivered to the Holder, or as the Holder may
direct, a certificate or certificates evidencing the number of fully paid and
non-assessable shares of Common Stock (which number shall be rounded down to the
nearest whole share in the event any fractional share may otherwise be issuable
upon such exercise and the Company shall pay a cash adjustment to the Holder in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price) to which the Holder shall be entitled on such exercise, in
such denominations as may be requested by the Holder, which certificate or
certificates shall be free of restrictive and trading legends (except for any
such legends as may be required under the Securities Act). In lieu of delivering
physical certificates for the shares of Common Stock issuable upon any exercise
of this Warrant, provided the Warrant Shares are not restricted securities and
the Company’s transfer agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer program or a similar program, upon
request of the Holder, the Company shall cause its transfer agent to
electronically transmit such shares of Common Stock issuable upon exercise of
this Warrant to the Holder (or its designee), by crediting the account of the
Holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal
Agent Commission system (provided that the same time periods herein as for stock
certificates shall apply) as instructed by the Holder (or its designee).
4.2. Compensation for Buy-In on Failure to Timely Deliver Exercise Shares.
In addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder Exercise Shares pursuant to
an exercise on or before the Exercise Share Delivery Date, and if after such
date the Holder is required by its broker to purchase (in an open market
transaction or otherwise) or the Holder’s brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Exercise Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (a) pay in cash to the Holder the amount, if
any, by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (1) the number of Exercise Shares that the
Company was required to deliver to the Holder in connection with the exercise at
issue times (2) the price at which the sell order giving rise to such purchase
obligation was executed, and (b) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Exercise Shares for which
such exercise was not honored (in which case such exercise shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (a) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In and evidence of the
amount of such loss. Nothing herein shall limit a Holder’s right to pursue a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
4.3. Charges, Taxes and Expenses. Issuance of Exercise Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Exercise Shares, all of which taxes
and expenses shall be paid by the Company, and such Exercise Shares shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event Exercise Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto (the “Assignment Form”) duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
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5. CERTAIN ADJUSTMENT.
5.1. Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (a) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (b) subdivides outstanding shares of
Common Stock into a larger number of shares, (c) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares, or (d) issues by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 5.1 shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
5.2 Pro Rata Distributions. During such time as this Warrant is outstanding,
if the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that, to the extent that
the Holder's right to participate in any such Distribution would result in the
Holder exceeding the beneficial ownership limitation provided for in Section 10,
then the Holder shall not be entitled to participate in such Distribution to
such extent (or in the beneficial ownership of any shares of Common Stock as a
result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the
beneficial ownership limitation).
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5.3 Fundamental Transaction. If, at any time while this Warrant is
outstanding, (a) the Company effects any merger or consolidation of the Company
with or into another Person, (b) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (c)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (d) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (each, a “Fundamental
Transaction”), then, upon the closing of a Fundamental Transaction and payment
of the exercise price therefore (including at the election of the Holder by
cashless exercise), the Holder shall receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such merger, consolidation or disposition of assets by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon exercise of this Warrant upon
the closing of such Fundamental Transaction. The foregoing notwithstanding, if
the Company effects any reclassification of the Common Stock or any compulsory
share exchange, in each case, into another security of the Company, this Warrant
shall remain outstanding and the Holder shall be entitled to receive the
Alternative Consideration upon any subsequent exercise of this Warrant and the
payment of the exercise price therefor. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section
5.3
5.4 Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding at the
close of the Trading Day on or, if not applicable, most recently preceding, such
given date.
5.5 Notice to Holder.
(a) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 5, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
(b) Notice to Allow Exercise by Holder. If (i) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock; (ii)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (iii) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (iv) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or (v) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Subject to applicable law, the Holder is entitled to exercise
this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice. Notwithstanding the
foregoing, the delivery of the notice described in this Section 5.5 is not
intended to and shall not bestow upon the Holder any voting rights whatsoever
with respect to outstanding unexercised Warrants.
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6. NO IMPAIRMENT. The Company will not, by amendment of the Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, 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 Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in taking all such action as may be necessary
or appropriate in order to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company (a) will not
increase the par value of any shares of Common Stock receivable on the exercise
of this Warrant above the amount payable therefor on such exercise and (b) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares of
stock on the exercise of this Warrant from time to time outstanding.
7. NOTICES OF RECORD DATE. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right;
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or any consolidation or merger of
the Company with or into any other Person or any other Change of Control; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then, and in each such event, the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is anticipated to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
fifteen (15) days prior to the date specified in such notice on which any such
action is to be taken.
8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT; REGULATORY
COMPLIANCE.
8.1. Reservation of Stock Issuable on Exercise of Warrant. The Company shall
at all times while this Warrant shall be outstanding, reserve and keep available
out of its authorized but unissued Common Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the exercise of all or
any portion of the Warrant Shares (disregarding for this purpose any and all
limitations of any kind on such exercise). The Company shall, from time to time
in accordance with the Delaware General Corporation Law, increase the authorized
number of shares of Common Stock or take other effective action if at any time
the unissued number of authorized shares shall not be sufficient to satisfy the
Company’s obligations under this Section 8.
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8.2. Regulatory Compliance. If any shares of Common Stock to be reserved for
the purpose of exercise of the Warrant Shares require registration or listing
with or approval of any Governmental Authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon exercise, the Company shall,
at its sole cost and expense, in good faith and as expeditiously as possible,
secure such registration, listing or approval, as the case may be.
9. DEFINITIONS. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Person specified.
“Aggregate Exercise Price” means, in connection with the exercise of this
Warrant at any time, an amount equal to the product obtained by multiplying (i)
the Exercise Price times (ii) the number of shares of Common Stock for which
this Warrant is being exercised at such time.
“Business Day” means any day other than a Saturday, Sunday or any other day on
which banks are permitted or required to be closed in New York City.
“Certificate of Incorporation” means the Company’s Certificate of Incorporation
as amended to date.
“Change of Control” has the meaning set forth in the Purchase Agreement.
“Common Stock” means (i) the Company’s Common Stock, $0.0001 par value per
share, and (ii) any other securities into which or for which any of the
securities described in clause (i) above have been converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time
in effect.
“Exercise Period” means the period commencing on the Issue Date and ending 11:59
P.M. (New York City time) on the five year anniversary of the Issue Date or
earlier closing of a Fundamental Transaction (other than a Fundamental
Transaction of the type described in clause (d) of the definition thereof
resulting in the conversion into or exchange for another security of the
Company).
“Exercise Price” means $1.16 per share, as may be adjusted pursuant to the terms
hereof.
“Exercise Shares” means the shares of Common Stock for which this Warrant is
then being exercised.
“Fair Market Value” means, with respect to any security or other property, the
fair market value of such security or other property as determined by the Board
of Directors, acting in good faith.
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).
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“Issue Date” means June 29, 2020.
“Note” means the senior secured convertible promissory note issued by the
Company to the Holder pursuant to the Purchase Agreement.
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
“Subsidiary” means, as of any time of determination and with respect to any
Person, any United States corporation, partnership, limited liability company or
limited liability partnership, all of the stock (or other equity interest) of
every class of which, except directors’ qualifying shares (or any equivalent),
shall, at such time, be owned by such Person either directly or through
Subsidiaries and of which such Person or a Subsidiary shall have 100% control
thereof, except directors’ qualifying shares. Unless the context otherwise
clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary
of the Company.
“Trading Day” means a day on which the Common Stock is traded on a Trading
Market.
“Trading Market” means whichever of the New York Stock Exchange, NYSE American,
or the Nasdaq Stock Market (including the Nasdaq Capital Market), on which the
Common Stock is listed or quoted for trading on the date in question.
“VWAP” means, as of any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of one share of Common
Stock trading in the ordinary course of business on the applicable Trading Price
for such date (or the nearest preceding date) on such Trading Market as reported
by Bloomberg Financial L.P.; (b) if the Common Stock is not then listed on a
Trading Market and if the Common Stock is traded in the over-the-counter market,
as reported by the OTC Bulletin Board, the volume weighted average price of one
share of Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, as reported by Bloomberg Financial L.P.; (c) if the Common Stock
is not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock is then reported in the “Pink Sheets” published by the Pink OTC
Markets Inc. (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price of one share of Common Stock so
reported, as reported by Bloomberg Financial L.P.; or (d) in all other cases,
the fair market value of one share of Common Stock as determined by an
independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company (in each case rounded to four decimal places).
“Warrant Shares” means collectively the shares of Common Stock of the Company
issuable upon exercise of the Warrant in accordance with its terms, as such
number may be adjusted pursuant to the provisions thereof.
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10. LIMITATION ON BENEFICIAL OWNERSHIP. Notwithstanding anything to the
contrary contained herein, the Holder shall not be entitled to receive shares of
Common Stock or other securities (together with Common Stock, “Equity
Interests”) upon exercise of this Warrant to the extent (but only to the extent)
that such exercise or receipt would cause the Holder Group to become, directly
or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) of a number
of Equity Interests of a class that is registered under the Exchange Act which
exceeds the Maximum Percentage (as defined below) of the Equity Interests of
such class that are outstanding at such time. Any purported delivery of Equity
Interests in connection with the exercise of the Warrant prior to the
termination of this restriction in accordance herewith shall be void and have no
effect to the extent (but only to the extent) that such delivery would result in
the Holder Group becoming the beneficial owner of more than the Maximum
Percentage of the Equity Interests of a class that is registered under the
Exchange Act that is outstanding at such time. If any delivery of Equity
Interests owed to the Holder following exercise of this Warrant is not made, in
whole or in part, as a result of this limitation, the Company’s obligation to
make such delivery shall not be extinguished and the Company shall deliver such
Equity Interests as promptly as practicable after the Holder gives notice to the
Company that such delivery would not result in such limitation being triggered
or upon termination of the restriction in accordance with the terms hereof. To
the extent limitations contained in this Section 10 apply, the determination of
whether this Warrant is exercisable and of which portion of this Warrant is
exercisable shall be the sole responsibility and in the sole determination of
the Holder, and the submission of an Exercise Notice shall be deemed to
constitute the Holder’s determination that the issuance of the full number of
Warrant Shares requested in the Exercise Notice is permitted hereunder, and
neither the Company nor any Warrant agent shall have any obligation to verify or
confirm the accuracy of such determination. For purposes of this Section 10, (i)
the term “Maximum Percentage” shall mean 4.99%; provided, that if at any time
after the date hereof the Holder Group beneficially owns in excess of 4.99% of
any class of Equity Interests in the Company that is registered under the
Exchange Act (excluding any Equity Interests deemed beneficially owned by virtue
of this Warrant or the Note), then the Maximum Percentage shall automatically
increase to 9.99% so long as the Holder Group owns in excess of 4.99% of such
class of Equity Interests (and shall, for the avoidance of doubt, automatically
decrease to 4.99% upon the Holder Group ceasing to own in excess of 4.99% of
such class of Equity Interests); and (ii) the term “Holder Group” shall mean the
Holder plus any other Person with which the Holder is considered to be part of a
group under Section 13 of the Exchange Act or with which the Holder otherwise
files reports under Sections 13 and/or 16 of the Exchange Act. In determining
the number of Equity Interests of a particular class outstanding at any point in
time, the Holder may rely on the number of outstanding Equity Interests of such
class as reflected in (x) the Company’s most recent Annual Report on Form 10-K
or Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission, as the case may be, (y) a more recent public announcement by the
Company or (z) a more recent notice by the Company or its transfer agent to the
Holder setting forth the number of Equity Interests of such class then
outstanding. For any reason at any time, upon written or oral request of the
Holder, the Company shall, within one (1) Trading Day of such request, confirm
orally and in writing to the Holder the number of Equity Interests of any class
then outstanding. The provisions of this Section 10 shall be construed,
corrected and implemented in a manner so as to effectuate the intended
beneficial ownership limitation herein contained.
11. REGISTRATION AND TRANSFER OF WARRANT.
11.1. Registration of Warrant. The Company shall register and record
transfers, exchanges, reissuances and cancellations of this Warrant, upon the
records to be maintained by the Company for that purpose, in the name of the
record holder hereof from time to time. The Company may deem and treat the
registered holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary. The Company shall be entitled to
rely, and held harmless in acting or refraining from acting in reliance upon,
any notices, instructions or documents it believes in good faith to be from an
authorized representative of the Holder.
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11.2 Transferability. This Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this Warrant
substantially in the form of assignment (the “Assignment Notice”) attached
hereto duly executed by the Holder or its agent or attorney. The Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of the transferred Warrant under the 1933 Act. Upon
such surrender, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such Assignment Notice, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. This Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of
Exercise Shares without having a new Warrant issued.
11.3. New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 11.2, as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for this Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the original Issue Date and shall be identical with
this Warrant except as to the number of Exercise Shares issuable pursuant
thereto.
12. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Exercise Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of this Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
13. REMEDIES. The Company stipulates that the remedies at law of the
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. NO RIGHTS AS A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in such Person’s capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person’s capacity as the Holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Exercise Shares.
15. NOTICES. All notices, requests, demands and other communications
that are required or may be given pursuant to the terms of this Warrant shall be
in writing and shall be deemed delivered (i) on the date of delivery when
delivered by hand on a Business Day during normal business hours or, if
delivered on a day that is not a Business Day or after normal business hours,
then on the next Business Day, (ii) on the date of transmission when sent by
facsimile transmission or email during normal business hours on a Business Day
with telephone confirmation of receipt or, if transmitted on a day that is not a
Business Day or after normal business hours, then on the next Business Day, or
(iii) on the second Business Day after the date of dispatch when sent by a
reputable courier service that maintains records of receipt. The addresses for
notice shall be as set forth in the Purchase Agreement.
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16. CONSENT TO AMENDMENTS. Any term of this Warrant may be amended, and
the Company may take any action herein prohibited, or compliance therewith may
be waived, only if the Company shall have obtained the written consent (and not
without such written consent) to such amendment, action or waiver from the
Holder. No course of dealing between the Company and the Holder nor any delay in
exercising any rights hereunder shall operate as a waiver of any rights of the
Holder.
17. MISCELLANEOUS. In case any provision of this Warrant shall be
invalid, illegal or unenforceable, or partially invalid, illegal or
unenforceable, the provision shall be enforced to the extent, if any, that it
may legally be enforced and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. If
any provision of this Warrant is found to conflict with the Purchase Agreement,
the provisions of this Warrant shall prevail. If any provision of this Warrant
is found to conflict with the Note, the provisions of the Note shall prevail.
THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF DELAWARE
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD PERMIT
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer.
Dated as of June 29, 2020
BIO-KEY INTERNATIONAL, INC. By: Name: Title:
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FORM OF SUBSCRIPTION
(To be signed only on exercise
of Common Stock Purchase Warrant)
TO: BIO-key International, Inc.
1. The undersigned Holder of the attached Warrant hereby elects to
exercise its purchase right under such Warrant to purchase shares of Common
Stock of BIO-key International, Inc., a Delaware corporation (the “Company”), as
follows (check one or more, as applicable):
☐
to exercise the Warrant to purchase __________ shares of Common Stock and to pay
the Aggregate Exercise Price therefor by wire transfer of United States funds to
the account of the Company, which transfer has been made prior to or as of the
date of delivery of this Form of Subscription pursuant to the instructions of
the Company;
and/or
☐
to exercise the Warrant with respect to ____________ shares of Common Stock
pursuant to the net exercise provisions specified in Section 2.3 of the Warrant.
2. In exercising this Warrant, the undersigned Holder hereby confirms
and acknowledges that the shares of Common Stock are being acquired solely for
the account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned shall not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act or any state securities laws. The
undersigned hereby further confirms and acknowledges that it is an “accredited
investor”, as that term is defined under the Securities Act.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other name(s) as is specified below:
Name: Address: TIN:
Dated:
(Signature must conform exactly to name of
Holder as specified on the face of the Warrant)
--------------------------------------------------------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
________________ the right represented by the within Warrant to purchase
shares of Common Stock of BIO-key International, Inc., a Delaware
corporation, to which the within Warrant relates, and appoints _________________
attorney to transfer such right on the books of BIO-key International, Inc.,
with full power of substitution in the premises.
[insert name of Holder] Dated:
By: Title: [insert address of
Holder]
Signed in the presence of:
|
Exhibit 10.5
SECOND SUPPLEMENTAL AGREEMENT
TO LICENSE Agreement DATED DECEMBER 12, 2019
This SECOND SUPPLEMENTAL AGREEMENT (this “Supplement”) is made and entered into
effective as of June 30, 2020 (the “Effective Date”), by and among ATHENEX,
INC., a corporation organized and existing under the laws of the State of
Delaware USA and having its principal office at Conventus Building, 1001 Main
Street, Suite 600, Buffalo, New York 14203, USA (“Athenex”), Chongqing Taihao
Pharmaceutical Co. Ltd., a company organized and existing under the laws of
China and having its principal office at C-5 #105 C-5, Er Lang Chuang Ye Road,
Jiulongpo District, Chongqing, China (“Taihao”), and GUANGZHOU XIANGXUE
PHARMACEUTICAL CO., LTD., a company organized and existing under the laws of
China and having its principal office at 2 Jinfengyuan Road, Guangzhou, China
(“XPH”) Athenex, Taihao, and XPH are sometimes referred to herein individually
as a “Party”, and collectively as the “Parties.”
RECITALS
A.Athenex and XPH entered into a License Agreement, dated as of December 12,
2019, as supplemented by a supplemental agreement dated as of March 31, 2020 by
and among Athenex, Taihao and XPH (collectively, the “License
Agreement”). Capitalized terms used but not defined in this Supplement have the
meanings given to them in the License Agreement.
B.Taihao is a wholly-owned subsidiary of Athenex, which is incorporated and has
an office and business operations in China, and Athenex has determined that it
is in the best interests of Athenex and its subsidiaries for Taihao, under the
framework of the License Agreement, to assist Athenex by providing oversight and
management of such license arrangement in the Territory. Athenex acknowledges
that Taihao has assisted Athenex in fulfilling its obligations in transferring
the relevant license to XPH, and exercising its rights, as licensor under the
License Agreement. Taihao shall collect the relevant License Payments (as
defined below) from XPH, and make the payments to Athenex as set out in this
Supplement.
NOW, THEREFORE, the Parties hereby agree as follows:
1.Purpose. The Parties are entering into this Supplement for purposes of (a)
facilitating the settlement of License Payments (as defined below) by XPH
pursuant to the terms of the License Agreement, and (b) clarifying certain
matters relating to the payment of License Payments and the Parties respective
obligations for Taxes with respect thereto. As used in this Supplement,
“License Payments” means all payments due from XPH to Athenex under the License
Agreement including, without limitation, all upfront fees, regulatory milestone
fees, sales milestone fees, royalties, Change of Control Payments. Except as
specifically modified or supplemented pursuant to this Supplement, the License
Agreement shall continue in full force and effect in accordance with its terms,
with XPH and Athenex being the key parties to the license arrangement set forth
in the License Agreement
--------------------------------------------------------------------------------
2.Taihao’s Services. Athenex hereby retains Taihao to provide, and Taihao hereby
agrees to provide to Athenex, services in connection with the management and
administration of the license arrangement in China as assigned from time to time
by Athenex. As part of its services, Taihao (a) has assisted Athenex in
fulfilling its obligations in transferring the relevant license to XPH, and
exercising its rights, as licensor under the License Agreement; (b) collects all
License Payments from XPH; (c) shall provide management and oversight for the
license arrangement in accordance with the License Agreement; and (d) according
to the License Agreement, shall remit the License Payments (less (i) any Taxes
required to be withheld by Taihao pursuant to the provisions of Section 3
(Payment of License Payments) of this Supplement and (ii) any fees and other
amounts that Athenex agrees to pay to Taihao for performing its services) to
Athenex, as directed by Athenex, by wire transfer of United States Dollars in
immediately available funds to an account designated by Athenex. Except as
otherwise agreed upon by Athenex and Taihao, in consideration for services
performed by Taihao pursuant to this Supplement, Taihao shall remit 97% of the
License Payments received from XPH (less any Taxes required to be withheld by
Taihao) to Athenex.
3.Payment of License Payments.
a.Payments to Taihao. Unless and until Athenex otherwise directs XPH in
writing, Athenex hereby authorizes and directs XPH to pay the License Payments
to Taihao (on behalf of Athenex), pursuant to wire instructions that Athenex and
Taihao delivers to XPH for such purposes. Upon XPH’s payment of any License
Payment to Taihao, XPH shall have satisfied in full its obligation to pay such
License Payment to Athenex pursuant to the License Agreement.
b.Currency. Notwithstanding the provisions of Section 5.7(a) of the License
Agreement (which requires payments in United States Dollars), XPH may make
License Payments to Taihao, for the benefit of Athenex, in Renminbi (“RMB”). The
amount of the License Payment payable in RMB shall be determined based on an
exchange rate agreed upon by Athenex and XPH at the time the applicable License
Payment becomes due.
c.Withholding. Notwithstanding the provisions of Section 5.7(c) of the License
Agreement, XPH will not withhold from any License Payments any income Taxes or
other Taxes. If and to the extent that any Taxes are required to be withheld
from the License Payments under applicable Laws upon Taihao’s remittance of
payment to Athenex, Taihao shall withhold such amounts from the License Payments
and shall pay such amounts to the proper Tax Authorities. If any Tax Authority
notifies XPH that it should have withheld Taxes from the License Payments, or
demands payment of any such Taxes from XPH, XPH shall notify Athenex in writing
of such notification or demand, and XPH and Athenex shall coordinate efforts to
pay, reduce or eliminate required withholding Taxes, in accordance with the
provisions of Section 5.7(c) of the License Agreement. If, following demand by
a Tax Authority (and following such efforts to reduce or eliminate such
withholding Taxes), XPH is required to pay and does pay to any Tax Authority any
withholding Taxes that were required to be withheld from the License Payments
under applicable Law (and for which Athenex is responsible under Section 5.7(c)
of the License Agreement, as modified by this Supplement), Athenex shall
reimburse XPH for the amount of such payment within 30 days after receipt of
evidence of such payment. If Athenex does not reimburse XPH for such payment,
XPH shall have the right to deduct the corresponding amount from future License
Payments.
2
--------------------------------------------------------------------------------
d.Indirect Taxes. Notwithstanding the provisions of Section 5.7(c) of the
License Agreement, Athenex and XPH agree that all Indirect Taxes in connection
with License Payments under the License Agreement shall be borne by Athenex,
rather than XPH; provided, however, that XPH shall be responsible for and shall
pay all import duties and import fees arising as a result of the transactions
contemplated by the License Agreement, which shall not constitute “Indirect
Taxes” under the License Agreement.
4.Binding Effect. This Supplement shall be binding upon and inure to the
benefit of the Parties hereto and their successors and permitted assigns.
5.Governing law This Supplement shall be governed by and construed and enforced
in accordance with the laws of Singapore without reference to any choice of law
principles thereof that would cause the application of the laws of a different
jurisdiction.
6.Counterparts. The Supplement may be executed in two or more counterparts, all
of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to the other Parties. This Supplement may be executed by facsimile
or .pdf signature and a facsimile or .pdf signature shall constitute an original
for all purposes.
7.Modifications. No modification or amendment of this Supplement shall be
effective unless in writing and signed by all Parties.
8.Severability. If any term or provision of this Supplement shall to any extent
be invalid or unenforceable, the remainder of this Supplement shall not be
affected thereby and each provision of this Supplement shall be valid and
enforceable to the fullest extent permitted by law.
[signature page follows]
3
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Parties have executed this Supplement as of the
Effective Date.
Athenex, inc.
By:
/s/ Randoll Sze
Name:
Randoll Sze
Title:
Chief Financial Officer
CHONGQING TAIHAO PHARMACEUTICAL CO. LTD.
By:
/s/ William Zuo
Name:
William Zuo
Title:
President
GUANGZHOU XIANGXUE PHARMACEUTICAL CO., LTD.
By:
/s/ YongHui Wang
Name:
YongHui Wang
Title:
Chief Executive Officer
[signature page to Second Supplemental Agreement]
|
Exhibit 10.1
Published Transaction CUSIP Number: 75343UAA9
Published Revolver CUSIP Number: 75343UAB7
CREDIT AND SECURITY AGREEMENT
among
RAPID7, INC.
RAPID7 LLC
as Borrowers
THE LENDERS NAMED HEREIN
as Lenders
and
KEYBANK NATIONAL ASSOCIATION
as Administrative Agent and Issuing Lender
KEYBANC CAPITAL MARKETS INC.
as Sole Lead Arranger and Sole Book Runner
dated as of
April 23, 2020
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1
Section 1.1.
Definitions 1
Section 1.2.
Accounting Terms 30
Section 1.3.
Terms Generally 31
Section 1.4.
Divisions 31
ARTICLE II. AMOUNT AND TERMS OF CREDIT
31
Section 2.1.
Amount and Nature of Credit 31
Section 2.2.
Revolving Credit Commitment 32
Section 2.3.
Interest 36
Section 2.4.
Evidence of Indebtedness 37
Section 2.5.
Notice of Loans and Credit Events; Funding of Loans 37
Section 2.6.
Payment on Loans and Other Obligations 38
Section 2.7.
Prepayment 39
Section 2.8.
Commitment and Other Fees 40
Section 2.9.
Modifications to Commitment 40
Section 2.10.
Computation of Interest and Fees 41
Section 2.11.
Mandatory Payments 42
Section 2.12.
Cash Collateral 42
Section 2.13.
Liability of Borrowers 43
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED
CAPITAL; TAXES
45
Section 3.1.
Requirements of Law 45
Section 3.2.
Taxes 46
Section 3.3.
Funding Losses 50
Section 3.4.
Change of Lending Office 51
Section 3.5.
Eurodollar Rate Lending Unlawful; Inability to Determine Rate 51
Section 3.6.
Replacement of Lenders 52
Section 3.7.
Discretion of Lenders as to Manner of Funding 52
Section 3.8
Effect of Benchmark Transition Event 53
ARTICLE IV. CONDITIONS PRECEDENT
54
Section 4.1.
Conditions to Each Credit Event 54
Section 4.2.
Conditions to the First Credit Event 55
Section 4.3.
Post-Closing Conditions 57
ARTICLE V. COVENANTS
57
Section 5.1.
Insurance 57
Section 5.2.
Money Obligations 58
Section 5.3.
Financial Statements and Information 58
Section 5.4.
Financial Records 59
Section 5.5.
Franchises; Change in Business 59
Section 5.6.
ERISA Pension and Benefit Plan Compliance 60
Section 5.7.
Financial Covenants 60
Section 5.8.
Borrowing 61
Section 5.9.
Liens 63
i
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Section 5.10.
Regulations T, U and X 65
Section 5.11.
Investments, Loans and Guaranties 65
Section 5.12.
Merger and Sale of Assets 66
Section 5.13.
Acquisitions 68
Section 5.14.
Notice 69
Section 5.15.
Restricted Payments 69
Section 5.16.
Environmental Compliance 70
Section 5.17.
Affiliate Transactions 70
Section 5.18.
Use of Proceeds 71
Section 5.19.
Corporate Names and Locations of Collateral 71
Section 5.20.
Subsidiary Guaranties, Security Documents and Pledge of Stock or Other
Ownership Interest 72
Section 5.21.
Collateral 73
Section 5.22.
Property Acquired Subsequent to the Closing Date and Right to Take Additional
Collateral 75
Section 5.23.
Restrictive Agreements 75
Section 5.24.
[Reserved] 75
Section 5.25.
Amendment of Organizational Documents 75
Section 5.26.
Fiscal Year 76
Section 5.27.
Further Assurances 76
Section 5.28.
Beneficial Ownership 76
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
76
Section 6.1.
Corporate Existence; Subsidiaries; Foreign Qualification 76
Section 6.2.
Corporate Authority 77
Section 6.3.
Compliance with Laws and Contracts 77
Section 6.4.
Litigation and Administrative Proceedings 78
Section 6.5.
Title to Assets 78
Section 6.6.
Liens and Security Interests 78
Section 6.7.
Tax Returns 78
Section 6.8.
Environmental Laws 78
Section 6.9.
Locations 79
Section 6.10.
Continued Business 79
Section 6.11.
Employee Benefits Plans 79
Section 6.12.
Consents or Approvals 80
Section 6.13.
Solvency 80
Section 6.14.
Financial Statements 81
Section 6.15.
Regulations 81
Section 6.16.
Material Agreements 81
Section 6.17.
Intellectual Property 81
Section 6.18.
Insurance 81
Section 6.19.
Deposit Accounts and Securities Accounts 82
Section 6.20.
Accurate and Complete Statements 82
Section 6.21.
Investment Company; Other Restrictions 82
Section 6.22.
Defaults 82
Section 6.23.
Beneficial Ownership 82
ii
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE VII. SECURITY
82
Section 7.1.
Security Interest in Collateral 82
Section 7.2.
Collections and Receipt of Proceeds by Borrowers 82
Section 7.3.
Collections and Receipt of Proceeds by Administrative Agent 83
Section 7.4.
Administrative Agent’s Authority Under Pledged Notes 85
Section 7.5.
Commercial Tort Claims 85
Section 7.6.
Use of Inventory and Equipment 86
ARTICLE VIII. EVENTS OF DEFAULT
86
Section 8.1.
Payments 86
Section 8.2.
Special Covenants 86
Section 8.3.
Other Covenants 86
Section 8.4.
Representations and Warranties 86
Section 8.5.
Cross Default 86
Section 8.6.
ERISA Default 87
Section 8.7.
Change in Control 87
Section 8.8.
Judgments 87
Section 8.9.
Security 87
Section 8.10.
Validity of Loan Documents 87
Section 8.11.
Solvency 88
ARTICLE IX. REMEDIES UPON DEFAULT
88
Section 9.1.
Optional Defaults 88
Section 9.2.
Automatic Defaults 89
Section 9.3.
Letters of Credit 89
Section 9.4.
Offsets 89
Section 9.5.
Equalization Provisions 90
Section 9.6.
Collateral 90
Section 9.7.
Other Remedies 91
Section 9.8.
Application of Proceeds 91
ARTICLE X. THE ADMINISTRATIVE AGENT
93
Section 10.1.
Appointment and Authorization 93
Section 10.2.
Rights as a Lender 93
Section 10.3.
Exculpatory Provisions 94
Section 10.4.
Reliance by the Administrative Agent 95
Section 10.5.
Delegation of Duties 95
Section 10.6.
Resignation of Administrative Agent 95
Section 10.7.
Non-Reliance on Administrative Agent and Other Lenders 96
Section 10.8.
Other Agents 97
Section 10.9.
Administrative Agent May File Proofs of Claim 97
Section 10.10.
Indemnification of Administrative Agent 97
Section 10.11.
Issuing Lender 98
Section 10.12.
No Reliance on Administrative Agent’s Customer Identification Program 98
Section 10.13.
Platform 98
ARTICLE XI. MISCELLANEOUS
99
iii
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TABLE OF CONTENTS
Page
Section 11.1.
Lenders’ Independent Investigation 99
Section 11.2.
No Waiver; Cumulative Remedies 99
Section 11.3.
Amendments, Waivers and Consents 99
Section 11.4.
Notices 101
Section 11.5.
Costs and Expenses 101
Section 11.6.
Indemnification 102
Section 11.7.
Obligations Several; No Fiduciary Obligations 102
Section 11.8.
Execution in Counterparts 102
Section 11.9.
Successors and Assigns 103
Section 11.10.
Defaulting Lenders 107
Section 11.11.
Patriot Act Notice 110
Section 11.12.
Severability of Provisions; Captions; Attachments 110
Section 11.13.
Investment Purpose 110
Section 11.14.
Entire Agreement 110
Section 11.15.
Confidentiality 110
Section 11.16.
Limitations on Liability of the Issuing Lender 111
Section 11.17.
General Limitation of Liability 112
Section 11.18.
No Duty 112
Section 11.19.
Legal Representation of Parties 112
Section 11.20.
Acknowledgement and Consent to Bail-In of Affected Financial Institutions
112
Section 11.21.
Certain ERISA Matters 113
Section 11.22.
Acknowledgement Regarding Any Supported QFCs 114
Section 11.23.
Governing Law; Submission to Jurisdiction 115
Jury Trial Waiver
Signature Page 1
Exhibit A Form of Revolving Credit Note Exhibit B Form of Notice of Loan
Exhibit C Form of Compliance Certificate Exhibit D Form of Assignment and
Assumption Agreement Exhibit E-1 Form of U.S. Tax Compliance Certificate (For
Foreign Lenders That Are Not
Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-2 Form of U.S. Tax Compliance Certificate (For Foreign Participants
That
Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-3 Form of U.S. Tax Compliance Certificate (For Foreign Participants
That Are
Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-4 Form of U.S. Tax Compliance Certificate (For Foreign Lenders That
Are
Partnerships For U.S. Federal Income Tax Purposes)
Schedule 1 Commitments of Lenders
iv
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This CREDIT AND SECURITY AGREEMENT (as the same may from time to time be
amended, restated or otherwise modified, this “Agreement”) is dated April 23,
2020 among:
(a) RAPID7, INC., a Delaware corporation (“Rapid7, Inc.”);
(b) RAPID7 LLC, a Delaware limited liability company (“Rapid7 LLC” and, together
with Rapid7 Inc., collectively, the “Borrowers” and, individually, each a
“Borrower”);
(c) the lenders listed on Schedule 1 hereto and each other Eligible Assignee, as
hereinafter defined, that from time to time becomes a party hereto pursuant to
Section 2.9(b) or 11.10 hereof (collectively, the “Lenders” and, individually,
each a “Lender”); and
(d) KEYBANK NATIONAL ASSOCIATION, a national banking association, as the
administrative agent for the Lenders under this Agreement (the “Administrative
Agent”) and the Issuing Lender.
WITNESSETH:
WHEREAS, the Borrowers, the Administrative Agent and the Lenders desire to
contract for the establishment of credits in the aggregate principal amounts
hereinafter set forth, to be made available to the Borrowers upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
“Account” means an account, as that term is defined in the U.C.C.
“Account Debtor” means an account debtor, as that term is defined in the U.C.C.,
or any other Person obligated to pay all or any part of an Account in any manner
and includes (without limitation) any Guarantor thereof.
“Acquired Indebtedness” means Indebtedness of a Person whose assets or equity
interests are acquired by a Credit Party or any of its Subsidiaries in an
Acquisition permitted pursuant to Section 5.13 hereof; provided that such
Indebtedness (a) is either purchase money Indebtedness or a capital lease with
respect to Equipment or mortgage financing with respect to real property,
(b) was in existence prior to the date of such Acquisition, and (c) was not
incurred in connection with, or in contemplation of, such Acquisition.
--------------------------------------------------------------------------------
“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of any Person (other than a Company), or any
business or division of any Person (other than a Company), (b) the acquisition
of in excess of fifty percent (50%) of the outstanding capital stock (or other
equity interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.
“Additional Commitment” means that term as defined in Section 2.9(b)(i) hereof.
“Additional Lender” means an Eligible Assignee that shall become a Lender during
the Commitment Increase Period pursuant to Section 2.9(b) hereof.
“Additional Lender Assumption Agreement” means an additional lender assumption
agreement, in form and substance satisfactory to the Administrative Agent,
wherein an Additional Lender shall become a Lender.
“Additional Lender Assumption Effective Date” means that term as defined in
Section 2.9(b)(ii) hereof.
“Administrative Agent” means that term as defined in the first paragraph of this
Agreement.
“Administrative Agent Fee Letter” means the Fee Letter between the Borrowers,
the Administrative Agent and KeyBanc Capital Markets Inc., dated as of April 9,
2020.
“Administrative Borrower” means Rapid7, Inc.
“Advantage” means any payment (whether made voluntarily or involuntarily, by
offset of any deposit or other indebtedness or otherwise) received by any Lender
in respect of the Obligations, if such payment results in that Lender having
less than its pro rata share (based upon its Commitment Percentage) of the
Obligations then outstanding.
“Affected Financial Institution” means (a) any EEA Financial Institution or
(b) any UK Financial Institution.
“Affiliate” means any Person, directly or indirectly, controlling, controlled by
or under common control with a Company and “control” (including the correlative
meanings, the terms “controlling”, “controlled by” and “under common control
with”) means the power, directly or indirectly, to direct or cause the direction
of the management and policies of a Company, whether through the ownership of
voting securities, by contract or otherwise.
“Agreement” means that term as defined in the first paragraph of this agreement.
2
--------------------------------------------------------------------------------
“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Companies from time to time concerning or
relating to bribery or corruption (including, without limitation, the Foreign
Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq.), as amended,
and the rules and regulations thereunder).
“Applicable Commitment Fee Rate” means twenty (20.00) basis points.
“Applicable Margin” means two hundred fifty (250.00) basis points for Eurodollar
Loans and zero (0.00) basis points for Base Rate Loans.
“Approved Fund” means any Person (other than a natural Person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans, bonds and similar extensions of credit in the ordinary course of its
activities that is administered or managed by (a) a Lender, (b) an Affiliate of
a Lender, or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.
“Assignment Agreement” means an Assignment and Assumption Agreement entered into
by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 11.9 hereof), and accepted by the Administrative
Agent, in substantially the form of Exhibit D, or any other form approved by the
Administrative Agent.
“Authorized Officer” means a Financial Officer or other individual authorized by
a Financial Officer in writing (with a copy to the Administrative Agent) to
handle certain administrative matters in connection with this Agreement.
“Available Liquidity” means, as of any date of determination, the sum of (a) the
Revolving Amount minus the Revolving Credit Exposure, plus (b) all unencumbered
(other than a Lien of the Administrative Agent), unrestricted cash on hand of
the Credit Parties plus any Cash Equivalents of the Credit Parties, in each
case, held at financial institutions (or in the case of Cash Equivalents,
securities intermediaries) located in the United States.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable Resolution Authority in respect of any liability of an Affected
Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, regulation rule or
requirement for such EEA Member Country from time to time which is described in
the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom,
Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and
any other law, regulation or rule applicable in the United Kingdom relating to
the resolution of unsound or failing banks, investment firms or other financial
institutions or their Affiliates (other than through liquidation, administration
or other insolvency proceedings).
3
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“Bank Product Agreements” means those certain cash management services and other
agreements entered into from time to time between a Company and the
Administrative Agent or a Lender (or an Affiliate of a Lender) in connection
with any of the Bank Products.
“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees and expenses owing by a Company to the
Administrative Agent or any Lender (or an Affiliate of a Lender) pursuant to or
evidenced by the Bank Product Agreements.
“Bank Products” means a service or facility extended to a Company by the
Administrative Agent or any Lender (or an Affiliate of a Lender) for (a) credit
cards and credit card processing services, (b) debit cards, purchase cards and
stored value cards, (c) ACH transactions, and (d) cash management, including
controlled disbursement, accounts or services.
“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now or hereafter in effect, or any successor thereto, as
hereafter amended.
“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the
Prime Rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds
Effective Rate, and (c) one percent (1%) in excess of the Eurodollar Rate with
an Interest Period of one month (or, if such day is not a Business Day, such
rate as calculated on the most recent Business Day). Any change in the Base Rate
shall be effective immediately from and after such change in the Base Rate.
“Base Rate Loan” means a Revolving Loan described in Section 2.2(a) hereof, that
shall be denominated in Dollars and on which the Borrowers shall pay interest at
the Derived Base Rate.
“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate
(which may include Term SOFR) that has been selected by the Administrative Agent
and the Administrative Borrower giving due consideration to (i) any selection or
recommendation of a replacement rate or the mechanism for determining such a
rate by the Relevant Governmental Body, or (ii) any evolving or then-prevailing
market convention for determining a rate of interest as a replacement to the
Eurodollar Rate for Dollar-denominated syndicated credit facilities at such
time, and (b) the Benchmark Replacement Adjustment; provided that, if the
Benchmark Replacement as so determined would be less than one percent (1.00%),
the Benchmark Replacement will be deemed to be one percent (1.00%) for the
purposes of this Agreement.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the
Eurodollar Rate with an Unadjusted Benchmark Replacement for each applicable
Interest Period, the spread adjustment, or method for calculating or determining
such spread adjustment (which may be a positive or negative value or zero) that
has been selected by the Administrative Agent and the Borrowers giving due
consideration to (a) any selection or recommendation of a spread adjustment, or
method for calculating or determining such spread adjustment, for the
replacement of the Eurodollar Rate with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body, or (b) any evolving or
then-prevailing market convention for determining a spread adjustment, or method
for calculating or determining such spread adjustment, for the replacement of
the Eurodollar Rate with the applicable Unadjusted Benchmark Replacement for
Dollar-denominated syndicated credit facilities at such time.
4
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“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the definition of “Base Rate,” the definition of “Interest Period,”
timing and frequency of determining rates and making payments of interest and
other administrative matters) that the Administrative Agent decides may be
appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Administrative Agent
in a manner substantially consistent with market practice (or, if the
Administrative Agent decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of the Benchmark
Replacement exists, in such other manner of administration as the Administrative
Agent decides is reasonably necessary in connection with the administration of
this Agreement).
“Benchmark Replacement Date” means the earlier to occur of the following events
with respect to the Eurodollar Rate:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition
Event,” the later of (i) the date of the public statement or publication of
information referenced therein, and (ii) the date on which the administrator of
the Eurodollar Rate permanently or indefinitely ceases to provide the Eurodollar
Rate; or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,”
the date of the public statement or publication of information referenced
therein.
“Benchmark Transition Event” means the occurrence of one or more of the
following events with respect to the Eurodollar Rate:
(a) a public statement or publication of information by or on behalf of the
administrator of the Eurodollar Rate announcing that such administrator has
ceased or will cease to provide the Eurodollar Rate, permanently or
indefinitely, provided that, at the time of such statement or publication, there
is no successor administrator that will continue to provide the Eurodollar Rate;
(b) a public statement or publication of information by the regulatory
supervisor for the administrator of the Eurodollar Rate, the United States
Federal Reserve System, an insolvency official with jurisdiction over the
administrator for the Eurodollar Rate, a resolution authority with jurisdiction
over the administrator for the Eurodollar Rate or a court or an entity with
similar insolvency or resolution authority over the administrator for the
Eurodollar Rate, which states that the administrator of the Eurodollar Rate has
ceased or will cease to provide the Eurodollar Rate permanently or indefinitely,
provided that, at the time of such statement or publication, there is no
successor administrator that will continue to provide the Eurodollar Rate; or
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(c) a public statement or publication of information by the regulatory
supervisor for the administrator of the Eurodollar Rate or a Relevant
Governmental Body announcing that the Eurodollar Rate is no longer
representative.
“Benchmark Transition Start Date” means (a) in the case of a Benchmark
Transition Event, the earlier of (i) the applicable Benchmark Replacement Date,
and (ii) if such Benchmark Transition Event is a public statement or publication
of information of a prospective event, the ninetieth (90th) day prior to the
expected date of such event as of such public statement or publication of
information (or if the expected date of such prospective event is fewer than
ninety (90) days after such statement or publication, the date of such statement
or publication), and (b) in the case of an Early Opt-in Election, the date
specified by the Administrative Agent or the Required Lenders, as applicable, by
notice to the Administrative Borrower, the Administrative Agent and the Lenders.
“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its
related Benchmark Replacement Date have occurred with respect to the Eurodollar
Rate and solely to the extent that the Eurodollar Rate has not been replaced
with a Benchmark Replacement, the period (a) beginning at the time that such
Benchmark Replacement Date has occurred if, at such time, no Benchmark
Replacement has replaced the Eurodollar Rate for all purposes hereunder in
accordance with Section 3.8 hereof, and (b) ending at the time that a Benchmark
Replacement has replaced the Eurodollar Rate for all purposes hereunder pursuant
to Section 3.8 hereof.
“Beneficial Ownership Certification” means a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA)
that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to
Section 4975 of the Code or (c) any Person whose assets include (for purposes of
ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or
Section 4975 of the Code) the assets of any such “employee benefit plan” or
“plan”.
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Borrower” means that term as defined in the first paragraph of this Agreement.
“Borrowers” means that term as defined in the first paragraph of this Agreement.
“Business Day” means a day that is not a Saturday, a Sunday or another day of
the year on which national banks are authorized or required to close in
Cleveland, Ohio, and, in addition, if the applicable Business Day relates to a
Eurodollar Loan, is a day of the year on which dealings in Dollar deposits are
carried on in the London interbank Eurodollar market.
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“Capital Distribution” means a payment made, liability incurred or other
consideration given by a Company to any Person that is not a Company, (a) for
the purchase, acquisition, redemption, repurchase, payment or retirement of any
capital stock or other equity interest of such Company, or (b) as a dividend,
return of capital or other distribution (other than any stock dividend, stock
split, restricted stock award under any such Company’s equity compensation
plans, stock distribution in connection with an Acquisition permitted by
Section 5.13 hereof, or other equity distribution, in each case payable only in
capital stock or other equity of such Company) in respect of such Company’s
capital stock or other equity interest.
“Capitalized Lease Obligations” means obligations of the Companies for the
payment of rent for any real or personal property under leases or agreements to
lease that, in accordance with GAAP, have been or should be capitalized on the
books of the lessee and, for purposes hereof, the amount of any such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash Collateral Account” means a commercial Deposit Account designated as a
“cash collateral account” and maintained by one or more Credit Parties with the
Administrative Agent, without liability by the Administrative Agent or the
Lenders to pay interest thereon, from which account the Administrative Agent, on
behalf of the Lenders, shall have the exclusive right to withdraw funds until
all of the Secured Obligations are paid in full.
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Issuing Lender or one or more
Lenders, as collateral for the Letter of Credit Exposure or obligations of
Lenders to fund participations in respect of the Letter of Credit Exposure, cash
or deposit account balances or, if the Administrative Agent and the Issuing
Lender shall agree in its sole discretion, other credit support, in each case
pursuant to documentation in form and substance reasonably satisfactory to the
Administrative Agent and the Issuing Lender. “Cash Collateral” shall have a
meaning analogous to the foregoing and shall include the proceeds of such cash
collateral and other credit support.
“Cash Equivalent” means cash equivalent as determined in accordance with GAAP.
“Cash Security” means all cash, instruments, Deposit Accounts, Securities
Accounts and cash equivalents, in each case whether matured or unmatured,
whether collected or in the process of collection, upon which a Credit Party
presently has or may hereafter have any claim or interest, wherever located,
including but not limited to any of the foregoing that are presently or may
hereafter be existing or maintained with, issued by, drawn upon by, or in the
possession of the Administrative Agent or any Lender.
“CFC” means a Controlled Foreign Corporation, as such term is defined in
Section 957(a) of the Code.
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“Change in Control” means:
(a) the acquisition of, or, if earlier, the shareholder or director approval of
the acquisition of, ownership or voting control, directly or indirectly,
beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act)
or of record, on or after the Closing Date, by any Person or group (within the
meaning of Sections 13d and 14d of the Exchange Act), of shares representing
more than forty percent (40%) of the aggregate ordinary Voting Power represented
by the issued and outstanding equity interests of the Borrower; and
(b) if, at any time during any period of twenty-four (24) consecutive months, a
majority of the members of the board of directors of Rapid7, Inc. cease to be
composed of individuals (i) who were members of that board of directors on the
first day of such period, (ii) whose election or nomination to that board of
directors was approved by individuals referred to in subpart (i) above that
constituted, at the time of such election or nomination, at least a majority of
that board of directors, or (iii) whose election or nomination to that board of
directors was approved by individuals referred to in subparts (i) and (ii) above
that constituted, at the time of such election or nomination, at least a
majority of that board of directors.
“Change in Law” means the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any Law, rule, regulation or
treaty, (b) any change in any Law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority, or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that, notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Act and all requests, rules, guidelines or
directives thereunder, or issued in connection therewith, and (ii) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.
“Closing Date” means April 23, 2020.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means (a) all of each Borrower’s existing and future (i) personal
property, (ii) Accounts, Investment Property, instruments, contract rights,
chattel paper, documents, supporting obligations, letter-of-credit rights,
Pledged Securities, Pledged Notes (if any), Commercial Tort Claims, General
Intangibles, Inventory and Equipment, (iii) funds now or hereafter on deposit in
the Cash Collateral Account, if any, and (iv) Cash Security; and (b) Proceeds
and products of any of the foregoing; provided that Collateral shall not include
Excluded Property.
“Commercial Tort Claim” means a commercial tort claim, as that term is defined
in the U.C.C. (Schedule 7.5 of the Confidential Disclosure Letter lists all
Commercial Tort Claims of the Credit Parties in existence as of the Closing Date
for which the amount in controversy exceeds Five Million Dollars ($5,000,000)).
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“Commitment” means the obligation hereunder of the Lenders, during the
Commitment Period, to make Loans and to participate in the issuance of Letters
of Credit pursuant to the Revolving Credit Commitment, up to the Total
Commitment Amount.
“Commitment Increase Period” means the period from the Closing Date to the date
that is six months prior to the last day of the Commitment Period.
“Commitment Percentage” means, for each Lender, the percentage, if any, set
forth opposite such Lender’s name under the column headed “Revolving Credit
Commitment Percentage”, as set forth on Schedule 1 hereto, subject to
assignments of interests pursuant to Section 11.10 hereof, reductions pursuant
to Section 2.9(a) hereof and increases pursuant to Section 2.9(b) hereof.
“Commitment Period” means the period from the Closing Date to the earlier of
(a) April 23, 2023, (b) ninety (90) days prior to the scheduled maturity of any
Convertible Debt Securities, or (c) such earlier date on which the Commitment
shall have been terminated pursuant to Article IX hereof.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, together with the rules and regulations
promulgated thereunder.
“Companies” means the Borrowers and all Subsidiaries of all Borrowers.
“Company” means a Borrower or a Subsidiary of a Borrower.
“Compliance Certificate” means a Compliance Certificate in the form of the
attached Exhibit C.
“Confidential Disclosure Letter” means the disclosure letter from the Borrowers
to the Administrative Agent and the Lenders delivered on the Closing Date, as
the same may from time to time be supplemented, amended, restated or otherwise
modified.
“Confidential Information” means all confidential or proprietary information
about the Companies that has been furnished by any Company to the Administrative
Agent or any Lender, whether furnished before or after the Closing Date and
regardless of the manner in which it is furnished, but does not include any such
information that (a) is or becomes generally available to the public other than
as a result of a disclosure by the Administrative Agent or such Lender not
permitted by this Agreement, (b) was available to the Administrative Agent or
such Lender on a nonconfidential basis prior to its disclosure to the
Administrative Agent or such Lender, or (c) becomes available to the
Administrative Agent or such Lender on a nonconfidential basis from a Person
other than any Company that is not, to the knowledge of the Administrative Agent
or such Lender, acting in violation of a confidentiality agreement with a
Company or is not otherwise prohibited from disclosing the information to the
Administrative Agent or such Lender.
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“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.
“Consideration” means, in connection with an Acquisition, the aggregate
consideration paid or to be paid, including borrowed funds, cash, deferred
payments, the issuance of securities or notes, the assumption or incurring of
liabilities (direct or contingent), the payment of consulting fees or fees for a
covenant not to compete and any other consideration paid or to be paid for such
Acquisition.
“Consolidated” means the resultant consolidation of the financial statements of
Rapid7, Inc. and its Subsidiaries in accordance with GAAP, including principles
of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.14 hereof.
“Consolidated Net Worth” means, at any date, the stockholders’ equity of Rapid7,
Inc., determined as of such date on a Consolidated basis.
“Control Agreement” means a Deposit Account Control Agreement or Securities
Account Control Agreement.
“Controlled Group” means a Company and each Person required to be aggregated
with a Company under Code Section 414(b), (c), (m) or (o).
“Convertible Debt Securities” means debt securities, the terms of which provide
for conversion into, or exchange for, equity interests of Rapid7, Inc., cash (in
an amount determined by reference to the price of such equity interests) or a
combination of equity interests and/or cash (in an amount determined by
reference to the price of such equity interests), including the Existing
Convertible Notes.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 382.2(b).
“Credit Event” means the making by the Lenders of a Loan, the conversion by the
Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the
Lenders of a Eurodollar Loan after the end of the applicable Interest Period, or
the issuance (or amendment or renewal) by the Issuing Lender of a Letter of
Credit.
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“Credit Party” means a Borrower, and any Subsidiary or other Affiliate of a
Borrower that is a Guarantor of Payment.
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions, from
time to time in effect.
“Default” means an event or condition that constitutes, or with the lapse of any
applicable grace period or the giving of notice or both would constitute, an
Event of Default, and that has not been waived by the Required Lenders (or, if
required hereunder, all of the Lenders) in writing.
“Default Rate” means (a) with respect to any Loan or other Obligation for which
a rate is specified, a rate per annum equal to two percent (2%) in excess of the
rate otherwise applicable thereto, and (b) with respect to any other amount, if
no rate is specified or available, a rate per annum equal to two percent (2%) in
excess of the Derived Base Rate from time to time in effect.
“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.
“Defaulting Lender” means, subject to Section 11.10(b) hereof, any Lender that
(a) has failed to (i) fund all or any portion of its Loans within two Business
Days of the date such Loans were required to be funded hereunder, unless such
Lender notifies the Administrative Agent and the Administrative Borrower in
writing that such failure is the result of such Lender’s determination that one
or more conditions precedent to funding (each of which conditions precedent,
together with any applicable default, shall be specifically identified in such
writing) has not been satisfied, or (ii) pay to the Administrative Agent, the
Issuing Lender or any other Lender any other amount required to be paid by it
hereunder (including in respect of its participation in Letters of Credit)
within two Business Days of the date when due, (b) has notified the
Administrative Borrower, the Administrative Agent or the Issuing Lender in
writing that it does not intend to comply with its funding obligations under
this Agreement, or has made a public statement to that effect (unless such
writing or public statement relates to such Lender’s obligation to fund a Loan
hereunder and states that such position is based on such Lender’s determination
that a condition precedent to funding (which condition precedent, together with
any applicable default, shall be specifically identified in such writing or
public statement) cannot be satisfied), (c) has failed, within three Business
Days after written request by the Administrative Agent or the Administrative
Borrower, to confirm in writing to the Administrative Agent and the
Administrative Borrower that it will comply with its prospective funding
obligations hereunder (provided that such Lender shall cease to be a Defaulting
Lender pursuant to this subpart (c) upon receipt of such written confirmation by
the Administrative Agent and the Administrative Borrower), or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state or federal regulatory
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authority acting in such a capacity, or (iii) become the subject of a Bail-In
Action; provided that, a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of any equity interest in that Lender, or
any direct or indirect parent company thereof, by a Governmental Authority, so
long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts within the United States, or from the
enforcement of judgments or writs of attachment on its assets, or permit such
Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under any one
or more of subparts (a) through (d) above shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 11.10(b) hereof) upon delivery of written notice of such
determination to the Administrative Borrower, the Issuing Lender and each
Lender.
“Deposit Account” means a deposit account, as that term is defined in the U.C.C.
“Deposit Account Control Agreement” means each Deposit Account Control Agreement
(or similar agreement with respect to a Deposit Account) among a Credit Party,
the Administrative Agent and a depository institution, dated on or after the
Closing Date, to be in form and substance reasonably satisfactory to the
Administrative Agent, as the same may from time to time be amended, restated or
otherwise modified.
“Derived Base Rate” means a rate per annum equal to the sum of the Applicable
Margin for Base Rate Loans plus the Base Rate.
“Derived Eurodollar Rate” means a rate per annum equal to the sum of the
Applicable Margin for Eurodollar Loans plus the Eurodollar Rate.
“Disposition” means the lease, transfer or other disposition of assets (whether
in one or more than one transaction) by a Company, other than a sale, lease,
transfer or other disposition made by a Company to another Company or in the
ordinary course of business.
“Dodd-Frank Act” means the Dodd–Frank Wall Street Reform and Consumer Protection
Act (Pub.L. 111-203, H.R. 4173) signed into law on July 21, 2010, as amended
from time to time.
“Dollar” or the $ sign means lawful currency of the United States.
“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.
“Dormant Subsidiary” means a Company that (a) is not a Credit Party or the
direct or indirect equity holder of a Credit Party, (b) has aggregate assets of
less than Two Hundred Fifty Thousand Dollars ($250,000), and (c) has no direct
or indirect Subsidiaries with aggregate assets, for such Company and all such
Subsidiaries, of more than Two Hundred Fifty Thousand Dollars ($250,000).
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“Early Opt-in Election” means the occurrence of:
(a) a determination by the Administrative Agent that Dollar-denominated
syndicated credit facilities being executed at such time, or that include
language similar to that contained in Section 3.8 hereof are being executed or
amended, as applicable, to incorporate or adopt a new benchmark interest rate to
replace the Eurodollar Rate, and
(b) the election by the Administrative Agent to declare that an Early Opt-in
Election has occurred and the provision by the Administrative Agent of written
notice of such election to the Administrative Borrower and the Lenders.
“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in subpart (a) of this definition,
or (c) any financial institution established in an EEA Member Country that is a
subsidiary of an institution described in subparts (a) or (b) of this definition
and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 11.9(b)(iii), (v) and (vi) hereof (subject to such
consents, if any, as may be required under Section 11.9(b)(iii) hereof).
“Environmental Laws” means all provisions of law (including the common law),
statutes, ordinances, codes, rules, guidelines, policies, procedures,
orders-in-council, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, authorizations, certificates, approvals,
registrations, awards and standards promulgated by a Governmental Authority or
by any court, agency, instrumentality, regulatory authority or commission of any
of the foregoing concerning environmental health or safety and protection of
natural resources, or regulation of the discharge of substances into, the
environment.
“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
“Equipment” means equipment, as that term is defined in the U.C.C.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
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“ERISA Event” means any of the following situations, occurrences or events, but
only if it has a Material Adverse Effect: (a) the existence of a condition or
event with respect to an ERISA Plan that presents a significant risk of the
imposition of an excise tax or any other material liability on a Company or of
the imposition of a Lien on the assets of a Company; (b) the engagement by a
Company in a non-exempt “prohibited transaction” (as defined under ERISA
Section 406 or Code Section 4975) or a breach of a fiduciary duty under ERISA
that could result in liability to a Company; (c) the application by a Controlled
Group member for a waiver from the minimum funding requirements of Code
Section 412 or ERISA Section 302 or a Controlled Group member is required to
provide security under Code Section 401(a)(29) or ERISA Section 307;); (d) the
occurrence of a Reportable Event with respect to any Pension Plan administered
by a Company or a Controlled Group member as to which notice is required to be
provided to the PBGC; (e) the withdrawal by a Controlled Group member from a
Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as such
terms are defined in ERISA Sections 4203 and 4205, respectively); (f) the
involvement of, or occurrence or existence of any event or condition that makes
likely the involvement of, a Multiemployer Plan in any reorganization under
ERISA Section 4241; (g) the failure of an ERISA Plan administered by a Company
or a Controlled Group member (and any related trust) that is intended to be
qualified under Code Sections 401 and 501 to be so qualified or the failure of
any “cash or deferred arrangement” under any such ERISA Plan to meet the
requirements of Code Section 401(k); (h) the taking by the PBGC of any steps to
terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or
the taking by a Controlled Group member of any steps to terminate a Pension
Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy
any requirements of law applicable to an ERISA Plan; (j) the commencement,
existence or threatening of a claim, action, suit, audit or investigation with
respect to an ERISA Plan, other than a routine claim for benefits; or (k) any
incurrence by or any expectation of the incurrence by a Controlled Group member
of any liability for post-retirement benefits under any Welfare Plan, other than
as required by ERISA Section 601, et. seq. or Code Section 4980B.
“ERISA Plan” means an “employee benefit plan” (within the meaning of ERISA
Section 3(3)) that a Controlled Group member at any time sponsors, maintains,
contributes to, has liability with respect to or has an obligation to contribute
to such plan.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor entity), as in effect
from time to time.
“Eurocurrency Liabilities” shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
“Eurodollar” means a Dollar denominated deposit in a bank or branch outside of
the United States.
“Eurodollar Loan” means a Revolving Loan described in Section 2.2(a) hereof,
that shall be denominated in Dollars and on which the Borrowers shall pay
interest at the Derived Eurodollar Rate.
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“Eurodollar Rate” means, with respect to a Eurodollar Loan, for any Interest
Period, a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of interest,
determined by the Administrative Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) as of
approximately 11:00 A.M. (London time) two Business Days prior to the beginning
of such Interest Period pertaining to such Eurodollar Loan, as listed as the
London interbank offered rate, as published by Thomson Reuters or Bloomberg (or,
if for any reason such rate is unavailable from Thomson Reuters or Bloomberg,
from any other similar company or service that provides rate quotations
comparable to those currently provided by Thomson Reuters or Bloomberg) for
Dollar deposits in immediately available funds with a maturity comparable to
such Interest Period; by (b) 1.00 minus the Reserve Percentage. Notwithstanding
the foregoing, if at any time the Eurodollar Rate, as determined above, is less
than one percent (1.00%), it shall be deemed to be one percent (1.00%) for
purposes of this Agreement.
“Event of Default” means an event or condition that shall constitute an event of
default as defined in Article VIII hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Accounts” means (a) accounts used exclusively for payroll, payroll
taxes or other employee benefit or wage payments, (b) any fiduciary or trust
account held exclusively for the benefit of an unaffiliated third party,
(c) such other accounts as may be agreed to in writing by the Administrative
Agent in its sole discretion, (d) any account used solely to cash collateralize
the SVB Letters of Credit, (e) accounts acquired pursuant to an Acquisition that
secure applicable Acquired Indebtedness (but only so long as such Acquired
Indebtedness remains outstanding), and (f) zero balance accounts. For the
avoidance of doubt, an Excluded Account may be a Deposit Account or a Securities
Account.
“Excluded Property” means (a) licenses and contracts which by the terms of such
licenses and contracts prohibit liens on, or the assignment of, such agreements
(to the extent such prohibition is enforceable at law and is in effect); (b) any
trademark applications for which a statement of use has not been filed (but only
until such statement is filed); (c) any rights or interest in any contract,
lease, permit, license, or license agreement covering personal property of any
Credit Party if under the terms of such contract, lease, permit, license, or
license agreement, or applicable Law or regulation with respect thereto, the
grant of a security interest or lien therein is prohibited as a matter of law or
under such regulation or under the terms of such contract, lease, permit,
license, or license agreement and such prohibition or restriction has not been
waived or the consent of the other party to such contract, lease, permit,
license, or license agreement has not been obtained (provided that, (i) the
foregoing exclusions shall in no way be construed (A) to apply to the extent
that any described prohibition or restriction is unenforceable or ineffective
under Section 9-406, 9-407, 9-408, or 9-409 of the U.C.C. or other applicable
Law or regulation, or (B) to apply to the extent that any consent or waiver has
been obtained that would permit Administrative Agent’s security interest or lien
to attach thereto notwithstanding the prohibition or restriction contained in
such contract, lease, permit, license, or license agreement or under applicable
Law or regulation, and (ii) the foregoing exclusions shall in no way be
construed to limit, impair, or otherwise affect Administrative Agent’s
continuing security interests in and liens upon any rights or interests of any
Credit Party in or to (1) monies due or to become due under or in connection
with any described contract, lease, permit, license, license agreement, or
equity interests (including any Accounts), or (2) any proceeds from the
collection,
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sale, license, lease, or other dispositions of any such contract, lease, permit,
license, license agreement, or equity interests); (d) any United States
intent-to-use trademark applications to the extent that, and solely during the
period in which, the grant of a security interest therein would impair the
validity or enforceability, or result in the abandonment, voiding or
cancellation, of such intent-to-use trademark applications under applicable
federal law, provided that upon submission and acceptance by the USPTO of an
amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor
provision), such intent-to-use trademark application shall be considered
Collateral; (e) real property; (f) shares of voting capital stock or other
voting equity interests in any Foreign Subsidiary or FSHCO in excess of
sixty-five percent (65%) of the total outstanding shares of each class of voting
capital stock or other voting equity interest of such Foreign Subsidiary or
FSHCO; and (g) motor vehicles and other assets subject to a certificate of title
statute, except to the extent perfection of a security interest therein may be
accomplished by filing of financing statements in appropriate form in a central
filing office located in the jurisdiction in which the granting Credit Party is
organized; provided that “Excluded Property” shall not include any Proceeds,
products, substitutions or replacements of any Excluded Property (unless such
Proceeds, products, substitutions or replacements would constitute Excluded
Property).
“Excluded Swap Obligations” means, with respect to any Credit Party, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Credit Party of, or the grant by such Credit Party of a security interest to
secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal
under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of such Credit Party’s failure to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act (determined after giving effect to any “keepwell, support or other
agreement” for the benefit of such Credit Party and any and all guarantees of
such Credit Party’s Swap Obligations by other Credit Parties), at the time such
guarantee or grant of security interest of such Credit Party becomes, or would
become, effective with respect to such Swap Obligation. If a Swap Obligation
arises under a master agreement governing more than one swap, such exclusion
shall apply only to the portion of such Swap Obligation that is attributable to
swaps for which such guarantee or security interest is, or becomes, illegal.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
branch profits Taxes, and franchise Taxes, in each case (i) imposed by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Recipient is organized or in which its principal office is located, or, in the
case of any Lender, in which its applicable lending office is located or
(ii) that otherwise are Other Connection Taxes, (b) in the case of a Lender,
United States federal withholding Taxes imposed on amounts payable to or for the
account of such Lender with respect to an applicable interest in a Loan or
Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan or Commitment, or (ii) such Lender changes
its lending office, except in each case to the extent that, pursuant to
Section 3.2, amounts with respect to such Taxes were payable either to such
Lender’s assignor immediately before such Lender became a party hereto, or to
such Lender immediately before it changed its lending office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 3.2(c), (d), (e)
and (f), or to deliver the documentation described in Section 3.2(e), and
(d) any withholding Taxes imposed under FATCA.
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“Existing Convertible Notes” means the Convertible Debt Securities issued by
Rapid7, Inc. pursuant to the Convertible Note Indenture.
“Existing Convertible Notes Indenture” means that certain Indenture, dated as of
August 13, 2018, between Rapid7, Inc. and U.S. Bank National Association, as
trustee.
“FATCA” means Sections 1471 through 1474 of the Code, as in effect on the
Closing Date (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), and any current or
future regulations or official interpretations thereof and any agreements
entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental
agreement entered into in connection with the implementation of such sections of
the Code, and any fiscal or regulatory legislation, rules, or practices adopted
pursuant to any intergovernmental agreement, treaty or convention among
Governmental Authorities implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded
upward to the nearest one one-hundredth of one percent (1/100 of 1%)) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being
the weighted average of the rates on overnight federal funds transactions
arranged by federal funds brokers on the previous trading day, as computed and
announced by such Federal Reserve Bank (or any successor) in substantially the
same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the “Federal Funds Effective Rate” as of the Closing
Date.
“Federal Reserve Bank of New York’s Website” means the website of the Federal
Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
“Financial Officer” means any of the following officers: chief executive
officer, president, chief financial officer or controller. Unless otherwise
qualified, all references to a Financial Officer in this Agreement shall refer
to a Financial Officer of the Administrative Borrower.
“Foreign Lender” means (a) if a Borrower is a U.S. Person, a Lender that is not
a U.S. Person, and (b) if a Borrower is not a U.S. Person, a Lender that is
resident or organized under the laws of a jurisdiction other than that in which
such Borrower is resident for tax purposes.
“Foreign Subsidiary” means a Subsidiary that is organized under the laws of any
jurisdiction other than the United States, any State thereof or the District of
Columbia.
“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to the Issuing Lender, such Defaulting Lender’s outstanding Letter of
Credit Exposure (to the extent of such Defaulting Lender’s Commitment Percentage
of the Revolving Credit Commitment) with respect to Letters of Credit issued by
the Issuing Lender, other than Letter of Credit Exposure as to which such
Defaulting Lender’s participation obligation has been reallocated to other
Lenders or Cash Collateralized in accordance with the terms hereof.
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“FSHCO” means any Domestic Subsidiary (including any disregarded entity for U.S.
federal income tax purposes), substantially all of the assets of which consist
of, directly or indirectly, equity interests in (or equity interests in and
indebtedness of) one or more CFCs.
“GAAP” means generally accepted accounting principles in the United States as
then in effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Rapid7, Inc.
“General Intangibles” means (a) general intangibles, as that term is defined in
the U.C.C.; and (b) choses in action, causes of action, intellectual property,
customer lists, corporate or other business records, inventions, designs,
patents, patent applications, service marks, registrations, trade names,
trademarks, copyrights, licenses, goodwill, computer software, rights to
indemnification and tax refunds.
“Governmental Authority” means any nation or government, any state, province or
territory, or any local or other political subdivision thereof, any governmental
agency, including state public utility commissions, department, authority,
instrumentality, regulatory body, court, central bank or other governmental
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank),
any securities exchange and any self-regulatory organization exercising such
functions, and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).
“Guarantor” means a Person that shall have pledged its credit or property in any
manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
shall have agreed conditionally or otherwise to make any purchase, loan or
investment in order thereby to enable another to prevent or correct a default of
any kind.
“Guarantor of Payment” means any Subsidiary of a Borrower that shall have
executed and delivered a Guaranty of Payment (or Guaranty of Payment Joinder) to
the Administrative Agent subsequent to the Closing Date.
“Guaranty of Payment” means each Guaranty of Payment executed and delivered on
or after the Closing Date in connection with this Agreement by one or more
Guarantors of Payment, as the same may from time to time be amended, restated or
otherwise modified.
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“Guaranty of Payment Joinder” means each Guaranty of Payment Joinder, executed
and delivered by a Guarantor of Payment for the purpose of adding such Guarantor
of Payment as a party to a previously executed Guaranty of Payment.
“Hedge Agreement” means any (a) hedge agreement, interest rate swap, cap, collar
or floor agreement, or other interest rate management device entered into by a
Company with any Person in connection with any Indebtedness of such Company, or
(b) currency swap agreement, forward currency purchase agreement or similar
arrangement or agreement designed to protect against fluctuations in currency
exchange rates entered into by a Company. For the avoidance of doubt, Permitted
Equity Derivatives shall not constitute Hedge Agreements.
“Indebtedness” means, for any Company, without duplication, (a) all obligations
to repay borrowed money, direct or indirect, incurred, assumed, or guaranteed,
(b) all obligations in respect of the deferred purchase price of property or
services (other than trade accounts payable and accrued expenses, in each case
incurred in the ordinary course of business), (c) all obligations under
conditional sales or other title retention agreements, (d) all obligations
(contingent or otherwise) under any letter of credit or banker’s acceptance,
(e) all net obligations under any currency swap agreement, interest rate swap,
cap, collar or floor agreement or other interest rate management device or any
Hedge Agreement, (f) all synthetic leases, (g) all Capitalized Lease
Obligations, (h) all obligations of such Company with respect to asset
securitization financing programs to the extent that there is recourse against
such Company or such Company is liable (contingent or otherwise) under any such
program, (i) all obligations to advance funds to, or to purchase assets,
property or services from, any other Person in order to maintain the financial
condition of such Person, (j) all indebtedness of the types referred to in
subparts (a) through (i) above of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability company) in
which such Company is a general partner or joint venturer, unless such
indebtedness is expressly made non-recourse to such Company, (k) any other
transaction (including forward sale or purchase agreements) having the
commercial effect of a borrowing of money entered into by such Company to
finance its operations or capital requirements, and (l) any guaranty of any
obligation described in subparts (a) through (k) above. For the avoidance of
doubt, “Indebtedness” shall not include Permitted Equity Derivatives.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Credit Party under any Loan Document, and (b) to the extent not otherwise
described in the foregoing subpart (a), Other Taxes.
“Intellectual Property Security Agreement” means each Intellectual Property
Security Agreement, executed and delivered on or after the Closing Date by a
Credit Party, wherein such Credit Party, as the case may be, has granted to the
Administrative Agent, for the benefit of the Lenders, a security interest in all
intellectual property owned by such Credit Party, as the same may from time to
time be amended, restated or otherwise modified.
“Interest Adjustment Date” means the last day of each Interest Period.
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“Interest Period” means, with respect to a Eurodollar Loan, the period
commencing on the date such Eurodollar Loan is made and ending on the last day
of such period, as selected by the Administrative Borrower pursuant to the
provisions hereof, and, thereafter (unless such Eurodollar Loan is converted to
a Base Rate Loan), each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of such period,
as selected by the Administrative Borrower pursuant to the provisions hereof.
The duration of each Interest Period for a Eurodollar Loan shall be one month,
two months, three months or six months, in each case as the Administrative
Borrower may select upon notice, as set forth in Section 2.5 hereof; provided
that, if the Administrative Borrower shall fail to so select the duration of any
Interest Period at least three Business Days prior to the Interest Adjustment
Date applicable to such Eurodollar Loan, the Borrowers shall be deemed to have
converted such Eurodollar Loan to a Base Rate Loan at the end of the then
current Interest Period. Notwithstanding the foregoing, no Interest Period shall
extend beyond the last day of the Commitment Period.
“Inventory” means inventory, as that term is defined in the U.C.C.
“Investment Policy” means that certain investment policy of Rapid7, Inc.,
provided to the Administrative Agent and the Lenders prior to the Closing Date,
as the same may be amended, restated or otherwise supplemented with the consent
of the Administrative Agent, which shall not be unreasonably withheld.
“Investment Property” means investment property, as that term is defined in the
U.C.C., unless the Uniform Commercial Code as in effect in another jurisdiction
would govern the perfection and priority of a security interest in investment
property, and, in such case, “investment property” shall be defined in
accordance with the law of that jurisdiction as in effect from time to time.
“Issuing Lender” means, as to any Letter of Credit transaction hereunder, the
Administrative Agent as issuer of the Letter of Credit, or, in the event that
the Administrative Agent either shall be unable to issue or the Administrative
Agent shall agree that another Revolving Lender may issue, a Letter of Credit,
such other Revolving Lender as shall be acceptable to the Administrative Agent
and shall agree to issue the Letter of Credit in its own name, but in each
instance on behalf of the Revolving Lenders.
“KeyBank” means KeyBank National Association, and its successors and assigns.
“Landlord’s Waiver” means a landlord’s waiver in form and substance reasonably
satisfactory to the Administrative Agent, delivered by a Credit Party in
connection with this Agreement, as such waiver may from time to time be amended,
restated or otherwise modified.
“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
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“Lender” means that term as defined in the first paragraph of this Agreement
and, as the context requires, shall include the Issuing Lender.
“Letter of Credit” means a commercial documentary letter of credit or standby
letter of credit that shall be issued by the Issuing Lender for the account of a
Borrower or a Guarantor of Payment, including amendments thereto, if any, and
shall have an expiration date no later than the earlier of (a) three hundred
sixty-four (364) days after its date of issuance (provided that such Letter of
Credit may provide for the renewal thereof for additional one year periods), or
(b) thirty (30) days prior to the last day of the Commitment Period.
“Letter of Credit Commitment” means the commitment of the Issuing Lender, on
behalf of the Revolving Lenders, to issue Letters of Credit in an aggregate face
amount of up to Fifteen Million Dollars ($15,000,000).
“Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all issued and outstanding Letters of Credit, and (b) the
aggregate of the draws made on Letters of Credit that have not been reimbursed
by the Borrowers or converted to a Revolving Loan pursuant to Section 2.2(b)(iv)
hereof.
“Letter of Credit Fee” means, with respect to any Letter of Credit, for any day,
an amount equal to (a) the face amount of such Letter of Credit, multiplied by
(b) the Applicable Margin for Revolving Loans that are Eurodollar Loans divided
by three hundred sixty (360).
“Lien” means any mortgage, deed of trust, security interest, lien (statutory or
other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of,
or conditional sale, lease (other than operating leases), sale with a right of
redemption or other title retention agreement and any capitalized lease with
respect to any property (real or personal) or asset.
“Loan” means a Revolving Loan.
“Loan Documents” means, collectively, this Agreement, the Confidential
Disclosure Letter, each Note, each Guaranty of Payment, each Guaranty of Payment
Joinder, all documentation relating to each Letter of Credit, each Security
Document and the Administrative Agent Fee Letter, as any of the foregoing may
from time to time be amended, restated or otherwise modified or replaced, and
any other document delivered pursuant thereto.
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or financial condition of the Companies taken as a whole,
(b) the ability of any Credit Party to perform its obligations under any Loan
Document to which it is a party, or (c) the legality, validity, binding effect
or enforceability against any Credit Party of any Loan Document to which it is a
party.
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“Material Indebtedness Agreement” means the Convertible Debt Securities and any
debt instrument, lease (capital, operating or otherwise), guaranty, contract,
commitment, agreement or other arrangement evidencing or entered into in
connection with any Indebtedness of any Company or the Companies equal to or in
excess of the amount of Twenty Million Dollars ($20,000,000).
“Maximum Amount” means, for each Lender, the amount set forth opposite such
Lender’s name under the column headed “Maximum Amount” as set forth on Schedule
1 hereto, subject to (a) decreases pursuant to Section 2.9(a) hereof,
(b) increases pursuant to Section 2.9(b) hereof, and (c) assignments of
interests pursuant to Section 11.10 hereof; provided that the Maximum Amount of
the Issuing Lender shall exclude the Letter of Credit Commitment (other than its
pro rata share thereof).
“Maximum Rate” means that term as defined in Section 2.3(c) hereof.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash
Collateral consisting of cash or deposit account balances, an amount equal to
one hundred three percent (103%) of the Fronting Exposure of the Issuing Lender
with respect to Letters of Credit issued and outstanding at such time, and
(b) otherwise, an amount determined by the Administrative Agent and the Issuing
Lender in their sole discretion.
“Moody’s” means Moody’s Investors Service, Inc., and any successor to such
company.
“Multiemployer Plan” means a Pension Plan that is subject to the requirements of
Subtitle E of Title IV of ERISA.
“Non-Consenting Lender” means that term as defined in Section 11.3(c) hereof.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Note” means a Revolving Credit Note, or any other promissory note delivered
pursuant to this Agreement.
“Notice of Loan” means a Notice of Loan in the form of the attached Exhibit B.
“Obligations” means, collectively, (a) all Indebtedness and other obligations
now owing or hereafter incurred by the one or more Borrowers to the
Administrative Agent, the Issuing Lender, or any Lender pursuant to this
Agreement and the other Loan Documents, and includes the principal of and
interest on all Loans, and all obligations of the Borrowers or any other Credit
Party pursuant to Letters of Credit; (b) each extension, renewal, consolidation
or refinancing of any of the foregoing, in whole or in part; (c) the commitment
and other fees, and any prepayment fees, payable pursuant to this Agreement or
any other Loan Document; (d) all fees and charges in connection with Letters of
Credit; (e) every other liability, now or hereafter owing to the Administrative
Agent or any Lender by any Company pursuant to this Agreement or any other Loan
Document; and (f) all Related Expenses.
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“Organizational Documents” means, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, operating
agreement or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between the Administrative Agent or
such Recipient and the jurisdiction imposing such Taxes (other than connections
arising solely from such Recipient having executed, delivered, become a party
to, performed its obligations under, received payments under, received or
perfected a security interest under, engaged in any other transaction pursuant
to, or enforced, any Loan Document, or sold or assigned an interest in any Loan,
Letter of Credit, or any Loan Document).
“Other Taxes” means any and all present or future stamp or documentary,
intangible, recording, filing or similar Taxes arising from any payment made
hereunder or under any other Loan Document, or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document, except any such Taxes that are Other Connection Taxes imposed with
respect to an assignment pursuant to Section 3.6 hereof.
“Participant” means that term as defined in Section 11.11 hereof.
“Participant Register” means that term as described in Section 11.11(e) hereof.
“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as
amended from time to time.
“PBGC” means the Pension Benefit Guaranty Corporation, and its successor.
“Pension Plan” means an ERISA Plan that is a “pension plan” (within the meaning
of ERISA Section 3(2)).
“Permitted Equity Derivatives” means any forward purchase agreement, accelerated
share purchase agreement, call option, warrant transaction or other equity
derivative transaction relating to the equity interests of Rapid7, Inc. (or
other securities or property following a merger event or other change of the
common stock of Rapid7, Inc.) executed in connection with the issuance of any
Convertible Debt Securities (or deemed executed therewith) (including the
Existing Convertible Notes).
“Person” means any individual, sole proprietorship, partnership, joint venture,
unincorporated organization, corporation, limited liability company, unlimited
liability company, institution, trust, estate, Governmental Authority or any
other entity.
“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar
electronic transmission system selected by the Administrative Agent.
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“Pledge Agreement” means each of the Pledge Agreements, relating to the Pledged
Securities, executed and delivered by a Credit Party, as applicable, in favor of
the Administrative Agent, for the benefit of the Lenders, dated on or after the
Closing Date, as any of the foregoing may from time to time be amended, restated
or otherwise modified.
“Pledged Notes” means the promissory notes payable to a Credit Party, as
described on Schedule 7.4 of the Confidential Disclosure Letter, and any
additional or future promissory notes that may hereafter from time to time be
payable to a Credit Party.
“Pledged Securities” means all of the shares of capital stock or other equity
interests of a direct Subsidiary of a Credit Party, whether now owned or
hereafter acquired or created, and all proceeds thereof; provided that Pledged
Securities shall exclude shares of voting capital stock or other voting equity
interests in any Foreign Subsidiary that is a CFC or any FSHCO in excess of
sixty-five percent (65%) of the total outstanding shares of each class of voting
capital stock or other voting equity interest of such Foreign Subsidiary or any
FSHCO, whether held directly or indirectly through a disregarded entity.
(Schedule 3 of the Confidential Disclosure Letter lists, as of the Closing Date,
all of the Pledged Securities.)
“Prime Rate” means the interest rate established from time to time by the
Administrative Agent as the Administrative Agent’s prime rate, whether or not
such rate shall be publicly announced; the Prime Rate may not be the lowest
interest rate charged by the Administrative Agent for commercial or other
extensions of credit. Each change in the Prime Rate shall be effective
immediately from and after such change.
“Proceeds” means (a) proceeds, as that term is defined in the U.C.C., and any
other proceeds, and (b) whatever is received upon the sale, exchange, collection
or other disposition of Collateral or proceeds, whether cash or non-cash. Cash
proceeds include, without limitation, moneys, checks and Deposit Accounts.
Proceeds include, without limitation, any Account arising when the right to
payment is earned under a contract right, any insurance payable by reason of
loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
right of the Administrative Agent and the Lenders to Proceeds specifically set
forth herein, or indicated in any financing statement, shall never constitute an
express or implied authorization on the part of the Administrative Agent or any
Lender to a Company’s sale, exchange, collection or other disposition of any or
all of the collateral securing the Secured Obligations.
“Project Stratus” means that certain company identified to the Administrative
Agent and the Lenders prior to the closing date as “Project Stratus”.
“PTE” means a prohibited transaction class exemption issued by the United States
Department of Labor, as any such exemption may be amended from time to time.
“QFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
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“Recipient” means, as applicable (a) any Lender, or (b) the Issuing Lender.
“Recurring Revenue” means, for any period, an amount equal to recurring revenue
of Rapid7, Inc. for such period, as determined on a Consolidated basis, from
products, maintenance and supports (and specifically excluding professional
services), calculated in a manner consistent with past business practices and as
each category is reported in the financial statements delivered pursuant to
Section 5.3(a) and (b) hereof.
“Register” means that term as described in Section 11.10(c) hereof.
“Regularly Scheduled Payment Date” means the last Business Day of each March,
June, September and December of each year.
“Related Expenses” means any and all documented reasonable out-of-pocket costs,
liabilities and expenses (including, without limitation, losses, damages,
penalties, claims, actions, reasonable and actual attorneys’ fees, legal
expenses, judgments, suits and disbursements) (a) incurred by the Administrative
Agent, or imposed upon or asserted against the Administrative Agent or any
Lender, in any attempt by the Administrative Agent to (i) enforce this Agreement
or any other Loan Document or obtain, preserve, perfect or enforce any Loan
Document or any security interest evidenced by any Loan Document; (ii) obtain
payment, performance or observance of any and all of the Secured Obligations; or
(iii) maintain, insure, audit, collect, preserve, repossess or dispose of any of
the collateral securing the Secured Obligations or any part thereof, including,
without limitation, costs and expenses for appraisals, assessments and audits of
any Company or any such collateral; or (b) incidental or related to subpart
(a) above, including, without limitation, interest thereupon from the date
incurred, imposed or asserted until paid at the Default Rate.
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York or any
successor thereto, including without limitation the Alternative Reference Rates
Committee.
“Removal Effective Date” means that term as defined in Section 10.6(b) hereof.
“Reportable Event” means a “reportable event” as that term is defined in Title
IV of ERISA, except actions of general applicability by the Secretary of Labor
under Section 110 of such Act.
“Required Lenders” means the holders of more than fifty percent (50%), based
upon each Lender’s Commitment Percentage, of an amount equal to (a) during the
Commitment Period, the Total Commitment Amount, and (b) after the Commitment
Period, the Revolving Credit Exposure; provided that (i) any portion held or
deemed to be held by any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders, and (ii) if there shall be two or
more unaffiliated Lenders (that are not Defaulting Lenders), Required Lenders
shall constitute at least two unaffiliated Lenders.
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“Reserve Percentage” means, for any day, that percentage (expressed as a
decimal) that is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Percentage.
“Resignation Effective Date” means that term as defined in Section 10.6(a)
hereof.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any
UK Financial Institution, a UK Resolution Authority.
“Restricted Payment” means, with respect to any Company, (a) any Capital
Distribution paid in cash, (b) any amount paid in cash by such Company in
repayment, redemption, retirement, conversion or repurchase, directly or
indirectly, (i) of any Subordinated Indebtedness or (ii) Indebtedness under
Convertible Debt Securities, or (c) any amount paid in cash by such Company in
respect of any management, consulting or other similar arrangement with any
equity holder (other than a Company) of a Company or an Affiliate.
Notwithstanding the foregoing, and for the avoidance of doubt, (A) a payment by
a Company to another Credit Party is not a Restricted Payment, (B) any delivery
of equity interests due upon conversion of any Convertible Debt Securities (plus
cash in lieu of delivering any fractional share) shall not constitute a
Restricted Payment and (C) any payment (including payment of any premium) or
delivery with respect to, or early unwind, settlement or termination of, any
Permitted Equity Derivative shall not constitute a Restricted Payment.
“Revolving Amount” means Thirty Million Dollars ($30,000,000), as such amount
may be increased pursuant to Section 2.9(b) hereof or reduced pursuant to
Section 2.9(a) hereof.
“Revolving Credit Commitment” means the obligation hereunder, during the
Commitment Period, of (a) the Revolving Lenders (and each Revolving Lender) to
make Revolving Loans, and (b) the Issuing Lender to issue, and each Revolving
Lender to participate in, Letters of Credit pursuant to the Letter of Credit
Commitment; up to an aggregate principal amount outstanding at any time equal to
the Revolving Amount.
“Revolving Credit Exposure” means, at any time, the sum of (a) the aggregate
principal amount of all Revolving Loans outstanding, and (b) the Letter of
Credit Exposure.
“Revolving Credit Note” means a Revolving Credit Note, in the form of the
attached Exhibit A, executed and delivered pursuant to Section 2.4(a) hereof.
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“Revolving Lender” means a Lender with a percentage of the Revolving Credit
Commitment as set forth on Schedule 1 hereto, or that acquires a percentage of
the Revolving Credit Commitment pursuant to Section 2.9(b) or 11.10 hereof.
“Revolving Loan” means a loan made to the Borrowers by the Revolving Lenders in
accordance with Section 2.2(a) hereof.
“Sanctions” means any sanctions administered or enforced from time to time by
(a) the U.S. government, including those administered by the Office of Foreign
Assets Control or the U.S. Department of State or (b) the United Nations
Security Council, the European Union or Her Majesty’s Treasury of the United
Kingdom.
“SEC” means the United States Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principal functions.
“Secured Obligations” means, collectively, (a) the Obligations, (b) all
obligations and liabilities of the Companies owing to a Lender (or an entity
that is an Affiliate of a then existing Lender) under Hedge Agreements, and
(c) the Bank Product Obligations owing to a Lender (or an entity that is an
Affiliate of a then existing Lender) under Bank Product Agreements; provided
that Secured Obligations of a Credit Party shall not include Excluded Swap
Obligations owing from such Credit Party. For the avoidance of doubt, Permitted
Equity Derivatives shall not constitute Secured Obligations.
“Securities Account” means a securities account, as that term is defined in the
U.C.C.
“Securities Account Control Agreement” means each Securities Account Control
Agreement (or similar agreement with respect to a Securities Account) among a
Credit Party, the Administrative Agent and a Securities Intermediary, dated on
or after the Closing Date, to be in form and substance reasonably satisfactory
to the Administrative Agent, as the same may from time to time be amended,
restated or otherwise modified.
“Securities Intermediary” means a clearing corporation or a Person, including,
without limitation, a bank or broker, that in the ordinary course of its
business maintains Securities Accounts for others and is acting in that
capacity.
“Security Agreement” means each Security Agreement, executed and delivered by
one or more Guarantors of Payment in favor of the Administrative Agent, for the
benefit of the Lenders, dated as of the Closing Date, and any other Security
Agreement executed on or after the Closing Date, as the same may from time to
time be amended, restated or otherwise modified.
“Security Agreement Joinder” means each Security Agreement Joinder, executed and
delivered by a Guarantor of Payment for the purpose of adding such Guarantor of
Payment as a party to a previously executed Security Agreement.
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“Security Document” means each Security Agreement, each Security Agreement
Joinder, each Pledge Agreement, each Intellectual Property Security Agreement,
the Landlord’s Waiver, each Control Agreement, each U.C.C. Financing Statement
or similar filing as to a jurisdiction located outside of the United States
filed in connection herewith or perfecting any interest created in any of the
foregoing documents, and any other document pursuant to which any Lien is
granted by a Company or any other Person to the Administrative Agent, for the
benefit of the Lenders, as security for the Secured Obligations, or any part
thereof, and each other agreement executed or provided to the Administrative
Agent in connection with any of the foregoing, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced.
“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark, (or a successor administrator) on the Federal
Reserve Bank of New York’s Website.
“Solvent” means, with respect to any Person, that (a) the fair value of such
Person’s assets is in excess of the total amount of such Person’s debts, as
determined in accordance with the Bankruptcy Code, (b) the present fair saleable
value of such Person’s assets is in excess of the amount that will be required
to pay such Person’s debts as such debts become absolute and matured, (c) such
Person is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
such liabilities mature in the normal course of business, (d) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which its property would constitute an
unreasonably small amount of capital. As used in this definition, the term
“debts” includes any legal liability, whether matured or unmatured, liquidated
or unliquidated, absolute, fixed or contingent, as determined in accordance with
the Bankruptcy Code.
“Standard & Poor’s” means S&P Global Ratings, a business unit of Standard &
Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and any
successor thereto.
“Subordinated Indebtedness” means Indebtedness that shall have been subordinated
(by written terms or written agreement being, in either case, in form and
substance reasonably satisfactory to the Administrative Agent) in favor of the
prior payment in full of the Obligations.
“Subsidiary” means, with respect to any Person, (a) a corporation more than
fifty percent (50%) of the Voting Power of which is owned, directly or
indirectly, by such Person or by one or more other subsidiaries of such Person
or by such Person and one or more subsidiaries of such Person, (b) a
partnership, limited liability company or unlimited liability company of which
such Person, one or more other subsidiaries of such Person or such Person and
one or more subsidiaries of such Person, directly or indirectly, is a general
partner or managing member, as the case may be, or otherwise has an ownership
interest greater than fifty percent (50%) of all of the ownership interests in
such partnership, limited liability company or unlimited liability company, or
(c) any other Person (other than a corporation, partnership, limited liability
company or unlimited liability company) in which such Person, one or more other
subsidiaries of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, has at least a majority interest in the Voting
Power or the power to elect or direct the election of a majority of directors or
other governing body of such Person. Unless the context otherwise requires,
Subsidiary herein shall be a reference to a Subsidiary of a Borrower.
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“Supporting Letter of Credit” means a standby letter of credit, in form and
substance satisfactory to the Administrative Agent and the Issuing Lender,
issued by an issuer satisfactory to the Administrative Agent and the Issuing
Lender.
“SVB Letters of Credit” means those certain cash collateralized standby letters
of credit issued by Silicon Valley Bank for the account of the Borrowers, set
forth on Schedule 5.8 to the Confidential Disclosure Letter.
“Swap Obligations” means, with respect to any Company, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act. For the
avoidance of doubt, Permitted Equity Derivatives shall not constitute Swap
Obligations.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Term SOFR” means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.
“Total Commitment Amount” means the principal amount of Thirty Million Dollars
($30,000,000), as such amount may be increased pursuant to Section 2.9(b)
hereof, or decreased pursuant to Section 2.9(a) hereof.
“U.C.C.” means the Uniform Commercial Code, as in effect from time to time in
the State of New York.
“U.C.C. Financing Statement” means a financing statement filed or to be filed in
accordance with the Uniform Commercial Code, as in effect from time to time, in
the relevant state or states.
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” means that term as defined in Section 3.2(e)
hereof.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended form time to time) promulgated by the United
Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6
of the FCA Handbook (as amended from time to time) promulgated by the United
Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or
investment firms.
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“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK
Financial Institution.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the
Benchmark Replacement Adjustment.
“United States” means the United States of America.
“USPTO” means the United States Patent and Trademark Office in Alexandria,
Virginia.
“Voting Power” means, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of members of the
board of directors or other similar governing body of such Person. The holding
of a designated percentage of Voting Power of a Person means the ownership of
shares of capital stock, partnership interests, membership interests or other
interests of such Person sufficient to control exclusively the election of that
percentage of the members of the board of directors or similar governing body of
such Person.
“Welfare Plan” means an ERISA Plan that is a “welfare plan” within the meaning
of ERISA Section 3(l).
“Withholding Agent” means any Credit Party and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule, and (b) with respect to the United Kingdom, any powers of
the applicable Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution
or any contract or instrument under which that liability arises, to convert all
or part of that liability into shares, securities or obligations of that person
or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation
that are related to or ancillary to any of those powers.
Section 1.2. Accounting Terms.
(a) Any accounting term not specifically defined in this Article I shall have
the meaning ascribed thereto by GAAP.
(b) If any change in the rules, regulations, pronouncements, opinions or other
requirements of the Financial Accounting Standards Board (or any successor
thereto or agency with similar function) is made with respect to GAAP, or if the
Borrowers adopt the International Financial Reporting Standards, and such change
or adoption results in a change in the calculation of any component (or
components in the aggregate) of the financial covenants set forth in Section 5.7
hereof or the related financial definitions, at the option of the Administrative
Agent,
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the Required Lenders or the Administrative Borrower, the parties hereto will
enter into good faith negotiations to amend such financial covenants and
financial definitions in such manner as the parties shall agree, each acting
reasonably, in order to reflect fairly such change or adoption so that the
criteria for evaluating the financial condition of the Borrowers shall be the
same in commercial effect after, as well as before, such change or adoption is
made (in which case the method and calculating such financial covenants and
definitions hereunder shall be determined in the manner so agreed); provided
that, until so amended, such calculations shall continue to be computed in
accordance with GAAP as in effect prior to such change or adoption.
(c) Notwithstanding the foregoing, all financial covenants contained herein
shall be calculated, and compliance with negative covenants contained herein
shall be determined, without giving effect to Accounting Standards Codification
842 (or any other Accounting Standards Codification having similar result or
effect) (and related interpretations) to the extent any lease (or similar
arrangement) would be required to be treated as a capital lease thereunder where
such lease (or arrangement) would have been treated as an operating lease under
GAAP as in effect immediately prior to the effectiveness of such Accounting
Standards Codification.
Section 1.3. Terms Generally. The foregoing definitions shall be applicable to
the singular and plural forms of the foregoing defined terms. Unless otherwise
defined in this Article I, terms that are defined in the U.C.C. are used herein
as so defined. For the avoidance of doubt, the term “equity interests” shall not
include Convertible Debt Securities (including the Existing Convertible Notes).
Section 1.4. Divisions. For all purposes under the Loan Documents, in connection
with any division or plan of division under Delaware law (or any comparable
event under a different jurisdiction’s laws): (a) if any asset, right,
obligation or liability of any Person becomes the asset, right, obligation or
liability of a different Person, then it shall be deemed to have been
transferred from the original Person to the subsequent Person, and (b) if any
new Person comes into existence, such new Person shall be deemed to have been
organized on the first date of its existence by the holders of its equity
interests at such time.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
Section 2.1. Amount and Nature of Credit.
(a) Subject to the terms and conditions of this Agreement, the Lenders, on and
after the Closing Date and during the remainder of the Commitment Period and to
the extent hereinafter provided, shall make Loans to the Borrowers, and
participate in Letters of Credit (or, if the Issuing Lender, issue Letters of
Credit) at the request of the Borrowers, in such aggregate amount as the
Borrowers shall request pursuant to the Commitment; provided that in no event
shall the aggregate principal amount of all Loans and Letters of Credit
outstanding under this Agreement be in excess of the Total Commitment Amount.
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(b) Each Lender, for itself and not one for any other, agrees to make Loans, and
participate in Letters of Credit (or, if the Issuing Lender, issue Letters of
Credit), during the Commitment Period, on such basis that, immediately after the
completion of any borrowing by the Borrowers or the issuance of a Letter of
Credit:
(i) the aggregate outstanding principal amount of Loans made by such Lender,
when combined with such Lender’s pro rata share, if any, of the Letter of Credit
Exposure, shall not be in excess of the Maximum Amount for such Lender; and
(ii) the aggregate outstanding principal amount of Loans shall represent that
percentage of the aggregate principal amount then outstanding on all Loans that
shall be such Lender’s Commitment Percentage.
Each borrowing from the Lenders shall be made pro rata according to the
respective Commitment Percentages of the Lenders.
(c) The Loans may be made as Revolving Loans as described in Section 2.2(a)
hereof, and Letters of Credit may be issued in accordance with Section 2.2(b)
hereof.
Section 2.2. Revolving Credit Commitment.
(a) Revolving Loans. Subject to the terms and conditions of this Agreement, on
and after the Closing Date and during the remainder of the Commitment Period,
the Revolving Lenders shall make a Revolving Loan or Revolving Loans to the
Borrowers in such amount or amounts as the Administrative Borrower, through an
Authorized Officer, may from time to time request, but not exceeding in
aggregate principal amount at any time outstanding hereunder the Revolving
Credit Commitment, when such Revolving Loans are combined with the Letter of
Credit Exposure. The Borrowers shall have the option, subject to the terms and
conditions set forth herein, to borrow Revolving Loans, maturing on the last day
of the Commitment Period, by means of any combination of Base Rate Loans or
Eurodollar Loans. Subject to the provisions of this Agreement, the Borrowers
shall be entitled under this Section 2.2(a) to borrow Revolving Loans, repay the
same in whole or in part and re-borrow Revolving Loans hereunder at any time and
from time to time during the Commitment Period. The aggregate outstanding amount
of all Revolving Loans shall be payable in full on the last day of the
Commitment Period.
(b) Letters of Credit.
(i) Generally. Subject to the terms and conditions of this Agreement, on and
after the Closing Date and during the remainder of the Commitment Period, the
Issuing Lender shall, in its own name, on behalf of the Revolving Lenders, issue
such Letters of Credit for the account of a Borrower or a Guarantor of Payment,
as the Administrative Borrower may from time to time request. The Administrative
Borrower shall not request any Letter of Credit (and the Issuing Lender shall
not be obligated to issue any Letter of Credit) if, after giving effect thereto,
(A) the Letter of Credit Exposure would exceed the Letter of Credit Commitment,
or (B) the Revolving Credit Exposure would exceed the Revolving Credit
Commitment. The issuance of each Letter of Credit shall confer upon each
Revolving Lender the benefits and liabilities of a participation consisting of
an undivided pro rata interest in the Letter of Credit to the extent of such
Revolving Lender’s Commitment Percentage.
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(ii) Request for Letter of Credit. Each request for a Letter of Credit shall be
delivered to the Administrative Agent (and to the Issuing Lender, if the Issuing
Lender is a Lender other than the Administrative Agent) by an Authorized Officer
not later than 11:00 A.M. (Eastern time) three Business Days prior to the date
of the proposed issuance of the Letter of Credit (or such shorter period as may
be acceptable to the Issuing Lender). Each such request shall be in a form
reasonably acceptable to the Administrative Agent (and the Issuing Lender, if
the Issuing Lender is a Lender other than the Administrative Agent) and shall
specify the face amount thereof, whether such Letter of Credit is a commercial
documentary or a standby Letter of Credit, the account party, the beneficiary,
the requested date of issuance, amendment, renewal or extension, the expiry date
thereof, and the nature of the transaction or obligation to be supported
thereby. Concurrently with each such request, the Administrative Borrower, and
any Guarantor of Payment for whose account the Letter of Credit is to be issued,
shall execute and deliver to the Issuing Lender an appropriate application and
agreement, being in the standard form of the Issuing Lender for such letters of
credit, as amended to conform to the provisions of this Agreement if required by
the Administrative Agent. The Administrative Agent shall give the Issuing Lender
and each Revolving Lender notice of each such request for a Letter of Credit.
(iii) Commercial Documentary Letters of Credit Fees. With respect to each Letter
of Credit that shall be a commercial documentary letter of credit and the drafts
thereunder, whether issued for the account of a Borrower or a Guarantor of
Payment, the Borrowers agree to (A) pay to the Administrative Agent, for the pro
rata benefit of the Revolving Lenders, a non-refundable commission based upon
the face amount of such Letter of Credit, which shall be paid quarterly in
arrears, on each Regularly Scheduled Payment Date, in an amount equal to the
aggregate sum of the Letter of Credit Fee for such Letter of Credit for each day
of such quarter; (B) pay to the Administrative Agent, for the sole benefit of
the Issuing Lender, an additional Letter of Credit fee, which shall be paid on
each date that such Letter of Credit is issued, amended or renewed, at the rate
of one-eighth percent (1/8%) of the face amount of such Letter of Credit; and
(C) pay to the Administrative Agent, for the sole benefit of the Issuing Lender,
such other issuance, amendment, renewal, negotiation, draw, acceptance, telex,
courier, postage and similar transactional fees as are customarily charged by
the Issuing Lender in respect of the issuance and administration of similar
letters of credit under its fee schedule as in effect from time to time.
(iv) Standby Letters of Credit Fees. With respect to each Letter of Credit that
shall be a standby letter of credit and the drafts thereunder, if any, whether
issued for the account of a Borrower or a Guarantor of Payment, the Borrowers
agree to (A) pay to the Administrative Agent, for the pro rata benefit of the
Revolving Lenders, a non-refundable commission based upon the face amount of
such Letter of Credit, which shall be paid quarterly in arrears, on each
Regularly Scheduled Payment Date, in an amount equal to the aggregate sum of the
Letter of Credit Fee for such Letter of Credit for each day of
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such quarter; (B) pay to the Administrative Agent, for the sole benefit of the
Issuing Lender, an additional Letter of Credit fee, which shall be paid on each
date that such Letter of Credit is issued, amended or renewed at the rate of
one-eighth percent (1/8%) of the face amount of such Letter of Credit; and
(C) pay to the Administrative Agent, for the sole benefit of the Issuing Lender,
such other issuance, amendment, renewal, negotiation, draw, acceptance, telex,
courier, postage and similar transactional fees as are customarily charged by
the Issuing Lender in respect of the issuance and administration of similar
letters of credit under its fee schedule as in effect from time to time.
(v) Refunding of Letters of Credit with Revolving Loans. Whenever a Letter of
Credit shall be drawn, the Borrowers shall promptly reimburse the Issuing Lender
for the amount drawn. In the event that the amount drawn shall not have been
reimbursed by the Borrowers within one Business Day of the drawing of such
Letter of Credit, the Borrowers shall be deemed to have requested a Revolving
Loan, subject to the provisions of Sections 2.2(a) and 2.5 hereof (other than
the requirement set forth in Section 2.5(d) hereof), in the amount drawn. Such
Revolving Loan shall be evidenced by the Revolving Credit Notes (or, if a Lender
has not requested a Revolving Credit Note, by the records of the Administrative
Agent and such Lender). Each Revolving Lender agrees to make a Revolving Loan on
the date of such notice, subject to no conditions precedent whatsoever. Each
Revolving Lender acknowledges and agrees that its obligation to make a Revolving
Loan pursuant to Section 2.2(a) hereof when required by this subpart (v) shall
be absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or Event of Default, and that its payment to the Administrative Agent,
for the account of the Issuing Lender, of the proceeds of such Revolving Loan
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not the Revolving Credit
Commitment shall have been reduced or terminated. The Borrowers irrevocably
authorizes and instructs the Administrative Agent to apply the proceeds of any
borrowing pursuant to this subpart (v) to reimburse, in full (other than the
Issuing Lender’s pro rata share of such borrowing), the Issuing Lender for the
amount drawn on such Letter of Credit. Each such Revolving Loan shall be deemed
to be a Base Rate Loan unless otherwise requested by and available to the
Borrowers hereunder. Each Revolving Lender is hereby authorized to record on its
records relating to its Revolving Credit Note (or, if such Revolving Lender has
not requested a Revolving Credit Note, its records relating to Revolving Loans)
such Revolving Lender’s pro rata share of the amounts paid and not reimbursed on
the Letters of Credit.
(vi) Participation in Letters of Credit. If, for any reason, the Administrative
Agent (and the Issuing Lender if the Issuing Lender is a Revolving Lender other
than the Administrative Agent) shall be unable to or, in the opinion of the
Administrative Agent, it shall be impracticable to, convert any amount drawn
under a Letter of Credit to a Revolving Loan pursuant to the preceding
subsection, the Administrative Agent (and the Issuing Lender if the Issuing
Lender is a Revolving Lender other than the Administrative Agent) shall have the
right to request that each Revolving Lender fund a participation in the amount
due with respect to such Letter of Credit, and the Administrative Agent shall
promptly notify each Revolving Lender thereof (by facsimile or email (in each
case
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confirmed by telephone) or telephone (confirmed in writing)). Upon such notice,
but without further action, the Issuing Lender hereby agrees to grant to each
Revolving Lender, and each Revolving Lender hereby agrees to acquire from the
Issuing Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Revolving Lender’s
Commitment Percentage of the principal amount due with respect to such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Issuing Lender, such Revolving Lender’s ratable share of the amount due with
respect to such Letter of Credit (determined in accordance with such Revolving
Lender’s Commitment Percentage). Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in the amount due under any Letter
of Credit that is drawn but not reimbursed by the Borrowers pursuant to this
subsection (vi) shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not the Revolving Credit Commitment shall
have been reduced or terminated. Each Revolving Lender shall comply with its
obligation under this subsection (vi) by wire transfer of immediately available
funds, in the same manner as provided in Section 2.5 hereof with respect to
Revolving Loans.
(vii) Auto-Renewal Letters of Credit. If the Administrative Borrower so
requests, a Letter of Credit shall have an automatic renewal provision; provided
that any Letter of Credit that has an automatic renewal provision must permit
the Administrative Agent (or the applicable Issuing Lender if the Issuing Lender
is a Lender other than the Administrative Agent) to prevent any such renewal by
giving prior notice to the beneficiary thereof not later than thirty (30) days
prior to the renewal date of such Letter of Credit. Once any such Letter of
Credit that has automatic renewal provisions has been issued, the Revolving
Lenders shall be deemed to have authorized (but may not require) the
Administrative Agent (and the Issuing Lender) to permit at any time the renewal
of such Letter of Credit to an expiry date not later than one year after the
last day of the Commitment Period.
(viii) Letters of Credit Outstanding Beyond the Commitment Period. If any Letter
of Credit is outstanding upon the termination of the Commitment, then, prior to
such termination, the Borrowers shall deposit with the Administrative Agent, for
the benefit of the Issuing Lender, with respect to all outstanding Letters of
Credit, either cash or a Supporting Letter of Credit, which, in each case, is
(A) in an amount equal to one hundred five percent (105%) of the undrawn amount
of the outstanding Letters of Credit, and (B) free and clear of all rights and
claims of third parties. The cash shall be deposited in an escrow account at a
financial institution designated by the Issuing Lender. The Issuing Lender shall
be entitled to withdraw (with respect to the cash) or draw (with respect to the
Supporting Letter of Credit) amounts necessary to reimburse the Issuing Lender
for payments to be made under the Letters of Credit and any fees and expenses
associated with such Letters of Credit, or incurred pursuant to the
reimbursement
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agreements with respect to such Letters of Credit. The Borrowers shall also
execute such documentation as the Administrative Agent or the Issuing Lender may
reasonably require in connection with the survival of the Letters of Credit
beyond the Commitment or this Agreement. After expiration of all undrawn Letters
of Credit, the Supporting Letter of Credit or the remainder of the cash, if any,
as the case may be, shall promptly be returned to the Borrowers.
Section 2.3. Interest.
(a) Revolving Loans.
(i) Base Rate Loan. The Borrowers shall pay interest on the unpaid principal
amount of a Revolving Loan that is a Base Rate Loan outstanding from time to
time from the date thereof until paid at the Derived Base Rate from time to time
in effect. Interest on such Base Rate Loan shall be payable, commencing June 30,
2020, and continuing on each Regularly Scheduled Payment Date thereafter and at
the maturity thereof.
(ii) Eurodollar Loans. The Borrowers shall pay interest on the unpaid principal
amount of each Revolving Loan that is a Eurodollar Loan outstanding from time to
time, with the interest rate to be fixed in advance on the first day of the
Interest Period applicable thereto through the last day of the Interest Period
applicable thereto, at the Derived Eurodollar Rate. Interest on such Eurodollar
Loan shall be payable on each Interest Adjustment Date with respect to an
Interest Period (provided that, if an Interest Period shall exceed three months,
the interest must also be paid every three months, commencing three months from
the beginning of such Interest Period).
(b) Default Rate. Anything herein to the contrary notwithstanding, if an Event
of Default shall occur and be continuing, upon the election of the
Administrative Agent or the Required Lenders (i) the principal of each Loan and
the unpaid interest thereon shall bear interest, until paid, at the Default
Rate, (ii) the fee for the aggregate undrawn amount of all issued and
outstanding Letters of Credit that have not been cash collateralized in
accordance with Section 9.3, shall be increased by two percent (2%) in excess of
the rate otherwise applicable thereto, and (iii) in the case of any other amount
not paid when due from the Borrowers hereunder or under any other Loan Document,
such amount shall bear interest at the Default Rate; provided that, during an
Event of Default under Section 8.1 or 8.11 hereof, the applicable Default Rate
shall apply without any election or action on the part of the Administrative
Agent or any Lender.
(c) Limitation on Interest. In no event shall the rate of interest hereunder
exceed the maximum rate allowable by law. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrowers. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (i) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.
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Section 2.4. Evidence of Indebtedness.
(a) Revolving Loans. Upon the request of a Revolving Lender, to evidence the
obligation of the Borrowers to repay the portion of the Revolving Loans made by
such Revolving Lender and to pay interest thereon, the Borrowers shall execute a
Revolving Credit Note, payable to the order of such Revolving Lender in the
principal amount equal to its Commitment Percentage of the Revolving Amount, or,
if less, the aggregate unpaid principal amount of Revolving Loans made by such
Revolving Lender; provided that the failure of a Revolving Lender to request a
Revolving Credit Note shall in no way detract from the Borrowers’ obligations to
such Revolving Lender hereunder.
Section 2.5. Notice of Loans and Credit Events; Funding of Loans.
(a) Notice of Loans and Credit Events. The Administrative Borrower, through an
Authorized Officer, shall provide to the Administrative Agent a Notice of Loan
prior to (i) 11:00 A.M. (Eastern time) on the proposed date of borrowing of, or
conversion of a Loan to, a Base Rate Loan, and (ii) 11:00 A.M. (Eastern time)
three Business Days prior to the proposed date of borrowing of, continuation of,
or conversion of a Loan to, a Eurodollar Loan. An Authorized Officer of the
Administrative Borrower may verbally request a Loan, so long as a Notice of Loan
is received by the end of the same Business Day, and, if the Administrative
Agent or any Lender provides funds or initiates funding based upon such verbal
request, the Borrowers shall bear the risk with respect to any information
regarding such funding that is later determined to have been incorrect. The
Borrowers shall comply with the notice provisions set forth in Section 2.2(b)
hereof with respect to Letters of Credit.
(b) Funding of Loans. The Administrative Agent shall notify the appropriate
Lenders of the date, amount and Interest Period (if applicable) promptly upon
the receipt of a Notice of Loan, and, in any event, by 2:00 P.M. (Eastern time)
on the date such Notice of Loan is received. On the date that the Credit Event
set forth in such Notice of Loan is to occur, each such Lender shall provide to
the Administrative Agent, not later than 3:00 P.M. (Eastern time), the amount in
Dollars, in federal or other immediately available funds, required of it. If the
Administrative Agent shall elect to advance the proceeds of such Loan prior to
receiving funds from such Lender, the Administrative Agent shall have the right,
upon prior notice to the Administrative Borrower, to debit any account of one or
more Borrowers or otherwise receive such amount from the Borrowers, promptly
after demand, in the event that such Lender shall fail to reimburse the
Administrative Agent in accordance with this subsection (b). The Administrative
Agent shall also have the right to receive interest from such Lender at the
Federal Funds Effective Rate in the event that such Lender shall fail to provide
its portion of the Loan on the date requested and the Administrative Agent shall
elect to provide such funds.
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(c) Conversion and Continuation of Loans.
(i) At the request of the Administrative Borrower to the Administrative Agent,
subject to the notice and other provisions of this Agreement, the appropriate
Lenders shall convert a Base Rate Loan to one or more Eurodollar Loans at any
time and shall convert a Eurodollar Loan to a Base Rate Loan on any Interest
Adjustment Date applicable thereto.
(ii) At the request of the Administrative Borrower to the Administrative Agent,
subject to the notice and other provisions of this Agreement, the appropriate
Lenders shall continue one or more Eurodollar Loans as of the end of the
applicable Interest Period as a new Eurodollar Loan with a new Interest Period.
(d) Minimum Amount for Loans. Each request for:
(i) a Base Rate Loan shall be in an amount of not less than Five Hundred
Thousand Dollars ($500,000), increased by increments of One Hundred Thousand
Dollars ($100,000); and
(ii) a Eurodollar Loan shall be in an amount of not less than One Million
Dollars ($1,000,000), increased by increments of Two Hundred Fifty Thousand
Dollars ($250,000).
(e) Interest Periods. The Administrative Borrower shall not request that
Eurodollar Loans be outstanding for more than six different Interest Periods at
the same time.
Section 2.6. Payment on Loans and Other Obligations.
(a) Payments Generally. Each payment made hereunder or under any other Loan
Document by a Credit Party shall be made without any offset, abatement,
recoupment, counterclaim, withholding or reduction whatsoever.
(b) Payments from Borrowers. All payments (including prepayments) to the
Administrative Agent of the principal of or interest on each Loan or other
payment, including but not limited to principal, interest, fees or any other
amount owed by the Borrowers under this Agreement, shall be made in Dollars. All
payments described in this subsection (b) shall be remitted to the
Administrative Agent, at the address of the Administrative Agent for notices
referred to in Section 11.4 hereof for the account of the appropriate Lenders
(or the Issuing Lender, as appropriate) not later than 1:00 P.M. (Eastern time)
on the due date thereof in immediately available funds. Any such payments
received by the Administrative Agent (or the Issuing Lender) after 1:00 P.M.
(Eastern time) shall be deemed to have been made and received on the next
Business Day.
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(c) Payments to Lenders. Upon the Administrative Agent’s receipt of payments
hereunder, the Administrative Agent shall immediately distribute to the
appropriate Lenders (except with respect to Letters of Credit, certain of which
payments shall be paid to the Issuing Lender) their respective ratable shares,
if any, of the amount of principal, interest, and commitment and other fees
received by the Administrative Agent for the account of such Lender. Payments
received by the Administrative Agent shall be delivered to the Lenders in
immediately available funds. Each appropriate Lender shall record any principal,
interest or other payment, the principal amounts of Base Rate Loans, Eurodollar
Loans and Letters of Credit, all prepayments and the applicable dates, including
Interest Periods, with respect to the Loans made, and payments received by such
Lender, by such method as such Lender may generally employ; provided that
failure to make any such entry shall in no way detract from the obligations of
the Borrowers under this Agreement or any Note. The aggregate unpaid amount of
Loans, types of Loans, Interest Periods and similar information with respect to
the Loans and Letters of Credit set forth on the records of the Administrative
Agent shall, absent manifest error, be rebuttably presumptive evidence with
respect to such information, including the amounts of principal, interest and
fees owing to each Lender.
(d) Timing of Payments. Whenever any payment to be made hereunder, including,
without limitation, any payment to be made on any Loan, shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the next
Business Day and such extension of time shall in each case be included in the
computation of the interest payable on such Loan; provided that, with respect to
a Eurodollar Loan, if the next Business Day shall fall in the succeeding
calendar month, such payment shall be made on the preceding Business Day and the
relevant Interest Period shall be adjusted accordingly.
Section 2.7. Prepayment.
(a) Right to Prepay. The Borrowers shall have the right at any time or from time
to time to prepay, on a pro rata basis for all of the Lenders, all or any part
of the principal amount of the Loans then outstanding, as designated by the
Administrative Borrower. Such payment shall include interest accrued on the
amount so prepaid to the date of such prepayment and any amount payable under
Article III hereof with respect to the amount being prepaid. Prepayments of Base
Rate Loans shall be without any premium or penalty.
(b) Notice of Prepayment. The Administrative Borrower shall give the
Administrative Agent irrevocable written notice of prepayment of (i) a Base Rate
Loan by no later than 11:00 A.M. (Eastern time) on the Business Day on which
such prepayment is to be made, and (ii) a Eurodollar Loan by no later than 1:00
P.M. (Eastern time) three Business Days before the Business Day on which such
prepayment is to be made.
(c) Minimum Amount for Eurodollar Loans. Each prepayment of a Eurodollar Loan
shall be in the principal amount of not less than the lesser of Five Hundred
Thousand Dollars ($500,000), or the principal amount of such Loan, except in the
case of a mandatory payment pursuant to Section 2.11 or Article III hereof.
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Section 2.8. Commitment and Other Fees.
(a) Commitment Fee. The Borrowers shall pay to the Administrative Agent, for the
ratable account of the Revolving Lenders, as a consideration for the Revolving
Credit Commitment, a commitment fee, for each day from the Closing Date through
the last day of the Commitment Period, in an amount equal to (i) (A) the
Revolving Amount at the end of such day, minus (B) the Revolving Credit Exposure
at the end of such day, multiplied by (ii) the Applicable Commitment Fee Rate in
effect on such day divided by three hundred sixty (360). The commitment fee
shall be payable quarterly in arrears, commencing on June 30, 2020 and
continuing on each Regularly Scheduled Payment Date thereafter, and on the last
day of the Commitment Period.
(b) Administrative Agent Fee. The Borrowers shall pay to the Administrative
Agent, for its sole benefit, the fees set forth in the Administrative Agent Fee
Letter.
Section 2.9. Modifications to Commitment.
(a) Optional Reduction of Revolving Credit Commitment. The Borrowers may at any
time and from time to time permanently reduce in whole or ratably in part the
Revolving Amount to an amount not less than the then existing Revolving Credit
Exposure, by giving the Administrative Agent not fewer than three Business Days’
written notice of such reduction, provided that any such partial reduction shall
be in an aggregate amount, for all of the Lenders, of not less than Five Million
Dollars ($5,000,000), increased in increments of Five Hundred Thousand Dollars
($500,000). The Administrative Agent shall promptly notify each Revolving Lender
of the date of each such reduction and such Revolving Lender’s proportionate
share thereof. After each such partial reduction, the commitment fees payable
hereunder shall be calculated upon the Revolving Amount as so reduced. If the
Borrowers reduce in whole the Revolving Credit Commitment, on the effective date
of such reduction (the Borrowers having prepaid in full the unpaid principal
balance, if any, of the Loans, together with all interest (if any) and
commitment and other fees accrued and unpaid with respect thereto, and provided
that no Letter of Credit Exposure shall exist), all of the Revolving Credit
Notes shall be delivered to the Administrative Agent marked “Canceled” and the
Administrative Agent shall redeliver such Revolving Credit Notes to the
Borrowers. Any partial reduction in the Revolving Amount shall be effective
during the remainder of the Commitment Period. Upon each decrease of the
Revolving Amount, the Total Commitment Amount shall be decreased by the same
amount.
(b) Increase in Commitment.
(i) At any time during the Commitment Increase Period, the Administrative
Borrower may request that the Administrative Agent increase the Total Commitment
Amount by increasing the Revolving Amount; provided that the aggregate amount of
all increases made pursuant to this subsection (b) shall not exceed Forty
Million Dollars ($40,000,000). Each such request for an increase shall be in an
amount of at least Five Million Dollars ($5,000,000), increased by increments of
One Million Dollars ($1,000,000), and may be made by either (A) increasing, for
one or more Lenders, with their prior written consent, their respective
Revolving Credit Commitments, or (B) including one or more Additional Lenders,
each with a new commitment (in a minimum amount of at least Ten Million Dollars
($10,000,000)) under the Revolving Credit Commitment, as a party to this
Agreement (each an “Additional Commitment” and, collectively, the “Additional
Commitments”). For clarification purposes, nothing contained in this
Section 2.9(b) shall be construed as a commitment by any Lender to make any
Additional Commitment and any such commitment by a Lender shall be at such
Lender’s sole and absolute discretion.
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(ii) During the Commitment Increase Period, all of the Lenders agree that the
Administrative Agent, in its sole discretion, may permit one or more Additional
Commitments upon satisfaction of the following requirements: (A) each Additional
Lender, if any, shall execute an Additional Lender Assumption Agreement, (B) the
Administrative Agent shall provide to the Administrative Borrower and each
Lender a revised Schedule 1 to this Agreement, including revised Commitment
Percentages for each of the Lenders, if appropriate, at least three Business
Days prior to the date of the effectiveness of such Additional Commitments (each
an “Additional Lender Assumption Effective Date”), and (C) the Borrowers shall
execute and deliver to the Administrative Agent and the applicable Lenders such
appropriate replacement or additional Revolving Credit Notes as shall be
required by the Administrative Agent (if Notes have been requested by such
Lender or Lenders). The Lenders hereby authorize the Administrative Agent to
execute each Additional Lender Assumption Agreement on behalf of the Lenders.
(iii) On each Additional Lender Assumption Effective Date, the Lenders shall
make adjustments among themselves with respect to the Revolving Loans then
outstanding and amounts of principal, interest, commitment fees and other
amounts paid or payable with respect thereto as shall be necessary, in the
opinion of the Administrative Agent, in order to reallocate among such Lenders
such outstanding amounts, based on the revised Commitment Percentages and to
otherwise carry out fully the intent and terms of this Section 2.9(b) (and the
Borrowers shall pay to the Lenders any amounts that would be payable pursuant to
Section 3.3 hereof if such adjustments among the Lenders would cause a
prepayment of one or more Loans). In connection therewith, it is understood and
agreed that the Maximum Amount of any Lender will not be increased (or decreased
except pursuant to subsection (a) hereof) without the prior written consent of
such Lender. The Administrative Borrower shall not request any increase in the
Revolving Amount pursuant to this subsection 2.9(b) if a Default or an Event of
Default shall then exist, or, after giving pro forma effect to any such increase
(including a pro forma calculation of the financial covenants set forth in
Section 5.7 hereof), would exist. Upon each increase of the Revolving Amount,
the Total Commitment Amount shall be increased by the same amount.
Section 2.10. Computation of Interest and Fees. With the exception of Base Rate
Loans, interest on Loans, Letter of Credit fees, Related Expenses and commitment
and other fees and charges hereunder shall be computed on the basis of a year
having three hundred sixty (360) days and calculated for the actual number of
days elapsed. With respect to Base Rate Loans, interest shall be computed on the
basis of a year having three hundred sixty-five (365) days or three hundred
sixty-six (366) days, as the case may be, and calculated for the actual number
of days elapsed.
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Section 2.11. Mandatory Payments. If, at any time, the Revolving Credit Exposure
shall exceed the Revolving Credit Commitment, the Borrowers shall, not later
than the next Business Day, pay an aggregate principal amount of the Revolving
Loans sufficient to bring the Revolving Credit Exposure within the Revolving
Credit Commitment. Each mandatory payment hereof shall be applied in the
following order: (a) first, to the outstanding Base Rate Loans, and (b) second,
to the outstanding Eurodollar Loans, provided that, in each case, if the
outstanding principal amount of any Eurodollar Loan shall be reduced to an
amount less than the minimum amount set forth in Section 2.7(c) hereof as a
result of such prepayment, then such Eurodollar Loan shall be converted into a
Base Rate Loan on the date of such prepayment. Any prepayment of a Eurodollar
Loan pursuant to this Section 2.11 shall be subject to the prepayment provisions
set forth in Article III hereof.
Section 2.12. Cash Collateral. At any time that there shall exist a Defaulting
Lender, within one Business Day following the written request of the
Administrative Agent or the Issuing Lender (with a copy to the Administrative
Agent), the Administrative Borrower shall Cash Collateralize the Issuing
Lender’s Fronting Exposure with respect to such Defaulting Lender (determined
after giving effect to Section 11.10(a)(iv) hereof and any Cash Collateral
provided by such Defaulting Lender) in an amount not less than the Minimum
Collateral Amount.
(a) Grant of Security Interest. The Borrowers, and to the extent provided by any
Defaulting Lender, such Defaulting Lender, hereby grant to the Administrative
Agent, for the benefit of the Issuing Lender, and agrees to maintain, a first
priority security interest in all such Cash Collateral as security for the
Defaulting Lender’s obligation to fund participations in respect of the Letter
of Credit Exposure, to be applied pursuant to subsection (b) below. If, at any
time, the Administrative Agent determines that Cash Collateral is subject to any
right or claim of any Person other than the Administrative Agent and the Issuing
Lender as herein provided, or that the total amount of such Cash Collateral is
less than the Minimum Collateral Amount, the Borrowers will, promptly upon
demand by the Administrative Agent, pay or provide to the Administrative Agent
additional Cash Collateral in an amount sufficient to eliminate such deficiency
(after giving effect to any Cash Collateral provided by such Defaulting Lender).
(b) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under this Section 2.12 or Section 11.10 in
respect of Letters of Credit shall be applied to the satisfaction of the
Defaulting Lender’s obligation to fund participations in respect of the Letter
of Credit Exposure (including, as to Cash Collateral provided by a Defaulting
Lender, any interest accrued on such obligation) for which the Cash Collateral
was so provided, prior to any other application of such property as may
otherwise be provided for herein.
(c) Termination of Requirement. Cash Collateral (or the appropriate portion
thereof) provided to reduce the Issuing Lender’s Fronting Exposure shall no
longer be required to be held as Cash Collateral pursuant to this Section 2.12
following (i) the elimination of the applicable Fronting Exposure (including by
the termination of Defaulting Lender status of the applicable Lender), or
(ii) the determination by the Administrative Agent and the Issuing Lender that
there exists excess Cash Collateral; provided that (A) subject to Section 11.10
hereof, the Person
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providing Cash Collateral and the Issuing Lender may agree that Cash Collateral
shall be held to support future anticipated Fronting Exposure or other
obligations, and (B) the extent that such Cash Collateral was provided by the
Borrowers, such Cash Collateral shall remain subject to any security interest
granted pursuant to the Loan Documents.
Section 2.13. Liability of Borrowers.
(a) Joint and Several Liability. Each Borrower hereby authorizes the
Administrative Borrower or any other Borrower to request Loans or Letters of
Credit hereunder. Each Borrower acknowledges and agrees that the Administrative
Agent and the Lenders are entering into this Agreement at the request of each
Borrower and with the understanding that each Borrower is and shall remain fully
liable, jointly and severally, for payment in full of the Obligations and any
other amount payable under this Agreement and the other Loan Documents. Each
Borrower agrees that it is receiving or will receive a direct pecuniary benefit
for each Loan made or Letter of Credit issued hereunder.
(b) Appointment of Administrative Borrower. Each Credit Party hereby irrevocably
appoints the Administrative Borrower as the borrowing agent and attorney-in-fact
for all Credit Parties, which appointment shall remain in full force and effect
unless and until the Administrative Agent shall have received prior written
notice signed by each Borrower that such appointment has been revoked and that
another Borrower has been appointed the Administrative Borrower. Each Credit
Party hereby irrevocably appoints and authorizes the Administrative Borrower to
(i) provide the Administrative Agent with all notices with respect to Loans and
Letters of Credit obtained for the benefit of any Borrower and all other notices
and instructions under this Agreement, (ii) take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Loans and
Letters of Credit, and (iii) exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Collateral of the Credit Parties in a combined fashion,
as more fully set forth herein, is done solely as an accommodation to the
Borrowers in order to utilize the collective borrowing powers of the Credit
Parties in the most efficient and economical manner and at their request, and
that neither the Administrative Agent nor any Lender shall incur liability to
any Credit Party as a result hereof. Each Credit Party expects to derive
benefit, directly or indirectly, from the handling of the Collateral in a
combined fashion since the successful operation of each Credit Party is
dependent on the continued successful performance of the integrated group.
(c) Maximum Liability of Each Borrower and Rights of Contribution. Anything in
this Agreement or any other Loan Document to the contrary notwithstanding, in no
event shall the maximum liability of any Borrower exceed the maximum amount that
(after giving effect to the incurring of the obligations hereunder and to any
rights to contribution of such Borrower from other Affiliates of such Borrower)
would not render the rights to payment of the Administrative Agent and the
Lenders hereunder void, voidable or avoidable under any applicable fraudulent
transfer law. The Borrowers hereby agree as among themselves that, in connection
with the payments made hereunder, each Borrower shall have a right of
contribution from each other Borrower in accordance with applicable Law. Such
contribution rights shall be waived until such time as the Secured Obligations
have been irrevocably paid in full, and no Borrower shall exercise any such
contribution rights until the Secured Obligations have been irrevocably paid in
full.
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(d) Waivers of Each Borrower. In the event that any obligation of any Borrower
under this Agreement is deemed to be an agreement by such Borrower to answer for
the debt or default of another Credit Party or as an hypothecation of property
as security therefor, each Borrower represents and warrants that (i) no
representation has been made to such Borrower as to the creditworthiness of such
other Credit Party, and (ii) such Borrower has established adequate means of
obtaining from such other Credit Party on a continuing basis, financial or other
information pertaining to such other Credit Party’s financial condition. Each
Borrower expressly waives, except as expressly required under this Agreement,
diligence, demand, presentment, protest and notice of every kind and nature
whatsoever, consents to the taking by the Administrative Agent and the Lenders
of any additional security of another Credit Party for the obligations secured
hereby, or the alteration or release in any manner of any security of another
Credit Party now or hereafter held in connection with the Obligations, and
consents that the Administrative Agent, the Lenders and any other Credit Party
may deal with each other in connection with such obligations or otherwise, or
alter any contracts now or hereafter existing between them, in any manner
whatsoever, including without limitation the renewal, extension, acceleration or
changes in time for payment of any such obligations or in the terms or
conditions of any security held. The Administrative Agent and the Lenders are
hereby expressly given the right, at their option, to proceed in the enforcement
of any of the Obligations independently of any other remedy or security they may
at any time hold in connection with such obligations secured and it shall not be
necessary for the Administrative Agent and the Lenders to proceed upon or
against or exhaust any other security or remedy before proceeding to enforce
their rights against such Borrower. Each Borrower further waives any right of
subrogation, reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect of sums paid to the Administrative Agent and the
Lenders by any other Credit Party until such time as the Commitment has been
terminated and the Secured Obligations have been repaid in full.
(e) Swap Obligations Keepwell Provision. Each Borrower, that is an “eligible
contract participant” as defined in the Commodity Exchange Act, hereby jointly
and severally, absolutely, unconditionally and irrevocably, undertakes to
provide such funds or other support as may be needed from time to time by each
other Credit Party in order for such Credit Party to honor its obligations under
the Loan Documents in respect of the Swap Obligations. The obligations of each
such Borrower under this Section 2.13(e) shall remain in full force and effect
until all Secured Obligations are paid in full. The Borrowers intend that this
Section 2.13(e) constitute, and this Section 2.13(e) shall be deemed to
constitute, a “keepwell, support, or other agreement” for the benefit of each
other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity
Exchange Act.
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ARTICLE III. ADDITIONAL PROVISIONS RELATING TO
EURODOLLAR LOANS; INCREASED CAPITAL; TAXES
Section 3.1. Requirements of Law.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement reflected in the Eurodollar Rate) or the Issuing
Lender;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in subparts (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on any Loan, Letter of Credit, or
commitment or other obligation hereunder, or its deposits, reserves, other
liabilities or capital attributable thereto; or
(iii) impose on any Lender or the Issuing Lender or the London interbank market
any other condition, cost or expense (other than Taxes) affecting this Agreement
or Loans made by such Lender or any Letter of Credit or participation therein;
(b) If any Lender shall have determined that, after the Closing Date, the
adoption of or any change in any Change in Law regarding capital adequacy or
liquidity, or liquidity requirements, or in the interpretation or application
thereof by a Governmental Authority or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy or liquidity (whether or not having the force of law) from any
Governmental Authority shall have the effect of reducing the rate of return on
such Lender’s or such corporation’s capital as a consequence of its obligations
hereunder, or under or in respect of any Letter of Credit, to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender or
such corporation with respect to capital adequacy and liquidity), then from time
to time, upon submission by such Lender to the Administrative Borrower (with a
copy to the Administrative Agent) of a written request therefor (which shall
include the method for calculating such amount and reasonable detail with
respect to such calculation), the Borrowers shall promptly pay or cause to be
paid to such Lender such additional amount or amounts as will compensate such
Lender or such corporation for such reduction.
(c) For purposes of this Section 3.1 and Section 3.5(a) hereof, the Dodd-Frank
Act, any requests, rules, guidelines or directives concerning capital adequacy
promulgated by the Bank for International Settlements, or the Basel Committee on
Banking Regulations and Supervisory Practices (or any successor or similar
authority) under Basel III, and any rules, regulations, orders, requests,
guidelines and directives adopted, promulgated or implemented in connection with
any of the foregoing, regardless of the date adopted, issued, promulgated or
implemented, are deemed to have been introduced and adopted after the Closing
Date.
(d) A certificate as to any additional amounts payable pursuant to this
Section 3.1 together with a reasonably detailed calculation and description of
such amounts contemplated by this Section 3.1, submitted by any Lender to the
Administrative Borrower (with a copy to the Administrative Agent) shall be
rebuttably presumptive evidence as to such additional amounts. In determining
any such additional amounts, such Lender may use any method of averaging and
attribution that it (in its reasonable credit judgment) shall deem applicable.
The obligations of the Borrowers pursuant to this Section 3.1 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
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(e) Notwithstanding the foregoing, no Lender shall be entitled to any
indemnification or reimbursement pursuant to this Section 3.1 to the extent such
Lender has not made demand therefore (as set forth above) within one year after
the occurrence of the event giving rise to such entitlement or, if later, such
Lender having knowledge of such event.
Section 3.2. Taxes.
(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.
(i) Any and all payments by or on account of any obligation of any Credit Party
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable Laws. If any applicable Laws (as
determined in the good faith discretion of an applicable Withholding Agent)
require the deduction or withholding of any Tax from any such payment by the
applicable Withholding Agent, then the applicable Withholding Agent shall be
entitled to make such deduction or withholding.
(ii) If any Withholding Agent shall be required by any applicable Laws to
withhold or deduct any Taxes from any payment, then (A) such Withholding Agent,
as required by such Laws, shall withhold or make such deductions, (B) such
Withholding Agent, to the extent required by such Laws, shall timely pay the
full amount withheld or deducted to the relevant Governmental Authority in
accordance with such Laws, and (C) to the extent that the withholding or
deduction is made on account of Indemnified Taxes, the sum payable by the
applicable Credit Party shall be increased as necessary so that, after any
required withholding or deductions for Indemnified Taxes have been made
(including deductions for Indemnified Taxes applicable to additional sums
payable under this Section 3.2), the applicable Recipient receives an amount
equal to the sum it would have received had no such withholding or deduction for
Indemnified Taxes been made.
(b) Payment of Other Taxes by the Credit Parties. Without limiting the
provisions of subsection (a) above, the Credit Parties shall timely pay to the
relevant Governmental Authority in accordance with applicable Law, or, at the
option of the Administrative Agent, timely reimburse it for the payment of, any
Other Taxes.
(c) Tax Indemnifications.
(i) Each of the Credit Parties shall, and does hereby, jointly and severally
indemnify each Recipient, and shall make payment in respect thereof within ten
days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section 3.2) payable or paid by such Recipient, or required
to be withheld or deducted from a payment to such Recipient, and any reasonable
expenses arising therefrom or with
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respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Administrative Borrower
by a Lender or the Issuing Lender (with a copy to the Administrative Agent), or
by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Lender, shall be conclusive absent manifest error.
(ii) Each Lender and the Issuing Lender shall, and does hereby, severally
indemnify, and shall make payment in respect thereof within ten days after
demand therefor, (A) the Administrative Agent against any Indemnified Taxes
attributable to such Lender or the Issuing Lender (but only to the extent that
any Credit Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and, without limiting the obligation of the Credit Parties to
do so), (B) the Administrative Agent and the Credit Parties, as applicable,
against any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 11.9(d) hereof relating to the maintenance of a
Participant Register, and (C) the Administrative Agent and the Credit Parties,
as applicable, against any Excluded Taxes attributable to such Lender or the
Issuing Lender, in each case, that are payable or paid by the Administrative
Agent or a Credit Party in connection with any Loan Document, and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to any Lender by the Administrative Agent shall be conclusive absent manifest
error. Each Lender and the Issuing Lender hereby authorize the Administrative
Agent to set off and apply any and all amounts at any time owing to such Lender
or the Issuing lender, as the case may be, under this Agreement or any other
Loan Document against any amount due to the Administrative Agent under this
subpart (ii).
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by
any Credit Party to a Governmental Authority pursuant to this Section 3.2, the
Administrative Borrower or such Credit Party shall deliver to the Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of any return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Status of Lenders; Tax Documentation.
(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Administrative Borrower and the Administrative Agent, at the time or times
reasonably requested by the Administrative Borrower or the Administrative Agent,
such properly completed and executed documentation reasonably requested by the
Administrative Borrower or the Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by the Administrative Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable Law or reasonably requested by the Administrative Borrower or the
Administrative Agent as will enable the
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Administrative Borrower or the Administrative Agent to determine whether or not
such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two
(2) sentences, the completion, execution and submission of such documentation
(other than such documentation set forth in Section 3.2(e)(ii)(A), (ii)(B) and
(ii)(D) below) shall not be required if, in the Lender’s reasonable judgment,
such completion, execution or submission would subject such Lender to any
material unreimbursed cost or expense, or would materially prejudice the legal
or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that a
Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Administrative
Borrower and the Administrative Agent on or prior to the date on which such
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of the Administrative Borrower or the Administrative
Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Administrative Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Administrative
Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (y) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or
W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S.
federal withholding Tax pursuant to the “interest” article of such tax treaty,
and (z) with respect to any other applicable payments under any Loan Document,
IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;
(2) executed originals of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (y) a certificate
substantially in the form of Exhibit E-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of each Borrower within the meaning of
Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”), and (z) executed copies of IRS Form W-8BEN-E (or W-8BEN, as
applicable); or
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(4) to the extent a Foreign Lender is not the beneficial owner, executed copies
of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or
W-8BEN, as applicable), a U.S. Tax Compliance Certificate substantially in the
form of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and other certification
documents from each beneficial owner, as applicable; provided that if, the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate, substantially in the form
of Exhibit E-4 hereto on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Administrative Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Administrative
Borrower or the Administrative Agent), executed copies (or originals, as
required) of any other form prescribed by applicable Law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable Law to permit the Administrative Borrower or the Administrative Agent
to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Administrative Borrower and the Administrative Agent at the
time or times prescribed by Law and at such time or times reasonably requested
by the Administrative Borrower or the Administrative Agent such documentation
prescribed by applicable Law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Administrative Borrower or the Administrative Agent
as may be necessary for the Borrowers and the Administrative Agent to comply
with their obligations under FATCA and to determine that such Lender has
complied with such Lender’s obligations under FATCA or to determine the amount
to deduct and withhold from such payment. Solely for purposes of this subpart
(D), “FATCA” shall include any amendments made to FATCA after the date of this
Agreement.
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(iii) Each Lender agrees that if, any form or certification it previously
delivered pursuant to this Section 3.2 expires or becomes obsolete or inaccurate
in any respect, it shall update such form or certification or promptly notify
the Administrative Borrower and the Administrative Agent in writing of its legal
inability to do so.
(f) Treatment of Certain Refunds. If any Recipient determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified by any Credit Party or with respect to which
any Credit Party has paid additional amounts pursuant to this Section 3.2, it
shall pay to such Credit Party an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by such Credit
Party under this Section 3.2 with respect to the Taxes giving rise to such
refund); net of all out-of-pocket expenses (including Taxes) incurred by such
Recipient, as the case may be, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund),
provided that each Credit Party, upon the request of the Recipient, agrees to
repay the amount paid over to such Credit Party (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Recipient
in the event the Recipient is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this subsection, in no
event will the applicable Recipient be required to pay any amount to such Credit
Party pursuant to this subsection the payment of which would place the Recipient
in a less favorable net after-Tax position than such Recipient would have been
in if the Tax subject to indemnification and giving rise to such refund had not
been deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid. This subsection
shall not be construed to require any Recipient to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to any Credit Party or any other Person.
(g) Survival. Each party’s obligations under this Section 3.2 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender or the Issuing Lender, the
termination of the Commitment and the repayment, satisfaction or discharge of
all other Obligations.
(h) Defined Terms. For purposes of this Section 3.2, the term “applicable Law”
includes FATCA.
Section 3.3. Funding Losses. The Borrowers agree to indemnify each Lender,
promptly after receipt of a written request therefor, and to hold each Lender
harmless from, any loss or expense that such Lender may sustain or incur as a
consequence of (a) default by a Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after such Borrower has given a notice
(including a written or verbal notice that is subsequently revoked) requesting
the same in accordance with the provisions of this Agreement, (b) default by
such Borrower in making any prepayment of or conversion from Eurodollar Loans
after such Borrower has given a notice (including a written or verbal notice
that is subsequently revoked) thereof in accordance with the provisions of this
Agreement, (c) the making of a prepayment of a Eurodollar Loan on a day that is
not the last day of an Interest Period applicable thereto, or (d) any conversion
of a Eurodollar Loan to a Base Rate Loan on a day that is not the last day of an
Interest Period applicable thereto. Such indemnification shall be in an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amounts so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to
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borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the appropriate London interbank market, along with any administration fee
charged by such Lender. A certificate as to any amounts payable pursuant to this
Section 3.3 submitted to the Administrative Borrower (with a copy to the
Administrative Agent) by any Lender, together with a reasonably detailed
calculation and description of such amounts, shall be rebuttably presumptive
evidence as to such amounts. The obligations of the Borrowers pursuant to this
Section 3.3 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
Section 3.4. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.1 or 3.2(a)
hereof with respect to such Lender, it will, if requested by the Administrative
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office (or an Affiliate of such
Lender, if practical for such Lender) for any Loans affected by such event with
the object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage; and provided, further, that nothing in this Section 3.4 shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 3.1 or 3.2(a) hereof.
Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate.
(a) If any Lender shall determine (which determination shall, upon notice
thereof to the Administrative Borrower and the Administrative Agent, be
conclusive and binding on the Borrowers) that, after the Closing Date, (i) the
introduction of or any change in or in the interpretation of any Law makes it
unlawful, or (ii) any Governmental Authority asserts that it is unlawful, for
such Lender to make or continue any Loan as, or to convert (if permitted
pursuant to this Agreement) any Loan into, a Eurodollar Loan, the obligations of
such Lender to make, continue or convert into any such Eurodollar Loan shall,
upon such determination, be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, and all outstanding Eurodollar Loans payable to such Lender shall
automatically convert (if conversion is permitted under this Agreement) into a
Base Rate Loan, or be repaid (if no conversion is permitted) at the end of the
then current Interest Periods with respect thereto or sooner, if required by Law
or such assertion.
(b) Except with respect to the cessation of LIBOR as contemplated by Section 3.8
hereof, if the Administrative Agent or the Required Lenders determine that for
any other reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Loan, or that the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Loan, the Administrative Agent
will
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promptly so notify the Administrative Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain such Eurodollar Loan shall be
suspended until the Administrative Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, the Administrative
Borrower may revoke any pending request for a borrowing of, conversion to or
continuation of such Eurodollar Loan or, failing that, will be deemed to have
converted such request into a request for a borrowing of a Base Rate Loan in the
amount specified therein.
Section 3.6. Replacement of Lenders. The Administrative Borrower shall be
permitted to replace any Lender that requests reimbursement for amounts owing
pursuant to Section 3.1 or 3.2(a) hereof, or asserts its inability to make a
Eurodollar Loan pursuant to Section 3.5 hereof; provided that (a) such
replacement does not conflict with any Change in Law, (b) no Default or Event of
Default shall have occurred and be continuing at the time of such replacement,
(c) prior to any such replacement, such Lender shall have taken no action under
Section 3.4 hereof so as to eliminate the continued need for payment of amounts
owing pursuant to Section 3.1 or 3.2(a) hereof or, if it has taken any action,
such request has still been made, (d) the replacement financial institution
shall purchase, at par, all Loans and other amounts owing to such replaced
Lender on or prior to the date of replacement and assume all commitments and
obligations of such replaced Lender, (e) the Borrowers shall be liable to such
replaced Lender under Section 3.3 hereof if any Eurodollar Loan owing to such
replaced Lender shall be purchased other than on the last day of the Interest
Period relating thereto, (f) the replacement Lender, if not already a Lender,
shall be satisfactory to the Administrative Agent, (g) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of
Section 11.10 hereof (provided that the Borrowers (or the succeeding Lender, if
such Lender is willing) shall be obligated to pay the assignment fee referred to
therein), and (h) until such time as such replacement shall be consummated, the
Borrowers shall pay all additional amounts (if any) required pursuant to
Section 3.1 or 3.2(a) hereof, as the case may be; provided that a Lender shall
not be required to make any such assignment if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrowers to
replace such Lender cease to apply.
Section 3.7. Discretion of Lenders as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of such Lender’s Loans in any
manner such Lender deems to be appropriate; it being understood, however, that
for the purposes of this Agreement all determinations hereunder shall be made as
if such Lender had actually funded and maintained each Eurodollar Loan during
the applicable Interest Period for such Loan through the purchase of deposits
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period.
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Section 3.8. Effect of Benchmark Transition Event.
(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in
any other Loan Document, (i) upon the determination of the Administrative Agent
(which shall be conclusive absent manifest error) that a Benchmark Transition
Event has occurred, or (ii) upon the occurrence of an Early Opt-in Election, as
applicable, the Administrative Agent and the Borrowers may amend this Agreement
to replace the Eurodollar Rate with a Benchmark Replacement, by a written
document executed by the Borrowers and the Administrative Agent, subject to the
requirements of this Section 3.8. Notwithstanding the requirements of
Section 11.3 hereof or anything else to the contrary herein or in any other Loan
Document, any such amendment with respect to a Benchmark Transition Event will
become effective and binding upon the Administrative Agent, the Borrowers and
the Lenders at 5:00 p.m. on the fifth (5th) Business Day after the
Administrative Agent has posted such proposed amendment to all Lenders and the
Borrowers so long as the Administrative Agent has not received, by such time,
written notice of objection to such amendment from Lenders comprising the
Required Lenders, and any such amendment with respect to an Early Opt-in
Election will become effective and binding upon the Administrative Agent, the
Borrowers and the Lenders on the date that Lenders comprising the Required
Lenders have delivered to the Administrative Agent written notice that such
Required Lenders accept such amendment. No replacement of the Eurodollar Rate
with a Benchmark Replacement pursuant to this Section 3.8 will occur prior to
the applicable Benchmark Transition Start Date.
(b) Benchmark Replacement Conforming Changes. In connection with the
implementation of a Benchmark Replacement, the Administrative Agent will have
the right to make Benchmark Replacement Conforming Changes from time to time
and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming
Changes will become effective without any further action or consent of any other
party to this Agreement.
(c) Notices; Standards for Decisions and Determinations. The Administrative
Agent will promptly notify the Administrative Borrower and the Lenders in
writing of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in
Election, as applicable, and its related Benchmark Replacement Date and
Benchmark Transition Start Date, (ii) the implementation of any Benchmark
Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming
Changes, and (iv) the commencement or conclusion of any Benchmark Unavailability
Period. Any determination, decision or election that may be made by the
Administrative Agent or Lenders pursuant to this Section 3.8, including, without
limitation, any determination with respect to a tenor, comparable replacement
rate or adjustment, or implementation of any Benchmark Replacement Rate
Conforming Changes, or of the occurrence or non-occurrence of an event,
circumstance or date and any decision to take or refrain from taking any action,
will be conclusive and binding on all parties hereto absent manifest error and
may be made in its or their sole discretion and without consent from any other
party hereto, except, in each case, as expressly required pursuant to this
Section 3.8 and shall not be a basis of any claim of liability of any kind or
nature by any party hereto, all such claims being hereby waived individually be
each party hereto.
(d) Benchmark Unavailability Period. Upon the Administrative Borrower’s receipt
of notice of the commencement of a Benchmark Unavailability Period, the
Borrowers may revoke any request for a borrowing of, conversion to or
continuation of Eurodollar Loans to be made, converted or continued during any
Benchmark Unavailability Period and, failing that, the Borrowers will be deemed
to have converted any such request into a request for a borrowing of or
conversion to Base Rate Loans. During any Benchmark Unavailability Period, the
components of Base Rate based upon the Eurodollar Rate will not be used in any
determination of Base Rate.
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(e) LIBOR Notification. The interest rate on Eurodollar Loans is determined by
reference to the LIBOR, which is derived from the London interbank offered rate.
The London interbank offered rate is intended to represent the rate at which
contributing banks may obtain short-term borrowings from each other in the
London interbank market. In July 2017, the U.K. Financial Conduct Authority
announced that, after the end of 2021, it would no longer persuade or compel
contributing banks to make rate submissions to the ICE Benchmark Administration
(together with any successor to the ICE Benchmark Administrator, the “IBA”) for
purposes of the IBA setting the London interbank offered rate. As a result, it
is possible that commencing in 2022, the London interbank offered rate may no
longer be available or may no longer be deemed an appropriate reference rate
upon which to determine the interest rate on Eurodollar Loans. In light of this
eventuality, public and private sector industry initiatives are currently
underway to identify new or alternative reference rates to be used in place of
the London interbank offered rate. In the event that the London interbank
offered rate is no longer available or in certain other circumstances as set
forth in this Section 3.8, this Section 3.8 provides a mechanism for determining
an alternative rate of interest. The Administrative Agent will notify the
Administrative Borrower, pursuant to this Section 3.8, in advance of any change
to the reference rate upon which the interest rate on Eurodollar Loans is based.
However, the Administrative Agent does not warrant or accept any responsibility
for, and shall not have any liability with respect to, the administration,
submission or any other matter related to the London interbank offered rate or
other rates in the definition of “Eurodollar Rate”, or with respect to any
alternative or successor rate thereto, or replacement rate therefor or thereof,
including, without limitation, whether the composition or characteristics of any
such alternative, successor or replacement reference rate, as it may or may not
be adjusted pursuant to this Section 3.8, will be similar to, or produce the
same value or economic equivalence of, the Eurodollar Rate or has the same
volume or liquidity as did the London interbank offered rate prior to its
discontinuance or unavailability.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.1. Conditions to Each Credit Event. The obligation of the Lenders and
the Issuing Lender to participate in any Credit Event shall be conditioned, in
the case of each Credit Event, upon the following:
(a) all conditions precedent as listed in Section 4.2 hereof required to be
satisfied prior to the first Credit Event after the Closing Date shall have been
satisfied prior to or as of such Credit Event;
(b) the Administrative Borrower shall have submitted a Notice of Loan (or with
respect to a Letter of Credit, complied with the provisions of
Section 2.2(b)(ii) hereof) and otherwise complied with Section 2.5 hereof;
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(c) no Default or Event of Default shall then exist or immediately after such
Credit Event would exist; and
(d) each of the representations and warranties contained in Article VI hereof
shall be true in all material respects as if made on and as of the date of such
Credit Event, except to the extent that any thereof expressly relate to an
earlier date.
Each request by the Administrative Borrower for a Credit Event shall be deemed
to be a representation and warranty by the Borrowers as of the date of such
request as to the satisfaction of the conditions precedent specified in
subsections (c) and (d) above.
Section 4.2. Conditions to the First Credit Event. The Borrowers shall cause the
following conditions to be satisfied on or prior to the Closing Date. The
obligation of the Lenders and the Issuing Lender to participate in the first
Credit Event is subject to the Borrowers satisfying each of the following
conditions prior to or concurrently with such Credit Event:
(a) Notes as Requested. Each Borrower shall have executed and delivered to each
Lender requesting a Revolving Credit Note such Lender’s Revolving Credit Note.
(b) Pledge Agreements. Each Credit Party that has a Subsidiary shall have
(i) executed and delivered to the Administrative Agent, for the benefit of the
Lenders, a Pledge Agreement, in form and substance reasonably satisfactory to
the Administrative Agent, with respect to the Pledged Securities, (ii) executed
and delivered to the Administrative Agent, for the benefit of the Lenders,
appropriate transfer powers for each of the Pledged Securities that are
certificated, and (iii) delivered to the Administrative Agent, for the benefit
of the Lenders, the Pledged Securities (to the extent such Pledged Securities
are certificated).
(c) Intellectual Property Security Agreements. Each Credit Party that owns U.S.
registered intellectual property shall have executed and delivered to the
Administrative Agent, for the benefit of the Lenders, an Intellectual Property
Security Agreement, in form and substance reasonably satisfactory to the
Administrative Agent.
(d) Lien Searches. With respect to the property owned or leased by each Credit
Party, and any other property securing the Obligations located in the United
States, the Borrowers shall have caused to be delivered to the Administrative
Agent (i) the results of Uniform Commercial Code lien searches, reasonably
satisfactory to the Administrative Agent and the Lenders, (ii) the results of
federal and state tax lien and judicial lien searches and pending litigation and
bankruptcy searches, in each case reasonably satisfactory to the Administrative
Agent (other than searches in U.S. District Courts subject to closure orders)
and (iii) Uniform Commercial Code termination statements reflecting termination
of all U.C.C. Financing Statements previously filed by any Person and not
expressly permitted pursuant to Section 5.9 hereof.
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(e) Officer’s Certificate, Resolutions, Organizational Documents. The Borrowers
shall have delivered to the Administrative Agent an officer’s certificate (or
comparable domestic or foreign documents) certifying the names of the officers
of each Credit Party authorized to sign the Loan Documents, together with the
true signatures of such officers and certified copies of (i) the resolutions of
the board of directors (or comparable domestic or foreign documents) of such
Credit Party evidencing approval of the execution, delivery and performance of
the Loan Documents to which such Credit Party is a party, and the consummation
of the transactions contemplated thereby, and (ii) the Organizational Documents
of such Credit Party.
(f) Good Standing Certificates. The Borrowers shall have delivered to the
Administrative Agent a good standing certificate or full force and effect
certificate (or comparable document, if neither certificate is available in the
applicable jurisdiction), as the case may be, for each Credit Party, issued on
or about the Closing Date by the Secretary of State in the state or states where
such Credit Party is incorporated or formed or qualified as a foreign entity.
(g) Legal Opinion. The Borrowers shall have delivered to the Administrative
Agent an opinion of counsel for each Credit Party, in form and substance
reasonably satisfactory to the Administrative Agent and the Lenders.
(h) KYC Information. Upon the request of any Lender made at least ten days prior
to the Closing Date, the Borrowers shall have provided to such Lender the
documentation and other information so requested in connection with applicable
“know your customer” and anti-money-laundering rules and regulations, including
the PATRIOT Act, in each case at least five days prior to the Closing Date.
(i) Advertising Permission Letter. The Borrowers shall have delivered to the
Administrative Agent an advertising permission letter, authorizing the
Administrative Agent to publicize the transaction and specifically to use the
names of the Borrowers in connection with “tombstone” advertisements in one or
more publications selected by the Administrative Agent.
(j) Closing and Solvency Certificate. The Borrowers shall have delivered to the
Administrative Agent an officer’s certificate certifying that, as of the Closing
Date, (i) all conditions precedent set forth in Sections 4.1 and 4.2 have been
satisfied, (ii) no Default or Event of Default exists or immediately after the
first Credit Event will exist, (iii) each of the representations and warranties
contained in Article VI hereof are true and correct as of the Closing Date, and
(iv) the Borrowers (on a consolidated basis), are Solvent as of the Closing
Date.
(k) Administrative Agent Fee Letter and Other Fees. The Borrowers shall have
(i) executed and delivered to the Administrative Agent, the Administrative Agent
Fee Letter and paid to the Administrative Agent, for its sole account, the fees
stated therein, and (ii) paid all legal fees and expenses of the Administrative
Agent in connection with the preparation and negotiation of the Loan Documents.
(l) Insurance Certificates. The Borrowers shall have delivered to the
Administrative Agent certificates of insurance on ACORD 25 and 27 or 28 form and
proof of endorsements reasonably satisfactory to the Administrative Agent and
the Lenders, providing for adequate personal property and liability insurance
for each Company, with the Administrative Agent, on behalf of the Lenders,
listed as, lender’s loss payee and additional insured.
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(m) No Material Adverse Change. No material adverse change shall have occurred
in the financial condition or operations of the Companies since December 31,
2019.
Section 4.3. Post-Closing Conditions. On or before each of the dates specified
in this Section 4.3 (unless a longer period is agreed to in writing by the
Administrative Agent), the Borrowers shall satisfy each of the following items
specified in the subsections below:
(a) Control Agreements. No later than fifteen (15) days after the Closing Date,
the Borrowers shall have delivered to the Administrative Agent executed Control
Agreements for each Deposit Account and each Securities Account maintained by a
Credit Party (other than (i) Excluded Accounts, (ii) Deposit Accounts and
Securities Accounts where the Administrative Agent or any other Lender is
depository bank or securities intermediary, or (iii) to the extent such Credit
Party would not be required to deliver a Control Agreement for such Deposit
Account pursuant to Section 5.21(c) hereof).
(b) Landlords’ Waiver. No later than sixty (60) days after the Closing Date, the
Borrowers shall have delivered to the Administrative Agent a Landlord’s Waiver
for their chief executive office.
(c) Lien Searches. As soon as practicable following the re-opening of the
applicable U.S. District Courts, the Borrowers shall have caused to be delivered
to the Administrative Agent the results of judicial lien searches and pending
litigation and bankruptcy searches, in each case reasonably satisfactory to the
Administrative Agent.
ARTICLE V. COVENANTS
Section 5.1. Insurance. Each Company shall at all times maintain insurance upon
its Inventory, Equipment and other personal and real property (including, if
applicable, insurance required by the National Flood Insurance Reform Act of
1994) in such form, written by such companies, in such amounts, for such
periods, and against such risks as is customarily maintained by comparable
companies engaged in the same or similar lines of business (it being agreed that
the insurance in place on the Closing Date satisfies the forgoing conditions),
with provisions reasonably satisfactory to the Administrative Agent for, with
respect to Credit Parties, payment of all losses thereunder to the
Administrative Agent, for the benefit of the Lenders, and such Company as their
interests may appear (with lender’s loss payable and additional insured
endorsements, as appropriate, in favor of the Administrative Agent, for the
benefit of the Lenders), and, if required by the Administrative Agent, the
Borrowers shall furnish copies of the policies to the Administrative Agent. Any
such policies of insurance shall provide for no fewer than thirty (30) days
prior written notice of cancellation to the Administrative Agent and the
Lenders. Any sums received by the Administrative Agent, for the benefit of the
Lenders, in payment of insurance losses, returns, or unearned premiums under the
policies shall be applied as set forth in Section 2.11(b) and (c) hereof. The
Administrative Agent is hereby authorized to act
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as attorney-in-fact for the Companies, after the occurrence and during the
continuance of an Event of Default, in obtaining, adjusting, settling and
canceling such insurance and indorsing any drafts. Within ten days of the
Administrative Agent’s written request, the Borrowers shall furnish to the
Administrative Agent such information about the insurance of the Companies as
the Administrative Agent may from time to time reasonably request, which
information shall be prepared in form and detail reasonably satisfactory to the
Administrative Agent and certified by a Financial Officer.
Section 5.2. Money Obligations. Each Company shall pay in full (a) prior in each
case to the date when penalties would attach, all material taxes, assessments
and governmental charges and levies (except only those so long as and to the
extent that the same shall be contested in good faith by appropriate and timely
proceedings and for which adequate provisions have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. §§ 206-207) or any comparable provisions (except for non-compliance being
contested in good faith by appropriate and timely proceedings); and (c) all of
its other material obligations calling for the payment of money (except in the
case of any of the foregoing obligations described in this Section 5.2, only
those so long as and to the extent that nonpayment of the same would not cause a
Material Adverse Effect) before such payment becomes overdue.
Section 5.3. Financial Statements and Information.
(a) Quarterly Financials. The Borrowers shall deliver to the Administrative
Agent and the Lenders, within forty-five (45) days after the end of the first
three quarterly periods of each fiscal year of Rapid7, Inc. (or, if earlier,
within five days after the date on which the Administrative Borrower shall be
required to submit its Form 10-Q), balance sheets of the Companies as of the end
of such period and statements of income (loss), stockholders’ equity and cash
flow for the quarter and fiscal year to date periods, all prepared on a
Consolidated basis, in form and detail reasonably satisfactory to the
Administrative Agent and the Lenders and certified by a Financial Officer.
(b) Annual Audit Report. The Borrowers shall deliver to the Administrative Agent
and the Lenders, within ninety (90) days after the end of each fiscal year of
Rapid7, Inc. (or, if earlier, within five days after the date on which the
Administrative Borrower shall be required to submit its Form 10-K), an annual
audit report of the Companies for that year prepared on a Consolidated basis, in
form and detail reasonably satisfactory to the Administrative Agent and the
Lenders and certified by an unqualified opinion of an independent public
accountant reasonably satisfactory to the Administrative Agent, which report
shall include balance sheets and statements of income (loss), stockholders’
equity and cash-flow for that period.
(c) Compliance Certificate. The Borrowers shall deliver a Compliance Certificate
to the Administrative Agent and the Lenders, concurrently with the delivery (or
deemed delivery) of the financial statements set forth in subsections (a) and
(b) above.
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(d) Annual Budget. The Borrowers shall deliver to the Administrative Agent,
within sixty (60) days after the end of each fiscal year of Rapid7, Inc., an
annual budget of the Companies for the then current fiscal year, to be in form
and detail reasonably satisfactory to the Administrative Agent.
(e) SEC Filings. Promptly after the same are publicly available, copies of all
annual, regular, periodic and special reports, proxy statements and registration
statements which the Borrowers file with the SEC or with any Governmental
Authority that may be substituted therefor or with any national securities
exchange, as the case may be (other than amendments to any registration
statement (to the extent such registration statement, in the form it became
effective, is delivered to the Administrative Agent), exhibits to any
registration statement and, if applicable, any registration statement on Form
S-8), and in any case not otherwise required to be delivered to the
Administrative Agent pursuant to any other clause of this Section 5.3; provided
that, notwithstanding the foregoing, the obligations in subparts (a) and (b) of
this Section 5.3 may be satisfied by causing such information to be publicly
available on the SEC’s EDGAR website or another publicly available reporting
service, and written notice thereof to the Administrative Agent and the Lenders
of such availability.
(f) Financial Information of the Companies. The Borrowers shall deliver to the
Administrative Agent and the Lenders, promptly upon the written request of the
Administrative Agent or any Lender, such other information about the financial
condition, properties and operations of any Company as the Administrative Agent
or such Lender may from time to time reasonably request, which information shall
be submitted in form and detail reasonably satisfactory to the Administrative
Agent or such Lender and certified by a Financial Officer of the Company or
Companies in question.
Section 5.4. Financial Records. Each Company shall at all times maintain true
and complete, in all material respects, records and books of account, including,
without limiting the generality of the foregoing, appropriate provisions for
possible losses and liabilities, all in accordance with GAAP, and at all
reasonable times (during normal business hours and upon reasonable notice to the
Administrative Borrower) permit the Administrative Agent, or any representative
of the Administrative Agent, to examine the Borrowers’ books and records and to
make excerpts therefrom and transcripts thereof; provided that, unless an Event
of Default has occurred and is continuing, or unless otherwise reasonably agreed
by the Borrowers, the Administrative Agent (and its designated representatives)
shall be limited to one such inspection during each fiscal year of Rapid7, Inc.
Section 5.5. Franchises; Change in Business.
(a) Each Credit Party shall preserve and maintain at all times its existence
(except as otherwise permitted pursuant to Section 5.12 hereof) and foreign
qualifications (except where the failure to maintain would not result in an
Material Adverse Effect).
(b) No Company shall engage in any business if, as a result thereof, the general
nature of the businesses of the Companies taken as a whole would be
substantially changed from the general nature of the businesses the Companies
are engaged in on the Closing Date, together with businesses reasonably similar
or related thereto.
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Section 5.6. ERISA Pension and Benefit Plan Compliance. No Company shall incur
any material accumulated funding deficiency within the meaning of ERISA, or any
material liability to the PBGC, established thereunder in connection with any
ERISA Plan. The Borrowers shall furnish to the Administrative Agent and the
Lenders (a) as soon as possible and in any event within thirty (30) days after
any Company knows or has reason to know that any material Reportable Event with
respect to any ERISA Plan has occurred, a statement of a Financial Officer of
such Company, setting forth details as to such Reportable Event and the action
that such Company proposes to take with respect thereto, together with a copy of
the notice of such Reportable Event given to the PBGC if a copy of such notice
is available to such Company, and (b) promptly after receipt thereof, a copy of
any material notice such Company, or any member of the Controlled Group may
receive from the PBGC or the Internal Revenue Service with respect to any ERISA
Plan administered by such Company; provided that this latter clause shall not
apply to notices of general application promulgated by the PBGC or the Internal
Revenue Service or to letters or notices with respect to an ERISA Plan, which do
not threaten a material liability of any Company. The Borrowers shall promptly
notify the Administrative Agent of any material taxes assessed, proposed to be
assessed or that the Borrowers have reason to believe may be assessed against a
Company by the Internal Revenue Service with respect to any ERISA Plan. As used
in this Section 5.6 and in Section 6.11 hereof, “material” means the measure of
a matter of significance that shall be determined as being an amount equal to
five percent (5%) of Consolidated Net Worth. As soon as practicable, and in any
event within twenty (20) days, after any Company shall become aware that an
ERISA Event shall have occurred, such Company shall provide the Administrative
Agent with notice of such ERISA Event with a certificate by a Financial Officer
of such Company setting forth the details of the event and the action such
Company or another Controlled Group member proposes to take with respect
thereto. The Borrowers shall, at the reasonable request of the Administrative
Agent or any Lender, deliver or cause to be delivered to the Administrative
Agent or such Lender, as the case may be, true and correct copies of any
documents relating to the ERISA Plan, excluding any documents providing
information regarding individual participants or the disclosure of which would
reasonably be expected to violate applicable Law.
Section 5.7. Financial Covenants.
(a) Available Liquidity. The Borrowers shall not permit at any time from and
after the date on which Indebtedness is incurred pursuant to Section 5.8(i)
hereof, Available Liquidity to be less than Thirty Million Dollars
($30,000,000.00).
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(b) Minimum Recurring Revenue. The Borrowers shall not suffer or permit the
Recurring Revenue to be less than the amounts set forth in the table below for
the four fiscal quarters ending on the dates corresponding to such amounts:
Four Fiscal Quarters
Ending Dates
Minimum Recurring Revenue
June 30, 2020
$ 270,000,000
September 30, 2020
$ 286,000,000
December 31, 2020
$ 301,000,000
March 31, 2021
$ 313,000,000
June 30, 2021
$ 325,000,000
September 30, 2021
$ 338,000,000
December 31, 2021
$ 352,000,000
March 31, 2022
$ 365,000,000
June 30, 2022
$ 379,000,000
September 30, 2022
$ 393,000,000
December 31, 2022
$ 406,000,000
March 31, 2023
$ 414,000,000
Section 5.8. Borrowing. No Company shall create, incur or have outstanding any
Indebtedness of any kind; provided that this Section 5.8 shall not apply to the
following:
(a) the Loans, the Letters of Credit and any other Indebtedness under this
Agreement;
(b) any loans granted to, or Capitalized Lease Obligations entered into by, any
Company for the purchase or lease of fixed assets (and refinancings of such
loans or Capitalized Lease Obligations), which loans and Capitalized Lease
Obligations shall only be secured by the fixed assets being purchased or leased,
so long as the aggregate principal amount of all such loans and Capitalized
Lease Obligations for all Companies shall not exceed Five Million Dollars
($5,000,000) at any time outstanding;
(c) the Indebtedness existing on the Closing Date as set forth in Schedule 5.8
of the Confidential Disclosure Letter (and any extension, renewal or refinancing
thereof but only to the extent that the principal amount thereof does not
increase after the Closing Date);
(d) loans to, and guaranties of Indebtedness of, a Company from a Company so
long as each such Company is a Credit Party;
(e) loans to, and guaranties of Indebtedness of, a Company that is not a Credit
Party from a Credit Party so long as such loans and guaranties are permitted
under Section 5.11 hereof;
(f) Indebtedness under any Hedge Agreement, so long as such Hedge Agreement
shall have been entered into in the ordinary course of business and not for
speculative purposes;
(g) unsecured Indebtedness resulting from the financing of insurance premiums
(with the insurance company providing such financing) in the ordinary course of
business and consistent with past business practices of such Company;
(h) unsecured Indebtedness of Rapid7, Inc. arising under (i) the Existing
Convertible Note Indenture and the Existing Convertible Notes and (ii) and any
extension, renewal or refinancing of the Existing Convertible Notes but only to
the extent that the principal amount thereof does not increase after the Closing
Date;
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(i) unsecured Indebtedness of Rapid7, Inc. arising under (i) Convertible Debt
Securities issued on or after the Closing Date, so long as (A) the aggregate
outstanding principal amount of such Indebtedness does not exceed Two Hundred
Fifty Million Dollars ($250,000,000) at any time outstanding, (B) the stated
maturity date for such Indebtedness shall be no earlier than ninety (90) days
after the end of the Commitment Period, and (C) the principal amount of such
Indebtedness shall not be subject to any regularly scheduled amortization or
sinking fund payments prior to the maturity date described in clause (B) above,
and (ii) and any extension, renewal or refinancing of the such Convertible Debt
Securities but only to the extent that the principal amount thereof does not
exceed Two Hundred Fifty Million Dollars ($250,000,000);
(j) Indebtedness arising in connection with endorsement of instruments for
deposit or owed in respect of business credit card programs and any netting
services, overdrafts and related liabilities arising from treasury, depository
and cash management services, in each case arising in the ordinary course of
business;
(k) contingent liabilities arising with respect to (i) customary indemnification
obligations by any of the Credit Parties and their Subsidiaries in favor of
purchasers in connection with dispositions permitted under Section 5.12 hereof
and (ii) the guaranty by any of the Credit Parties and their Subsidiaries of a
lease, sublease, license, or sublicense entered into in the ordinary course of
business by another Credit Party thereof;
(l) Indebtedness incurred in the ordinary course of business in respect of
credit cards, credit card processing services, debit cards, stored value cards,
commercial cards (including so-called “purchase cards”, “procurement cards” or
“p-cards”), or cash management services in an amount not to exceed Ten Million
Dollars ($10,000,000) outstanding at any one time;
(m) Acquired Indebtedness in an amount not to exceed Five Million Dollars
($5,000,000) outstanding at any one time;
(n) unsecured Indebtedness owing to sellers of assets or equity to a Company
that is incurred by such Company in connection with the consummation of one or
more Acquisitions permitted by Section 5.13 so long as the aggregate principal
amount for all such unsecured Indebtedness does not exceed Twenty Million
Dollars ($20,000,000) at any one time outstanding;
(o) unsecured Indebtedness of Borrowers or their Subsidiaries in respect of
earn-outs and hold-back amounts owing to sellers of assets or equity interests
to such Borrower or its Subsidiaries that is incurred in connection with the
consummation of one or more Acquisitions permitted by Section 5.13 hereof; and
(p) other unsecured Indebtedness, in addition to the Indebtedness listed above,
in an aggregate principal amount for all Companies not to exceed Five Million
Dollars ($5,000,000) at any time outstanding.
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Section 5.9. Liens. No Company shall create, assume or suffer to exist (upon the
happening of a contingency or otherwise) any Lien upon any of its property or
assets, whether now owned or hereafter acquired; provided that this Section 5.9
shall not apply to the following:
(a) Liens for taxes not yet due or that are being actively contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;
(b) other statutory Liens, including, without limitation, statutory Liens of
landlords, carriers, warehousemen, utilities, mechanics, repairmen, workers and
materialmen, incidental to the conduct of its business or the ownership of its
property and assets that (i) were not incurred in connection with the incurring
of Indebtedness or the obtaining of advances or credit, and (ii) do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(c) any Lien granted to the Administrative Agent, for the benefit of the Lenders
(and Affiliates thereof);
(d) the Liens existing on the Closing Date as set forth in Schedule 5.9 of the
Confidential Disclosure Letter and replacements, extensions, renewals,
refundings or refinancings thereof, but only to the extent that the amount of
debt secured thereby, and the amount and description of the property subject to
such Liens, shall not be increased;
(e) Liens on deposits and purchase money Liens on fixed assets securing the
loans and Capitalized Lease Obligations pursuant to Section 5.8(b) hereof,
provided that such Lien is limited to the purchase price and only attaches to
the property being acquired and deposits made in connection with such purchases;
(f) easements or other minor defects or irregularities in title of real property
not interfering in any material respect with the use of such property in the
business of any Company;
(g) any interest or title of, or Liens created by, a lessor under any leases or
subleases entered into by any Company, as tenant, in the ordinary course of
business;
(h) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights, including Liens
of a collecting bank arising in the ordinary course of business under
Section 4-208 of the U.C.C.;
(i) Liens solely on earnest money deposits made by a Borrower or any of its
Subsidiaries in connection with any letter of intent or purchase agreement
executed in connection with a transaction permitted by this Agreement;
(j) Liens arising from precautionary U.C.C. Financing Statement filings
regarding operating leases entered into by a Borrower or any of its Subsidiaries
in the ordinary course of business;
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(k) Liens on insurance proceeds to the extent of premiums financed;
(l) pledges, deposits and other Liens securing liability for reimbursement or
indemnification obligations of (including obligations in respect of letters of
credit or bank guarantees for the benefit of) insurance carriers providing
property, casualty, workmen’s compensation or liability insurance in an
aggregate principal amount not to exceed Ten Million Dollars ($10,000,000);
(m) an agreement to transfer any property in a disposition permitted under
Section 5.12 hereof, to the extent that such an agreement may constitute a Lien,
and Liens on earnest money deposits of cash or Cash Equivalents made by the
Companies in connection with any Disposition permitted under Section 5.12
hereof;
(n) any encumbrance or restriction with respect to the equity interests of any
joint venture or similar arrangement created after the Closing Date and pursuant
to the joint venture or similar agreements with respect to such joint venture or
similar arrangements permitted under this Agreement;
(o) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Section 8.8 hereof;
(p) Liens assumed by a Company in connection with an Acquisition that secures
Acquired Indebtedness that is permitted by Section 5.8(m) hereof, but only so
long as such Lien is limited to the assets being acquired by such Acquisition;
(q) Liens incurred to secure cash management services or to implement cash
pooling arrangements in the ordinary course of business, in the aggregate for
all Companies, not to exceed Two Million Dollars ($2,000,000);
(r) non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business; and
(s) other Liens, in addition to the Liens listed above, not incurred in
connection with the incurring of Indebtedness, securing amounts, in the
aggregate for all Companies, not to exceed Two Million Dollars ($2,000,000) at
any time.
No Company shall enter into any contract or agreement (other than (i) a contract
or agreement entered into in connection with the purchase or lease of fixed
assets that prohibits Liens on such fixed assets, (ii) customary provisions in
joint venture agreements restricting liens on joint venture assets (to the
extent joint ventures are permitted by this Agreement), (iii) customary
provisions in licenses of intellectual property that restrict the creation of
liens entered into in the ordinary course of business, (iv) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
entered into in the ordinary course of business, and (v) customary restrictions
and conditions contained in any agreement relating to the sale of any asset
permitted under Section 5.12 hereof pending the consummation of such sale) that
would prohibit the Administrative Agent or the Lenders from acquiring a security
interest, mortgage or other Lien on, or a collateral assignment of, any of the
property or assets of such Company.
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Section 5.10. Regulations T, U and X. No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations T, U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.
Section 5.11. Investments, Loans and Guaranties. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any stocks,
bonds or securities of any kind, (c) be or become a party to any joint venture
or other partnership, (d) make or keep outstanding any advance or loan to any
Person, or (e) be or become a Guarantor of any kind (other than a Guarantor of
Payment under the Loan Documents); provided that this Section 5.11 shall not
apply to the following:
(i) any endorsement of a check or other medium of payment for deposit or
collection through normal banking channels or similar transaction in the normal
course of business;
(ii) investments in Cash Equivalents;
(iii) investments made in compliance with the Investment Policy;
(iv) the holding of each of the Subsidiaries listed on Schedule 6.1 of the
Confidential Disclosure Letter, and the creation, acquisition and holding of and
any investment in any newly formed or acquired Subsidiary after the Closing Date
so long as such Subsidiary shall have been created, acquired or held, and
investments made, in accordance with the terms and conditions of this Agreement;
(v) loans to, investments in and guaranties of the Indebtedness (permitted under
Section 5.8(d) hereof) of, a Company from or by a Company so long as each such
Company is a Credit Party;
(vi) any loans by a Company (that is not a Credit Party) to, investments by a
Company (that is not a Credit Party) in, and guaranties by a Company (that is
not a Credit Party) of Indebtedness of, another Company;
(vii) any advance or loan to an officer or employee of a Company as an advance
on commissions, travel and other items in the ordinary course of business, so
long as all such advances and loans (other than through use of company credit
cards or similar purchase cards) from all Companies aggregate not more than the
maximum principal sum of Five Hundred Thousand Dollars ($500,000) at any time
outstanding;
(viii) any loans by a Credit Party to, investments by a Credit Party in, and
guaranties by a Credit Party of Indebtedness of, a Company that is not a Credit
Party, so long as the aggregate amount thereof shall not exceed Five Million
Dollars ($5,000,000) per fiscal year;
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(ix) the holdings of any stock or equity interest that remains following the
sale or other disposition of a Company (or a majority interest therein)
permitted by Section 5.12 hereof;
(x) to the extent constituting an investment, Indebtedness permitted under
Section 5.8 hereof;
(xi) accounts receivable arising and trade credit granted in the ordinary course
of business (including, for the avoidance of doubt, pursuant to cost plus
arrangements) and securities of account debtors received in satisfaction or
partial satisfaction thereof from financially troubled account debtors or
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such account debtors;
(xii) guaranties by a Company of operating leases (other than Capitalized Lease
Obligations) or of other obligations that do not constitute Indebtedness, in
each case entered into by a Company in the ordinary course of business;
(xiii) the entering into Hedge Agreements permitted under Section 5.8(f) hereof,
and the purchase of any Permitted Equity Derivatives in connection with the
issuance of Convertible Debt Securities permitted under Section 5.8(h) and
(i) hereof (and the replacement of any such Permitted Equity Derivatives)
provided that the purchase price for such Permitted Equity Derivatives, net of
any proceeds relating to any concurrent sale or termination of any Permitted
Equity Derivatives, in respect of any Convertible Debt Securities does not
exceed the net cash proceeds from such issuance of Convertible Debt Securities;
(xiv) investments in the nature of Acquisitions to the extent permitted under
Section 5.13 hereof; or
(xv) other investments in an amount not to exceed Ten Million Dollars
($10,000,000) in any fiscal year.
For purposes of this Section 5.11, the amount of any investment in equity
interests shall be based upon the initial amount invested and shall not include
any appreciation in value or return on such investment but shall take into
account repayments, redemptions and return of capital.
Section 5.12. Merger and Sale of Assets. No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:
(a) a Company (other than a Borrower) may merge with (i) a Borrower (provided
that such Borrower shall be the continuing or surviving Person) or (ii) any one
or more Guarantors of Payment (provided that at least one Guarantor of Payment
shall be the continuing or surviving Person);
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(b) a Company (other than a Borrower) may sell, lease, transfer or otherwise
dispose of any of its assets to (i) a Borrower or (ii) any Guarantor of Payment;
(c) a Company (other than a Credit Party) may (i) merge with or sell, lease,
transfer or otherwise dispose of any of its assets to any other Company and
(ii) may, following the transfer of substantially all of its assets to another
Company, voluntary dissolve or liquidate;
(d) a Company may sell, lease, transfer or otherwise dispose of any assets that
are obsolete or no longer useful in such Company’s business, including by way of
(i) the lapse of registered patents, trademarks, copyrights and other
intellectual property of Borrowers or any of their Subsidiaries to the extent
not economically desirable in the conduct of its business or (ii) the
abandonment of patents, trademarks, copyrights, or other intellectual property
rights in the ordinary course of business so long as (in each case under clauses
(i) and (ii)), (A) with respect to copyrights, such copyrights are not material
revenue generating copyrights, and (B) such lapse is not materially adverse to
the interests of the Lenders;
(e) Acquisitions may be effected in accordance with the provisions of
Section 5.13 hereof;
(f) a Company may terminate a lease of real or personal property that is not
necessary for the ordinary course of business, could not reasonably be expected
to have a Material Adverse Effect and does not result from a Company’s default;
(g) the unwinding, settlement or termination of any obligations under or in
respect of any Hedge Agreements (including Swap Obligations) and Permitted
Equity Derivatives;
(h) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business;
(i) to the extent constituting investments, the granting of Liens permitted by
Section 5.9 hereof and the making of Restricted Payments permitted by
Section 5.15 hereof;
(j) the sale or issuance of equity interests by of Rapid7, Inc.;
(k) dispositions of assets acquired by Borrowers and their Subsidiaries pursuant
to an Acquisition consummated within 12 months of the date of the proposed
disposition so long as (i) the consideration received for the assets to be so
disposed is at least equal to the fair market value of such assets, (ii) the
assets to be so disposed are not necessary or economically desirable in
connection with the business of Borrowers or their Subsidiaries, and (iii) the
assets to be so disposed are readily identifiable as assets acquired pursuant to
the subject Acquisition; and
(l) a Credit Party may sell, lease, transfer or otherwise dispose of any other
assets in an aggregate amount not to exceed Ten Million Dollars ($10,000,000)
during the Commitment Period.
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Section 5.13. Acquisitions. No Company shall effect an Acquisition; provided
that a Company may effect (i) the Acquisition of Project Stratus pursuant to
terms consistent with those disclosed to the Administrative Agent and the
Lenders prior to the Closing Date, and (ii) any other Acquisition so long as
such Acquisition meets all of the following requirements:
(a) in the case of an Acquisition that involves a merger, amalgamation or other
combination including a Borrower, a Borrower shall be the surviving entity;
(b) in the case of an Acquisition that involves a merger, amalgamation or other
combination including a Credit Party (other than a Borrower), a Credit Party
shall be the surviving entity;
(c) the business to be acquired shall be similar to, or related to, or
incidental to the lines of business of the Companies;
(d) the Companies shall be in full compliance with the Loan Documents both prior
to and after giving pro forma effect to such Acquisition;
(e) no Default or Event of Default shall exist prior to or, after giving pro
forma effect to such Acquisition, thereafter shall begin to exist;
(f) such Acquisition is not actively opposed by the board of directors (or
similar governing body) of the selling Persons or the Persons whose equity
interests are to be acquired;
(g) with respect to an Acquisition with Consideration equal to or less than
Fifteen Million Dollars ($15,000,000), the Borrowers shall have provided to the
Administrative Agent and the Lenders, on or prior to such Acquisition,
(i) copies of the Acquisition documents and related disclosure schedules, and
(ii) historical financial statements of the target entity and a pro forma
financial statement of the Companies accompanied by a certificate of a Financial
Officer showing pro forma compliance with Section 5.7 hereof, both before and
after giving effect to the proposed Acquisition;
(h) with respect to an Acquisition with Consideration in excess of Fifteen
Million Dollars ($15,000,000), the Borrowers shall have provided to the
Administrative Agent and the Lenders, at least five (5) business days prior to
such Acquisition, (i) copies of the Acquisition documents and related disclosure
schedules, and (ii) historical financial statements of the target entity and a
pro forma financial statement of the Companies accompanied by a certificate of a
Financial Officer showing pro forma compliance with Section 5.7 hereof, both
before and after giving effect to the proposed Acquisition;
(i) the Available Liquidity shall be no less than Fifty Million Dollars
($50,000,000) after giving pro forma effect to such Acquisition; and
(j) the aggregate cash Consideration paid for such Acquisition, when combined
with all Acquisitions (other than Project Stratus) for all Companies during the
Commitment Period, does not exceed the sum of (i) Seventy-Five Million Dollars
($75,000,000), plus (ii) fifty percent (50%) of the net cash proceeds of any
Convertible Debt Securities issued after the Closing Date.
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Section 5.14. Notice. Each Borrower shall cause a Financial Officer of such
Borrower to promptly notify the Administrative Agent and the Lenders, in
writing, whenever any of the following shall occur:
(a) a Default or Event of Default has occurred hereunder or any representation
or warranty made in Article VI hereof or elsewhere in this Agreement or in any
other Loan Document for any reason ceases in any material respect to be true and
complete;
(b) a Borrower learns of a litigation or proceeding against such Borrower before
a court, administrative agency or arbitrator that would reasonably be expected
to have a Material Adverse Effect; or
(c) a Borrower learns that there has occurred or begun to exist any event,
condition or thing that is reasonably likely to have a Material Adverse Effect.
Section 5.15. Restricted Payments. No Company shall make or commit itself to
make any Restricted Payment at any time, except:
(a) Rapid7, Inc. may declare and pay dividends with respect to its equity
interests, and make other Restricted Payments, in each case payable solely in
additional shares of its common stock;
(b) Rapid7, Inc. may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of Rapid7,
Inc. and its Subsidiaries in a manner consistent with past business practices;
(c) so long as no Default or Event of Default has occurred and is continuing or
would arise after giving effect (including pro forma effect) thereto, the
Borrower and any Subsidiaries may repurchase equity interests from any current
or former officer, director, employee or consultant to comply with Tax
withholding obligations relating to Taxes payable by such Person upon the grant
or award of such equity interests (or upon vesting thereof);
(d) so long as no Default or Event of Default has occurred and is then
continuing or would arise after giving effect (including pro forma effect)
thereto, Rapid7, Inc. and any Subsidiaries may purchase equity interests from
present or former officers, directors or employees of Rapid7, Inc. or any
Subsidiary upon the death, disability, retirement or termination of employment
or service of such officer, director or employee in an aggregate amount for the
not to exceed Five Million Dollars ($5,000,000) during the Commitment Period;
(e) the purchase of (i) any Permitted Equity Derivatives in connection with the
issuance of any Convertible Debt Securities permitted under Section 5.7 hereof
(and the replacement of any such Permitted Equity Derivatives) and (ii) equity
interests of Rapid7, Inc. with proceeds of any Convertible Debt Securities;
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(f) the Borrowers may make (i) interest payments on Convertible Debt Securities,
and (ii) so long as no Default or Event of Default has occurred and is
continuing or would arise after giving effect (including pro forma effect)
thereto, cash settlement payments upon any conversion of Convertible Debt
Securities in accordance with the terms thereof in an aggregate amount not to
exceed the principal amount thereof; and
(g) so long as no Default or Event of Default has occurred and is continuing or
would arise after giving effect (including pro forma effect) thereto, Rapid7,
Inc. and any Subsidiaries may make other Restricted Payments (other than
payments on Convertible Debt Securities) in an aggregate amount not exceeding
Five Million Dollars ($5,000,000) in any fiscal year of the Borrower.
Section 5.16. Environmental Compliance. Each Company shall comply in all
material respects with any and all Environmental Laws and Environmental Permits
including, without limitation, all Environmental Laws in jurisdictions in which
such Company owns or operates a facility or site, arranges for disposal or
treatment of hazardous substances, solid waste or other wastes, accepts for
transport any hazardous substances, solid waste or other wastes or holds any
interest in real property or otherwise. The Administrative Borrower shall
furnish to the Administrative Agent and the Lenders, promptly after receipt
thereof, a copy of any notice any Company may receive from any Governmental
Authority or private Person, or otherwise, that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
ownership interest or performs any of its operations, in violation of any
material provision of Environmental Law. As used in this Section 5.16,
“litigation or proceeding” means any demand, claim, notice, suit, suit in equity
action, administrative action, investigation or inquiry whether brought by any
Governmental Authority or private Person, or otherwise. Each Borrower shall
defend, indemnify and hold the Administrative Agent and the Lenders harmless
against all properly documented costs, expenses, claims, damages, penalties and
liabilities of every kind or nature whatsoever (including attorneys’ fees)
arising out of or resulting from the noncompliance of any Company with any
Environmental Law. Such indemnification shall survive any termination of this
Agreement.
Section 5.17. Affiliate Transactions. No Company shall, directly or indirectly,
enter into or permit to exist any transaction or series of transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate (other than a
Company that is a Credit Party) on terms that shall be less favorable to such
Company than those that might be obtained at the time in a transaction with a
Person that is not an Affiliate; provided that the foregoing shall not prohibit
(a) the payment of customary and reasonable directors’ fees to directors who are
not employees of a Company or an Affiliate; (b) any employment agreement,
employee benefit plan, stock option plan, officer, director, consultant or
employee indemnification agreement (and the payment of indemnities and fees
pursuant to such arrangements) or any similar arrangement entered into by a
Company in the ordinary course of business; (c) loans to employees or officers
to the extent permitted under this
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Agreement; or (d) any transactions in respect of which the Borrowers delivers to
the Administrative Agent (for delivery to the Lenders) a letter addressed to the
Board of Directors of the Borrowers from an account, appraisal or investment
banking firm, in each case of nationally recognized standing that is (A) in the
good faith determination of the Borrowers qualified to render such letter, and
(B) reasonably satisfactory to the Administrative Agent, which letter states
that such transaction is on terms that are no less favorable to a Borrower or
such Subsidiary, as applicable, than would be obtained in a comparable
arm’s-length transaction with a Person that is not an Affiliate.
Section 5.18. Use of Proceeds. The Borrowers’ use of the proceeds of the Loans
shall be for working capital and other general corporate purposes of the
Companies, for Acquisitions permitted hereunder, and for certain fees and
expenses associated with the transactions contemplated by this Agreement. The
Borrowers will not, directly or indirectly, use the proceeds of the Loans and
Letters of Credit, or lend, contribute or otherwise make available such proceeds
to any Subsidiary, joint venture partner or other Person, (a) (i) to fund
activities or business of or with any Person, or in any country or territory,
that, at the time of such funding, is, or whose government is, the subject of
Sanctions, or (ii) in any other manner that would result in a violation of
Sanctions by any Person (including any Person participating in the Loans,
whether as underwriter, advisor, investor, or otherwise); or (b) in furtherance
of an offer, payment, promise to pay, or authorization of the payment or giving
of money, or anything else of value, to any Person in violation of
Anti-Corruption Laws.
Section 5.19. Corporate Names and Locations of Collateral. No Credit Party shall
(a) change its corporate name, or (b) change its state, province or other
jurisdiction, or form of organization, or extend or continue its existence in or
to any other jurisdiction (other than its jurisdiction of organization at the
date of this Agreement); unless, in each case, the Borrowers shall have provided
the Administrative Agent with at least thirty (30) days prior written notice
thereof. The Administrative Borrower shall also provide the Administrative Agent
with at least thirty (30) days prior written notification of (i) any change in
any location where any material amount of a Credit Party’s Inventory or
Equipment is maintained, and any new locations where any material amount of a
Credit Party’s Inventory or Equipment is to be maintained; (ii) any change in
the location of the office where any Credit Party’s records pertaining to its
Accounts are kept; and (iii) any change in the location of any Credit Party’s
chief executive office. In the event of any of the foregoing or if otherwise
deemed reasonably appropriate by the Administrative Agent, the Administrative
Agent is hereby authorized to file new U.C.C. Financing Statements describing
the Collateral and otherwise in form and substance sufficient for recordation
wherever necessary or appropriate, as determined in the Administrative Agent’s
sole discretion, to perfect or continue perfected the security interest of the
Administrative Agent, for the benefit of the Lenders, in the Collateral. The
Borrowers shall pay all filing and recording fees and taxes in connection with
the filing or recordation of such U.C.C. Financing Statements and security
interests and shall promptly reimburse the Administrative Agent therefor if the
Administrative Agent pays the same. Such amounts not so paid or reimbursed shall
be Related Expenses hereunder.
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Section 5.20. Subsidiary Guaranties, Security Documents and Pledge of Stock or
Other Ownership Interest.
(a) Guaranties and Security Documents. Each Domestic Subsidiary (other than
(i) a Subsidiary that is a Dormant Subsidiary, (ii) a Subsidiary that is held
directly or indirectly by a CFC, or (iii) a FSHCO) created, acquired or held
subsequent to the Closing Date, shall promptly (and in any event within 30 days
or such later date reasonably acceptable to the Administrative Agent) execute
and deliver to the Administrative Agent, for the benefit of the Lenders, a
Guaranty of Payment (or a Guaranty of Payment Joinder) of all of the Obligations
and a Security Agreement (or a Security Agreement Joinder), such agreements to
be prepared by the Administrative Agent and in form and substance reasonably
acceptable to the Administrative Agent, along with any such other supporting
documentation, Security Documents, corporate governance and authorization
documents, and an opinion of counsel as may reasonably be deemed necessary or
advisable by the Administrative Agent. With respect to a Domestic Subsidiary
that has been classified as a Dormant Subsidiary, at such time that such
Subsidiary no longer meets the requirements of a Dormant Subsidiary, the
Administrative Borrower shall provide to the Administrative Agent prompt written
notice thereof, and shall provide, with respect to such Subsidiary, all of the
documents referenced in the foregoing sentence.
(b) Pledge of Stock or Other Ownership Interest. With respect to the creation or
acquisition of a Subsidiary (other than any direct or indirect Subsidiary of a
CFC) after the Closing Date, the Borrowers shall deliver to the Administrative
Agent, for the benefit of the Lenders, all of the share certificates (or other
evidence of equity) owned by a Credit Party pursuant to the terms of a Pledge
Agreement prepared by the Administrative Agent and in form and substance
reasonably satisfactory to the Administrative Agent, and executed by the
appropriate Credit Party; provided that no such pledge shall include shares of
voting capital stock or other voting equity interests of any Foreign Subsidiary
that is a CFC or any FSHCO in excess of sixty-five percent (65%) of the total
outstanding shares of voting capital stock or other voting equity interest of
such Foreign Subsidiary or FSHCO, whether held directly or indirectly through a
disregarded entity.
(c) Perfection or Registration of Interest in Foreign Shares. After the
occurrence and during the continuance of an Event of Default, with respect to
any foreign shares pledged to the Administrative Agent, for the benefit of the
Lenders, on or after the Closing Date, the Administrative Agent shall, in the
discretion of the Administrative Agent or the Required Lenders, have the right
to perfect, at the Borrowers’ cost, payable upon request therefor (including,
without limitation, any foreign counsel, or foreign notary, filing, registration
or similar, fees, costs or expenses), its security interest in such shares in
the respective foreign jurisdiction. Such perfection may include the requirement
that the applicable Company promptly execute and deliver to the Administrative
Agent a separate pledge document (prepared by the Administrative Agent and in
form and substance reasonably satisfactory to the Administrative Agent),
covering such equity interests, that conforms to the requirements of the
applicable foreign jurisdiction, together with an opinion of local counsel as to
the perfection of the security interest provided for therein, and all other
documentation necessary or desirable to effect the foregoing and to permit the
Administrative Agent to exercise any of its rights and remedies in respect
thereof. Notwithstanding the foregoing, such perfection shall not be required
if, in the reasonable judgment of Administrative Agent and the Borrowers, the
burden, cost or consequences of creating or perfecting such pledges or security
interests in such assets is excessive in relation to the benefits to be obtained
therefrom by the Administrative Agent and Lenders.
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Section 5.21. Collateral. Each Credit Party shall:
(a) once per fiscal year, at reasonable times and, except after the occurrence
of an Event of Default, upon reasonable notice, allow the Administrative Agent
by or through any of the Administrative Agent’s officers, agents, employees,
attorneys or accountants to (i) examine, inspect and make extracts from such
Credit Party’s books and other records, including, without limitation, the tax
returns of such Credit Party, (ii) arrange for verification of such Credit
Party’s Accounts, under reasonable procedures, directly with Account Debtors or
by other methods, and (iii) examine and inspect such Credit Party’s Inventory
and Equipment, wherever located;
(b) promptly furnish to the Administrative Agent upon reasonable request
(i) additional statements and information with respect to the Collateral, and
all writings and information relating to or evidencing any of such Credit
Party’s Accounts (including, without limitation, computer printouts or
typewritten reports listing the mailing addresses of all present Account
Debtors), and (ii) any other writings and information as the Administrative
Agent may reasonably request;
(c) promptly notify the Administrative Agent in writing of the existence of any
Deposit Account or Securities Account of any Credit Party, and promptly (or
prior to or simultaneously with the creation of any new Deposit Account or
Securities Account) provide for the execution of a Deposit Account Control
Agreement or Securities Account Control Agreement with respect thereto, if
required by the Administrative Agent; provided that no Credit Party shall be
required to deliver a Deposit Account Control Agreement or Securities Account
Control Agreement (i) with respect to any Excluded Account, or (ii) so long as
(A) the aggregate balance in each Deposit Account (that is not an Excluded
Account) that is not subject to a Control Agreement does not exceed One Hundred
Thousand Dollars ($100,000) at any time, and (B) the aggregate balance in all
Deposit Accounts (that are not Excluded Accounts) that are not subject to a
Control Agreement does not exceed Five Hundred Thousand Dollars ($500,000) at
any time;
(d) promptly notify the Administrative Agent in writing whenever the Equipment
or Inventory of a Company, valued in excess of Five Hundred Thousand Dollars
($500,000), is located at a location of a third party (other than another
Company) that is not covered by an executed Landlord’s Waiver or similar
document with respect thereto, and deliver to the Administrative Agent an
executed Landlord’s Waiver or similar document with respect thereto or notice
that may be required by the Administrative Agent;
(e) promptly notify the Administrative Agent in writing of any information that
the Credit Parties have or may receive with respect to the Collateral that might
reasonably be determined to materially and adversely affect the value thereof or
the rights of the Administrative Agent with respect thereto;
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(f) maintain such Credit Party’s Equipment (other than Equipment that is
obsolete or no longer useful in the Borrowers’ business) in good operating
condition and repair, ordinary wear and tear excepted, making all necessary
replacements in management’s reasonable judgment and in the ordinary course of
business thereof so that the value and operating efficiency thereof shall at all
times be maintained and preserved;
(g) deliver to the Administrative Agent, to hold as security for the Secured
Obligations, all certificated Investment Property owned by a Credit Party and
constituting Collateral, in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance reasonably satisfactory to the Administrative Agent, or in
the event such Investment Property is in the possession of a Securities
Intermediary or credited to a Securities Account (other than an Excluded
Account), execute with the related Securities Intermediary a Securities Account
Control Agreement over such Securities Account in favor of the Administrative
Agent, for the benefit of the Lenders, in form and substance reasonably
satisfactory to the Administrative Agent;
(h) provide to the Administrative Agent, on a quarterly basis (as necessary), a
list of any patents, trademarks or copyrights that have been federally
registered by a Credit Party during such quarter, and provide for the execution
of an appropriate Intellectual Property Security Agreement; and
(i) upon request of the Administrative Agent, promptly take such action and
promptly make, execute and deliver all such additional and further items, deeds,
assurances, instruments and any other writings as the Administrative Agent may
from time to time deem necessary or appropriate, including, without limitation,
chattel paper, to carry into effect the intention of this Agreement, or so as to
completely vest in and ensure to the Administrative Agent and the Lenders their
respective rights hereunder and in or to the Collateral.
Each Credit Party hereby authorizes the Administrative Agent, on behalf of the
Lenders, to file U.C.C. Financing Statements or other appropriate notices with
respect to the Collateral. If certificates of title or applications for title
are issued or outstanding with respect to any of the Inventory or Equipment of
any Credit Party constituting Collateral, such Credit Party shall, upon request
of the Administrative Agent, (i) execute and deliver to the Administrative Agent
a short form security agreement, prepared by the Administrative Agent and in
form and substance reasonably satisfactory to the Administrative Agent, and
(ii) deliver such certificate or application to the Administrative Agent and
cause the interest of the Administrative Agent, for the benefit of the Lenders,
to be properly noted thereon. Each Credit Party hereby authorizes the
Administrative Agent or the Administrative Agent’s designated agent (but without
obligation by the Administrative Agent to do so) to incur Related Expenses
(whether prior to, upon, or subsequent to any Default or Event of Default), and
the Borrowers shall promptly repay, reimburse, and indemnify the Administrative
Agent and the Lenders for any and all Related Expenses. If any Credit Party
fails to keep and maintain its Equipment (other than Equipment that is obsolete
or no longer useful in the Borrowers’ business) in good operating condition,
ordinary wear and tear excepted, the Administrative Agent may (but shall not be
required to) so maintain or repair all or any part of such Credit Party’s
Equipment and the cost thereof shall be a Related Expense. All Related Expenses
are payable to the Administrative Agent upon demand therefor; the Administrative
Agent may, at its option, debit Related Expenses directly to any Deposit Account
of a Company located at the Administrative Agent or the Revolving Loans.
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Section 5.22. Property Acquired Subsequent to the Closing Date and Right to Take
Additional Collateral. The Borrowers shall provide the Administrative Agent with
prompt written notice with respect to any personal property (other than in the
ordinary course of business and excluding Accounts, Inventory, Equipment and
General Intangibles and other property acquired in the ordinary course of
business) acquired by any Company subsequent to the Closing Date. In addition to
any other right that the Administrative Agent and the Lenders may have pursuant
to this Agreement or otherwise, upon written request of the Administrative
Agent, whenever made, the Borrowers shall, and shall cause each Guarantor of
Payment to, grant to the Administrative Agent, for the benefit of the Lenders,
as additional security for the Secured Obligations, a first Lien on any personal
property of the each Borrower and Guarantor of Payment (other than for Excluded
Property, leased equipment or equipment subject to a purchase money security
interest in which the lessor or purchase money lender of such equipment holds a
first priority security interest, in which case, the Administrative Agent shall
have the right to obtain a security interest junior only to such lessor or
purchase money lender), including, without limitation, such property acquired
subsequent to the Closing Date, in which the Administrative Agent does not have
a first priority Lien. The Borrowers agree that, within ten days after the date
of such written request, to secure all of the Secured Obligations by delivering
to the Administrative Agent security agreements, intellectual property security
agreements, pledge agreements, or other documents, instruments or agreements or
such thereof as the Administrative Agent may reasonably require with respect to
any of the Credit Parties. The Borrowers shall pay all recordation, legal and
other expenses in connection therewith.
Section 5.23. Restrictive Agreements. Except as set forth in this Agreement, the
Borrowers shall not, and shall not permit any of their Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a) make,
directly or indirectly, any Capital Distribution to any Borrower, (b) make,
directly or indirectly, loans or advances or capital contributions to any
Borrower or (c) transfer, directly or indirectly, any of the properties or
assets of such Subsidiary to any Borrower; except for such encumbrances or
restrictions existing under or by reason of (i) applicable Law, (ii) customary
non-assignment provisions in leases or other agreements entered in the ordinary
course of business and consistent with past practices, (iii) customary
restrictions in security agreements or mortgages securing Indebtedness, or
capital leases, of a Company to the extent such restrictions shall only restrict
the transfer of the property subject to such security agreement, mortgage or
lease, or (iv) any encumbrance or restriction with respect to the equity
interests of any joint venture or similar arrangement created after the Closing
Date and pursuant to the joint venture or similar agreements with respect to
such joint venture or similar arrangements permitted under this Agreement.
Section 5.24. [Reserved].
Section 5.25. Amendment of Organizational Documents. Without the prior written
consent of the Administrative Agent, no Credit Party shall (a) amend its
Organizational Documents in any manner adverse to the Lenders, or (b) amend its
Organizational Documents to change its name or state, province or other
jurisdiction of organization, or its form of organization.
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Section 5.26. Fiscal Year. No Borrower shall change the date of its fiscal
year-end without the prior written consent of the Administrative Agent and the
Required Lenders. As of the Closing Date, the fiscal year end of each Borrower
is December 31 of each year.
Section 5.27. Further Assurances. The Borrowers shall, and shall cause each
other Credit Party to, promptly upon request by the Administrative Agent, or the
Required Lenders through the Administrative Agent, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments related
to any of the collateral securing the Secured Obligations as the Administrative
Agent, or the Required Lenders through the Administrative Agent, may reasonably
require from time to time in order to carry out more effectively the purposes of
the Loan Documents.
Section 5.28. Beneficial Ownership. Promptly following any request therefor,
each Borrower shall provide information and documentation reasonably requested
by the Administrative Agent or any Lender for purposes of compliance with
applicable “know your customer” and anti-money-laundering rules and regulations,
including, without limitation, the PATRIOT Act and the Beneficial Ownership
Regulation.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification. Each
Company is duly organized, validly existing, and in good standing (or comparable
concept in the applicable jurisdiction) under the laws of its state or
jurisdiction of incorporation or organization, and is duly qualified and
authorized to do business and is in good standing (or comparable concept in the
applicable jurisdiction) as a foreign entity in the jurisdictions set forth
opposite its name on Schedule 6.1 of the Confidential Disclosure Letter, which
are all of the states or jurisdictions where the character of its property or
its business activities makes such qualification necessary, except where a
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect. Schedule 6.1 of the Confidential Disclosure Letter sets forth,
as of the Closing Date, each Subsidiary of a Borrower (and whether such
Subsidiary is a Dormant Subsidiary), its state (or jurisdiction) of formation,
its relationship to the Borrowers, including the percentage of each class of
stock or other equity interest owned by a Company, each Person that owns the
stock or other equity interest of each Company. Schedule 6.1 of the Confidential
Disclosure Letter sets forth the tax identification number and the location of
its chief executive office and principal place of business each Credit Party.
Except as set forth on Schedule 6.1 of the Confidential Disclosure Letter, as of
the Closing Date, each Borrower, directly or indirectly, owns all of the equity
interests of each of its Subsidiaries.
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Section 6.2. Corporate Authority. Each Credit Party has the right and power and
is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Credit Party is a party
have been duly authorized and approved by such Credit Party’s board of directors
or other governing body, as applicable, and are the legal, valid and binding
obligations of such Credit Party, enforceable against such Credit Party in
accordance with their respective terms, except as enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally and by equitable principles (regardless of, whether
enforcement is sought in equity or at law). The execution, delivery and
performance of the Loan Documents do not conflict with, result in a breach in
any of the provisions of, constitute a default under, or result in the creation
of a Lien (other than Liens permitted under Section 5.9 hereof) upon any assets
or property of any Credit Party under the provisions of, such Company’s
Organizational Documents or any material agreement to which such Company is a
party.
Section 6.3. Compliance with Laws and Contracts. Each Company:
(a) holds permits, certificates, licenses, orders, registrations, franchises,
authorizations, and other approvals from any Governmental Authority necessary
for the conduct of its business and is in compliance with all applicable Laws
relating thereto, except where the failure to do so would not have a Material
Adverse Effect;
(b) is in compliance in all material respects with all federal, state, local, or
foreign applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices, except where the failure to be in
compliance would not have a Material Adverse Effect;
(c) is not in violation of or in default under any agreement to which it is a
party or by which its assets are subject or bound, except with respect to any
violation or default that would not have a Material Adverse Effect;
(d) has ensured that no Company, or to the knowledge of any Company, any
director, officer, agent, employee or Affiliate of a Company, is a Person that
is, or is owned or controlled by Persons that are (i) the subject of any
Sanctions, or (ii) located, organized or resident in a country or territory that
is, or whose government is, the subject of Sanctions;
(e) is in material compliance with all applicable Bank Secrecy Act (“BSA”) and
anti-money laundering laws and regulations; and
(f) has ensured that no Company or, to the knowledge of any Company, any
director, officer, agent, employee or other person acting on behalf of a Company
has taken any action, directly or indirectly, that would result in a violation
by such persons of Anti-Corruption Laws, and the Credit Parties have instituted
and maintain policies and procedures designed to ensure continued compliance
therewith; and
(g) is in compliance, in all material respects, with the Patriot Act.
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Section 6.4. Litigation and Administrative Proceedings. Except as disclosed on
Schedule 6.4 of the Confidential Disclosure Letter (and for matters disclosed by
Rapid7, Inc. on its periodic public filings), there are (a) no lawsuits,
actions, investigations, examinations or other proceedings pending or, to the
knowledge of the Companies, threatened against any Company, or in respect of
which any Company may have any liability, in any court or before or by any
Governmental Authority, arbitration board, or other tribunal that could
reasonably be expected to have a Material Adverse Effect, (b) no orders, writs,
injunctions, judgments, or decrees of any court or Governmental Authority to
which any Company is a party or by which the property or assets of any Company
are bound that could reasonably be expected to have a Material Adverse Effect,
and (c) no grievances, disputes, or controversies outstanding with any union or
other organization of the employees of any Company, or threats of work stoppage,
strike, or pending demands for collective bargaining that could reasonably be
expected to have a Material Adverse Effect.
Section 6.5. Title to Assets. Each Credit Party has good title to and ownership
of all property it purports to own, which property is free and clear of all
Liens, except those permitted under Section 5.9 hereof. As of the Closing Date,
the Credit Parties do not own any real estate.
Section 6.6. Liens and Security Interests. On and after the Closing Date, except
for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will be no
U.C.C. Financing Statement or similar notice of Lien outstanding covering any
personal property of any Credit Party; (b) there is and will be no mortgage or
charge outstanding covering any real property of any Credit Party; and (c) no
real or personal property of any Credit Party is subject to any Lien of any
kind. The Administrative Agent, for the benefit of the Lenders, upon the filing
of the U.C.C. Financing Statements and taking such other actions necessary to
perfect its Lien against collateral of the corresponding type as authorized
hereunder will have a valid and enforceable first Lien on the collateral
securing the Secured Obligations to the extent such Lien may be perfected by the
filing of a U.C.C. Financing Statement. No Company has entered into any contract
or agreement (other than a contract or agreement entered into in connection with
the purchase or lease of fixed assets that prohibits Liens on such fixed assets
that exists on or after the Closing Date that would prohibit the Administrative
Agent or the Lenders from acquiring a Lien on, or a collateral assignment of,
any of the property or assets of any Credit Party).
Section 6.7. Tax Returns. All federal, state and local tax returns and other
reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been timely filed (subject to
valid extensions) and all taxes, assessments, fees and other governmental
charges that are due and payable have been timely paid or are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves are being maintained in accordance with GAAP, in each case,
except as otherwise permitted herein or where the failure to do so does not and
will not cause or result in a Material Adverse Effect.
Section 6.8. Environmental Laws. Each Company is in compliance with all
Environmental Laws, including, without limitation, all Environmental Laws in all
jurisdictions in which any Company owns or operates, or has owned or operated, a
facility or site, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts or has accepted for
transport any hazardous substances, solid waste or
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other wastes or holds or has held any interest in real property or otherwise,
except for such non-compliance that could not reasonably be expected to have a
Material Adverse Effect. No litigation or proceeding arising under, relating to
or in connection with any Environmental Law or Environmental Permit is pending
or, to the best knowledge of each Company, threatened, against any Company, any
real property in which any Company holds or has held an interest or any past or
present operation of any Company that could reasonably be expected to have a
Material Adverse Effect. No material release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring, or has occurred
(other than those that are currently being remediated in accordance with
Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in violation in any
material respect of any Environmental Law, in each case, except for such items
that could not reasonably be expected to have a Material Adverse Effect. As used
in this Section 6.8, “litigation or proceeding” means any demand, claim, notice,
suit, suit in equity, action, administrative action, investigation or inquiry
whether brought by any Governmental Authority or private Person, or otherwise.
Section 6.9. Locations. As of the Closing Date, the Credit Party have places of
business or maintain their Accounts, Inventory and Equipment at the locations
(including third party locations) set forth on Schedule 6.9 of the Confidential
Disclosure Letter, and each Credit Party’s chief executive office is set forth
on Schedule 6.1 of the Confidential Disclosure Letter. Schedule 6.9 of the
Confidential Disclosure Letter further specifies whether each location, as of
the Closing Date, (a) is owned by a Credit Party, or (b) is leased by a Credit
Party from a third party, and, if leased by a Credit Party from a third party,
if a Landlord’s Waiver is required to be delivered pursuant to the terms hereof.
As of the Closing Date, Schedule 6.9 hereto correctly identifies the name and
address of each third-party location where assets of a Credit Party are located.
Section 6.10. Continued Business. There exists no actual, pending, or, to each
Borrower’s knowledge, any threatened termination, cancellation or limitation of,
or any modification or change (other than consistent with past business
practices of the Companies and at the election of the Companies) in the business
relationship of any Company and any customer or supplier, or any group of
customers or suppliers, whose purchases or supplies, individually or in the
aggregate, are material to the business of any Company, which could reasonably
be expected to have a Material Adverse Effect, and there exists no other present
condition or state of facts or circumstances that would have a Material Adverse
Effect or prevent a Company from conducting such business or the transactions
contemplated by this Agreement in substantially the same manner in which it was
previously conducted.
Section 6.11. Employee Benefits Plans. Schedule 6.11 of the Confidential
Disclosure Letter identifies each ERISA Plan as of the Closing Date. No ERISA
Event has occurred or is expected to occur with respect to an ERISA Plan.
Disregarding any matters which do not have a Material Adverse Effect: (a) full
payment has been made of all amounts that a Controlled Group member is required,
under applicable Law or under the governing documents, to have paid as a
contribution to or a benefit under each ERISA Plan; (b) the liability of each
Controlled Group member with respect to each ERISA Plan has been appropriately
funded based upon reasonable and proper actuarial assumptions, has been fully
insured, or has been appropriately reserved for
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on its financial statements; and (c) no changes have occurred or are expected to
occur that would cause a material increase in the cost of providing benefits
under the ERISA Plan. To the knowledge of the Borrowers, with respect to each
ERISA Plan administered by a Company or a Controlled Group member that is
intended to be qualified under Code Section 401(a), (i) the ERISA Plan and any
associated trust operationally comply with the applicable requirements of Code
Section 401(a), (ii) the ERISA Plan and any associated trust have been amended
to comply with all such requirements as currently in effect, other than those
requirements for which a retroactive amendment can be made within the “remedial
amendment period” available under Code Section 401(b) (as extended under
Treasury Regulations and other Treasury pronouncements upon which taxpayers may
rely), (iii) the ERISA Plan and any associated trust have received a favorable
determination letter or opinion letter from the Internal Revenue Service stating
that the ERISA Plan (or a prototype or volume submitter plan utilized as the
plan document for such ERISA Plan) qualifies under Code Section 401(a), that the
associated trust qualifies under Code Section 501(a) and, if applicable, that
any cash or deferred arrangement under the ERISA Plan qualifies under Code
Section 401(k), unless the ERISA Plan was first adopted at a time for which the
above-described “remedial amendment period” has not yet expired, (iv) the ERISA
Plan currently satisfies the requirements of Code Section 410(b), without regard
to any retroactive amendment that may be made within the above-described
“remedial amendment period”, and (v) no contribution made to the ERISA Plan is
subject to an excise tax under Code Section 4972. With respect to any Pension
Plan, the “accumulated benefit obligation” of Controlled Group members with
respect to the Pension Plan (as determined in accordance with Statement of
Accounting Standards No. 87, “Employers’ Accounting for Pensions”) does not
exceed the fair market value of Pension Plan assets.
Section 6.12. Consents or Approvals. Except as set forth on Schedule 6.12 of the
Confidential Disclosure Letter, and pursuant to Section 5.25 hereof, no consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person is required to be obtained or
completed by any Credit Party in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed, except the filing and recording of financing statements and other
documents necessary in order to perfect the Liens created by this Agreement or
the Security Documents.
Section 6.13. Solvency. The Borrowers, on a consolidated basis, have received
consideration that is the reasonably equivalent value of the obligations and
liabilities that the Borrowers have incurred to the Administrative Agent and the
Lenders. The Borrowers, on a consolidated basis, are not insolvent as defined in
any applicable state, federal or relevant foreign statute, nor will the
Borrowers, on a consolidated basis, be rendered insolvent by the execution and
delivery of the Loan Documents to the Administrative Agent and the Lenders. The
Borrowers, on a consolidated basis are not engaged or about to engage in any
business or transaction for which the assets retained by it are or will be an
unreasonably small amount of capital, taking into consideration the obligations
to the Administrative Agent and the Lenders incurred hereunder. The Borrowers,
on a consolidated basis, do not intend, nor do they believe that it will, incur
debts beyond its ability to pay such debts as they mature.
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Section 6.14. Financial Statements. The audited Consolidated financial
statements of Rapid7, Inc. for the fiscal year ended December 31, 2019 furnished
to the Administrative Agent and the Lenders are true and complete in all
material respects, have been prepared in accordance with GAAP, and fairly
present in all material respects the financial condition of the Companies as of
the date of such financial statements and the results of their operations for
the periods then ending. Since the dates of such statements, there has been no
material adverse change in any Company’s financial condition, properties or
business or any change in any Company’s accounting procedures, other than as
required by GAAP.
Section 6.15. Regulations. No Company is engaged principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any “margin stock” (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States).
Neither the granting of any Loan (or any conversion thereof) or Letter of Credit
nor the use of the proceeds of any Loan or Letter of Credit will violate, or be
inconsistent with, the provisions of Regulation T, U or X or any other
Regulation of such Board of Governors.
Section 6.16. Material Agreements. Except as disclosed on Schedule 5.8 and
Schedule 6.16 of the Confidential Disclosure Letter, as of the Closing Date, no
Company is a party to any (a) debt instrument (excluding the Loan Documents);
(b) lease (capital, operating or otherwise), whether as lessee or lessor
thereunder; (c) contract, commitment, agreement, or other arrangement involving
the purchase or sale of any inventory by it, or the license of any right to or
by it other than such contracts and agreements entered into in the ordinary
course of business; (d) contract, commitment, agreement, or other arrangement
with any of its “Affiliates” (as such term is defined in the Exchange Act) other
than a Company; (e) management or employment contract or contract for personal
services with any of its Affiliates that is not otherwise terminable at will or
on less than ninety (90) days’ notice without liability; (f) collective
bargaining agreement; or (g) other contract, agreement, understanding, or
arrangement with a third party; that, as to subparts (a) through (g) above, if
violated, breached, or terminated for any reason, would have or would be
reasonably expected to have a Material Adverse Effect.
Section 6.17. Intellectual Property. Each Credit Party owns, or has the right to
use, all of the material patents, patent applications, industrial designs,
designs, trademarks, service marks, copyrights and licenses, and rights with
respect to the foregoing, necessary for the conduct of its business without any
known material conflict with the rights of others. Schedule 6.17 of the
Confidential Disclosure Letter sets forth all federally registered patents,
trademarks, copyrights, service marks and license agreements owned by each
Credit Party as of the Closing Date.
Section 6.18. Insurance. Each Credit Party maintains with financially sound and
reputable insurers insurance with coverage (including, if applicable, insurance
coverage required by the National Flood Insurance Reform Act of 1994) and limits
as required by law and as is customary with Persons engaged in the same
businesses as the Companies. Schedule 6.18 of the Confidential Disclosure Letter
sets forth all insurance carried by the Companies on the Closing Date, setting
forth in detail the amount and type of such insurance.
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Section 6.19. Deposit Accounts and Securities Accounts. Schedule 6.19 of the
Confidential Disclosure Letter lists all banks, other financial institutions and
Securities Intermediaries at which any Credit Party maintains Deposit Accounts
or Securities Accounts as of the Closing Date, and Schedule 6.19 of the
Confidential Disclosure Letter correctly identifies the name, address and
telephone number of each such financial institution or Securities Intermediary,
the name in which the account is held, a description of the purpose of the
account, and the complete account number therefor.
Section 6.20. Accurate and Complete Statements. Neither the Loan Documents nor
any written statement made by any Company in connection with any of the Loan
Documents contains any untrue statement of a material fact or, taken as a whole,
omits to state a material fact necessary to make the statements contained
therein or in the Loan Documents not misleading. After due inquiry by the
Borrowers, there is no known fact that any Company has not disclosed to the
Administrative Agent and the Lenders that has or is likely to have a Material
Adverse Effect.
Section 6.21. Investment Company; Other Restrictions. No Company is (a) an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or (b) subject to
any foreign, federal, state or local statute or regulation limiting its ability
to incur Indebtedness.
Section 6.22. Defaults. No Default or Event of Default exists, nor will any
begin to exist immediately after the execution and delivery hereof.
Section 6.23. Beneficial Ownership. The information included in each Beneficial
Ownership Certification most recently delivered to each Lender is true and
correct in all respects.
ARTICLE VII. SECURITY
Section 7.1. Security Interest in Collateral. In consideration of and as
security for the full and complete payment of all of the Secured Obligations,
each Borrower hereby grants to the Administrative Agent, for the benefit of the
Lenders (and Affiliates thereof that hold Secured Obligations), a security
interest in the Collateral.
Section 7.2. Collections and Receipt of Proceeds by Borrowers.
(a) Upon written notice to the Administrative Borrower from the Administrative
Agent after the occurrence and during the continuance of an Event of Default, a
Cash Collateral Account shall be opened by the Borrowers at the main office of
the Administrative Agent (or such other office as shall be designated by the
Administrative Agent) and all such lawful collections of each Borrower’s
Accounts and such Proceeds of each Borrower’s Accounts and Inventory shall be
remitted daily by each Borrower to the Administrative Agent in the form in which
they are received by such Borrower, either by mailing or by delivering such
collections and Proceeds to the Administrative Agent, appropriately endorsed for
deposit in the Cash Collateral Account. In the event that such notice is given
to the Administrative Borrower from
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the Administrative Agent, no Borrower shall commingle such collections or
Proceeds with any of such Borrower’s other funds or property or the funds or
property of any other Borrower, but shall hold such collections and Proceeds
separate and apart therefrom upon an express trust for the Administrative Agent,
for the benefit of the Lenders. In such case, the Administrative Agent may, in
its sole discretion, and shall, at the request of the Required Lenders, at any
time and from time to time after the occurrence and during the continuance of an
Event of Default, apply all or any portion of the account balance in the Cash
Collateral Account as a credit against (i) the outstanding principal or interest
of the Loans, or (ii) any other Secured Obligations in accordance with this
Agreement. If any remittance shall be dishonored, or if, upon final payment, any
claim with respect thereto shall be made against the Administrative Agent on its
warranties of collection, the Administrative Agent may charge the amount of such
item against the Cash Collateral Account or any other Deposit Account (other
than a trust, tax withholding or payroll account) maintained by any Borrower
with the Administrative Agent or with any other Lender, and, in any event,
retain the same and such Borrower’s interest therein as additional security for
the Secured Obligations. The Administrative Agent may, in its sole discretion,
at any time and from time to time, release funds from the Cash Collateral
Account to the Borrowers for use in the business of the Borrowers. The balance
in the Cash Collateral Account may be withdrawn by the Borrowers upon
termination of this Agreement and payment in full of all of the Secured
Obligations.
(b) After the occurrence and during the continuance of an Event of Default, at
the Administrative Agent’s written request, each Borrower shall cause all
remittances representing collections and Proceeds of Collateral to be mailed to
a lockbox at a location acceptable to the Administrative Agent, to which the
Administrative Agent shall have access for the processing of such items in
accordance with the provisions, terms and conditions of the customary lockbox
agreement of the Administrative Agent.
(c) The Administrative Agent, or the Administrative Agent’s designated agent, is
hereby constituted and appointed attorney-in-fact for each Borrower with
authority and power to endorse, after the occurrence and during the continuance
of an Event of Default, any and all instruments, documents, and chattel paper
upon the failure of the Borrowers to do so. Such authority and power, being
coupled with an interest, shall be (i) irrevocable until all of the Secured
Obligations (other than inchoate indemnity obligations) are paid,
(ii) exercisable by the Administrative Agent at any time and without any request
upon such Borrower by the Administrative Agent to so endorse, and
(iii) exercisable in the name of the Administrative Agent or such Borrower. To
the extent permitted by applicable Law, each Borrower hereby waives presentment,
demand, notice of dishonor, protest, notice of protest, and any and all other
similar notices with respect thereto, regardless of the form of any endorsement
thereof. Neither the Administrative Agent nor the Lenders shall be bound or
obligated to take any action to preserve any rights therein against prior
parties thereto.
Section 7.3. Collections and Receipt of Proceeds by Administrative Agent. Each
Credit Party hereby constitutes and appoints the Administrative Agent, or the
Administrative Agent’s designated agent, as such Credit Party’s attorney-in-fact
to exercise, at any time, after the occurrence and during the continuance of an
Event of Default, all or any of the following powers which, being coupled with
an interest, shall be irrevocable until the complete and full payment of all of
the Secured Obligations (other than contingent indemnification obligations to
the extent no claim giving rise thereto has been asserted):
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(a) to receive, retain, acquire, take, endorse, assign, deliver, accept, and
deposit, in the name of the Administrative Agent or such Credit Party, any and
all of such Credit Party’s cash, instruments, chattel paper, documents, Proceeds
of Accounts, Proceeds of Inventory, collection of Accounts, and any other
writings relating to any of the Collateral. To the extent permitted by
applicable Law, each Credit Party hereby waives presentment, demand, notice of
dishonor, protest, notice of protest, and any and all other similar notices with
respect thereto, regardless of the form of any endorsement thereof. The
Administrative Agent shall not be bound or obligated to take any action to
preserve any rights therein against prior parties thereto;
(b) to transmit to Account Debtors, on any or all of such Credit Party’s
Accounts, notice of assignment to the Administrative Agent, for the benefit of
the Lenders, thereof and the security interest therein, and to request from such
Account Debtors at any time, in the name of the Administrative Agent or such
Credit Party, information concerning such Credit Party’s Accounts and the
amounts owing thereon;
(c) to transmit to purchasers of any or all of such Credit Party’s Inventory,
notice of the Administrative Agent’s security interest therein, and to request
from such purchasers at any time, in the name of the Administrative Agent or
such Credit Party, information concerning such Credit Party’s Inventory and the
amounts owing thereon by such purchasers;
(d) to notify and require Account Debtors on such Credit Party’s Accounts and
purchasers of such Credit Party’s Inventory to make payment of their
indebtedness directly to the Administrative Agent;
(e) to enter into or assent to such amendment, compromise, extension, release or
other modification of any kind of, or substitution for, the Accounts, or any
thereof, as the Administrative Agent, in its sole discretion, may deem to be
advisable;
(f) to enforce the Accounts or any thereof, or any other Collateral, by suit or
otherwise, to maintain any such suit or other proceeding in the name of the
Administrative Agent or one or more Credit Parties, and to withdraw any such
suit or other proceeding. The Credit Parties agree to lend every assistance
reasonably requested by the Administrative Agent in respect of the foregoing,
all at no cost or expense to the Administrative Agent and including, without
limitation, the furnishing of such witnesses and of such records and other
writings as the Administrative Agent may reasonably require in connection with
making legal proof of any Account. The Credit Parties agree to reimburse the
Administrative Agent in full for all court costs and reasonable attorneys’ fees
and every other cost, expense or liability, if any, incurred or paid by the
Administrative Agent in connection with the foregoing, which obligation of such
Credit Parties shall constitute Obligations, shall be secured by the Collateral
and shall bear interest, until paid, at the Default Rate;
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(g) to take or bring, in the name of the Administrative Agent or such Credit
Party, all steps, actions, suits, or proceedings deemed by the Administrative
Agent necessary or desirable to effect the receipt, enforcement, and collection
of the Collateral; and
(h) to accept all collections in any form relating to the Collateral, including
remittances that may reflect deductions, and to deposit the same into the Cash
Collateral Account or, at the option of the Administrative Agent, to apply them
as a payment against the Loans or any other Secured Obligations in accordance
with this Agreement.
Section 7.4. Administrative Agent’s Authority Under Pledged Notes. For the
better protection of the Administrative Agent and the Lenders hereunder, each
Credit Party, as appropriate, will execute, with respect to any existing or
future Pledged Notes an appropriate endorsement on (or separate from) each
Pledged Note and with respect to Pledged Notes in the original principal amount
in excess of Five Hundred Thousand Dollars ($500,000), or upon request after the
occurrence and during the continuance of an Event of Default, has deposited (or
will deposit, with respect to future Pledged Notes) such Pledged Notes with the
Administrative Agent, for the benefit of the Lenders. Such Credit Party
irrevocably authorizes and empowers the Administrative Agent, for the benefit of
the Lenders, to, after the occurrence and during the continuance of an Event of
Default, (a) ask for, demand, collect and receive all payments of principal of
and interest on the Pledged Notes; (b) compromise and settle any dispute arising
in respect of the foregoing; (c) execute and deliver vouchers, receipts and
acquittances in full discharge of the foregoing; (d) exercise, in the
Administrative Agent’s discretion, any right, power or privilege granted to the
holder of any Pledged Note by the provisions thereof including, without
limitation, the right to demand security or to waive any default thereunder;
(e) endorse such Credit Party’s name to each check or other writing received by
the Administrative Agent as a payment or other proceeds of or otherwise in
connection with any Pledged Note; (f) enforce delivery and payment of the
principal and/or interest on the Pledged Notes, in each case by suit or
otherwise as the Administrative Agent may desire; and (g) enforce the security,
if any, for the Pledged Notes by instituting foreclosure proceedings, by
conducting public or other sales or otherwise, and to take all other steps as
the Administrative Agent, in its discretion, may deem advisable in connection
with the forgoing; provided that nothing contained or implied herein or
elsewhere shall obligate the Administrative Agent to institute any action, suit
or proceeding or to make or do any other act or thing contemplated by this
Section 7.4 or prohibit the Administrative Agent from settling, withdrawing or
dismissing any action, suit or proceeding or require the Administrative Agent to
preserve any other right of any kind in respect of the Pledged Notes and the
security, if any, therefor.
Section 7.5. Commercial Tort Claims. If any Credit Party shall at any time hold
or acquire a Commercial Tort Claim in excess of Five Million Dollars
($5,000,000), such Credit Party shall promptly notify the Administrative Agent
thereof in a writing signed by such Credit Party, that sets forth the details
thereof and grants to the Administrative Agent (for the benefit of the Lenders)
a Lien thereon and on the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be prepared by and in form and substance
reasonably satisfactory to the Administrative Agent.
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Section 7.6. Use of Inventory and Equipment. Until the exercise by the
Administrative Agent and the Required Lenders of their rights under Article IX
hereof, each Credit Party may (a) retain possession of and use its Inventory and
Equipment in any lawful manner not inconsistent with this Agreement or with the
terms, conditions, or provisions of any policy of insurance thereon; (b) sell or
lease its Inventory or Equipment in the ordinary course of business or as
otherwise permitted by this Agreement; and (c) use and consume any raw materials
or supplies, the use and consumption of which are necessary in order to carry on
such Credit Party’s business.
ARTICLE VIII. EVENTS OF DEFAULT
Any of the following specified events shall constitute an Event of Default (each
an “Event of Default”):
Section 8.1. Payments. If (a) the interest on any Loan, any commitment or other
fee, or any other Obligation not listed in subpart (b) hereof, shall not be paid
in full within three Business Days of any applicable date when due and payable,
or (b) the principal of any Loan, or any reimbursement obligation under any
Letter of Credit that has been drawn, or any amount owing pursuant to
Section 2.11(a) or (b) hereof shall not be paid in full when due and payable.
Section 8.2. Special Covenants. If any Company shall fail or omit to perform and
observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.15, or 5.18 hereof.
Section 8.3. Other Covenants.
(a) If any Company shall fail or omit to perform and observe Section 5.3 and
that Default shall not have been fully corrected within five (5) days
thereafter; or
(b) If any Company shall fail or omit to perform and observe any agreement or
other provision (other than those referred to in Section 8.1 or 8.2 hereof)
contained or referred to in this Agreement or any other Loan Document that is on
such Company’s part to be complied with, and that Default shall not have been
fully corrected within thirty (30) days after the earlier of (a) any Financial
Officer of such Company becomes aware of the occurrence thereof, or (b) the
giving of written notice thereof to the Administrative Borrower by the
Administrative Agent or the Required Lenders that the specified Default is to be
remedied.
Section 8.4. Representations and Warranties. If any representation, warranty or
statement made in or pursuant to this Agreement or any other Loan Document or
any other material information furnished in writing by any Company to the
Administrative Agent or the Lenders, or any thereof, shall be false or
erroneous, in any material respect when made or deemed made.
Section 8.5. Cross Default. If any Company shall default in the payment of
principal or interest due and owing under any Material Indebtedness Agreement
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created beyond any period of grace
provided with respect thereto, if the effect of such default is to allow the
acceleration of the maturity of such Indebtedness or to permit the holder
thereof to cause such Indebtedness to become due prior to its stated maturity.
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Section 8.6. ERISA Default. The occurrence of one or more ERISA Events or the
imposition of a Lien on the assets of a Credit Party in accordance with
Section 430(k) of the Code of any Company.
Section 8.7. Change in Control. If any Change in Control shall occur.
Section 8.8. Judgments. There is entered against any Company:
(a) a final judgment or order for the payment of money by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of forty-five (45) days
after the date on which the right to appeal has expired, provided that such
occurrence shall constitute an Event of Default only if the aggregate of all
such judgments for all such Companies, shall exceed Ten Million Dollars
($10,000,000) (less any amount that will be covered by the proceeds of insurance
and is not subject to dispute by the insurance provider); or
(b) any one or more non-monetary final judgments that are not covered by
insurance, or, if covered by insurance, for which the insurance company has not
agreed to or acknowledged coverage, and that, in either case, the Required
Lenders reasonably determine have, or could be expected to have, individually or
in the aggregate, a Material Adverse Effect and, in either case, (i) enforcement
proceedings are commenced by the prevailing party or any creditor upon such
judgment or order, or (ii) there is a period of three consecutive Business Days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect.
Section 8.9. Security. If any Lien as to any material amount of Collateral (as
reasonably determined by the Administrative Agent, in its reasonable discretion)
granted in this Agreement or any other Loan Document in favor of the
Administrative Agent, for the benefit of the Lenders, shall be determined to be
(a) void, voidable or invalid, or is subordinated or not otherwise given the
priority contemplated by this Agreement and the Borrowers (or the appropriate
Credit Party) have failed to promptly execute appropriate documents to correct
such matters, or (b) unperfected as to any material amount of Collateral (as
reasonably determined by the Administrative Agent, in its reasonable discretion)
and the Borrowers (or the appropriate Credit Party) have failed to promptly
execute appropriate documents to correct such matters.
Section 8.10. Validity of Loan Documents. If (a) any material provision of any
Loan Document shall at any time cease to be valid, binding and enforceable
against any Credit Party; (b) the validity, binding effect or enforceability of
any Loan Document against any Credit Party shall be contested by any Credit
Party; (c) any Credit Party shall deny that it has any or further liability or
obligation under any Loan Document; or (d) any Loan Document shall be
terminated, invalidated or set aside, or be declared ineffective or inoperative
or in any way cease to give or provide to the Administrative Agent and the
Lenders any material benefits purported to be created thereby.
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Section 8.11. Solvency. If any Company (other than a Dormant Subsidiary) shall
(a) except as permitted pursuant to Section 5.12 hereof, discontinue business;
(b) generally not pay its debts as such debts become due; (c) make a general
assignment for the benefit of creditors; (d) apply for or consent to the
appointment of an interim receiver, a receiver, a receiver and manager, an
administrator, a sequestrator, a monitor, a custodian, a trustee, an interim
trustee, a liquidator, an agent or any other similar official of all or a
substantial part of its assets or of such Company; (e) be adjudicated a debtor
or insolvent or have entered against it an order for relief under the Bankruptcy
Code, or under any other bankruptcy insolvency, liquidation, winding-up,
corporate or similar statute or law, foreign, federal, state or provincial, in
any applicable jurisdiction, now or hereafter existing, as any of the foregoing
may be amended from time to time, or other applicable statute for jurisdictions
outside of the United States, as the case may be; (f) file a voluntary petition
under the Bankruptcy Code or seek relief under any bankruptcy or insolvency or
analogous law in any jurisdiction outside of the United States, or file a
proposal or notice of intention to file such petition; (g) have an involuntary
proceeding under the Bankruptcy Code filed against it and the same shall not be
controverted within ten days, or shall continue undismissed for a period of
sixty (60) days from commencement of such proceeding or case; (h) file a
petition, an answer, an application or a proposal seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors, or admit (by answer, by default or otherwise) the
material allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether federal, provincial or
state, or, if applicable, other jurisdiction) relating to relief of debtors;
(i) suffer or permit to continue unstayed and in effect for sixty
(60) consecutive days any judgment, decree or order entered by a court of
competent jurisdiction, that approves a petition or an application or a proposal
seeking its reorganization or appoints an interim receiver, a receiver and
manager, an administrator, custodian, trustee, interim trustee or liquidator of
all or a substantial part of its assets, or of such Company; (j) have an
administrative receiver appointed over the whole or substantially the whole of
its assets, or of such Company; (k) have assets, the fair market value of which
is less than its liabilities (taking into account rights of contribution and
indemnification); or (l) have a moratorium declared in respect of any of its
Indebtedness, or any analogous procedure or step is taken in any jurisdiction.
ARTICLE IX. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or elsewhere:
Section 9.1. Optional Defaults. If any Event of Default referred to in
Section 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof shall occur
and be continuing, the Administrative Agent may, with the consent of the
Required Lenders, and shall, at the written request of the Required Lenders,
give written notice to the Borrowers to:
(a) terminate the Commitment, if not previously terminated, and, immediately
upon such election, the obligations of the Lenders, and each thereof, to make
any further Loan, and the obligation of the Issuing Lender to issue any Letter
of Credit, immediately shall be terminated; and/or
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(b) accelerate the maturity of all of the Obligations (if the Obligations are
not already due and payable), whereupon all of the Obligations shall become and
thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by each Borrower.
Section 9.2. Automatic Defaults. If any Event of Default referred to in
Section 8.11 hereof shall occur:
(a) all of the Commitment shall automatically and immediately terminate, if not
previously terminated, and no Lender thereafter shall be under any obligation to
grant any further Loan, nor shall the Issuing Lender be obligated to issue any
Letter of Credit; and
(b) the principal of and interest then outstanding on all of the Loans, and all
of the other Obligations, shall thereupon become and thereafter be immediately
due and payable in full (if the Obligations are not already due and payable),
all without any presentment, demand or notice of any kind, which are hereby
waived by each Borrower.
Section 9.3. Letters of Credit. If the maturity of the Obligations shall be
accelerated pursuant to Section 9.1 or 9.2 hereof, the Borrowers shall
immediately deposit with the Administrative Agent, as security for the
obligations of the Borrowers and any Guarantor of Payment to reimburse the
Administrative Agent and the Revolving Lenders for any then outstanding Letters
of Credit, cash equal to one hundred five percent (105%) of the sum of the
aggregate undrawn balance of any then outstanding Letters of Credit. The
Administrative Agent and the Lenders are hereby authorized, at their option, to
deduct any and all such amounts from any deposit balances then owing by any
Lender (or any Affiliate of such Lender, wherever located) to or for the credit
or account of any Company, as security for the obligations of the Borrowers and
any Guarantor of Payment to reimburse the Administrative Agent and the Lenders
for any then outstanding Letters of Credit.
Section 9.4. Offsets. If there shall occur or exist, and be continuing, any
Event of Default referred to in Section 8.11 hereof or if the maturity of the
Obligations is accelerated pursuant to Section 9.1 or 9.2 hereof, each Lender
and its Affiliates shall have the right at any time to set-off against, and to
appropriate and apply toward the payment of, any and all of the Obligations then
owing by the Borrowers or a Guarantor of Payment to such Lender or its Affiliate
(including, without limitation, any participation purchased or to be purchased
pursuant to Section 2.2(b), 2.2(c) or 9.5 hereof), whether or not the same shall
then have matured, any and all deposit (general or special) balances and all
other indebtedness then held or owing by such Lender or its Affiliate
(including, without limitation, by branches and agencies or any Affiliate of
such Lender, wherever located) to or for the credit or account of any Borrower
or Guarantor of Payment, all without notice to or demand upon any Borrower or
any other Person, all such notices and demands being hereby expressly waived by
each Borrower. Each Lender agrees to
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notify the Administrative Borrower and the Administrative Agent promptly after
any such set-off and application (provided that the failure to give such notice
shall not affect the validity of such set-off and application). In the event
that any Defaulting Lender shall exercise any such right of set-off, (a) all
amounts so set-off shall be paid over immediately to the Administrative Agent
for further application in accordance with the provisions of Section 2.6(c) and
(d) hereof, and, pending such payment, shall be segregated by such Defaulting
Lender from its other funds and deemed held in trust for the benefit of the
Administrative Agent, the Issuing Lender and the Lenders, and (b) such
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of set-off. Each Lender and the Issuing
Lender agrees to notify the Administrative Borrower and the Administrative Agent
promptly after any such set-off and application; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
Section 9.5. Equalization Provisions. Each Lender agrees with the other Lenders
that, if it at any time shall obtain any Advantage over the other Lenders, or
any thereof, in respect of the Obligations (except as to Letters of Credit prior
to the Administrative Agent’s giving of notice to participate and except under
Article III hereof), it shall purchase from the other Lenders, for cash and at
par, such additional participation in the Obligations as shall be necessary to
nullify such Advantage. If any such Advantage resulting in the purchase of an
additional participation as aforesaid shall be recovered in whole or in part
from the Lender receiving such Advantage, each such purchase shall be rescinded,
and the purchase price restored (but without interest unless the Lender
receiving such Advantage is required to pay interest on such Advantage to the
Person recovering such Advantage from such Lender) ratably to the extent of the
recovery. Each Lender further agrees with the other Lenders that if it at any
time shall receive any payment for or on behalf of any Borrower (or through any
Guarantor of Payment) on any Indebtedness owing by any Borrower pursuant to this
Agreement (whether by voluntary payment, by realization upon security, by reason
of offset of any deposit or other indebtedness, by counterclaim or cross-action,
by the enforcement of any right under any Loan Document, or otherwise), it will
apply such payment first to any and all Obligations owing by such Borrower to
that Lender (including, without limitation, any participation purchased or to be
purchased pursuant to this Section 9.5 or any other section of this Agreement).
Each Credit Party agrees that any Lender so purchasing a participation from the
other Lenders or any thereof pursuant to this Section 9.5 may exercise all of
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.
Section 9.6. Collateral. The Administrative Agent and the Lenders shall at all
times have the rights and remedies of a secured party under the U.C.C., in
addition to the rights and remedies of a secured party provided elsewhere within
this Agreement, in any other Loan Document, or otherwise provided in law or
equity. Upon the occurrence and during the continuance of an Event of Default
and at all times thereafter, the Administrative Agent may require the Borrowers
to assemble the collateral securing the Secured Obligations, which each Borrower
agrees to do, and make it available to the Administrative Agent and the Lenders
at a reasonably convenient place to be designated by the Administrative Agent.
The Administrative Agent may, with or without notice to or demand upon such
Borrower and with or without the aid of legal process, make use of such force as
may be necessary to enter any premises where such
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collateral, or any thereof, may be found and to take possession thereof
(including anything found in or on such collateral that is not specifically
described in this Agreement, each of which findings shall be considered to be an
accession to and a part of such collateral) and for that purpose may pursue such
collateral wherever the same may be found, without liability for trespass or
damage caused thereby to such Borrower. After any delivery or taking of
possession of the collateral securing the Secured Obligations, or any portion
thereof, pursuant to this Agreement, then, with or without resort to any
Borrower personally or any other Person or property, all of which each Borrower
hereby waives, and upon such terms and in such manner as the Administrative
Agent may deem advisable, the Administrative Agent, in its discretion, may sell,
assign, transfer and deliver any of such collateral at any time, or from time to
time. No prior notice need be given to any Borrower or to any other Person in
the case of any sale of such collateral that the Administrative Agent determines
to be perishable or to be declining speedily in value or that is customarily
sold in any recognized market, but in any other case the Administrative Agent
shall give the Borrowers not fewer than ten days prior notice of either the time
and place of any public sale of such collateral or of the time after which any
private sale or other intended disposition thereof is to be made. Each Borrower
waives advertisement of any such sale and (except to the extent specifically
required by the preceding sentence) waives notice of any kind in respect of any
such sale. At any such public sale, the Administrative Agent or the Lenders may
purchase such collateral, or any part thereof, free from any right of
redemption, all of which rights each Borrower hereby waives and releases. After
deducting all Related Expenses, and after paying all claims, if any, secured by
Liens having precedence over this Agreement, the Administrative Agent may apply
the net proceeds of each such sale to or toward the payment of the Secured
Obligations, whether or not then due, in such order and by such division as the
Administrative Agent, in its sole discretion, may deem advisable. Any excess, to
the extent permitted by law, shall be paid to the Borrowers, and each Borrower
shall remain liable for any deficiency. In addition, the Administrative Agent
shall at all times have the right to obtain new appraisals of any Borrower or
any collateral securing the Secured Obligations, the cost of which shall be paid
by the Borrowers.
Section 9.7. Other Remedies. The remedies in this Article IX are in addition to,
and not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lenders may be entitled. The
Administrative Agent shall exercise the rights under this Article IX and all
other collection efforts on behalf of the Lenders and no Lender shall act
independently with respect thereto, except as otherwise specifically set forth
in this Agreement. In addition, the Administrative Agent shall be entitled to
exercise remedies, pursuant to the Loan Documents, against collateral securing
the Secured Obligations, on behalf of any Affiliate of a Lender that holds
Secured Obligations, and no Affiliate of a Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.
Section 9.8. Application of Proceeds.
(a) Payments Prior to Exercise of Remedies. Prior to the exercise by the
Administrative Agent, on behalf of the Lenders, of remedies under this Agreement
or the other Loan Documents, all monies received by the Administrative Agent in
connection with the Revolving Credit Commitment shall be applied, unless
otherwise required by the terms of the other Loan Documents or by applicable
Law; to the Loans and Letters of Credit, as appropriate; provided that the
Administrative Agent shall have the right at all times to apply any payment
received from the Borrowers first to the payment of all obligations (to the
extent not paid by the Borrowers) incurred by the Administrative Agent pursuant
to Section 11.5 hereof and to the payment of Related Expenses.
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(i) with respect to payments received in connection with the Revolving Credit
Commitment, to the Revolving Lenders;
(b) Payments Subsequent to Exercise of Remedies. After the exercise by the
Administrative Agent or the Required Lenders of remedies under this Agreement or
the other Loan Documents, all monies received by the Administrative Agent shall
be applied, unless otherwise required by the terms of the other Loan Documents
or by applicable Law, as follows:
(i) first, to the payment of all costs, expenses and other amounts (to the
extent not paid by the Borrowers) incurred by the Administrative Agent pursuant
to Sections 11.5 and 11.6 hereof and to the payment of Related Expenses to the
Administrative Agent;
(ii) second, to the payment pro rata of (A) interest then accrued and payable on
the outstanding Loans, (B) any fees then accrued and payable to the
Administrative Agent, (C) any fees then accrued and payable to the Issuing
Lender or the holders of the Letter of Credit Commitment in respect of the
Letter of Credit Exposure, (D) any commitment fees, amendment fees and similar
fees shared pro rata among the Lenders entitled thereto under this Agreement
that are then accrued and payable, and (E) to the extent not paid by the
Borrowers, to the obligations incurred by the Lenders (other than the
Administrative Agent) pursuant to Sections 11.5 and 11.6 hereof;
(iii) third, for payment of (A) principal outstanding on the Loans and the
Letter of Credit Exposure, on a pro rata basis to the Lenders, based upon each
such Lender’s Commitment Percentage, provided that the amounts payable in
respect of the Letter of Credit Exposure shall be held and applied by the
Administrative Agent as security for the reimbursement obligations in respect
thereof, and, if any Letter of Credit shall expire without being drawn, then the
amount with respect to such Letter of Credit shall be distributed to the
Lenders, on a pro rata basis in accordance with this subpart (iii), (B) the
Indebtedness under any Hedge Agreement with a Lender (or an entity that is an
Affiliate of a then existing Lender), such amount to be based upon the net
termination obligation of the Borrowers under such Hedge Agreement, and (C) the
Bank Product Obligations owing to a Lender (or an entity that is an Affiliate of
a then existing Lender) under Bank Product Agreements; with such payment to be
pro rata among (A), (B) and (C) of this subpart (iii);
(iv) fourth, to any remaining Secured Obligations; and
(v) finally, any remaining surplus after all of the Secured Obligations have
been paid in full, to the Administrative Borrower or to whomsoever shall be
lawfully entitled thereto.
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Each Lender hereby agrees to promptly provide all information reasonably
requested by the Administrative Agent regarding any Bank Product Obligations
owing to such Lender (or Affiliate of such Lender) or any Hedge Agreement
entered into by a Company with such Lender (or Affiliate of such Lender), and
each such Lender, on behalf of itself and any of its Affiliates, hereby agrees
to promptly provide notice to the Administrative Agent upon such Lender (or any
of its Affiliates) entering into any such Hedge Agreement or cash management
services agreement.
ARTICLE X. THE ADMINISTRATIVE AGENT
Section 10.1. Appointment and Authorization.
(a) General. Each of the Lenders and the Issuing Lender hereby irrevocably
appoints KeyBank National Association to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. Except as otherwise provided in Section 10.6(b) hereof, the provisions
of this Article are solely for the benefit of the Administrative Agent, the
Lenders and the Issuing Lender, and the Borrowers shall not have rights as a
third-party beneficiary of any of such provisions. It is understood and agreed
that the use of the term “agent” herein or in any other Loan Documents (or any
other similar term) with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law. Instead such term is used as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between contracting parties.
(b) Bank Products and Hedging Products. Each Lender that is providing Bank
Products or products in connection with a Hedge Agreement (or whose Affiliate is
providing such products) hereby irrevocably authorizes the Administrative Agent
to take such action as agent on its behalf (and its Affiliate’s behalf) with
respect to the collateral securing the Secured Obligations and the realization
of payments with respect thereto pursuant to Section 9.8(b)(iii) hereof. The
Borrowers and each Lender agree that the indemnification and reimbursement
provisions of this Agreement shall be equally applicable to the actions of the
Administrative Agent pursuant to this subsection (b). Each Lender hereby
represents and warrants to the Administrative Agent that it has the authority to
authorize the Administrative Agent as set forth above.
Section 10.2. Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, own
securities of, act as the financial advisor or in any other advisory capacity
for, and generally engage in any kind of business with, the Borrowers or any
Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the
Lenders.
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Section 10.3. Exculpatory Provisions.
(a) The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents, and its duties
hereunder shall be administrative in nature. Without limiting the generality of
the foregoing, the Administrative Agent:
(i) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents); provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any Debtor Relief Law; and
(iii) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrowers or any of its Affiliates
that is communicated to or obtained by the Person serving as the Administrative
Agent or any of its Affiliates in any capacity.
(b) The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 11.3 and Article IX hereof), or (ii) in
the absence of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction by final and nonappealable judgment. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until notice describing such Default is given to the Administrative Agent in
writing by a Borrower, a Lender or an Issuing Lender.
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(c) The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth herein or therein or the occurrence of any Default,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV
hereof or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
Section 10.4. Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Loan, or the issuance, extension, increase,
reinstatement or renewal of a Letter of Credit, that by its terms must be
fulfilled to the satisfaction of a Lender or the Issuing Lender, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the Issuing Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender or Issuing Lender prior to the making of
such Loan or the issuance of such Letter of Credit. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
Section 10.5. Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities herein as
well as activities as Administrative Agent. The Administrative Agent shall not
be responsible for the negligence or misconduct of any sub-agents except to the
extent that a court of competent jurisdiction determines in a final and
nonappealable judgment that the Administrative Agent acted with gross negligence
or willful misconduct in the selection of such sub-agents.
Section 10.6. Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to
the Lenders, the Issuing Lender and the Borrowers. Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrowers, to appoint a successor. If no such successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation (or such earlier day as shall be agreed by the
Required Lenders) (the
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“Resignation Effective Date”), then the retiring Administrative Agent may (but
shall not be obligated to), on behalf of the Lenders and the Issuing Lender,
appoint a successor Administrative Agent; provided that in no event shall any
such successor Administrative Agent be a Defaulting Lender. Whether or not a
successor has been appointed, such resignation shall become effective in
accordance with such notice on the Resignation Effective Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, the Required Lenders may, to
the extent permitted by applicable Law, by notice in writing to the
Administrative Borrower and such Person remove such Person as Administrative
Agent and, in consultation with the Administrative Borrower, appoint a
successor. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days (or such earlier
day as shall be agreed by the Required Lenders) (the “Removal Effective Date”),
then such removal shall nonetheless become effective in accordance with such
notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective
Date (as applicable) (i) the retiring or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents and (ii) except for any indemnity payments owed to the retiring or
removed Administrative Agent, all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and the Issuing Lender directly, until such time, if
any, as the Required Lenders appoint a successor Administrative Agent as
provided for above. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring or
removed Administrative Agent (other than any rights to indemnity payments owed
to the retiring or removed Administrative Agent), and the retiring or removed
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents. The fees payable by the Borrowers
to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrowers and such successor.
After the retiring or removed Administrative Agent’s resignation or removal
hereunder and under the other Loan Documents, the provisions of this Article and
Section 11.5 hereof shall continue in effect for the benefit of such retiring or
removed Administrative Agent, its sub agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring or removed Administrative Agent was acting as Administrative
Agent.
Section 10.7. Non-Reliance on Administrative Agent and Other Lenders. Each
Lender and the Issuing Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
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Section 10.8. Other Agents. The Administrative Agent shall have the continuing
right, in consultation with the Borrowers, from time to time to designate one or
more Lenders (or its or their Affiliates) as “syndication agent”,
“co-syndication agent”, “documentation agent”, “co-documentation agent”, “book
runner”, “lead arranger”, “joint lead arranger”, “arrangers” or other
designations for purposes hereof. Any such designation referenced in the
previous sentence or listed on the cover of this Agreement shall have no
substantive effect, and any such Lender and its Affiliates so referenced or
listed shall have no additional powers, duties, responsibilities or liabilities
as a result thereof, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the Issuing Lender hereunder.
Section 10.9. Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any Debtor Relief Law the Administrative Agent
(irrespective of whether the principal of any Loan or Letter of Credit
obligation shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Administrative Agent shall have
made any demand on the Borrowers) shall be entitled and empowered (but not
obligated) by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, Letter of Credit obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, the
Issuing Lender and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders,
the Issuing Lender and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders, the Issuing Lender and the
Administrative Agent under the Loan Documents) allowed in such judicial
proceeding; and
(b) to collect and receive any monies 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 Lender and the Issuing Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the Issuing Lender, to pay
to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under Sections
11.5 and 11.6 hereof.
Section 10.10. Indemnification of Administrative Agent. The Lenders agree to
indemnify the Administrative Agent (to the extent not reimbursed by the
Borrowers) ratably, according to their respective Commitment Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable attorneys’ fees
and expenses) or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent in its
capacity as agent in any way relating to or arising out of this Agreement or any
other Loan Document, or any action taken or omitted by the Administrative Agent
with respect to this Agreement or any
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other Loan Document, provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable attorneys’ fees and expenses) or
disbursements resulting from the Administrative Agent’s gross negligence or
willful misconduct, as determined by a final and non-appealable judgment of a
court of competent jurisdiction, or from any action taken or omitted by the
Administrative Agent in any capacity other than as agent under this Agreement or
any other Loan Document. No action taken in accordance with the directions of
the Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 10.10. The undertaking in this
Section 10.10 shall survive repayment of the Loans, cancellation of the Notes,
if any, expiration or termination of the Letters of Credit, termination of the
Commitment, any foreclosure under, or modification, release or discharge of, any
or all of the Loan Documents, termination of this Agreement and the resignation
or replacement of the agent.
Section 10.11. Issuing Lender. The Issuing Lender shall act on behalf of the
Revolving Lenders with respect to any Letters of Credit issued by the Issuing
Lender and the documents associated therewith. The Issuing Lender shall have all
of the benefits and immunities (a) provided to the Administrative Agent in this
Article X with respect to any acts taken or omissions suffered by the Issuing
Lender in connection with the Letters of Credit and the applications and
agreements for letters of credit pertaining to such Letters of Credit as fully
as if the term “Administrative Agent”, as used in this Article X, included the
Issuing Lender with respect to such acts or omissions, and (b) as additionally
provided in this Agreement with respect to the Issuing Lender.
Section 10.12. No Reliance on Administrative Agent’s Customer Identification
Program. Each Lender acknowledges and agrees that neither such Lender, nor any
of its Affiliates, participants or assignees, may rely on the Administrative
Agent to carry out such Lender’s or its Affiliate’s, participant’s or assignee’s
customer identification program, or other obligations required or imposed under
or pursuant to the Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other anti-terrorism law, including any programs
involving any of the following items relating to or in connection with the
Borrowers, their respective Affiliates or agents, the Loan Documents or the
transactions hereunder: (a) any identity verification procedures, (b) any record
keeping, (c) any comparisons with government lists, (d) any customer notices or
(e) any other procedures required under the CIP Regulations or such other laws.
Section 10.13. Platform.
(a) Each Credit Party agrees that the Administrative Agent may, but shall not be
obligated to, make the Communications (as defined below) available to the
Issuing Lender and the other Lenders by posting the Communications on the
Platform.
(b) The Platform is provided “as is” and “as available.” The Agent Parties (as
defined below) do not warrant the adequacy of the Platform and expressly
disclaim liability for errors or omissions in the Communications. No warranty of
any kind, express, implied or statutory, including, without limitation, any
warranty of merchantability, fitness for a particular purpose, non-infringement
of third-party rights or freedom from viruses or other code defects, is
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made by any Agent Party in connection with the Communications or the Platform.
In no event shall the Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to the Borrowers or the
other Credit Parties, any Lender or any other Person or entity for damages of
any kind, including, without limitation, direct or indirect, special, incidental
or consequential damages, losses or expenses (whether in tort, contract or
otherwise) arising out of any Borrower’s, any Credit Party’s or the
Administrative Agent’s transmission of communications through the Platform.
“Communications” means, collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of any Credit
Party pursuant to any Loan Document or the transactions contemplated therein
that is distributed to the Administrative Agent, any Lender or the Issuing
Lender by means of electronic communications pursuant to this Section, including
through the Platform.
ARTICLE XI. MISCELLANEOUS
Section 11.1. Lenders’ Independent Investigation. Each Lender, by its signature
to this Agreement, acknowledges and agrees that the Administrative Agent has
made no representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between the
Administrative Agent and such Lender. Each Lender represents that it has made
and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in connection
with the extension of credit hereunder, and agrees that the Administrative Agent
has no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto
(other than such notices as may be expressly required to be given by the
Administrative Agent to the Lenders hereunder), whether coming into its
possession before the first Credit Event hereunder or at any time or times
thereafter. Each Lender further represents that it has reviewed each of the Loan
Documents.
Section 11.2. No Waiver; Cumulative Remedies. No omission or course of dealing
on the part of the Administrative Agent, any Lender or the holder of any Note
(or, if there is no Note, the holder of the interest as reflected on the books
and records of the Administrative Agent) in exercising any right, power or
remedy hereunder or under any of the other Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or under any of the Loan
Documents. The remedies herein provided are cumulative and in addition to any
other rights, powers or privileges held under any of the Loan Documents or by
operation of law, by contract or otherwise.
Section 11.3. Amendments, Waivers and Consents.
(a) General Rule. Except as set forth in Section 3.8 hereof, no amendment,
modification, termination, or waiver of any provision of any Loan Document nor
consent to any variance therefrom (other than pursuant to Section 2.9(b) and
(c) hereof), shall be effective unless the same shall be in writing and signed
by the Required Lenders and, other than with respect to waivers and consents,
the Borrowers, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
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(b) Exceptions to the General Rule. Notwithstanding the provisions of subsection
(a) above, but subject to the provisions of Section 2.9(b) and (c) hereof:
(i) Consent of Lenders Affected Required. No amendment, modification, waiver or
consent shall (A) extend or increase the Commitment of any Lender without the
written consent of such Lender, (B) extend the date scheduled for payment of any
principal of or interest on the Loans or Letter of Credit reimbursement
obligations or commitment fees payable hereunder without the written consent of
each Lender directly affected thereby, (C) reduce the principal amount of any
Loan, the stated rate of interest thereon (provided that the institution of the
Default Rate or post default interest and a subsequent removal of the Default
Rate or post default interest shall not constitute a decrease in interest rate
pursuant to this Section 11.3(b)) or the stated rate of commitment fees payable
hereunder, without the consent of each Lender directly affected thereby,
(D) change the manner of the application of any payments made by the Borrowers
to the Lenders hereunder, without the consent of each Lender directly affected
thereby, (E) without the unanimous consent of the Lenders, change any percentage
voting requirement, voting rights, or the Required Lenders definition in this
Agreement, (F) without the unanimous consent of the Lenders, release any
Borrower or any Guarantor of Payment or release or subordinate any material
amount of collateral securing the Secured Obligations, except in connection with
a transaction specifically permitted hereunder, (G) without the unanimous
consent of the Lenders, amend this Section 11.3 or Section 9.5 or 9.8 hereof, or
(H) without the unanimous consent of the Lenders, permit a Borrower to assign
its rights hereunder or any interest herein.
(ii) Provisions Relating to Special Rights and Duties. No provision of this
Agreement affecting the Administrative Agent in its capacity as such shall be
amended, modified or waived without the consent of the Administrative Agent. The
Administrative Agent Fee Letter may be amended or modified by the Administrative
Agent and the Administrative Borrower without the consent of any other Lender.
No provision of this Agreement relating to the rights or duties of the Issuing
Lender in its capacity as such shall be amended, modified or waived without the
consent of the Issuing Lender.
(iii) Technical and Conforming Modifications. Notwithstanding the foregoing,
technical and conforming modifications to the Loan Documents may be made with
the consent of the Administrative Borrower and the Administrative Agent (A) if
such modifications are not adverse to the Lenders and are requested by
Governmental Authorities, (B) to cure any ambiguity, defect or inconsistency, or
(C) to the extent necessary to integrate any increase in the Commitment or new
Loans pursuant to Section 2.9(b) hereof.
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(c) Replacement of Non-Consenting Lender. If, in connection with any proposed
amendment, waiver or consent hereunder, the consent of all Lenders is required,
but only the consent of Required Lenders is obtained, (any Lender withholding
consent as described in this subsection (c) being referred to as a
“Non-Consenting Lender”), then, so long as the Administrative Agent is not the
Non-Consenting Lender, the Administrative Agent may (and shall, if requested by
the Administrative Borrower), at the sole expense of the Borrowers, upon notice
to such Non-Consenting Lender and the Administrative Borrower, require such
Non-Consenting Lender to assign and delegate, without recourse (in accordance
with the restrictions contained in Section 11.10 hereof) all of its interests,
rights and obligations under this Agreement to a financial institution
acceptable to the Administrative Agent and the Administrative Borrower that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that such Non-Consenting Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from such financial institution (to the extent of such outstanding
principal and accrued interest and fees) or the Administrative Borrower (in the
case of all other amounts, including any breakage compensation under Article III
hereof).
(d) Generally. Notice of amendments, waivers or consents ratified by the Lenders
hereunder shall be forwarded by the Administrative Agent to all of the Lenders.
Each Lender or other holder of a Note, or if there is no Note, the holder of the
interest as reflected on the books and records of the Administrative Agent (or
interest in any Loan or Letter of Credit) shall be bound by any amendment,
waiver or consent obtained as authorized by this Section 11.3, regardless of its
failure to agree thereto.
Section 11.4. Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to a Borrower, mailed or
delivered to it, addressed to it at the address specified on the signature pages
of this Agreement, if to the Administrative Agent or a Lender, mailed or
delivered to it, addressed to the address of the Administrative Agent or such
Lender specified on the signature pages of this Agreement, or, as to each party,
at such other address as shall be designated by such party in a written notice
to each of the other parties. All notices, statements, requests, demands and
other communications provided for hereunder shall be deemed to be given or made
when delivered (if received during normal business hours on a Business Day, such
Business Day or otherwise the following Business Day), or two Business Days
after being deposited in the mails with postage prepaid by registered or
certified mail, addressed as aforesaid, or sent by facsimile or electronic
communication, in each case of facsimile or electronic communication with
telephonic confirmation of receipt. All notices pursuant to any of the
provisions hereof shall not be effective until received. For purposes of Article
II hereof, the Administrative Agent shall be entitled to rely on telephonic
instructions from any person that the Administrative Agent in good faith
believes is an Authorized Officer, and the Borrowers shall hold the
Administrative Agent and each Lender harmless from any loss, cost or expense
resulting from any such reliance.
Section 11.5. Costs and Expenses. The Borrowers agree to pay on demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent and all
Related Expenses, including but not limited to (a) reasonable syndication,
administration, travel and out-of-pocket expenses, including but not limited to
properly documented attorneys’ fees and expenses, of the Administrative Agent in
connection with the preparation, negotiation and closing of the Loan Documents
and the administration of the Loan Documents, and the
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collection and disbursement of all funds hereunder and the other instruments and
documents to be delivered hereunder, and (b) the reasonable and actual fees and
expenses of special counsel for the Administrative Agent, with respect to the
foregoing, and of local counsel, if any, who may be retained by said special
counsel with respect thereto. The Borrowers also agree to pay on demand all
out-of-pocket costs and expenses (including Related Expenses) of the
Administrative Agent and the Lenders, including reasonable and actual attorneys’
fees and expenses, in connection with the restructuring, amendment or
enforcement of the Obligations or any Loan Document. All obligations provided
for in this Section 11.5 shall survive any termination of this Agreement.
Section 11.6. Indemnification. The Borrowers agree to defend, indemnify and hold
harmless the Administrative Agent, the Issuing Lender and the Lenders (and their
respective Affiliates, officers, directors, attorneys, agents and employees)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including reasonable
attorneys’ fees) or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent or any
Lender in connection with any investigative, administrative or judicial
proceeding (whether or not such Lender or the Administrative Agent shall be
designated a party thereto) or any other claim by any Person (or any other
Credit Party) relating to or arising out of any Loan Document or any actual or
proposed use of proceeds of the Loans or any of the Obligations, or any
activities of any Company or its Affiliates; provided that no Lender nor the
Administrative Agent shall have the right to be indemnified under this
Section 11.6 for its own (or its respective Affiliates’, officers’, directors’,
attorneys’, agents’ or employees’) bad faith, gross negligence or willful
misconduct, as determined by a final and non-appealable judgment of a court of
competent jurisdiction. All obligations provided for in this Section 11.6 shall
survive any termination of this Agreement. Notwithstanding the foregoing, the
obligations provided for in this Section 11.6 shall not apply with respect to
any Taxes other than Taxes that represent losses, claims, damages, etc., arising
from any non-Tax claim.
Section 11.7. Obligations Several; No Fiduciary Obligations. The obligations of
the Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by the Administrative Agent or the Lenders
pursuant hereto shall be deemed to constitute the Administrative Agent or the
Lenders a partnership, association, joint venture or other entity. No default by
any Lender hereunder shall excuse the other Lenders from any obligation under
this Agreement; but no Lender shall have or acquire any additional obligation of
any kind by reason of such default. The relationship between the Borrowers and
the Lenders with respect to the Loan Documents is and shall be solely that of
debtors and creditors, respectively, and neither the Administrative Agent nor
any Lender shall have any fiduciary obligation toward any Credit Party with
respect to any such documents or the transactions contemplated thereby.
Section 11.8. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
and by facsimile or other electronic signature, each of which counterparts when
so executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
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Section 11.9. Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither any Borrower nor
any other Credit Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender, and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of subsection (b) of this Section 11.9, (ii) by way of participation
in accordance with the provisions of subsection (d) of this Section 11.9, or
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (e) of this Section 11.9 (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section 11.9 and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including, without limitation (i) such Lender’s Commitment, (ii) all Loans made
by such Lender, (iii) such Lender’s Notes (if any), and (iv) such Lender’s
interest in any Letter of Credit); provided that any such assignment shall be
subject to the following conditions:
(i) Minimum Amounts.
(A) no minimum amount is required to be assigned in the case of (x) an
assignment of the entire remaining amount of the assigning Lender’s Commitment
(to the extent the Commitment is still in effect) and the Loans at the time
owing to such Lender, (y) contemporaneous assignments to related Approved Funds
(determined after giving effect to such assignments) that equal at least the
amount specified in subpart (b)(i)(B) of this Section 11.9 in the aggregate, or
(z) in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund; and
(B) in any case not described in subpart (b)(i)(A) of this Section 11.9, the
aggregate amount of each such assignment (determined as of the date the
Assignment Agreement with respect to such assignment is delivered to the
Administrative Agent (or, if “Trade Date” is specified in the Assignment
Agreement, as of the Trade Date)) shall not be less than Five Million Dollars
($5,000,000), unless each of the Administrative Agent and, so long as no Default
or Event of Default has occurred and is continuing, the Administrative Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed).
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(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the portion of
such Lender’s Commitment assigned, except that this subpart (ii) shall not
prohibit any Lender from assigning all or a portion of its rights and
obligations with respect to separate facilities on a non-pro rata basis.
(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section 11.9 and, in
addition:
(A) the consent of the Administrative Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless (1) a Default or
Event of Default has occurred and is continuing at the time of such assignment,
or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved
Fund; provided that (y) the Borrowers shall be deemed to have consented to any
such assignment unless it shall object thereto by written notice to the
Administrative Agent within three Business Days after having received notice
thereof, and (z) the Administrative Borrower’s consent shall not be required
during the primary syndication of the Commitment;
(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments to a Person that is not a
Lender, an Affiliate of a Lender or an Approved Fund; and
(C) the consent of the Issuing Lender shall be required for any assignment in
respect of the Revolving Credit Commitment.
(iv) Assignment Agreement. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment Agreement, together with a
processing and recordation fee of Three Thousand Five Hundred Dollars ($3,500);
provided that the Administrative Agent may, in its sole discretion, elect to
waive such processing and recordation fee in the case of any assignment. The
assignee, if it is not a Lender, shall deliver to the Administrative Agent an
administrative questionnaire in a form supplied by the Administrative Agent.
(v) No Assignment to Certain Persons. No such assignment shall be made to (A) a
Borrower or any of any Borrower’s Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any Person that, upon becoming a Lender, would constitute a
Defaulting Lender.
(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural Person (or a holding company, investment vehicle or trust for, or owned
and operated for the primary benefit of, a natural Person).
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(vii) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Administrative Borrower and the Administrative
Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and
assignor hereby irrevocably consent), to (A) pay and satisfy in full all payment
liabilities then owed by such Defaulting Lender to the Administrative Agent, the
Issuing Lender and each other Lender hereunder (and interest accrued thereon),
and (B) acquire (and fund as appropriate) its full pro rata share of all Loans
and participations in Letters of Credit in accordance with its Commitment
Percentage. Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become effective
under applicable Law without compliance with the provisions of this subpart
(vii), then the assignee of such interest shall be deemed to be a Defaulting
Lender for all purposes of this Agreement until such compliance occurs.
(viii) Treatment as Lenders. Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section 11.9, from and
after the effective date specified in each Assignment Agreement, the assignee
thereunder shall be a party to this Agreement, and, to the extent of the
interest assigned by such Assignment Agreement, have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment Agreement, be released
from its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Article III and Sections 11.5 and 11.6 hereof
with respect to facts and circumstances occurring prior to the effective date of
such assignment; provided that, except to the extent otherwise expressly agreed
by the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subpart shall be treated for purposes of this Agreement as a sale by such Lender
of a participation in such rights and obligations in accordance with subsection
(d) of this Section 11.9.
(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at one of its offices a copy of each
Assignment Agreement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amounts (and stated interest) of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive absent
manifest error, and the Administrative Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Administrative
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
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(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrowers or the Administrative Agent, sell participations to any
Person (other than a natural Person, or a holding company, investment vehicle or
trust for, or owned and operated for the primary benefit of, a natural Person,
or any Borrower or any of any Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of the Commitment and the Loans and participations owing to it and
the Notes, if any, held by it); provided that (i) such Lender’s obligations
under this Agreement and the other Loan Documents shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (iii) the Borrowers, the Administrative
Agent, the Issuing Lender and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and each of the other Loan Documents. For the
avoidance of doubt, each Lender shall be responsible for the indemnity under
Section 10.10 with respect to any payments made by such Lender to any of its
Participants.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to the following (to the
extent that it affects such Participant): (i) any increase in the portion of the
participation amount of any Participant over the amount thereof then in effect,
or any extension of the Commitment Period; or (ii) any reduction of the
principal amount of or extension of the time for any payment of principal on any
Loan, or the reduction of the rate of interest or extension of the time for
payment of interest on any Loan, or the reduction of the commitment fee. The
Borrowers agree that each Participant shall be entitled to the benefits of
Article III hereof (subject to the requirements and limitations therein,
including the requirements under Section 3.2(e) hereof (it being understood that
the documentation required under Section 3.2(e) hereof shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to subsection (b) of this
Section 11.9; provided that such Participant (A) agrees to be subject to the
provisions of Sections 3.4 and 3.6 hereof as if it were an assignee under
subsection (b) of this Section 11.9; and (B) shall not be entitled to receive
any greater payment under Article III hereof, with respect to any participation,
than its participating Lender would have been entitled to receive, except to the
extent such entitlement to receive a greater payment results from a Change in
Law that occurs after the Participant acquired the applicable participation.
Each Lender that sells a participation agrees, at the Administrative Borrower’s
request and expense, to use reasonable efforts to cooperate with the Borrowers
to effectuate the provisions of Section 3.6 hereof with respect to any
Participant. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.4 hereof as though it were a Lender;
provided that such Participant agrees to be subject to Section 9.5 hereof as
though it were a Lender. Each Lender that sells a participation shall, acting
solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a
register on which it enters the name and
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address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in the Loans or other obligations under the Loan
Documents (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant
Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
Section 11.10. Defaulting Lenders.
(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of Required Lenders. Any amendment,
waiver or consent requiring the consent of all the Lenders or each affected
Lender that by its terms effects any Defaulting Lender more adversely than the
other affected Lenders shall require the consent of such Defaulting Lender.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article IX hereof or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 9.5 hereof shall be applied at such time
or times as may be determined by the Administrative Agent as follows: (A) first,
to the payment of amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; (B) second, to the payment on a pro rata basis of any amounts
owing by such Defaulting Lender to the Issuing Lender hereunder; (C) third, to
Cash Collateralize the Issuing Lender’s Fronting Exposure with respect to such
Defaulting Lender in accordance with Section 2.11 hereof; (D) fourth, as the
Administrative Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Loan in respect of which such Defaulting Lender
has failed to fund its portion thereof as required by this Agreement, as
determined by the
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Administrative Agent; (E) fifth, if so determined by the Administrative Agent
and the Administrative Borrower, to be held in a deposit account and released
pro rata in order to (1) satisfy such Defaulting Lender’s potential future
funding obligations with respect to Loans under this Agreement, and (2) Cash
Collateralize the Issuing Lender’s future Fronting Exposure with respect to such
Defaulting Lender with respect to future Letters of Credit issued under this
Agreement, in accordance with Section 2.11 hereof; (F) sixth, to the payment of
any amounts owing to the Lenders or the Issuing Lender as a result of any
judgment of a court of competent jurisdiction obtained by any Lender or the
Issuing Lender against such Defaulting Lender as a result of such Defaulting
Lender’s breach of its obligations under this Agreement; (G) seventh, so long as
no Default or Event of Default exists, to the payment of any amounts owing to
the Borrowers as a result of any judgment of a court of competent jurisdiction
obtained by the Borrowers against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement; and
(H) eighth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that, if (y) such payment is a payment of the
principal amount of any Loans or any Letters of Credit in respect of which such
Defaulting Lender has not fully funded its appropriate share, and (z) such Loans
were made or reimbursement of any payment on any Letters of Credit were made or
the related Letters of Credit were issued at a time when the conditions set
forth in Section 4.1 hereof were satisfied or waived, such payment shall be
applied solely to pay the Loans of, and the Letter of Credit Exposure owed to,
all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or Letter of Credit Exposure owed to, such Defaulting
Lender until such time as all Loans and funded and unfunded participations in
the Letter of Credit Exposure are held by the Lenders pro rata in accordance
with the Commitment under the applicable facility without giving effect to
Section 11.10(a)(iv) hereof. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender or to post Cash Collateral pursuant to this
Section 11.10(a)(ii) hereof shall be deemed paid to and redirected by such
Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any commitment fee
pursuant to Section 2.7(a) hereof for any period during which that Lender is a
Defaulting Lender (and the Borrowers shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).
(B) Each Defaulting Lender shall be entitled to receive letter of credit fees,
as set forth in Section 2.2(b) hereof for any period during which that Lender is
a Defaulting Lender only to the extent allocable to its Commitment Percentage of
the stated amount of Letters of Credit for which it has provided Cash Collateral
pursuant to Section 2.12 hereof.
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(C) With respect to any fee not required to be paid to any Defaulting Lender
pursuant to subpart (A) or (B) above, the Administrative Borrower shall (1) pay
to each Non-Defaulting Lender that portion of any such fee otherwise payable to
such Defaulting Lender with respect to such Defaulting Lender’s participation in
the Letter of Credit Exposure that has been reallocated to such Non-Defaulting
Lender pursuant to subpart (iv) below, (2) pay to the Issuing Lender, as
applicable, the amount of any such fee otherwise payable to such Defaulting
Lender to the extent allocable to the Issuing Lender’s Fronting Exposure to such
Defaulting Lender, and (3) not be required to pay the remaining amount of any
such fee.
(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part
of such Defaulting Lender’s participation in the Letter of Credit Exposure shall
be reallocated among the Non-Defaulting Lenders in accordance with their
respective Commitment Percentages with respect thereto (calculated without
regard to such Defaulting Lender’s Commitment) but only to the extent that such
reallocation does not cause the aggregate Revolving Credit Exposure of any
Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment
Percentage with respect to the Revolving Credit Commitment. No reallocation
hereunder shall constitute a waiver or release of any claim of any party
hereunder against a Defaulting Lender arising from that Lender having become a
Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of
such Non-Defaulting Lender’s increased exposure following such reallocation.
(b) Defaulting Lender Cure. If the Administrative Borrower, the Administrative
Agent and the Issuing Lender agree in writing that a Lender is no longer a
Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any
conditions set forth therein (which may include arrangements with respect to any
Cash Collateral), such Lender will, to the extent applicable, purchase at par
that portion of outstanding Loans of the other Lenders or take such other
actions as the Administrative Agent may determine to be reasonably necessary to
cause the Loans and funded and unfunded participations in Letters of Credit to
be held pro rata by the Lenders in accordance with the Commitments under the
applicable facility (without giving effect to Section 11.10(a)(iv) hereof),
whereupon such Lender will cease to be a Defaulting Lender; provided that (i) no
adjustments will be made retroactively with respect to fees accrued or payments
made by or on behalf of the Borrowers while that Lender was a Defaulting Lender,
and (ii) except to the extent otherwise expressly agreed by the affected
parties, no change hereunder from Defaulting Lender to Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender.
(c) New Letters of Credit. So long as any Lender is a Defaulting Lender, the
Issuing Lender shall not be required to issue, extend, renew or increase any
Letter of Credit unless it is satisfied that it will have no Fronting Exposure
after giving effect thereto.
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(d) Replacement of Defaulting Lenders. Each Lender agrees that, during the time
in which any Lender is a Defaulting Lender, the Administrative Agent shall have
the right (and the Administrative Agent shall, if requested by the
Administrative Borrower), at the sole expense of the Borrowers, upon notice to
such Defaulting Lender and the Administrative Borrower, to require that such
Defaulting Lender assign and delegate, without recourse (in accordance with the
restrictions contained in Section 11.9 hereof), all of its interests, rights and
obligations under this Agreement to an Eligible Assignee, approved by the
Administrative Borrower (unless an Event of Default shall exist) and the
Administrative Agent, that shall assume such obligations.
Section 11.11. Patriot Act Notice. Each Lender, and the Administrative Agent
(for itself and not on behalf of any other party), hereby notifies the Credit
Parties that, pursuant to the requirements of the Patriot Act, such Lender and
the Administrative Agent are required to obtain, verify and record information
that identifies the Credit Parties, which information includes the name and
address of each of the Credit Parties and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify the Credit
Parties in accordance with the Patriot Act. The Administrative Borrower shall
provide, to the extent commercially reasonable, such information and take such
actions as are reasonably requested by the Administrative Agent or a Lender in
order to assist the Administrative Agent or such Lender in maintaining
compliance with the Patriot Act.
Section 11.12. Severability of Provisions; Captions; Attachments. Any provision
of this Agreement that shall be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.
Section 11.13. Investment Purpose. Each of the Lenders represents and warrants
to the Borrowers that such Lender is entering into this Agreement with the
present intention of acquiring any Note issued pursuant hereto (or, if there is
no Note, the interest as reflected on the books and records of the
Administrative Agent) for investment purposes only and not for the purpose of
distribution or resale, it being understood, however, that each Lender shall at
all times retain full control over the disposition of its assets.
Section 11.14. Entire Agreement. This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions mentioned
herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof
(except with respect to any provisions of the Administrative Agent Fee Letter or
any commitment letter and fee letter between the Borrowers and KeyBank that by
their terms survive the termination of such agreements, in each case, which
shall remain in full force and effect after the Closing Date).
Section 11.15. Confidentiality. The Administrative Agent and each Lender shall
hold all Confidential Information in accordance with the customary procedures of
the Administrative Agent or such Lender for handling confidential information of
this nature, and in accordance with safe and sound banking practices.
Notwithstanding the foregoing, the Administrative Agent
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or any Lender may in any event make disclosures of, and furnish copies of
Confidential Information (a) to another agent under this Agreement or another
Lender; (b) when reasonably required by any bona fide transferee or participant
in connection with the contemplated transfer of any Loans or Commitment or
participation therein (provided that each such prospective transferee or
participant shall have an agreement for the benefit of the Borrowers with such
prospective transferor Lender or participant containing substantially similar
provisions to those contained in this Section 11.15); (c) to the parent
corporation or other Affiliates of the Administrative Agent or such Lender, and
to their respective auditors, accountants and attorneys; and (d) as required or
requested by any Governmental Authority or representative thereof, or pursuant
to legal process, provided, that, unless specifically prohibited by applicable
Law or court order, the Administrative Agent or such Lender, as applicable,
shall notify the chief financial officer of the Administrative Borrower of any
request by any Governmental Authority or representative thereof (other than any
such request in connection with an examination of the financial condition of the
Administrative Agent or such Lender by such Governmental Authority), and of any
other request pursuant to legal process, for disclosure of any such non-public
information prior to disclosure of such Confidential Information. In no event
shall the Administrative Agent or any Lender be obligated or required to return
any materials furnished by or on behalf of any Company. Each Borrower hereby
agrees that the failure of the Administrative Agent or any Lender to comply with
the provisions of this Section 11.15 shall not relieve any Borrower of any of
the obligations to the Administrative Agent and the Lenders under this Agreement
and the other Loan Documents.
Section 11.16. Limitations on Liability of the Issuing Lender. The Borrowers
assume all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letters of Credit. Neither
the Issuing Lender nor any of its officers or directors shall be liable or
responsible for (a) the use that may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Lender
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
account party on such Letter of Credit shall have a claim against the Issuing
Lender, and the Issuing Lender shall be liable to such account party, to the
extent of any direct, but not consequential, damages suffered by such account
party that such account party proves were caused by (i) the Issuing Lender’s
willful misconduct or gross negligence (as determined by a final judgment of a
court of competent jurisdiction) in determining whether documents presented
under a Letter of Credit comply with the terms of such Letter of Credit, or
(ii) the Issuing Lender’s willful failure to make lawful payment under any
Letter of Credit after the presentation to it of documentation strictly
complying with the terms and conditions of such Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Lender may accept documents
that appear on their face to be in order, without responsibility for further
investigation.
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Section 11.17. General Limitation of Liability. No claim may be made by or
against any party hereto or the affiliates, directors, officers, employees,
attorneys or agents of any of them for any damages other than actual
compensatory damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this Agreement or any of the other Loan Documents, or any act, omission or
event occurring in connection therewith; the parties hereto, to the fullest
extent permitted under applicable Law, waive, release and agree not to sue or
counterclaim upon any such claim for any special, indirect, consequential or
punitive damages, whether or not accrued and whether or not known or suspected
to exist in their favor and regardless of whether advised of the likelihood of
such loss of damage.
Section 11.18. No Duty. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such Person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Loan Documents shall
have the right to act exclusively in the interest of the Administrative Agent or
such Lender, as the case may be, and shall have no duty of disclosure, duty of
loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrowers, any other Companies, or any other Person, with
respect to any matters within the scope of such representation or related to
their activities in connection with such representation. Each Borrower agrees,
on behalf of itself and its Subsidiaries, not to assert any claim or
counterclaim against any such persons with regard to such matters, all such
claims and counterclaims, now existing or hereafter arising, whether known or
unknown, foreseen or unforeseeable, being hereby waived, released and forever
discharged.
Section 11.19. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
Section 11.20. Acknowledgement and Consent to Bail-In of Affected Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any Affected Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the Write-Down and Conversion Powers of the
applicable Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable
Resolution Authority to any such liabilities arising hereunder that may be
payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if
applicable:
(i) a reduction in full or in part or cancellation of any such liability;
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(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such Affected Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of the applicable Resolution
Authority.
Section 11.21. Certain ERISA Matters
(a) Each Lender (x) represents and warrants, as of the date such Person became a
Lender party hereto, to, and (y) covenants, from the date such Person became a
Lender party hereto to the date such Person ceases being a Lender party hereto,
for the benefit of, the Administrative Agent and not, for the avoidance of
doubt, to or for the benefit of the Borrowers or any other Credit Party, that at
least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42)
of ERISA or otherwise) of one or more Benefit Plans with respect to such
Lender’s entrance into, participation in, administration of and performance of
the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14
(a class exemption for certain transactions determined by independent qualified
professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable with respect
to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional
Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender
to enter into, participate in, administer and perform the Loans, the Letters of
Credit, the Commitments and this Agreement, (C) the entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement satisfies the requirements of sub-sections
(b) through (g) of Part I of PTE 8414 and (D) to the best knowledge of such
Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied
with respect to such Lender’s entrance into, participation in, administration of
and performance of the Loans, the Letters of Credit, the Commitments and this
Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.
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(b) In addition, unless either (1) sub-clause (i) in the immediately preceding
clause (a) is true with respect to a Lender or (2) a Lender has provided another
representation, warranty and covenant in accordance with sub-clause (iv) in the
immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and
(y) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent and not, for the avoidance of doubt, to or for the benefit
of the Borrowers or any other Credit Party, that the Administrative Agent is not
a fiduciary with respect to the assets of such Lender involved in such Lender’s
entrance into, participation in, administration of and performance of the Loans,
the Letters of Credit, the Commitments and this Agreement (including in
connection with the reservation or exercise of any rights by the Administrative
Agent under this Agreement, any Loan Document or any documents related hereto or
thereto).
Section 11.22. Acknowledgement Regarding Any Supported QFCs. To the extent that
the Loan Documents provide support, through a guarantee or otherwise, for Hedge
Agreements or any other agreement or instrument that is a QFC (such support,
“QFC Credit Support” and each such QFC a “Supported QFC”), the parties
acknowledge and agree as follows with respect to the resolution power of the
Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act
and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(together with the regulations promulgated thereunder, the “U.S. Special
Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support
(with the provisions below applicable notwithstanding that the Loan Documents
and any Supported QFC may in fact be stated to be governed by the laws of the
State of New York and/or of the United States or any other state of the United
States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a
“Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution
Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United
States or a state of the United States. In the event a Covered Party or a BHC
Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under the Loan Documents that might
otherwise apply to such Supported QFC or any QFC Credit Support that may be
exercised against such Covered Party are permitted to be exercised to no greater
extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United States. Without
limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a Defaulting Lender shall in no event
affect the rights of any Covered Party with respect to a Supported QFC or any
QFC Credit Support.
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Section 11.23. Governing Law; Submission to Jurisdiction.
(a) Governing Law. This Agreement and each of the Notes shall be governed by and
construed in accordance with the laws of the State of New York and the
respective rights and obligations of the Borrowers, the Administrative Agent,
and the Lenders shall be governed by New York law.
(b) Submission to Jurisdiction. Each Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of any New York state or federal court sitting in New
York County, New York, over any action or proceeding arising out of or relating
to this Agreement and the Obligations and each Borrower hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York state or federal court. Each Borrower, on behalf of
itself and its Subsidiaries, hereby irrevocably waives, to the fullest extent
permitted by Law, any objection it may now or hereafter have to the laying of
venue in any action or proceeding in any such court as well as any right it may
now or hereafter have to remove such action or proceeding, once commenced, to
another court on the grounds of FORUM NON CONVENIENS or otherwise. Each Borrower
agrees that a final, non-appealable judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
[Remainder of page left intentionally blank]
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JURY TRIAL WAIVER. TO THE EXTENT PERMITTED BY LAW, EACH BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE LENDERS, OR ANY THEREOF, ARISING
OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the parties have executed and delivered this Credit and
Security Agreement as of the date first set forth above.
Address: RAPID7, INC. By:
/s/ Jeffrey Kalowski
Jeffrey Kalowski Chief Financial Officer Address:
RAPID7 LLC By: Rapid7, Inc., its sole member By:
/s/ Jeffrey Kalowski
Jeffrey Kalowski Chief Financial Officer
Address:
KEYBANK NATIONAL ASSOCIATION
as the Administrative Agent, the Issuing
Lender and as a Lender
By:
/s/ Thomas A. Crandell
Thomas A. Crandell Senior Vice President
Signature Page to
Credit and Security Agreement
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SCHEDULE 1
LENDERS REVOLVING CREDIT
COMMITMENT
PERCENTAGE REVOLVING
CREDIT
COMMITMENT
AMOUNT MAXIMUM AMOUNT
KeyBank National Association
100 % $ 30,000,000 $ 30,000,000
Total Commitment Amount
100 % $ 30,000,000 $ 30,000,000
S-1
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EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
$___________ ________, 20__
FOR VALUE RECEIVED, the undersigned, RAPID7, INC., a Delaware corporation and
RAPID7 LLC, a Delaware limited liability company (collectively, the “Borrowers”,
and individually, each a “Borrower”), jointly and severally, promises to pay, on
the last day of the Commitment Period, as defined in the Credit Agreement (as
hereinafter defined), to the order of _________ (“Lender”) at the main office of
KEYBANK NATIONAL ASSOCIATION, as the Administrative Agent, as hereinafter
defined, 127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of
AND 00/100
DOLLARS
or the aggregate unpaid principal amount of all Revolving Loans, as defined in
the Credit Agreement, made by Lender to the Borrowers pursuant to Section 2.2(a)
of the Credit Agreement, whichever is less, in lawful money of the United
States.
As used herein, “Credit Agreement” means the Credit and Security Agreement dated
April 23, 2020, among the Borrowers, the Lenders, as defined therein, and
KeyBank National Association, as the administrative agent for the Lenders (the
“Administrative Agent”), as the same may from time to time be amended, restated
or otherwise modified. Each capitalized term used herein that is defined in the
Credit Agreement and not otherwise defined herein shall have the meaning
ascribed to it in the Credit Agreement.
The Borrowers also promise to pay interest on the unpaid principal amount of
each Revolving Loan from time to time outstanding, from the date of such
Revolving Loan until the payment in full thereof, at the rates per annum that
shall be determined in accordance with the provisions of Section 2.3(a) of the
Credit Agreement. Such interest shall be payable on each date provided for in
such Section 2.3(a); provided that interest on any principal portion that is not
paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, interest owing thereon and payments of
principal and interest of any thereof, shall be shown on the records of Lender
by such method as Lender may generally employ; provided that failure to make any
such entry shall in no way detract from the obligations of the Borrowers under
this Note or the Credit Agreement.
If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, pursuant to the terms of the Credit
Agreement, until paid, at a rate per annum equal to the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.
E-1
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This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement and is entitled to the benefits thereof. Reference is made to the
Credit Agreement for a description of the right of the undersigned to anticipate
payments hereof, the right of the holder hereof to declare this Note due prior
to its stated maturity, and other terms and conditions upon which this Note is
issued.
Except as expressly provided in the Credit Agreement, the Borrowers expressly
waive presentment, demand, protest and notice of any kind. This Note shall be
governed by and construed in accordance with the laws of the State of New York.
JURY TRIAL WAIVER. EACH BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWERS, THE ADMINISTRATIVE AGENT
AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
RAPID7, INC.
By:
Name:
Title:
RAPID7 LLC
By:
Name:
Title:
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EXHIBIT B
FORM OF
NOTICE OF LOAN
_______________________, 20____
KeyBank National Association, as the Administrative Agent
127 Public Square
Cleveland, Ohio 44114
Attention: Institutional Bank
Ladies and Gentlemen:
The undersigned, RAPID7, INC., a Delaware corporation (the “Administrative
Borrower”, and together with Rapid7 LLC, a Delaware limited liability company,
collectively, the “Borrowers”, and individually, each a “Borrower”), refers to
the Credit and Security Agreement dated April 23, 2020, (as the same may from
time to time be amended, restated or otherwise modified, the “Credit Agreement”,
the terms defined therein being used herein as therein defined), among the
Borrowers, the Lenders, as defined in the Credit Agreement, and KEYBANK NATIONAL
ASSOCIATION, as the administrative agent for the Lenders (the “Administrative
Agent”), and hereby gives you notice, pursuant to Section 2.5 of the Credit
Agreement that the Borrowers hereby request a Loan (the “Proposed Loan”), and in
connection therewith sets forth below the information relating to the Proposed
Loan as required by Section 2.5 of the Credit Agreement:
(a)
The Borrower requesting the Proposed Loan is _______________.
(b)
The Business Day of the Proposed Loan is __________, 20__.
(c)
The amount of the Proposed Loan is $_______________.
(d)
The Proposed Loan is to be a Base Rate Loan ____ / Eurodollar Loan ___.
(Check one.)
(e)
If the Proposed Loan is a Eurodollar Loan, the Interest Period requested is one
month ___, two months ___, three months ___, six months ____. (Check one.)
The undersigned hereby certifies on behalf of the Borrowers that the following
statements are true on the date hereof, and will be true on the date of the
Proposed Loan:
(i) the representations and warranties contained in each Loan Document are true
and correct in all material respects as if made on and as of the date hereof,
except to the extent that any thereof expressly relate to an earlier date,
before and after giving effect to the Proposed Loan and the application of the
proceeds therefrom, as though made on and as of such date;
E-3
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(ii) no event has occurred and is continuing, or would result from such Proposed
Loan, or the application of proceeds therefrom, that constitutes a Default or
Event of Default; and
(iii) the conditions set forth in Section 2.5 and Article IV of the Credit
Agreement have been satisfied.
RAPID7, INC.
By:
Name:
Title:
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EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
For Fiscal Quarter ended ____________________
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly appointed [Chief Executive Officer] [President] or [Chief
Financial Officer] of RAPID7, INC., a Delaware corporation (the “Administrative
Borrower”, and together with Rapid7 LLC, a Delaware limited liability company,
collectively, the “Borrowers”, and individually, each a “Borrower”);
(2) I am familiar with the terms of that certain Credit and Security Agreement
dated April 23, 2020, among the Borrowers, the lenders party thereto (together
with their respective successors and permitted assigns, collectively, the
“Lenders”), as defined in the Credit Agreement, and KEYBANK NATIONAL
ASSOCIATION, as the Administrative Agent (as the same may from time to time be
amended, restated or otherwise modified, the “Credit Agreement”, the terms
defined therein being used herein as therein defined), and the terms of the
other Loan Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and condition of
the Companies during the accounting period covered by the attached financial
statements;
(3) The review described in paragraph (2) above did not disclose, and I have no
knowledge of, the existence of any condition or event that constitutes or
constituted a Default or Event of Default, at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate;
(4) The representations and warranties made by the Borrowers contained in each
Loan Document are true and correct in all material respects as though made on
and as of the date hereof (except for those representations and warranties that
relate to a specific date) except as noted below; and
(5) Set forth on Attachment I hereto are calculations of the financial covenants
set forth in Section 5.7 of the Credit Agreement, which calculations show
compliance with the terms thereof.
Exceptions:
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, I have signed this certificate the ___ day of _________,
20___.
RAPID7, INC.
By:
Name:
Title:
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EXHIBIT D
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this “Assignment Agreement”) is dated
as of the Effective Date set forth below and is entered into by and between
[the][each]1 Assignor identified in Section 1 below ([the][each, an] “Assignor”)
and [the][each] 2 Assignee identified in Section 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]3 hereunder are several and not joint.]4
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by [the][each]
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment Agreement as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (a) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the respective facilities identified below (including without limitation
any letters of credit, guaranties, and swing loans included in such facilities),
and (b) to the extent permitted to be assigned under applicable Law, all claims,
suits, causes of action and any other right of [the Assignor (in its capacity as
a Lender)][the respective Assignors (in their respective capacities as Lenders)]
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
subpart (a) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to subparts (a) and (b) above being
referred to herein collectively as [the][an] “Assigned Interest”). Each such
sale and assignment is without recourse to [the][any] Assignor and, except as
expressly provided in this Assignment Agreement, without representation or
warranty by [the][any] Assignor.
1
For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.
2
For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
3
Select as appropriate.
4
Include bracketed language if there are either multiple Assignors or multiple
Assignees.
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1. Assignor[s]:
2. Assignee[s]:
[Assignee is an [Affiliate][Approved Fund] of [identify Lender]] 3.
Borrowers: Rapid7, Inc., a Delaware corporation Rapid7 LLC, a
Delaware limited liability corporation 4. Administrative Agent: KeyBank
National Association, as the administrative agent under the Credit Agreement 5.
Credit Agreement: The $30,000,000 Credit and Security Agreement dated as
of April 23, 2020 among the Borrowers, the Lenders parties thereto, and the
Administrative Agent. 6. Assigned Interest[s]:
Assignor[s]
Assignee[s] Commitment
Assigned Aggregate
Amount of
Commitment/Loans
for all
Lenders Amount of
Commitment/Loans
Assigned Percentage
Assigned of
Commitment/
Loans5 CUSIP
Number $ $ % $ $ %
$ $ %
[7. Trade Date: ______________]6
8. Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]
[Remainder of page intentionally left blank.]
5
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
6
To be completed if the Assignor(s) and the Assignee(s) intend that the minimum
assignment amount is to be determined as of the Trade Date.
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The terms set forth in this Assignment Agreement are hereby agreed to:
ASSIGNOR[S]
[NAME OF ASSIGNOR]
By:
Title: [NAME OF ASSIGNOR] By:
Title:
ASSIGNEE[S]
[NAME OF ASSIGNEE]
By:
Title: [NAME OF ASSIGNEE] By:
Title:
[Consented to and]7 Accepted: KEYBANK NATIONAL ASSOCIATION, as Administrative
Agent By:
Title: [Consented to:]8 RAPID7, INC. By:
Title: RAPID7 LLC By:
Title:
7
To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.
8
To be added only if the consent of the Borrowers and/or other parties is
required by the terms of the Credit Agreement.
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ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Representations and Warranties.
1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii)
[the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim, (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment Agreement and to
consummate the transactions contemplated hereby, and (iv) it is not a Defaulting
Lender; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
collateral thereunder, (iii) the financial condition of the Borrower[s], any of
[its][their] Subsidiaries or Affiliates or any other Person obligated in respect
of any Loan Document, or (iv) the performance or observance by the Borrower[s],
any of [its][their] Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.
1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment Agreement and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 11.9 of the Credit
Agreement (subject to such consents, if any, as may be required thereunder),
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of [the][the
relevant] Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it is sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the Person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements delivered pursuant to
Section 5.3 thereof, as applicable, and such other documents and information as
it deems appropriate to make its own credit analysis and decision to enter into
this Assignment Agreement and to purchase [the][such] Assigned Interest, (vi) it
has, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment Agreement and to purchase [the][such] Assigned Interest, and (vii) if
it is a Foreign Lender, attached to the Assignment Agreement is any
documentation required to be delivered by it pursuant to the terms of the Credit
Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, [the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.
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2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.9 Notwithstanding the foregoing, the Administrative Agent
shall make all payments of interest, fees or other amounts paid or payable in
kind from and after the Effective Date to [the][the relevant] Assignee.
3. General Provisions. This Assignment Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment Agreement may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment Agreement by
facsimile or electronic communication shall be effective as delivery of a
manually executed counterpart of this Assignment Agreement. This Assignment
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York.
9
The Administrative Agent should consider whether this method conforms to its
systems. In some circumstances, the following alternative language may be
appropriate:
“From and after the Effective Date, the Administrative Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignee
whether such amounts have accrued prior to, on or after the Effective Date. The
Assignor[s] and the Assignee[s] shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.”
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EXHIBIT E-1
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to that certain Credit and Security Agreement dated
April 23, 2020 (the “Credit Agreement”), among Rapid7, Inc., a Delaware
corporation and Rapid7 LLC, a Delaware limited liability company (collectively,
the “Borrowers”, and individually, each a “Borrower”), the Lenders, as defined
therein, and KeyBank National Association, as the administrative agent for the
Lenders (the “Administrative Agent”).
Pursuant to the provisions of Section 3.2 of the Credit Agreement, the
undersigned hereby certifies that (a) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (b) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%)
shareholder of any of the Borrowers within the meaning of Section 871(h)(3)(B)
of the Code and (d) it is not a controlled foreign corporation related to any of
the Borrowers as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowers with a
certificate of its non-U.S. Person status on IRS Form W-8BEN-E (or IRS Form
W-8BEN, if applicable). By executing this certificate, the undersigned agrees
that (i) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Borrowers and the Administrative Agent,
and (ii) the undersigned shall have at all times furnished the Borrowers and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER] By:
Name: Title:
Date: ________ __, 20[ ]
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EXHIBIT E-2
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to that certain Credit and Security Agreement dated
April 23, 2020 (the “Credit Agreement”), among Rapid7, Inc., a Delaware
corporation and Rapid7 LLC, a Delaware limited liability company (collectively,
the “Borrowers”, and individually, each a “Borrower”), the Lenders, as defined
therein, and KeyBank National Association, as the administrative agent for the
Lenders (the “Administrative Agent”).
Pursuant to the provisions of Section 3.2 of the Credit Agreement, the
undersigned hereby certifies that (a) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(c) it is not a ten percent (10%) shareholder of any of the Borrowers within the
meaning of Section 871(h)(3)(B) of the Code, and (d) it is not a controlled
foreign corporation related to any of the Borrowers as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN-E (or IRS Form W-8BEN, if applicable).
By executing this certificate, the undersigned agrees that (i) if the
information provided on this certificate changes, the undersigned shall promptly
so inform such Lender in writing, and (ii) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT] By:
Name: Title:
Date: ________ __, 20[ ]
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EXHIBIT E-3
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to that certain Credit and Security Agreement dated
April 23, 2020 (the “Credit Agreement”), among Rapid7, Inc., a Delaware
corporation and Rapid7 LLC, a Delaware limited liability company (collectively,
the “Borrowers”, and individually, each a “Borrower”), the Lenders, as defined
therein, and KeyBank National Association, as the administrative agent for the
Lenders (the “Administrative Agent”).
Pursuant to the provisions of Section 3.2 of the Credit Agreement, the
undersigned hereby certifies that (a) it is the sole record owner of the
participation in respect of which it is providing this certificate, (b) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (c) with respect such participation, neither the undersigned nor
any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its
direct or indirect partners/members is a ten percent (10%) shareholder of any of
the Borrowers within the meaning of Section 871(h)(3)(B) of the Code and
(e) none of its direct or indirect partners/members is a controlled foreign
corporation related to any of the Borrowers as described in Section 881(c)(3)(C)
of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E
or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from
each of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(A) if the information provided on this certificate changes, the undersigned
shall promptly so inform such Lender and (B) the undersigned shall have at all
times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT] By:
Name: Title:
Date: ________ __, 20[ ]
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EXHIBIT E-4
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to that certain Credit and Security Agreement dated
April 23, 2020 (the “Credit Agreement”), among Rapid7, Inc., a Delaware
corporation and Rapid7 LLC, a Delaware limited liability company (collectively,
the “Borrowers”, and individually, each a “Borrower”), the Lenders, as defined
therein, and KeyBank National Association, as the administrative agent for the
Lenders (the “Administrative Agent”).
Pursuant to the provisions of Section 3.2 of the Credit Agreement, the
undersigned hereby certifies that (a) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (b) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (c) with respect to the extension of credit pursuant to the Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct
or indirect partners/members is a ten percent (10%) shareholder of any of the
Borrowers within the meaning of Section 871(h)(3)(B) of the Code and (e) none of
its direct or indirect partners/members is a controlled foreign corporation
related to any of the Borrowers as described in Section 881(c)(3)(C) of the
Code.
The undersigned has furnished the Administrative Agent and the Borrowers with
IRS Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN-E or IRS Form W-8BEN, as applicable, or (ii) an IRS Form W-8IMY
accompanied by an IRS Form W-8BEN-E or IRS Form W-8BEN, as applicable, from each
of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(A) if the information provided on this certificate changes, the undersigned
shall promptly so inform the Borrowers and the Administrative Agent, and (B) the
undersigned shall have at all times furnished the Borrowers and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER] By:
Name: Title:
Date: ________ __, 20[ ]
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Exhibit 10.4
Directorship Agreement
Directorship Agreement
By and between
Ittella’s Chef LLC, a company incorporated and existing under the laws of
California, USA, with offices in 6305 Alondra Blvd, Paramount, CA 90723
(“Ittella USA”), duly represented by its Chief Executive Officer Mr. Salvatore
Galletti
and
Giuseppe Bardari, born in Vibo Valentia on May 6th,1976, Fiscal Code
BRDGPP76E06F537D (“Director”)
Ittella USA and the Director, collectively, the “Parties”
Tra
Ittella’s Chef LLC, società costituita ed esistente ai sensi della legge della
California, con sede in 6305 Alondra Blvd, Paramount, CA 90723 (“Ittella USA”),
rappresentata dal proprio Chief Executive Officer Sig. Salvatore Galletti
and
Giuseppe Bardari, nato a Vibo Valentia, il 6 maggio 1976, C.F. BRDGPP76E06F537D
(l’“Amministratore”)
Ittella USA e l’Amministratore, congiuntamente, le “Parti”
RECITALS:
A. Ittella Italy s.r.l., a company incorporated and existing under the laws
of Italy, with registered offices in Prossedi (Latina, Italy), via STRADA DELLA
CASAINA SNC, cap 04010, capital of Euro 1.100.000,00, Italian tax code
03393170794, registration with the Companies register of Latina (Italy) no. REA
LT 212808 (“Ittella Italy” or the “Company) is a company active in the food
industry of frozen products, primarily for the U.S. market.
B. The Director has experience in the above mentioned business industry,
having also served as the sole director of Ittella Italy until the date hereof.
C. On the date hereof, among the others, Ittella USA’s indirect parent
company, Myjojo Inc. (“Myjojo”) executed a reverse triangular merger governed
under the laws of Delaware pursuant to which Myjojo merged with and into a fully
owned subsidiary of Forum Merger II Corporation, a company incorporated and
existing under the laws of Delaware (“Forum”) (the “Merger”). As result of the
Merger, Forum holds – indirectly – 100% of the equity interests of Ittella USA,
which owns, in turn, 100% of the equity interests of the Company.
D. In the context and pursuant to the Merger, on the date hereof (i) Ittella
Italy’s quota-holders meeting has convened and Ittella USA, considering the
experience and professional skills of the Director, voted in favour of the
appointment of the Director as sole director of Ittella Italy (the “Office”)
until the term indicated therein, and (ii) the Director accepted such
appointment and all its relevant terms and conditions.
E. By entering into this agreement (the “Agreement”), the Parties set forth
and further specify the terms and conditions governing the Office.
Premesse:
A. Ittella Italy s.r.l., società costituita ed esistente ai sensi della legge
italiana, con sede legale in Prossedi (Latina), via STRADA DELLA CASAINA SNC,
cap 04010, capitale sociale Euro 1.100.000,00, codice fiscale 03393170794 e
Numero REA LT 212808 (“Ittella Italy” o la “Società”) è una società attiva nel
settore dell’industria alimentare di prodotti surgelati, principalmente
destinati al mercato statunitense.
B. L’Amministratore ha esperienza nel settore sopra indicato, avendo egli
altresì ricoperto la carica di amministratore unico di Ittella Italy sino alla
data odierna.
C. In data odierna, inter alia, il socio indiretto di Ittella USA, Myjojo Inc.
(“Myjojo”) ha eseguito una fusione di tipo “reverse triangular merger”, ai sensi
delle leggi dello stato del Delaware a seguito della quale Myjojo si è fusa per
incorporazione con (e in) una società interamente posseduta da Forum Merger II
Corporation, società costituita ed esistente ai sensi della legge del Delaware
(“Forum”) (la “Fusione”). Quale risultato della Fusione, Forum è proprietaria –
indirettamente – del 100% delle quota rappresentative del capitale sociale di
Ittella USA la quale, a sua volta, è proprietaria di una quota rappresentativa
del 100% del capitale sociale della Società.
D. Nel contesto e in esecuzione della Fusione, in data odierna (i) l’assemblea
dei soci della Società si è riunita e Ittella USA, quale socio della Società,
tenuto conto dell’esperienza e della competenza dell’Amministratore, ha espresso
il proprio voto favorevole alla nomina dell’Amministratore quale amministratore
unico della Società (l’“Incarico”) sino al termine ivi indicato, e (ii)
l’Amministratore ha accettato tale incarico e i relativi termini e condizioni.
E. Con il presente accordo (l’”Accordo”) le Parti intendono disciplinare e
meglio specificare i aggiuntivi termini e condizioni dell’Incarico.
now, therefore, the Parties agree as follows: Tutto ciò premesso le Parti
stipulano e convengono quanto segue:
1. Recitals and definitions
1. Premesse e definizioni
1.1 The recitals are an essential part of this Agreement.
1.2 As used in this Agreement and in addition to any other terms expressly
defined herein, the following terms shall have the meanings indicated below:
(i) “Business” means any business that is competitive with the business of the
Company and/or any other company of the Group as of, alternatively, (A) the date
of this Agreement, or (B) the 12 (twelve) months prior to the date of this
Agreement, including any activities or business (i) engaged in the production,
marketing or distribution of (a) plant-based meals or dishes, (b) value-added
fruit and vegetables, (c) plant- and/or dairy-based pizza toppings, (d)
plant-based novelty food products, or (ii) that offers any product or service in
the same line of business or product or service category as any product or
service offered by the Company and/or the Group or in development by the Company
and/or the Group;
(ii) “Cause” means: (i) the breach by the Director of any of the obligations
under articles 6, 7, and 8 of this Agreement, and (ii) any other events
qualifying as “giusta causa” under Italian law;
(iii) “Competitor” means any Third Party who or which is engaged in a
Business;
(iv) “Confidential Information” mean, in relation to the Company and/or the
Group, any news, data, information, documents, research, charts, inventions,
products, product sheets, details of the product, client lists, strategies,
materials, research and results, technical knowledge, commercial, organizational
concerning the business, the organization and structure of the Company and/or
the Group, the remuneration, incentive and personnel management policies, as
well as the projects and the industrial, commercial, sales, business, marketing,
pricing strategies, price list and discounts, even intercompany, special
conditions of supply, list of suppliers and distributors, non-public financial
information, including, but always and only by way of example, budget proposals,
budget and management accounts, business plans and strategic plans, proposals
for capital investment and, more generally, any other information, having a
confidential and/or secret nature, of which the Director comes to know by reason
of the Office;
(v) “Group” means, alone or collectively, the Company, Ittella USA, Forum, and
any person or entity whatsoever existing or organized which is, directly and/or
indirectly, a parent, affiliate, related, controlled, or under the common
control of, one or more of the aforementioned entities;
(vi) “Intellectual Property” means any concepts, formulas, discoveries,
inventions or utility models (whether or not patentable or patented), plant
varieties; processes, procedures, developments and relevant improvements; data
of any nature; registered and unregistered designs and models; texts, plans,
drawings; registered and unregistered trademarks and any other distinctive
signs; pictures; photographs; databases; computer software; engineering project;
any other artistic, literary and howsoever creative works (including all related
preparatory and design materials) as well as any and all parts thereof; methods;
confidential information; know-how; trade and/or industrial secrets, even of
negative nature;
1.1 Le premesse costituiscono parte integrante e sostanziale dell’Accordo.
1.2 Ove utilizzati nel presente Accordo e in aggiunta alle ulteriori
definizioni ivi indicate, i seguenti termini hanno il significato a essi
attribuito qui di seguito:
(i) “Business” significa qualsiasi attività che si pone in concorrenza con il
settore in cui opera la Società o ogni altra entità del Gruppo,
alternativamente, (A) alla data del presente Accordo, ovvero (B) nel periodo di
12 (dodici) mesi antecedentemente a tale data, inclusa ogni attività o settore
(i) afferente la produzione, commercializzazione o distribuzione di (a) pasti a
base vegetale o piatti, (b) concentrati di frutta e verdura, (c) condimenti per
pizza con prodotti vegetali e /o caseari, (d) prodotti alimentari a base
vegetale, (ii) che offre qualsiasi prodotto o servizio nello stesso settore o
categoria di prodotti o servizi, nonché qualsiasi prodotto o servizio offerto
dalla Società e/o dal Gruppo o sviluppato e/o prodotto dalla Società e/o dal
Gruppo;
(ii) “Concorrente” significa ogni Terzo che operi nell’ambito del Business;
(iii) “Giusta Causa” significa (a) la violazione, da parte
dell’Amministratore, di una qualsiasi delle obbligazioni di cui agli articoli 6,
7 e 8 del presente Accordo, e (b) qualsiasi altro evento che integri una “giusta
causa” secondo la legge italiana.
(iv) “Gruppo” significa, da sole o congiuntamente, la Società, Ittella USA,
Forum e ogni altra persona o ente (in qualunque forma esistenti o costituiti)
che sia, direttamente o indirettamente, controllante, affiliata, collegata,
controllata da, o sotto il comune controllo di, una o più delle suddette
società;
(v) “Informazioni Confidenziali” significa, con riferimento alla Società e/o
al Gruppo, notizie, dati, informazioni, documenti, ricerche, tabelle,
invenzioni, prodotti, schede dei prodotti, dettagli di prodotto, elenchi dei
clienti, strategie, materiali, ricerca ed i relativi risultati, conoscenze
tecniche, commerciali, organizzative riguardanti l’attività, l’organizzazione e
la struttura della Società e/o del Gruppo, le politiche retributive, di
incentivazione e di gestione del personale, nonché i progetti e le strategie di
sviluppo industriale, commerciale, di vendita, di business, di marketing, di
pricing, il listino prezzi e sconti, anche intercompany, condizioni particolari
di fornitura, listino dei fornitori e dei distributori, informazioni finanziarie
non pubbliche, ivi incluse, sempre e solo in via esemplificativa, proposte di
budget, budget e conti di gestione, business plan e piani strategici, proposte
per investimenti di capitali e, più in generale, qualsiasi altra informazione,
avente natura confidenziale e/o segreta, di cui l’Amministratore venga a
conoscenza in forza dell’Incarico;
2
(vii) “Material Business Relationship” means any (x) customer, supplier,
licensee, licensor, franchisee -and its employees, consultants and/or suppliers
– of any entity of the Group as of the date of this Agreement or at any time in
the 12 (twelve) months period prior to the date of this Agreement, or (y) any
other Third Party with whom any entity of the Group, as of the date of this
Agreement or at any time in the 12 (twelve) months period prior to the date of
this Agreement, has or had a material (or potentially material) business
relationship;
(viii) “Third Party” means any person or entity other than any entity of the
Group, whatsoever existing or organized and regardless of such third party being
or not being a Competitor.
(vi) “Proprietà Intellettuale” deve intendersi ogni idea, formula, scoperta,
invenzione o modello di utilità (che sia o meno brevettabile o brevettata) e
relativi miglioramenti; varietà vegetale; processo, procedura, sviluppo e
relativi miglioramenti; dato di qualunque natura; disegno e modello registrato e
non registrato; testo, piano, elaborato; marchio registrato e non registrato ed
ogni altro segno distintivo; immagini; fotografia; banca dati; software;
progetto di ingegneria; ogni altra opera di natura artistica, letteraria o
comunque creativa (inclusi tutti i materiali ed i disegni preparatori) e tutte e
ciascuna le parti di essa; metodi; informazione confidenziale; know-how; segreto
commerciale e/o industriale, anche di natura negativa;
(vii) “Relazione Commerciale Rilevante” significa qualsiasi (x) cliente,
fornitore, licenziatario, licenziante, affiliato – e i relativi dipendenti,
consulenti e/o fornitori – di ogni e qualsivoglia entità del Gruppo alla data
del presente Accordo o in un periodo di 12 (dodici) mesi antecedente la data del
presente Accordo, o (y) qualsiasi altro Terzo con il quale una entità del
Gruppo, alla data del presente Accordo o in un periodo di 12 (dodici) mesi
antecedente la data del presente Accordo, , intrattenga o abbia intrattenuto un
rapporto commerciale rilevante (o potenzialmente rilevante);
(viii) “Terzo” significa qualsivoglia soggetto terzo diverso da alcuna delle
entità del Gruppo, in qualunque forma esistente o costituito, che sia o meno un
Concorrente.
2. Term of the Office and of this Agreement
2. Durata dell’Incarico e del Presente Accordo
2
2.1 The Director shall hold the Office until the term resolved upon by the
quota-holders’ meeting of the Company, without prejudice however to the
termination of the Office before such term pursuant to applicable law
(including, without limitation, resignation, removal, incompatibility with the
Office and/or in case of lack of the necessary requirements to hold the Office
set forth under the by-laws and/or any applicable laws and/or regulations) (the
date on which such termination will occur, the “Termination Date”).
2.2 This Agreement shall automatically terminate with immediate effects on the
Termination Date, without prejudice to articles 5, 6, 7, and 8.2 of this
Agreement, which will remain in full force and effects also after the
Termination Date for the relevant period of time mentioned in therein.
2.3 In case the Office terminates for Cause, the Director will be liable to
the Company for the relevant damages under this Agreement, without prejudice to
any other actions, claims and/or remedies applicable under law.
2.1 L’Amministratore rimarrà in carica fino alla data stabilita dall’assemblea
dei soci della Società, fatta comunque salva la cessazione dell’Incarico prima
di tale data secondo la legge applicabile (incluso, a titolo esemplificativo,
nell’ipotesi di dimissioni, revoca, incompatibilità o qualora vengano a mancare
i necessari requisiti per ricoprire la carica di cui all’Incarico ai sensi di
legge, dei regolamenti applicabili, e/o dello statuto della Società (la data di
cessazione dell’Incarico, la “Data di Cessazione”).
2.2 Il presente Accordo cesserà automaticamente di efficacia alla Data di
Cessazione, fatto comunque salvo quanto disposto agli articoli 5, 6, 7 e 8.2 del
presente Accordo, che rimarranno pienamente validi ed efficaci anche
successivamente alla Data di Cessazione per il periodo rispettivamente ivi
indicato.
2.3 Nel caso in cui l’Incarico cessi per Giusta Causa, l’Amministratore sarà
responsabile nei confronti della Società per i danni dovuti ai sensi del
presente Accordo, senza pregiudizio per ogni ulteriore eventuale azione, pretesa
e/o diritto spettante alla Società ai sensi della legge applicabile.
3. Powers and Responsibilities
3. Poteri e Responsabilita’
3
3.1 The Director will be responsible for managing the Company in full
accordance with the powers granted by the quota-holders’ meeting of the Company
upon his appointment, the by-laws, and with any applicable laws.
3.1 L’Amministratore avrà i poteri e le responsabilità di gestire la Società
secondo i limiti indicati dall’assemblea dei soci della Società all’atto della
nomina e in conformità allo statuto della Società e alla legge.
3
3.2 The Director will perform the Office with the utmost degree of diligence
required by its nature.
3.3 The Director will benefit from the D&O (Directors & Officers Liability)
insurance policy entered into by Forum in accordance with its terms and
conditions
3.2 L’Amministratore eseguirà l’Incarico con il più elevato standard di
diligenza richiesto dalla sua natura.
3.3 L’Amministratore beneficerà della copertura assicurativa di cui alla
polizza “D&O” (copertura assicurativa per amministratori e dirigenti)
sottoscritta da Forum secondo i suoi termini e condizioni
4. compensation – Benefits – Reimbursement of expenses
4. Remunerazione – Benefits – Rimborso Spese
4
4.1 The Director will receive, as overall compensation for the performance of
the Office and for every relevant activity and responsibilities connected
thereto, a fixed compensation equal to gross Euro 360,000.00 (threehundred
sixtythousand) per year (the “Fixed Compensation”).
4.2 Payment of the Fixed Compensation, deducted any applicable tax and social
security withholdings, will be made in 12 (twelve) monthly instalments in
arrears each of equal amount of Euro 30,000.00 (thirty thousand).
4.3 The Director will be eligible to participate in bonuses plans/programs
based upon the Director’s performance relative to annual goals and other
financial and non-financial performance measures to be established by Forum, in
its reasonable discretion, and will be entitled to 4 (four) weeks of paid leave.
4.4 In addition to the above, the Company will grant the Director the
following benefits: the right to continue to use the apartment in Frosinone, and
the company’s mobile phone and pc and company credit card.
4.5 The Director will be reimbursed for the duly documented expenses
reasonably incurred in performing of the Office, pursuant to the Group’s
policies and procedures.
4.1 A titolo di corrispettivo onnicomprensivo per l’esecuzione dell’Incarico e
di ogni relativa azione e responsabilità, sarà attribuito all’Amministratore un
emolumento fisso pari a Euro [360.000,00] (trecentosessantamila) lordi su base
annua (l’”Emolumento Fisso”).
4.2 Il pagamento dell’Emolumento Fisso, dedotta ogni ritenuta fiscale e
previdenziale applicabile, avverrà in 12 (dodici) rate mensili posticipate
ognuna di importo pari a Euro 30.000,00 (trentamila) .
4.3 L’Amministratore parteciperà a piani e/o programmi di incentivazione
basati sui risultati di performance relativamente ad obiettivi annuali e ad
altri parametri finanziari e non, che saranno identificati da Forum a propria
ragionevole discrezione, e avrà diritto a 4 (quattro) settimane di assenza
remunerata.
4.4 Inoltre, saranno assegnati all’Amministratore i seguenti benefits: diritto
di continuare ad utilizzare l’appartamento in Frosinone ed il PC, il cellulare e
carta di credito aziendale.
4.5 Verranno rimborsate all’Amministratore le spese ragionevolmente sostenute
e documentate in esecuzione dell’Incarico secondo i termini delle policy e
procedure del Gruppo.
5. Confidentiality
5. Riservatezza
5
5.1 Without prejudice – and in addition – to any confidentiality obligation
under applicable law, the Director undertakes, during the performance of the
Office and for the period of 12 (twelve) months after the Termination Date, for
any reason and unless in one of the cases under article 5.3 below:
(i) not to disclose or communicate by any means or instrument, to any Third
Party, any of the Confidential Information;
(ii) to use the utmost care and caution in the treatment of the Confidential
Information, using the same only for the proper performance of the Office;
(iii) not to use any Confidential Information in a way that may, even if only
potentially, damage, directly or indirectly, the Company or the Group;
(iv) not to copy, reproduce or duplicate, in any form or by any means, data,
documents, files – including in digital format – which contain or refer to
Confidential Information.
5.1 Senza pregiudizio per – e in aggiunta a – ogni e qualsiasi obbligazione di
riservatezza e confidenzialità ai sensi di legge, l’Amministratore si obbliga,
durante l’esecuzione dell’Incarico e per il periodo di 12 (dodici) mesi dalla
Data di Cessazione, per qualsiasi motivo e salvo per i casi di cui all’articolo
5.3 che segue, a:
(i) non divulgare, diffondere o comunicare, con qualsiasi mezzo o strumento, a
qualsivoglia Terzo, alcuna delle Informazioni Confidenziali;
(ii) utilizzare la massima diligenza e cautela nel trattamento delle
Informazioni Confidenziali, utilizzando le stesse esclusivamente per il corretto
adempimento dell’Incarico;
(iii) non utilizzare alcuna delle Informazioni Confidenziali in modo che si
possa, anche solo potenzialmente, arrecare danno, direttamente o indirettamente,
la Società e/o il Gruppo;
(iv) a non copiare, duplicare o riprodurre, in alcun modo e con qualsiasi
mezzo, dati, documenti, files – anche in formato digitate – che contengano o si
riferiscano ad Informazioni Confidenziali.
4
5.2 Any of the Confidential Information that the Director would have access
to, for any reason, during the performance of the Office shall be returned, in
whatever format it is contained and/or recorded, on the Termination Date,
without retaining any copy.
5.3 The confidentiality obligations under this article 5 will not apply if and
to the extent that: (i) disclosure of the Confidential Information is ordered by
the competent authorities or mandated by law, or (ii) such Confidential
Information have become of public domain autonomously, and thus not as a result
of the breach by the Director of his confidentiality obligations. If one or more
elements, data and/or information being Confidential Information become,
peacefully, of public domain, the obligations referred to in this clause will
remain in full force and effect with respect to all the remaining elements, data
and/or information not of public domain yet.
5.2 Qualsiasi delle Informazioni Confidenziali di cui l’Amministratore dovesse
venire in possesso, a qualsiasi titolo, nel corso dello svolgimento
dell’Incarico dovrà essere restituita, in qualunque formato essa sia contenuta
e/o registrata, alla Data di Cessazione senza trattenerne copia alcuna.
5.3 Gli obblighi di confidenzialità e riservatezza di cui al presente articolo
5 non troveranno applicazione ove (i) la rivelazione delle suddette Informazioni
Confidenziali sia ordinata dalla competente autorità giudiziaria o imposta dalla
legge; o (ii) dette Informazioni Confidenziali siano diventate di pubblico
dominio, e ciò non per effetto della violazione da parte dell’Amministratore
degli obblighi di confidenzialità a suo carico. Qualora uno o più elementi, dati
e/o notizie costituenti Informazioni Confidenziali diventi, pacificamente, di
dominio pubblico, gli obblighi di cui al presente articolo avranno, comunque,
piena ed integrale efficacia e validità nei confronti dell’Amministratore con
riferimento a tutti i rimanenti elementi, dati e/o notizie ancora non divenuti
di dominio pubblico.
6. Non-competition Covenants
6. Patto di non concorrenza
6.1 Without prejudice to any additional non-competition obligations or
restrictions set forth under applicable law or whatsoever, the Director will not
– during the term of the Office as well as at any time during a period of 12
(twelve) months following the Termination Date (the “Restricted Period”) within
the territory of Canada, the U.S.A., and the European Union (the “Territory”)
engage in any activity falling within the Business or in favor of a Competitor
(the “Restricted Activities”). For the sake of clarity, reference to the
Territory means that the Director is prohibited from carrying out any Restricted
Activities anyhow connected with the Territory, even if any such Restricted
Activities are actually performed in/from countries which do not fall under the
Territory.
6.2 The Director cannot carry out any of the activities prohibited by the
provisions above whether directly or indirectly, whether alone or jointly with
any other Third Party, and whether as shareholder, director, manager, officer,
employee, agent, promoter, consultant of, in or to any other Third Party, or in
any other form.
6.3 The Director will provide the Company and Ittella USA in writing – during
the Restricted Period and within 7 (seven) days from commencement of working or
professional activities of any nature engaged after the Termination Date (the
“New Activities”) – any significant information regarding the New Activities,
including but not limited to the data of the new employer or principal and the
content of the New Activities. The Director further covenants and undertakes to
inform previously his new employer or principal of the covenants undertaken by
him under this Agreement.
6.4 The Parties acknowledge that the Fixed Compensation has been negotiated
and agreed taking into consideration the restrictions under this Agreement,
including the those related to the non-competition and non-solicitation
covenants; the portion of Fixed Compensation apportioned in consideration for
these undertakings/restrictions is equal to 40% of the Fixed Compensation.
6.1 Senza pregiudizio per ogni e qualsiasi ulteriore impegno di non concorrenza
ai sensi di legge o di qualsiasi altra fonte, l’Amministratore si obbliga a non
svolgere sotto qualsiasi forma – per il periodo di decorrenza dell’Incarico e
per 12 (dodici) mesi a decorrere dalla Data di Cessazione (il “Periodo di Non
Concorrenza”) – relativamente al territorio degli Stati Uniti d’America, Canada
e Unione Europea (il “Territorio”) qualsiasi attività nell’ambito del Business
ovvero in favore di un Concorrente (le “Attività In Concorrenza”). Per scrupolo
di chiarezza, il riferimento al Territorio deve essere interpretato nel senso
che è vietato, ai sensi del presente articolo, lo svolgimento di qualsiasi
Attività In Concorrenza che sia correlata al Territorio, anche se tale
svolgimento sia materialmente effettuato in/da paesi non ricompresi nel
Territorio.
6.2 Resta inteso che l’Amministratore non potrà svolgere alcuna delle attività
vietate dalle disposizioni che precedono né direttamente né indirettamente, né
individualmente né unitamente ad altri Terzi, né come socio, amministratore,
manager, dipendente, agente, promoter, consulente, collaboratore di altri Terzi,
né sotto qualsiasi altra forma.
6.3 L’Amministratore fornirà alla Società e a Ittella USA, per iscritto –
durante il Periodo di Non Concorrenza ed entro 7 (sette) giorni dall’inizio di
attività lavorative o professionali di qualsiasi natura intraprese
successivamente alla Data di Cessazione (le “Nuove Attività”) – ogni
informazione rilevante riguardante le Nuove Attività, inclusi, a titolo
esemplificativo e non esaustivo, i dati identificativi del nuovo datore di
lavoro o committente (o equivalenti figure) e il contenuto delle Nuove Attività.
Inoltre, l’Amministratore si obbliga a informare preventivamente il suo nuovo
datore di lavoro o committente (o equivalenti figure) degli obblighi di cui al
presente Accordo assunti dall’Amministratore.
6.4 Le Parti prendono atto che l’Emolumento Fisso è stato negoziato e concordato
tenendo in considerazione le previsioni e divieti di cui al presente Accordo,
tra le quali anche quelle correlate al presente articolo; il relativo
corrispettivo per i suddetti obblighi e divieti è pari al 40% dell’Emolumento
Fisso.
5
6.5 Upon breach of any of the provisions and the obligations under this
article 6, without prejudice to the judicial remedies under Italian law
(including provisional proceedings and/or measures), the Director will pay to
the Company, as liquidated damages, an amount equal to Euro 300 for each and
every breach occurred and for every day when such breach has taken place (the
“Liquidated Damages”), without prejudice for the Company to claim additional
damages. The Parties acknowledge that the amount of the Liquidated Damages has
been fully negotiated at arm’s length and that such amount is fair and in line
with the obligations and covenants undertaken under this Agreement.
6.5 In caso di violazione di anche una sola delle disposizioni ed obbligazioni
di cui al presente articolo 6, fermi i rimedi processuali di cui all’ordinamento
italiano (inclusi i procedimenti/azioni cautelari), l’Amministratore verserà
alla Società, a titolo di penale, un importo pari a Euro 300,00 per ciascuna
violazione commessa e per ogni giornata in cui tale violazione è occorsa (la
“Penale”), fatto salvo il diritto della Società al risarcimento del danno
ulteriore. Le Parti riconoscono e prendono atto che l’importo della Penale è
stato pienamente negoziato secondo le normali condizioni di mercato, e che tale
importo è equo e in linea con le obbligazioni e i doversi di cui al presente
Accordo.
7. Non-Solicitation and non-interference
7. Divieto di storno e di interferenza
7.1 During the Office and for 12 (twelve) months after the Termination Date,
the Director will not, directly or indirectly, on his account or on behalf of
any Third Party:
(a) endeavor or attempt to induce any employee, independent contractor or
consultant of the Company and/or of the Group to terminate the existing working
relationship engaged with them in order to establish a working relationship of
employment or self-employment with the Director or any Third Party;
(b) offer any jobs/collaboration and/or enter into employment or self-employment
contracts with employees, independent contractors or consultants of the Company
and/or the Group, on behalf of the Director or of any Third Party.
7.2 During the Office and for 12 (twelve) months after the Termination Date, the
Director, directly or indirectly, on his account or on behalf of any Third
Party, will not:
(i) interfere with the relationship between the Company and any
Material Business Relationship;
(ii) solicit, contact, induce or attempt to induce (or assist any Third
Party in soliciting, contacting, inducing, or attempting to induce) any Material
Business Relationship to terminate its relationship with the Company, cease
doing business with the Company or terminate or otherwise adversely modify its
relationship with the Company;
(iii) acquire or attempt to acquire an interest in any person or business
in relation to which, prior to the date of this Agreement, any entity of the
Group had either (a) entertained business discussions, or (b) requested or
received information relating to, or was considering (even potentially), the
acquisition of, such Third Party (or any of its businesses).
7.1 Durante l’Incarico e per 12 (dodici) mesi decorrenti dalla Data di
Cessazione, l’Amministratore, direttamente o indirettamente, né per conto
proprio né per conto di Terzi, non:
(a) proporrà ad alcun dipendente, collaboratore o consulente della Società e/o
del Gruppo di risolvere il rapporto di lavoro esistente con gli stessi per
instaurare un rapporto di lavoro di natura subordinata o autonoma con
l’Amministratore o con qualsiasi Terzo;
(b) a non fare offerte di lavoro/di collaborazione e/o stipulare contratti di
lavoro di natura autonoma o subordinata con dipendenti, collaboratori e/o
consulenti della Società e/o del Gruppo, per conto proprio o di Terzi.
7.2 Durante l’Incarico e per 12 (dodici) mesi decorrenti dalla Data di
Cessazione, l’Amministratore, direttamente o direttamente, per conto proprio o
per mezzo o per conto di Terzi, non:
(i) interferirà nel rapporto tra la Società e ogni Relazione Commerciale;
(ii) solleciterà, contatterà, indurrà o tenterà di indurre (né supporterà
qualsiasi persona e/o ente nel sollecitare, contattare, indurre o tentare di
indurre) qualsiasi Relazione Commerciale a terminare il proprio rapporto con la
Società, cessare di fare affari con la Società o terminare o modificare in altro
modo il proprio rapporto con la Società;
(iii) acquisirà o tenterà di acquisire una partecipazione in un Terzo in
relazione al quale, prima della data del presente Accordo, un’entità del Gruppo:
(a) avesse intrattenuto discussioni commerciali, ovvero (b) avesse richiesto o
ricevuto informazioni relative alla, o stesse contemplando (anche solo
potenzialmente), l’acquisizione di tale Terzo (o di un suo bene e/o azienda).
6
8. Further obligations of the Director
8. Ulteriori Obbligazioni dell’Amministratore
8.1 Without prejudice to any other obligation set forth under applicable law and
in this Agreement, during the performance of the Office the Director will not,
either directly or indirectly, on his account or on behalf of any Third Party:
(i) carry out any working or professional activity, in any form
whatsoever, with or without consideration, for the benefit of any Third Party;
(ii) set up, or hold in whatsoever form, shares, quota, or any other
kind of interest, in any Competitor.
8.2 During the performance of the Office, and at any time after the
Termination Date, the Director will:
(i) not give interviews to any source of information, without the prior
written consent of the Ittella USA, in relation to the business of the Company
and/or the Group;
(ii) not make any negative, derogatory or disparaging statements or
communications, either orally or in writing, regarding the activities of the
Company and/or the Group, criticize or disparage the Company and/or the Group
and/or any individual who is, or has been, officer, director, employee,
representative whatsoever of the Company and/or any entities of the Group, and
(iii) refrain from making any statements or taking any actions (or
omission) which may damage the goodwill or reputation of the Company and/or the
Group and/or any of the individuals indicated in point (ii) above.
8.1 Senza pregiudizio per ogni e qualsiasi ulteriore obbligazione ai sensi di
legge, del presente Accordo o di qualsiasi altra fonte, durante l’esecuzione
dell’Incarico, l’Amministratore, direttamente o indirettamente, per conto
proprio o di un Terzo, non:
(i) svolgerà alcuna attività lavorativa o professionale, sotto
qualsiasi forma, con o senza corrispettivo, in favore di qualsiasi Terzo;
(ii) non costituirà, direttamente o tramite terze parti, né deterrà
quote o azioni o ogni altro strumento di simile natura, in qualunque forma, di
alcun Concorrente.
8.2 Durante l’esecuzione dell’Incarico e in ogni tempo successivamente alla
Data di Cessazione, l’Amministratore:
(i) non rilascerà interviste a qualsiasi fonte di informazione in
relazione alle attività della Società e/o del Gruppo, senza preventiva
autorizzazione da parte di Ittella USA;
(ii) non rilascerà dichiarazioni o comunicazioni di contenuto negativo,
denigratorio o dispregiativo, sia oralmente che per iscritto, in merito alle
attività della Società e/o del Gruppo, o criticare o denigrare la Società e/o il
Gruppo e/o qualsiasi persona che sia, o sia stata, amministratore, dipendente,
rappresentante a qualsiasi titolo della Società e/o di qualsiasi entità del
Gruppo; e
(iii) si asterrà dall’effettuare qualsivoglia affermazione ovvero
dall’intraprendere qualsivoglia azione (o omissione) che possano cagionare un
danno all’avviamento commerciale ovvero alla reputazione della Società e/o del
Gruppo e/o di qualsiasi soggetto sopra menzionato al punto (ii).
9. Intellectual Property Rights
9. Diritti di Proprietà Intellettuale
9
9.1 Any and all rights on Intellectual Property – with no exclusion
whatsoever, save only for those moral rights which cannot be waived or assigned
pursuant to applicable law – that the Director may develop and/or contribute to
develop in the performance of the Office will originally vest in and be the
exclusive property of the Company in any territory. To this extent, the Fixed
Fees have been set out taking into account also any creative and inventive
activity that the Director may carry out in the course of the Office. As a
consequence, the Director shall not be entitled to any special additional
consideration or compensation of whatsoever nature in connection with any
results that he may develop and/or contribute to develop while performing the
Office.
9.2 If any rights on Intellectual Property shall not originally vest in the
Company or cannot be deemed as exclusive property of the Company, by executing
this Agreement the Director hereby assigns and transfers irrevocably to the
Company now for then (ora per allora) – to the maximum extent permissible under
applicable law and in relation to any territory – any and all rights, titles and
interest on the Intellectual Property, including any rights to their economic
and commercial exploitation.
9.3 The Director undertakes to provide the Company with any reasonable
assistance needed for the purpose of filing, registering, patenting and/or
formalizing, at domestic and international level, any rights on the Intellectual
Property which originally vested in the Company or have been subsequently
assigned to the Company under the provisions above.
9.1 Ogni e qualsiasi diritto sulla Proprietà Intellettuale – senza esclusione
alcuna, fatta eccezione soltanto per quei diritti morali che non possono essere
oggetto di rinuncia o cessione ai sensi della normativa applicabile – che
l’Amministratore potrà sviluppare e/o contribuire a sviluppare nell’esecuzione
dell’Incarico sorgerà a titolo originario in capo alla Società e sarà di
esclusiva titolarità della Società in qualsiasi territorio. A tal fine,
l’Emolumento Fisso è stato calcolato tenendo in considerazione anche ogni
attività creativa e inventiva che l’Amministratore potrà svolgere nel corso
dell’Incarico. Ne consegue che l’Amministratore non avrà titolo per pretendere o
conseguire alcun pagamento di qualsivoglia natura in relazione a ogni e
qualsiasi risultato che potrà sviluppare, o contribuire a sviluppare, durante
l’Incarico.
9.2 Tuttavia, nei casi in cui vi siano diritti sulla Proprietà Intellettuale
che non sorgano a titolo originario in capo alla Società ovvero che non possono
essere considerati di esclusiva titolarità della Società, con la sottoscrizione
della presente Accordo l’Amministratore Unico cede e trasferisce
irrevocabilmente alla Società ora per allora –- nell’estensione massima
consentita dalla legge applicabile e in qualsiasi territorio – ogni e qualsiasi
diritto, titolo e interesse sulla Proprietà Intellettuale, incluso ogni diritto
di sfruttamento economico e commerciale della stessa.
7
9.3 L’Amministratore si impegna a fornire alla Società ogni ragionevole
assistenza necessaria ai fini del deposito, registrazione, brevettazione e/o
formalizzazione, a livello nazionale e internazionale, dei diritti sulla
Proprietà Intellettuale che siano sorti a titolo originario in capo alla Società
o che siano stati oggetto di cessione in favore della Società ai sensi delle
disposizioni che precedono.
10. Notices
10. Comunicazioni
10
Any communication required or admitted hereunder shall be made in writing to the
following addresses and sent with registered mail with return receipt requested:
- if to Ittella USA:
6305 Alondra Blvd, Paramount, CA 90723
Attention: Chief Executive Officer
- if to the Director:
Mr. Giuseppe Bardari
c/o Ittella Italy
STRADA DELLA CASAINA SNC
04010, Prossedi (Latina, Italy)
Qualsiasi comunicazione necessaria o consentita in relazione al presente Accordo
verrà effettuata per iscritto ai seguenti indirizzi ed inviata a mezzo di
raccomandata con ricevuta di ritorno:
- se a Ittella USA:
6305 Alondra Blvd, Paramount, CA 90723
Attenzione: Chief Executive Officer
- se all’Amministratore:
Sig. Giuseppe Bardari
c/o Ittella Italy Srl
STRADA DELLA CASAINA SNC
04010, Prossedi (Latina, Italy)
11. Miscellanea
11. Miscellanea
11.1. Any amendments and/or integration to the Agreement shall be agreed in
writing and undersigned by the Parties and will make express reference to this
Agreement and to the provisions which the Parties intend to amend and/or
integrate.
11.2. Should any provision of the Agreement be deemed null, void or non
effective, in whole or in part, the validity and/or enforceability of the other
provisions shall not be affected.
11.3. This Agreement supersedes any prior oral and written agreement between
the Parties on the subject matter.
11.4. This Agreement is governed by and shall be construed in accordance with
the laws of Italy.
11.5. This Agreement has been drafted in Italian and English language; in case
of discrepancies, the English version will prevail at all effects.
11.1. Qualsiasi modifica e/o integrazione del presente Accordo dovrà essere
convenuta per iscritto e sottoscritta dalle Parti, e dovrà fare riferimento al
presente Accordo e alle disposizioni che le Parti intendono modificare e/o
integrare.
11.2. Nel caso in cui qualsiasi delle disposizioni dell’Accordo sia ritenuta
invalida e/o inefficace, in tutto o in parte, ciò non inficerà la validità e/o
l’efficacia delle rimanenti disposizioni.
11.3. Il presente Accordo supera ogni precedente accordo o intesa scritti e/o
orali tra le Parti in relazione all’oggetto dello stesso.
11.4. Il presente Accordo è governato, e sarà interpretato, in base alla legge
italiana.
11.5. Il presente Accordo è stato predisposto in lingua italiana e inglese; in
caso di conflitto tra le due versioni, la versione inglese sarà ritenuta
prevalente ad ogni effetto.
DATE: 15 October 2020
DATA: 15 Ottobre 2020
____________________________ ____________________________ Ittella’s Chef,
LLC Ittella’s Chef, LLC ____________________________
____________________________ Giuseppe Bardari Giuseppe Bardari Also,
exclusively for acknowledgment of the benefits and obligations of the Director
under this Agreement Esclusivamente per presa d’atto dei diritti e delle
obbligazioni dell’Amministratore ai sensi del presente Accordo
____________________________ ____________________________ Ittella Italy s.r.l.
Ittella Italy s.r.l.
8
|
EXHIBIT 10.14
AWARD NOTICE
UNDER THE FIFTH AMENDED AND RESTATED
ANSYS, INC. 1996 STOCK OPTION AND GRANT PLAN
Name of Participant:
Target Award:
Grant Date of Target Award:
Performance Cycles: January 1, 2018 to December 31, 2018
January 1, 2019 to December 31, 2019
January 1, 2020 to December 31, 2020
Pursuant to the Fifth Amended and Restated ANSYS, Inc. 1996 Stock Option and
Grant Plan (the “Plan”), ANSYS, Inc., a Delaware corporation, (the “Company”)
has selected the Participant named above to be awarded the Target Award
specified above, subject to the terms and conditions of the Plan and this Award
Notice. Capitalized terms used but not defined in this Award Notice shall have
the meaning given such terms in the Plan. A copy of the Plan is attached hereto
as Exhibit A.
1.Acceptance of Award. The total number of Restricted Stock Units that may be
credited to the Participant (if any) shall be determined by the Company’s
performance for the Performance Cycles specified above, as set forth in Section
5 below. One third of the Target Award is eligible to be credited for each
Performance Cycle (the “Annual Target”). The actual number of Restricted Stock
Units that may be credited could be up to 200% of the Target Award and could
also be lower than the Target Award and could be zero.
2.Termination of Employment. Subject to Sections 3 and 5(a) below, a Participant
must be employed through the last day of the final Performance Cycle to vest in
any of the Restricted Stock Units that may be credited with respect to all three
Performance Cycles, and all Restricted Stock Units not yet vested upon the
termination of the Participant’s employment with the Company (or a
Subsidiary(ies) as applicable) for any reason shall automatically be forfeited
as of the date of termination of employment.
3.Transaction. Upon a Transaction, the Award shall be treated as specified in
Section 3(c) of the Plan.
4.Issuance of Shares.
(a) Each Restricted Stock Unit relates to one share of the Company’s Stock.
Shares of Stock (if any) shall be issued in settlement of any credited
Restricted Stock Units within 74 days after the end of the final Performance
Cycle, subject to the Participant’s continued employment with the Company
through the last day of the final Performance Cycle. Shares of Stock (if any)
shall be delivered to the Participant in accordance with the terms of this Award
Notice and of the Plan, upon compliance to the satisfaction of the Committee
with all requirements under applicable laws or regulations in connection with
such issuance and with the requirements hereof and of the Plan. The
determination of the Committee as to such compliance shall be final and binding
on the Participant.
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(b) Until such time as shares of Stock are issued to the Participant pursuant
to the terms hereof and of the Plan, the Participant shall have no rights as a
stockholder with respect to any shares of Stock underlying the Restricted Stock
Units, including but not limited to any voting rights.
5.Determination and Payment of Awards
(a) The Annual Target shall become credited based on achievement by the
Company of the Performance Criteria for the applicable Performance Cycle as set
forth in Exhibit B attached hereto (as updated for each Performance Cycle) and
incorporated herein by reference, subject to the Participant’s continued
employment with the Company through the conclusion of the final Performance
Cycle. For purposes of clarity and by way of example: If, during the Performance
Cycle ending December 31, 2018, the Participant is credited 75% of the Annual
Target for the 2018 Performance Cycle, determined by reference to the
Performance Criteria included in Exhibit B, 25% of the Annual Target shall be
forfeited and the credited Restricted Stock Units (75% of the Annual Target)
shall vest and be settled if the Participant remains employed through the last
day of the end of the final Performance Cycle.
(b) For purposes of this Section 5, the following definitions shall apply:
(i) “Revenue” means non-GAAP revenue as reported in the Company’s public
filings.
(ii) “Operating Margin” means non-GAAP operating margin percent as reported
in the Company’s public filings.
(c) For purposes of the foregoing definitions, (1) there shall be constant
currency measurement for both Revenue compared to the prior year and Operating
Margin; (1) future years’ annual performance targets will be designed to exclude
future acquisitions depending on the closing date, subject to the Committee’s
discretion; and (iii) the Committee shall assess the materiality of any merger
or acquisition and reserves the discretion to determine the impact thereof on
the applicable targets.
(d) The Committee, at its first regular meeting following the conclusion of
each Performance Cycle and the delivery to the Company of its audited financial
statements for such Performance Cycle, shall determine the actual number of
Restricted Stock Units that will be deemed to have been credited as of the final
day of such Performance Cycle, in accordance with the Performance Criteria set
forth in Exhibit B.
(e) Notwithstanding the foregoing, as soon as practicable (but in no event
later than 74 days) following the conclusion of the final (third) Performance
Cycle, the Restricted Stock Units that were credited over all three Performance
Cycles, if any, will vest and be settled in an equal number of shares of Stock,
subject to the Participant’s continued employment with the Company.
6. Non-Competition and Non-Solicitation. As additional consideration for the
grant of this Award to the Participant, the Participant hereby agrees that he or
she shall not, at anytime during his or her employment with the Company or any
Subsidiary, [for non-California employees only: and for a period of one year
immediately after the termination of such employment (no matter if terminated by
the Participant or the Company and no matter what the reason for that
termination),]
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engage for any reason, directly or indirectly, whether as owner, part-owner,
shareholder, member, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity, on behalf of himself or herself or any
firm, corporation or other business organization other than the Company and its
subsidiaries, in any one or more of the following activities:
(a) the development, marketing, solicitation, or selling of any product or
service that is competitive with the products or services of the Company, or
products or services that the Company has under development or that are subject
to active planning at any time during Participant’s employment;
(b) the use of any of the Company’s confidential or proprietary information,
copyrights, patents or trade secrets which was acquired by the Participant as an
employee of the Company and its subsidiaries; or
(c) any activity for the purpose of inducing, encouraging, or arranging for
the employment or engagement by anyone other than the Company and its
subsidiaries of any employee, officer, director, agent, consultant, or sales
representative of the Company and its subsidiaries or attempt to engage any of
them in a manner which would deprive the Company and its subsidiaries of their
services or place them in a conflict of interest with the Company and its
subsidiaries.
The Participant acknowledges and agrees that the activities set forth in (a)-(c)
(above) are adverse to the Company’s interests, and that it would be inequitable
for Participant to benefit from this Award should Participant engage in any such
activities during or within one year after termination of his or her employment
with the Company. The Participant may be released from his or her obligations as
stated above only if the Committee (or its duly appointed agent) determines in
its sole discretion that such action is in the best interests of the Company and
its subsidiaries.
7. Claw-Back of Award Proceeds. The Committee shall have the authority to
unilaterally terminate this Award and/or cause some or all of the proceeds
relating to this Award that have been received by the Participant to become
immediately due and payable by the Participant to the Company upon the
occurrence of any of the following events:
(a) the Participant’s violation of Section 6 of this Agreement (entitled
Non-Competition and Non-Solicitation);
(b) the material restatement of the Company’s financial statements due to
misconduct by the Participant;
(c) the material restatement of the Company’s financial statements that
results in the Participant receiving more compensation under the Award than the
Participant would have received absent the incorrect financial statements.
The determination of whether any of the foregoing events has occurred and the
extent of the application of this Section to the Participant and this Award
shall be determined by the Committee in its sole discretion.
8. Incorporation of Plan. Notwithstanding anything herein to the contrary,
this Award Notice shall be subject to and governed by all the terms and
conditions of the Plan, including the powers of the Committee set forth in
Section 2 of the Plan.
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9. Transferability. This Award is personal to the Participant, is
non-assignable and is not transferable by Participant in any manner, by
operation of law or otherwise, other than by will or the laws of descent and
distribution. The Stock to be issued upon the vesting of this Award to the
Participant shall be issued, during the Participant’s lifetime, only to the
Participant, and thereafter, only to the Participant’s beneficiary. The
Participant may designate a beneficiary by providing written notice of the name
of such beneficiary to the Company, and may revoke or change such designation at
any time by filing written notice of revocation or change with the Company.
10. Section 409A. This Award is intended as a short-term deferral, and to
not be subject to any tax, penalty, or interest under, Section 409A of the
Internal Revenue Code and the regulations promulgated thereunder. This Award,
this Agreement and the Plan (as to the Award) shall be construed and interpreted
consistent with such intent.
11. Tax Withholding. Any issuance of shares of Stock to a Participant shall
be subject to tax withholding. The minimum tax withholding obligation shall be
satisfied through a net issuance of shares. The Company shall withhold from
shares of Stock to be issued to the Participant a number of shares of Stock with
an aggregate fair market value that would satisfy the minimum withholding amount
due.
12. No Contract for Continuing Services. Neither the Plan nor this Award
Notice shall be construed as creating any contract for continued services
between the Company or any of its subsidiaries and the Participant and nothing
herein contained shall give the Participant the right to be retained as an
employee or consultant of the Company or any of its subsidiaries.
13. Mandatory Arbitration. The Participant and the Company agree that any
dispute or claim arising out of or in any way related to (i) the Participant’s
employment with the Company, and/or (ii) this Agreement or any breach hereof,
this Award, the Plan and/or any actions taken under the Plan, to the fullest
extent permitted by law, shall be submitted to and resolved by confidential,
binding arbitration by a single, neutral arbitrator. The arbitration shall be
held in the county where the Company has an office at which the Participant
provides services (for remote Participants, the nearest county where the Company
has an office) or any other locale to which the parties jointly agree. The
arbitration shall be administered by and under the auspices of JAMS in
accordance with the then-current Employment Arbitration Rules & Procedures of
JAMS (which are available at www.jamsadr.com/rules-employment). Arbitrator
selection and discovery shall be conducted pursuant to the JAMS Rules. The
arbitrator shall issue a written award setting forth the essential findings and
conclusions on which the award is based, which shall be final and binding and
judgment thereon may be entered in any court of competent jurisdiction. Other
than an amount equal to the fee for filing such an action in the local state
court, which amount the Participant shall pay toward the costs of the
arbitration, the Company shall bear the administrative, filing and forum costs
of the arbitration, including the JAMS administrative fees and the arbitrator’s
fees. Except as otherwise provided by law or in the arbitrator’s ruling, each
party shall otherwise bear its own respective attorneys’ fees and costs of the
arbitration. The Participant and the Company agree that each may bring claims
against the other only in an individual capacity, and not as a plaintiff,
claimant or class member in any purported class action, collective action or
other representative proceeding, or otherwise seeking to represent the interests
of any other person. This agreement to arbitrate shall survive any separation of
the Participant’s employment. Notwithstanding the foregoing, nothing herein or
otherwise shall preclude the Company from pursuing a court action for the
purpose of obtaining a temporary restraining order
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or other injunctive relief to enforce any restrictive covenants the Participant
has with or for the benefit of the Company.
14. General Release of Claims by the Participant.
(a)As a condition of and in consideration for the promises made by the Company
herein, including without limitation to provide the Award hereunder, the
Participant hereby knowingly and voluntarily releases and discharges to the
fullest extent permitted by law the Company and its past, present and future
parents, subsidiaries, affiliates, and related entities, any and all of its or
their past, present or future directors, shareholders, officers, executives,
employees, and/or agents, and/or its and their respective predecessors,
successors, and assigns (individually and collectively, the “Company
Releasees”), from and with respect to any and all claims and causes of action
whatsoever, in law or in equity, known or unknown, which the Participant ever
had, has or may have against the Company and/or any or all of the other Company
Releasees for, upon, or by reason of any matter whatsoever up to the date on
which the Participant signs this Agreement (individually and collectively,
“Claims”). The parties intend the foregoing to be a general release of any and
all Claims to the fullest extent permissible by law. Notwithstanding the
foregoing, nothing herein is a release by the Participant of (A) any rights or
Claims with respect to accrued and vested benefits and/or previously awarded
equity interests, subject in each instance to the terms and conditions of any
applicable plan, grant, and/or agreement pertaining to such benefits, awards or
interests and applicable law, (B) any rights or Claims arising under or to
enforce this Agreement, or (C) any rights or Claims that, under applicable law,
cannot lawfully be released by private agreement or otherwise.
(b) FOR CALIFORNIA RESIDENTS ONLY: In granting the foregoing release, the
Participant acknowledges that he/she has been advised to consult with legal
counsel and is familiar with the provision of California Civil Code Section
1542, a statute that otherwise prohibits the release of unknown claims, which
provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
Being aware of said Code section, the Participant hereby expressly waives any
rights the Participant may have thereunder, as well as under any other state or
federal statutes or common law principles of similar effect.
(c) Nothing contained in this Agreement (including the foregoing general
release) limits the Participant’s ability to file a charge or complaint with any
federal, state or local governmental agency, commission or regulatory entity (a
“Government Agency”). If the Participant files any charge or complaint with any
Government Agency, if any Government Agency pursues any charge or claim on the
Participant’s behalf, or if any other third party pursues any claim or charge on
the Participant’s behalf, the Participant waives any right to monetary or other
individualized relief (either individually, or as part of any collective or
class action); provided, however, that nothing in this Agreement limits any
right the Participant may have to receive a whistleblower award or bounty for
information provided to the Securities and Exchange Commission. The Participant
represents that he/she is not aware of any unlawful conduct or violations of any
federal, state or local law, rule or
5
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regulation by the Company and/or any other Company Releasees or any basis to
bring a charge or complaint to any Government Agency.
15. Notices. Notices hereunder shall be mailed or delivered to the Company at
its principal place of business and shall be mailed or delivered to the
Participant at the address on file with the Company or, in either case, at such
other address as one party may subsequently furnish to the other party in
writing.
16. Severability. If any provision(s) hereof shall be determined to be
illegal or unenforceable, such determination shall in no manner affect the
legality or enforceability of any other provision hereof.
17. Counterparts. For the convenience of the parties and to facilitate
execution, this document may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
18. Time to Review and Accept; Right to Revoke; Effective Date. The
Participant is advised by the Company to consult with an attorney in connection
with this Agreement. The Participant understands that as part of his/her
agreement to release Claims against the Company and the other Company Releasees,
the Participant is releasing Claims for age discrimination under the federal Age
Discrimination in Employment Act (the “ADEA”). Accordingly, the Participant has
the right, and acknowledges that he/she has been given the opportunity, to
review and consider this Agreement for a period of twenty-one (21) days from the
Participant’s receipt of this Agreement before signing it (the “Review Period”).
To accept this Agreement and the Award granted hereunder, the Participant must
return a signed original or signed .pdf copy of this Agreement to: [NAME, TITLE,
ADDRESS; E-MAIL ADDRESS] at any time before the end of the Review Period. If the
Participant signs this Agreement before the end of the Review Period, the
Participant acknowledges that such decision was voluntary and that he/she had
the opportunity to consider this Agreement for the full Review Period. For the
period of seven (7) days from the date when the Participant signs this
Agreement, the Participant has the right to revoke this Agreement by written
notice to [NAME, TITLE, ADDRESS; E-MAIL ADDRESS], provided such notice is
delivered so that it is received at or before the expiration of the 7-day
revocation period. This Agreement shall not become effective or enforceable
during the revocation period. If timely accepted and not revoked by the
Participant prior to the end of the revocation period, this Agreement shall
become effective on the first business day following the expiration of the
revocation period (the “Effective Date”). If not timely accepted or if (after
timely signing) the Participant revokes prior to the expiration of the
revocation period, this Agreement shall not become effective and the Participant
will not be entitled to or receive the Award granted hereunder and/or such Award
shall be rescinded.
19. Knowing and Voluntary Agreement. By signing this Agreement, the
Participant acknowledges and represents that the Participant (a) has carefully
read this Agreement in its entirety; (b) is hereby advised by the Company in
writing to consult with an attorney of the Participant’s choice before signing
this Agreement; (c) has been afforded and has had a full and reasonable
opportunity and period of time of at least 21 days to consider the terms and
conditions of this Agreement; (d) fully understands the meaning and
significance, and consequences, of all of the terms and conditions of this
Agreement (including without limitation the general release given by the
Participant in this Agreement); and (e) is signing this Agreement knowingly,
voluntarily and of the Participant’s own free will and with the intent to be
fully bound hereby.
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anssexhibit1014201912_image1.jpg [anssexhibit1014201912_image1.jpg]ANSYS, Inc.
By:
Name: Ajei S. Gopal
Title: President and CEO
7
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The foregoing Award is hereby accepted and the terms and conditions of this
Agreement are hereby agreed to by the undersigned. Electronic acceptance of this
Award pursuant to the Company’s instructions to the Grantee (including through
an online acceptance process) is acceptable.
Dated:
Optionee’s Signature
Optionee’s name and address:
%%FIRST_NAME%-% %%LAST_NAME%-%
%%ADDRESS_LINE_1%-%
%%ADDRESS_LINE_2%-%
%%ADDRESS_LINE_3%-%
%%CITY%-% %%STATE%-% %%ZIPCODE%-%
%%COUNTRY%-%
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INTERNATIONAL APPENDIX
Additional Terms and Conditions
Terms and Conditions
This International Appendix includes additional terms and conditions that govern
the award granted to you under the Plan for your country. Certain capitalized
terms used but not defined in this International Appendix have the meanings set
forth in the Plan and the Agreement that relate to your award. By acceptance of
the award you agree to be bound by the terms and conditions contained in the
paragraphs below in addition to the terms of the Plan and the Agreement and the
terms of any other document that may apply to you and your award.
Notifications
This International Appendix also includes information regarding issues of which
you should be aware with respect to participation in the Plan. The information
is based on the securities, exchange control, and other laws in effect in the
respective countries as of the date set forth above. Such laws are often complex
and change frequently. As a result, it is strongly recommended that you not rely
on the information in this International Appendix as the only source of
information relating to the consequences of your participation in the Plan
because the information may be out of date at the time you vest in your award or
sell shares acquired under the Plan.
The information contained herein is general in nature and may not apply to your
particular situation, and the Company is not in a position to assure you of a
particular result. In addition, please note that the requirements may differ for
residents and non-residents. Accordingly, you are advised to seek appropriate
professional advice as to how the relevant laws in your country may apply to
your situation.
Finally, if you are a citizen or resident of a country other than the one in
which you are currently working, transferred employment to another country after
the award was granted to you, or are considered a resident of another country
for local law purposes, the information contained herein may not apply.
Provisions Applicable to all International Awards
Data Privacy. The Participant explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Participant’s
personal data by and among, as applicable, the Company, its subsidiaries and
affiliates, for the exclusive purpose of implementing, administering and
managing the Participant’s participation in the Plan. The Participant hereby
understands that the Company, its subsidiaries and affiliates hold (but only
process or transfer to the extent required or permitted by local law) certain
personal information about the Participant, including, but not limited to, the
Participant’s name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any Shares or directorships held in the Company, details of all Restricted Stock
Units or
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any other entitlement to Shares awarded, canceled, exercised, vested, unvested
or outstanding in the Participant’s favor, for the purpose of implementing,
administering and managing the Plan (“Data”). The Participant hereby understands
that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that these recipients
may be located in the Participant’s country or elsewhere (including countries
outside of the European Economic Area such as the United States of America), and
that the recipient’s country may have different data privacy laws and
protections than the Participant’s country. The Participant hereby understands
that the Participant may request a list with the names and addresses of any
potential recipients of the Data by contacting the Participant’s local human
resources representative. The Participant authorizes the recipients to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing the Participant’s
participation in the Plan, including any requisite transfer of such Data as may
be required to a broker or other third party with whom the Participant may elect
to deposit any Shares acquired upon exercise. The Participant hereby understands
that Data will be held only as long as is necessary to implement, administer and
manage the Participant’s participation in the Plan and in accordance with local
law. The Participant hereby understands that the Participant may, at any time,
view Data, request additional information about the storage and processing of
Data, require any necessary amendments to Data or refuse or withdraw the
consents herein, in any case without cost, by contacting in writing the
Participant’s local human resources representative. The Participant hereby
understands, however, that refusing or withdrawing the Participant’s consent may
affect the Participant’s ability to participate in the Plan. For more
information on the consequences of the Participant’s refusal to consent or
withdrawal of consent, the Participant hereby understands that the Participant
may contact the Participant’s local human resources representative.
Nature of Grant. In accepting the grant of Restricted Stock Units, the
Participant acknowledges that:
(a) the Plan is established voluntarily by the Company, is discretionary in
nature and may be modified, amended, suspended or terminated by the Company at
any time, unless otherwise provided in the Plan and this Agreement;
(b) the grant of Restricted Stock Units is voluntary and occasional and does
not create any contractual or other right to receive future grants of Restricted
Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted
Stock Units have been granted repeatedly in the past;
(c) all decisions with respect to future Restricted Stock Units, if any, will
be at the sole discretion of the Company;
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(d) the Participant’s participation in the Plan will not create a right to
further employment with the Participant’s employer (the “Employer”) and shall
not interfere with the ability of the Employer to terminate the Participant’s
employment relationship;
(e) the Participant is voluntarily participating in the Plan;
(f) the Restricted Stock Units are an extraordinary item that does not
constitute compensation of any kind for services of any kind rendered to the
Company or the Employer, and which is outside the scope of the Participant’s
employment contract, if any;
(g) the Restricted Stock Units are not part of normal or expected
compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments and in no event should be considered as compensation for, or
relating in any way to, past services for the Company or the Employer;
(h) in the event that the Participant is not an employee of the Company, the
grant of Restricted Stock Units will not be interpreted to form an employment
contract or relationship with the Company; and furthermore, the grant of
Restricted Stock Units will not be interpreted to form an employment contract
with the Employer or any subsidiary or affiliate of the Company;
(i) the future value of the underlying Shares is unknown and cannot be
predicted with certainty;
(j) if the Participant vests in the Restricted Stock Units and obtains
Shares, the value of those Shares may increase or decrease in value;
(k) in consideration of the grant of the Restricted Stock Units, no claim or
entitlement to compensation or damages shall arise from termination of the
Restricted Stock Units or diminution in value of the Restricted Stock Units or
Shares acquired resulting from termination of the Participant’s employment by
the Company or the Employer, and the Participant irrevocably releases the
Company and the Employer from any such claim that may arise; if, notwithstanding
the foregoing, any such claim is found by a court of competent jurisdiction to
have arisen, then, by signing this Agreement, the Participant will be deemed
irrevocably to have waived his or her entitlement to pursue such claim; and
(l) in the event of termination of the Participant’s employment,
Participant’s right to receive the Restricted Stock Units and vest in the
Restricted Stock Units under the Plan, if any, will terminate effective as of
the date that the Participant is no longer actively employed.
Country-Specific Language
Below please find country-specific language that applies to you if you are a
citizen or resident of one of the following countries: Belgium, Canada, France,
Germany, India, Italy, Japan, South Korea, Spain, Sweden, Switzerland, Taiwan
and United Kingdom.
BELGIUM
Notifications
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Tax Reporting Information. Participants are required to report any bank accounts
opened and maintained outside Belgium on their annual tax return.
CANADA
Terms and Conditions
Restricted Stock Units Settled in Shares Only. Notwithstanding anything to the
contrary in the Plan and/or the Agreement, you understand that any Restricted
Stock Units granted to you shall be paid in shares only and do not provide any
right for you to receive a cash payment.
The following provision will apply to residents of Quebec:
Language Consent. The parties to the Agreement have expressly required that the
Agreement and all documents and notices relating to the Agreement be drafted in
English.
Les parties aux présentes ont expressément exigé que la présente convention et
tous les documents et avis qui y sont afférents soient rédigés en anglais.
Notifications
Additional Restrictions on Resale. In addition to the restrictions on resale and
transfer noted in Plan materials, securities purchased under the Plan may be
subject to certain restrictions on resale imposed by Canadian provincial
securities laws. Participants are encouraged to seek legal advice prior to any
resale of such securities. In general, Participants resident in Canada may
resell their securities in transactions carried out on exchanges outside of
Canada.
Tax Reporting. The Tax Act and the regulations thereunder require a Canadian
resident individual (among others) to file an information return disclosing
prescribed information where, at any time in a tax year, the total cost amount
of such individual’s “specified foreign property” (which includes shares)
exceeds Cdn.$100,000. Participants should consult their own tax advisor
regarding this reporting requirement.
FRANCE
Notifications
Exchange Control Information. If a Participant imports or exports cash (e.g.,
sale proceeds received under the Plan) with a value equal to or exceeding
€10,000 and does not use a financial institution to do so, Participant must
submit a report to the customs and excise authorities. If Participant maintains
a foreign bank account, Participant is required to report such account to the
French tax authorities when filing his/her annual tax return.
GERMANY
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Notifications
Exchange Control Information. Cross-border payments in excess of €12,500 must be
reported monthly to the German Federal Bank. If a Participant uses a German bank
to transfer a cross-border payment in excess of €12,500 in connection with the
sale of Shares acquired under the Plan, the bank will file the report for the
Participant.
INDIA
Terms and Conditions
Repatriation of Proceeds. You understand that you must repatriate any proceeds
from the sale of Shares acquired upon vesting of the Restricted Stock Units to
India and convert the proceeds into local currency within 90 days of receipt.
You will receive a foreign inward remittance certificate (“FIRC”) from the bank
where you deposit the foreign currency. You should maintain the FIRC as evidence
of the repatriation of funds in the event the Reserve Bank of India or your
employer requests proof of repatriation.
Notifications
Tax Information. The amount subject to tax at vesting may partially be dependent
upon a valuation of Shares from a Merchant Banker in India. The Company has no
responsibility or obligation to obtain the most favorable valuation possible nor
obtain valuations more frequently than required under Indian tax law.
ITALY
Terms and Conditions
Data Privacy. In addition to the data privacy provision that is set forth above,
by accepting the grant of Restricted Stock Units, you also consent to the
following additional data privacy-related terms:
I am aware that providing the Company and my employer with Data is necessary for
participation in the Plan and that my refusal to provide such Data may affect my
ability to participate in the Plan. The Controller of personal data processing
is Ansys, Inc., with registered offices at 2600 Ansys Drive, Canonsburg, PA
15317 and, pursuant to D.lgs 196/2003, its representative in Italy is ANSYS
Italia Srl with registered offices at via G. B. Pergolesi n. 25 20124 Milano MI
Italy.
I understand that I may at any time exercise the rights acknowledged by Section
7 of Legislative Decree June 30, 2003 n.196, including, but not limited to, the
right to access, delete, update, request the rectification of my Data and cease,
for legitimate reasons, the data processing. Furthermore, I am aware that my
Data will not be used for direct marketing purposes.
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Notifications
Exchange Control Information. By September 30th of each year, the Participants
are required to report on their annual tax return (Form RW) any foreign
investments (including proceeds from the sale of Shares acquired upon vesting)
held outside of Italy if the investment may give rise to income in Italy.
However, deposits and bank accounts held outside of Italy only need to be
disclosed if the value of the assets exceeds €10,000 during any part of the tax
year.
With respect to Shares received upon vesting of the Restricted Stock Units, the
Participants must report (i) the value of the Shares at the beginning of the
year or on the day the Participant acquired the Shares, whichever is later; and
(ii) the value of the Shares when sold, or if the Participant still owns the
Shares at the end of the year, the value of the Shares at the end of the year.
The value to be reported is the fair market value of the Shares on the
applicable dates mentioned above.
JAPAN
Notifications
Exchange Control Information. If you acquire Shares valued at more than
¥100,000,000 in a single transaction, you must file a Securities Acquisition
Report with the Ministry of Finance through the Bank of Japan within 20 days of
the acquisition of the Shares.
SOUTH KOREA
Notifications
Exchange Control Information. If you receive US$500,000 or more from the sale of
underlying Shares, Korean exchange control laws require you to repatriate the
proceeds to South Korea within 18 months of sale.
SPAIN
Notifications
Exchange Control Information. All acquisitions of foreign shares by Spanish
residents must comply with exchange control regulations in Spain. Because of
foreign investment requirements, the acquisition of Shares upon vesting of the
Restricted Stock Units must be declared for statistical purposes to the Spanish
Direccion General de Politica Comercial y de Inversiones Extranjeras (the
“DGPCIE”). If you acquire Shares through the use of a Spanish financial
institution, that institution will automatically make the declaration to the
DGPCIE for you. Otherwise, you must make the declaration by filing a form with
the DGPCIE.
If you import the Shares acquired upon vesting of the Restricted Stock Units
into Spain, you must declare the importation of the share certificates to the
DGPCIE.
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In addition, you must also file a declaration of the ownership of the Shares
with the Directorate of Foreign Transactions each January while the shares are
owned. These filings are made on standard forms furnished by the Directorate of
Foreign Transactions.
When you receive any foreign currency payments (i.e., as a result of the sale of
the Shares), you must inform the institution receiving the payment of the basis
upon which such payment is made and provide certain specific information (e.g.,
name, address, and fiscal identification number; the name and corporate domicile
of the company; the amount of the payment; the type of foreign currency
received; the country of origin; and the reason for the payment).
Tax Reporting. If you hold assets (e.g., cash or shares in a bank or brokerage
account) or rights outside Spain that exceed €50,000 per type of asset, you must
file a Form 720 with the Spanish Tax Authorities by April 30th of each year.
SWITZERLAND
Notifications
Securities Law Information. The offer of the Restricted Stock Units is
considered a private offering in Switzerland and is not subject to registration
in Switzerland.
TAIWAN
Notifications
Exchange Control Information. Taiwan’s foreign exchange control regulations may
have an impact on the grant and vesting of the Restricted Stock Units as well as
the repatriation of capital gains realized from the holding or sale of the
underlying Shares. Under current foreign exchange regulations, a Taiwanese
resident can remit up to US $5 million (or an equivalent amount of other foreign
currencies) per year into or out of Taiwan without prior approval from the
Taiwan Central Bank.
If the transaction amount is TWD500,000 or more in a single transaction, you
must submit a Foreign Exchange Transaction Form. If the transaction amount is
US$500,000 or more in a single transaction, you must also provide supporting
documentation to the satisfaction of the remitting bank.
UNITED KINGDOM
Terms and Conditions
Purpose. This section is to modify those provisions of the Plan in order for
awards made under the Plan, and communications concerning those awards, to be
exempt from provisions of the United Kingdom Financial Services and Markets Act
2000 (the "FSMA").
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Application. These provisions shall be used solely to grant awards to employees
of the Company or any member of the same group as the Company resident and
providing services in the United Kingdom. (The term "group" in relation to the
Company shall bear the meaning given to such term in section 421 of the FSMA.)
Restricted Delivery of Awards. Payments of benefits under these provisions shall
be made only in Shares or such other securities of the Company that may arise
from such Shares under the adjustment provisions of the Plan. For the avoidance
of doubt, and without limitation, no cash settlement of awards (including
dividends or dividend equivalent payments in cash) shall be permissible.
Exercise of Restricted Stock Units/Vesting of Awards. The Administrator may
specify, in its discretion, any other conditions of exercise and/or vesting of
awards that will be specified in the award agreement.
Restricted Transfer of Rights. The persons to whom rights under awards may be
assigned or transferred, whether by will or the laws of descent and distribution
or any transferability of awards shall be limited to a Participant's children
and step-children under the age of eighteen, spouses and surviving spouses and
civil partners and civil partners (within the meaning of the United Kingdom
Civil Partnerships Act 2004) and surviving partners.
Tax. All awards will be subject to tax withholding and all references to "tax"
shall be read and construed as including, without limitation, United Kingdom
income tax and primary class 1 (employee's) national insurance contributions
that the Participant's employer is liable to account for and, if so agreed
between the Company and the Participant, secondary class 1 (employer's) national
insurance contributions that the Participant's employer is liable to account
for.
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 10th day of September,
2020 by and between Verde Bio Holdings, Inc. (the “Company”), and GHS
Investments, LLC (the “Investor”).
Recitals
A.The Investor wishes to purchase from the Company and the Company wishes to
sell and issue to the Investor, upon the terms and conditions stated in this
Agreement, a Promissory Note in the original principal amount of $35,000
(“Note”).:
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have
the meanings set forth below:
“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries controls, is controlled by, or
is under common control with, such Person.
“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.
“Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).
“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction
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of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
“Intellectual Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
“Purchase Price” means $30,000 which includes a 10% issuance discount on the
Note and $2,000 being withheld by the Investor to offset transaction costs.
“SEC” means the United States Securities and Exchange Commission.
“Securities” means the Note and the common shares issuable at conversion.
“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first
Person.
“Transaction Documents” means this Agreement, the Note, the Company
Representation Letter, and supporting documents.
“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
2.Purchase and Sale of the Securities. Subject to the terms and conditions of
this Agreement, the Company shall sell and issue to the Investor the Note.
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2.1Security. As Security for the Company's obligations contained herein and in
all Notes issued by the Company to the Holder, following any Event of Default
which remains uncured for one hundred twenty (120) calendar days, the Holder
shall be granted an unconditional first priority interest in and to, any and all
property of the Company and its subsidiaries, of any kind or description,
tangible or intangible, whether now existing or hereafter arising or acquired
until the balance of all Notes has been reduced to $0. "Any and all property,"
as described herein shall be inclusive of, but not limited to, assets reported
by the Company on its SEC filings, cash, inventory, accounts receivable,
intellectual property rights, equipment and property. The Investor is authorized
to make all filings the Investor, in its discretion, deems necessary to evidence
its security interests.
3.Closing. Upon confirmation that the other conditions to closing specified
herein have been satisfied or duly waived by the Investor, the Company shall
deliver to the Investor, a Note registered the name of the Investor and the
Investor shall cause a wire transfer in same day funds to be sent to the account
of the Company as instructed in writing by the Company.
4.Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investor that, except as set forth in the schedules
delivered herewith (collectively, the “Disclosure Schedules”) and as disclosed
in the Company’s SEC Filings:
4. 1Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification or leasing necessary
unless the failure to so qualify has not and could not reasonably be expected to
have a Material Adverse Effect. The Company’s Subsidiaries are listed on the
Company’s public disclosures filed with the SEC.
4.2Authorization. The Company has full power and authority and, has taken all
requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) authorization of the performance of all obligations
of the Company hereunder or thereunder, and (iii) the authorization, issuance
(or reservation for issuance) and delivery of the Securities. The Transaction
Documents constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.
4.3Capitalization. As of the date hereof, the authorized common stock of the
Company on the date hereof is 5,000,000,000; (b) the number of shares of capital
stock issued and outstanding as of August 19th, 2020 is 42,459,078,; (c) the
number of shares of capital stock issuable pursuant to the Company’s stock plans
is zero; and (d) the number of shares of capital
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stock issuable and reserved for issuance pursuant to securities (other than the
Securities) exercisable for, or convertible into or exchangeable for any shares
of capital stock of the Company as of September 9, 2020 are only the shares
issued in connection with the conversion of the Note. All of the issued and
outstanding shares of the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of pre-emptive rights.
All of the issued and outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights, were issued in full compliance with applicable
state and federal securities law and any rights of third parties and are owned
by the Company, beneficially and of record, subject to no lien, encumbrance or
other adverse claim. No Person is entitled to pre-emptive or similar statutory
or contractual rights with respect to any securities of the Company. Other than
described herein and in the Company's periodic reports filed with the SEC, there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its Subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor any
of its Subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind.
The issuance and sale of the Securities hereunder will not obligate the Company
to issue shares of Common Stock or other securities to any other Person (other
than the Investor) and will not result in the adjustment of the exercise,
conversion, exchange or reset price of any outstanding security.
The Company does not have outstanding stockholder purchase rights or “poison
pill” or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.
4.4Valid Issuance. The issued Securities have been duly and validly authorized
and, when issued and paid for pursuant to this Agreement, shall be free and
clear of all encumbrances and restrictions (other than those created by the
Investor), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. Upon the due conversion of
the Debenture, the Converted Shares will be validly issued, fully paid and
non-assessable free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the Investor. The
Company has reserved a sufficient number of shares of Common Stock for issuance
upon the exercise of the Debenture, free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws and except for those created
by the Investor.
4.5Consents. The execution, delivery and performance by the Company of the
Transaction Documents, and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws, and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods. Subject to the accuracy of the
representations and warranties of the Investor set forth in Section 5 hereof,
the Company has taken all action necessary to exempt (i) the issuance and sale
of the Securities, (ii) the issuance of the Shares upon due conversion of
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the Debenture, and (iii) the other transactions contemplated by the Transaction
Documents from the provisions of any shareholder rights plan or other “poison
pill” arrangement, any anti-takeover, business combination or control share law
or statute binding on the Company or to which the Company or any of its assets
and properties may be subject and any provision of the Company’s Articles of
Incorporation or By-laws that is or could reasonably be expected to become
applicable to the Investor as a result of the transactions contemplated hereby,
including without limitation, the issuance of the Securities and the ownership,
disposition or voting of the Securities by the Investor or the exercise of any
right granted to the Investor pursuant to this Agreement or the other
Transaction Documents.
4.6Delivery of SEC Filings; Business. The Company has made available to the
Investor through the EDGAR system, true and complete copies of the Company’s
most recent Annual Report on Form 10-K for its last fiscal year (the “10-K”),
and all other reports filed by the Company pursuant to the 1934 Act since the
filing of the 10-K and prior to the date hereof (collectively, the “SEC
Filings”). The SEC Filings are the only filings required of the Company
pursuant to the 1934 Act for such period. The Company and its Subsidiaries are
engaged in all material respects only in the business described in the SEC
Filings and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and its Subsidiaries, taken as
a whole.
4.7Use of Proceeds. The net proceeds of the sale of the Note hereunder shall be
used by the Company for working capital and general corporate purposes. The
Company agrees that it shall not use the funds from this Agreement, at any time,
to lend money, give credit or make advances to any officers, directors,
employees, subsidiaries and affiliates of the Company.
4.8No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company’s Articles of Incorporation or the Company’s Bylaws, both as in effect
on the date hereof (true and complete copies of which have been made available
to the Investor through the EDGAR system), or (ii)(a) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, or (b) any agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or a Subsidiary is
bound or to which any of their respective assets or properties is subject.
4.9Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.
4.10No Directed Selling Efforts or General Solicitation. Neither the Company
nor any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Securities.
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4.11No Integrated Offering. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
1933 Act.
4.12Private Placement. The offer and sale of the Securities to the Investor as
contemplated hereby is exempt from the registration requirements of the 1933
Act.
5.Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:
5.1Organization and Existence. Such Investor is a validly existing corporation,
limited partnership or limited liability company and has all requisite
corporate, partnership or limited liability company power and authority to
invest in the Securities pursuant to this Agreement.
5.2Authorization. The execution, delivery and performance by such Investor of
the Transaction Documents to which such Investor is a party have been duly
authorized and will each constitute the valid and legally binding obligation of
such Investor, enforceable against such Investor in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.
5.3Purchase Entirely for Own Account. The Securities to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Securities
in compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.
5.4Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.
5.5Disclosure of Information. Such Investor has had an opportunity to receive
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. Such Investor
acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor
any other due diligence investigation conducted by such Investor shall
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modify, amend or affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.
5.6Restricted Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.
5.7Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:
(a)“The securities represented hereby may not be transferred unless (i) such
securities have been registered for sale pursuant to the Securities Act of 1933,
as amended, (ii) such securities may be sold pursuant to Rule 144(i), or (iii)
the Company has received an opinion of counsel reasonably satisfactory to it
that such transfer may lawfully be made without registration under the
Securities Act of 1933 or qualification under applicable state securities
laws.”
(b)If required by the authorities of any state in connection with the issuance
of sale of the Securities, the legend required by such state authority.
5.8Accredited Investor. Such Investor is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act.
5.9No General Solicitation. Such Investor did not learn of the investment in
the Securities as a result of any public advertising or general solicitation.
5.10Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor.
6. Conditions to Closing.
6.1Conditions to the Investor’s Obligations. The obligation of the Investor to
purchase the Note at Closing is subject to the fulfillment to such Investor’s
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by the Investor:
(a)The representations and warranties made by the Company in Section 4 hereof
qualified as to materiality shall be true and correct at all times prior to and
on the Closing Date, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier
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date, in which case such representation or warranty shall be true and correct in
all material respects as of such earlier date. The Company shall have performed
in all material respects all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b)The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities, and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.
(c)No judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.
(d)The Company shall have executed and delivered the Note and supporting
documentation.
(e)The Company shall have executed and delivered the Irrevocable Transfer Agent
Instructions.
(f)No stop order or suspension of trading shall have been imposed by the public
markets on which the Company’s common stock is traded or quoted, the SEC or any
other governmental or regulatory body with respect to public trading in the
Common Stock.
6.2Conditions to Obligations of the Company. The Company's obligation to sell
and issue the Note at Closing is subject to the fulfillment to the satisfaction
of the Company on or prior to the Closing Date of the following conditions, any
of which may be waived by the Company:
(a)The representations and warranties made by the Investor in Section 5 hereof,
other than the representations and warranties contained in Sections 5.3, 5.4,
5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and
correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date. The Investment Representations shall be
true and correct in all respects when made, and shall be true and correct in all
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date. The Investor shall have performed in all material
respects all obligations and conditions herein required to be performed or
observed by them on or prior to the Closing Date.
(b)The Investor shall have delivered the Purchase Price to the Company in
accordance with the schedule outlined herein.
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6.3Termination of Obligations to Effect Closing; Effects.
(a)The obligations of the Company, on the one hand, and the Investor, on the
other hand, to effect the Closing shall terminate as follows:
(i)Upon the mutual written consent of the Company and the Investor;
(ii)By the Company if any of the conditions set forth in Section 6.2 shall have
become incapable of fulfillment, and shall not have been waived by the Company;
(iii)By the Investor if any of the conditions set forth in Section 6.1 shall
have become incapable of fulfillment, and shall not have been waived by the
Investor; or provided, however, that, except in the case of clause (i) above,
the party seeking to terminate its obligation to effect the Closing shall not
then be in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement or the other Transaction Documents if
such breach has resulted in the circumstances giving rise to such party’s
seeking to terminate its obligation to effect the Closing.
7.Survival and Indemnification.
7.1 Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement.
7.2 Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates and their respective directors, officers, employees
and agents from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.
7.3 Conduct of Indemnification Proceedings. Promptly after receipt by any
Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 7.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however,that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the
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reasonable judgment of counsel to such Indemnified Person representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Company shall not be liable for any
settlement of any proceeding effected without its written consent, which consent
shall not be unreasonably withheld, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Company shall indemnify and
hold harmless such Indemnified Person from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment. Without the
prior written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not affect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such proceeding.
8.Miscellaneous.
8.1Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investor, as applicable,
provided, however, that an Investor may assign its rights and delegate its
duties hereunder in whole or in part to an Affiliate or to a third party
acquiring some or all of its Securities in a private transaction without the
prior written consent of the Company, after notice duly given by such Investor
to the Company. The provisions of this Agreement shall inure to the benefit of
and be binding upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
8.2Counterparts; This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may also be executed in
electronic form, which shall be deemed an original.
8.3Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.4Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
as hereinafter described (i) if given by personal delivery, then such notice
shall be deemed given upon such delivery, (ii) if given by fax, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by
an internationally recognized overnight air courier, then such notice shall be
deemed given one business day after delivery to such carrier. All notices shall
be addressed to the party to be notified at the address as follows, or at such
other address as such party may designate by ten days’ advance written notice to
the other party:
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If to the Company:
Verde Bio Holdings, Inc.
5 Cowboys Way, Suite 300Frisco, Texas 75034
Attn: Scott Cox
Email: scott@verdebh.com
Tel: 972-948-1179
If to the Investor:
GHS Investments, LLC
420 Jericho Turnpike, Suite 102
Jericho, NY 11753
8.5Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith. In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection
with this Agreement or the other Transaction Documents, the party or parties
which do not prevail in such proceedings shall severally, but not jointly, pay
their pro rata share of the reasonable attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.
8.6Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time outstanding, each
future holder of all such Securities, and the Company.
8.7Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
8.8Entire Agreement. This Agreement, including the Exhibits and the Disclosure
Schedules, and the other Transaction Documents constitute the entire agreement
among the parties hereof with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
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8.9Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.
8.10Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Nevada, without regard to principles of conflicts of law.
Each of the parties hereto irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in New York City, New York over any action
or proceeding arising out of or relating to this Agreement and the parties
hereto hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non conveniens.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.
The Company:Verde Bio Holdings Inc.
By:
Name:
Scott A. Cox
Title:
CEO
The Investor:GHS Investments, LLC.
By:
Member
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Disclosure Schedules/ Exhibits
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-14- |
Exhibit 10.01
Ninth Amendment
to the
Xcel Energy Senior Executive Severance and Change-In-Control Policy
THIS NINTH AMENDMENT is made this 22nd day of May, 2020, by Xcel Energy Inc.
(the “Principal Sponsor”).
WITNESSETH:
WHEREAS, the Principal Sponsor maintains the Xcel Energy Senior Executive
Severance and Change-In-Control Policy (the “Policy”), and
WHEREAS, the Board of Directors of the Principal Sponsor (the “Board”) has
reserved the right to make amendments to the Policy, and
WHEREAS, the Governance, Compensation and Nominating Committee of the Board of
Directors of the Principal Sponsor (the “Committee”) has reserved the right to
appoint or remove Participants under the Policy, and
WHEREAS, the Committee wishes to amend the Policy in certain respects to add a
Participant to Schedule I to be effective June 1, 2020.
NOW, THEREFORE, the Policy is hereby amended as follows:
1.Schedule I - Participants: Schedule I to the Policy is hereby amended to add
those noted below to the Schedule as a Tier I Participants:
NameTierSeverance MultipleChange-in-Control MultipleDarla Figoli113Amanda
Rome113
2.Savings Clause. Except as hereinabove set forth, the Xcel Energy Senior
Executive Severance and Change-In-Control Policy shall continue in full force
and effect.
IN WITNESS WHEREOF, Xcel Energy Inc. has caused this instrument to be enacted by
its duly authorized officer as of the date set forth to be effective June 1,
2020.
XCEL ENERGY INC.By:/s/ BEN FOWKEIts:Chairman and Chief Executive Officer
|
Exhibit 10.4
FIRST AMENDMENT TO
TRXADE GROUP, INC. 2019 EQUITY INCENTIVE PLAN
RESTRICTED STOCK GRANT AGREEMENT
This First Amendment to Restricted Stock Grant Agreement (“Agreement”), dated as
of July 23, 2020 (the “Effective Date”), amends that certain Trxade Group, Inc.
2019 Equity Incentive Plan Restricted Stock Grant Agreement dated April 14, 2020
(the “Award Agreement”, which term shall include the Notice of Restricted Stock
Grant which forms the first page thereof), entered into between [Grantee] (the
“Grantee”) and Trxade Group, Inc., a Delaware corporation (the “Company”),
pursuant to which Grantee was issued [Shares] shares of Restricted Stock of the
Company. Certain capitalized terms used below but not otherwise defined shall
have the meanings given to such terms in the Award Agreement and the Company’s
Amended and Restated 2019 Equity Incentive Plan, as applicable.
WHEREAS, the Company’s Board of Directors has approved amendments to the Award
Agreement to provide that the Restricted Stock shall vest immediately upon (a)
the death of Grantee; (b) the Retirement of the Grantee; and (c) a Change of
Control of the Company (collectively, the “Board Approved Amendments”); and
WHEREAS, the Company and Grantee desire to amend the Award Agreement on the
terms and conditions set forth below, to reflect the Board Approved Amendments.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, and considerations herein contained, and other good and valuable
consideration, which consideration the parties hereby acknowledge and confirm
the receipt and sufficiency thereof, the parties hereto agree as follows:
1. Amendments to Award Agreement.
(A) For the sake of clarity, and in an abundance of caution, the Company and the
Grantee confirm and acknowledge that all references to ‘Restricted Stock’ in the
Award Agreement shall refer to the ‘Shares’ referenced in the Notice of
Restricted Stock Grant which forms the first page of the Award Agreement.
(B) Effective as of the Effective Date, Section 3(c) of the Award Agreement
shall be amended and restated to read as follows:
“(c) Any Nonvested Shares will automatically vest and become nonforfeitable if
Grantee’s service with the Company ceases owing to the Grantee’s (a) death; or
(b) Retirement.”
(C) Effective as of the Effective Date, Section 3(d) of the Award Agreement
shall be amended and restated to read as follows:
First Amendment to Restricted Stock Grant Agreement
Page 1 of 3
“(d) Any Nonvested Shares will vest and become nonforfeitable immediately prior
to the date of a Change of Control, provided that the Board (or an authorized
committee thereof), in its discretion, may also accelerate the time at which all
or any portion of Grantee’s Nonvested Shares will vest prior to a contemplated
Change of Control.”
(D) Effective as of the Effective Date, Section 4 of the Award Agreement shall
be amended and restated to read as follows:
“4. Forfeiture of Nonvested Shares. Except as provided herein, if Grantee’s
service with the Company ceases for any reason (including Disability) other than
Grantee’s (a) Retirement or (b) death, any Nonvested Shares will be
automatically forfeited to the Company for no consideration; unless the Board
(or an authorized committee thereof) provides otherwise, and provided, however,
that the Board (or an authorized committee thereof) may cause any Nonvested
Shares immediately to vest and become nonforfeitable if Grantee’s service with
the Company is terminated by the Company without Cause.”
2. Effect of Agreement; Award Agreement to Continue in Full Force and Effect.
Upon the effectiveness of this Agreement, each reference in the Award Agreement
to “Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall
mean and be a reference to such Award Agreement as modified or amended hereby.
Except as specifically modified or amended herein, the Award Agreement and the
terms and conditions thereof shall remain in full force and effect.
3. Entire Agreement. This Agreement sets forth all of the promises, agreements,
conditions, understandings, warranties and representations among the parties
with respect to the transactions contemplated hereby and thereby, and supersedes
all prior agreements, arrangements and understandings between the parties,
whether written, oral or otherwise. This Agreement shall be read in connection
with the Award Agreement (as amended hereby).
4. Counterparts and Signatures. This Agreement and any signed agreement or
instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, may be executed in one or more counterparts, all of which
shall constitute one and the same instrument. Any such counterpart, to the
extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg
or similar attachment to electronic mail shall be treated in all manner and
respects as an original executed counterpart and shall be considered to have the
same binding legal effect as if it were the original signed version thereof
delivered in person.
[Remainder of page left intentionally blank. Signature page follows.]
First Amendment to Restricted Stock Grant Agreement
Page 2 of 3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written to be effective as of the Effective Date.
Company: Grantee: Trxade Group, Inc. Suren Ajjarapu
[Grantee] Chief Executive Officer
First Amendment to Restricted Stock Grant Agreement
Page 3 of 3
|
Exhibit 10.15
Execution Version
COMMITMENT INCREASE AGREEMENT
March 3, 2020
JPMorgan Chase Bank, N.A., as Administrative
Agent for the Lenders party to the Credit
Agreement referred to below (the
“Administrative Agent”)
500 Stanton Christiana Road, NCC5/Floor 1
Newark, DE 19713
Ladies and Gentlemen:
We refer to the Amended and Restated Senior Secured Revolving Credit Agreement
dated as of November 7, 2019 (as amended, modified or supplemented from time to
time, the “Credit Agreement”; the terms defined therein being used herein as
therein defined) among FS KKR Capital Corp. (“FSK”) and FS KKR Capital Corp. II
(formerly known as FS Investment Corporation II and successor by merger to FS
Investment Corporation III) ( the “Relevant Borrower” and together with FSK, the
“Borrowers”), the Lenders party thereto, ING Capital LLC, as Collateral Agent,
and JPMorgan Chase Bank, N.A., as Administrative Agent for said Lenders. You
have advised us that the Relevant Borrower has requested in two letters, each
dated March 3, 2020 (the “Increase Requests”), from the Relevant Borrower to the
Administrative Agent that the aggregate amount of the Commitments be increased
on the terms and subject to the conditions set forth herein.
A. Commitment Increase. Pursuant to Section 2.07(e) of the Credit Agreement, BNP
Paribas and ING Capital LLC (each, an “Increasing Lender” and together the
“Increasing Lenders”), hereby severally agree to make Loans in the amount set
forth opposite the name of such Increasing Lender listed in Schedule I hereto
pursuant to the instruction of the Administrative Agent, such Loans to be
effective as of the Increase Date (as defined in the Increase Requests);
provided that (i) the Administrative Agent shall have received a duly executed
officer’s certificate from the Relevant Borrower, dated the Increase Date, in
substantially the form of Exhibit I and (ii) the Administrative Agent shall have
received evidence of the payment by the Relevant Borrower of all fees due and
payable to the Increasing Lenders on the Increase Date that the Relevant
Borrower has agreed to pay in connection with this Agreement.
B. Confirmation of Each Increasing Lender. Each Increasing Lender (i) confirms
that it has received a copy of the Credit Agreement and the other Loan
Documents, together with copies of the financial statements referred to therein
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent
or any other Lender or Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; and (iii) acknowledges
and agrees that, from and after the Increase Date and subject to the conditions
in Clause (A) above, the Commitment Increase set forth opposite the name of such
Increasing Lender listed in Schedule I hereto shall be included in the
Commitment, and the Commitment Increase shall be governed for all purposes by
the Credit Agreement and the other Loan Documents.
C. Counterparts, etc.. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when
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taken together shall constitute a single contract. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy or e-mail shall be
effective as delivery of a manually executed counterpart of this Agreement. This
Agreement shall be deemed to be a Loan Document.
D. Governing Law, etc. The provisions of Sections 9.09 and 9.10 of the Credit
Agreement are incorporated herein by reference mutatis mutandis.
--------------------------------------------------------------------------------
Very truly yours, INCREASING LENDER BNP PARIBAS By: /s/ Laurent Vanderzyppe
Name: Laurent Vanderzyppe Title: Managing Director By: /s/ Liza Shabetayer
Name: Liza Shabetayer Title: Director
--------------------------------------------------------------------------------
INCREASING LENDER ING CAPITAL LLC By: /s/ Patrick Frisch
Name: Patrick Frisch
Title: Managing Director
By: /s/ Dominik Breuer
Name: Dominik Breuer
Title: Managing Director
--------------------------------------------------------------------------------
Accepted and agreed: FS KKR CAPITAL CORP. By: /s/ William Goebel Name:
William Goebel Title: Chief Accounting Officer
--------------------------------------------------------------------------------
FS KKR CAPITAL CORP. II By: /s/ William Goebel Name: William Goebel Title:
Chief Accounting Officer
--------------------------------------------------------------------------------
Acknowledged:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: /s/ Diego E. Nunes Name: Diego E. Nunes Title: Executive Director
--------------------------------------------------------------------------------
SCHEDULE I
Increasing Lender
Multicurrency
Commitment
BNP Paribas
$ 70,000,000
ING Capital LLC
$ 20,000,000 |
Management Incentive Plan Tied Restricted Share Unit
for the
Carnival plc 2014 Employee Share Plan (the Plan)
Grant Agreement - Conditional Right to Receive
This Management Incentive Plan Tied Restricted Share Unit Grant Agreement (the
Agreement), shall apply to the grant of Management Incentive Plan Tied
Restricted Share Units made to select Executives of Carnival plc (the Company),
on [DATE] under the Carnival plc 2014 Employee Share Plan (the Plan).
The Company hereby makes to you a Management Incentive Plan Tied restricted
share unit (the MTE RSUs) grant consisting of that number of MTE RSUs set forth
in your EquatePlus portfolio, on the terms and conditions set forth in the Plan
and this Agreement. In the event of any inconsistency, the rules of the Plan
shall take precedence. Any capitalized terms not otherwise defined in this
Agreement shall have the definitions set forth in the Plan.
1.Nature of Grant
Each MTE RSU comprised in your grant is equivalent to a hypothetical investment
in one ordinary share of $1.66 each in the capital of the Company (a Share).
Your grant is in the form of a conditional right to acquire the number of Shares
equal to the number of MTE RSUs comprised in your grant at a nil cost.
You will have no beneficial interest in any Shares during the Restricted Period.
2.Restricted Period
Your grant is subject to a Restricted Period. In this case, the Restricted
Period on the MTE RSUs shall expire on the second anniversary of the grant date
specified in your EquatePlus portfolio (the Grant Date).
Generally, your grant will be forfeited automatically on you ceasing to be an
employee of the plc Group (whether lawfully or unlawfully) before the expiry of
the Restricted Period. However, upon the termination of your employment with the
Combined Group or an Affiliate due to death, Disability or Retirement or as
otherwise set forth in subsections (c), (d) and (e) below, the grant shall be
released according to the following, unless and until you engage in competition
in violation of the Competition and Nondisclosure provisions below:
a)In the event you terminate by reason of death or Disability, the Restricted
Period shall lapse on the date of your death or Disability.
b)In the event you terminate by reason of Retirement, the MTE RSUs shall become
non-forfeitable, but shall remain subject to all other restrictions until the
end of the Restricted Period.
c)In the event you voluntarily terminate employment as a direct result of you
being diagnosed with a terminal medical condition, the Restricted Period shall
lapse as to 100% of the MTE RSUs and the MTE RSUs shall fully vest and become
non-restricted on the date of termination and shall be settled as soon as
practicable following the date of termination.
d)In the event a member of the Combined Group or an Affiliate terminates your
employment with such company for a reason other than for Cause and other than in
the circumstances set forth in subsection (e) below, you shall be deemed to have
vested on the date of termination in a number of MTE RSUs equal to the product
of (i) the number of MTE RSUs granted multiplied by (ii) a fraction, the
numerator of which is the number of days
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elapsed during the period commencing on the Grant Date through and including the
date of termination, and the denominator of which is 730, rounded down to the
nearest whole MTE RSU, and the remaining unvested portion of the MTE RSUs shall
terminate on the date of termination of employment or service. The Restricted
Period for these MTE RSUs shall lapse on the second anniversary of the Grant
Date.
e)In accordance with Section 12(a) of the Plan, in the event a member of the
Combined Group or an Affiliate terminates your employment with such company
other than for Cause upon or within 12 months following a Change in Control, the
Restricted Period shall lapse on the date of your termination of employment.
Notwithstanding anything herein to the contrary, but subject to the above, no
release of the grant shall be made, and all rights to this grant shall be
forfeited, if any of the following events shall occur:
a)Your employment with the Combined Group or an Affiliate is terminated for
Cause. For purposes of this Agreement, “Cause” shall be defined set forth in the
Plan;
b)You voluntarily terminate employment with the Combined Group or an Affiliate
prior to Retirement unless such voluntary termination is directly related to
death, Disability or you being diagnosed with a terminal medical condition;
c)You engage in competition, as more particularly described below, either (i)
during the term of your employment with the Combined Group or an Affiliate; (ii)
following your voluntary termination of employment with the Combined Group or an
Affiliate; or (iii) following the employing company’s termination of your
employment for any reason; or
d)You violate the nondisclosure provisions set forth below.
3.Release of Grant
You will be deemed to have called for the release of your grant on the date on
which your grant vests following expiration of the Restricted Period and
attainment of the vesting criteria set out in the Restricted Period clause above
unless the release of your grant would be prohibited by law, the Model Code for
Securities Transactions by Directors of Listed Companies or the Company’s
dealing code. In such a case you will be deemed to have called for the release
of your grant on the first date following vesting of your grant on which the
release of your grant would not be prohibited. This grant may only be settled in
Shares.
4.Dividends
The Compensation Committee has determined that on each occasion on which a
dividend is paid in respect of one Share, a notional amount of cash and shares
equal to the cash and share dividend paid in respect of one Share will be
credited to each MTE RSU comprised in your grant (the Dividend Equivalents).
Dividend Equivalents will be withheld by the Company for your account and will
be distributed to you in the form of additional Shares on settlement of your
grant. If your grant is forfeited, you will have no entitlement to such Dividend
Equivalents.
5.Taxation
You acknowledge that, regardless of any action taken by the Company or, if
different, your employer (the Employer), the ultimate liability for all income
tax, social insurance, payroll tax, fringe benefits tax, payment on account or
other tax-related items related to your participation in the Plan and legally
applicable to you (Tax-Related Items), is and remains your responsibility and
may exceed the amount actually withheld by the Company or the
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Employer. You further acknowledge that the Company and/or the Employer (1) make
no representations or undertakings regarding the treatment of any Tax-Related
Items in connection with any aspect of the grant, including, but not limited to,
the grant, vesting or settlement of the grant, the subsequent sale of Shares
acquired pursuant to such settlement and the receipt of any dividends and/or any
Dividend Equivalents; and (2) do not commit to and are under no obligation to
structure the terms of the grant or any aspect of the grant to reduce or
eliminate your liability for Tax-Related Items or achieve any particular tax
result. Further, if you are subject to Tax-Related Items in more than one
jurisdiction, you acknowledge that the Company and/or the Employer (or former
employer, as applicable) may be required to withhold or account for Tax-Related
Items in more than one jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you agree
to make adequate arrangements satisfactory to the Company and/or the Employer to
satisfy all Tax-Related Items. In this regard, you authorize the Company or its
agent to satisfy any applicable withholding obligations with regard to all
Tax-Related Items by one or a combination of the following: (i) withholding from
your wages or other cash compensation paid to you by the Company and/or the
Employer; or (ii) withholding from proceeds of the sale of Shares acquired upon
settlement of the grant either through a voluntary sale or through a mandatory
sale arranged by the Company (on your behalf pursuant to this authorization
without further consent); or (iii) withholding in Shares to be issued upon
settlement of the grant.
Notwithstanding the foregoing, if you are an officer subject to Section 16 of
the Exchange Act, the Company will not withhold in Shares upon the relevant
taxable or tax withholding event other than in the event that U.S. federal tax
withholding is required upon lapse of the forfeiture restrictions pursuant to
subsections (b), (c) or (d) in the “Restricted Period” section of this
Agreement, or if otherwise approved in advance by the Committee or the Board.
Depending on the withholding method, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding rates
or other applicable withholding rates, including maximum applicable rates, in
which case you may receive a refund of any over-withheld amount in cash and will
have no entitlement to the Share equivalent. If the obligation for Tax-Related
Items is satisfied by withholding in Shares, for tax purposes, you are deemed to
have been issued the full number of Shares subject to the vested grant,
notwithstanding that a number of the Shares are held back solely for the purpose
of paying the Tax-Related Items.
Finally, you agree to pay to the Company or the Employer any amount of
Tax-Related Items that the Company or the Employer may be required to withhold
or account for as a result of your participation in the Plan that cannot be
satisfied by the means previously described. The Company may refuse to issue or
deliver the Shares or the proceeds of the sale of Shares, if you fail to comply
with your obligations in connection with the Tax-Related Items.
6.Nature of Grant
In accepting the grant, you acknowledge, understand and agree that:
e)the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, to the extent permitted by the Plan;
f)the grant of your grant is exceptional, voluntary and occasional and does not
create any contractual or other right to receive future grants of MTE RSUs, or
benefits in lieu of MTE RSUs, even if MTE RSUs have been granted in the past;
g)all decisions with respect to future awards or other grants, if any, will be
at the sole discretion of the Company;
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h)the grant and your participation in the Plan shall not create a right to
employment or be interpreted as forming or amending an employment or service
contract with the Company, the Employer, or any member of the Combined Group and
its Affiliates and shall not interfere with the ability of the Company, the
Employer or any member of the Combined Group and its Affiliates, as applicable,
to terminate your employment or service relationship (if any);
i)you are voluntarily participating in the Plan;
j)the grant and the Shares subject to the grant, and the income from and value
of same, are not intended to replace any pension rights or compensation;
k)the grant and the Shares subject to the grant, and the income from and value
of same, are not part of normal or expected compensation for any purpose,
including, without limitation, calculating any severance, resignation,
termination, redundancy, dismissal, end-of-service payments, bonuses,
long-service awards, pension or retirement or welfare benefits or similar
payments;
l)the future value of the underlying Shares is unknown, indeterminable and
cannot be predicted with certainty;
m)no claim or entitlement to compensation or damages shall arise from forfeiture
of the grant resulting from the termination of your employment or other service
relationship (for any reason whatsoever, whether or not later found to be
invalid or in breach of employment laws in the jurisdiction where you are
employed or the terms of your employment agreement, if any);
n)unless otherwise agreed with the Company, the grant and the Shares, and the
income from and value of same, are not granted as consideration for, or in
connection with, the service you may provide as a director of the Company or any
member of the Combined Group and its Affiliates;
o)unless otherwise provided in the Plan or by the Company in its discretion, the
grant, and the benefits evidenced by this Agreement do not create any
entitlement to have the grant or any such benefits transferred to, or assumed
by, another company nor to be exchanged, cashed out or substituted for, in
connection with any corporate transaction affecting the shares of the Company;
and
p)neither the Company, the Employer or any member of the Combined Group or its
Affiliates shall be liable for any foreign exchange rate fluctuation between
your local currency and the British Pound Sterling that may affect the value of
the grant or of any amounts due to you pursuant to the settlement of the grant
or the subsequent sale of any Shares acquired upon settlement.
7.No Advice Regarding Grant
The Company is not providing any tax, legal or financial advice, nor is the
Company making any recommendations regarding your participation in the Plan, or
your acquisition or sale of the underlying Shares. You should consult with your
own personal tax, legal and financial advisors regarding your participation in
the Plan before taking any action related to the Plan.
8.Data Privacy
The Employer, the Company and any Affiliate may collect, use, process, transfer
or disclose your Personal Information for the purpose of implementing,
administering and managing
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your participation in the Plan, in accordance with the Carnival Corporation &
plc Equity Plans Participant Privacy Notice you have previously received.
(Please contact ownership@carnival.com if you would like to receive another copy
of this notice.) For example, your Personal Information may be directly or
indirectly transferred to Equatex AG or any other third party stock plan service
provider as may be selected by the Company, and any other third parties
assisting the Company with the implementation, administration and management of
the Plan.
9.Competition
The services you provide are unique, extraordinary and essential to the business
of the Combined Group or its Affiliates, particularly in view of your access to
the Combined Group or its Affiliates’ confidential information and trade
secrets. Accordingly, in consideration of the grant, you agree that you will
not, without the prior written approval of the Board of Directors, at anytime
during the term of your employment with the Combined Group or its Affiliates and
(except as provided below) for the then remaining duration of the Restricted
Period, if any, following the date on which your employment with the Combined
Group or its Affiliates terminates, directly or indirectly, within the cruise
industry wherever located, engage in any business activity directly or
indirectly competitive with the business of the Combined Group or its
Affiliates, or serve as an officer, director, owner, consultant, or employee of
any organization then in competition with the Combined Group or its Affiliates.
In addition, you agree that during such restricted period following your
employment with the Combined Group or its Affiliates, you will not solicit,
either directly or indirectly, any employee of the Combined Group or its
Affiliates, its subsidiaries or division, who was such at the time of your
separation from employment hereunder. In the event that this provision should
ever be adjudicated to exceed the time, geographic or other limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic or other
limitations permitted by applicable law.
10.Nondisclosure
You expressly agree and understand that the Combined Group or its Affiliates own
and/or control information and material which is not generally available to
third parties and which Combined Group or its Affiliates consider confidential,
including, without limitation, methods, products, processes, customer lists,
trade secrets and other information applicable to its business and that it may
from time to time acquire, improve or produce additional methods, products,
processes, customers lists, trade secrets and other information (collectively,
the Confidential Information). You acknowledge that each element of the
Confidential Information constitutes a unique and valuable asset of Combined
Group or its Affiliates, and that certain items of the Confidential Information
have been acquired from third parties upon the express condition that such items
would not be disclosed to Combined Group or its Affiliates and its officers and
agents other than in the ordinary course of business. You acknowledge that
disclosure of Combined Group or its Affiliates’ Confidential Information to
and/or use by anyone other than in Combined Group or its Affiliates’ ordinary
course of business would result in irreparable and continuing damage to Combined
Group or its Affiliates. Accordingly, you agree to hold the Confidential
Information in the strictest secrecy, and covenant that, during the term of your
employment with Combined Group or its Affiliates (or any member of the Combined
Group or its Affiliates) or at any time thereafter, you will not, without the
prior written consent of the Board of Directors, directly or indirectly, allow
any element of the Confidential Information to be disclosed, published or used,
nor permit the Confidential Information to be discussed, published or used,
either by himself or by any third parties, except in effecting your duties for
Combined Group or its Affiliates in the ordinary course of business. You agree
to keep all such records in connection with your employment as Combined Group or
its Affiliates may direct, and all such records shall be the sole and absolute
property of Combined Group or its Affiliates. You further agree that, within
five (5)
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days of Combined Group or its Affiliates’ request, you shall surrender to
Combined Group or its Affiliates any and all documents, memoranda, books,
papers, letters, price lists, notebooks, reports, logbooks, code books, salesmen
records, customer lists, activity reports, video or audio recordings, computer
programs and any and all other data and information and any and all copies
thereof relating to Combined Group or its Affiliates’ business or any
Confidential Information.
Notwithstanding the foregoing, nothing in this Agreement prohibits you from
voluntarily communicating, without notice to or approval by the Company, with
any federal or state government agency about a potential violation of a federal
or state law or regulation or to participate in investigations, testify in
proceedings regarding the Company's or an Affiliate’s past or future conduct, or
engage in any activities protected under whistle blower statutes. Further,
pursuant to the Defend Trade Secrets Act of 2016, you shall not be held
criminally, or civilly, liable under any federal or state trade secret law for
the disclosure of a trade secret that is made in confidence either directly or
indirectly to a federal, state, or local government official, or an attorney,
for the sole purpose of reporting, or investigating, a violation of law.
Moreover, you may disclose trade secrets in a complaint, or other document,
filed in a lawsuit, or other proceeding, if such filing is made under seal.
Finally, if you file a lawsuit alleging retaliation by the Company or an
Affiliate for reporting a suspected violation of the law, you may disclose the
trade secret to your attorney and use the trade secret in the court proceeding,
if you file any document containing the trade secret under seal and do not
disclose the trade secret, except pursuant to court order.
11.Clawback / Forfeiture
(a)In the case of fraud, negligence, intentional or gross misconduct or other
wrongdoing on your part (or any other event or circumstance set forth in any
clawback policy implemented by the Company, including, without limitation, any
clawback policy adopted to comply with the requirements of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and any rules or regulations
promulgated thereunder) that results in a material restatement of the Company’s
issued financial statements, you will (i) forfeit any unvested MTE RSUs and (ii)
be required to reimburse the Company for all or a portion, as determined by the
Committee in its sole discretion, of any income or gain realized on the
settlement of the MTE RSUs or the subsequent sale of Shares acquired upon
settlement of the MTE RSUs with respect to any fiscal year in which the
Company’s financial results are negatively impacted by such restatement. You
agree to and shall be required to repay any such amount to the Company within 30
days after the Company demands repayment. In addition, if the Company is
required by law to include an additional “clawback” or “forfeiture” provision to
outstanding awards, under the Dodd-Frank Wall Street Reform and Consumer
Protection Act or otherwise, then such clawback or forfeiture provision shall
also apply to this Agreement as if it had been included on the Grant Date and
the Company shall promptly notify you of such additional provision. In
addition, if you have engaged or are engaged in Detrimental Activity after your
employment or service with the Company or its Affiliates has ceased, then,
within 30 days after written demand by the Company, you shall return any income
or gain realized on the settlement of the MTE RSUs or the subsequent sale of
Shares acquired upon settlement of the MTE RSUs.
(b)For purposes of this Agreement, “Detrimental Activity” means any of the
following: (i) unauthorized disclosure of any Confidential Information or
proprietary information of the Combined Group, (ii) any activity that would be
grounds to terminate your employment or service with the Combined Group for
Cause, (iii) whether in writing or orally, maligning, denigrating or disparaging
the Combined Group or their respective predecessors and successors, or any of
the current or former directors, officers, employees, shareholders, partners,
members, agents or representatives of any of the foregoing, with respect to any
of
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their respective past or present activities, or otherwise publishing (whether in
writing or orally) statements that tend to portray any of the aforementioned
persons or entities in an unfavorable light, or (iv) the breach of any
noncompetition, nonsolicitation or other agreement containing restrictive
covenants, with the Combined Group. For purposes of the preceding sentence the
phrase “the Combined Group” shall mean “any member of the Combined Group or any
Affiliate”.
12.General
The grant is not transferable and may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered, other than in the limited
circumstances specified in rule 14(b) of the Plan.
13.Sale or Transfer of Shares upon Death / Separation from Employment
Following your death or termination of employment or service with the Company
and its Affiliates for any reason, you (or your legal representative, if
applicable) must provide for all Shares underlying the released grant (including
those issued under this Agreement as well as Shares underlying released grants
issued under any other similar agreement, whether on account of termination or
previously released in connection with the vesting terms of such similar
agreement) to be liquidated or transferred to a third party broker no later than
six months following the later of (i) your death or the date of termination, as
applicable, or (ii) the latest Settlement Date (whether under this Agreement or
a similar agreement) occurring following your death or termination. If you (or
your legal representative, as applicable) fail to liquidate or transfer the
Shares prior to the end of the applicable six month period, the Company is
hereby authorized and directed by you to either, in the Company’s discretion:
(i) sell any such remaining Shares on your (or your legal representative’s)
behalf on the next trading date following the end of such period on which the
Company is not prohibited from selling such Shares; or (ii) transfer such Shares
to the Company’s stock transfer agent for registration in your (or your legal
representative’s) name. The Company will not be responsible for any gain or loss
or taxes incurred with respect to the Shares underlying the released grants in
connection with such liquidation or transfer.
14.Compliance with Law
Notwithstanding any other provision of the Plan or this Agreement, unless there
is an available exemption from any registration, qualification or other legal
requirement applicable to the Shares, the Company shall not be required to
deliver any Shares issuable upon settlement of the grant prior to the completion
of any registration or qualification of the Shares under any local, state,
federal or foreign securities or exchange control law or under rulings or
regulations of the U.S. Securities and Exchange Commission (SEC) or of any other
governmental regulatory body, or prior to obtaining any approval or other
clearance from any local, state, federal or foreign governmental agency, which
registration, qualification or approval the Company shall, in its absolute
discretion, deem necessary or advisable. You understand that the Company is
under no obligation to register or qualify the Shares with the SEC or any state
or foreign securities commission or to seek approval or clearance from any
governmental authority for the issuance or sale of the Shares. Further, you
agree that the Company shall have unilateral authority to amend the Plan and the
Agreement without your consent to the extent necessary to comply with securities
or other laws applicable to issuance of Shares.
15.Insider Trading/Market Abuse Laws
You may be subject to insider trading restrictions and/or market abuse laws in
applicable jurisdictions, including the United States, the United Kingdom, and
your country, which may affect your ability to directly or indirectly, for
yourself or a third party, acquire or sell, or
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attempt to sell, Shares under the Plan during such times you are considered to
have “inside information” regarding the Company (as defined by the laws and
regulations in the applicable jurisdiction, including the United States, the
United Kingdom, and your country of residence), or may affect the trade in
Shares or the trade in rights to Shares under the Plan. Local insider trading
laws and regulations may prohibit the cancellation or amendment of orders you
placed before you possessed inside information. Furthermore, you could be
prohibited from (i) disclosing the inside information to any third party, which
may include fellow employees (other than on a “need to know” basis) and (ii)
“tipping” third parties or causing them otherwise to buy or sell securities.
Local insider trading laws and regulations may be the same or different from any
Company insider trading policy. You acknowledge that it is your responsibility
to be informed of and compliant with such regulations, and you should speak to
your personal advisor on this matter.
16.Foreign Asset/Account, Exchange Control and Tax Reporting
You may be subject to foreign asset/account, exchange control and/or tax
reporting requirements as a result of the acquisition, holding and/or transfer
of Shares or cash (including dividends, Dividend Equivalents and the proceeds
arising from the sale of Shares) derived from your participation in the Plan, to
and/or from a brokerage/bank account or legal entity located outside your
country. The applicable laws of your country may require that you report such
accounts, assets, the balances therein, the value thereof and/or the
transactions related thereto to the applicable authorities in such country. You
also may be required to repatriate sale proceeds or other funds received as a
result of your participation in the Plan to your country through a designated
bank or broker within a certain time after receipt. You acknowledge that you are
responsible for ensuring compliance with any applicable foreign asset/account,
exchange control and tax reporting requirements and should consult your personal
legal advisor on this matter.
17.Governing Law
The grant and the provisions of this Agreement are governed by, and subject to,
the laws of England. All disputes arising out of or in connection with the rules
shall be subject to the exclusive jurisdiction of the courts of England and
Wales.
18.Language
You acknowledge that you are proficient in the English language, or have
consulted with an advisor who is sufficiently proficient, so as to allow you to
understand the terms and conditions of this Agreement. If you have received this
Agreement or any other document related to the Plan translated into a language
other than English and if the meaning of the translated version is different
than the English version, the English version will control.
19.Electronic Delivery and Acceptance
The Company may, in its sole discretion, decide to deliver any documents related
to current or future participation in the Plan by electronic means. You hereby
consent to receive such documents by electronic delivery and agree to
participate in the Plan through an on-line or electronic system established and
maintained by the Company or a third party designated by the Company.
20.Severability
If any provision of the Agreement is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person or grant, or
would disqualify the Plan or any grant under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
grant, such provision shall be stricken as to such jurisdiction,
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person or grant and the remainder of the Plan and any such grant shall remain in
full force and effect.
21.Waiver
You acknowledge that a waiver by the Company of breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other provision
of this Agreement, or of any subsequent breach of this Agreement.
22.Country-Specific Provisions
The grant shall be subject to the additional terms and conditions set forth in
Appendix A for your country, if any. Moreover, if you relocate to one of the
countries included in Appendix A, the special terms and conditions for such
country will apply to you, to the extent the Company determines that the
application of such terms and conditions is necessary or advisable for legal or
administrative reasons. Appendix A constitutes part of this Agreement.
23.Imposition of Other Requirements
The Company reserves the right to impose other requirements on your
participation in the Plan, on the grant and on any Shares acquired under the
Plan, to the extent the Company determines it is necessary or advisable for
legal or administrative reasons, and to require you to sign any additional
agreements or undertakings that may be necessary to accomplish the foregoing.
This Agreement is notice of your grant under the Plan and should be kept in a
safe place.
EXECUTED AND DELIVERED )
AS A DEED BY CARNIVAL PLC )
ACTING BY A DIRECTOR )
AND A DIRECTOR )
OR THE SECRETARY )
Arnold W. Donald, Director
Arnaldo Perez, Secretary
APPENDIX A
Country Specific Information
TERMS AND CONDITIONS
This Appendix A includes additional terms and conditions that govern the grant
made to you if you reside in one of the countries listed herein. This Appendix A
forms part of the Agreement. These terms and conditions are in addition to, or
if so indicated, in place of, the terms and conditions in the Agreement.
If you are a citizen or resident of a country other than the one in which you
are currently working, are considered a resident of another country for local
law purposes or transfer employment and/or residency between countries after the
Grant Date, the Company shall, in its sole discretion, determine to what extent
the additional terms and conditions included herein will apply to you under
these circumstances.
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NOTIFICATIONS
This Appendix A also includes information regarding exchange controls,
securities laws and certain other issues of which you should be aware with
respect to your participation in the Plan. The information is based on the
exchange control, securities laws and other laws in effect in the respective
countries as of December 2018. Such laws are often complex and change
frequently. As a result, the Company strongly recommends that you not rely on
the information noted herein as the only source of information relating to the
consequences of your participation in the Plan because the information may be
out of date at the time you vest in the grant or when you sell the Shares
acquired under the Plan.
In addition, the information contained herein is general in nature and may not
apply to your particular situation, and the Company is not in a position to
assure you of any particular result. Accordingly, you are advised to seek
appropriate professional advice as to how the relevant laws in your country may
apply to your situation.
Finally, if you are a citizen or resident of a country other than the one in
which you are currently working, are considered a resident of another country
for local law purposes or transfer employment and/or residency between countries
after the Grant Date, the information contained herein may not be applicable in
the same manner to you.
Capitalized terms not explicitly defined in this Appendix A but defined in the
Agreement or Plan shall have the same definitions as in the Plan and/or the
Agreement.
ARGENTINA
TERMS AND CONDITIONS
Nature of Grant. This provision supplements the “Nature of Grant” section of the
Agreement:
In accepting the grant, you acknowledge and agree that the grant is made by the
Company (not the Employer) in its sole discretion and that the value of any
grants or Shares acquired under the Plan shall not constitute salary or wages
for any purpose under Argentine labor law, including the calculation of (i) any
labor benefits including, but not limited to, vacation pay, thirteenth salary,
compensation in lieu of notice, annual bonus, disability, and leave of absence
payments, or (ii) any termination or severance indemnities.
If, notwithstanding the foregoing, any benefits under the Plan are considered
for purposes of calculating any termination or severance indemnities, you
acknowledge and agree that such benefits shall not accrue more frequently than
on an annual basis.
NOTIFICATIONS
Securities Law Information. Neither your grant nor the underlying Shares are
publicly offered or listed on any stock exchange in Argentina and, as a result,
have not been and will not be registered with the Argentine Securities
Commission (Comisión Nacional de Valores, CNV). The offer is private and not
subject to the supervision of any Argentine governmental authority. Neither this
nor any other offering material related to the MTE RSUs, nor the underlying
Shares, may be utilized in connection with any general offering to the public in
Argentina. Argentine residents who acquire MTE RSUs under the Plan do so
according to the terms of a private offering made from outside Argentina.
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Exchange Control Information. Exchange control regulations in Argentina are
subject to frequent change. You are solely responsible for complying with any
applicable exchange control restrictions, approvals, and reporting requirements
in connection with the MTE RSUs. You should consult with your personal legal
advisor to ensure compliance with the applicable requirements.
Foreign Asset/Account Reporting Information. If you are an Argentine tax
resident, you must report any Shares acquired under the Plan and held by you on
December 31 of each year on your annual tax return for that year.
AUSTRALIA
Notifications
Tax Information. The Plan is a plan to which Subdivision 83A-C of the Income Tax
Assessment Act of 1997 (Cth) (the Act) applies (subject to the conditions of the
Act).
Australia Offer Document. The offer of the MTE RSUs is intended to comply with
the provisions of the Corporations Act 2001, Australian Securities and
Investments Commission (ASIC) Regulatory Guide 49 and ASIC Class Order 14/1000.
Additional details are set forth in the Offer Document for the Offer of MTE RSUs
to Australian Resident Employees.
AUSTRIA
Notifications
Exchange Control Information. If you hold Shares obtained through the Plan
outside Austria, you must submit a report to the Austrian National Bank. An
exemption applies if the value of the Shares as of any given quarter does not
meet or exceed €30,000,000 or as of December 31 does not meet or exceed
€5,000,000. If the former threshold is exceeded, quarterly obligations are
imposed, whereas if the latter threshold is exceeded, annual reports are
required. The quarterly reporting deadline is the fifteenth day of the month
following the last day of the respective quarter. The annual reporting date is
December 31 and the deadline for filing the annual report is January 31 of the
following year.
When Shares are sold, there may be exchange control obligations if the cash
received is held outside Austria. If the transaction volume of all your accounts
abroad meets or exceeds €10,000,000, the movements and balances of all accounts
must be reported monthly, as of the last day of the month, on or before the
fifteenth day of the following month.
BELGIUM
Notifications
Foreign Asset/Account Reporting Information. You are required to report any
security (e.g., Shares under the Plan) or bank accounts (including brokerage
accounts) opened and maintained outside Belgium on your annual tax return. In a
separate report, you are required to report to the National Bank of Belgium any
bank accounts opened and maintained outside Belgium. This report, as well as
additional information on how to complete it, can be found on the website of the
National Bank of Belgium, www.nbe.be, under the Kredietcentrales / Centrales des
crédits caption.
Stock Exchange Tax Information. A stock exchange tax applies to transactions
executed by a Belgian resident through a non-Belgian financial intermediary,
such as a U.S. broker.
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The stock exchange tax likely will apply when Shares acquired under the Plan are
sold. You should consult with your tax or financial advisor for additional
details on your obligations with respect to the stock exchange tax.
BRAZIL
TERMS AND CONDITIONS
Compliance with Law. By accepting the grant, you agree to comply with applicable
Brazilian laws and to report and pay applicable Tax-Related Items associated
with the settlement of the grant or the subsequent sale of the Shares acquired
under the Plan.
Nature of Grant. This provision supplements the “Nature of Grant” section of
the Agreement:
By accepting the grant, you agree that you are making an investment decision,
the Shares will be issued to you only if the vesting conditions are met and any
necessary services are rendered by you over the vesting period, and the value of
the underlying Shares is not fixed and may increase or decrease in value over
the vesting period without compensation to you.
Notifications
Exchange Control Information. If you are resident or domiciled in Brazil, you
will be required to submit an annual declaration of assets and rights held
outside Brazil to the Central Bank of Brazil if the aggregate value of such
assets and rights is equal to or greater than US$100,000. Assets and rights that
must be reported include Shares acquired under the Plan.
Tax on Financial Transaction (IOF). Cross-border financial transactions relating
to the grant may be subject to the IOF (tax on financial transactions). You are
solely responsible for complying with any applicable IOF arising from your
participation in the Plan. You should consult with your personal tax advisor for
additional details.
CANADA
TERMS AND CONDITIONS
Form of Settlement. Notwithstanding any discretion contained in rule 9(g) of the
Plan, the grant is payable in Shares only.
Notifications
Securities Law Information. You are permitted to sell Shares acquired under the
Plan through the designated broker appointed under the Plan, if any, provided
the sale of the Shares takes place outside Canada through the facilities of a
stock exchange on which the Shares are listed (i.e., the London Stock Exchange).
Foreign Asset/Account Reporting Information. You are required to report any
specified foreign property (including MTE RSUs and Shares) on form T1135
(Foreign Income Verification Statement) if the total cost of the specified
foreign property exceeds C$100,000 at any time in the year. The form must be
filed by April 30 of the following year. MTE RSUs
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must be reported – generally at a nil cost – if the C$100,000 cost threshold is
exceeded because of other specified foreign property you hold. When Shares are
acquired, their cost generally is the adjusted cost base (ACB) of the Shares.
The ACB would ordinarily equal the fair market value of the Shares at the time
of acquisition, but if you own other shares, this ACB may have to be averaged
with the ACB of the other shares. It is your responsibility to comply with
applicable reporting obligations. You should consult with your personal legal
advisor to ensure compliance with applicable reporting obligations.
CHINA
TERMS AND CONDITIONS
The following terms and conditions will be applicable to you to the extent that
the Company, in its sole discretion, determines that your participation in the
Plan will be subject to exchange control restrictions in the People’s Republic
of China (PRC), as implemented by the PRC State Administration of Foreign
Exchange (SAFE):
Vesting. This provision supplements the “Restricted Period” section of the
Agreement:
Notwithstanding anything to the contrary in the Agreement, the grant will not
vest and no Shares will be issued to you unless and until all necessary exchange
control or other approvals with respect to the grant under the Plan are obtained
from SAFE or its local counterpart (SAFE Approval), as determined by the Company
in its sole discretion. In the event that SAFE Approval has not been obtained,
or the Company is unable to maintain its SAFE approval, prior to any date(s) on
which the grant is scheduled to vest in accordance with the Vesting Schedule set
forth in Appendix A to the Agreement, the grant will not vest until the seventh
day of the month following the month in which SAFE Approval is obtained or
reinstated (the Actual Vesting Date). If your Employment terminates prior to the
Actual Vesting Date, you shall not be entitled to vest in any portion of the
grant and the grant shall be forfeited without any liability to the Company, the
Employer or any member of the Combined Group and its Affiliates.
If or to the extent the Company is unable to obtain or maintain SAFE Approval,
no Shares subject to the MTE RSUs for which SAFE Approval has not been obtained
or maintained shall be issued. In this case, the Company retains the discretion
to settle any MTE RSUs in cash paid through local payroll in an amount equal to
the market value of the Shares subject to the MTE RSUs less any Tax-Related
Items; provided, however, that in case the Company is able to obtain or
reinstate its SAFE Approval with respect to any MTE RSUs, the cash payment for
MTE RSUs not covered by the SAFE Approval shall not be made until the SAFE
Approval has been obtained or reinstated.
Settlement of MTE RSUs and Sale of Shares. This provision supplements the
“Release of Grant” section of the Agreement:
Notwithstanding anything to the contrary in the Plan or the Agreement, to
facilitate compliance with PRC exchange control restrictions you agree that any
Shares acquired at settlement of the grant may be immediately sold at settlement
or, at the Company’s discretion, at a later time (including when you terminate
your Employment for any reason). If, however, the sale of the Shares is not
permissible under the Company’s insider trading policy, the Company retains the
discretion to postpone the issuance of the Shares subject to the vested grant
until such time that the sale is again permissible and to then immediately sell
the Shares subject to the grant. You further agree that the Company is
authorized to
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instruct its designated broker to assist with the mandatory sale of the Shares
(on your behalf pursuant to this authorization), and you expressly authorize
such broker to complete the sale of the Shares. You acknowledge that the
Company’s designated broker is under no obligation to arrange for the sale of
Shares at any particular price. Upon the sale of the Shares, the Company agrees
to pay the cash proceeds from the sale, less any brokerage fees or commissions,
to you in accordance with applicable exchange control laws and regulations and
provided any liability for Tax-Related Items has been satisfied. Due to
fluctuations in the share price and/or the United States Dollar exchange rate
between the settlement date and (if later) the date on which the Shares are
sold, the sale proceeds may be more or less than the market value of the Shares
on the settlement date (which is the amount relevant to determining your tax
liability). You understand and agree that the Company is not responsible for the
amount of any loss you may incur and that the Company assumes no liability for
any fluctuation in the share price and/or United States Dollar exchange rate.
You further agree that any Shares to be issued to you shall be deposited
directly into an account with the Company’s designated broker. The deposited
Shares shall not be transferable (either electronically or in certificate form)
from the brokerage account. This limitation shall apply both to transfers to
different accounts with the same broker and to transfers to other brokerage
firms. The limitation shall apply to all Shares issued to you under the Plan,
whether or not you continue to be employed by the Company, the Combined Group or
one of its Affiliates.
Exchange Control Restrictions. By accepting the grant, you understand and agree
that you will be required to immediately repatriate to China the proceeds from
the sale of any Shares acquired under the Plan or from any cash dividends paid
or such Shares. You further understand that such repatriation of the proceeds
may need to be effected through a special exchange control account established
by the Company or any Affiliate, and you hereby consent and agree that the
proceeds may be transferred to such account by the Company (or its designated
broker) on your behalf prior to being delivered to you. You also acknowledge and
understand that there may be a delay between the date the Shares are sold and
the date the cash proceeds are distributed to you. You further agree to sign any
agreements, forms and/or consents that may be reasonably requested by the
Company (or the Company’s designated broker) to effectuate such transfers.
The proceeds may be paid to you in United States Dollars or local currency, at
the Company’s discretion. If the proceeds are paid to you in United States
Dollars, you understand that you will be required to set up a United States
Dollar bank account in China so that the proceeds may be deposited into this
account. If the proceeds are paid to you in local currency, (i) you acknowledge
that the Company is under no obligation to secure any particular exchange
conversion rate and that the Company may face delays in converting the proceeds
to local currency due to exchange control restrictions, and (ii) you agree to
bear any currency fluctuation risk between the time the Shares are sold or
dividends are paid and the time the proceeds are converted to local currency and
distributed to you. You agree to comply with any other requirements that may be
imposed by the Company in the future in order to facilitate compliance with
exchange control requirements in China.
FRANCE
TERMS AND CONDITIONS
Consent to Receive Information in English. By accepting the grant, you confirm
having read and understood the documents relating to this grant (the Plan and
the Agreement)
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which were provided in the English language. You accept the terms of these
documents accordingly.
Consentement relatif à l’utilisation de la langue anglaise. En acceptant
l’attribution, vous confirmez ainsi avoir lu et compris les documents relatifs à
cette attribution (le Plan et ce Contrat) qui ont été communiqués en langue
anglaise. Vous en acceptez les termes en connaissance de cause.
Notifications
Foreign Asset/Account Reporting Information. If you retain Shares acquired under
the Plan outside France or maintain a foreign bank account, you must report such
to the French tax authorities when filing your annual tax return. Failure to
comply could trigger significant penalties.
GERMANY
NOTIFICATIONS
Exchange Control Information. Cross-border payments in excess of €12,500
(including transactions made in connection with the sale of securities) must be
reported monthly to the German Federal Bank (Bundesbank). If you make or receive
a payment in excess of this amount, you must report the payment to Bundesbank
electronically using the “General Statistics Reporting Portal” (Allgemeines
Meldeportal Statistik) available via Bundesbank’s website (www.bundesbank.de).
Foreign Asset/Account Reporting Information. If your acquisition of Shares under
the Plan leads to a so-called qualified participation at any point during the
calendar year, you will need to report the acquisition when you file your tax
return for the relevant year. A qualified participation is attained if (i) the
value of the Shares acquired exceeds EUR 150,000 or (ii) in the unlikely event
you hold Shares exceeding 10% of the ordinary shares in the capital of the
Company.
HONG KONG
TERMS AND CONDITIONS
Sale Restriction. Shares received at vesting are accepted as a personal
investment. In the event that the grant vests and Shares are issued to you (or
your legal representatives) within six months of the Grant Date, you (or your
legal representatives) agree that the Shares will not be offered to the public
or otherwise disposed of prior to the six-month anniversary of the Grant Date.
NOTIFICATIONS
Securities Law Information. WARNING: The contents of this document have not been
reviewed by any regulatory authority in Hong Kong. You are advised to exercise
caution in relation to the offer. If you are in any doubt about any of the
contents of the Agreement, including this Appendix A, or the Plan, you should
obtain independent professional advice. Neither the grant of the grant nor the
issuance of Shares upon settlement of the grant constitutes a public offering of
securities under Hong Kong law and is available only to
15
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employees of the Company and members of the Combined Group and its Affiliates.
The Agreement, the Plan and other incidental communication materials distributed
in connection with the grant have not been prepared in accordance with and are
not intended to constitute a “prospectus” for a public offering of securities
under the applicable securities legislation in Hong Kong and are intended only
for the personal use of each eligible employee of the Company or members of the
Combined Group and its Affiliates and may not be distributed to any other
person.
Nature of Scheme. The Plan is not intended to be an occupational retirement
scheme for purposes of the Occupational Retirement Schemes Ordinance.
ITALY
TERMS AND CONDITIONS
Plan Document Acknowledgment. In accepting the grant, you acknowledge that you
have received a copy of the Plan and the Agreement, have reviewed the Plan and
the Agreement in their entirety and fully understand and accept all provisions
of the Plan and the Agreement.
You acknowledge that you have read and specifically and expressly approve the
following sections of the Agreement: Restricted Period; Taxation; Nature of
Grant; Governing Law; and Language.
NOTIFICATIONS
Foreign Asset/Account Reporting Information. If you are an Italian resident and
hold investments or financial assets outside Italy (e.g., cash, MTE RSUs,
Shares) during any fiscal year which may generate income taxable in Italy (or if
you are the beneficial owner of such an investment or asset even if you do not
directly hold the investment or asset), you are required to report such
investments or assets on your annual tax return for such fiscal year (on UNICO
Form, RW Schedule, or on a special form if you are not required to file a tax
return).
JAPAN
NOTIFICATIONS
Foreign Asset/Account Reporting Information. You are required to report details
of any assets held outside Japan as of December 31 (including Shares acquired
under the Plan), to the extent such assets have a total net fair market value
exceeding ¥50 million. Such report will be due by March 15 each year. You should
consult with your personal tax advisor to determine if the reporting obligation
applies to you and whether you will be required to include details of your
outstanding MTE RSUs, as well as Shares, in the report.
Korea
Notifications
Foreign Asset/Account Reporting Information. If you are a Korean resident, you
must declare all of your foreign financial accounts (i.e., non-Korean bank
accounts, brokerage accounts, etc.) to the Korean tax authority and file a
report with respect to such accounts if the monthly balance of such accounts
exceeds KRW 500 million (or an equivalent amount in
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foreign currency) on any month-end date in a calendar year. You should consult
with your personal tax advisor to determine how to value your foreign accounts
for such purposes and your personal reporting obligations.
NETHERLANDS
There are no country specific provisions.
SINGAPORE
TERMS AND CONDITIONS
Restrictions on Sale. You agree that, in the event that any portion of the grant
vests prior to the six-month anniversary of the Grant Date, you will not sell
any Shares acquired at vesting prior to the six-month anniversary of the Grant
Date, unless such sale or offer is made pursuant to the exemptions under Part
XIII Division (1) Subdivision (4) (other than section 280) of the Securities and
Futures Act (Chapter 289, 2006 Ed.) (SFA).
NOTIFICATIONS
Securities Law Information. The grant is being made pursuant to the “Qualifying
Person” exemption under section 273(1)(f) of the SFA under which it is exempt
from the prospectus and registration requirements under the SFA and is not made
to you with a view to the Shares being subsequently offered for sale to any
other party. The Plan has not been lodged or registered as a prospectus with the
Monetary Authority of Singapore.
Chief Executive Officer and Director Notification Requirement. The Chief
Executive Officer (“CEO”) and the directors, associate directors or shadow
directors1 of a Singapore Subsidiary or Affiliate are subject to certain
notification requirements under the Singapore Companies Act. Specifically, the
CEO and directors must notify the Singapore Subsidiary or Affiliate in writing
of an interest (e.g., MTE RSUs, Shares, etc.) in the Company or any related
company within two business days of (i) its acquisition or disposal, (ii) any
change in a previously-disclosed interest (e.g., upon vesting / settlement of
the grant or when Shares acquired under the Plan are subsequently sold), or
(iii) becoming the CEO or a director.
1 A shadow director is an individual who is not on the board of directors of the
Singapore Subsidiary or Affiliate, but who has sufficient control so that the
board of directors of the Singapore Subsidiary or Affiliate acts in accordance
with the directions or instructions of the individual
SPAIN
TERMS AND CONDITIONS
Nature of Grant. The following provision supplements the “Nature of Grant”
section of the Agreement:
In accepting the grant, you consent to participation in the Plan and acknowledge
that you have received a copy of the Plan.
You understand that the Company has unilaterally, gratuitously and in its sole
discretion decided to make grants under the Plan to individuals who may be
employees of the Company, the Employer, or any member of the Combined Group and
its Affiliates throughout the world. This decision is a limited decision that is
entered into upon the express
17
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assumption and condition that any grant will not bind the Company, the Employer,
or any member of the Combined Group and its Affiliates. Consequently, you
understand that the grant is made on the assumption and condition that the grant
and any Shares issued upon settlement of the grant are not a part of any
employment contract (either with the Company or any member of the Combined Group
and its Affiliates) and shall not be considered a mandatory benefit, salary for
any purposes (including severance compensation) or any other right whatsoever.
Further, you understand and agree that, unless otherwise expressly provided for
by the Company or set forth in the Agreement, the grant will be cancelled
without entitlement to any Shares if you cease to be an eligible Employee for
any reason, including, but not limited to: resignation, disciplinary dismissal
adjudged to be with cause, disciplinary dismissal adjudged or recognized to be
without cause (i.e., subject to a “despido improcedente”), material modification
of the terms of employment under Article 41 of the Workers’ Statute, relocation
under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, or
under Article 10.3 of Royal Decree 1382/1985. The Committee, in its sole
discretion, shall determine the date when your status as an eligible Employee
has terminated for purposes of the grant.
In addition, you understand that this grant would not be made to you but for the
assumptions and conditions referred to above; thus, you acknowledge and freely
accept that should any or all of the assumptions be mistaken or should any of
the conditions not be met for any reason, then any grant of, or right to, the
grant shall be null and void.
NOTIFICATIONS
Securities Law Information. No “offer of securities to the public,” as defined
under Spanish law, has taken place or will take place in the Spanish territory
in connection with the grant. The Agreement has not been, nor will it be,
registered with the Comisión Nacional del Mercado de Valores, and does not
constitute a public offering prospectus.
Exchange Control Information. You must declare the acquisition, ownership and
disposition of Shares to the Spanish Dirección General de Comercio e Inversiones
(the DGCI) of the Ministry of Economy and Competitiveness on a Form D-6.
Generally, the declaration must be made in January for Shares owned as of
December 31 of the prior year and/or Shares acquired or disposed of during the
prior year; however, if the value of Shares acquired or disposed of or the
amount of the sale proceeds exceeds €1,502,530 (or if you hold 10% or more of
the share capital of the Company or other such amount that would entitle you to
join the Company’s Board of Directors), the declaration must be filed within one
month of the acquisition or disposition, as applicable.
In addition, you may be required to electronically declare to the Bank of Spain
any foreign accounts (including brokerage accounts held abroad), any foreign
instruments (including Shares acquired under the Plan), and any transactions
with non-Spanish residents (including any payments of Shares made pursuant to
the Plan), depending on the balances in such accounts together with the value of
such instruments as of December 31 of the relevant year, or the volume of
transactions with non-Spanish residents during the relevant year.
Foreign Asset/Account Reporting Information. To the extent that you hold rights
or assets (e.g., cash or Shares held in a bank or brokerage account) outside
Spain with a value in excess of €50,000 per type of right or asset (e.g.,
Shares, cash, etc.) as of December 31 each year, you are required to report
information on such rights and assets on your tax return for such year. After
such rights or assets are initially reported, the reporting obligation will only
apply for subsequent years if the value of any previously-reported rights or
assets
18
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increases by more than €20,000 or if you transfer or dispose of any
previously-reported rights or assets. The reporting must be completed by March
31. Failure to comply with this reporting requirement may result in penalties.
Accordingly, you are should consult with your personal tax and legal advisors to
ensure that you are properly complying with your reporting obligations.
SWITZERLAND
NOTIFICATIONS
Securities Law Information. The offer of MTE RSUs is considered a private
offering in Switzerland; therefore, it is not subject to registration in
Switzerland. Neither this document nor any other materials relating to the grant
(i) constitutes a prospectus as such term is understood pursuant to article 652a
of the Swiss Code of Obligations, (ii) may be publicly distributed nor otherwise
made publicly available in Switzerland or (iii) have been or will be filed with,
approved or supervised by any Swiss regulatory authority, including the Swiss
Financial Market Supervisory Authority (FINMA)).
TAIWAN
NOTIFICATIONS
Securities Law Information. The offer of participation in the Plan is available
only for employees of the Company and members of the Combined Group and its
Affiliates. The offer of participation in the Plan is not a public offer of
securities by a Taiwanese company.
Exchange Control Information. You may acquire and remit foreign currency
(including cash dividends, Dividend Equivalents, proceeds from the sale of
Shares) into and out of Taiwan up to US$5,000,000 per year. If the transaction
amount is TWD 500,000 or more in a single transaction, you must submit a Foreign
Exchange Transaction Form and also provide supporting documentation to the
satisfaction of the remitting bank.
UNITED KINGDOM
TERMS AND CONDITIONS
Taxation. This provision supplements the “Taxation” section of the Agreement:
Without limitation to the “Taxation” section of this Agreement, if you are a
U.K. tax resident, you will be liable for all Tax-Related Items and hereby
covenant to pay all such Tax-Related Items as and when requested by the Company
or any Affiliate or by Her Majesty's Revenue and Customs (HMRC) (or any other
tax authority or any other relevant authority). You also agree to indemnify and
keep indemnified the Company and any Affiliate against any Tax-Related Items
that they are required to pay or withhold or have paid or will pay on your
behalf to HMRC (or any other tax authority or any other relevant authority).
Notwithstanding the foregoing, if you are a director or executive officer of the
Company (within the meaning of Section 13(k) of the Exchange Act), you may not
be able to indemnify the Company for the amount of any income tax not collected
from or paid by you, in case the indemnification could be considered a loan. In
this case, the income tax not collected or paid may constitute a benefit to you
on which additional income tax and National Insurance contributions may be
payable. You will be responsible for reporting and paying any income tax due on
this additional benefit directly to HMRC under the self-assessment regime and
for paying the Company or the Employer, as applicable, for the value of any
employee National Insurance
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contributions due on this additional benefit, which the Company or the Employer
may recover from you by any of the means referred to in this Agreement.
In addition, you agree that the Company and/or the Employer may calculate the
income tax to be withheld and accounted for by reference to the maximum
applicable rates, without prejudice to any right you may have to recover any
overpayment from HMRC or any applicable tax authority.
UNITED STATES
TERMS AND CONDITIONS
Taxation. This provision supplements the “Taxation” section of the Agreement:
Notwithstanding anything in the Agreement to the contrary, the Company may cause
a portion of the MTE RSUs to vest prior to the applicable date set forth in the
“Restricted Period” section of this Agreement in order to satisfy any
Tax-Related Items that arise prior to the date of settlement of the MTE RSUs;
provided that to the extent necessary to avoid a prohibited distribution under
Section 409A of the Code, the number of MTE RSUs so accelerated and settled
shall be with respect to a number of Shares with a value that does not exceed
the liability for such Tax-Related Items.
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Exhibit 10.1
Execution Copy
LOGO [g878420g22m50.jpg]
II-VI INCORPORATED, 375 Saxonburg Boulevard, Saxonburg, PA 16056
General Offices: 724-352-4455
AMENDED & RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
effective as of this 26th day of January, 2020, by and between II-VI
INCORPORATED, a Pennsylvania corporation (the “Employer”), and Vincent D.
Mattera, Jr. (the “Employee”).
PREAMBLE
Employer has employed Employee as its Chief Executive Officer under the terms of
an employment agreement between Employer and Employee dated August 1, 2016 (the
“Prior Agreement”). The initial term under the Prior Agreement ended on
August 1, 2019, and the Prior Agreement is currently in a one-year renewal term
scheduled to expire on August 1, 2020. Employer desires to continue to employ
Employee as its Chief Executive Officer beyond August 1, 2020. This Agreement
extends the employment term and updates certain provisions regarding Employee’s
compensation opportunities, especially in light of the acquisition of Finisar
Corporation. This Agreement replaces and supersedes the Prior Agreement in its
entirety upon becoming effective.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties hereto agree to the following:
1. Employment. Employer shall continue to employ Employee as Chief Executive
Officer to perform such duties as may be determined and assigned to Employee by
the Employer from time to time.
2. Term. Subject to earlier termination as provided in this Agreement,
Employee shall be employed for a term beginning on August 1, 2019 and ending on
August 1, 2023 (the “Initial Term”). Employee’s employment shall automatically
be extended for successive additional terms of one (1) year (each a “Renewal
Term”) unless either party gives the other written notice of its intent not to
renew at least ninety (90) days prior to the end of the Initial Term or the then
current Renewal Term. As used herein, “Term” shall mean collectively the Initial
Term and any Renewal Term(s). Notwithstanding any provision herein to the
contrary, Employee’s employment may be terminated prior to the end of the Term
in accordance with Section 10(a) either: (i) by Employee for any reason (i.e.,
with or without “Good Reason” as defined herein), (ii) by Employer for any
reason (i.e., with or without “Cause” as defined herein), or (iii) due to
Employee’s death or Employee having become permanently disabled as reasonably
determined by Employer’s board of directors (the “Board of Directors”) or as
certified by a qualified physician selected by the Board of Directors
(“Disability”).
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3. Compensation.
(a) Total Direct Compensation. In consideration of the services to be
performed by Employee, Employer agrees to pay Employee a base salary payable in
equal installments at the regularly scheduled pay dates of Employer. In addition
to base salary, Employee shall be eligible to receive cash bonuses and annual
long-term incentive awards as Employer shall determine from time to time at
Employer’s discretion and consistent with Employer’s senior executive
compensation policies and practices as established by the Board of Directors
from time to time and exclusive of the Deferred Compensation Plan contribution
described in Section 3(b) (collectively, the “Total Direct Compensation”).
Employee’s Total Direct Compensation for Employer’s Fiscal Year 2020 (July 1,
2019 – June 30, 2020) shall be the amounts shown and described on Exhibit 1,
which is attached hereto and incorporated herein. Employee’s base salary may be
adjusted from time to time in accordance with Employer’s performance review
processes and policies, provided that in no event will the amount of Employee’s
base salary be reduced.
(b) Annual Employer Contribution Under the Deferred Compensation Plan. On
September 1, 2019, under the terms of the Prior Agreement, Employer credited
Employee’s account under Employer’s Nonqualified Deferred Compensation Plan (the
“Deferred Compensation Plan”) with an Employer contribution in the amount of
$100,000. As an additional retention incentive for Employee’s service during the
Initial Term, Employer shall credit Employee’s account under the Deferred
Compensation Plan with an Employer contribution in the following amounts on each
the following dates, provided Employee has not separated from service with
Employer prior to such date:
Date
Amount of Credit
June 30, 2020
$ 150,000
June 30, 2021
$ 450,000
June 30, 2022
$ 700,000
June 30, 2023
$ 1,000,000
Such Employer contributions shall be (i) vested as of the date credited except
in the case of involuntary termination by Employer for Cause, (ii) periodically
adjusted for deemed earnings in accordance with the terms of the Deferred
Compensation Plan, and (iii) payable to Employee in a single lump sum cash
payment upon Employee’s “separation from service” in accordance with the terms
of the Deferred Compensation Plan (subject to any six-month payment delay
required by “Section 409A” (as defined herein) and the terms of the Deferred
Compensation Plan).
(c) Other Benefits. Employer also agrees to provide Employee with fringe
benefits and all other benefits from time to time provided to similarly situated
executive employees. Employer agrees to provide Employee with life insurance
coverage in an amount equal to two (2) times Employee’s annual base salary.
Employer agrees to provide Employee with a long-term disability benefit which
will provide Employee with a disability benefit in an amount equal to sixty
percent (60%) of his annual base salary in excess of two hundred thousand
dollars ($200,000) (“Supplemental Disability Benefit”). The Supplemental
Disability Benefit will be payable to Employee provided Employee has satisfied
and continues to satisfy the eligibility provisions and been determined to be
disabled under Employer’s long-term disability plan provided to all employees of
Employer. Employer shall pay directly
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to Employee the Supplemental Disability Benefit in equal monthly installments,
subject to all applicable withholding as required by law, and shall provide
Employee with the Supplemental Disability Benefit until Employee attains the age
of sixty-six (66). Employee shall be eligible to receive five (5) weeks of
vacation per year.
4. Full Time, Best Efforts and Conduct. Employee covenants and agrees to
devote all of Employee’s business time and efforts to the faithful performance
of the duties assigned to Employee from time to time by Employer, except to the
extent that Employer expressly permits Employee to engage in outside activities
during business hours. Employer and Employee acknowledge that from time to time,
Employee may either desire or be asked by Employer to engage in business
activities or perform business services for the benefit of third parties, such
as, e.g., serving as an outside director or consultant for another company. In
each case, Employee’s involvement in such business activities or services shall
be subject to the mutual agreement and approval of both Employer and Employee.
Employee shall at all times engage in conduct in accordance with the highest
standards of ethics and shall take no action that will harm the reputation of
Employer. To every extent not inconsistent with the terms of this Agreement, the
terms and conditions of Employee’s employment are also governed by Employer’s
personnel policies and employee handbook, as they may be issued and amended from
time to time.
5. Confidential Information.
(a) Nondisclosure and Non-use. Both during the term of Employee’s employment
with Employer and thereafter, Employee covenants and agrees that Employee
(i) shall exercise the utmost diligence to protect and safeguard the
Confidential Information of Employer and its Affiliates; (ii) shall not disclose
to any third party any Confidential Information, except as may be required by
Employer in the course of Employee’s employment or by law; and (iii) shall not
use, directly or indirectly, for Employee’s own benefit or for the benefit of
another, any Confidential Information. Employee acknowledges that Confidential
Information has been and will be developed and acquired by Employer and its
Affiliates by means of substantial expense and effort, that the Confidential
Information is a valuable proprietary asset of Employer’s and its Affiliates’
business, and that its disclosure would cause substantial and irreparable injury
to Employer’s and its Affiliates’ business. For purposes of this Agreement,
“Affiliate” shall mean any entity controlling, controlled by, or under common
control with Employer.
(b) Definition of Confidential Information. “Confidential Information” means
all information of a confidential or proprietary nature, whether or not
specifically labeled or identified as “confidential,” in any form or medium,
that is or was disclosed to, or developed or learned by, Employee in connection
with Employee’s past, present or future employment with Employer and that
relates to the business, products, services, research or development of any of
the Employer or its Affiliates or their suppliers, distributors or customers.
Confidential Information includes, but is not limited to, the following:
(i) internal business information (including, but not limited to, information
relating to strategic plans and practices, business, training, marketing,
promotional and sales plans and practices, cost, rate and pricing structures,
accounting and business methods); (ii) identities of, individual requirements
of, specific contractual arrangements with, and information about, any of
Employer’s, or any of its Affiliates’, suppliers, distributors and customers and
their confidential information; (iii) trade secrets, know-how, compilations of
data and analyses, techniques, systems, formulae, research, records, reports,
manuals, documentation, models, data and data bases relating thereto;
(iv) inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar
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or related information (whether or not patentable); and (v) other information or
thing that has economic value, actual or potential, from not being generally
known to or not being readily ascertainable by proper means by other persons.
(c) Not Confidential Information. Confidential Information shall not include
information that Employee can demonstrate: (i) is publicly known through no
wrongful act or breach of obligation of confidentiality; (ii) was rightfully
received by Employee from a third party without a breach of any obligation of
confidentiality by such third party; or (iii) was known to Employee on a
non-confidential basis prior to the Employee’s employment with Employer.
(d) Presumption of Confidentiality. In any judicial proceeding, it will be
presumed that the Confidential Information constitutes protectable trade secrets
and Employee will bear the burden of proving that any Confidential Information
is publicly or rightfully known by Employee.
(e) Return of Confidential Information and Materials. Employee agrees to
return to Employer either before or immediately upon the termination of
Employee’s employment with Employer any and all information, materials or
equipment which constitutes, contains or in any way relates to the Confidential
Information and any other document, equipment or materials of any kind relating
in any way to the business of Employer in the possession, custody or control of
Employee which was obtained by Employee during the course of or as a result of
Employee’s employment with Employer whether confidential or not, including, but
without limitation, any copies thereof which may have been made by or for
Employee. Employee shall also provide Employer, if requested to do so, the name
of the new employer of Employee and Employer shall have the right to advise any
subsequent employer of Employee’s obligations hereunder.
6. Inventions.
(a) Ownership of Inventions. Any and all developments, discoveries,
inventions, enhancements, modifications and improvements (collectively,
“Inventions”) created or developed by Employee alone or with others during the
term of Employee’s employment, whether or not during working hours and whether
on Employer’s premises or elsewhere, shall be deemed works for hire and will be
the sole and exclusive property of Employer if the Invention is:
(i) within the scope of Employee’s duties assigned or implied in accordance
with Employee’s position; or
(ii) a product, service, or other item which would be in competition with
Employer Products or which is related to Employer Products, whether presently
existing, under development, or under active consideration; or
(iii) in whole or in part, the result of Employee’s use of Employer’s
resources, including, without limitation, personnel, computers, equipment,
facilities or otherwise.
(b) Assignment of Inventions. Employee shall promptly and fully disclose all
Inventions to Employer and shall cooperate and perform all actions reasonably
requested by Employer to establish, confirm and protect Employer’s right, title
and interest in each such Invention. During the term of Employee’s employment
with Employer and after termination of such employment, if Employer should then
so request, Employee agrees to assign and does hereby assign to Employer all
rights in the Inventions. Employee agrees to execute and deliver to Employer any
instruments Employer deems necessary to vest in
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Employer the sole title to and all exclusive rights in the Inventions. Employee
agrees to execute and deliver to Employer all proper papers for use in applying
for, obtaining, maintaining, amending and enforcing any legal protections as
Employer may desire. Employee further agrees to assist fully Employer or its
nominees in the preparation and prosecution of any litigation connected with the
Inventions. If Employer is unable because of Employee’s mental or physical
incapacity or for any other reason (including, but without limitation,
Employee’s refusal to do so after request therefor is made by Employer) to
secure Employee’s signature to apply for or to pursue any application for any
United States or foreign patents or copyright registrations covering Inventions
belonging to or assigned to Employer pursuant to this Agreement, then Employee
hereby irrevocably designates and appoints Employer and its duly authorized
officers and agents as Employee’s agent and attorney-in-fact to act for and on
Employee’s behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
patents or copyright registrations thereon with the same legal force and effect
as if executed by Employee.
7. Non-Competition. Employee covenants and agrees that during the term of
Employee’s employment with the Employer and for a period of two (2) years after
the date of termination of the Employee’s employment hereunder for any reason
(the “Restricted Period”), Employee shall not, directly or indirectly, for the
benefit of Employee or others, either as an employee, principal, agent,
stockholder, consultant or in any other capacity, engage in or have a financial
interest in any Competitor within the Restricted Territory. Notwithstanding the
foregoing, nothing herein shall prohibit the Employee from being a passive owner
of not more than 2% of the outstanding securities of any class of a corporation
which is publicly traded, so long as Employee has no active participation in the
business of any such corporation.
For purposes of this Agreement:
(a) “Competitor” shall mean any corporation, limited liability company,
partnership, sole proprietorship or other person or entity who is involved or is
engaged in the design, manufacture, purchasing, distribution, sale, assembly,
provision or marketing of any products or services that are the same as or
similar to Employer Products.
(b) “Employer Products” shall mean any products or services:
(i) designed, manufactured, purchased, distributed, sold, assembled, provided
and/or marketed by Employer or its Affiliates; or
(ii) that Employer or its Affiliates has planned to design, manufacture,
purchase, distribute, sell, assemble, provide or market, and for which Employee
has provided services or over which Employee had direct or indirect managerial
or supervisory authority or about which Employee received Confidential
Information.
(c) “Restricted Territory” means anywhere in the world where Employer’s
Products are designed, manufactured, assembled, marketed or sold.
This covenant on the part of Employee shall be construed as an agreement
independent of any other provision of this Agreement; and the existence of any
claim or cause of action of Employee against Employer, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by Employer of this covenant. Employee expressly agrees that the restrictions of
this Section 7
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will not prevent Employee from otherwise obtaining gainful employment upon
termination of Employee’s employment with Employer.
8. Non-Solicitation of Business Associates. During the Restricted Period,
Employee shall not directly or indirectly induce, solicit or encourage any
customer, supplier or other business associate of Employer or an Affiliate to
terminate or alter its relationship with Employer or Affiliate, or introduce,
offer or sell to or for any customer or business associate, any products or
services that compete with the Employer Products.
9. Non-Solicitation of Employees. During the Restricted Period, Employee
shall not, directly or indirectly, induce, solicit or encourage any employee of
Employer or its Affiliates to terminate or alter his, her or its relationship
with Employer or its Affiliates.
10. Termination.
(a) Termination Date and Procedures. If the Agreement is not renewed in
accordance with Section 2, Employee’s employment will automatically end upon the
end of the applicable Initial Term or Renewal Term. Employee’s employment may
also be ended earlier as follows:
(i) Death. Employment hereunder shall terminate automatically upon Employee’s
death.
(ii) Disability. Employment hereunder shall terminate upon written notice to
Employee by the Board of Directors of termination due to Disability.
(iii) By Employer. Employer may terminate Employee’s employment hereunder
without Cause upon ninety (90) days’ advance written notice to Employee.
Employer may terminate Employee’s employment immediately for Cause, subject to
any applicable notice and cure requirements as specified in the definition of
“Cause” below.
(iv) By Employee. Employee may terminate employment hereunder without Good
Reason upon ninety (90) days’ advance written notice to Employer. Employee may
terminate employment hereunder for Good Reason, subject to the applicable notice
and cure requirements as specified in the definition of “Good Reason” below.
(b) Termination Without Cause or by Employee for Good Reason. If (i) Employer
terminates Employee without Cause, (ii) the Term of the Agreement is not renewed
under Section 2 by action of the Employer without Cause, or (iii) Employee
terminates his employment for Good Reason, except when such termination is
coincident with or within a twenty-four (24) month period following the
occurrence of a Change in Control, Employer shall pay Employee severance pay in
an amount equal to two (2) multiplied by Employee’s Average Annual Income;
provided, however, that if such termination of employment occurs after Employee
has attained age seventy (70), the amount shall equal one (1) times Employee’s
annual rate of base salary. In addition, Employer shall pay to Employee an
amount equal to the product of (A) eighteen (18) and (B) the full total monthly
premium cost (i.e., Employee’s and Employer’s portion) for Employee’s Healthcare
Coverage. The amounts payable under this Section 10(b) will be paid to Employee
no later than sixty (60) days after the date of termination, subject to the
conditions of Section 10(g). The severance pay will not be considered
compensation for the purpose of any other fringe benefit program of Employer.
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(c) Termination on Death or Disability or by Employee without Good
Reason. On termination of Employee’s employment as a result of Employee’s
death or Disability, Employer shall pay to Employee or his personal
representative on behalf of the estate of Employee, his annual base salary
through the last day of the fiscal year in which the date of death or Disability
occurs and payment of any bonuses that would have been paid to Employee for such
fiscal year had Employee remained employed by Employer, which bonuses shall not
be prorated because Employee was not employed for the full fiscal year. Any such
payments shall be made not later than the 15th day of the third month following
Employer’s fiscal year in which such death or Disability occurs. On the
termination of employment by Employee for other than Good Reason, Employer shall
promptly pay to Employee any unpaid annual base salary and bonuses, on a pro
rata basis, earned by Employee up to the date of termination in accordance with
Employer’s established payroll practices.
(d) Termination after Change in Control. If (i) Employer terminates
Employee’s employment without Cause, (ii) the Term of the Agreement is not
renewed under Section 2 by action of the Employer without Cause, or
(iii) Employee terminates Employee’s employment for Good Reason, and in each
such case such termination is coincident with or within a twenty-four (24) month
period following the occurrence of a Change in Control, Employer shall pay
Employee severance pay in an amount equal to three (3) multiplied by Employee’s
Average Annual Income. The severance pay will be paid to Employee within the
period specified in Section 10(d)(iv) below after the expiration of any
applicable revocation periods set forth in the Release required under
Section 10(g)(i) below. This severance payment will not be considered
compensation for the purpose of any other fringe benefit plan of Employer.
(i) In addition, Employer shall cause any unvested Equity Awards held by
Employee to become fully vested and, if applicable, shall cause each such Equity
Award to remain exercisable for the period set forth in the applicable Equity
Awards Agreement. For the avoidance of any doubt, the provisions of this
Section 10(d)(i) shall supersede the provisions contained in the applicable
Equity Award Agreements, provided that the provisions of the Equity Award
Agreements will control to the extent such provisions are more favorable to
Employee. In the case of any performance-based Equity Awards, “full vesting”
means vesting based on the level of performance adjustment determined under the
terms of the applicable Equity Award Agreement in connection with the Change in
Control.
(ii) In addition, Employer shall pay to Employee an amount equal to the
product of (A) twenty-four (24) and (B) the full total monthly premium cost
(i.e., Employee’s and Employer’s portion) for Employee’s Healthcare Coverage.
(iii) In addition, Employer shall pay Employee a lump sum cash payment of
Forty Thousand Dollars ($40,000.00) in order to cover the cost of
post-termination benefit coverage and expenses associated with seeking another
employment position.
(iv) All payments to be made pursuant to this Section 10(d) shall be made, in
lump sum, no later than sixty (60) days after the date of termination.
(e) Special Retirement Provisions for Equity Awards. Notwithstanding any
provision of this Agreement to the contrary, if Employee’s employment with the
Company terminates at any time on or after the date he attains age 65 for any
reason, whether voluntary or involuntary, other than a termination by the
Company for Cause, then the following vesting treatment shall apply to any
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outstanding Equity Awards granted from and after the date of this Agreement:
(i) stock options shall continue to vest and become exercisable in accordance
with the applicable vesting schedule and remain exercisable for the full option
term; (ii) time-vesting restricted stock units shall immediately vest in full;
and (iii) performance-vesting awards (including performance share units) shall
continue to vest in full (i.e., not prorated) upon completion of the applicable
performance period based on actual performance results; provided, however, that
if such termination of employment occurs before the end of the Initial Term,
performance-vesting awards shall be prorated for the portion of the performance
period completed unless aggregate performance results for the performance period
are achieved at 100% of target or greater (in which case the award as adjusted
for performance will vest in full as otherwise provided by this Section). For
the avoidance of any doubt, the provisions of this Section shall supersede the
provisions contained in the applicable Equity Award Agreements, provided that
the provisions of the Equity Award Agreements will control to the extent such
provisions are more favorable to Employee.
(f) Adjustments to Payments.
(i) Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by Employer to Employee
or for Employee’s benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (the
“Payments”) would be subject to the excise tax imposed by Section 4999 (or any
successor provisions) of the Internal Revenue Code of 1986, as amended (the
“IRC”), or any interest or penalty is incurred by Employee with respect to such
excise tax (such excise tax, together with any such interest and penalties, is
hereinafter collectively referred to as the “Excise Tax”), then the Payments
shall be reduced (but not below zero) if and to the extent that such reduction
would result in Employee retaining a larger amount, on an after-tax basis
(taking into account federal, state and local income taxes and the imposition of
the Excise Tax), than if Employee received all of the Payments. Employer shall
reduce or eliminate the Payments, by first reducing or eliminating the portion
of the Payments which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with payments
or benefits which are to be paid the farthest in time from the determination.
(ii) All determinations required to be made under this Section, including
whether and when an adjustment to any Payments is required and, if applicable,
which Payments are to be so adjusted, shall be made by an independent accounting
firm selected by Employer from among the four (4) largest accounting firms in
the United States or any nationally recognized financial planning and benefits
consulting company (the “Accounting Firm”) which shall provide detailed
supporting calculations both to Employer and to Employee within fifteen
(15) business days of the receipt of notice from Employee that there has been a
Payment, or such earlier time as is requested by Employer. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, Employer shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by Employer. If the Accounting Firm determines that no Excise Tax is
payable by Employee, it shall furnish Employee with a written opinion that
failure to report the Excise Tax on Employee’s applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon Employer and
Employee.
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(g) Conditions to Receipt of Severance Benefits/Repayment of Severance
Benefits.
(i) As a condition to receiving any severance benefits to which Employee may
otherwise be entitled under Sections 10(b) and 10(d) of this Agreement (the
“Severance Benefits”), Employee shall execute, deliver and not revoke a release
and waiver (the “Release”), in a form provided by Employer to be substantially
in the form as attached hereto as Exhibit 2, of any claims, whether arising
under Federal, state or local statute, common law or otherwise, against Employer
and its Affiliates. Unless otherwise required by applicable law, the Release
must be executed by Employee within twenty-one (21) days (or, if required by
law, forty-five (45) days) of the date of termination; provided, however, in all
cases, the Release must become final, binding and irrevocable prior to the
sixtieth (60th) day following Employee’s date of termination. If Employee fails
or otherwise refuses to execute a Release within the time specified herein, or
revokes the Release, Employee will not be entitled to any such Severance
Benefits and Employer shall have no further obligations with respect to the
payment of the Severance Benefits. In addition, if following a termination of
employment that gives Employee a right to the payment of Severance Benefits,
Employee engages in any activities that would have violated any of the covenants
in Sections 5, 6, 7, 8 or 9 of this Agreement, Employee shall have no further
right or claim to any Severance Benefits from and after the date on which
Employee engages in such activities and Employer shall have no further
obligations with respect to the payment of the Severance Benefits.
(ii) If Employee violates any of Employee’s obligations set forth in Sections
5, 6, 7, 8 or 9 of this Agreement, Employer after becoming aware of such
violation may provide written notice of such violation or breach to Employee and
request repayment of Severance Benefits. Employee agrees that, in the event of
such a violation, within thirty (30) days after the date Employer provides
notice to Employee, Employee shall pay to Employer, in a form acceptable to
Employer, a dollar amount equal to any Severance Benefits paid to or on behalf
of Employee pursuant to this Agreement. The parties agree that during the thirty
(30) day period, they will use their best efforts to resolve the issues.
Employee agrees that failure to make such timely payment to Employer constitutes
an independent and material breach of the terms and conditions of this
Agreement, for which Employer may seek recovery of the unpaid amount as
liquidated damages, in addition to all other rights and remedies that Employer
may have resulting from Employee’s breach of the obligations set forth in
Sections 5, 6, 7, 8 or 9 of this Agreement. Employee agrees that timely payment
to Employer as set forth in this Section 10(g)(ii) is reasonable and necessary
because the compensatory damages that will result from breaches of Sections 5,
6, 7, 8 or 9 of this Agreement cannot readily be ascertained. Further, Employee
agrees that timely payment to Employer as set forth in this Section 10(g)(ii) is
not a penalty, and it does not preclude Employer from seeking all other remedies
including injunctive relief that may be available to Employer.
(h) Section 409A/Termination of Employment. The provisions of this Agreement
will be administered, interpreted and construed in a manner intended to comply
with Section 409A of the IRC (“Section 409A”), the regulations issued thereunder
or any exception thereto (or disregarded to the extent such provision cannot be
so administered, interpreted, or construed).
(i) For purposes of the Agreement, Employee shall be considered to have
experienced a termination of employment only if Employee has terminated
employment with Employer and all of its controlled group members within the
meaning of Section 409A. For
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purposes hereof, the determination of controlled group members shall be made
pursuant to the provisions of Sections 414(b) and 414(c) of the IRC; provided
that the language “at least 50 percent” shall be used instead of “at least 80
percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the IRC
and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business
reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language
“at least 20 percent” shall be used instead of “at least 80 percent” in each
place it appears. Whether Employee’s employment has been terminated shall be
determined by all of the facts and circumstances and in accordance with the
guidance issued under Section 409A of the IRC.
(ii) For purposes of Section 409A, each severance benefit payment shall be
treated as a separate payment. Each payment under this Agreement is intended to
be excepted from Section 409A to the maximum extent provided under Section 409A
as follows: (1) each payment that is scheduled to be made following Employee’s
termination date and within the applicable two and one-half (21⁄2) month period
specified in Treas. Reg. § 1.409A-1(b)(4) is intended to be excepted under the
short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4); (2)
post-termination medical benefits are intended to be excepted under the medical
benefits exception as specified in Treas. Reg. § 1.409A-1(b)(9)(v)(B); and
(3) each payment that is not otherwise excepted under the short-term deferral
exception or medical benefits exception is intended to be excepted under the
involuntary pay exception as specified in Treas. Reg. § 1.409A-1(b)(9)(iii).
Employee shall have no right to designate the date of any payment under this
Agreement.
(iii) With respect to payments subject to Section 409A (and not excepted
therefrom), if any, it is intended that each payment is paid on permissible
distribution event and at a specified time consistent with Section 409A.
Employer reserves the right to accelerate and/or defer any payment to the extent
permitted and consistent with Section 409A. Notwithstanding any provision of
this Agreement to the contrary, to the extent that a payment hereunder is
subject to Section 409A (and not excepted therefrom) and payable on account of a
termination of employment, such payment shall be delayed for a period of six
months after the date of termination (or, if earlier, the death of the Employee)
if the Employee is a “specified employee” (as defined in Section 409A and
determined in accordance with the procedures established by Employer). Any
payment that would otherwise have been due or owing during such six (6) month
period will be paid immediately following the end of the six (6) month period in
the month following the month containing the six (6) month anniversary of the
date of termination.
(i) Definitions. For purposes of this Agreement, the following definitions
shall have the following meanings:
(i) “Average Annual Income” means an amount equal to (A) the sum of
Employee’s annual base salary and annual cash bonuses for the three (3) fiscal
years of Employer preceding the date of Employee’s termination of employment
divided by (B) three (3).
(ii) “Cause” shall mean a determination by the Board of Directors, in the
exercise of its reasonable judgment that any of the following has occurred:
(1) the willful and continued failure by Employee to perform Employee’s
duties and responsibilities with Employer under the Agreement (other than any
such
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failure resulting from incapacity due to physical or mental illness or
disability) which is not cured within thirty (30) days of receiving written
notice from Employer specifying in reasonable detail the duties and
responsibilities which Employer believes are not being adequately performed;
(2) the willful engaging by Employee in any act which is materially damaging
to Employer;
(3) the conviction of Employee of, or a plea of “guilty” or “no contest” to:
(A) any felony; or (B) a criminal offense involving fraud, dishonesty or other
moral turpitude;
(4) any material breach by Employee of the terms of the Agreement; or
(5) the engaging by Employee in any intentional act of dishonesty resulting
or intended to result, directly or indirectly, in personal gain to Employee at
Employer’s expense.
(iii) “Change in Control” shall be deemed to have occurred when:
(1) Employer is merged or consolidated with another entity the result of
which is that immediately following such transaction (A) the persons who were
the shareholders of Employer immediately prior to such transaction have less
than a majority of the voting power of Employer or the entity owning or
controlling Employer; or (B) the individuals who comprised the Board of
Directors of Employer immediately prior to such transaction cease to be at least
a majority of the members of the Board of Directors of Employer or of the entity
controlling Employer, or
(2) a majority of Employer’s assets are sold or otherwise transferred to
another corporation not controlled by or under common control with Employer or
to a partnership, firm, entity or one or more individuals not so controlled, or
(3) a majority of the members of Employer’s Board of Directors consists of
persons who were not nominated for election as directors by or on behalf of
Employer’s Board of Directors or with the express concurrence of the Employer’s
Board of Directors, or
(4) a single person, or a group of persons acting in concert, obtains voting
control over a majority of Employer’s outstanding voting shares.
(iv) “Equity Award” means an award granted to Employee covering the common
stock of Employer, including stock options, restricted stock, restricted stock
units, and performance stock units, granted under any equity incentive plan
maintained by Employer from time to time, including: (1) the II-VI Incorporated
2005 Omnibus Incentive Plan, (2) the II-VI Incorporated 2009 Omnibus Incentive
Plan, (3) the II-VI Incorporated Second Amended and Restated 2012 Omnibus
Incentive Plan, (4) the II-VI Incorporated 2018 Omnibus Incentive Plan, or
(5) any successor plan(s) thereto.
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(v) “Equity Award Agreement” means the agreement evidencing, and governing
the terms of, an Equity Award.
(vi) “Good Reason” means, without Employee’s express written consent:
(1) a reduction in title or position;
(2) a material reduction of Employee’s employment responsibilities;
(3) a material reduction by Employer of (i) Employee’s annual rate of base
salary, (ii) Employee’s target Total Direct Compensation under Section 3(a) to a
level below 50th percentile of the Employer’s compensation competitor group as
determined by the Board of Directors from time to time, or (iii) the annual
Employer contribution under the Deferred Compensation Plan under Section 3(b),
in each case as provided as in effect immediately prior to such reduction;
(4) a material increase in the amount of Employee’s business travel which
produces a constructive relocation of Employee; or
(5) a material reduction by Employer in the kind or level of employee
benefits to which Employee is entitled immediately prior to such reduction with
the result that Employee’s overall benefits package is significantly reduced.
In order for Employee to terminate for Good Reason: Employer must be notified by
Employee in writing within ninety (90) days of the event constituting Good
Reason; the event must remain uncorrected by Employer for thirty (30) days
following such notice (the “Notice Period”); and such termination must occur
within sixty (60) days after the expiration of the Notice Period.
(vii) “Healthcare Coverage” means coverage for Employee and his tax-qualified
dependents under Employer’s group health plan that provides medical care
(including group dental and vision), based on the applicable plans and
Employee’s coverage elections in effect immediately prior to the Employee’s date
of termination of employment. Employer’s group health plan does not include
other benefits offered under an Employer welfare plan such as life insurance and
disability insurance.
11. Remedies.
(a) Arbitration. Except to the extent set forth in Section 11(b) below, any
dispute arising out of or relating to this Agreement or the breach, termination
or validity hereof shall be finally settled by arbitration conducted
expeditiously in accordance with the rules of the American Arbitration
Association by three independent and impartial arbitrators. Each party shall
appoint one of such arbitrators, and the two arbitrators so appointed shall
appoint the third arbitrator. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by
the arbitrators may be entered by any court having jurisdiction thereof. The
place of arbitration shall be Pittsburgh, Pennsylvania. The arbitrators are not
empowered to award damages in excess of economic and compensatory damages.
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(b) Injunctive Relief. It is agreed by the parties hereto that any violation
by Employee of any of the covenants contained in Sections 5, 6, 7, 8 or 9 herein
would cause immediate, material and irreparable harm to Employer and/or its
Affiliates which may not be adequately compensated for by money damages and,
therefore, Employer and/or its Affiliates shall be entitled to injunctive relief
(including, without limitation, one or more preliminary injunctions and/or ex
parte restraining orders) in addition to, and not in derogation of, any other
remedies provided by law, in equity or otherwise for such a violation including,
but not limited to, the right to have such covenants specifically enforced by
any court of competent jurisdiction and the right to require Employee to account
for and pay over to Employer and/or its Affiliates all benefits derived or
received by Employee as a result of any such breach of covenant together with
interest thereon, from the date of such initial violation until such sums are
received by Employer and/or its Affiliates. The Restricted Period set forth
herein shall be extended by any period of time in which Employee is in breach of
the covenants contained in Sections 5, 6, 7, 8 or 9 of this Agreement and for
any period of time which may be necessary to secure an order of court or
injunction, either temporary or permanent, to enforce any of the covenants
contained in Sections 5, 6, 7, 8 or 9 of this Agreement.
(c) Employee Acknowledgment. Employee acknowledges and agrees that the
periods of restriction and geographical areas of restriction imposed by the
confidentiality and non-competition covenants of this Agreement are fair and
reasonably required for the protection of Employer and its Affiliates.
12. Severability. In the event that, and if for any reason, any portion of
this Agreement shall be held to be invalid or unenforceable, it is agreed that
the remaining covenants and restrictions or portions thereof shall remain in
full force and effect, and that if the validity or unenforceability is due to
the unreasonableness of the time or geographical area covered by said covenants
and restrictions, said covenants and restrictions of this Agreement shall
nevertheless be effective for such period of time and for such area as may be
determined to be reasonable by a Court of competent jurisdiction.
13. Disparaging Statements. Both parties agree not to make any disparaging
statements that reflect negatively on the reputation or good name of the other.
14. Entire Agreement; Amendments; No Waiver. This Agreement supersedes the
Prior Agreement and any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Employee by
Employer and contains all of the covenants and agreements between the parties
with respect to such employment in any manner whatsoever, provided that this
Agreement does not supersede, replace or modify in any respect any
indemnification agreement between Employer and Employee. No alterations,
amendments, changes or additions to this Agreement will be binding upon either
Employer or Employee unless in writing and signed by both parties. No waiver of
any right arising under this Agreement made by either party will be valid unless
set forth in writing signed by both parties. Notwithstanding the foregoing or
any provision of this Agreement to the contrary, Employer may at any time (after
consultation with Employee) modify, amend or terminate any or all of the
provisions of this Agreement or take any other action, to the extent necessary
or advisable to conform the provisions of this Agreement or the benefits
provided thereunder with Section 409A, the regulations issued thereunder or an
exception thereto.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without reference
to its conflict of laws provisions.
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16. Employee’s Representations. Employee warrants and represents that, to the
best of Employee’s knowledge, Employee has provided Employer with copies of all
agreements with previous employers that may still be applicable and that
Employee’s performance under this Agreement will not violate any agreement to
which Employee is a party and that Employee will not bring any materials which
are proprietary to a third party to Employer without the prior written consent
of such third party.
17. Binding Effect. This Agreement is binding upon the parties hereto and on
their respective heirs, personal representatives, successors and assigns.
Employee agrees that the obligations contained in Sections 5, 6, 7, 8 and 9 of
this Agreement will survive the termination of this Agreement.
18. Assignment. Employee’s rights and obligations under this Agreement shall
not be transferable by Employee, by assignment or otherwise, and any purported
assignment, transfer or delegation thereof by Employee shall be void. Employer
may assign/delegate all or any portion of this Agreement whereupon Employee
shall continue to be bound hereby with respect to such assignee/delegatee,
without prior notice to Employee and without need of Employee’s consent thereto.
In addition to and without limiting the Employer’s right to assign, transfer, or
convey this Agreement or any portion of it, Employee recognizes that Employer
may assign the Employee temporarily or permanently to one or more Affiliates of
Employer. In such event, all of Employee’s duties under this Agreement shall
apply with equal force to the Affiliate(s), and the Affiliate(s) shall be
empowered to stand in the shoes of the Employer for purposes of enforcing this
Agreement.
19. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto intending to be legally bound have set
their hands and seals the day and year first above written.
II-VI INCORPORATED
By:
/s/ Walter R. Bashaw II
Walter R. Bashaw II, President
EMPLOYEE:
/s/ Vincent D. Mattera, Jr.
Vincent D. Mattera, Jr.
Page 15 of 22
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Exhibit 1
1.
Total Direct Compensation for Fiscal Year 2020 (July 1, 2019 - June 30, 2020)
Target Total Direct Compensation on an annualized basis of $7,439,998, as
follows:
Compensation
Element
FY20
Target
Amount
Comment
Base Salary
$ 920,200 This amount approximates 50th percentile CEO base salary
versus approved compensation competitor group (based on the combined business
following the closing of the Finisar acquisition). This change is effective
August 1, 2019.
Target STI
BIP
GRIP
Total
$
$
$
153,673
1,655,575
1,809,248
BIP based on standard target of 16.7% of base salary
Equity
$ 4,710,550 Awarded 30% stock options, 30% time-vesting restricted
shares and 40% performance shares, on the date approved by the Compensation
Committee of the Board of Directors, following standard practice for determining
number of shares/options, standard vesting conditions and standard award
agreement forms as generally applicable to senior executive officers and
approved by the Board of Directors
TDC
$ 7,439,998 FY20 target amount determined by Board of Directors, with
advice and analysis of compensation consultant, approximates 50th percentile
versus approved compensation competitor group (based on the combined business
following the closing of the Finisar acquisition)
Page 16 of 22
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Exhibit 2
Form of Release
AGREEMENT AND GENERAL RELEASE
THIS AGREEMENT (“Agreement”) dated as of the day of ,
20 ,
BY AND BETWEEN
II-VI INCORPORATED,
a Pennsylvania corporation (“Employer”)
AND
, an individual, (“Employee”)
W I T N E S E T H:
WHEREAS, Employee has been employed by Employer as a
;
WHEREAS, effective as of , 20 (the “Separation Date”),
Employee’s position with Employer has been terminated; and
WHEREAS, the parties desire to meet and conclude certain aspects of the
employment relationship.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties hereto for themselves and
their respective heirs, personal representatives, successors and assigns, hereby
agree as follows:
1.
Releases.
(a) Employee, for Employee and Employee’s heirs, administrators, and assigns,
irrevocably and unconditionally generally releases and forever discharges any
causes of action or claims, known or unknown (including, but not limited to,
claims for attorneys’ fees, expenses and/or costs) that Employee has or may have
against (a) Employer, (b) its or their past or present parents, affiliates or
subsidiaries and/or any of their predecessors or successors and (c) the current
and former directors, owners, administrators, shareholders, managers, agents,
and officers of Employer (collectively referred to as “Company”) and expressly
waives and releases Company from any and all claims, grievances, actions and
causes of action, at law or in equity, contract or tort, including negligence,
or any other cause or claim that has or may have or could be brought before any
federal, state, local or municipal court directly or indirectly relating to or
connected with Employee’s employment with Company, Employee’s termination from
employment with Company, or the facts, circumstances, actions or inactions
arising out of or relating to any aspect of Company’s treatment of Employee
until the date of this Agreement. Without limitation of the foregoing general
terms, this release includes, but is not
Page 17 of 22
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limited to, claims (including for costs and attorneys’ fees) arising from any
alleged violation of any federal, state or local statutes, ordinances, executive
orders, or common law principles relating to tort law, education, employment,
the payment of wages and benefits, educational benefits, training, or any other
claims relating to or arising from, in connection with or during Employee’s
employment and/or affiliation with Company, including but not limited to, claims
arising under the Civil Rights Act of 1964 as amended, including Title IX, 20
U.S.C. § 1687, Title VI, 42 U.S.C. § 2000(d), and Title VII of the Civil Rights
Act, as amended, the Americans with Disabilities Act, as amended, the
Rehabilitation Act of 1973, the Civil Rights Acts of 1866 and 1871, the Civil
Rights Act of 1991, the Employment Retirement Income Security Act (ERISA), the
Age Discrimination in Employment Act, as amended (ADEA), the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA), the Equal Pay Act of 1963,
the Older Workers Benefit Protection Act, the Family and Medical Leave Act
(FMLA), whistle-blower, and any and all common law claims, including but not
limited to, all other forms of employment discrimination, wrongful termination,
retaliatory discharge, breach of express, implied, or oral contact, interference
with contractual relations, commission of tort, fraud, defamation, and slander
based on any act, transaction, circumstance or event contemporaneous with, or
prior to, the date of this Agreement. This release also expressly includes any
pension or benefit plans of Company and/or the past or present officers,
directors, trustees, administrators, agents and employees of Company or of any
Company benefit plan, for any actions up to and including the date hereof and
the continuing efforts thereof, except for the performance of the provisions of
this Agreement and except for the payment of any vested pension benefits to
which Employee may be entitled, if any, under the express provisions of the
Company pension plan, subject to ERISA’s vesting requirements. It is the
intention of Employee to effect a general release of all actual and potential
claims as of the date of this Agreement. Provided, however, that nothing
contained in this Agreement shall prevent Employee from challenging the validity
and legality of the release under the ADEA.
(b) Employee agrees that Employee will not initiate or cause to have
initiated or be a party to any legal action against Employer, except to the
extent necessary to enforce any remaining aspect of the Agreement or as
specifically excluded in this Paragraph 1(b) or in Paragraph 1(a) above. In the
event that Employee brings or causes to bring any action against Company that
Employee has agreed in the preceding sentence not to bring or should Company
prevail in any claim of a breach of this Agreement, Employee will indemnify and
hold the Company harmless from and against all costs incurred in connection with
defense or prosecution of the legal action, including attorneys’ fees. Company
will be entitled to all damages available at law or equity in addition to its
costs of defending or prosecuting such action. The Employee’s right to file a
charge of discrimination with the Equal Employment Opportunity Commission or
similar agency and Employee’s right to challenge the validity and legality of
the release in paragraph 1(a) under the ADEA are expressly excluded from the
Employee’s promise not to bring any legal action against the Company. However,
if any charge, complaint, lawsuit or administrative claim is filed by or in the
name of Employee or on Employee’s behalf with the Equal Employment Opportunity
Commission, the Pennsylvania Human Relations Commission, or any other similar
administrative agency or organization, or in any other forum, against any of the
persons or entities released in this Agreement, based upon any act or event
which occurred on or before the date Employee signed this Agreement, Employee
will not seek or accept any personal relief, including but not limited to any
award of monetary damages or reinstatement to Employee’s employment with
Employer. (Provided, however, that this provision shall not apply to a claim for
damages under the ADEA in the event that the Agreement is declared invalid with
respect to the waiver of all ADEA claims. If successful on such a claim,
however, any monetary damages obtained by Employee shall be offset by the monies
paid under the Agreement, together with all allowable interest thereon.)
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(c) As of the date of execution of this Agreement, the Employee represents
and warrants that Employee knows of no work-related injury, illness, or
condition sustained during Employee’s employment with Employer. As of the date
of execution of this Agreement, Employee further represents and warrants that
Employee knows of no condition or event that would entitle him to benefits under
the FMLA.
(d) As of the Separation Date, Employee has
( ) earned and unused vacation days, having a gross value of
($ ). This amount, from which all
required taxes and withholdings shall be deducted, shall be paid in the
Employee’s final paycheck as an active employee. Employee acknowledges that with
the payments set forth in this Paragraph 1(d), the Employer shall have paid him
in full. The Employee also represents that Employee knows of no claim that would
entitle him to relief under the Fair Labor Standards Act.
(e) Employee agrees that the payment set forth in Section 2(a) below exceeds
any amounts Employee is entitled to receive and shall be sufficient
consideration for all of the Employee’s agreements, obligations, covenants, and
releases contained in this Agreement. Employee further agrees that the Employer
has no plan or practice of paying severance covering Employee.
(f) Effective , neither party shall be required to
perform under any agreement related or ancillary to Employee’s employment with
Employer, including, without limitation, , except as
expressly set forth in this Agreement. Employee shall cease to perform any
duties for the Employer, and shall cease to represent that Employee is a current
employee of Employer, effective .
2.
Wage Payments, Severance Payments and Benefits.
In consideration of the representations and covenants of Employee contained in
this Agreement, Employer agrees to do the following:
(a) Employer shall pay Employee the severance payments and benefits specified
in the Employment Agreement between Employer and Employee dated January ,
2020, as the same may be amended from time to time (the “Employment Agreement”).
(b) Employer agrees not to contest Employee’s application for unemployment
compensation unless (i) Employee becomes employed; or (ii) the Employee provides
inaccurate information in Employee’s application for benefits. The parties agree
that the reason for Employee’s unemployment for purposes of seeking unemployment
compensation benefits shall be “ .”
(c) Nothing contained in this Agreement or the payments and benefits
contemplated in it shall be interpreted to be inconsistent with the fact that
Employee’s employment with Employer was terminated for all purposes on the
Separation Date. Employee further acknowledges that the payments set forth in
Paragraph 2 do not constitute any type of admission by Employer.
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3.
Returning Company’s Property and Maintaining Confidentiality.
Employee agrees to return all Company property and confidential and proprietary
information which may be in Employee’s possession including, but not limited to
supplier lists, proprietary, confidential or secret information, customer lists,
customer file information, product information and data, financial matters,
competitive status, organizational matters, technical capabilities, marketing
and distribution plans, customer or supplier data, strategies, processes, books,
computer hardware, software, diskettes, notes, reports, work products, and any
other information prepared for Employer by him or at Employee’s or Employer’s
direction (collectively, “confidential and proprietary information”). Employee
shall also delete all confidential and proprietary information from any personal
electronic files, including, without limitation, information or files maintained
in any personal computer, PDA, blackberry or other electronic device. Such
deletions shall be done in a manner that will not allow them to be recovered or
duplicated. All such property shall be returned and deletions made by the
Effective Date. Employee further agrees not to use or apply confidential and
proprietary information for Employee’s own advantage or for the benefit of any
person or entity except Employer and its affiliates and agrees not to disclose,
divulge or disseminate confidential and proprietary information or any other
customer or product information to anyone not affiliated with Employer, except
with the prior written consent of Employer. Employee also agrees to provide
Employer with all passwords that Employee uses in connection with Employee’s
employment to allow Employer to have access to all information to which Employee
has access and to comply with all exit routines, including check lists, that the
Employer normally uses in connection with terminations from employment.
4.
Opportunity to Review and Revoke.
Employee acknowledges that this Agreement contains a complete waiver and release
of claims of age discrimination under, among other statutes, the ADEA and that
Company offered Employee a period of at least twenty-one (21) days (or, if
required by law, forty-five (45) days) within which to consider this Agreement.
Employee acknowledges that 21 days (or 45 days, if applicable) is a reasonable
period of time to review this Agreement, but that Employee may voluntarily elect
to sign this Agreement earlier. Employee further acknowledges that Employee has
been advised and has had a full and fair opportunity to consult with an attorney
of Employee’s choosing. Within a period of seven (7) days following the
execution of this Agreement, Employee may revoke this Agreement by delivery (in
person or by certified mail) of a written notice revoking the same, to the Vice
President, Human Resources, II-VI Incorporated, 375 Saxonburg Boulevard,
Saxonburg, PA 16056. The notice must be received within the said seven (7) day
period. This Agreement shall not become effective or enforceable until that date
on which the seven-day revocation period has expired without a revocation of
this Agreement (the “Effective Date”). Employee fully understands the terms and
significance of this Agreement including the release contained within it, and
Employee particularly understands that Employee is waiving and releasing any and
all claims against the Company.
5.
Continuation of Restrictive Covenants.
Employee acknowledges and agrees that Employee remains subject to the covenants
set forth in Sections 5, 6, 7, 8 and 9 of the Employment Agreement.
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6.
Non-Disclosure.
Employee agrees to keep confidential and not discuss, disclose, or reveal,
directly or indirectly, the terms of this Agreement to any person, corporation,
or entity with the exception of the members of Employee’s immediate family, any
person from whom Employee legitimately seeks financial or tax advice, and/or any
person consulted by Employee prior to Employee signing this Agreement to
understand the interpretation, application, or legal effect of this Agreement,
who (prior to disclosure to them) shall likewise agree to maintain the
confidentiality of this Agreement. It shall be deemed a material breach of this
Agreement for Employee to disclose or reveal the existence of this Agreement or
any of the terms hereof to anyone in violation of the confidentiality provisions
of this Agreement, provided, however, that nothing in this Agreement prohibits
Employee from reporting possible violations of federal law or regulation to any
governmental agency or entity, including but not limited to the Department of
Justice, the Securities and Exchange Commission, the Congress, and any agency
Inspector General, or making other disclosures that are protected under the
whistleblower provisions of federal law or regulation. Employee does not need
the prior authorization of the Company to make any such reports or disclosures
and Employee is not required to notify the Company that he has made such reports
or disclosures.
7.
Miscellaneous.
(a) There are no understandings between the parties regarding this Agreement
other than as specifically set forth herein and there have been no promises,
inducements or commitments made to or by Employer in conjunction with this
Agreement that are not explicitly set forth herein.
(b) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(c) This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of Employee
by Employer and the termination of such employment and contains all of the
covenants and agreements between the parties with respect to such employment and
the termination thereof, provided that this Agreement does not supersede,
replace or modify in any respect any indemnification agreement between Employer
and Employee. No alterations, amendments, changes or additions to this Agreement
will be binding upon either Employer or Employee unless reduced to writing and
signed by both parties. No waiver of any right arising under this Agreement made
by either party will be valid unless given in writing and signed by both
parties.
(d) This Agreement is binding upon the parties hereto and their respective
heirs, personal representatives, successors, affiliates and assigns.
(e) By Employee’s execution of this Agreement, Employee expressly
understands, covenants and agrees that Employee will not apply for or seek in
any way to be employed, hired, recalled or reinstated by the Company now or in
the future; and Employee covenants and agrees that Company will not ever be
obligated to employ or reemploy him or engage Employee’s services.
(f) The provisions, including individual terms and phrases, of this Agreement
are severable. Any provision of this Agreement or portion thereof which is held
to be prohibited or
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability, without invalidating the
remaining portion of any such provision or this Agreement as a whole, and
without affecting the validity or enforceability of such provision in any other
jurisdiction.
(g) All parties represent and warrant that each is fully capable of
performing all obligations required under this Agreement and has not assigned or
otherwise alienated any right or obligation that in any manner would reduce or
undermine the full implementation and effect of this Agreement.
8.
Right to Seek Counsel of Attorney.
EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS FULLY READ AND FULLY UNDERSTOOD THIS
AGREEMENT; THAT EMPLOYEE ENTERED INTO IT FREELY AND VOLUNTARILY AND WITHOUT
COERCION OR PROMISES NOT CONTAINED IN THIS AGREEMENT; THAT EMPLOYEE WAS GIVEN
THE OPPORTUNITY TO REVIEW THIS AGREEMENT WITH LEGAL COUNSEL OF EMPLOYEE’S CHOICE
BEFORE SIGNING IT, AND THAT EMPLOYEE WAS ENCOURAGED AND ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY PRIOR TO SIGNING IT.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound have set
their hands and seals on this date, , 20 .
[EMPLOYEE]
II-VI INCORPORATED
By:
Page 22 of 22 |
Exhibit 10.72
REALOGY HOLDINGS CORP.
2018 LONG-TERM INCENTIVE PLAN
LONG-TERM PERFORMANCE AWARD NOTICE OF GRANT
& LONG-TERM PERFORMANCE AWARD AGREEMENT
Realogy Holdings Corp. (the “Company”), pursuant to Section 8.1 of the 2018
Long-Term Incentive Plan (the “Plan”), hereby grants to the individual listed
below (the “Participant”), a Long-Term Performance Award. The Long-Term
Performance Award is subject to all of the terms and conditions set forth herein
and in the Long-Term Performance Award Agreement attached hereto as Exhibit A
(the “Agreement”) and the Plan, which are incorporated herein by reference. In
addition, as a condition to receiving this Long-Term Performance Award, the
Participant understands and agrees to be bound by and comply with the
restrictive covenants and other provisions set forth in the Restrictive Covenant
Agreement attached hereto as Exhibit B (the “Restrictive Covenant Agreement”), a
copy of which the Participant acknowledges receipt. The Participant understands
and agrees that the Restrictive Covenant Agreement shall survive the grant,
payment, vesting or termination of the Long-Term Performance Award and any
termination of employment of the Participant, and that full compliance with the
Restrictive Covenant Agreement is an express condition precedent to (i) the
receipt, delivery and vesting of the Long-Term Performance Award and (ii) any
rights to any payments with respect to the Long-Term Performance Award.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Notice of Grant (“Notice”) and the Agreement.
Participant:
Grant Date:
Target Grant: $
Performance Period: January 1, 2020 – December 31, 2022
Performance Criteria: See Schedule 1 to Exhibit A attached hereto
--------------------------------------------------------------------------------
By accepting this Long-Term Performance Award, the Participant agrees to be
bound by the terms and conditions of the Plan, the Agreement and this Notice,
including the Restrictive Covenants Agreement. The Participant has reviewed the
Agreement, the Plan and this Notice in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice and fully
understands all provisions of this Notice, the Agreement and the Plan. The
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan or relating to the Long-Term Performance Award.
Participant’s Consent Regarding Use of Personal Information. By accepting this
Long-Term Performance Award, the Participant explicitly consents (i) to the use
of the Participant’s Personal Information (as defined in Section 6.14 of the
Agreement and to the extent permitted by law) for the purpose of implementing,
administering and managing the Participant’s Long-Term Performance Award under
the Plan and of being considered for participation in future equity, deferred
cash or other award programs (to the extent he/she is eligible under the terms
of such plan or program, and without any guarantee that any award will be made);
and (ii) to the use, transfer, processing and storage, electronically or
otherwise, of his/her Personal Information, as such use has occurred to date,
and as such use may occur in the future, in connection with this or any equity
or other award, as described above.
Note: Participants electing to accept this grant via the Fidelity Stock Plan
Services Net Benefits OnLine Grant Award Acceptance Process are not required to
print and sign this Agreement.
REALOGY HOLDINGS CORP. PARTICIPANT
By: ______________________________ By: ______________________________
Print Name: Print Name:
2
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Exhibit A: LONG-TERM PERFORMANCE AWARD AGREEMENT
Pursuant to the Long-Term Performance Award Notice of Grant (the “Notice”) to
which this Long-Term Performance Award Agreement (this “Agreement”) is attached,
Realogy Holdings Corp. (the “Company”) has granted under Section 8.1 of the
Company’s 2018 Long-Term Incentive Plan (the “Plan”) the Long-Term Performance
Award indicated in the Notice, subject to the terms and conditions set forth in
this Agreement, the Notice and the Plan, including the performance conditions
set forth in Schedule 1 hereto. Capitalized terms not specifically defined
herein shall have the meanings specified in the Plan and Notice.
ARTICLE I
GENERAL
1.1 Incorporation of Terms of Plan. The Long-Term Performance Award is subject
to the terms and conditions of the Plan, which are incorporated herein by
reference. In the event of any inconsistency between the Plan and this
Agreement, the terms of the Plan shall control.
ARTICLE II
GRANT OF LONG-TERM PERFORMANCE AWARD
2.1 Grant of Long-Term Performance Award. In consideration of the Participant’s
past and/or continued employment with or Service to the Company or any Affiliate
and for other good and valuable consideration, effective as of the Grant Date
set forth in the Notice (the “Grant Date”), the Company grants to the
Participant the Long-Term Performance Award set forth in the Notice (the “Target
Grant”), subject to the terms and conditions set forth in the Plan and this
Agreement, including Schedule 1 attached hereto, and subject to the
Participant’s full compliance at all times with the restrictive covenants and
other provisions set forth in the Restrictive Covenants Agreement (as defined in
the Notice), which is an express condition precedent to (i) the receipt,
delivery and vesting of any Long-Term Performance Award and (ii) any rights to
any payments with respect to the Long-Term Performance Award.
2.2 Consideration to the Company. In consideration of the grant of the Long-Term
Performance Award by the Company, the Participant agrees to render Services to
the Company or any Affiliate and to comply at all times with the Restrictive
Covenants Agreement. Nothing in the Plan or this Agreement shall confer upon the
Participant any right to continue in the employ or Service of the Company or any
Affiliate or shall interfere with or restrict in any way the rights of the
Company and its Affiliates, which rights are hereby expressly reserved, to
discharge or terminate the Services of the Participant at any time for any
reason whatsoever, with or without Cause, except to the extent expressly
provided otherwise in a written agreement between the Company or an Affiliate
and the Participant.
ARTICLE III
PERFORMANCE CRITERIA AND PERFORMANCE PERIOD
3.1 Performance Period. Subject to the remaining terms of this Agreement, after
completion of the Performance Period as set forth on the Grant Notice, the
amount ultimately earned under the Long-Term Performance Award pursuant to this
Agreement will be based on the Company’s performance against certain criteria
(the “Performance Criteria”) as set forth on Schedule 1 hereto.
3.2 Settlement of Long-Term Performance Award. The Participant shall be entitled
to receive a cash payment equal to a multiple of the Target Grant, as determined
in accordance with Schedule 1 hereto and subject to the terms and conditions
described herein (subject to any reductions for tax withholding or otherwise to
the extent permitted under the Plan or this Agreement), including the
Participant's full compliance at all times with the Restrictive Covenants
Agreement. Except as provided in Article V below, any payment earned under this
Agreement shall be delivered as soon as reasonably practicable following
approval of the amount earned under the
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Long-Term Performance Award, but in no event later than two and half months
following the end of the Performance Period, provided that the Participant fully
complies at all times with the Restrictive Covenants Agreement. Any portion of
the Long-Term Performance Award that could have been earned in accordance with
the provisions of Schedule 1 that is not earned as of the end of the Performance
Period shall be immediately forfeited at the end of the Performance Period.
3.3 No Rights as a Stockholder. The Long-Term Performance Award is a cash award
and is not an equity interest in the Company and the Participant shall not be,
or have any of the rights or privileges of a stockholder of the Company with
respect to, the Long-Term Performance Award.
3.4 No Dividend or Dividend Equivalents Rights. The Long-Term Performance Award
carries no dividend or dividend equivalent rights related to any cash or other
dividend paid by the Company while the Long-Term Performance Award is
outstanding.
ARTICLE IV
FORFEITURES
4.1 Termination of Employment. Except as otherwise specifically set forth in
this Article IV or Article V, if the Participant terminates employment with or
ceases to provide Services to the Company or any Affiliate prior to the date on
which the Performance Period ends, this Agreement will terminate and be of no
further force or effect on the date that the Participant is no longer actively
employed by or providing Services to the Company or any of its Affiliates and
the Long-Term Performance Award shall be forfeited on such date. The Participant
will, however, be entitled to receive his or her earned cash payment based upon
actual performance under this Agreement if the Participant’s employment
terminates or Services cease after the Performance Period but before the
Participant’s receipt of such payment.
4.2 Death or Disability. Except as set forth in Section 5.1 below, if the
Participant terminates employment with or ceases to provide Services to the
Company or any Affiliate prior the end of the Performance Period on account of
death or Disability, the Participant will be entitled to receive his or her
earned cash payment based upon actual performance under this Agreement had the
Participant’s employment or Services not terminated, with such payment pro-rated
for the number of full months of the Performance Period during which the
Participant was employed by or was providing Services to the Company or any
Affiliate.
4.3 Termination other than for Cause or for Good Reason. Except as set forth in
Section 5.1 below, in the case where the Participant terminates employment with
or ceases to provide Services to the Company or any Affiliate prior to the end
of the Performance Period other than for Cause or the Participant resigns from
employment from the Company or any Affiliate with Good Reason, the Participant
will be entitled to receive his or her earned cash payment based upon actual
performance under this Agreement had the Participant’s employment or Services
not terminated, with such payment pro-rated for the number of full months of the
Performance Period during which the Participant was employed by or was providing
Services to the Company or any Affiliate.
4.4 Retirement. In the case of a Participant’s Retirement on or following the
first anniversary of the commencement of the Performance Period, the Participant
will be entitled to receive his or her earned cash payment based upon actual
performance under this Agreement had the Participant’s employment or Services
not terminated, without pro-ration.
4.5 Timing of Payment. Without limiting the foregoing, in the event the
Participant’s employment or Services terminate before the end of the Performance
Period on account of death, Disability, Retirement or termination by the Company
other than for Cause or a resignation for Good Reason, any amount that becomes
payable in accordance with any of Sections 4.2, 4.3 or 4.4 above shall be
payable at the time and in the manner set forth in Section 3.2 following the end
of the Performance Period, provided that the Participant fully complies at all
times with the Restrictive Covenants Agreement.
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ARTICLE V
CHANGE IN CONTROL
5.1 Change in Control. In the event that Change in Control occurs during the
Performance Period, the Long-Term Performance Award shall, immediately prior to
the Change in Control, (a) be converted to a time-based cash award equal to the
Target Grant, (b) cease to be subject to the achievement of the Performance
Criteria and (c) be payable in full at the end of the Performance Period
provided the Participant is employed by or is providing Services to the Company
or any Affiliate on such date and fully complies at all times with the
Restrictive Covenants Agreement, subject to the following:
(a) If the Long-Term Performance Award is assumed or substituted in connection
with the Change in Control, in the event that during the Performance Period,
(i) a Participant’s employment or Service is terminated other than for Cause by
the Company or any Affiliate or the Participant resigns from employment from the
Company or any Affiliate with Good Reason, (1) the Long-Term Performance Award
shall become fully payable and (2) the Long-Term Performance Award shall be
settled in a cash payment as soon as practicable, but in no event later than ten
(10) days following such termination, provided that the Participant fully
complies at all times with the Restrictive Covenants Agreement; or
(ii) a Participant’s employment or Service is terminated on account of death or
Disability, (1) the Long-Term Performance Award shall become fully payable and
(2) the Long-Term Performance Award shall be settled in a cash payment as soon
as practicable, but in no event later than ten (10) days following such
termination, provided that the Participant fully complies at all times with the
Restrictive Covenants Agreement.
(b) If the Long-Term Performance Award is not assumed or substituted in
connection with a Change in Control, immediately upon the occurrence of the
Change in Control, (i) the Long-Term Performance Award shall become fully
payable and (ii) the Participant shall receive a cash payment equal to the
Target Grant, provided that the Participant fully complies at all times with the
Restrictive Covenants Agreement. As soon as practicable, but in no event later
than ten (10) days, following the Change in Control, the Company or its
successor shall deliver to the Participant (or, if applicable, the Participant’s
estate) the cash payment as calculated pursuant to the preceding sentence.
5.2 Assumption/Substitution. For purposes of Section 5.1, the Long-Term
Performance Award shall be considered assumed or substituted for if, following
the Change in Control, the Long-Term Performance Award remains subject to the
same terms and conditions that were applicable to the Long-Term Performance
Award immediately prior to the Change in Control except that the Long-Term
Performance Award shall no longer be subject to the achievement of the
Performance Criteria.
ARTICLE VI
MISCELLANEOUS
6.1 Administration. The Administrator shall have the power to interpret the
Plan, the Restrictive Covenants Agreement and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. All
actions taken and all interpretations and determinations made by the
Administrator in good faith shall be final and binding upon the Participant, the
Company and all other interested persons. No member of the Administrator or the
Board shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan, this Agreement or the Long-Term
Performance Award.
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6.2 Restrictions on Transfer. The Long-Term Performance Award may not be
transferred or otherwise disposed of by the Participant, including by way of
sale, assignment, transfer, pledge, hypothecation or otherwise, except as
permitted by the Administrator, or by will or the laws of descent and
distribution.
6.3 Invalid Transfers. No purported sale, assignment, mortgage, hypothecation,
transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or
other disposition of, or creation of a security interest in or lien on, the
Long-Term Performance Award by any holder thereof in violation of the provisions
of this Agreement shall be valid, and the Company will not transfer any
Long-Term Performance Award on its books or otherwise. The foregoing
restrictions are in addition to and not in lieu of any other remedies, legal or
equitable, available to enforce said provisions.
6.4 Termination of Employment or Service/Breach of the Restrictive Covenants
Agreement. The Administrator, in its sole discretion, shall determine the effect
of all matters and questions relating to termination of employment or Service,
including without limitation, whether a termination has occurred, whether any
termination resulted from a discharge for Cause and whether any particular leave
of absence constitutes a termination, as well as whether the Participant has
fully complied with the Restrictive Covenants Agreement for purposes of this
Agreement.
6.5 Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of the Chief Human Resources
Officer at the Company’s principal office, and any notice to be given to the
Participant shall be addressed to the Participant’s last address reflected on
the Company’s records.
6.6 Titles. Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
6.7 Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
6.8 Conformity to Securities Laws. The Participant acknowledges that the Plan
and this Agreement are intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, and state securities laws and regulations. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and the Long-Term
Performance Award is granted, only in such a manner as to conform to such laws,
rules and regulations. To the extent permitted by applicable law, the Plan and
this Agreement shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
6.9 Amendments, Suspension and Termination. To the extent permitted by the Plan,
this Agreement may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Administrator or
the Board; provided, however, that, except as may otherwise be provided by the
Plan, no amendment, modification, suspension or termination of this Agreement
shall adversely affect the Long-Term Performance Award in any material way
without the prior written consent of the Participant.
6.10 Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth in this Article 6, this Agreement
shall be binding upon the Participant and his or her heirs, executors,
administrators, successors and assigns.
6.11 Unfunded Status of Long-Term Performance Award. With respect to any
payments not yet made to the Participant pursuant to the Plan, including this
Long-Term Performance Award, nothing contained in the Plan, the Notice, the
Restrictive Covenants Agreement or this Agreement shall give the Participant any
rights that are greater than those of a general creditor of the Company or any
Affiliate.
6.12 Entire Agreement. The Plan, the Notice, the Restrictive Covenants Agreement
and this Agreement (including all Exhibits and Schedules thereto) constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and the Participant with respect to
the subject matter hereof.
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6.13 Section 409A. The intent of the parties is that payments and benefits under
this Agreement and the Long-Term Performance Award be exempt from, or comply
with, Section 409A of the Internal Revenue Code (the “Code”), and accordingly,
to the maximum extent permitted, this Agreement and the Long-Term Performance
Award shall be interpreted and administered to be in accordance therewith.
Notwithstanding anything contained herein to the contrary, the Participant shall
not be considered to have terminated employment with the Company for purposes of
any payments under this Agreement and the Long-Term Performance Award which are
subject to Section 409A of the Code until the Participant would be considered to
have incurred a “separation from service” from the Company within the meaning of
Section 409A of the Code. Each amount to be paid or benefit to be provided under
this Agreement and the Long-Term Performance Award shall be construed as a
separate identified payment for purposes of Section 409A of the Code, and any
payments described in this Agreement and the Long-Term Performance Award that
are due within the “short term deferral period” as defined in Section 409A of
the Code shall not be treated as deferred compensation unless applicable law
requires otherwise. Without limiting the foregoing and notwithstanding anything
contained herein to the contrary, to the extent required in order to avoid
accelerated taxation and/or tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to this Agreement and the Long-Term Performance Award during
the six-month period immediately following the Participant’s separation from
service shall instead be paid on the first business day after the date that is
six months following the Participant’s separation from service (or, if earlier,
the Participant’s death). The Company makes no representation that any or all of
the payments described in this Agreement and the Long-Term Performance Award
will be exempt from or comply with Section 409A of the Code and makes no
undertaking to preclude Section 409A of the Code from applying to any such
payment. The Participant understands and agrees that he or she shall be solely
responsible for the payment of any taxes and penalties incurred under Section
409A.
6.14 Disclosure Regarding Use of Personal Information.
(a) Definition and Use of “Personal Information”. In connection with the grant
of the Long-Term Performance Award, and any other award under other incentive
award programs, and the implementation and administration of any such program,
including, without limitation, the Participant’s actual participation, or
consideration by the Company for potential future participation, in any program
at any time, it is or may become necessary for the Company to collect, transfer,
use, and hold certain personal information regarding Participant in and/or
outside of Participant’s country of employment. The “Personal Information” the
Company may collect, process, store and transfer for the purposes outlined above
may include the Participant’s name, nationality, citizenship, tax or other
residency status, work authorization, date of birth, age, government/tax
identification number, passport number, brokerage account information, GEID or
other internal identifying information, home address, work address, job and
location history, compensation and incentive award information and history,
business unit, employing entity, and the Participant’s beneficiaries and contact
information. The Participant may obtain more details regarding the access and
use of his or her personal information, and may correct or update such
information, by contacting his or her human resources representative or local
equity coordinator.
(b) Use, Transfer, Storage and Processing of Personal Information. The use,
transfer, storage and processing of Personal Information electronically or
otherwise, may be in connection with the Company’s internal administration of
its incentive award programs, or in connection with tax or other governmental
and regulatory compliance activities directly or indirectly related to an
incentive award program. To the extent permitted by law, Personal Information
may be used by third parties retained by the Company to assist with the
administration and compliance activities of its incentive award programs, and
may be transferred by the entity that employs (or any entity that has employed)
the Participant from the Participant’s country of employment to the Company (or
its Affiliates or Subsidiaries) and third parties located in the U.S. and in
other countries. Specifically, those parties that may have access to the
Participant’s Personal Information for the purposes described herein include,
but are not limited to: (i) human resources personnel responsible for
administering the award programs, including local and regional equity award
coordinators, and global coordinators located in the U.S.; (ii) Participant’s
U.S. broker and equity account administrator and trade facilitator; (iii)
Participant’s U.S., regional and local employing entity and business unit
management, including Participant’s supervisor and his or her superiors; (iv)
the Administrator; (v) the Company’s technology systems support team (but only
to the extent necessary to maintain the proper operation of electronic
information systems that support the incentive award programs); and (vi)
internal and
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external legal, tax and accounting advisors (but only to the extent necessary
for them to advise the Company on compliance and other issues affecting the
incentive award programs in their respective fields of expertise). At all times,
Company personnel and third parties will be obligated to maintain the
confidentiality of the Participant’s Personal Information except to the extent
the Company is required to provide such information to governmental agencies or
other parties. Such action will always be undertaken only in accordance with
applicable law.
ARTICLE VII
DEFINITIONS
Wherever the following terms are used in the Agreement they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.
7.1 “Disability” shall mean a condition such that an individual would be
considered disabled for the purposes of Section 409(A) of the Code.
7.2 “Retirement” shall mean a “separation from service” (within the meaning of
Section 409A of the Code) with the Company and all Affiliates (other than for
Cause) after attaining eligibility for Retirement. A Participant attains
eligibility for Retirement upon the earlier of (a) age 65 or (b) age 55 with at
least ten (10) whole years of consecutive Service starting from the
Participant’s most recent hire date with the Company and all Affiliates. For the
avoidance of doubt, the phrase “consecutive service” in the preceding sentence
shall not include time spent by the Participant:
(a) as a consultant or advisor to the Company or its Affiliates following a
“separation from service” within the meaning of Section 409A of the Code;
(b) engaged as an independent sales agent affiliated with one of the Company’s
or its Affiliates’ real estate brands; or
(c) employed with or providing services to any business acquired by the Company
or any Affiliate prior to the time such business was acquired by the Company or
any Affiliate or employed with or providing services to any business after the
time such business was divested by the Company or any Affiliate.
7.3 “Service” or “Services” shall mean services performed by the Participant for
the Company or its Affiliates as an Employee, consultant or adviser, provided
that services performed by a Participant in the capacity as an independent sales
agent affiliated with one of the Company’s or its Affiliates’ real estate brands
shall not constitute Service.
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Exhibit 10.3
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 5,
2020, is made and entered into by and among FirstMark Horizon Acquisition Corp.,
a Delaware corporation (the “Company”), FirstMark Horizon Sponsor LLC, a
Delaware limited liability company (the “Sponsor”), and the other parties listed
on the signature pages hereto and any person or entity who hereafter becomes a
party to this Agreement pursuant to Section 5.2 of this Agreement (each such
party, together with the Sponsor, a “Holder” and collectively, the “Holders”).
RECITALS
WHEREAS, the Sponsor and certain other Holders collectively own an aggregate of
10,350,000 shares of the Company’s Class B common stock, par value $0.0001 per
share (the “Founder Shares”);
WHEREAS, the Founder Shares are convertible into shares of the Company’s Class A
common stock, par value $0.0001 per share (“Common Stock”), on the terms and
conditions provided in the Company’s amended and restated certificate of
incorporation, as may be amended from time to time;
WHEREAS, on October 5, 2020, the Company and the Sponsor entered into that
certain Private Placement Warrants Purchase Agreement, pursuant to which the
Sponsor agreed to purchase 6,133,333 warrants (or up to 6,853,333 warrants
depending on the extent to which the underwriters in the Company’s initial
public offering exercise over-allotment option) (the “Private Placement
Warrants”) in a private placement transaction to close substantially
concurrently with the closing of the Company’s initial public offering; each
Private Placement Warrant entitles the holder thereof to purchase one share of
Common Stock at a price of $11.50 per share; and
WHEREAS, the Company and the Holders desire to enter into this Agreement,
pursuant to which the Company shall grant the Holders certain registration
rights with respect to certain securities of the Company, as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and
agreements contained herein, and certain other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of
this Agreement, have the respective meanings set forth below:
“Adverse Disclosure” shall mean any public disclosure of material non-public
information, which disclosure, in the good faith judgment of the Chief Executive
Officer, President, Secretary or Chief Financial Officer of the Company, after
consultation with counsel to the Company, (i) would be required to be made in
any Registration Statement or Prospectus in order for the applicable
Registration Statement or Prospectus not to contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein (in the case of any prospectus and any preliminary prospectus,
in the light of the circumstances under which they were made) not misleading,
(ii) would not be required to be made at such time if the Registration Statement
were not being filed and (iii) the Company has a bona fide business purpose for
not making such information public.
“Agreement” shall have the meaning given in the Preamble.
“Board” shall mean the Board of Directors of the Company.
“Business Combination” shall mean any merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses, involving the Company.
“Commission” shall mean the Securities and Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble.
“Demand Registration” shall have the meaning given in subsection 2.1.1.
“Demanding Holder” shall have the meaning given in subsection 2.1.1.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be
amended from time to time.
“Form S-1” shall have the meaning given in subsection 2.1.1.
“Form S-3” shall have the meaning given in subsection 2.3.1.
“Founder Shares” shall have the meaning given in the Recitals hereto and shall
be deemed to include the shares of Common Stock issuable upon conversion
thereof.
“Founder Shares Lock-Up Period” shall mean, with respect to the Founder Shares,
the period ending on the earlier of (A) one year after the completion of the
Company’s initial Business Combination and (B) subsequent to the Company’s
initial Business Combination, (x) if the last reported sale price of the Common
Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after the
Company’s initial Business Combination or (y) the date on which the Company
completes a liquidation, merger, stock exchange, reorganization or other similar
transaction that results in all of the Company’s public stockholders having the
right to exchange their shares of Common Stock for cash, securities or other
property.
2
“Holders” shall have the meaning given in the Preamble.
“Insider Letter” shall mean that certain letter agreement, dated the date
hereof, by and among the Company, the Sponsor and each of the other parties
thereto.
“Maximum Number of Securities” shall have the meaning given in subsection 2.1.4.
“Misstatement” shall mean an untrue statement of a material fact or an omission
to state a material fact required to be stated in a Registration Statement or
Prospectus or necessary to make the statements in a Registration Statement or
Prospectus (in the case of a Prospectus, in the light of the circumstances under
which they were made) not misleading.
“Permitted Transferees” shall mean any person or entity to whom a Holder of
Registrable Securities is permitted to transfer such Registrable Securities
prior to the expiration of the Founder Shares Lock-Up Period or Private
Placement Lock-Up Period, as the case may be, under the Insider Letter and any
other applicable agreement between such Holder and the Company and to any
transferee thereafter.
“Piggyback Registration” shall have the meaning given in subsection 2.2.1.
“Private Placement Lock-Up Period” shall mean, with respect to Private Placement
Warrants and any Common Stock issued or issuable upon the exercise or conversion
of the Private Placement Warrants that are held by the initial purchasers of the
Private Placement Warrants or their Permitted Transferees, the period ending 30
days after the completion of the Company’s initial Business Combination.
“Private Placement Warrants” shall have the meaning given in the Recitals.
“Prospectus” shall mean the prospectus included in any Registration Statement,
as supplemented by any and all prospectus supplements and as amended by any and
all post-effective amendments and including all material incorporated by
reference in such prospectus.
“Registrable Security” shall mean (a) the shares of Common Stock issued or
issuable upon the conversion of any Founder Shares, (b) the Private Placement
Warrants (including any shares of Common Stock issued or issuable upon the
exercise of any Private Placement Warrant), (c) any outstanding share of Common
Stock or any other equity security (including the shares of Common Stock issued
or issuable upon the exercise of any other equity security) of the Company held
by a Holder as of the date of this Agreement, (d) any equity securities
(including the shares of Common Stock issued or issuable upon the exercise of
any such equity security) of the Company issuable upon conversion of any working
capital loans in an amount up to $1,500,000 made to the Company by a Holder, and
(e) any other equity security of the Company or any of its subsidiaries, or any
successor, issued or issuable with respect to any such share of Common Stock by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation, spin-off or reorganization;
provided, however, that, as to any particular Registrable Security, such
securities shall cease to be Registrable Securities when: (A) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been sold,
transferred, disposed of or exchanged in accordance with such Registration
Statement; (B) such securities shall have been otherwise transferred, new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of such securities shall not require registration under the
Securities Act; (C) such securities shall have ceased to be outstanding; (D)
such securities have been sold without registration pursuant to Section 4(a)(1)
of the Securities Act or Rule 144 or Rule 145 promulgated under the Securities
Act (or any successor rule promulgated thereafter by the Commission); or (E)
such securities have been sold to, or through, a broker, dealer or underwriter
in a public distribution or other public securities transaction.
3
“Registration” shall mean a registration effected by preparing and filing a
registration statement or similar document in compliance with the requirements
of the Securities Act, and the applicable rules and regulations promulgated
thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the out-of-pocket expenses of a Registration,
including, without limitation, the following:
(A)all registration and filing fees (including fees with respect to filings
required to be made with the Financial Industry Regulatory Authority, Inc.) and
any securities exchange on which the Common Stock is then listed;
(B)fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of outside counsel for the Underwriters in
connection with blue sky qualifications of Registrable Securities);
(C)printing, messenger, telephone and delivery expenses;
(D)reasonable fees and disbursements of counsel for the Company;
(E)reasonable fees and disbursements of all independent registered public
accountants of the Company incurred specifically in connection with such
Registration; and
(F)reasonable fees and expenses of one (1) legal counsel selected by the
majority-in-interest of the Demanding Holders initiating a Demand Registration
to be registered for offer and sale in the applicable Registration.
“Registration Statement” shall mean any registration statement that covers the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including
post-effective amendments) and supplements to such registration statement, and
all exhibits to and all material incorporated by reference in such registration
statement.
“Requesting Holder” shall have the meaning given in subsection 2.1.1.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.
“Shelf” shall have the meaning given in subsection 2.3.1.
4
“Sponsor” shall have the meaning given in the Preamble.
“Takedown Requesting Holder” shall have the meaning given in subsection 2.3.3.
“Underwriter” shall mean a securities dealer who purchases any Registrable
Securities as principal in an Underwritten Offering and not as part of such
dealer’s market-making activities.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration
in which securities of the Company are sold to an Underwriter in a firm
commitment underwriting for distribution to the public.
ARTICLE II
REGISTRATIONS
2.1 Demand Registration.
2.1.1 Request for Registration. Subject to the provisions of subsection 2.1.4
and Section 2.4 hereof, at any time and from time to time on or after the date
the Company consummates the initial Business Combination, the Holders of at
least thirty percent (30%) in interest of the then outstanding number of
Registrable Securities (the “Demanding Holders”) may make a written demand for
Registration under the Securities Act of all or part of their Registrable
Securities, which written demand shall describe the amount and type of
securities to be included in such Registration and the intended method(s) of
distribution thereof (such written demand a “Demand Registration”). The Company
shall, within ten (10) days of the Company’s receipt of the Demand Registration,
notify, in writing, all other Holders of Registrable Securities of such demand,
and each Holder of Registrable Securities who thereafter wishes to include all
or a portion of such Holder’s Registrable Securities in a Registration pursuant
to a Demand Registration (each such Holder that includes all or a portion of
such Holder’s Registrable Securities in such Registration, a “Requesting
Holder”) shall so notify the Company, in writing, within five (5) days after the
receipt by the Holder of the notice from the Company. Upon receipt by the
Company of any such written notification from a Requesting Holder(s) to the
Company, such Requesting Holder(s) shall be entitled to have their Registrable
Securities included in a Registration pursuant to a Demand Registration and the
Company shall effect, as soon thereafter as practicable, the Registration of all
Registrable Securities requested by the Demanding Holder(s) and Requesting
Holder(s) pursuant to such Demand Registration, including by filing a
Registration Statement relating thereto as soon as practicable, but not more
than forty five (45) days immediately after the Company’s receipt of the Demand
Registration. Under no circumstances shall the Company be obligated to effect
more than an aggregate of three (3) Registrations pursuant to a Demand
Registration under this subsection 2.1.1 with respect to any or all Registrable
Securities; provided, however, that a Registration shall not be counted for such
purposes unless a Form S-1 or any similar long-form registration statement that
may be available at such time (“Form S-1”) has become effective and all of the
Registrable Securities requested by the Requesting Holders to be registered on
behalf of the Requesting Holders in such Form S-1 Registration have been sold,
in accordance with Section 3.1 of this Agreement.
5
2.1.2 Effective Registration. Notwithstanding the provisions of subsection 2.1.1
above or any other part of this Agreement, a Registration pursuant to a Demand
Registration shall not count as a Registration unless and until (i) the
Registration Statement filed with the Commission with respect to a Registration
pursuant to a Demand Registration has been declared effective by the Commission
and (ii) the Company has complied with all of its obligations under this
Agreement with respect thereto; provided, further, that if, after such
Registration Statement has been declared effective, an offering of Registrable
Securities in a Registration pursuant to a Demand Registration is subsequently
interfered with by any stop order or injunction of the Commission, federal or
state court or any other governmental agency the Registration Statement with
respect to such Registration shall be deemed not to have been declared
effective, unless and until, (i) such stop order or injunction is removed,
rescinded or otherwise terminated, and (ii) a majority-in-interest of the
Demanding Holders initiating such Demand Registration thereafter affirmatively
elect to continue with such Registration and accordingly notify the Company in
writing, but in no event later than five (5) days, of such election; provided,
further, that the Company shall not be obligated or required to file another
Registration Statement until the Registration Statement that has been previously
filed with respect to a Registration pursuant to a Demand Registration becomes
effective or is subsequently terminated.
2.1.3 Underwritten Offering. Subject to the provisions of subsection 2.1.4 and
Section 2.4 hereof, if a majority-in-interest of the Demanding Holders so advise
the Company as part of their Demand Registration that the offering of the
Registrable Securities pursuant to such Demand Registration shall be in the form
of an Underwritten Offering, then the right of such Demanding Holder or
Requesting Holder (if any) to include its Registrable Securities in such
Registration shall be conditioned upon such Holder’s participation in such
Underwritten Offering and the inclusion of such Holder’s Registrable Securities
in such Underwritten Offering to the extent provided herein. All such Holders
proposing to distribute their Registrable Securities through an Underwritten
Offering under this subsection 2.1.3 shall enter into an underwriting agreement
in customary form with the Underwriter(s) selected for such Underwritten
Offering by the majority-in-interest of the Demanding Holders initiating the
Demand Registration.
2.1.4 Reduction of Underwritten Offering. If the managing Underwriter or
Underwriters in an Underwritten Registration pursuant to a Demand Registration,
in good faith, advises the Company, the Demanding Holders and the Requesting
Holders (if any) in writing that the dollar amount or number of Registrable
Securities that the Demanding Holders and the Requesting Holders (if any) desire
to sell, taken together with all other shares of Common Stock or other equity
securities that the Company desires to sell and the shares of Common Stock, if
any, as to which a Registration has been requested pursuant to separate written
contractual piggy-back registration rights held by any other stockholders who
desire to sell, exceeds the maximum dollar amount or maximum number of equity
securities that can be sold in the Underwritten Offering without adversely
affecting the proposed offering price, the timing, the distribution method, or
the probability of success of such offering (such maximum dollar amount or
maximum number of such securities, as applicable, the “Maximum Number of
Securities”), then the Company shall include in such Underwritten Offering, as
follows: (i) first, the Registrable Securities of the Demanding Holders and the
Requesting Holders (if any) (pro rata based on the respective number of
Registrable Securities that each Demanding Holder and Requesting Holder (if any)
has requested be included in such Underwritten Registration and the aggregate
number of Registrable Securities that the Demanding Holders and Requesting
Holders have requested be included in such Underwritten Registration) that can
be sold without exceeding the Maximum Number of Securities; (ii) second, to the
extent that the Maximum Number of Securities has not been reached under the
foregoing clause (i), the Common Stock or other equity securities that the
Company desires to sell, which can be sold without exceeding the Maximum Number
of Securities; and (iii) third, to the extent that the Maximum Number of
Securities has not been reached under the foregoing clauses (i) and (ii), the
Common Stock or other equity securities of other persons or entities that the
Company is obligated to register in a Registration pursuant to separate written
contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Securities.
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2.1.5 Demand Registration Withdrawal. A majority-in-interest of the Demanding
Holders initiating a Demand Registration or a majority-in-interest of the
Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1
shall have the right to withdraw from a Registration pursuant to such Demand
Registration for any or no reason whatsoever upon written notification to the
Company and the Underwriter or Underwriters (if any) of their intention to
withdraw from such Registration prior to the effectiveness of the Registration
Statement filed with the Commission with respect to the Registration of their
Registrable Securities pursuant to such Demand Registration (or in the case of
an Underwritten Registration pursuant to Rule 415 under the Securities Act, at
least two business days prior to the time of pricing of the applicable
offering). Notwithstanding anything to the contrary in this Agreement, (i) the
Company may effect any Underwritten Registration pursuant to any then effective
Registration Statement, including a Form S-3, that is then available for such
offering and (ii) the Company shall be responsible for the Registration Expenses
incurred in connection with a Registration pursuant to a Demand Registration
prior to its withdrawal under this subsection 2.1.5.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If, at any time on or after the date the Company
consummates an initial Business Combination, the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into equity securities, for its own account or
for the account of stockholders of the Company (or by the Company and by the
stockholders of the Company including, without limitation, pursuant to Section
2.1 hereof), other than a Registration Statement (i) filed in connection with
any employee stock option or other benefit plan, (ii) for an exchange offer or
offering of securities solely to the Company’s existing stockholders, (iii) for
an offering of debt that is convertible into equity securities of the Company or
(iv) for a dividend reinvestment plan, then the Company shall give written
notice of such proposed filing to all of the Holders of Registrable Securities
as soon as practicable but not less than ten (10) days before the anticipated
filing date of such Registration Statement, which notice shall (A) describe the
amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, in such offering, and (B) offer to all of the Holders of
Registrable Securities the opportunity to register the sale of such number of
Registrable Securities as such Holders may request in writing within five
(5) days after receipt of such written notice (such Registration a “Piggyback
Registration”). The Company shall, in good faith, cause such Registrable
Securities to be included in such Piggyback Registration and shall use its best
efforts to cause the managing Underwriter or Underwriters of a proposed
Underwritten Offering to permit the Registrable Securities requested by the
Holders pursuant to this subsection 2.2.1 to be included in a Piggyback
Registration on the same terms and conditions as any similar securities of the
Company included in such Registration and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All such Holders proposing to distribute
their Registrable Securities through an Underwritten Offering under this
subsection 2.2.1 shall enter into an underwriting agreement in customary form
with the Underwriter(s) selected for such Underwritten Offering by the Company.
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2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or
Underwriters in an Underwritten Registration that is to be a Piggyback
Registration, in good faith, advises the Company and the Holders of Registrable
Securities participating in the Piggyback Registration in writing that the
dollar amount or number of shares of the Common Stock that the Company desires
to sell, taken together with (i) the shares of Common Stock, if any, as to which
Registration has been demanded pursuant to separate written contractual
arrangements with persons or entities other than the Holders of Registrable
Securities hereunder, (ii) the Registrable Securities as to which registration
has been requested pursuant to Section 2.2 hereof, and (iii) the shares of
Common Stock, if any, as to which Registration has been requested pursuant to
separate written contractual piggy-back registration rights of other
stockholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If the Registration is undertaken for the Company’s account, the Company
shall include in any such Registration (A) first, the shares of Common Stock or
other equity securities that the Company desires to sell, which can be sold
without exceeding the Maximum Number of Securities; (B) second, to the extent
that the Maximum Number of Securities has not been reached under the foregoing
clause (A), the Registrable Securities of Holders exercising their rights to
register their Registrable Securities pursuant to subsection 2.2.1 hereof, pro
rata, based on the respective number of Registrable Securities that each Holder
has so requested exercising its rights to register its Registrable Securities
pursuant to subsection 2.2.1 hereof, which can be sold without exceeding the
Maximum Number of Securities; and (C) third, to the extent that the Maximum
Number of Securities has not been reached under the foregoing clauses (A) and
(B), the shares of Common Stock, if any, as to which Registration has been
requested pursuant to written contractual piggy-back registration rights of
other stockholders of the Company, which can be sold without exceeding the
Maximum Number of Securities;
(b) If the Registration is pursuant to a request by persons or entities other
than the Holders of Registrable Securities, then the Company shall include in
any such Registration (A) first, the shares of Common Stock or other equity
securities, if any, of such requesting persons or entities, other than the
Holders of Registrable Securities, which can be sold without exceeding the
Maximum Number of Securities; (B) second, to the extent that the Maximum Number
of Securities has not been reached under the foregoing clause (A), the
Registrable Securities of Holders exercising their rights to register their
Registrable Securities pursuant to subsection 2.2.1, pro rata, based on the
respective number of Registrable Securities that each Holder has requested be
included in such Underwritten Registration and the aggregate number of
Registrable Securities that the Holders have requested to be included in such
Underwritten Registration, which can be sold without exceeding the Maximum
Number of Securities; (C) third, to the extent that the Maximum Number of
Securities has not been reached under the foregoing clauses (A) and (B), the
shares of Common Stock or other equity securities that the Company desires to
sell, which can be sold without exceeding the Maximum Number of Securities; and
(D) fourth, to the extent that the Maximum Number of Securities has not been
reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock
or other equity securities for the account of other persons or entities that the
Company is obligated to register pursuant to separate written contractual
arrangements with such persons or entities, which can be sold without exceeding
the Maximum Number of Securities.
8
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities
shall have the right to withdraw from a Piggyback Registration for any or no
reason whatsoever upon written notification to the Company and the Underwriter
or Underwriters (if any) of his, her or its intention to withdraw from such
Piggyback Registration prior to the effectiveness of the Registration Statement
filed with the Commission with respect to such Piggyback Registration (or in the
case of an Underwritten Registration pursuant to Rule 415 under the Securities
Act, at least two business days prior to the time of pricing of the applicable
offering). The Company (whether on its own good faith determination or as the
result of a request for withdrawal by persons pursuant to separate written
contractual obligations) may withdraw a Registration Statement filed with the
Commission in connection with a Piggyback Registration at any time prior to the
effectiveness of such Registration Statement. Notwithstanding anything to the
contrary in this Agreement, the Company shall be responsible for the
Registration Expenses incurred in connection with the Piggyback Registration
prior to its withdrawal under this subsection 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any
Registration effected pursuant to Section 2.2 hereof shall not be counted as a
Registration pursuant to a Demand Registration effected under Section 2.1
hereof.
2.3 Shelf Registrations.
2.3.1 The Holders of Registrable Securities may at any time, and from time to
time, request in writing that the Company, pursuant to Rule 415 under the
Securities Act (or any successor rule promulgated thereafter by the Commission),
register the resale of any or all of their Registrable Securities on Form S-3 or
any similar short-form registration statement that may be available at such time
(“Form S-3”), or if the Company is ineligible to use Form S-3, on Form S-1; a
registration statement filed pursuant to this subsection 2.3.1 (a “Shelf”) shall
provide for the resale of the Registrable Securities included therein pursuant
to any method or combination of methods legally available to, and requested by,
any Holder. Within three (3) days of the Company’s receipt of a written request
from a Holder or Holders of Registrable Securities for a Registration on a
Shelf, the Company shall promptly give written notice of the proposed
Registration to all other Holders of Registrable Securities, and each Holder of
Registrable Securities who thereafter wishes to include all or a portion of such
Holder’s Registrable Securities in such Registration shall so notify the
Company, in writing, within three (3) days after the receipt by the Holder of
the notice from the Company. As soon as practicable thereafter, but not more
than ten (10) days after the Company’s initial receipt of such written request
for a Registration on a Shelf, the Company shall register all or such portion of
such Holder’s Registrable Securities as are specified in such written request,
together with all or such portion of Registrable Securities of any other Holder
or Holders joining in such request as are specified in the written notification
given by such Holder or Holders; provided, however, that the Company shall not
be obligated to effect any such Registration pursuant to this subsection
2.3.1 if the Holders of Registrable Securities, together with the Holders of any
other equity securities of the Company entitled to inclusion in such
Registration, propose to sell the Registrable Securities and such other equity
securities (if any) at any aggregate price to the public of less than
$5,000,000. The Company shall maintain each Shelf in accordance with the terms
hereof, and shall prepare and file with the Commission such amendments,
including post-effective amendments, and supplements as may be necessary to keep
such Shelf continuously effective, available for use and in compliance with the
provisions of the Securities Act until such time as there are no longer any
Registrable Securities included on such Shelf. In the event the Company files a
Shelf on Form S-1, the Company shall use its commercially reasonable efforts to
convert the Form S-1 to a Form S-3 as soon as practicable after the Company is
eligible to use Form S-3.
9
2.4 Restrictions on Registration Rights. If (A) during the period starting with
the date sixty (60) days prior to the Company’s good faith estimate of the date
of the filing of, and ending on a date one hundred and twenty (120) days after
the effective date of, a Company initiated Registration and provided that the
Company has delivered written notice to the Holders prior to receipt of a Demand
Registration pursuant to subsection 2.1.1 and it continues to actively employ,
in good faith, all reasonable efforts to cause the applicable Registration
Statement to become effective; (B) the Holders have requested an Underwritten
Registration and the Company and the Holders are unable to obtain the commitment
of underwriters to firmly underwrite the offer; or (C) in the good faith
judgment of the Board such Registration would be seriously detrimental to the
Company and the Board concludes as a result that it is essential to defer the
filing of such Registration Statement at such time, then in each case the
Company shall furnish to such Holders a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or the Secretary of the
Company stating that in the good faith judgment of the Board it would be
seriously detrimental to the Company for such Registration Statement to be filed
in the near future and that it is therefore essential to defer the filing of
such Registration Statement. In such event, the Company shall have the right to
defer such filing for a period of not more than thirty (30) days; provided,
however, that the Company shall not defer its obligation in this manner more
than once in any 12-month period. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not be required to effect or
permit any Registration or cause any Registration Statement to become effective,
with respect to any Registrable Securities held by any Holder, until after the
expiration of the Founder Shares Lock-Up Period or the Private Placement Lock-Up
Period, as the case may be.
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. If at any time on or after the date the Company
consummates an initial Business Combination, the Company is required to effect
the Registration of Registrable Securities, the Company shall use its best
efforts to effect such Registration to permit the sale of such Registrable
Securities in accordance with the intended plan of distribution thereof, and
pursuant thereto the Company shall, as expeditiously as possible:
3.1.1 prepare and file with the Commission as soon as practicable a Registration
Statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such Registration Statement to become effective and remain
effective until all Registrable Securities covered by such Registration
Statement have been sold;
10
3.1.2 prepare and file with the Commission such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be reasonably requested by the majority-in-interest of the
Holders with Registrable Securities registered on such Registration Statement or
any Underwriter of Registrable Securities or as may be required by the rules,
regulations or instructions applicable to the registration form used by the
Company or by the Securities Act or rules and regulations thereunder to keep the
Registration Statement effective until all Registrable Securities covered by
such Registration Statement are sold in accordance with the intended plan of
distribution set forth in such Registration Statement or supplement to the
Prospectus;
3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment
or supplement thereto, furnish without charge to the Underwriters, if any, and
the Holders of Registrable Securities included in such Registration, and such
Holders’ legal counsel, copies of such Registration Statement as proposed to be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the Prospectus included in such Registration Statement (including each
preliminary Prospectus), and such other documents as the Underwriters and the
Holders of Registrable Securities included in such Registration or the legal
counsel for any such Holders may request in order to facilitate the disposition
of the Registrable Securities owned by such Holders;
3.1.4 prior to any public offering of Registrable Securities, use its best
efforts to (i) register or qualify the Registrable Securities covered by the
Registration Statement under such securities or “blue sky” laws of such
jurisdictions in the United States as the Holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other governmental authorities as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the Holders of
Registrable Securities included in such Registration Statement to consummate the
disposition of such Registrable Securities in such jurisdictions; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
or take any action to which it would be subject to general service of process or
taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause all such Registrable Securities to be listed on each securities
exchange or automated quotation system on which similar securities issued by the
Company are then listed;
11
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar
for all such Registrable Securities no later than the effective date of such
Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such Registration Statement or
the initiation or threatening of any proceeding for such purpose and promptly
use its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
3.1.8 at least five (5) days prior to the filing of any Registration Statement
or Prospectus or any amendment or supplement to such Registration Statement or
Prospectus, furnish a copy thereof to each seller of such Registrable Securities
or its counsel;
3.1.9 notify the Holders at any time when a Prospectus relating to such
Registration Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the Prospectus included in such
Registration Statement, as then in effect, includes a Misstatement, and then to
correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the Holders, the Underwriters, if any, and any
attorney or accountant retained by such Holders or Underwriter to participate,
at each such person’s own expense, in the preparation of the Registration
Statement, and cause the Company’s officers, directors and employees to supply
all information reasonably requested by any such representative, Underwriter,
attorney or accountant in connection with the Registration; provided, however,
that such representatives or Underwriters enter into a confidentiality
agreement, in form and substance reasonably satisfactory to the Company, prior
to the release or disclosure of any such information;
3.1.11 obtain a “cold comfort” letter from the Company’s independent registered
public accountants in the event of an Underwritten Registration, in customary
form and covering such matters of the type customarily covered by “cold comfort”
letters as the managing Underwriter may reasonably request, and reasonably
satisfactory to a majority-in-interest of the participating Holders;
3.1.12 on the date the Registrable Securities are delivered for sale pursuant to
such Registration, obtain an opinion, dated such date, of counsel representing
the Company for the purposes of such Registration, addressed to the Holders, the
placement agent or sales agent, if any, and the Underwriters, if any, covering
such legal matters with respect to the Registration in respect of which such
opinion is being given as the Holders, placement agent, sales agent, or
Underwriter may reasonably request and as are customarily included in such
opinions and negative assurance letters, and reasonably satisfactory to a
majority in interest of the participating Holders;
3.1.13 in the event of any Underwritten Offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing Underwriter of such offering;
12
3.1.14 make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
(12) months beginning with the first day of the Company’s first full calendar
quarter after the effective date of the Registration Statement which satisfies
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any successor rule promulgated thereafter by the Commission);
3.1.15 if the Registration involves the Registration of Registrable Securities
involving gross proceeds in excess of $25,000,000, use its reasonable efforts to
make available senior executives of the Company to participate in customary
“road show” presentations that may be reasonably requested by the Underwriter in
any Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such
customary actions as may reasonably be requested by the Holders, in connection
with such Registration.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall
be borne by the Company. It is acknowledged by the Holders that the Holders
shall bear all incremental selling expenses relating to the sale of Registrable
Securities, such as Underwriters’ commissions and discounts, brokerage fees,
Underwriter marketing costs and, other than as set forth in the definition of
“Registration Expenses,” all reasonable fees and expenses of any legal counsel
representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. No person may
participate in any Underwritten Offering for equity securities of the Company
pursuant to a Registration initiated by the Company hereunder unless such person
(i) agrees to sell such person’s securities on the basis provided in any
underwriting arrangements approved by the Company and (ii) completes and
executes all customary questionnaires, powers of attorney, indemnities, lock-up
agreements, underwriting agreements and other customary documents as may be
reasonably required under the terms of such underwriting arrangements.
3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from
the Company that a Registration Statement or Prospectus contains a Misstatement,
each of the Holders shall forthwith discontinue disposition of Registrable
Securities until he, she or it has received copies of a supplemented or amended
Prospectus correcting the Misstatement (it being understood that the Company
hereby covenants to prepare and file such supplement or amendment as soon as
practicable after the time of such notice), or until he, she or it is advised in
writing by the Company that the use of the Prospectus may be resumed. If the
filing, initial effectiveness or continued use of a Registration Statement in
respect of any Registration at any time would require the Company to make an
Adverse Disclosure or would require the inclusion in such Registration Statement
of financial statements that are unavailable to the Company for reasons beyond
the Company’s control, the Company may, upon giving prompt written notice of
such action to the Holders, delay the filing or initial effectiveness of, or
suspend use of, such Registration Statement for the shortest period of time, but
in no event more than ninety (90) days in any 12-month period, determined in
good faith by the Company to be necessary for such purpose. In the event the
Company exercises its rights under the preceding sentence, the Holders agree to
suspend, immediately upon their receipt of the notice referred to above, their
use of the Prospectus relating to any Registration in connection with any sale
or offer to sell Registrable Securities. The Company shall immediately notify
the Holders of the expiration of any period during which it exercised its rights
under this Section 3.4.
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3.5 Reporting Obligations. As long as any Holder shall own Registrable
Securities, the Company, at all times while it shall be a reporting company
under the Exchange Act, covenants to file timely (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to
Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders
with true and complete copies of all such filings. The Company further covenants
that it shall take such further action as any Holder may reasonably request, all
to the extent required from time to time to enable such Holder to sell shares of
the Common Stock held by such Holder without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act (or any successor rule promulgated thereafter by the
Commission), including providing any legal opinions. Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
duly authorized officer as to whether it has complied with such requirements.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each
Holder of Registrable Securities, its officers, directors and agents and each
person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and out-of-pocket expenses
(including, without limitation reasonable outside attorneys’ fees) resulting
from any untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information or affidavit so furnished in writing to the Company by such Holder
expressly for use therein. The Company shall indemnify the Underwriters, their
officers and directors and each person who controls such Underwriters (within
the meaning of the Securities Act) to the same extent as provided in the
foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration Statement in which a Holder of
Registrable Securities is participating, such Holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors, officers and agents and each person who controls the Company (within
the meaning of the Securities Act) against all losses, claims, damages,
liabilities and out-of-pocket expenses (including, without limitation reasonable
outside attorneys’ fees) resulting from any untrue or alleged untrue statement
of material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such Holder expressly for use therein;
provided, however, that the obligation to indemnify shall be several, not joint
and several, among such Holders of Registrable Securities, and the liability of
each such Holder of Registrable Securities shall be in proportion to and limited
to the net proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Registration Statement. The Holders of Registrable
Securities shall indemnify the Underwriters, their officers, directors and each
person who controls such Underwriters (within the meaning of the Securities Act)
to the same extent as provided in the foregoing with respect to indemnification
of the Company.
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4.1.3 Any person entitled to indemnification herein shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which he,
she or it seeks indemnification (provided that the failure to give prompt notice
shall not impair any person’s right to indemnification hereunder to the extent
such failure has not materially prejudiced the indemnifying party) and
(ii) unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. No indemnifying party shall, without the consent of the
indemnified party, consent to the entry of any judgment or enter into any
settlement which cannot be settled in all respects by the payment of money (and
such money is so paid by the indemnifying party pursuant to the terms of such
settlement) or which settlement does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
4.1.4 The indemnification provided for under this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling person of such
indemnified party and shall survive the transfer of securities. The Company and
each Holder of Registrable Securities participating in an offering also agrees
to make such provisions as are reasonably requested by any indemnified party for
contribution to such party in the event the Company’s or such Holder’s
indemnification is unavailable for any reason.
4.1.5 If the indemnification provided under Section 4.1 hereof from the
indemnifying party is unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities and
out-of-pocket expenses referred to herein, then the indemnifying party, in lieu
of indemnifying the indemnified party, shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities and out-of-pocket expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party,
as well as any other relevant equitable considerations. The relative fault of
the indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, was made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the indemnifying party’s and
indemnified party’s relative intent, knowledge, access to information and
opportunity to correct or prevent such action; provided, however, that the
liability of any Holder under this subsection 4.1.5 shall be limited to the
amount of the net proceeds received by such Holder in such offering giving rise
to such liability. The amount paid or payable by a party as a result of the
losses or other liabilities referred to above shall be deemed to include,
subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3
above, any legal or other fees, charges or out-of-pocket expenses reasonably
incurred by such party in connection with any investigation or proceeding. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this subsection 4.1.5 were determined by pro rata allocation or by
any other method of allocation, which does not take account of the equitable
considerations referred to in this subsection 4.1.5. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution pursuant to this subsection
4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
15
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or communication under this Agreement must be in writing
and given by (i) deposit in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, (ii) delivery in person or by courier service providing evidence of
delivery, or (iii) transmission by hand delivery, electronic mail or facsimile.
Each notice or communication that is mailed, delivered, or transmitted in the
manner described above shall be deemed sufficiently given, served, sent, and
received, in the case of mailed notices, on the third business day following the
date on which it is mailed and, in the case of notices delivered by courier
service, hand delivery, electronic mail or facsimile, at such time as it is
delivered to the addressee (with the delivery receipt or the affidavit of
messenger) or at such time as delivery is refused by the addressee upon
presentation. Any notice or communication under this Agreement must be
addressed, if to the Company, to: c/o FirstMark Horizon Acquisition Corp., 100
5th Ave, 3rd Floor, New York, New York 10011, email: eric@firstmarkcap.com, and,
if to any Holder, at such Holder’s address as set forth in the Company’s books
and records. Any party may change its address for notice at any time and from
time to time by written notice to the other parties hereto, and such change of
address shall become effective thirty (30) days after delivery of such notice as
provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company
hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 Prior to the expiration of the Founder Shares Lock-Up Period or the
Private Placement Lock-Up Period, as the case may be, no Holder may assign or
delegate such Holder’s rights, duties or obligations under this Agreement, in
whole or in part, except in connection with a transfer of Registrable Securities
by such Holder to a Permitted Transferee but only if such Permitted Transferee
agrees to become bound by the transfer restrictions set forth in this Agreement.
16
5.2.3 This Agreement and the provisions hereof shall be binding upon and shall
inure to the benefit of each of the parties and its successors and the permitted
assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This Agreement shall not confer any rights or benefits on any persons that
are not parties hereto, other than as expressly set forth in this Agreement and
Section 5.2 hereof.
5.2.5 No assignment by any party hereto of such party’s rights, duties and
obligations hereunder shall be binding upon or obligate the Company unless and
until the Company shall have received (i) written notice of such assignment as
provided in Section 5.1 hereof and (ii) the written agreement of the assignee,
in a form reasonably satisfactory to the Company, to be bound by the terms and
provisions of this Agreement (which may be accomplished by an addendum or
certificate of joinder to this Agreement). Any transfer or assignment made other
than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts. This Agreement may be executed in multiple counterparts
(including facsimile or PDF counterparts), each of which shall be deemed an
original, and all of which together shall constitute the same instrument, but
only one of which need be produced.
5.4 Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE
EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (1) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW
YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B), AS
APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED
ENTIRELY WITHIN NEW YORK AND (2) SUBJECT TO APPLICABLE LAW, THE VENUE FOR ANY
ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT
IN NEW YORK COUNTY IN THE STATE OF NEW YORK.
5.5 TRIAL BY JURY. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
17
5.6 Amendments and Modifications. Upon the written consent of the Company and
the Holders of at least a majority in interest of the Registrable Securities at
the time in question, compliance with any of the provisions, covenants and
conditions set forth in this Agreement may be waived, or any of such provisions,
covenants or conditions may be amended or modified; provided, however, that
notwithstanding the foregoing, any amendment hereto or waiver hereof that
adversely affects one Holder, solely in his, her or its capacity as a holder of
the shares of capital stock of the Company, in a manner that is materially
different from the other Holders (in such capacity) shall require the consent of
the Holder so affected. No course of dealing between any Holder or the Company
and any other party hereto or any failure or delay on the part of a Holder or
the Company in exercising any rights or remedies under this Agreement shall
operate as a waiver of any rights or remedies of any Holder or the Company. No
single or partial exercise of any rights or remedies under this Agreement by a
party shall operate as a waiver or preclude the exercise of any other rights or
remedies hereunder or thereunder by such party.
5.7 Other Registration Rights. The Company represents and warrants that no
person, other than a Holder of Registrable Securities, has any right to require
the Company to register any securities of the Company for sale or to include
such securities of the Company in any Registration filed by the Company for the
sale of securities for its own account or for the account of any other person.
Further, the Company represents and warrants that this Agreement supersedes any
other registration rights agreement or agreement with similar terms and
conditions and in the event of a conflict between any such agreement or
agreements and this Agreement, the terms of this Agreement shall prevail.
5.8 Term. This Agreement shall terminate with respect to any Holder on the date
that such Holder no longer holds any Registrable Securities. The provisions of
Section 3.5 and Article IV shall survive any termination.
5.9 Holder Information. Each Holder agrees, if requested in writing, to
represent to the Company the total number of Registrable Securities held by such
Holder in order for the Company to make determinations hereunder.
[SIGNATURE PAGES FOLLOW]
18
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as
of the date first written above.
COMPANY: FIRSTMARK HORIZON ACQUISITION CORP., a Delaware corporation
By: /s/ Eric Cheung Name: Eric Cheung Title: Secretary
HOLDERS: Firstmark horizon sponsor LLC, a Delaware limited liability
company
By: /s/ Eric Cheung Name: Eric Cheung Title: General Counsel
/s/ Jason Robins Jason Robins
/s/ Luis Ubiñas Luis Ubiñas
/s/ Frederick Ball Frederick Ball
/s/ Allison Goldberg Allison Goldberg
[Signature Page to Registration Rights Agreement]
|
Exhibit 10.1
Execution Version
SENIOR SECURED SUPER PRIORITY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of March 30, 2020
Among
CARBO CERAMICS INC.
as Borrower,
The Guarantors Party Hereto,
and
WILKS BROTHERS, LLC,
as Lender,
and
The Other Lenders Party Hereto
as Lenders
$15,000,000
--------------------------------------------------------------------------------
Article 1 DEFINITIONS AND ACCOUNTING TERMS
2
Section 1.1
Terms Defined Above
2
Section 1.2
Certain Defined Terms
2
Section 1.3
Computation of Time Periods
22
Section 1.4
Accounting Terms; Changes in GAAP
22
Section 1.5
Miscellaneous
22
Section 1.6
Divisions
22
Article 2 CREDIT FACILITIES
23
Section 2.1
Loans
23
Section 2.2
Loans and Borrowings
23
Section 2.3
Requests for Borrowings
24
Section 2.4
Scheduled Termination of Commitments
24
Section 2.5
Prepayments
24
Section 2.6
Repayment
25
Section 2.7
Fees
25
Section 2.8
Interest.
26
Section 2.9
Reserved.
26
Section 2.10
Reserved.
26
Section 2.11
Increased Costs.
26
Section 2.12
Payments and Computations.
27
Section 2.13
Taxes.
28
Section 2.14
Replacement of Lenders
30
Article 3 CONDITIONS OF EFFECTIVENESS
31
Section 3.1
Conditions to Effectiveness
31
Section 3.2
Conditions to Each Borrowing
34
Section 3.3
Reserved.
35
Section 3.4
Post-Closing Requirements
35
Article 4 REPRESENTATIONS AND WARRANTIES
35
Section 4.1
Organization
35
Section 4.2
Authorization
36
--------------------------------------------------------------------------------
Section 4.3
Enforceability
36
Section 4.4
Financial Condition
36
Section 4.5
Ownership and Liens; Real Property
37
Section 4.6
True and Complete Disclosure
37
Section 4.7
Litigation
37
Section 4.8
Compliance with Agreements
37
Section 4.9
Pension Plans
38
Section 4.10
Environmental Condition
38
Section 4.11
Subsidiaries
39
Section 4.12
Investment Company Act
39
Section 4.13
Taxes
39
Section 4.14
Permits, Licenses, etc
40
Section 4.15
Use of Proceeds
40
Section 4.16
Condition of Property; Casualties
40
Section 4.17
Insurance
40
Section 4.18
Compliance with Laws
40
Section 4.19
Security Interest
41
Section 4.20
FCPA; Sanctions
41
Section 4.21
Deposit Accounts
42
Section 4.22
EEA Financial Institutions
42
Section 4.23
Reorganization Matters
42
Article 5 AFFIRMATIVE COVENANTS
42
Section 5.1
Organization
42
Section 5.2
Reporting
43
Section 5.3
Insurance
47
Section 5.4
Compliance with Laws
48
Section 5.5
Reserved
48
Section 5.6
Material Domestic Subsidiaries
48
Section 5.7
Records; Inspection
49
Section 5.8
Maintenance of Property
49
Section 5.9
Security
49
Section 5.10
Further Assurances; Cure of Title Defects
50
--------------------------------------------------------------------------------
Section 5.11
FCPA; Sanctions
51
Section 5.12
Reserved
51
Section 5.13
Payment of Obligations
51
Section 5.14
Performance of Obligations under Credit Documents
52
Section 5.15
Case Milestones
52
Section 5.16
Cash Management
52
Article 6 NEGATIVE COVENANTS
53
Section 6.1
DIP Budget
53
Section 6.2
Debt
53
Section 6.3
Liens
54
Section 6.4
Investments
55
Section 6.5
Acquisitions
56
Section 6.6
Agreements Restricting Liens
56
Section 6.7
Use of Proceeds
57
Section 6.8
Corporate Actions
57
Section 6.9
Dispositions
58
Section 6.10
Restricted Payments
58
Section 6.11
Affiliate Transactions
59
Section 6.12
Line of Business
59
Section 6.13
Hazardous Materials
59
Section 6.14
Compliance with ERISA
59
Section 6.15
Limitation on Hedging
60
Section 6.16
Chapter 11 Claims
60
Section 6.17
Other Financings
60
Section 6.18
Superpriority Claims
60
Section 6.19
Minimum Liquidity
61
Article 7 DEFAULT AND REMEDIES
61
Section 7.1
Events of Default
61
Section 7.2
Acceleration of Maturity
65
Section 7.3
Reserved
65
Section 7.4
Reserved
65
--------------------------------------------------------------------------------
Section 7.5
Remedies Cumulative, No Waiver
65
Section 7.6
Application of Payments
65
Section 7.7
Lenders May File Proofs of Claim
66
Article 8 RESERVED
67
Article 9 MISCELLANEOUS
67
Section 9.1
Costs and Expenses
67
Section 9.2
Indemnification; Waiver of Damages
67
Section 9.3
Waivers and Amendments
68
Section 9.4
Severability
69
Section 9.5
Survival of Representations and Obligations
69
Section 9.6
Binding Effect
69
Section 9.7
Lender Assignments and Participations
70
Section 9.8
Confidentiality
71
Section 9.9
Notices, Etc
72
Section 9.10
Business Loans
72
Section 9.11
Usury Not Intended
72
Section 9.12
Usury Recapture
73
Section 9.13
Governing Law; Waiver of Jury Trial
73
Section 9.14
Reserved
75
Section 9.15
Reserved
75
Section 9.16
Submission to Jurisdiction
75
Section 9.17
Execution in Counterparts
75
Section 9.18
Reserved
75
Section 9.19
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
75
Section 9.20
USA Patriot Act
76
Section 9.21
No Oral Agreements
76
Section 9.22
Right of Setoff
76
Section 9.23
No Third Party Beneficiaries
77
Section 9.24
Credit Bidding
77
Section 9.25
Incorporation of DIP Orders by Reference
78
--------------------------------------------------------------------------------
ANNEXES
Annex I
– Commitments
EXHIBITS:
Exhibit A
– Form of Assignment and Acceptance
Exhibit B
– Form of Compliance Certificate
Exhibit C
– Form of Guaranty
Exhibit D
– Form of Note
Exhibit E
– Reserved
Exhibit F
– DIP Budget
Exhibit G
– Form of Borrowing Request
SCHEDULES:
Schedule I
– Contact Information
Schedule 1.2
– Existing Letters of Credit
Schedule 4.1
– Organizational Information
Schedule 4.7
– Litigation
Schedule 4.8
– Compliance with Agreements
Schedule 4.10
– Environmental Conditions
Schedule 4.11
– Subsidiaries
Schedule 4.13
– Waivers of Tax Statute of Limitations
Schedule 4.20
– Sanctions
Schedule 4.21
– Deposit Accounts
Schedule 5.9(d)
– Real Property
Schedule 6.2(f)
– Purchase Money Debt and Capital Leases
Schedule 6.2(k)
– Outstanding Debt
Schedule 6.2(m)
– Existing Corporate Credit Card Services
Schedule 6.4(a)
– Investments
Schedule 6.9(a)(iii)
– Specified Dispositions
--------------------------------------------------------------------------------
This SENIOR SECURED SUPER PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT dated
as of March 30, 2020 (this “Agreement”) is among (a) CARBO Ceramics Inc., a
Delaware corporation (the “Borrower”), (b) the Guarantors from time to time
party hereto, (c) Wilks Brothers, LLC, as a Lender (as defined below), and ()
the other Lenders from time to time party hereto.
RECITALS
A.The Borrower previously entered into that certain Amended and Restated Credit
Agreement dated as of March 2, 2017, among the Borrower, the lenders party
thereto (the “Prepetition Lenders”), and Wilks Brothers, LLC, as Administrative
Agent (the “Prepetition Administrative Agent”) (as amended, restated, amended
and restated, supplemented and/or modified from time to time through the date
hereof but before giving effect to this Agreement, the “Prepetition Credit
Agreement”).
B.In order to secure the full and punctual payment and performance of the
obligations under the Prepetition Credit Agreement, the Borrower and the
Guarantors (as defined in the Prepetition Credit Agreement) executed and
delivered mortgages, deeds of trust, collateral assignments, security
agreements, pledge agreements and financing statements in favor of the
Prepetition Administrative Agent (collectively, as amended, restated,
supplemented and/or modified from time to time immediately prior to giving
effect to this Agreement, and as amended, restated, amended and restated,
supplemented and/or modified from time to time after this Agreement becomes
effective and/or in connection with this Agreement becoming effective, the
“Prepetition Security Instruments”) granting a mortgage lien and continuing
security interest in and to the collateral described in such Prepetition
Security Instruments to secure the payment and performance of the obligations
and indebtedness of the Borrower and the Guarantors arising under the
Prepetition Credit Agreement and the Prepetition Security Instruments.
C.On March 29, 2020 (the “Petition Date”), the Borrower and the Guarantors each
commenced a voluntary case (collectively, the “Chapter 11 Cases”) under chapter
11 of title 11 of the United States Code (the “Bankruptcy Code”), and the
Chapter 11 Cases are being jointly administered in the United States Bankruptcy
Court for the Southern District of Texas, Houston Division (the “Bankruptcy
Court”).
D.From and after the Petition Date, the Borrower and the Guarantors continue to
operate their business and manage their property as debtors and debtors in
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
E.The Borrower seeks to obtain post-petition debtor-in-possession credit
financing (the “DIP Facility”) consisting of a new money multiple draw term loan
facility in an aggregate amount not to exceed $15,000,000, in accordance with
the terms and conditions set forth in the Credit Documents (as defined below).
F.All of the claims and the liens granted under the DIP Orders (as defined
below) and the Credit Documents in respect of the DIP Facility shall be subject
and subordinate to the Carve-Out (as defined below).
--------------------------------------------------------------------------------
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the Credit Parties and the Lenders do hereby
further agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1Terms Defined Above. As used in this Agreement, each term defined
above has the meaning indicated above.
Section 1.2Certain Defined Terms. The following terms shall have the following
meanings (unless otherwise indicated, such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
“Acceptable Plan” means a Chapter 11 Plan in form and substance satisfactory to
the Lenders and the Prepetition Administrative Agent that reflects the terms of
the Restructuring Support Agreement (as defined below) and (i) provides for the
termination of the unused commitments under the DIP Facility upon the effective
date of such plan, (ii) provides that the effective date of such plan shall
occur by a date that is within the applicable Case Milestones, and (iii)
contains customary releases and other exculpatory provisions for the benefit of
the Lenders, the Prepetition Administrative Agent and the Prepetition Lenders.
“Acceptable Security Interest” means a security interest which (a) exists in
favor of the Lenders and the other Secured Parties, (b) is superior to all other
security interests (other than certain of the Permitted Liens), (c) secures the
Obligations, and (d) is perfected and enforceable against the Credit Party which
created such security interest.
“Account Control Agreement” and “Control Agreement” each means, with respect to
any deposit account or securities account, an agreement, in form and substance
reasonably satisfactory to the Lenders, among the Lenders, the financial
institution or other Person at which such account is maintained and the Credit
Party maintaining such account or owning such entitlement, effective to grant
“control” (as defined in the UCC (as defined in the Security Agreement), as
applicable) over such account to the Lenders.
“Account Debtor” means an account debtor as defined in the Uniform Commercial
Code, as in effect in the State of Texas.
“Acquisition” means the purchase by any Credit Party of any business, including
the purchase of associated assets or operations or the Equity Interests of a
Person.
“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise. For purposes of this Agreement, neither
Wilks Brothers, LLC nor any of its Affiliates shall be deemed to be an
“Affiliate” of any Credit Party or any of their respective Subsidiaries.
-2-
--------------------------------------------------------------------------------
“Aggregate Commitments” at any time shall equal the sum of the Commitments.
“Agreement” is defined in the introductory paragraph hereof.
“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or any of its Subsidiaries from time to
time concerning or relating to bribery or corruption.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
“Asset Guard” means Asset Guard Products Inc., a Delaware corporation, formerly
known as Falcon Technologies and Services, Inc.
“Assignment and Acceptance” means an assignment and acceptance executed by a
Lender and an Eligible Assignee and accepted by the Lenders, in substantially
the same form as Exhibit A.
“ASTM E 1527-13” means the American Society of Testing and Materials Practice E
1527-13 Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process (ASTM E 1527-13).
“Available Draw Commitments” means, as to any Lender, at any time, an amount
equal to the then available unfunded Commitment of such Lender.
“Avoidance Actions” has the meaning set forth in the DIP Orders.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.
“Borrower” means CARBO Ceramics Inc., a Delaware corporation.
“Borrowing” means Loans made on a Borrowing Date.
“Borrowing Date” means the date on which any Loan is made hereunder.
“Borrowing Request” means a written request by the Borrower for a Borrowing in
accordance with Section 2.3.
“Budgeted Expenses” means expenses permitted to be paid by the Credit Parties in
accordance with the DIP Budget, subject to the Permitted Variances and the
Permitted Carry.
“Building” has the meaning assigned to such term in the applicable Flood
Insurance Regulation.
-3-
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“Business Day” means a day other than a Saturday, Sunday, or other day on which
the Lenders are authorized to close under the laws of, or is in fact closed in,
Houston, Texas.
“Capital Leases” means, for any Person, any lease of any Property by such Person
as lessee which would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on the balance sheet of such Person.
“Carve-Out” has the meaning set forth in the DIP Orders.
“Case Milestones” has the meaning given thereto in Section 5.15.
“Cash Management Order” means an order in form and substance approved by the
Lenders regarding the Credit Parties’ cash management system, bank accounts,
cash collections and disbursements, intercompany transactions, bank fees,
business forms, corporate cards and related matters, as such order may be
amended, supplemented or modified with the prior approval of the Lenders.
“Casualty Event” means the damage, destruction or condemnation, as the case may
be, of property of the Borrower or any Subsidiary, including by process of
eminent domain or any Disposition of property in lieu of condemnation.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
“Change in Control” means the occurrence of any of the following events:
(a)the Borrower ceases to own, either directly or indirectly, 100% of the Equity
Interest in any Guarantor other than as a result of transaction permitted under
Section 6.8 or Section 6.9; and
(b)any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding any employee benefit plan of such person or
its subsidiaries, any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan), becomes a “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an
“option right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 50% or more of the Equity Interests
of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right);
(c)substantially all of the Credit Parties’ property and assets are sold,
transferred and/or are Disposed of (in one sale, transfer or Disposition or a
series of sales, transfers and/or Dispositions);
(d)the merger or consolidation of the Borrower with or into any other Person or
group, to the extent that the Borrower is not the surviving entity; and
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(e)adoption of a plan of liquidation or dissolution in regards to the Borrower.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
“Chapter 11 Plan” means a plan of reorganization or liquidation filed in any of
the Chapter 11 Cases under Section 1121 of the Bankruptcy Code.
“Closing Fee” has the meaning set forth in Section 2.7(b).
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means all property of the Credit Parties which is “Collateral” (as
defined in the Security Agreement) and other similar terms referred to in the
Security Documents (including without limitation, the Mortgages) and all of the
other property that is or is intended under the terms of the Security Documents
to be subject to Liens in favor of the Lenders for the benefit of the Secured
Parties.
“Collateral Access Agreement” means a landlord lien waiver or subordination
agreement, bailee letter or any other similar agreement, in any case, in form
and substance reasonably acceptable to the Lenders and executed by the parties
thereto.
“Collateral Assignment” means that certain Collateral Assignment of Bond and
Deed to Secure Debt dated as of the date hereof and granted by the Borrower in
favor of the Lenders.
“Commitments” means, with respect to each Lender, the commitment of such Lender
to make Loans pursuant to Section 2.1 in an aggregate principal amount not to
exceed the amount set forth opposite such Lender’s name on Annex I hereto, as
such commitment may be modified from time to time pursuant to assignments by or
to such Lender pursuant to Section 9.7, as such amount may be adjusted from time
to time in accordance with this Agreement.
“Committee” means, collectively, if applicable, the official committee of
unsecured creditors and any other official committee formed, appointed or
approved in any Chapter 11 Case and each of such committees shall be referred to
herein as a “Committee”.
“Compliance Certificate” means a compliance certificate executed by a
Responsible Officer of the Borrower or such other Person as required by this
Agreement in substantially the same form as Exhibit B.
“Confirmation Order” has the meaning given thereto in Section 5.15(f).
“Consolidated Net Tangible Assets” means, as of any date of determination, an
amount equal to the aggregate book value of the tangible assets of the Borrower
and the other Credit Parties and, to the extent of the ownership interest of the
Borrower and the other Credit Parties therein, any Non-Guarantor Subsidiaries
and joint ventures at such time, minus the liabilities of the Borrower
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and the other Credit Parties, all as determined on a consolidated basis in
accordance with GAAP based on the most recent quarterly or annual consolidated
financial statements of the Borrower referred to in Section 4.4 or delivered as
provided in Section 5.2, as the case may be (for the avoidance of doubt,
Consolidated Net Tangible Assets shall not include goodwill, trade names,
patents, unamortized debt discount and expense or any other like intangibles).
“Consummation Date” means the date of the substantial consummation (as defined
in section 1101 of the Bankruptcy Code and which for purposes of this Agreement
shall be no later than the effective date) of a Reorganization Plan that is
confirmed pursuant to an order of the Bankruptcy Court.
“Controlled Group” means all members of a controlled group of corporations and
all businesses (whether or not incorporated) under common control which,
together with the Borrower, any Guarantor or any Subsidiary, are treated as a
single employer under Section 414 of the Code.
“Credit Documents” means this Agreement, the Notes, the Guaranties, the Security
Documents, and each other agreement, instrument, or document executed at any
time in connection with this Agreement.
“Credit Parties” means the Borrower and the Guarantors.
“Debt” means, for any Person, without duplication: (a) indebtedness of such
Person for borrowed money, including the face amount of any letters of credit
supporting the repayment of indebtedness for borrowed money issued for the
account of such Person; (b) to the extent not covered under clause (a) above,
obligations under letters of credit and agreements relating to the issuance of
letters of credit or acceptance financing; (c) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, or upon
which interest payments are customarily made; (d) obligations of such Person
under conditional sale or other title retention agreements relating to any
Properties purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business); (e) obligations of such Person to pay the deferred purchase
price of property, services, or Acquisitions (including, without limitation, any
earn-out obligations, contingent obligations, or other similar obligations
associated with such purchase, and including obligations that are non-recourse
to the credit of such Person but are secured by the assets of such Person);
(f) obligations of such Person as lessee under Capital Leases and obligations of
such Person in respect of synthetic leases; (g) obligations of such Person under
any Hedging Arrangement; (h) obligations of such Person owing in respect of
redeemable preferred stock or other preferred Equity Interest of such Person if
such redeemable preferred stock or other preferred Equity Interest is redeemable
at the option of the holders thereof, or mandatorily redeemable by the issuer,
in each case prior to the Maturity Date; (i) the Debt of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer, but only to the extent to which there is recourse to such Person
for the payment of such Debt; (j) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) of
such Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (i) above; (k) indebtedness or obligations of
others of the kinds referred to in clauses (a) through (j) secured by any Lien
on or
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in respect of any Property of such Person, and (l) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.
“Debt Incurrence” means any incurrence, issuance or sale by the Borrower or any
of its Subsidiaries of any Debt after the Effective Date other than Permitted
Debt.
“Debt Incurrence Proceeds” means, with respect to any Debt Incurrence, all cash
and Liquid Investments received by the Borrower or any of its Subsidiaries from
such Debt Incurrence after payment of, or provision for, all underwriter fees
and expenses, original issue discount, SEC and blue sky fees, printing costs,
fees and expenses of accountants, lawyers and other professional advisors,
brokerage commissions, Taxes paid or payable in connection with such Debt
Incurrence and other out-of-pocket fees and expenses actually incurred in
connection with such Debt Incurrence; provided that, an original issue discount
shall not reduce the amount of such Debt Incurrence Proceeds unless such
discount is due and payable at or immediately following the closing of such Debt
Incurrence and such discount has not already been taken into account to reduce
the amount of proceeds received by the Borrower or such Subsidiary from such
Debt Incurrence.
“Default” means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
“Deposit Account” means any operating, administrative, cash management,
collection activity, demand, time, savings, passbook or other deposit account
maintained with a bank or other financial institution.
“DIP Budget” means a 13-week cash flow forecast detailing the Credit Parties’
anticipated cash receipts and expenditures (including Professional Fees and
expenses), as amended, supplemented, or replaced from time to time in accordance
with this Agreement, which budget (and any amendments thereto or replacements
thereof) shall be in form and substance acceptable to the Lenders and shall be
incorporated into the DIP Orders.
“DIP Cash Collateral” means cash collateral, as such term is defined in Section
363(a) of the Bankruptcy Code and as defined in the DIP Orders, arising from or
relating to Collateral granted to the Lenders.
“DIP Orders” means, together or individually, as applicable, the Interim DIP
Order and the Final DIP Order.
“Disclosure Statement” has the meaning given thereto in Section 5.15(c).
“Disposition” means any sale, lease, license, transfer, assignment, conveyance,
or other disposition of any Property; “Dispose” or similar terms shall have
correlative meanings.
“Dollars” and “$” means lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States, any state thereof or the District of Columbia.
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“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent;
“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.
“Effective Date” has the meaning given thereto in section 3.1.
“Eligible Assignee” means (a) a Lender, (b) any Affiliate of a Lender approved
by the Lenders, (c) any Approved Fund approved by the Lenders or (d) any other
Person (other than a natural Person) approved by Lenders and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected in
accordance with Section 9.7, the Borrower.
“Environment” or “Environmental” has the meanings set forth in 42 U.S.C. 9601(8)
(1988).
“Environmental Claim” means any third party (including governmental agencies and
employees) action, lawsuit, claim, demand, regulatory action or proceeding,
order, decree, consent agreement or notice of potential or actual responsibility
or violation (including claims or proceedings under the Occupational Safety and
Health Acts or similar laws or requirements relating to health or safety of
employees) which seeks to impose liability under any Environmental Law.
“Environmental Law” means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements,
including common law theories, now or hereafter in effect and relating to, or in
connection with the Environment, health, or safety, including without limitation
CERCLA, relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water,
groundwater, land surface or subsurface strata, or other natural resources;
(b) solid, gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical infections, or toxic substances,
materials or wastes; (d) the safety or health of employees; or (e) the
manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical infections, or toxic substances,
materials or wastes.
“Environmental Permit” means any permit, license, order, approval, registration
or other authorization under Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
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“Equipment” of any Person means all equipment (as defined in the UCC) owned by
such Person, wherever located.
“Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.
“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board as in effect from time to time.
“Event of Default” has the meaning specified in Section 7.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Account” means any deposit account or securities account in which
funds are maintained and used solely for (a) the payment of salaries, wages and
payroll tax, workers’ compensation, and 401K, health and welfare plans, (b)
petty cash with a balance less than $25,000 individually or in the aggregate for
all such petty cash accounts, at all times, (c) cash or securities on deposit
that are subject to a Lien permitted under Section 6.3(i) and that otherwise
constitute Prior Liens, (d) cash deposits for utilities pursuant to an order of
the Bankruptcy Court issued in the Chapter 11 Cases or (e) cash for payment of
any Professional Fees.
“Excluded Collateral” means:
(a)any contracts, instruments, licenses, license agreements or other documents
(or any rights thereunder), to the extent (and only to the extent) that the
grant of a security interest would (i) constitute a violation of a restriction
in favor of, or requires a consent not obtained prior to the Effective Date of,
a third party on such grant, (ii) give any other party to such contract,
instrument, license, license agreement or other document the right to terminate
its obligations thereunder, or (iii) violates any law or requires the consent
not obtained prior to the Effective Date of any Governmental Authority; provided
that the limitation set forth in this clause (a) above shall not affect, limit,
restrict or impair the grant by a Credit Party of a security interest pursuant
to the Security Agreement in any such right, to the extent that an otherwise
applicable prohibition or restriction on such grant is rendered ineffective by
any applicable law, including the UCC or the Bankruptcy Code;
(b)any application to register any trademark or service mark prior to the filing
under applicable law of a verified statement of use (or the equivalent) for such
trademark or service mark to the extent the creation of a security interest
therein or the grant of a mortgage thereon would void or invalidate such
trademark or service mark;
(c)any Excluded Accounts; and
(d)Avoidance Actions (and the proceeds thereof).
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“Excluded Swap Obligation” means, with respect to any Guarantor, any Hedge
Obligation if, and to the extent that, all or a portion of the guaranty of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Hedge Obligation (or any guaranty thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guaranty of such Guarantor or the grant
of such security interest becomes effective with respect to such Hedge
Obligation. If a Hedge Obligation arises under a master agreement governing
more than one swap, such exclusion shall apply only to the portion of such Hedge
Obligation that is attributable to swaps for which such guaranty or security
interest is or becomes illegal.
“Excluded Taxes” has the meaning specified in Section 2.13(a).
“Existing Letters of Credit” means those letters of credit set forth on Schedule
1.2.
“Extraordinary Receipts” means any proceeds resulting from a Casualty Event,
including any insurance proceeds, less any Taxes paid or payable in connection
with such Casualty Event.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future Treasury
Regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among Governmental Authorities and implementing
such Sections of the Code.
“FCPA” has the meaning set forth in Section 4.20(a).
“Federal Flood Insurance” means federally backed Flood Insurance available under
the National Flood Insurance Program to owners of real property improvements
located in Special Flood Hazard Areas in a community participating in the
National Flood Insurance Program.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any of its successors.
“FEMA” means the Federal Emergency Management Agency, a component of the United
States Department of Homeland Security that administers the National Flood
Insurance Program, or any of its successors.
“Final DIP Order” means an order of the Bankruptcy Court in the Chapter 11 Cases
authorizing and approving on a final basis, among other things, (a) the DIP
Facility and the extensions of credit thereunder, including the incurrence by
the Credit Parties of secured indebtedness in accordance with this Agreement,
(b) the form of this Agreement and the other Credit Documents, (c) the granting
of Liens and claims by the Credit Parties in favor of the Lenders, (d) the
payment by the Credit Parties of the fees contemplated by this Agreement, (e)
the provision of adequate protection to the Prepetition Lenders in a manner
satisfactory to the Lenders and the Prepetition Majority Lenders, (f) the other
obligations of the Credit Parties under this Agreement and the other Credit
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Documents, and (g) such other matters as are usual and customary for orders of
this kind, which order shall be in form and substance satisfactory to the
Lenders in all respects, which order shall not have been vacated, reversed,
modified or stayed, and as the same may be amended, supplemented or modified
from time to time after entry thereof in accordance with the terms hereof but
only with the written consent of the Lenders.
“First Day Orders” has the meaning given thereto in Section 3.1(p).
“Flood Insurance” means, for any owned real property located in a Special Flood
Hazard Area, Federal Flood Insurance or private insurance that meets or exceeds
the requirements set forth by FEMA in its Mandatory Purchase of Flood Insurance
Guidelines.
“Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968
as now or hereafter in effect or any successor statute thereto, (b) the Flood
Disaster Protection Act of 1973 as now or hereafter in effect or any successor
statute thereto, (c) the National Flood Insurance Reform Act of 1994 (amending
42 USC § 4001, et seq.), as the same may be amended or recodified from time to
time, and (d) the Flood Insurance Reform Act of 2004 and any regulations
promulgated thereunder.
“Foreign Subsidiary” means any Subsidiary of Borrower that is a “controlled
foreign corporation” as defined in Section 957 of the Code.
“FSHCO” means any Subsidiary substantially all of whose assets consist of Equity
Interests and/or indebtedness of one or more Foreign Subsidiaries.
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means United States of America generally accepted accounting principles
as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.4.
“Governmental Authority” means, with respect to any Person, any foreign
governmental authority, the United States of America, any state of the United
States of America, the District of Columbia, and any subdivision of any of the
foregoing, and any agency, department, commission, board, authority or
instrumentality, bureau or court having jurisdiction over such Person.
“Guarantors” means any Person that now or hereafter executes a Guaranty,
including (a) Asset Guard, (b) Stratagen Inc., a Delaware corporation, and (c)
each Material Domestic Subsidiary or other Subsidiary that becomes a guarantor
of all or a portion of the Obligations and which has entered into either a
joinder agreement substantially in the form attached to the Guaranty or a new
Guaranty; provided, however, that the Guarantors shall not include any Foreign
Subsidiary, FSHCO or any Subsidiary of a Foreign Subsidiary or FSHCO.
“Guaranty” means the Guaranty Agreement executed in substantially the same form
as Exhibit C.
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“Hazardous Substance” means any substance or material identified as such
pursuant to CERCLA and those regulated under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum
products, radionuclides, and radioactive materials.
“Hazardous Waste” means any substance or material regulated or designated as
such pursuant to any Environmental Law, including without limitation,
pollutants, contaminants, flammable substances and materials, explosives,
radioactive materials, oil, petroleum and petroleum products, chemical liquids
and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar
substances and materials.
“Hedge Obligation” means, with respect to any Guarantor, any obligation to pay
or perform under any agreement, contract or transaction that constitutes a
“swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Hedging Arrangement” means a hedge, call, swap, collar, floor, cap, option,
forward sale or purchase or other contract or similar arrangement (including any
obligations to purchase or sell any commodity or security at a future date for a
specific price) which is entered into to reduce or eliminate or otherwise
protect against the risk of fluctuations in prices or rates, including interest
rates, foreign exchange rates, commodity prices and securities prices.
“Inventory” of any Person means all Property of such Person which would, in
accordance with GAAP, be required to be classified and accounted for as
inventory on the balance sheet of such Person.
“Interim DIP Order” means an order of the Bankruptcy Court in the Chapter 11
Cases authorizing and approving on an interim basis, among other things, (a) the
DIP Facility and the extensions of credit thereunder, including the incurrence
by the Credit Parties of secured indebtedness in accordance with this Agreement,
(b) the form of this Agreement and the other Credit Documents, (c) the granting
of Liens and claims by the Credit Parties in favor of the Lenders, (d) the
payment by the Credit Parties of the fees contemplated by this Agreement, (e)
the provision of adequate protection to the Prepetition Lenders in a manner
satisfactory to the Lenders and the Prepetition Majority Lenders, (f) the other
obligations of the Credit Parties under this Agreement and the other Credit
Documents, and (g) such other matters as are usual and customary for orders of
this kind, which order shall be in form and substance satisfactory to the
Lenders in all respects, which order shall not have been vacated, reversed,
modified or stayed, and as the same may be amended, supplemented or modified
from time to time after entry thereof in accordance with the terms hereof but
only with the written consent of the Lenders.
“Legal Requirement” means any law, statute, ordinance, decree, requirement,
order, judgment, rule, regulation (or official interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations T, U and X.
“Lenders” means the Persons listed on the signature pages hereto as Lenders, any
other Person that shall have become a Lender hereto pursuant to Section 2.14,
and any other Person that shall have become a Lender hereto pursuant to an
Assignment and Acceptance, but in any event,
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excluding any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
“Lending Office” means, as to any Lender, the office or offices of such Lender
described on Schedule I, or such other office or offices as a Lender may from
time to time notify the Borrower.
“Lien” means any mortgage, lien, pledge, charge, deed of trust, security
interest, or encumbrance to secure or provide for the payment of any obligation
of any Person, whether arising by contract, operation of law, or otherwise
(including the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease, or other title retention agreement).
“Liquid Investments” means (a) readily marketable direct full faith and credit
obligations of the United States of America or obligations unconditionally
guaranteed by the full faith and credit of the United States of America;
(b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or
(ii) any commercial banking institutions or corporations rated at least P-2 by
Moody’s or A-2 by S&P; (c) certificates of deposit, time deposits, and bankers’
acceptances issued by (i) any of the Lenders or (ii) any other commercial
banking institution which is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than $250,000,000
and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are
entered into with any of the Lenders or any major money center banks included in
the commercial banking institutions described in clause (c) and which are
secured by readily marketable direct full faith and credit obligations of the
government of the United States of America or any agency thereof;
(e) investments in any money market fund which holds investments substantially
of the type described in the foregoing clauses (a) through (d); (f) other
investments made through the Lenders or their Affiliates and approved by the
Lenders; and (g) deposit accounts and securities accounts (solely to the extent
that such securities accounts only hold the invests described in the foregoing
clauses (a) through (f)), subject to the terms and conditions of Section 5.9(c)
of this Agreement. All the Liquid Investments described in clauses (a) through
(d) above shall have maturities of not more than 365 days from the date of
issue.
“Liquidity” means, at any time, the sum of (a) the positive remainder, if any,
of (i) the maximum aggregate amount of Commitments pursuant to Section 2.1 at
such time (but only to the extent Borrower is permitted to borrow such maximum
amount under the terms of this Agreement, including, without limitation, Section
3.2) minus (ii) the aggregate outstanding principal amount of the Loans at such
time, plus (b) the aggregate amount of all cash and cash equivalents on the
consolidated balance sheet of the Borrower and its Subsidiaries at such time
that is not “restricted” for purposes of GAAP or otherwise encumbered (other
than by a Lien granted under a Security Document).
“Loans” means any and all term loans made, or to be made, to the Borrower by the
Lenders pursuant to Section 2.1.
“Manufactured (Mobile) Home” has the meaning assigned to such term in the
applicable Flood Insurance Regulation.
“Material Adverse Change” means a material adverse change (a) in the business,
financial condition, properties or results of operations of the Borrower and its
Subsidiaries, taken as a whole;
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(b) on the validity or enforceability of this Agreement or any of the other
Credit Documents; or (c) on any Credit Party’s ability to perform its
obligations under this Agreement, any Note, the Guaranties or any other Credit
Document; provided that none of the following shall be taken into account in
determining whether there has been a Material Adverse Change: (i) the
commencement or continuation of the Chapter 11 Cases, or any events resulting
therefrom, (ii) changes or conditions generally affecting the economy or the
financial markets in the United States or globally or (iii) changes or
conditions generally affecting the industries in which the Credit Parties
operate.
“Material Domestic Subsidiary” means, (a) as of any fiscal quarter end, any
Domestic Subsidiary that (i) has operating income equal to or greater than 10%
of the Borrower’s consolidated operating income, in each case, for the
four-fiscal quarter period then ended, or (ii) has book value of total assets
equal to or greater than 10% of the Borrower’s consolidated book value of total
assets, in each case under clauses (i) and (ii) above, as established in
accordance with GAAP and as reflected in the financial statements covering such
fiscal quarter and delivered to the Lenders pursuant hereto, (b) Asset Guard and
(c) StrataGen, Inc., a Delaware corporation.
“Maturity Date” means the earliest of (a) the Scheduled Maturity Date; (b) the
date upon which the Interim DIP Order expires if the Final DIP Order has not
then been entered; (c) thirty (30) days after the Petition Date if the Final DIP
Order has not then been entered; (d) the Consummation Date; (e) the closing of
any sale of assets, which when taken together with all asset sales completed
since the Effective Date, constitutes a sale of all or substantially all of the
assets of the Borrower and the Guarantors; (f) the date of the failure to
achieve any of the Case Milestones in accordance with Section 5.15 hereof; and
(g) the date on which all Loans become due and payable and the Commitments are
terminated under the Credit Documents, whether by acceleration or otherwise.
“Maximum Rate” means the maximum nonusurious interest rate under applicable law.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto which
is a nationally recognized statistical rating organization.
“Mortgage” means each mortgage or deed of trust in form reasonably acceptable to
the Lenders executed by any Credit Party to secure all or a portion of the
Obligations.
“Mortgaged Property” means any real Property owned by any Loan Party that is
subject to a Mortgage.
“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.
“National Flood Insurance Program” means the program created by any Governmental
Authority of the United States pursuant to the Flood Insurance Regulations, that
mandates the purchase of flood insurance to cover real property improvements
located in Special Flood Hazard Areas in participating communities and provides
protection to property owners through a federal insurance program.
“Net Cash Proceeds” means, with respect to any Disposition, all cash and Liquid
Investments received from such Disposition after (a) payment of, or provision
for, all reasonable brokerage and
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transaction commissions, marketing costs, restoration and refurbishment
expenses, and other reasonable out of pocket fees and expenses actually incurred
in connection with such Disposition; (b) payment of any outstanding obligations
(permitted hereunder) secured by the Property that is being Disposed (other than
the Obligations); (c) all Taxes paid or payable by such Person, any Subsidiary
of such Person or any member of the Tax Group of such Person in connection with
such Disposition; and (d) the amount of reserves recorded in accordance with
GAAP for indemnity or similar obligations of the Person making such Disposition
and its Affiliates directly related to such Disposition.
“Non-Material Domestic Subsidiary” means any Domestic Subsidiary other than a
Material Domestic Subsidiary.
“Notes” has the meaning set forth in Section 2.2(b).
“Obligations” means all principal, interest (including post-petition interest),
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by any of the Credit Parties to the Lenders under this Agreement and the other
Credit Documents (but excluding, for the avoidance of doubt, any Prepetition
Secured Debt), and any increases, extensions, and rearrangements of those
obligations under any amendments, restatements, supplements, and other
modifications of the documents and agreements creating those obligations.
“OFAC” has the meaning set forth in Section 4.20(b).
“Other Taxes” has the meaning set forth in Section 2.13(b).
“Paid in Full” or “Payment in Full” means the Obligations hereunder has been
indefeasibly paid in full in cash (other than contingent indemnification
obligations for which no claim has been asserted) and the Commitments have been
terminated.
“Participant Register” has the meaning set forth in Section 9.7(d).
“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).
“Payment Date” means (a) the last Business Day of each calendar month; provided,
however, that if any such day is not a Business Day, such Payment Date shall be
the next succeeding Business Day and (b) the Termination Date.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
“Permitted Carry” has the meaning set forth in the DIP Orders.
“Permitted Debt” has the meaning set forth in Section 6.2.
“Permitted Investments” has the meaning set forth in Section 6.4.
“Permitted Liens” has the meaning set forth in Section 6.3.
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“Permitted Variances” has the meaning set forth in the DIP Orders.
“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, limited liability company, limited liability
partnership, unincorporated association, joint venture, or other entity, or a
government or any political subdivision or agency thereof, or any trustee,
receiver, custodian, or similar official.
“Petition Date” has the meaning set forth in the Recitals hereto.
“Plan” means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
“Prepetition Administrative Agent” has the meaning set forth in the Recitals
hereto.
“Prepetition Credit Agreement” has the meaning set forth in the Recitals hereto.
“Prepetition Debt” means the Debt of the Credit Parties outstanding immediately
prior to the Petition Date.
“Prepetition Lenders” has the meaning set forth in the Recitals hereto.
“Prepetition Loan Documents” has the meaning assigned to the term “Credit
Documents” in the Prepetition Credit Agreement.
“Prepetition Majority Lenders” has the meaning assigned to the term “Majority
Lenders” in the Prepetition Credit Agreement.
“Prepetition Secured Debt” means the Debt of the Credit Parties outstanding
immediately prior to the Petition Date pursuant to the Prepetition Credit
Agreement.
“Prepetition Secured Loans” means the “Term Loans” (as defined in the
Prepetition Credit Agreement) made by the Prepetition Lenders to the Borrower
pursuant to the Prepetition Credit Agreement that are outstanding as of any date
of determination.
“Prepetition Security Instruments” has the meaning set forth in the Recitals
hereto.
“Previously Absent Covenant” means, at any time (x) any negative or financial
covenant that is not included in this Agreement at such time and (y) any
negative or financial covenant in any other Debt that is included in this
Agreement at such time but with covenant levels that are more restrictive to the
Borrower and its Subsidiaries than the covenant levels included in this
Agreement at such time.
“Prior Liens” has the meaning set forth in the DIP Orders.
“Professional Fees” has the meaning set forth in the DIP Orders.
“Property” of any Person means any property or assets (whether real, personal,
or mixed, tangible or intangible) of such Person.
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“Pro Rata Share” means, at any time with respect to any Lender, (a) the ratio
(expressed as a percentage) of such Lender’s outstanding Loans at such time to
the aggregate Loans of all Lenders outstanding at such time.
“Qualified Equity Interests” means preferred Equity Interests issued by a Person
the terms of which are the same as those applicable to any class of units or
common Equity Interests issued by such Person other than that such preferred
Equity Interests (a) may be provided a preference over any class of units or the
common Equity Interests in liquidation or payment of dividends or distributions,
(b) may be convertible or exchangeable at the option of the holder but only into
any common Equity Interests, (c) may have customary class voting rights, and (d)
may have a fixed or variable dividend or distribution rate; provided that, in no
event shall such units or such other preferred Equity Interests have any
“debt”-like features such as (but not limited to) (i) a scheduled maturity, any
amortization, any scheduled prepayments or any other prepayment terms (except
that such preferred Equity Interests may have a scheduled maturity date that is
no earlier than 180 days after the scheduled Maturity Date), (ii) any required
cash interest payments, coupons, dividends or any other payments (other than
conversions or exchanges into common Equity Interests or PIK dividends in
additional Qualified Equity Interests or any principal payments at such
scheduled maturity date), or (iii) any financial or other type of covenants
other than covenants that are customary to common Equity Interests).
“Receivables” of any Person means, at any date of determination thereof, all
Property of such Person which would, in accordance with GAAP, be required to be
classified and accounted for as accounts receivable on the balance sheet of such
Person.
“Redemption” means, with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. “Redeem” has the correlative meaning thereto.
“Refinancing Debt” means, with respect to any Person, Debt issued, incurred or
otherwise obtained in exchange for, or to extend, renew, replace or refinance,
in whole or part, any Debt of such Person (solely for purposes of this
definition, “Refinanced Debt”); provided that (a) such Debt has a later maturity
than and a weighted average life to maturity equal to or greater than the
Refinanced Debt, (b) except as otherwise permitted hereunder (subject to
dollar-for-dollar reduction of any applicable basket) such Debt shall not have a
greater principal amount than the principal amount of the Refinanced Debt plus
accrued interest, fees and premiums (if any) thereon and reasonable fees and
expenses associated with the refinancing (provided that the principal amount of
such Debt shall not include any principal constituting interest paid in kind),
(c) such Refinanced Debt shall be repaid, defeased or satisfied and discharged
on a dollar-for-dollar basis, and all accrued interest, fees and premiums (if
any) in connection therewith shall be paid (by way of defeasance, discharge or
otherwise), substantially concurrently with the incurrence of such Refinancing
Debt, (d) such Debt shall not at any time be guaranteed by any Persons other
than Persons that are guarantors of the Refinanced Debt, and the terms of such
guarantee, taken as a whole, shall be no more favorable to the secured parties
in respect of such Debt than the terms of the guarantee of the Refinanced Debt,
taken as a whole, (e) if the Refinanced Debt is secured, the terms and
conditions relating to collateral for such Debt , taken as a whole, shall be no
more favorable to the secured parties in respect of such Debt than the terms and
conditions with respect to the collateral for the Refinanced Debt (and the Liens
on any Collateral securing such Debt shall
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have the same (or lesser) priority as the Refinanced Debt relative to the Liens
on the Collateral securing the Obligations), (f) if the Refinanced Debt is
subordinated in right of payment to the Obligations, such Debt shall be
subordinated in right of payment to the Obligations on terms at least as
favorable to the Lenders as the subordination terms applicable to the Refinanced
Debt, (g) the terms and conditions of any such modified, refinanced, refunded,
renewed, replaced, exchanged or Debt (other than interest, fees, premiums,
funding discounts, optional prepayment/redemption provisions (including any
premiums related thereto), guarantees, collateral, and subordination are,
either (i) substantially identical to or less favorable to the investors
providing such Refinancing Debt, taken as a whole, than the terms and conditions
of the Debt being modified, refinanced, refunded, renewed, replaced, exchanged
or extended or (ii) when taken as a whole, not more restrictive to the Borrower
and/or its Subsidiaries, as applicable, than those set forth in this Agreement
(after giving effect to the addition of the Previously Absent Covenant pursuant
to the immediately following proviso in this clause (g)) or are customary for
similar Debt in light of the then current market conditions; provided that to
the extent the documentation governing such Debt includes a Previously Absent
Covenant, the Lenders shall be given prompt written notice thereof and this
Agreement shall be amended to include such Previously Absent Covenant for the
benefit of this Agreement; provided further that a certificate of a Responsible
Officer of the Borrower shall be delivered to the Lenders in good faith at least
five Business Days prior to the incurrence of such Debt, together with a
reasonably detailed description of the material terms and conditions of such
Debt or drafts of the documentation relating thereto, stating that the Borrower
has determined in good faith that such terms and conditions satisfy the
requirement set out in this clause (g) and (h) at the time thereof, no Default
or Event of Default shall have occurred and be continuing.
“Register” has the meaning set forth in Section 9.7(b).
“Regulations T, U, and X” means Regulations T, U, and X of the Federal Reserve
Board, as each is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
“Release” has the meaning set forth in CERCLA or under any other Environmental
Law.
“Reorganization Plan” means a chapter 11 plan of reorganization or liquidation
of any Credit Party in the Chapter 11 Cases.
“Response” has the meaning set forth in CERCLA or under any other Environmental
Law.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
(other than any such event not subject to the provision for 30-day notice to the
PBGC under the regulations issued under such section).
“Responsible Officer” means (a) with respect to any Person that is a
corporation, such Person’s chief financial officer, treasurer or controller, (b)
with respect to any Person that is a limited liability company, if such Person
has officers, then such Person’s chief financial officer, treasurer or
controller, and if such Person is managed by members, then a chief financial
officer, treasurer or controller of such Person’s managing member, and if such
Person is managed by managers, then a manager (if such manager is an individual)
or a Responsible Officer of such manager (if such manager is an entity), and (c)
with respect to any Person that is a general partnership, limited
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partnership or a limited liability partnership, the Responsible Officer of such
Person’s general partner or partners.
“Restricted Payment” means, with respect to any Person, (a) any direct or
indirect dividend or distribution (whether in cash, securities or other
Property) or any direct or indirect payment of any kind or character (whether in
cash, securities or other Property) in consideration for or otherwise in
connection with any Equity Interest of such Person, including in connection with
any retirement, purchase, redemption or other acquisition of such Equity
Interest, or any options, warrants or rights to purchase or acquire any such
Equity Interest or (b) principal or interest payments (in cash, Property or
otherwise) on, or redemption of, debt of such Person contractually subordinated
to the Obligations; provided that the term “Restricted Payment” shall not
include any dividend, distribution, repurchase or redemption payable solely in
common Equity Interests or Qualified Equity Interests or from the proceeds of
the contemporaneous issuance of additional common Equity Interests of such
Person or warrants, options or other rights to purchase such common Equity
Interests.
“Restructuring Support Agreement” means that certain Restructuring Support
Agreement, dated as of March 28, 2020, by and among the Borrower, the Guarantors
and the Prepetition Lenders, as the same may from time to time be amended,
modified, supplemented or restated pursuant to the terms thereof.
“S&P” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill
Companies, Inc., or any successor thereof which is a national credit rating
organization.
“Sanctions” has the meaning set forth in Section 4.20(b).
“Scheduled Maturity Date” means the date that is one hundred fifty (150) days
after the Effective Date.
“SEC” means, the Securities and Exchange Commission.
“Section 363 Sale” means a sale of all or substantially all of the assets and
business of the Credit Parties conducted pursuant to Section 363 of the
Bankruptcy Code.
“Secured Parties” means the Lenders.
“Security Agreement” means the Pledge and Security Agreement of even date
herewith among the Credit Parties and the Lenders in such form acceptable to the
Lenders.
“Security Documents” means, collectively, the Security Agreement, the Collateral
Assignment, any other Prepetition Security Instrument, the DIP Orders, any
Account Control Agreement, to the extent requested, the Mortgages, and any and
all other instruments, documents or agreements, now or hereafter executed by any
Credit Party or any other Person as security for the payment or performance of
the Obligations, the Notes or this Agreement, as such agreements may be amended,
modified, supplemented or restated from time to time.
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“Special Flood Hazard Area” means an area that FEMA’s current flood maps
indicate has at least a one percent (1%) chance of a flood equal to or exceeding
the base flood elevation (a 100-year flood) in any given year.
“Specified Dispositions” means the sale by any Credit Party of the assets or
Equity Interests set out on Schedule 6.9(a)(iii) hereto.
“Subject Lender” has the meaning set forth in Section 2.14.
“Subsidiary” means, with respect to any Person (the “holder”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the holder in the
holder’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity, a majority of whose outstanding Voting Securities shall at any time be
owned by the holder or one more Subsidiaries of the holder. Unless expressly
provided otherwise, all references herein and in any other Credit Document to
any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the
Borrower or any other Credit Party.
“Superpriority Claim” means a claim against a Credit Party in any of the Chapter
11 Cases that is a superpriority administrative expense claim, subject and
subordinate to the Carve-Out, having priority over any or all administrative
expenses and other claims of the kind specified in, or otherwise arising or
ordered under, any sections of the Bankruptcy Code (including, without
limitation, sections 105, 326, 328, 330, 331, 503(b), 507(a), 507(b), 546, 726,
1113 and/or 1114 thereof), whether or not such claim or expenses may become
secured by a judgment Lien or other non-consensual Lien, levy or attachment.
“Survey” means a survey of the real Property listed on Schedule 5.9(d), prepared
by a land surveyor duly licensed and registered in the state in which such real
property is located, and in form, scope and substance sufficient to cause all
standard survey exceptions to be deleted from title policy and otherwise
reasonably satisfactory to the Lenders, and duly certified to the Borrower by a
form of certification customarily used by surveyors of similar property in
similar locations or as is otherwise reasonably acceptable to Lenders.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Tax Group” has the meaning set forth in Section 4.13.
“Termination Date” means the earliest of (a) the Maturity Date, (b) the
effective date of any Acceptable Plan or any other Chapter 11 Plan, (c) the
entry of an order for the conversion of any of the Chapter 11 Cases to a case
under Chapter 7 of the Bankruptcy Code, (d) the entry of an order for the
dismissal of any of the Chapter 11 Cases, and (e) at the election of the
Lenders, the date on which any Event of Default is continuing.
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“Termination Event” means (a) a Reportable Event with respect to a Plan, (b) the
withdrawal of the Borrower or any member of the Controlled Group from a Plan
during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or
(e) any other event or condition which constitutes grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
“Third Party Locations” means any location which holds, stores or otherwise
maintains Collateral, including such locations that are leased locations,
trailer storage or self-storage facilities, distribution centers or warehouses,
and such locations that are the subject of any bailee arrangement.
“Treasury Rate” means, with respect to a prepayment date, the yield to maturity
at the time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such prepayment date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the prepayment date to the date that is six
months after the Effective Date; provided, however, that if the period from such
prepayment date to the date that is six months after the Effective Date is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
“Unused Commitment Fee” has the meaning set forth in Section 2.7(a).
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“Voting Securities” means (a) with respect to any corporation, capital stock of
the corporation having general voting power under ordinary circumstances to
elect directors of such corporation (irrespective of whether at the time stock
of any other class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency), (b) with respect to any
partnership, any partnership interest or other ownership interest having general
voting power to elect the general partner or other management of the partnership
or other Person, and (c) with respect to any limited liability company,
membership certificates or interests having general voting power under ordinary
circumstances to elect managers of such limited liability company.
“Wells Fargo” means Wells Fargo Bank, National Association.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.
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Section 1.3Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but
excluding”.
Section 1.4Accounting Terms; Changes in GAAP.
(a)All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the financial statements delivered to the Lenders
for the fiscal year ending December 31, 2019 as required under Section 5.2.
(b)Unless otherwise indicated, all financial statements of the Borrower, all
calculations for compliance with covenants in this Agreement, and all
calculations of any amounts to be calculated under the definitions in Section
1.2 shall be based upon the consolidated accounts of the Borrower and its
Subsidiaries in accordance with GAAP and consistent with the principles of
consolidation applied in preparing the Borrower’s financial statements referred
to in Section 4.4.
(c)If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Credit Document, and either the
Borrower or the Lenders shall so request, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Lenders); provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
Section 1.5Miscellaneous. Article, Section, Schedule, and Exhibit references
are to this Agreement, unless otherwise specified. All references to
instruments, documents, contracts, and agreements (including this Agreement) are
references to such instruments, documents, contracts, and agreements as the same
may be amended, supplemented, restated and otherwise modified from time to time,
unless otherwise specified and shall include all schedules and exhibits thereto
unless otherwise specified. Any reference herein to any law shall be construed
as referring to such law as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time. Any reference herein to any Person
shall be construed to include such Person’s successors and assigns (subject to
the restrictions contained herein). The words “hereof”, “herein”, and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term “including” means “including, without
limitation,”. Paragraph headings have been inserted in this Agreement as a
matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.
Section 1.6Divisions. For all purposes under the Credit Documents, in
connection with any division or plan of division under Delaware law (or any
comparable event under a different
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jurisdiction’s laws): (a) if any asset, right, obligation or liability of any
Person becomes the asset, right, obligation or liability of a different Person,
then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any new Person comes into existence, such new
Person shall be deemed to have been organized on the first date of its existence
by the holders of its Equity Interests at such time.
ARTICLE 2
CREDIT FACILITIES
Section 2.1Loans. Subject to the terms and conditions of this Agreement, each
Lender hereby agrees, severally and not jointly, to make term loans from time to
time to the Borrower in a principal amount not exceed such Lender’s Available
Draw Commitment. The aggregate amount of the Loans shall not exceed $5,000,000
until such date that the Final DIP Order is entered. The aggregate principal
amount of all Loans advanced to the Borrower pursuant to this Section 2.1 shall
not exceed the Commitments of all Lenders. Amounts paid or prepaid in respect
of Loans may not be reborrowed. Upon disbursement of each Loan by a Lender, the
amount of the Available Draw Commitment of such Lender shall be reduced by the
amount of such Loan so disbursed.
Section 2.2Loans and Borrowings.
(a)Borrowings; Several Obligations. Each Loan shall be made as part of a
Borrowing on each applicable Borrowing Date consisting of Loans made by the
Lenders ratably in accordance with their respective Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments are
several and no Lender shall be responsible for any other Lender’s failure to
make Loans as required.
(b)Notes. If requested by a Lender, the Loans made by such Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit D (each a “Note” and collectively referred to herein as the “Notes”),
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement or (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Acceptance, as of the effective date
of the Assignment and Acceptance, payable to such Lender in a principal amount
equal to its Commitment as in effect on such date, and otherwise duly completed.
In the event that any Lender’s Commitment increases or decreases for any reason
(whether pursuant to Section 9.7 or otherwise), the Borrower shall deliver or
cause to be delivered, to the extent such Lender is then holding a Note, on the
effective date of such increase or decrease, a new Note payable to such Lender
in a principal amount equal to its Commitment after giving effect to such
increase or decrease, and otherwise duly completed, and each Lender shall return
to the Borrower the Note so replaced. The date, amount and interest rate of each
Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Note. Failure to
make any such recordation shall not affect any Lender’s or the Borrower’s rights
or obligations in respect of such Loans or affect the validity of such transfer
by any Lender of its Note.
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Section 2.3Requests for Borrowings. To request a Borrowing, the Borrower shall
notify the Lenders of such request in writing by facsimile or e-mail to the
Lenders of a written Borrowing Request in substantially the form of Exhibit G
and signed by the Borrower not later than 12:00 noon, Houston, Texas time, three
(3) Business Days before the date of any requested Borrowing. Each written
Borrowing Request shall specify the following information:
(a)the aggregate amount of the requested Borrowing;
(b)the date of such Borrowing, which shall be a Business Day;
(c)the location and number of the Borrower’s account to which funds are to be
disbursed;
(d)the amount of the current total outstanding principal amount of the Loans
(without regard to the requested Borrowing) and the pro forma total outstanding
principal amount of the Loans (giving effect to the requested Borrowing); and
(e)that the proposed use of the proceeds thereof is for Budgeted Expenses in
compliance with the DIP Budget.
The Lenders may condition the disbursement of Loans on receipt of such
documentation as it shall reasonably require to evidence that the proceeds of
such Loans shall be used in accordance with the DIP Budget both as to amount of
such Loans and as to the timing of such Loans. Each Borrowing Request shall
constitute a representation by the Credit Parties that the amount of the
requested Borrowing shall not cause the total outstanding principal amount of
the Loans to exceed the total Commitments.
(f)Funding of Loans. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., Houston, Texas time, to an account of the Borrower
designated by the Borrower in the applicable Borrowing Request. Nothing herein
shall be deemed to obligate any Lender to obtain the funds for its Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for its Loan in any particular place or
manner.
Section 2.4Scheduled Termination of Commitments. Unless previously terminated,
the Commitments shall terminate on the Termination Date.
Section 2.5Prepayments.
(a)Optional Prepayments. The Borrower shall have the right at any time and from
time to time to prepay any Borrowing in whole or in part, subject to prior
notice in accordance with Section 2.5(b).
(b)Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by facsimile) of any prepayment
hereunder not later than 12:00 noon, Houston, Texas time, 3 Business Days before
the date of prepayment. Each such notice shall be irrevocable and shall specify
the prepayment date and the principal amount of each Borrowing or portion
thereof to be prepaid. Promptly following receipt of any such notice
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relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
aggregate amount not less than $1,000,000 and integral multiples of $100,000 in
excess thereof. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.8.
(c)Mandatory.
(i)If the Borrower or any Subsidiary receives Debt Incurrence Proceeds, then not
later than two Business Days following the receipt of such proceeds, the
Borrower shall prepay the Loans in an amount equal to 100% of such Debt
Incurrence Proceeds.
(ii)If any Credit Party completes a Disposition permitted under Section
6.9(a)(v), then the Borrower shall, no later than three Business Days following
the completion of such Disposition and in an amount equal to 100% of the Net
Cash Proceeds received from such Disposition, prepay the outstanding principal
amount of the Loans until such time as the Loans are repaid in full.
(iii)If the Borrower or any Subsidiary receives any Extraordinary Receipts
(whether from a single Casualty Event or related series of Casualty Events and
whether as one payment or a series of payments) in excess of $100,000 in the
aggregate since the Effective Date, then the Borrower shall, no later than five
Business Days following the receipt of such Extraordinary Receipts and in an
amount equal to 100% of the amount of such excess Extraordinary Receipts, prepay
the outstanding principal amount of the Loans until such time as the Loans are
repaid in full.
(d)Interest; Costs. Each prepayment pursuant to this Section 2.5 shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment.
Section 2.6Repayment. The Borrower hereby unconditionally promises to pay to
each Lender the aggregate outstanding principal amount of all Loans of such
Lender on the Maturity Date.
Section 2.7Fees.
(a)Unused Commitment Fee. The Borrower agrees to pay to each Lender an unused
commitment fee (the “Unused Commitment Fee”), which shall accrue at a rate of
0.50% per annum on the average daily amount of the unused amount of the
Commitment of such Lender during the period from and including the Effective
Date to but excluding the Termination Date. Accrued Unused Commitment Fees shall
be payable in arrears on the first Business Day of each calendar quarter and on
the Termination Date, commencing on the first such date to occur after the
Effective Date. All Unused Commitment Fees shall be computed on the basis of a
year of 360 days, unless such computation would exceed the Maximum Rate, in
which case interest shall be computed on the basis of a year of 365 days (or 366
days in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
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(b)Closing Fee. On the Effective Date, the Borrower agrees to pay to each
Lender a fee (the “Closing Fee”) in an amount equal to 1.50% of such Lender’s
Commitment in immediately available funds. Such Closing Fee is fully earned as
of the Effective Date and shall be payable on the initial funding of the Loans
under this Agreement.
(c)DIP Fee. If any of the Borrower, Guarantors or any of their respective
Subsidiaries enters into a debtor-in-possession financing arrangement in lieu of
the DIP Facility or as a refinancing or replacement of, in whole or in part, the
DIP Facility (an “Alternative DIP”) and a financial institution other than the
DIP Lenders provides such Alternative DIP or other credit financing to the
Borrower, Guarantors or any of their respective Subsidiaries, or if any such
Alternative DIP is consummated, in whole or in part, with funds advanced by the
DIP Lenders, in lieu of some or all of the DIP Facility, then the Borrower and
Guarantors agree, on a joint and several basis, to pay (or cause to be paid) to
each Lender a prepayment premium (the “DIP Fee”) in an amount equal to 1.50% of
the aggregate outstanding principal amount of the Loans and unused Commitments
of each Lender, immediately upon consummation of the Alternative DIP.
(d)Generally. All such fees shall be paid on the dates due, in immediately
available Dollars to the Lenders. Once paid, absent manifest error, none of
these fees shall be refundable under any circumstances.
Section 2.8Interest.
(a)Except as otherwise set forth herein, each Loan shall bear interest on the
unpaid principal amount thereof from the date made through repayment (whether by
acceleration or otherwise) at a rate per annum equal to eight percent (8.00%).
(b)Interest shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan shall be included, and the date of payment of such Loan
shall be excluded.
(c)Except as otherwise set forth herein, interest on each Loan shall be due and
payable by Borrower on each Payment Date.
(d)Notwithstanding the foregoing, if any Event of Default has occurred and is
continuing, all Loans outstanding shall automatically bear interest, after as
well as before judgment, at a rate per annum equal to two percent (2%) plus the
rate applicable to the Loans, but in no event to exceed the Maximum Rate.
Section 2.9Reserved.
Section 2.10Reserved.
Section 2.11Increased Costs.
(a)Capital Adequacy; Taxes. If, after the Effective Date, any Lender shall have
determined that any Change in Law affecting such Lender or any lending office of
such Lender or such Lender’s holding company, if any, regarding capital
requirements has or would have the
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effect of reducing the rate of return on the capital of financial institutions
generally, including such Lender or any corporation controlling such Lender, as
a consequence of such Lender’s obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such Change in Law
(taking into consideration its policies with respect to capital adequacy), then
from time to time within three Business Days after written demand by such
Lender, as the case may be, the Borrower shall pay to such Lender such
additional amount or amounts as such Lender determines in good faith to be
necessary to compensate such Lender for such reduction. If, after the Effective
Date, any Lender shall have determined that (i) any Change in Law affecting such
Lender or any lending office of such Lender or such Lender’s holding company, if
any, shall subject such Lender to any additional Taxes (other than Indemnified
Taxes, Other Taxes and Excluded Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto, then from time to time within three
Business Days after written demand by such Lender, as the case may be, the
Borrower shall pay to such Lender such additional amount or amounts as such
Lender determines in good faith to be necessary to compensate such Lender for
such Taxes.
(b)Mitigation. Each Lender shall promptly notify the Borrower of any event of
which it has knowledge, occurring after the Effective Date, which will entitle
such Lender to compensation pursuant to this Section 2.11 and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 2.11 shall furnish to the Borrower a statement
setting forth the additional amount or amounts to be paid to it hereunder which
shall be determined by such Lender in good faith and which shall be conclusive
in the absence of manifest error. In determining such amount, such Lender may
use any reasonable averaging and attribution methods.
(c)Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 2.11 shall not constitute a waiver of such
Lender’s right to demand such compensation, provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section 2.11 for any
increased costs incurred or reductions suffered more than one year prior to the
date that such Lender, as the case may be, notifies the Borrower of the Change
in Law giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
one-year period referred to above shall be extended to include the period of
retroactive effect thereof).
Section 2.12Payments and Computations.
(a)Payments. All payments of principal, interest, and other amounts to be made
by the Borrower under this Agreement and other Credit Documents shall be made to
each Lender in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim.
(b)Payment Procedures. The Borrower shall make each payment under this Agreement
and under the Notes not later than 11:00 a.m. (Houston, Texas time) on the day
when due in Dollars to each Lender at the location referred to in the Notes or
herein (or such other location as the Lenders shall designate in writing to the
Borrower) in same day funds in accordance with each Lender’s applicable Pro Rata
Share for the account of their respective applicable
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Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement.
(c)Non‑Business Day Payments. Whenever any payment shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
(d)Computations. All computations of interest shall be made by the Lenders on
the basis of a year of 365/366 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or fees are payable. Each determination by the Lenders
of an amount of interest or fees shall be conclusive and binding for all
purposes, absent manifest error.
(e)Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set‑off, or
otherwise) on account of the Loans made by it in excess of its Pro Rata Share of
payments on account of the Loans obtained by the Lenders, such Lender shall
notify the other Lenders and forthwith purchase from the other Lenders such
participations in the Loans made by it as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with the other Lenders;
provided that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such Lender’s Pro Rata Share, but without
interest. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.12(e) may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set‑off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Section 2.13Taxes.
(a)No Deduction for Certain Taxes. Any and all payments by any Credit Party
under any of the Credit Documents to a Lender shall be made, in accordance with
Section 2.12, free and clear of and without deduction for any Taxes, excluding,
in the case of a Lender, (i) Taxes imposed on or measured by its net income
(however denominated), franchise Taxes and branch profits Taxes, in each case
imposed as a result of such Lender being organized under the laws of, or having
its principal office or, in the case of any Lender, having its applicable
Lending Office located in the jurisdiction (or any political subdivision
thereof) imposing such Tax, (ii) in the case of a Lender, any United States
federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in an Obligation, if and to
the extent such United States federal withholding Taxes are in effect on the
date a Lender becomes a Lender hereunder (other than pursuant to an assignment
request by the Borrower under Section 2.14), (iii) Taxes attributable to such
Lender’s failure to comply with Section 2.13(e), and (iv) any Taxes imposed
under FATCA (the Taxes described in clauses (i) through (iv) being hereinafter
referred to as “Excluded Taxes” and all such Taxes, other than Excluded Taxes,
imposed on or with respect to any payment by or on account of any obligation of
the Borrower under any Credit Document being hereinafter referred to as
“Indemnified Taxes”). If any Credit Party shall be required by law to deduct
any Indemnified Taxes from or in respect of any sum payable to any
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Lender, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions of Indemnified Taxes
applicable to additional sums payable under this Section 2.13), such Lender
receives an amount equal to the sum it would have received had no such
deductions been made; (ii) such Credit Party shall make such deductions; and
(iii) such Credit Party shall pay the full amount deducted to the relevant
Governmental Authority or other authority in accordance with applicable law.
(b)Other Taxes. In addition, the Borrower agrees to pay, or at the option of
the Lenders timely reimburse it for the payment of, any present or future stamp,
court or documentary, intangible, recording, filing or similar Taxes which arise
from any payment made under any Credit Document or from the execution, delivery,
performance, enforcement or registration of, from the receipt or perfection of a
security interest under, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents, except any Taxes that are (i) Excluded
Taxes or (ii) imposed with respect to any assignment (other than an assignment
request by the Borrower under Section 2.14) (hereinafter referred to as “Other
Taxes”).
(c)Indemnification. THE BORROWER AND EACH OTHER CREDIT PARTY SHALL INDEMNIFY
EACH LENDER FOR THE FULL AMOUNT OF INDEMNIFIED TAXES OR OTHER TAXES (INCLUDING,
WITHOUT LIMITATION, ANY INDEMNIFIED TAXES OR OTHER TAXES IMPOSED ON AMOUNTS
PAYABLE UNDER THIS SECTION 2.13) PAID BY SUCH LENDER AND ANY REASONABLE EXPENSES
ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER
TAXES WERE CORRECTLY OR LEGALLY ASSERTED. A CERTIFICATE AS TO THE AMOUNT OF
SUCH PAYMENT OR EXPENSES DELIVERED TO THE BORROWER BY A LENDER SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.
(d)Evidence of Tax Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Credit Party to a Governmental
Authority, the Borrower shall deliver to the Lenders the original or a certified
copy of any receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Lenders.
(e)Lender Withholding Exemption. Each Lender that is a U.S. Person shall
deliver to the Borrower on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower), an executed copy of IRS Form W-9 certifying
that such Lender is exempt from U.S. federal backup withholding Tax. Each Lender
that is not a U.S. Person and that is entitled to an exemption from or reduction
of United States withholding Tax with respect to payments under this Agreement
under applicable law or any treaty to which the United States is a party shall
deliver to the Borrower on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower), such properly completed and executed
documentation (including an applicable Internal Revenue Service Form W-8BEN or
W-8ECI) prescribed by applicable law or reasonably requested by the Borrower as
will permit such payments to be made without withholding or at a reduced rate of
withholding. Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower in writing of
its legal inability to do so.
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(f)Reserved.
(g)Mitigation. Each Lender shall use reasonable efforts (consistent with its
internal policies and legal and regulatory restrictions) to select a
jurisdiction for its applicable Lending Office or change the jurisdiction of its
applicable Lending Office, as the case may be, so as to avoid the imposition of
any Indemnified Taxes or Other Taxes or to eliminate or reduce the payment of
any additional sums under this Section 2.13; provided, that no such selection or
change of jurisdiction for its applicable Lending Office shall be made if, in
the reasonable judgment of such Lender, such selection or change would be
disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(h)Tax Refunds. If any Lender determines, in its sole discretion exercised in
good faith, that it has received a refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section, it
shall pay to the Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower under
this Section with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses (including Taxes) of such
Lender, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Lender in the event such Lender is required to
repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this paragraph (h), in no event will any Lender be required to
pay any amount to a Borrower pursuant to this paragraph (h) the payment of which
would place a Lender in a less favorable net after-Tax position than the
applicable Lender would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. This subsection shall not be construed to require any
Lender to make available its Tax returns (or any other information relating to
its Taxes that it deems confidential) to any Borrower or any other Person.
(i)Payment. If any Lender becomes entitled to receive payment of Indemnified
Taxes, Other Taxes or additional sums pursuant to this Section 2.13, it shall
give notice and demand thereof to the Borrower, and the Borrower (unless such
Lender shall withdraw such notice and demand or the Borrower is not obligated to
pay such amounts) shall pay such Indemnified Taxes, Other Taxes or additional
sums within 10 days after the Borrower’s receipt of such notice and demand.
Section 2.14Replacement of Lenders. If the Borrower is required pursuant to
Section 2.11 or 2.13 to make any additional payment to any Lender or to any
Governmental Authority for the account of any Lender pursuant to Section 2.13,
and, with respect to a payment pursuant to Section 2.13, such Lender has
declined or is unable to designate a different lending office in accordance with
Section 2.13(g) (any such Lender being a “Subject Lender”), the Borrower may,
upon notice to the Subject Lender and the Lenders and at the Borrower’s sole
cost and expense, require such Subject Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 9.7), all of its interests,
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rights and obligations under this Agreement and the related Credit Documents to
an Eligible Assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that, in any
event:
(a)as to assignments requested by the Borrower, the Borrower shall have paid to
the Lenders the assignment fee specified in Section 9.7;
(b)such Subject Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Credit Documents
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts, if
applicable);
(c)in the case of any such assignment resulting from a claim for compensation
under Section 2.13, such assignment will result in a reduction in such
compensation or payments thereafter; and
(d)such assignment does not conflict with applicable Legal Requirements.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
ARTICLE 3
CONDITIONS OF EFFECTIVENESS
Section 3.1 Conditions to Effectiveness. This Agreement will become effective
and the obligations of Lenders to make the Loans will occur on the date (the
“Effective Date”) on which the following conditions precedent are satisfied or
waived:
(a)Payment of Fees.
(i)The Lenders shall have received all commitment, arrangement, upfront,
facility and agency fees and all other fees and amounts due and payable by the
Credit Parties on or prior to the Effective Date, including reimbursement or
payment of all reasonable and documented (in summary form) out-of-pocket fees
and expenses required to be reimbursed or paid by the Borrower under paragraph
32 of the DIP Orders (including the fees and expenses of Norton Rose Fulbright
US LLP, Stroock & Stroock & Lavan LLP, each as counsel to the Lenders, and
Ankura Consulting Group, LLC, financial advisor to the Lenders).
(ii)The Prepetition Administrative Agent and the Prepetition Lenders shall have
received all reasonable and documented (in summary form) out-of-pocket fees and
expenses due and payable by the Credit Parties on or prior to the Effective Date
pursuant to the Prepetition Loan Documents, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower thereunder.
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(b)Documentation. The Lenders shall have received the following, duly executed
by all the parties thereto, in form and substance reasonably satisfactory to the
Lenders:
(i)this Agreement (and all attached Exhibits and Schedules), the Security
Agreement, to the extent requested by any Lender, a Note payable to such Lender,
the Collateral Assignment and all other applicable Credit Documents. In
connection with the execution and delivery of the Security Documents, the
Lenders shall:
(A)be satisfied that the Interim DIP Order and any other Security Documents
required to be executed on the Effective Date create (or will create, upon
proper filing, recording or registration thereof, or upon entry of, the Interim
DIP Order) perfected Liens having the priorities set forth in the Interim DIP
Order (subject only to Permitted Liens) on all of the tangible and intangible
Property of the Credit Parties other than the Excluded Collateral; and
(B)have received (or its bailee pursuant to the DIP Order has received)
certificates, if any, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
each of the Guarantors.
(ii)certificates of insurance in compliance with Section 5.3(b) of this
Agreement;
(iii)a certificate from an authorized officer of each of the Credit Parties
dated as of the Effective Date stating that as of such date (A) all
representations and warranties of such Credit Party set forth in this Agreement
and the Credit Documents are true and correct in all material respects, (B) such
Credit Party shall have performed and complied with all covenants and conditions
required herein to be performed or complied with by it prior to the date hereof
and (C) no Default then exists;
(iv)a secretary’s certificate from each Credit Party certifying such Credit
Party’s (A) officers’ incumbency, (B) authorizing resolutions, (C)
organizational documents, and (D) governmental approvals, if any, with respect
to the Credit Documents to which the Borrower is a party;
(v)certificates of good standing for each Credit Party in the state in which
each such Person is incorporated or organized, which certificates shall be dated
a date not earlier than 30 days prior to the Effective Date;
(vi)a legal opinion of Vinson & Elkins LLP as special counsel to the Credit
Parties, in form and substance reasonably acceptable to the Lenders; and
(vii)such other documents, governmental certificates, agreements, and lien
searches as any Lender may reasonably request.
(c)Consents; Authorization; Conflicts. The Borrower shall have received any
consents, licenses and approvals required in accordance with applicable law, or
in accordance with any document, agreement, instrument or arrangement to which
the Borrower, or any Subsidiary is a party, in connection with the execution,
delivery, performance, validity and enforceability of this
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Agreement and the other Credit Documents. In addition, the Credit Parties and
the Subsidiaries shall have all such material consents, licenses and approvals
required in connection with the continued operation of the Credit Parties and
the Subsidiaries, and such approvals shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on this Agreement and the actions contemplated hereby.
(d)Representations and Warranties. The representations and warranties contained
in Article 4 and in each other Credit Document shall be true and correct on and
as of the Effective Date.
(e)Other Proceedings. No action, suit, investigation or other proceeding
(including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be pending
or, to the knowledge of Borrower, threatened and no preliminary or permanent
injunction or order by a state or federal court shall have been entered (i) in
connection with this Agreement, any other credit agreement or any transaction
contemplated hereby or thereby or (ii) which, in any case, in the judgment of
the Lenders, could reasonably be expected to result in a Material Adverse
Change.
(f)Other Reports. Subject to Section 3.1(b), the Lenders shall have received,
in form and substance reasonably satisfactory to it, all environmental reports,
and such other reports, audits or certifications as it may reasonably request,
which reports the Lenders acknowledge they has received as of the date of this
Agreement.
(g)Reserved.
(h)No Default. No Default then exists.
(i)Reserved.
(j)Delivery of Financial Statements. The Lenders shall have received true and
correct copies of the unaudited consolidated income statement and balance sheet
of the Credit Parties for the fiscal quarter ended December 31, 2019; provided
that, notwithstanding the foregoing, such income statement and balance sheet do
not reflect expected material impairments and are otherwise not complete in all
respect as a result of the impact of the Chapter 11 Cases.
(k)Copies of Existing Certificates; Documents. The Lenders shall have received
true and correct copies of all of the following certificates and other documents
with respect to the real property listed on Schedule 5.9(d), if any, that have
been previously delivered to the Prepetition Administrative Agent during the
five year period ending on the Effective Date, pursuant to the Prepetition
Credit Agreement and the Prepetition Security Instruments: (i) all flood
determination certificates and, if applicable, flood insurance policies, if
any, covering such real property; (ii) all Lien searches, if any, from the
counties in which such real property is located; (iii) all legal opinions, if
any, that have been delivered to the Prepetition Administrative Agent with
respect to the Prepetition Security Instruments covering such real property;
(iv) all existing mortgagee policies of title insurance in favor of the
Prepetition Administrative Agent, if any, with respect to such real Property;
(v) the most recent surveys, if any, with respect to such real property; and
(vi) the most recent Phase I Environmental Site Assessment Reports, if any,
completed by an independent environmental consultant with respect to such real
property;
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(l)USA Patriot Act. The Borrower has delivered to each Lender that is subject
to the Patriot Act such information requested by such Lender in order to comply
with the Patriot Act.
(m)DIP Budget. The Lenders shall have received the DIP Budget, which DIP Budget
shall have been approved by the Lenders.
(n)Petition Date. The Petition Date shall have occurred, and each Credit Party
shall be a debtor and a debtor-in-possession in the Chapter 11 Cases.
(o)Interim DIP Order. The Bankruptcy Court shall have entered the Interim DIP
Order with such changes as may be acceptable to the Lenders, which Interim DIP
Order (i) shall have been entered on the docket of the Bankruptcy Court no later
than 10 days after the Petition Date and (ii) shall be in full force and effect
and shall not have been vacated, stayed, reversed, modified or amended in any
respect except as otherwise agreed to in writing by the Lenders in their sole
discretion.
(p)First Day Orders. The “first day” orders (including, without limitation, any
motions related to the Credit Documents, cash management, cash collateral and
any critical vendor or supplier motions, but excluding retention applications),
in form, scope and substance reasonably satisfactory to the Lenders shall have
been entered in the Chapter 11 Cases, in each case in form and substance
reasonably satisfactory to the Lenders (the “First Day Orders”) and shall not
have been (i) stayed, vacated or reversed, or (ii) amended or modified except as
otherwise agreed to in writing by the Lenders in their reasonable discretion.
(q)Bankruptcy Trustee. No trustee under chapter 7 or chapter 11 of the
Bankruptcy Code or examiner with enlarged powers beyond those set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code shall have been appointed in
the Chapter 11 Cases.
(r)Additional Information. The Lenders shall have received any other
information (financial or otherwise) reasonably requested by the Lenders, which
information shall be in form and substance reasonably satisfactory to the
Lenders.
Section 3.2 Conditions to Each Borrowing. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including the initial funding) under
this Agreement shall be subject to the further conditions precedent that on the
date such Borrowing is made:
(a)No Event of Default. As of the date of the making of such Borrowing, no
Default or Event of Default shall exist, and the making of such Borrowing would
not cause a Default or Event of Default to exist.
(b)Reserved.
(c)Representations and Warranties. The representations and warranties contained
in Article 4 and in each other Credit Document shall be true and correct in all
material respects on and as of any Borrowing Date before and after giving effect
to the making of such Borrowing and to the application of the proceeds
therefrom.
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(d)Reserved.
(e)Borrowing Request. The receipt by the Lenders of a Borrowing Request in
accordance with Section 2.3.
(f)No Alternative DIP Order. No Bankruptcy Court order has been entered
authorizing the Credit Parties to obtain financing or credit pursuant to Section
364 of the Bankruptcy Code from any Person other than the Secured Parties
secured by a security interest or having the priority of an administrative claim
unless otherwise consented to by the Lenders in writing.
(g)DIP Orders. For Loans made (i) on or before the date that is 30 days
following the Petition Date, the Interim DIP Order shall be in full force and
effect and shall not have been vacated, reversed, modified, or amended unless
otherwise consented to by the Lenders in writing and, in the event that such
order is the subject of any pending appeal, no performance of any obligation of
any party hereto shall have been stayed pending appeal, and (ii) after the date
that is 30 days following the Petition Date, the Final DIP Order shall be in
full force and effect and shall not have been vacated, reversed, modified, or
amended unless otherwise consented to by the Lenders in writing and, in the
event that such order is the subject of any pending appeal, no performance of
any obligation of any party hereto shall have been stayed pending appeal, and
(iii) each of the DIP Orders shall be reasonably satisfactory in form and
substance to the Lenders.
Section 3.3 Reserved.
Section 3.4 Post-Closing Requirements.
(a)Control Agreements. Notwithstanding the generality of Section 5.9(a) below,
the Credit Parties shall deliver to the Lenders as soon as is practicable but in
no event later than 30 days after the Effective Date fully executed control
agreement(s) covering each of the deposit accounts of the Credit Parties listed
on Schedule 4.21 hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each Credit Party hereto represents and warrants as follows:
Section 4.1 Organization. Subject to any restriction arising on account of each
Credit Party’s status as a “debtor” under the Bankruptcy Code and any required
approvals of the Bankruptcy Court, each Credit Party is duly and validly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation or formation and is authorized to do business and is in good
standing in all jurisdictions in which such qualifications or authorizations are
necessary except where the failure to be so qualified or authorized could not
reasonably be expected to result in a Material Adverse Change, and in each case,
not subject to the automatic stay under the Chapter 11 Cases or executed after
the Petition Date. As of the Effective Date, each Credit Party’s type of
organization and jurisdiction of incorporation or formation are set forth on
Schedule 4.1.
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Section 4.2 Authorization. Subject to the entry of the DIP Orders, the
execution, delivery, and performance by each Credit Party of each Credit
Document to which such Credit Party is a party and the consummation of the
transactions contemplated thereby (a) are within such Credit Party’s powers,
(b) have been duly authorized by all necessary corporate, limited liability
company or partnership action, (c) do not contravene any articles or certificate
of incorporation or bylaws, partnership or limited liability company agreement
binding on or affecting such Credit Party, (d) do not contravene any law or any
contractual restriction binding on or affecting such Credit Party, (e) do not
result in or require the creation or imposition of any Lien prohibited by this
Agreement, and (f) do not require any authorization or approval or other action
by, or any notice or filing with, any Governmental Authority. Subject to the
entry of the DIP Orders, the borrowing of the Loans and the use of the proceeds
thereof are within the Borrower’s corporate power, have been duly authorized by
all necessary action, do not contravene (i) the Borrower’s certificate or
articles of incorporation or bylaws, or (ii) any Legal Requirement or any
material contractual restriction binding on or affecting the Borrower, will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement, and do not require any authorization or approval or other action by,
or any notice or filing with, any Governmental Authority.
Section 4.3 Enforceability. Subject to entry of the Interim DIP Order or the
Final DIP Order, as the case may be, the Credit Documents have each been duly
executed and delivered by each Credit Party that is a party thereto and each
Credit Document constitutes the legal, valid, and binding obligation of each
Credit Party that is a party thereto enforceable against such Credit Party in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws at the time in effect
affecting the rights of creditors generally and by general principles of equity
whether applied by a court of law or equity.
Section 4.4 Financial Condition.
(a)The Borrower has delivered to the Lenders the income statement and balance
sheet for the Credit Parties and their Subsidiaries dated as of December 31,
2019 for the fiscal quarter ending thereon. The income statement and balance
sheet referred to in the preceding sentence have been prepared in accordance
with GAAP and present fairly the consolidated financial condition of the
aforementioned Persons as of the respective dates thereof; provided that,
notwithstanding the foregoing, such income statement and balance sheet do not
reflect expected material impairments and are otherwise not complete in all
respects as a result of the impact of the Chapter 11 Cases. As of the date of
the aforementioned income statement and balance sheet, there were no material
contingent obligations, liabilities for Taxes, unusual forward or long‑term
commitments, or unrealized or anticipated losses of the applicable Persons,
except as disclosed therein and adequate reserves for such items have been made
in accordance with GAAP.
(b)Since the Petition Date, no event or condition has occurred that could
reasonably be expected to result in Material Adverse Change.
(c)No Credit Party or any Subsidiary has on the date hereof any material Debt or
any material contingent liabilities, off-balance sheet liabilities or
liabilities for Taxes, except as referred to or reflected or provided for in the
DIP Budget, the First Day Orders or the financial statements previously
delivered to the Lenders.
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Section 4.5 Ownership and Liens; Real Property. Each Credit Party (a) has good
and defensible title to, or a valid and subsisting leasehold interest in, all
real property, and good title to all personal Property, used in its business,
and (b) none of the Property owned or leased by the Borrower or a Subsidiary of
the Borrower is subject to any Lien except Permitted Liens.
Section 4.6 True and Complete Disclosure. All written factual information
(whether delivered before or after the date of this Agreement) prepared by or on
behalf of any Credit Party and its Subsidiaries and furnished to the Lenders for
purposes of or in connection with this Agreement, any other Credit Document or
any transaction contemplated hereby or thereby does not contain any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein not misleading. There is no fact known to any officer of any
Credit Party on the date of this Agreement that has not been disclosed to the
Lenders that could reasonably be expected to result in a Material Adverse
Change. All projections, estimates, budgets, and pro forma financial
information furnished by any Credit Party or any of its Subsidiaries (or on
behalf of any such Credit Party or any such Subsidiary), were prepared on the
basis of assumptions, data, information, tests, or conditions (including current
and reasonably foreseeable business conditions) believed to be reasonable at the
time such projections, estimates, and pro forma financial information were
furnished.
Section 4.7 Litigation. Except as set forth in Schedule 4.7 and the Chapter 11
Cases, there are no actions, suits, or proceedings pending or, to any Credit
Party’s knowledge, threatened against any Credit Party or any Subsidiary, at
law, in equity, or in admiralty, or by or before any Governmental Authority,
which could reasonably be expected to result in a Material Adverse
Change. Additionally, except as disclosed in writing to the Lenders and the
Chapter 11 Cases, there is no pending or, to the knowledge of any Credit Party,
threatened action or proceeding instituted against any Credit Party or any
Subsidiary which seeks to adjudicate the Borrower or any Subsidiary as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
Property.
Section 4.8 Compliance with Agreements.
(a)Except for the Chapter 11 Cases and as specified in the DIP Orders, no Credit
Party nor any Subsidiary is a party to any indenture, loan or credit agreement
or any lease or any other types of agreement or instrument or subject to any
charter or corporate restriction or provision of applicable law or governmental
regulation the performance of or compliance with which could reasonably be
expected to cause a Material Adverse Change. Subject to the entry of the
Interim DIP Order or the Final DIP Order, as the case may be, and other than as
set forth on Schedule 4.8, no Credit Party or any Subsidiary is in default under
or with respect to any contract, agreement, lease or any other types of
agreement or instrument to which any Credit Party or such Subsidiary is a party
and which could reasonably be expected to cause a Material Adverse Change. To
the best knowledge of the Credit Parties, except as set forth on Schedule 4.8,
no Credit Party or any Subsidiary is in default under, or has received a notice
of default under, any contract, agreement, lease or any other document or
instrument to which any Credit Party or its Subsidiaries is a party which is
continuing and which, if not cured, could reasonably be expected to cause a
Material Adverse Change.
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(b)No Default has occurred and is continuing.
Section 4.9 Pension Plans. (a) Except for matters that could not reasonably be
expected to result in a Material Adverse Change, all Plans are in compliance
with all applicable provisions of ERISA, (b) no Termination Event has occurred
with respect to any Plan that would result in an Event of Default under Section
7.1(i), and, except for matters that could not reasonably be expected to result
in a Material Adverse Change, each Plan has complied with and been administered
in accordance with applicable provisions of ERISA and the Code, (c) no
“accumulated funding deficiency” (as defined in Section 302 of ERISA) has
occurred, and for plan years after December 31, 2007, no unpaid minimum required
contribution exists, and there has been no excise Tax imposed under Section 4971
of the Code, (d) to the knowledge of Credit Parties, no Reportable Event has
occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has
complied with and been administered in accordance with applicable provisions of
ERISA and the Code in all material respects, (e) the present value of all
benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in an
amount that could reasonably be expected to result in a Material Adverse Change,
(f) neither the Borrower nor any member of the Controlled Group has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any unsatisfied withdrawal liability that could reasonably be expected to result
in a Material Adverse Change or an Event of Default under Section 7.1(i), and
(g) except for matters that could not reasonably result in a Material Adverse
Change, as of the most recent valuation date applicable thereto, neither the
Borrower nor any member of the Controlled Group would become subject to any
liability under ERISA if the Borrower or any Subsidiary has received notice that
any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP
existing as of the date of this Agreement and current factual circumstances, no
Credit Party has any reason to believe that the annual cost during the term of
this Agreement to the Borrower or any Subsidiary for post-retirement benefits to
be provided to the current and former employees of the Borrower or any
Subsidiary under Plans that are welfare benefit plans (as defined in
Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause
a Material Adverse Change.
Section 4.10 Environmental Condition.
(a)Permits, Etc. Except as set forth on Schedule 4.10 hereto, each Credit Party
and its Subsidiaries (i) has obtained all material Environmental Permits
necessary for the ownership and operation of its Properties and the conduct of
its businesses; (ii) is in material compliance with all terms and conditions of
such Permits and with all other material requirements of applicable
Environmental Laws; (iii) has not received written notice of any material
violation or alleged material violation of any Environmental Law or
Environmental Permit that has not been resolved; and (iv) is not subject to any
actual or contingent Environmental Claim which could reasonably be expected to
cause a Material Adverse Change.
(b)Certain Liabilities. To the Credit Parties’ best knowledge, none of the
present or previously owned or operated Property of any Credit Party or of any
Subsidiary thereof, wherever located, (i) has been placed on or proposed to be
placed on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs,
or have been otherwise investigated, designated, listed, or identified as
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a potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws; (ii) is
subject to a Lien, arising under or in connection with any Environmental Laws,
that attaches to any revenues or to any Property owned or operated by any Credit
Party, wherever located, which could reasonably be expected to cause a Material
Adverse Change; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations which has caused
at the site or at any third‑party site any condition that has resulted in or
could reasonably be expected to result in the need for Response that could cause
a Material Adverse Change.
(c)Certain Actions. Without limiting the foregoing, (i) all necessary material
notices have been properly filed, and no further action is required under
current applicable Environmental Law as to each Response undertaken by the
Borrower, any of its Subsidiaries or any of the Borrower’s or such Subsidiary’s
former Subsidiaries on any of their presently or formerly owned or operated
Property and (ii) to the Credit Parties’ knowledge, the present and future
liability, if any, of the Borrower or of any Subsidiary which could reasonably
be expected to arise in connection with requirements under Environmental Laws
will not result in a Material Adverse Change.
Section 4.11 Subsidiaries. As of the Effective Date, the Credit Parties have no
Subsidiaries other than those listed on Schedule 4.11. Each Material Domestic
Subsidiary of the Borrower (including any such Material Domestic Subsidiary
formed or acquired subsequent to the Effective Date) has complied with the
requirements of Section 5.6.
Section 4.12 Investment Company Act. No Credit Party nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. Neither the
Borrower nor any Subsidiary is subject to regulation under any Federal or state
statute, regulation or other Legal Requirement which limits its ability to incur
Debt.
Section 4.13 Taxes. To the extent that failure to do so could reasonably,
either individually or in the aggregate, be expected to result in a Material
Adverse Change, proper and accurate, federal, state, local and foreign Tax
returns, reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by any Credit Party and each
Subsidiary or any member of the affiliated group as determined under Section
1504 of the Code or similar combined, consolidated or unitary group (hereafter
collectively called the “Tax Group”) have been filed with the appropriate
Governmental Authorities, and all Taxes and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for non-payment thereof except Taxes
for which payment is stayed or excused under the Bankruptcy Code or that are
being contested in good faith by appropriate proceeding and for which adequate
reserves have been established in compliance with GAAP. Except as set forth in
Schedule 4.13, no Credit Party nor any member of the Tax Group has given, or
been requested to give, a waiver of the statute of limitations relating to the
payment of any federal, state, local or foreign Taxes or other
impositions. Proper and accurate amounts have been withheld by the Credit
Parties and all other members of the Tax Group from their employees for all
periods to comply in all material respects with the Tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law.
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Section 4.14 Permits, Licenses, etc. Each Credit Party and its Subsidiaries
possesses all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names rights, and copyrights which are material to the
conduct of its business. Each Credit Party and its Subsidiaries manages and
operates its business in accordance with all applicable Legal Requirements
except where the failure to so manage or operate could not reasonably be
expected to result in a Material Adverse Change; provided that this Section 4.14
does not apply with respect to Environmental Permits or Legal Requirements of
Environmental Law.
Section 4.15 Use of Proceeds. The proceeds of the Loans shall be used in
accordance with the DIP Budget (subject to Permitted Variances and Permitted
Carry) and the DIP Orders. Notwithstanding anything to the contrary herein or
elsewhere, neither this Agreement nor any other Credit Document shall restrict
the payment of Professional Fees benefitting from the Carve-Out. No Credit
Party is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U). No
proceeds of any Loan will be used to purchase or carry any margin stock in
violation of Regulation T, U or X. No part of the proceeds of any Loan will be
used for any purpose which violates the provisions of Regulations T, U or X.
Section 4.16 Condition of Property; Casualties. The material Properties used or
to be used in the continuing operations of each Credit Party and each
Subsidiary, are in good working order and condition, normal wear and tear
excepted. Neither the business nor the material Properties of each Credit Party
or any Subsidiary has been affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy, which effect could
reasonably be expected to cause a Material Adverse Change.
Section 4.17 Insurance. Each Credit Party and its Subsidiaries carry insurance
(which may be carried by each Credit Party on a consolidated basis) with
reputable insurers in respect of such of their respective Properties, in such
amounts and against such risks as is customarily maintained by other Persons of
similar size engaged in similar businesses, or self-insure to the extent
customary for persons of similar size engaged in similar businesses. No Credit
Party owns any material Building or material Manufactured (Mobile) Home, in
either case subject to a Mortgage, for which such Credit Party has not delivered
to the Lenders evidence or confirmation reasonably satisfactory to the Lenders
that (i) such Credit Party maintains Flood Insurance for such Building or
Manufactured (Mobile) Home in accordance with Section 5.3 or (ii) such Building
or Manufactured (Mobile) Home is not located in a Special Flood Hazard Area.
Section 4.18 Compliance with Laws. Each Credit Party and each of the
Subsidiaries is in compliance with all laws, rules, regulations and orders of
any Governmental Authority applicable to them or their Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change, or where non-compliance
therewith is permitted by any applicable Governmental Authority (including any
order of the Bankruptcy Court) or as a result of the commencement of the Chapter
11 Cases; provided that, this Section 4.18 shall not apply with respect to any
requirement under Environmental Laws.
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Section 4.19 Security Interest.
(a)This Agreement and the other Credit Documents, upon execution and delivery
thereof by the parties thereto and entry of the DIP Orders (and subject to the
terms therein), will create in favor of the Lenders a legal, valid and
enforceable security interest in the Collateral described therein and the
proceeds thereof, which security interest shall be deemed valid and perfected as
of the Effective Date by entry of the DIP Orders with respect to each Credit
Party and which shall constitute continuing Liens on the Collateral having
priority over all other Liens on the Collateral, securing all the Obligations,
other than the Carve-Out and as otherwise set forth in the DIP Orders. The
Lenders shall not be required to file or record (but shall have the option and
authority to file or record) any financing statements, mortgages, notices of
Lien or similar instruments, in any jurisdiction or filing office or to take any
other action in order to validate, perfect or establish the priority of the
Liens and security interest granted by or pursuant to this Agreement, any other
Credit Document or the DIP Orders.
(b)Pursuant to Section 364(c)(1) of the Bankruptcy Code, the Obligations of the
Credit Parties shall at all times constitute allowed senior administrative
expenses against each of the Credit Parties in the Chapter 11 Cases (without the
need to file any proof of claim or request for payment of administrative
expense), with priority over any and all other administrative expenses, adequate
protection claims, diminution claims and all other claims against the Credit
Parties, now existing or hereafter arising, of any kind or nature whatsoever,
including, without limitation, all administrative expenses of the kind specified
in sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all other
administrative expense claims arising under Sections 105, 326, 328, 330, 331,
503(b), 506(c) (with any claims arising under Section 506(c) only subject to the
entry of the DIP Orders), 507(a), 507(b), 546, 726, 1113 and 1114 of the
Bankruptcy Code, whether or not such expenses or claims may become secured by a
judgment Lien or other nonconsensual Lien, levy or attachment, which allowed
claims shall for purposes of section 1129(a)(9)(A) of the Bankruptcy Code be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, and which shall be payable from and have recourse to all pre-
and post-petition property of the Credit Parties and their estates and all
proceeds thereof, subject, as to priority, only to the Carve-Out and as
otherwise set forth in the DIP Orders.
Section 4.20 FCPA; Sanctions.
(a)No Credit Party nor any Subsidiaries nor, to the knowledge of the Borrower,
any director, officer, agent, employee or other person acting on behalf of any
Credit Party or any Subsidiaries has taken any action, directly or indirectly,
that would result in a violation in any material respect by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”) or any other applicable Anti-Corruption Law; and the
Credit Parties have instituted and maintain policies and procedures designed to
promote and achieve continued compliance therewith.
(b)Except as set forth on Schedule 4.20, none of the Credit Parties, any of
their Subsidiaries or any director, officer, employee, or, to the knowledge of
Borrower, agent, or affiliate of the Credit Parties or any of their Subsidiaries
is an individual or entity that is, or is owned or controlled by Persons that
are: (i) the target of any sanctions administered or enforced by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S.
Department
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of State, the United Nations Security Council, the European Union, or Her
Majesty’s Treasury (collectively, “Sanctions”), or (ii) located, organized or
resident in a country or territory that is, or whose government is, the subject
of Sanctions, including, without limitation currently, Cuba, Iran, North Korea,
Sudan and Syria.
(c)No Loan, use of proceeds thereof or other transaction contemplated by this
Agreement will violate any Anti-Corruption Law or applicable Sanctions.
Section 4.21 Deposit Accounts. Schedule 4.21 (as amended or supplemented from
time to time with the prior written consent of the Lenders) lists all Deposit
Accounts maintained by or for the benefit of the Credit Parties or any
Subsidiary.
Section 4.22 EEA Financial Institutions. No Credit Party is an EEA Financial
Institution.
Section 4.23 Reorganization Matters.
(a)The Chapter 11 Cases were commenced on the Petition Date in accordance in all
material respects with applicable law and proper notice thereof and the proper
notice of the motion seeking approval of the Credit Documents and the DIP Orders
were given; provided that the Borrower shall give, on a timely basis as
specified in the DIP Orders, all notices required to be given to all parties
specified in the DIP Orders.
(b)The DIP Orders are, as applicable, in full force and effect have not been
reversed, stayed, modified or amended in an adverse manner without the Lenders’
consent.
(c)Each DIP Budget and all projected consolidated balance sheets, income
statements and cash flow statements of the Credit Parties delivered to the
Lenders were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were believed in good faith by the Borrower to be
fair in light of the conditions existing at the time of delivery of such report
or projection.
ARTICLE 5
AFFIRMATIVE COVENANTS
So long as any Obligation shall remain unpaid, each Credit Party agrees to
comply with the following covenants.
Section 5.1 Organization. Each Credit Party shall, and shall cause each of its
respective Subsidiaries to, preserve and maintain its partnership, limited
liability company or corporate existence, rights, franchises and privileges in
the jurisdiction of its organization, and qualify and remain qualified as a
foreign business entity in each jurisdiction in which qualification is necessary
or desirable in view of its business and operations or the ownership of its
Properties and where failure to qualify could reasonably be expected to cause a
Material Adverse Change; provided, however, that nothing herein contained shall
prevent any transaction permitted by Section 6.8 or Section 6.9.
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Section 5.2 Reporting.
(a)Annual Financial Reports. The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower (commencing with the fiscal
year ending December 31, 2019), a consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries (excluding, in the case of Foreign
Subsidiaries, consolidating balance sheets) as at the end of such fiscal year,
and the related consolidated and consolidating statements of income or
operations for such fiscal year (excluding, in the case of Foreign
Subsidiaries, consolidating statements of income or operations), setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be certified by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flow
of each Credit Party and its Subsidiaries in accordance with GAAP; provided
that, notwithstanding the foregoing, any such income statement and balance sheet
may be subject to certain expected material impairments, including any
associated tax adjustments, and may otherwise be incomplete as a result of the
impact of the Chapter 11 Cases, including, but not limited to, any
inconsistencies in the accounting periods covered thereby as result of the
commencement of the Chapter 11 Cases on the Petition Date.
(b)Quarterly Financials. The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower (commencing with the fiscal quarter ended March 31, 2020), a
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries (excluding, in the case of Foreign Subsidiaries, consolidating
balance sheets) as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations for such
fiscal quarter and for the portion of the Borrower’s fiscal year then ended
(excluding, in the case of Foreign Subsidiaries, consolidating statements of
income or operations), setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certified by the chief executive officer,
chief financial officer, treasurer or controller of the Borrower as fairly
presenting the financial condition, results of operations, shareholders’ equity
and cash flow of each Credit Party and its Subsidiaries in accordance with GAAP;
provided that, notwithstanding the foregoing, any such income statement and
balance sheet may be subject to certain expected material impairments, including
any associated tax adjustments, and may otherwise be incomplete as a result of
the impact of the Chapter 11 Cases, including, but not limited to, any
inconsistencies in the accounting periods covered thereby as result of the
commencement of the Chapter 11 Cases on the Petition Date.
(c)Monthly Financials. The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 30 days
after the end of each month of each fiscal year of the Borrower (commencing with
the month ended March 31, 2020), a consolidated and consolidating balance sheet
of each Credit Party and its Subsidiaries (excluding, in the case of Foreign
Subsidiaries, consolidating balance sheets) as at the end of such month, and the
related consolidated and consolidating statements of income or operations for
such month and for the portion of the Borrower’s fiscal year then ended
(excluding, in the case of Foreign Subsidiaries, consolidating statements of
income or operations), setting forth in each case in
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comparative form the figures for the corresponding month of the previous fiscal
year and the corresponding portion of the previous fiscal year, all in
reasonable detail, such consolidated statements to be certified by the chief
executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flow of each Credit Party and its Subsidiaries in
accordance with GAAP, provided that, notwithstanding the foregoing, any such
income statement and balance sheet may be subject to certain expected material
impairments, including any associated tax adjustments, and may otherwise be
incomplete as a result of the impact of the Chapter 11 Cases, including, but not
limited to, any inconsistencies in the accounting periods covered thereby as
result of the commencement of the Chapter 11 Cases on the Petition Date.
(d)Compliance Certificate. Concurrently with the delivery of the financial
statements referred to in Section 5.2(a), (b) and (c) above, the Borrower shall
provide to the Lenders a duly completed Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower.
(e)Reserved.
(f)Defaults. The Credit Parties shall provide to the Lenders promptly, but in
any event within five (5) Business Days after the occurrence thereof, a notice
of each Default or Event of Default known to any Credit Party or to any
Subsidiary, together with a statement of an officer of the Borrower setting
forth the details of such Default or Event of Default and the actions which the
Credit Parties have taken and proposes to take with respect thereto.
(g)Other Creditors. The Credit Parties shall provide to the Lenders promptly
after the giving or receipt thereof, copies of any default notices given or
received by any Credit Party or by any Subsidiary pursuant to the terms of any
indenture, loan agreement, credit agreement, notes, or similar agreement.
(h)Litigation. To the extent the same is not otherwise notified to the Lenders
in connection with proper notices and filings with the Bankruptcy Court, the
Credit Parties shall provide to the Lenders promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any Governmental
Authority, affecting any Credit Party or any Subsidiary.
(i)Environmental Notices. Promptly upon, and in any event no later than 3
Business Days after, the receipt thereof, or the acquisition of knowledge
thereof, by any Credit Party, to the extent the same is not otherwise notified
to the Lenders in connection with proper notices and filings with the Bankruptcy
Court, the Credit Parties shall provide the Lenders with a copy of any form of
request, claim, complaint, order, notice, summons or citation received from any
Governmental Authority or any other Person, (i) concerning violations or alleged
violations of Environmental Laws, (ii) concerning any action or omission on the
part of any of the Credit Parties or any of their former Subsidiaries in
connection with Hazardous Waste or Hazardous Substances or requiring that action
be taken to respond to or clean up a Release of Hazardous Substances or
Hazardous Waste into the environment, including without limitation any
information request related to, or notice of, potential responsibility under
CERCLA, or (iii) concerning the filing of a Lien arising under Environmental Law
upon, against or in connection with the Borrower, any Subsidiary, or any of
their respective former Subsidiaries, or any of their leased or owned Property,
wherever located.
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(j)Material Changes. To the extent the same is not otherwise notified to the
Lenders in connection with proper notices and filings with the Bankruptcy Court,
the Borrower will promptly furnish to the Lenders (and in any event within three
Business Days) written notice of the following:
(i)the occurrence of a Material Adverse Change;
(ii)a breach of or noncompliance with any material term, condition, or covenant
of any material contract to which any Credit Party or any Subsidiary is a party
or by which their Properties may be bound which breach or noncompliance could
reasonably be expected to result in a Material Adverse Change; and
(iii)the occurrence of any Default.
Each notice delivered under this Section 5.2(j) shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
(k)Termination Events. As soon as possible and in any event (i) within 3
Business Days after the Borrower or any member of the Controlled Group knows or
has reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and
(ii) within 10 days after the Borrower or any member of the Controlled Group
knows or has reason to know that any other Termination Event with respect to any
Plan has occurred, the Credit Parties shall provide to the Lenders a statement
of a Responsible Officer of the Borrower describing such Termination Event and
the action, if any, which the Borrower or any Affiliate of the Borrower proposes
to take with respect thereto;
(l)Termination of Plans. Promptly and in any event within 3 Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from the
PBGC, the Credit Parties shall provide to the Lenders copies of each notice
received by the Borrower or any such member of the Controlled Group of the
PBGC’s intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(m)Other ERISA Notices. Promptly and in any event within 3 Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from a
Multiemployer Plan sponsor, the Credit Parties shall provide to the Lenders a
copy of each notice received by the Borrower or any member of the Controlled
Group concerning the imposition or amount of withdrawal liability imposed on the
Borrower or any member of the Controlled Group pursuant to Section 4202 of
ERISA;
(n)Other Governmental Notices. Promptly and in any event within 3 Business Days
after receipt thereof by any Credit Party or any Subsidiary, the Credit Parties
shall provide to the Lenders a copy of any notice, summons, citation, or
proceeding seeking to modify in any material respect, revoke, or suspend any
material contract, license, permit, or agreement with any Governmental
Authority;
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(o)Disputes; etc. To the extent the same is not otherwise notified to the
Lenders in connection with proper notices and filings with the Bankruptcy Court,
the Credit Parties shall provide to the Lenders prompt written notice of any
claims, legal or arbitration proceedings, proceedings before any Governmental
Authority, or disputes, or to the knowledge of any Credit Party, any such
actions threatened, or affecting any Credit Party or any Subsidiary, or any
material labor controversy of which the Borrower or any of its Subsidiaries has
knowledge resulting in or reasonably considered to be likely to result in a
strike against the Borrower or any Subsidiary;
(p)Securities Law Filings and other Public Information. Promptly after the same
are available, the Credit Parties shall provide to the Lenders copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of the Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of the
Exchange Act or any other securities Governmental Authority, and not otherwise
required to be delivered to the Lenders pursuant hereto (provided that a notice
and link posted to the Borrower’s main company website of any such document or
information shall be deemed a satisfaction of the covenant in this clause (p)).
(q)Other Information. Subject to the confidentiality provisions of Section 9.8,
the Credit Parties shall provide to the Lenders such other information
respecting the business, operations, or Property of any Credit Party or any
Subsidiary, financial or otherwise, as any Lender may reasonably request.
(r)Accounting Changes. No Credit Party shall make a change in the method of
accounting employed in the preparation of the financial statements referred to
in Section 4.4 or change the fiscal year end of the Borrower unless required to
conform to GAAP or approved in writing by the Lenders.
(s)DIP Budget and Variance Reports. The Borrower shall deliver updated DIP
Budgets and reports of any variances thereto in accordance with and in the
manner set forth in paragraph 4(a) of the Interim DIP Order.
(t)Reserved.
(u)Reports filed with the Bankruptcy Court. As soon as practicable in advance
of filing with the Bankruptcy Court of any document, motion or pleading relating
to or impacting (i) any rights or remedies of any Lender, (ii) the DIP Facility,
the DIP Orders, the Cash Management Order, the Credit Documents, the Prepetition
Loan Documents (including the Credit Parties’ obligations thereunder), (iii) the
Collateral, any Liens thereon or any Superpriority Claims (including, without
limitation, any sale or other disposition of Collateral or the priority of any
such Liens or Superpriority Claims), (iv) use of cash collateral, (v)
debtor-in-possession financing, (vi) adequate protection or otherwise relating
to the Prepetition Debt, (vii) any Chapter 11 Plan, (viii) any Section 363 Sale,
or (ix) any transaction outside of the ordinary course of business with any
Credit Party, all such documents to be filed and provide the Lenders with a
reasonable opportunity to review and comment on all such documents.
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(v)Acceptable Plan Reports. Promptly following written notice from the Lenders,
telephonic weekly reports by the Credit Parties and their advisors regarding any
Acceptable Plan and any other information regarding the Chapter 11 Cases
reasonably requested by the Lenders.
(w)Sale Offers. Subject to any confidentiality requirements, the Credit Parties
shall promptly deliver to the Lenders any and all material documentation
received after the Effective Date that constitutes a written, bona fide
solicitation, offer, or proposed sale or disposition of a material amount of
property of any of the Credit Parties’ estates actually received by a
Responsible Officer of a Credit Party or its counsel or financial advisor,
including, without limitation, letters of inquiry, solicitations, letters of
intent, or asset purchase agreements.
Section 5.3 Insurance.
(a)Each Credit Party shall, and shall cause each of its Subsidiaries to, carry
insurance in such amounts and against such risks as is customarily maintained by
other Persons of similar size engaged in similar businesses and with sound and
reputable insurers, or self-insure to the extent customary for persons of
similar size engaged in similar businesses and only to the extent the maximum
liability under such self- insurance is less than $5,000,000.
(b)Certificates of all insurance policies covering the property or business of
the Credit Parties, and the renewals thereof, shall be delivered by Borrower to
the Lenders. All certificates of insurance shall set forth the coverage, the
limits of liability, the name of the carrier, the policy number, and the period
of coverage. All such policies shall contain a provision that notwithstanding
any contrary agreements between any such Credit Party, its Subsidiaries, and the
applicable insurance company, such policies will not be canceled or allowed to
lapse without renewal without at least 30 days’ (or 10 days’ with respect to
cancellation due to any failure to pay premiums or other amounts due under such
policies, or, in either case, such shorter period as may be accepted by the
Lenders) prior written notice to the Lenders. All policies of property
insurance with respect to the Collateral either shall have attached thereto a
lender’s loss payable endorsement in favor of the Lenders for its benefit and
the ratable benefit of the Secured Parties or name the Lenders as loss payees
for its benefit and the ratable benefit of the Secured Parties, in either case,
in form reasonably satisfactory to the Lenders, and all policies of liability
insurance shall name the Lenders as additional insureds and shall provide for a
waiver of subrogation in favor of the Lenders. All such policies shall contain
a provision that notwithstanding any contrary agreements between any such Credit
Party, its Subsidiaries, and the applicable insurance company, such policies
will not be canceled or allowed to lapse without renewal without at least 30
days’ (or 10 days’ with respect to cancellation due to any failure to pay
premiums or other amounts due under such policies, or, in either case, such
shorter period as may be accepted by the Lenders) prior written notice to the
Lenders.
(c)If at any time the area in which any real Property constituting Collateral
(to the extent any Building or Manufactured (Mobile) Home is situated on such
real Property) is located is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), the Borrower shall, and shall cause each other Credit Party
to, obtain Flood Insurance in such total amount and on such terms as the
applicable Flood Insurance Regulations may require and otherwise in form and
substance satisfactory to the Lenders, and otherwise comply with Flood Insurance
Regulations.
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Section 5.4 Compliance with Laws. Except as expressly permitted by any
applicable Governmental Authority (including any order of the Bankruptcy Court),
each Credit Party shall, and shall cause each of its Subsidiaries to, comply
with all federal, state, and local laws and regulations (including Environmental
Laws) which are applicable to the operations and Property of any Credit Party
and maintain all related permits necessary for the ownership and operation of
each Credit Party’s Property and business, except in any case where the failure
to so comply could not reasonably be expected to result in a Material Adverse
Change.
Section 5.5 Reserved.
Section 5.6 Material Domestic Subsidiaries. The Borrower shall notify the
Lenders promptly after, and in any event no later than three (3) days after, the
formation or acquisition of any Subsidiary formed or acquired by the Borrower or
any Credit Party after the Effective Date. Upon the request of a Lender, the
Borrower shall cause each Material Domestic Subsidiary, whether existing on the
Effective Date or created or acquired after the Effective Date, to, within 30
days of creation or acquisition (or such later date as the Lenders shall agree),
execute and deliver to the Lenders (A) a joinder to the Guaranty or otherwise
deliver a Guaranty (and a joinder to this Agreement), in each case, in any
event, in form and substance satisfactory to the Lenders and (B) a joinder to
the Security Agreement or otherwise deliver a security agreement, in any event,
in form and substance satisfactory to the Lenders and (C) take all actions
necessary to perfect each Lender’s lien in the Collateral of such Subsidiary,
consistent with the provisions of the Security Agreement. Furthermore, if, as of
any fiscal quarter end, the Non-Material Domestic Subsidiaries collectively (a)
have operating income equal to or greater than 10% of the Borrower’s
consolidated operating income for the four fiscal quarter period then ended, or
(b) have a total book value of total assets equal to or greater than 10% of the
Borrower’s consolidated book value of total assets, in either case under clause
(a) or (b), as established in accordance with GAAP and as reflected in the
financial statements covering such fiscal quarter and delivered to the Lenders
pursuant hereto, then, within 30 days of delivery of such financial statements
and the accompanying Compliance Certificate required under Section 5.2(d) above,
the Borrower shall cause such Non-Material Domestic Subsidiaries to execute and
deliver to the Lenders (x) a joinder to the Guaranty or otherwise deliver a
Guaranty (and a joinder to this Agreement), in each case, in any event, in form
and substance satisfactory to the Lenders and (y) a joinder to the Security
Agreement or otherwise deliver a security agreement, in any event, in form and
substance satisfactory to the Lenders, but only to the extent necessary in order
to result in (i) operating income of all Non-Material Domestic Subsidiaries that
are not Guarantors and Grantors under the Security Agreement to be less than 10%
of the Borrower’s consolidated operating income for the four fiscal quarter
period then ended, and (ii) total book value of total assets of all Non-Material
Domestic Subsidiaries that are not Guarantors and Grantors under the Security
Agreement to be less than 10% of the Borrower’s consolidated book value of total
assets, in either case under clause (i) or (ii), as established in accordance
with GAAP and as reflected in the financial statements covering such fiscal
quarter and delivered to the Lenders pursuant hereto. Furthermore, concurrently
with the delivery of each financial statement as required in Sections 5.2(a),
(b) and (c) and the accompanying Compliance Certificate required under Section
5.2(d), the Borrower may request that the Lenders release, and within 30 days of
such request, the Lenders shall release, any Domestic Subsidiary from its
Guaranty as requested by the Borrower, so long as no Default then exists and
after giving effect to such release, the Borrower is in compliance with this
Section 5.6. For the avoidance of doubt, no Foreign Subsidiary, FSCHO or any
Subsidiary of a Foreign Subsidiary or FSHCO shall be required to become a
Guarantor hereunder.
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Section 5.7 Records; Inspection. Each Credit Party shall, and shall cause each
of its Subsidiaries to maintain proper, complete and consistent, in all material
respects, books of record with respect to such Person’s operations, affairs, and
financial condition. From time to time upon reasonable prior notice, each
Credit Party shall permit any Lender and shall cause each of its Subsidiaries to
permit any Lender, at such reasonable times and intervals and to a reasonable
extent and under the reasonable guidance of officers of or employees delegated
by officers of such Credit Party or such Subsidiary, to, subject to any
applicable confidentiality considerations, examine and copy the books and
records of such Credit Party or such Subsidiary, to visit and inspect the
Property of such Credit Party or such Subsidiary at the Borrower's sole cost and
expense, and to discuss the business operations and Property of such Credit
Party or such Subsidiary with the officers and directors thereof; provided that,
if no Event of Default has occurred and is continuing only two such inspections
shall be at the Borrower’s sole cost and expense.
Section 5.8 Maintenance of Property. Each Credit Party shall, and shall cause
each of its Subsidiaries to (in accordance with and to the extent permitted by
the DIP Budget and any Permitted Variance), maintain its owned, leased, or
operated Property in good condition and repair, normal wear and tear excepted;
and shall abstain from, and cause each of its Subsidiaries to abstain from,
knowingly or willfully permitting the commission of waste or other injury,
destruction, or loss of natural resources, or the occurrence of pollution,
contamination, or any other condition in, on or about the owned or operated
Property involving the Environment that could reasonably be expected to result
in Response activities and that could reasonably be expected to cause a Material
Adverse Change.
Section 5.9 Security.
(a)Each Credit Party agrees that at all times before the termination of this
Agreement and payment in full of the Obligations, the Lenders shall have an
Acceptable Security Interest in the Collateral to secure the performance and
payment of the Obligations. Upon the request of the Lenders, each Credit Party
shall, and shall cause each of its Subsidiaries to, promptly grant to each
Lender a Lien in any Collateral of such Credit Party or such Subsidiary now
owned or hereafter acquired (other than leased real property) and to take such
actions as may be requested by the Lenders or otherwise required under the
Security Documents to ensure that each Lender has an Acceptable Security
Interest in such Collateral.
(b)Within 30 days after opening a deposit account or securities account (other
than an Excluded Account), or such greater period of time as may be approved by
the Lenders, the applicable Credit Party shall execute and deliver and shall
cause to be delivered to the Lenders an Account Control Agreement from the bank
maintaining such deposit account or securities account and take any steps which
may reasonably be requested by the Lenders to perfect their security interest in
such account.
(c)Except as expressly contemplated by Section 5.9(b), all deposit accounts and
securities accounts (in each case, other than Excluded Accounts) owned or held
by a Credit Party shall be subject to an Account Control Agreement at all times.
(d)Mortgages and Title Information. Notwithstanding the generality of Section
5.9(a) above, with respect to the real Property set forth on Schedule 5.9(d),
upon the
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request of the Lenders, the Credit Parties shall provide the following to the
Lenders as soon as is practicable but in no event later than 45 days of the date
of such request (or such later date as may be agreed by the Lenders in their
sole discretion):
(i)executed Mortgages covering the real Property listed on Schedule 5.9(d)
hereto;
(ii)such customary endorsements and affirmative assurances to each mortgagee
title insurance policy with respect to the Mortgaged Property as the Lenders
shall reasonably request and which are reasonably obtainable from the applicable
title company issuing such policy in the state where such real property interest
is located; and
(iii)legal opinions of local counsel to the Credit Parties in each relevant
jurisdiction in which the Mortgages described in the preceding clause (i) will
be filed with respect to the Mortgages described in the immediately preceding
clause (i) above, in form and substance reasonably acceptable to the Lenders.
(e)Survey. Upon the request of the Lenders, the Borrower shall promptly, and in
no event later than 45 days following date of such request, deliver or cause to
be delivered to the Lenders a Survey, with respect to the real Property listed
on Schedule 5.9(d).
(f)Environmental Report. Upon the request of the Lenders, the Borrower shall
promptly, and in no event later than 60 days following date of such request,
deliver or cause to be delivered to the Lenders a Phase I Environmental Site
Assessment Report completed by an independent environmental consultant with
respect to the real Property listed on Schedule 5.9(d). In the event that such
Phase I Environmental Site Assessment Report identify any “recognized
environmental conditions,” “controlled recognized environmental conditions,” or
“historical recognized environmental conditions” as defined in the ASTM E
1527-13, Borrower shall also provide to Lenders within a reasonable time
thereafter copies of any and all environmental activities and/or reports, as
applicable, reasonably required to ensure that the applicable real Property is
in compliance with Environmental Laws in all material respects.
(g)Collateral Access Agreements. Upon the request of the Lenders, the Borrower
shall (i) promptly, and in no event later than 45 days following the date of
such request, deliver or cause to be delivered to the Lenders a copy of each
Collateral Access Agreement in favor of Prepetition Administrative Agent
available, if any, with respect to each real property set forth on Schedule
5.9(d), and (ii) use commercially reasonable efforts to deliver an assignment of
such Collateral Access Agreements or new Collateral Access Agreements to the
Lenders for such real property locations described on Schedule 5.9(d) as the
Lenders require in their sole discretion.
Section 5.10 Further Assurances; Cure of Title Defects.
(a)Each Credit Party shall, and shall cause each Subsidiary to, cure promptly
any defects in the execution and delivery of the Credit Documents. The Credit
Parties hereby authorize each Lender to file any (x) financing statements to the
extent permitted by applicable Legal Requirements in order to perfect or
maintain the perfection of any security interest granted under any of the Credit
Documents and/or (y) any amendments to the existing financing statements to
reflect the terms of the Credit Documents. Each Credit Party at its expense
will, and will cause
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each Subsidiary to, promptly execute and deliver to the Lenders upon reasonable
request by the Lenders all such other documents, agreements and instruments to
comply with or accomplish the covenants and agreements of any Credit Party or
Subsidiary, as the case may be, in the Credit Documents, or to further evidence
and more fully describe the collateral intended as security for the Obligations,
or to correct any omissions in the Security Documents, or to state more fully
the security obligations set out herein or in any of the Security Documents, or
to perfect, protect or preserve any Liens created pursuant to this Agreement,
the DIP Orders or any of the Security Documents or the priority thereof, or to
make any recordings, to file any notices or obtain any consents, all as may be
necessary or appropriate in connection therewith or to enable the Lenders to
exercise and enforce its rights and remedies with respect to any Collateral.
(b)Pursuant to the terms of the DIP Orders, no filings or other action
(including the taking of possession or control) will be necessary to perfect or
protect the Liens and security interests created pursuant to this Agreement, the
DIP Orders or any other Security Document. Upon entry by the Bankruptcy Court,
the Liens and security interests created by the DIP Orders shall automatically
constitute fully perfected first priority Liens on, and security interests in,
all right, title and interest of the Credit Parties in the Collateral covered
thereby (including after-acquired Collateral), in each case free of all Liens
other than Liens permitted under Section 6.3, and prior and superior to all
other Liens other than as provided in the DIP Orders. Notwithstanding the
foregoing, upon the reasonable request of the Lenders, the Borrower and each of
its Subsidiaries shall take any additional actions requested, with respect to
any Property of the Borrower or any other Credit Party, in each case
constituting Collateral, to cause such Property to be subject to a Lien pursuant
to the Security Documents or the DIP Orders or to evidence the Lien on such
Property, including to execute and deliver such Security Documents (in proper
form for filing, registration or recordation, as applicable) as are requested by
the Lenders, and take such actions necessary or advisable to subject such
Property to a Lien or evidence of the Lien on such Property pursuant to the
Security Documents.
Section 5.11 FCPA; Sanctions. Each Credit Party will maintain in effect
policies and procedures designed to promote compliance by such Credit Party, its
Subsidiaries, and their respective directors, officers, employees, and agents
with the FCPA and any other applicable Anti-Corruption Laws and all applicable
Sanctions.
Section 5.12 Reserved.
Section 5.13 Payment of Obligations. In accordance with the Bankruptcy Code and
subject to any required approval by an applicable order of the Bankruptcy Court,
the Borrower will, and will cause each Subsidiary to, pay its material
obligations, including material Tax liabilities of the Borrower and all of its
Subsidiaries, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect or result in the seizure or levy
of any Borrowing Base Property or any other material Property of the Borrower or
any Subsidiary, in each case, unless subject to the automatic stay under the
Chapter 11 Cases, and in each case subject to rejection of agreements in
accordance with the Bankruptcy Code.
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Section 5.14 Performance of Obligations under Credit Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will, and will cause each Subsidiary to, do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Credit Documents, including this Agreement, at the time or times and in the
manner specified subject to any required approvals of the Bankruptcy Court.
Section 5.15 Case Milestones. Each Credit Party shall ensure that each of the
milestones set forth below (the “Case Milestones”) is achieved in accordance
with the applicable timing referred to below (or such later dates as approved in
writing by the Lenders); provided that when the performance of any covenant,
duty or obligation is stated to be due or performance required under this
Section 5.15 falls on a day which is not a Business Day, the date of such
performance shall extend to the immediately succeeding Business Day:
(a)On the Petition Date, the Credit Parties shall have filed a motion seeking
approval of the DIP Orders, in form and substance acceptable to the Lenders in
all respects.
(b)Not later than the date that is ten (10) days following the Petition Date,
the Bankruptcy Court shall have entered the Interim DIP Order and such Interim
DIP Order shall be in full force and effect and shall not have been (A) vacated,
reversed, or stayed, or (B) amended or modified except as otherwise agreed to in
writing by the Lenders.
(c)Not later than ten (10) days after the Petition Date, the Credit Parties
shall have filed in the Bankruptcy Court an Acceptable Plan, a corresponding
disclosure statement (the “Disclosure Statement”), and a motion seeking approval
of the Disclosure Statement, in each case, in form and substance acceptable to
the Lenders and the Prepetition Administrative Agent.
(d)Not later than the date that is thirty (30) days following the Petition Date,
the Bankruptcy Court shall have entered the Final DIP Order and such Final DIP
Order shall be in full force and effect and shall not have been (A) vacated,
reversed, or stayed, or (B) amended or modified except as otherwise agreed to in
writing by the Lenders.
(e)Not later than fifty (50) days after the Petition Date, the Credit Parties
shall have obtained entry of the order by the Bankruptcy Court approving the
Disclosure Statement in form and substance acceptable to the Lenders and the
Prepetition Administrative Agent.
(f)Not later than ninety (90) days after the Petition Date, the Credit Parties
shall have obtained entry by the Bankruptcy Court of the order confirming the
Acceptable Plan (the “Confirmation Order”), in form and substance acceptable to
the Lenders and the Prepetition Administrative Agent.
(g)Not later than sixteen (16) days after entry of the Confirmation Order, the
effective date of the Acceptable Plan shall have occurred and the Credit Parties
shall have discharged the Loans by (A) Payment in Full of the Obligations or (B)
such other treatment as acceptable to the Lenders and the Credit Parties.
Section 4.16 Cash Management. The Credit Parties shall maintain the cash
management of the Credit Parties in accordance in all material respects with the
Cash Management Order.
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ARTICLE 6
NEGATIVE COVENANTS
So long as any Obligation shall remain unpaid, the Credit Parties agree to
comply with the following covenants.
Section 6.1 DIP Budget. The Credit Parties shall use all proceeds of the Loans
and any DIP Cash Collateral, and shall operate, strictly in accordance with the
DIP Budget, as the DIP Budget may be modified pursuant to Section 5.2(s), and
subject to any Permitted Variances and the Permitted Carry.
Section 6.2 Debt. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become
liable, directly, indirectly, or contingently in respect of, any Debt other than
the following (collectively, the “Permitted Debt”):
(a)the Obligations;
(b)Prepetition Debt of the Borrower and its Subsidiaries existing on the date
hereof;
(c)Reserved;
(d)intercompany Debt incurred in the ordinary course of business owed by any
Credit Party to any other Credit Party provided that if such Debt constitutes an
investment, such investment is also permitted under Section 6.4;
(e)Debt in the form of accounts payable to trade creditors for goods or services
and current operating liabilities (other than for borrowed money) which in each
case are not more than 90 days past due, in each case incurred in the ordinary
course of business, as presently conducted, unless contested in good faith and
by appropriate proceedings;
(f)(i) purchase money indebtedness and Capital Leases in effect on the Effective
Date and set forth in Schedule 6.2(f) and (ii) such other purchase money
indebtedness or Capital Leases incurred after the Effective Date; provided that,
the aggregate outstanding principal amount of such purchase money indebtedness
and Capital Leases incurred after the Effective Date shall not exceed $5,000,000
at any time;
(g)Reserved;
(h)(i) the Existing Letters of Credit, in effect as of the Effective Date, so
long as the face amount of the Existing Letters of Credit is not increased after
the Effective Date, and (ii) other letters of credit issued by Wells Fargo or
other commercial banks reasonably satisfactory to the Borrower in the ordinary
course of business provided that no more than an aggregate of $15,000,000 of
letters of credit may be outstanding at any time pursuant to this Section
6.2(h);
(i)Debt incurred pursuant to one or more loan agreements between the Borrower
and CARBO International (Eurasia) LLC, a company duly organized and existing
under
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the laws of Russia; provided that (i) such Debt is unsecured, (ii) the aggregate
principal amount of such Debt outstanding at any time shall not to exceed
$300,000.00, and (iii) such Debt is subordinated to the Debt under this
Agreement and the other Credit Documents on terms reasonably acceptable to the
Lenders;
(j)Debt in the form of insurance premium financings incurred in the ordinary
course of business;
(k)all Debt outstanding as of the Effective Date, which is described on
Schedule 6.2(k);
(l)all refinancings or replacements of any of the Debt permitted under the
foregoing clauses (a)-(k) provided that any such refinanced or replaced Debt in
excess of $5,000,000 on an individual basis and $10,000,000 in the aggregate
constitutes Refinancing Debt; and
(m)Debt incurred pursuant to the existing corporate credit card services
provided to Borrower by Wells Fargo and described on Schedule 6.2(m), provided
that the aggregate principal amount of such Debt outstanding pursuant to this
Section 6.2(m) shall not exceed $315,000.00 at any time.
Section 6.3 Liens. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the
Property of any Credit Party or any Subsidiary, whether now owned or hereafter
acquired, or assign any right to receive any income, other than the following
(collectively, the “Permitted Liens”):
(a)Liens securing the Obligations pursuant to the Security Documents;
(b)Liens imposed by law, such as materialmen’s, mechanics’, carriers’,
workmen’s, landlords’ and repairmen’s liens, and other similar liens arising in
the ordinary course of business securing obligations which are not overdue for a
period of more than 30 days or are being contested in good faith by appropriate
procedures or proceedings and for which adequate reserves have been established;
(c)Liens arising in the ordinary course of business out of pledges or deposits
under workers compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation to secure
public or statutory obligations;
(d)Liens for Taxes, assessment, or other governmental charges which are not yet
due and payable or which are being actively contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
compliance with GAAP;
(e)Liens securing purchase money debt or Capital Lease obligations permitted
under Section 6.2(f); provided that each such Lien encumbers only the Property
purchased in connection with the creation of any such purchase money debt or the
subject of any such Capital Lease and the amount secured thereby is not
increased;
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(f)Liens arising from precautionary UCC financing statements regarding operating
leases to the extent such operating leases are permitted hereby;
(g)encumbrances consisting of minor easements, zoning restrictions, or other
restrictions on the use of real property that do not (individually or in the
aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of any Credit Party to use such assets in its
business, and none of which is violated in any material aspect by existing or
proposed structures or land use;
(h)Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a depository
institution;
(i)subject to the Cash Management Order and to the extent permitted by the DIP
Budget, Liens on cash or securities pledged to secure (i) letters of credit
permitted under Section 6.2(h), (ii) reserved, (iii) performance of tenders,
surety and appeal bonds, government contracts, performance and return of money
bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business, and (iv) corporate credit card services permitted under
Section 6.2(m), provided that the amount of such cash or securities pledges to
secure such corporate credit card services shall not exceed $525,000.00 at any
time;
(j)to the extent arising prior to the Petition Date, judgment and attachment
Liens not giving rise to an Event of Default, provided that (i) any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and (ii) no action to enforce
such Lien has been commenced;
(k)Liens granted pursuant to the DIP Orders or any other order of the Bankruptcy
Court;
(l)the Carve-Out;
(m)any Prior Liens; and
(n)Liens permitted under the Prepetition Credit Agreement that were granted
prior to the Effective Date (including, for the avoidance of doubt, Liens in
respect of the Prepetition Secured Debt).
Notwithstanding the foregoing, none of the Liens permitted pursuant to clause
(m) of this Section 6.3 (other than Liens securing the Prepetition Secured Debt)
may at any time attach to any portion of the Collateral or any of the Mortgaged
Properties.
Section 6.4 Investments. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make or hold any direct or indirect investment in any Person,
including capital contributions to the Person, investments in or the acquisition
of the debt or equity securities of the Person, or any loans, guaranties, trade
credit, or other extensions of credit to any Person, other than the following
(collectively, the “Permitted Investments”):
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(a)Investments made prior to the Effective Date which are disclosed to the
Lenders in Schedule 6.4(a) or reflected in the DIP Budget
(b)investments in the form of trade credit to customers of a Credit Party
arising in the ordinary course of business and represented by accounts from such
customers;
(c)Liquid Investments, provided that all such Liquid Investments shall be
subject to a first priority, perfected Lien and security interest in favor of
the Lenders;
(d)loans, advances, or capital contributions to, or investments in, or purchases
or commitments to purchase any stock or other securities or evidences of
indebtedness of or interests in any Subsidiary that is not a Credit Party,
including any travel advances or travel loans to officers and employees;
provided that on the date any such loans, advances, capital contributions,
investments, purchases and commitments are made, the aggregate amount of such
loans, advances, capital contributions, investments, purchases and commitments
together with any other loans, advances contributions, investments, purchases
and commitments (other than appreciation) then outstanding under this clause (c)
shall not exceed $5,000,000;
(e)loans and advances by a Credit Party to any other Credit Party;
(f)investments in the form of Acquisitions permitted by Section 6.5; provided
that, if such Acquisition is of an equity interest or other securities in a
Person (that is not a Credit Party and does not become a Credit Party), such
investments shall also be permitted under clause (c) above;
(g)creation of any additional Subsidiaries; provided that in connection with any
such creation of an additional Subsidiary the Borrower shall comply with the
terms and conditions in Section 5.6;
(h)Reserved;
(i)the Wilkinson Bonds; and
(j)other Investments to the extent included in the DIP Budget (subject to the
Permitted Variances).
Section 6.5 Acquisitions. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make an Acquisition in a transaction or related series of
transactions for cash consideration unless (i) the assets, operations or
business purchased in connection with such transaction become Collateral and
subject to the first priority Lien in favor of each Lender, and (ii) the
transaction is otherwise acceptable to the Lenders.
Section 6.6 Agreements Restricting Liens. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
contract, agreement or understanding (other than (i) this Agreement and the
other Credit Documents, (ii) the Prepetition Loan Documents, (iii) agreements in
respect of Prepetition Debt entered into in accordance with the terms of the
Prepetition Credit Agreement, (iv) documents creating Liens which are described
in clauses (c) and (g) of Section 6.3, but then only with respect to the
Property that is the subject
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of the applicable lease or document described in such clause (c) or (g), (v) in
connection with any sale or other disposition of Property permitted under this
Agreement, restrictions on such Property during the pendency of such sale or
other disposition imposed under the agreements governing such sale or
disposition, and (vi) anti-assignment provisions in Excluded Contracts (as
defined in the Security Agreement)) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property,
whether now owned or hereafter acquired, to secure the Obligations or restricts
any Subsidiary from paying Restricted Payments to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.
Section 6.7 Use of Proceeds. No Credit Party shall, nor shall it permit any of
its Subsidiaries to, use the proceeds of the Loans for any purposes other than
as permitted by Section 4.15 hereof. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, use any part of the proceeds
of Loans for any purpose which violates, or is inconsistent with, Regulations T,
U, or X. No part of the proceeds of the Loans will be used, directly or
indirectly, in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of the FCPA or any other applicable anticorruption
law. The Borrower will not, directly or indirectly, use the proceeds of the
Loans, or lend, contribute or otherwise make available such proceeds to any
subsidiary, or, to its knowledge, to any joint venture partner or other Person,
(i) to fund any activities or business of or with any Person, or in any country
or territory, that, at the time of such funding, is, or whose government is, the
subject of Sanctions only to the extent the funding of such proceeds would
violate such Sanctions, or (ii) in any other manner that would result in a
violation of Sanctions by the Borrower, any of its Subsidiaries or any Lender.
Section 6.8 Corporate Actions.
(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to, merge
or consolidate with or into any other Person, except that (i) the Borrower may
merge with any of its wholly-owned Subsidiaries, (ii) any Credit Party may merge
or be consolidated with or into any other Credit Party, (iii) any Subsidiary of
the Borrower that is not a Credit Party may merge or consolidate with any Credit
Party or any other Subsidiary of the Borrower that is not a Credit Party, and
(iv) any entity may merge or be consolidated with or into any Credit Party;
provided that immediately after giving effect to any such proposed transaction
no Default would exist and, in the case of any such merger to which (x) the
Borrower is a party, the Borrower is the surviving entity, and (y) a Credit
Party (other than Borrower) is a party, a Credit Party is the surviving entity;
provided, further, that this section shall not prohibit a transaction required
or permitted to be entered into or pursued pursuant to a Case Milestone.
(b)No Credit Party shall, nor shall it permit any of its Subsidiaries to, change
its name, change its state of incorporation, formation or organization, change
its organizational identification number or reorganize in another jurisdiction,
or in any manner rearrange its business structure as it exists on the date of
this Agreement, provided that a Credit Party may change its name, change its
state of incorporation, formation or organization, and change its organizational
number provided that such Credit Party has given the Lenders at least ten (10)
days’ prior notice of such change.
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(c)The Borrower shall not, nor shall it permit any of its Subsidiaries to,
modify or change its fiscal year or its method of accounting (other than as may
be required to conform to GAAP) without the prior written consent of the
Lenders.
Section 6.9 Dispositions.
(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell,
convey, license or otherwise transfer any of its assets except that the Borrower
and its Subsidiaries may (i) sell Inventory in the ordinary course of business;
(ii) sell, convey, or otherwise transfer of Equipment that is (i) obsolete, worn
out, depleted or uneconomic and disposed of in the ordinary course of business,
or (ii) contemporaneously replaced by Equipment of at least comparable value and
use; provided that no Event of Default shall exist or shall result from such
sale, conveyance, or transfer; (iii) consummate the Specified Dispositions; (iv)
license or otherwise dispose of Intellectual Property (as such term is defined
in the Security Agreement) pursuant to the terms of the Security Agreement; and
(v) sell, convey or otherwise transfer assets so long as the Borrower makes any
prepayments of the Loans with the Net Cash Proceeds thereof to the extent
required under Section 2.5(c)(ii).
(b)No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell
or otherwise dispose of any of its ownership interest in any of its
Subsidiaries, or in any manner rearrange its business structure as it exists on
the date of this Agreement except that the Borrower and its Subsidiaries may (i)
create or acquire new Subsidiaries if such new Subsidiaries comply with Section
5.6 and such transactions otherwise comply with the terms of this Agreement,
(ii) transfer, sell or otherwise dispose of such ownership interests in
connection with any merger or consolidation permitted under Section 6.8(a) or
any dissolution or liquidation of any Subsidiary of the Borrower to the extent
that the Borrower has reasonably determined that such Subsidiary is no longer
useful in its business so long as the Borrower makes any prepayments of the
Loans with the Net Cash Proceeds thereof to the extent required under Section
2.5(c)(ii), (iii) dispose of any of its ownership interests in any of its
Subsidiaries provided that no Event of Default shall exist or shall result from
such sale, conveyance, or transfer; (iv) consummate the Specified Dispositions;
and (v) sell, convey or otherwise transfer assets so long as the Borrower makes
any prepayments of the Loans with the Net Cash Proceeds thereof to the extent
required under Section 2.5(c)(ii).
Section 6.10 Restricted Payments.
(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to make
any Restricted Payments other than (i) a Restricted Payment to a Credit Party
and (ii) a Restricted Payment from a Subsidiary that is not a Credit Party to a
Credit Party or another Subsidiary that is not a Credit Party.
(b)The Borrower will not, and will not permit any of its Subsidiaries to, prior
to the date that is ninety-one (91) days after the Maturity Date, make or offer
to make any optional or voluntary Redemption of or otherwise optionally or
voluntarily Redeem (whether in whole or in part) any principal in respect of any
Debt other than the Obligations, unless approved by the Lenders in writing or
authorized by the Bankruptcy Court after notice and hearing.
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Section 6.11 Affiliate Transactions. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of transactions (including, but not limited to,
the purchase, sale, lease or exchange of Property, the making of any investment,
the giving of any guaranty, the assumption of any obligation or the rendering of
any service) with any of their Affiliates which are not Credit Parties unless
such transaction or series of transactions is on terms no less favorable to the
Borrower or any Subsidiary, as applicable, than those that could be obtained in
a comparable arm’s length transaction with a Person that is not an affiliate.
Section 6.12 Line of Business. No Credit Party shall, and shall not permit any
of its Subsidiaries to, change the character of the Borrower’s and its
Subsidiaries collective business as conducted on or immediately prior to the
Effective Date, or engage in any type of business not reasonably related to the
Borrower’s and its Subsidiaries collective business as of or immediately prior
to the Effective Date subject to the Credit Parties rights to consummate
Acquisitions or other investments in accordance with the terms of this
Agreement.
Section 6.13 Hazardous Materials. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (a) create, handle, transport, use, or dispose of
any Hazardous Substance or Hazardous Waste, except in the ordinary course of its
business and except in compliance with Environmental Law other than to the
extent that such non-compliance could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change, and (b) Release
any Hazardous Substance or Hazardous Waste into the environment or permit any
Credit Party’s or any Subsidiary’s Property to be subjected to any Release of
Hazardous Substance or Hazardous Waste, except in compliance with Environmental
Law other than to the extent that such non-compliance could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Change.
Section 6.14 Compliance with ERISA. Except for matters that individually or in
the aggregate could not reasonably be expected to cause a Material Adverse
Change, no Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly: (a) knowingly engage in any transaction in connection
with which the Borrower or any Subsidiary could be subjected to either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a Tax
imposed by Chapter 43 of Subtitle D of the Code; (b) terminate, or permit any
member of the Controlled Group to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability to
the Borrower, any Subsidiary or any member of the Controlled Group to the PBGC;
(c) fail to make, or permit any member of the Controlled Group to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or
member of the Controlled Group is required to pay as contributions thereto; (d)
permit to exist, or allow any Subsidiary or any member of the Controlled Group
to permit to exist, any accumulated funding deficiency (or unpaid minimum
required contribution for plan years after December 31, 2007) within the meaning
of Section 302 of ERISA or section 412 of the Code, whether or not waived, with
respect to any Plan; (e) permit, or allow any member of the Controlled Group to
permit, the actuarial present value of the benefit liabilities (as “actuarial
present value of the benefit liabilities” shall have the meaning specified in
section 4041 of ERISA) under any Plan that is regulated under Title IV of ERISA
to exceed the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such benefit
liabilities; (f) contribute to or assume an
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obligation to contribute to, or permit any member of the Controlled Group to
contribute to or assume an obligation to contribute to, any Multiemployer Plan;
(g) acquire, or permit any member of the Controlled Group to acquire, an
interest in any Person that causes such Person to become a member of the
Controlled Group if such Person sponsors, maintains or contributes to, or at any
time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities; (h) incur, or permit any member
of the Controlled Group to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or
assume an obligation to contribute to any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of Borrower or any
Subsidiary, that may not be terminated by such entities in their sole discretion
at any time without any liability; or (j) amend or permit any member of the
Controlled Group to amend, a Plan resulting in a material increase in current
liability such that the Borrower, any Subsidiary or any member of the Controlled
Group is required to provide security to such Plan under section 401(a)(29) of
the Code.
Section 6.15 Limitation on Hedging. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position
in any commodities market or futures market or enter into any Hedging
Arrangement for speculative purposes; or (b) be party to or otherwise enter into
any Hedging Arrangement which is entered into for reasons other than as a part
of its normal business operations as a risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s or
its Subsidiaries’ operations.
Section 6.16 Chapter 11 Claims. Other than (i) any valid, perfected, and
non-avoidable senior liens in the Collateral in existence immediately prior to
the Petition Date and any such valid and non-avoidable liens in existence
immediately prior to the Petition Date that are perfected subsequent to the
Petition Date pursuant to section 546(b) of the Bankruptcy Code and (ii) the
Carve-Out, the Credit Parties shall not incur, create, assume, suffer to exist,
or permit any claim in the Chapter 11 Cases (including without limitation any
claim under Section 506(c) of the Bankruptcy Code and any deficiency claim
remaining after the satisfaction of a Lien that secures a claim) to be on a
parity with or senior to the claims of the Lenders against the Credit Parties
hereunder, or apply to the Bankruptcy Court for authority to do so unless such
relief, if granted, would cause the Obligations to be Paid in Full. The Credit
Parties shall not pay fees and expenses to any Professional Person (as defined
in the DIP Orders) until such Professional Person is authorized to be paid
pursuant to any fee procedure approved by the Bankruptcy Court.
Section 6.17 Other Financings. The Credit Parties shall not obtain any
financing or credit pursuant to Section 364 of the Bankruptcy Code from any
Person other than the Lenders.
Section 6.18 Superpriority Claims. The Credit Parties shall not create or
permit to exist any superpriority claim (including any superpriority
administrative claim and all other benefits and protections allowable under
Sections 507(b) and 503(b)(1) of the Bankruptcy Code) other than with respect to
the Prepetition Secured Debt or the Obligations or as expressly permitted in
writing by the Lenders.
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Section 6.19 Minimum Liquidity. The Borrower shall not permit the Liquidity to
be less than $2,500,000 as of the last day of any calendar month following the
Effective Date.
ARTICLE 7
DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any of the following events
shall constitute an “Event of Default” under this Agreement and any other Credit
Document:
(a)Payment Failure. Any Credit Party (i) fails to pay any principal when due
under this Agreement or (ii) fails to pay, within three Business Days of when
due, any other amount due under this Agreement or any other Credit Document,
including payments of interest, fees, reimbursements, and indemnifications;
(b)False Representation or Warranties. Any representation or warranty made or
deemed to be made by any Credit Party or any officer thereof in this Agreement,
in any other Credit Document or in any certificate delivered in connection with
this Agreement or any other Credit Document is incorrect, false or otherwise
misleading in any material respect (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) at the time it was
made or deemed made;
(c)Breach of Covenant. (i) Any breach by any Credit Party of any of the
covenants in Section 5.1, Section 5.2(f), Section 5.2(g), Section 5.2(j)(iii),
Section 5.2(s), Section 5.2(t), Section 5.3(a), Section 5.15, Section 5.16 or
Article 6 of this Agreement or the corresponding covenants in any Guaranty; or
(ii) any breach by any Credit Party of any other covenant contained in this
Agreement (other than those specified in Section 7.1(a), Section 7.1(b) or the
foregoing clause (i) of this Section 7.1(c)) or any other Credit Document and
such breach shall remain unremedied for a period of thirty (30) days after the
earlier of (A) the date on which any Credit Party has actual knowledge of such
breach and (B) the date written notice of such breach shall have been given to
the Borrower by any Lender (such grace period to be applicable only in the event
such Default can be remedied by corrective action of a Credit Party or any of
its Subsidiaries);
(d)Guaranties. Any provisions in the Guaranties shall at any time (before its
expiration according to its terms) and for any reason cease to be in full force
and effect and valid and binding on the Guarantors party thereto or shall be
contested by any party thereto; any Guarantor shall deny it has any liability or
obligation under such Guaranties; or any Guarantor shall cease to exist other
than as expressly permitted by the terms of this Agreement;
(e)Reserved.
(f)Bankruptcy.
(i)the failure to meet or satisfy any of the Case Milestones;
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(ii)any of the Chapter 11 Cases shall be dismissed or converted to a case under
chapter 7 of the Bankruptcy Code or any Credit Party shall file a motion or
other pleading or support a motion or other pleading filed by any other Person
seeking the dismissal or conversion of any of the Chapter 11 Cases under section
1112 of the Bankruptcy Code or otherwise, in each case, without the consent of
the Lenders;
(iii)a trustee under chapter 7 or chapter 11 of the Bankruptcy Code, a
responsible officer, or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in section 1106(a)(3)
and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code
shall be appointed in any of the Chapter 11 Cases or any Credit Party shall file
a motion or other pleading or shall consent to a motion or other pleading filed
by any other Person seeking any of the foregoing;
(iv)entry of an order by the Bankruptcy Court, without the consent of the
Lenders, granting any other Superpriority Claim or any Lien (other than the
Carve-Out and those approved by the DIP Orders) which is pari passu with or
senior to the claims of the Lenders and the other Secured Parties against any
other Credit Party hereunder, or there shall arise or be granted any such pari
passu or senior Superpriority Claim (other than the Carve-Out and those approved
by the DIP Orders) or any Credit Party shall file a motion or other pleading or
support a motion or other pleading filed by any other Person requesting any of
the foregoing (other than in connection with any financing pursuant to which the
Obligations would be Paid in Full);
(v)three (3) Business Days after entry of an order by the Bankruptcy Court,
without the consent of the Lenders, granting relief from the automatic stay
applicable under section 362 of the Bankruptcy Code (A) to the holder or holders
of any security interest to proceed against, including foreclosure (or the
granting of a deed in lieu of foreclosure or the like) on, any assets of any
Credit Party that have a value in excess of $250,000 in the aggregate (excluding
foreclosure or setoff of liens or security interests on cash or cash equivalents
pledged to secure or support letters of credit, reclamation obligations,
corporate credit card programs or other obligations of a like nature incurred in
the ordinary course of business) or (B) to any state or local environmental or
regulatory agency or authority to proceed against, including foreclose (or the
granting of a deed in lieu of foreclosure or the like) on, any assets of any
Credit Party that have a value in excess of $250,000;
(vi)an order of the Bankruptcy Court (or any other court of competent
jurisdiction) shall be entered, whether on appeal or otherwise, (A) without the
written consent of the Lenders, reversing, staying, modifying, or vacating the
DIP Orders that would otherwise be in effect, (B) without the written consent of
the Lenders, amending, supplementing or modifying the DIP Orders then in effect
or (C) denying or terminating the use of cash collateral by the Credit Parties
pursuant to the DIP Orders; or any Credit Party shall file a motion or other
pleading or shall support a motion or other pleading filed by any other Person
seeking any of the foregoing;
(vii)the failure of any Credit Party to comply in any respect with any provision
of the DIP Orders, the Restructuring Support Agreement, or any Credit Document
(in each case, subject to any applicable notice and cure periods set forth
therein);
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(viii)subject to entry of the Final DIP Order, the Bankruptcy Court shall enter
an order imposing, surcharging or assessing against any Lender’s interest in the
Collateral any costs of expenses, whether pursuant to sections 506(c) or 552 of
the Bankruptcy Code or otherwise, or any Credit Party shall file a motion or
other pleading or support a motion or other pleading filed by any other Person
requesting the foregoing;
(ix)the Bankruptcy Court shall terminate or reduce the periods pursuant to
section 1121 of the Bankruptcy Code during which the Credit Parties have the
exclusive right to file a Reorganization Plan and solicit acceptances thereof;
(x)any of the Credit Parties shall seek court authorization to commence, or
shall commence, join in, assist or otherwise participate as an adverse party in
any suit or other proceeding against any of the Lenders, provided, however, that
the Credit Parties may comply with discovery requests in connection with any
such suit or other proceeding in accordance with applicable law;
(xi)an order of the Bankruptcy Court (or any other court of competent
jurisdiction) shall be entered approving any financing under Section 364 of the
Bankruptcy Code (other than under the Credit Documents) without the written
consent of the Lenders that does not result in Payment in Full of the
Obligations or any Credit Party shall file a motion or other pleading or shall
support a motion or other pleading filed by any other Person seeking any of the
foregoing;
(xii)any Credit Party contests the validity or enforceability of any provision
of any Credit Document or any Prepetition Loan Document or the validity, extent,
perfection or priority of a Lien granted in favor of the Prepetition
Administrative Agent, the Lenders or the Prepetition Lenders or shall support or
consent to any other Person concerning the foregoing, provided, however, that
the Credit Parties may comply with discovery requests in connection with any
suit or proceeding in accordance with applicable law;
(xiii)the filing by any Credit Party of any Reorganization Plan without the
consent of the Lenders that is not an Acceptable Plan;
(xiv)an order of the Bankruptcy Court shall be entered approving a sale of
substantially all of the Credit Parties’ assets that (i) does not propose for
all Obligations to be Paid in Full on the effective date of such sale or (ii) is
not consented to in writing by the Lenders in their sole discretion;
(xv)an order (other than the DIP Orders) of the Bankruptcy Court shall be
entered pursuant to section 363(k) of the Bankruptcy Code limiting the ability
of the Lenders, either individually or together with one or more Lenders, to
credit bid the full amount of their claims in the Chapter 11 Cases in connection
with any asset sale process or plan sponsorship process or any sale of assets
(in whole or part) by any Credit Party, including without limitation sales
occurring pursuant to section 363 of the Bankruptcy Code or included as part of
any restructuring plan subject to confirmation under section
1129(b)(2)(A)(ii)-(iii) of the Bankruptcy Code;
(xvi)an order shall have been entered by the Bankruptcy Court without the
consent of the Lenders providing for a change in venue with respect to the
Chapter 11 Cases;
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(xvii)three (3) Business Days after the Borrower, any Guarantor or any of their
Subsidiaries shall be enjoined, restrained, or in any way prevented by order of
a court of competent jurisdiction from continuing to conduct all or any part of
the business affairs of the Borrower, any Guarantor or any of their
Subsidiaries, taken as a whole, which could reasonably be expected to have a
Material Adverse Effect; provided that the Borrower, any such Guarantor or such
Subsidiary shall have thirty (30) days after the entry of such an order to
obtain a court order vacating, staying or otherwise obtaining relief from the
Bankruptcy Court or another court to address any such court order;
(xviii)the occurrence of a Termination Event (as defined in the Restructuring
Support Agreement), or the Restructuring Support Agreement is otherwise
terminated pursuant to Section 5 thereof;
(xix)the Lenders shall have objected in writing to any supplemental or new
Approved Budget and the Borrower and Lenders are unable to resolve the objection
in accordance with the DIP Orders within three (3) Business Days of receipt of
the Lenders’ objection in writing to such supplemental or new Approved Budget;
(xx)a violation of any Permitted Variance that is not resolved and approved in
writing by the Lenders within three (3) Business Days after the delivery of the
applicable Permitted Variance report;
(xxi)any Credit Party shall file, support, or acquiesce in any motion or other
pleading with the intent of effectuating a merger, consolidation, disposition,
acquisition, investment, dividend, incurrence of indebtedness, or other similar
transaction outside of the ordinary course of business other than (i) the
commencement of the Chapter 11 Cases, (ii) as permitted under the DIP Orders or
the Restructuring Support Agreement, or (iii) with the prior consent of the
Lenders;
(xxii)three (3) Business Days after the date any Credit Party enters into any
non-ordinary course transaction or makes any payment that is materially
inconsistent with the Restructuring Support Agreement, a Reorganization Plan or
the Approved Budget without the prior written consent of the Lenders;
(g)Reserved;
(h)Termination Events. Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given to the
Borrower by the Lenders, such Termination Event shall not have been corrected
and shall have created and caused to be continuing a material risk of Plan
termination or liability for withdrawal from the Plan as a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA), which termination could
reasonably be expect to result in a liability of, or liability for withdrawal
could reasonably be expected to be, greater than $5,000,000;
(i)Plan Withdrawals. The Borrower or any member of the Controlled Group as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and such withdrawing employer shall have
incurred a withdrawal liability in an annual amount exceeding $5,000,000; or
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(j)Change in Control. The occurrence of a Change in Control.
(k)Security Documents. The Security Agreement or any other material Security
Document shall at any time and for any reason cease to create an Acceptable
Security Interest in all material Property purported to be subject to such
agreement (and such Acceptable Security Interest) in accordance with the terms
of such agreement or any provisions thereof shall cease to be in full force and
effect and valid and binding on the Credit Party that is a party thereto or any
such Person shall so state in writing.
Section 7.2 Acceleration of Maturity. If any Event of Default shall have
occurred and be continuing, then, and in any such event, but subject to the
terms and conditions of the DIP Orders,
(a)the Lenders may, by notice to the Borrower, (i) terminate the Commitments,
and thereupon the Commitments shall terminate immediately, (ii) declare the
Loans (including, all principal and interest thereon), and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Loans (including all such principal and interest), and all other amounts payable
under this Agreement shall become and be forthwith due and payable in full,
without presentment, demand, protest or further notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by each of the Credit
Parties immediately due and payable pursuant to the term of this Section
7.2(a)), and
(b)the Lenders may proceed to enforce its rights and remedies under the
Guaranties or any other Credit Document for the ratable benefit of the Secured
Parties by appropriate proceedings.
Section 7.3 Reserved.
Section 7.4 Reserved.
Section 7.5 Remedies Cumulative, No Waiver. No right, power, or remedy
conferred to any Lender in this Agreement or the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right, power
or remedy. No course of dealing and no delay in exercising any right, power, or
remedy conferred to any Lender in this Agreement and the Credit Documents or now
or hereafter existing at law, in equity, by statute, or otherwise shall operate
as a waiver of or otherwise prejudice any such right, power, or remedy. No
notice to or demand upon the Borrower or any other Credit Party shall entitle
the Borrower or any other Credit Party to similar notices or demands in the
future.
Section 7.6 Application of Payments. Prior to an Event of Default, all payments
made hereunder shall be applied by the Lenders as directed by the Borrower, but
subject to the terms of this Agreement, including the application of prepayments
according to Section 2.5 and Section 2.12. During the existence of an Event of
Default, all payments and collections received by the Lenders shall be applied
to the Obligations in accordance with Section 2.12 and otherwise in such manner
as determined by the Lenders provided that in the event that the Obligations
have been accelerated pursuant to Section 7.2 or any Lender has exercised any
remedy set forth in this
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Agreement or any other Credit Document, all payments received on account of the
Obligations and all net proceeds from the enforcement of the Obligations shall
be applied by the Lenders as follows:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts, including attorney fees, payable to the
Lenders in their capacities as such;
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders under the Credit Documents, including attorney fees, ratably among the
Lenders in proportion to the respective amounts described in this clause Second
payable to them;
Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;
Fourth, to payment of all other Obligations ratably among the Secured Parties in
proportion to the respective amounts described in this clause Fourth payable to
them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly
Paid in Full, to the Borrower or as otherwise required by Legal Requirements.
Section 7.7 Lenders May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Credit Party, each Lender (irrespective of whether the principal of any
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether any Lender shall have made any demand on
the Borrower) shall be entitled and empowered (but not obligated) by
intervention in such proceeding or otherwise:
(a)to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Lenders
and their respective agents and counsel and all other amounts due the Lenders)
allowed in such judicial proceeding; and
(b)to collect and receive any monies 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 Lender to make such payments to the Lenders.
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ARTICLE 8
RESERVED
ARTICLE 9
MISCELLANEOUS
Section 9.1 Costs and Expenses. The Borrower agrees to pay in accordance with
the DIP Orders:
(a)all reasonable out-of-pocket costs and expenses of Lenders in connection with
the preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the Notes, and the other Credit Documents and
waivers of the provisions hereunder and thereunder, in each case, whether or not
the transactions contemplated hereby or thereby shall be consummated and
including reasonable costs associated with field examinations, appraisals, and
the reasonable fees and out‑of‑pocket expenses of outside counsel for Lenders,
with respect to advising the Lenders as to its rights and responsibilities under
this Agreement, and
(b)all out‑of‑pocket costs and expenses, if any, of each Lender (including
outside counsel fees and expenses of each Lender) in connection with the
enforcement (whether through negotiations, workout, legal proceedings, or
otherwise) of this Agreement, the Notes, and the other Credit Documents.
Section 9.2 Indemnification; Waiver of Damages.
(a)INDEMNIFICATION. EACH CREDIT PARTY HERETO AGREES TO, JOINTLY AND SEVERALLY,
INDEMNIFY AND HOLD HARMLESS EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN
“INDEMNITEE”) FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES,
COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES)
THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNITEE, IN EACH
CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT
LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR
PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE CREDIT DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS
OF THE LOANS, INCLUDING SUCH INDEMNITEE’S OWN NEGLIGENCE, EXCEPT TO THE EXTENT
SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF
AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS
SECTION 9.2 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH
INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY ANY CREDIT PARTY, ITS
DIRECTORS, SHAREHOLDERS OR
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CREDITORS OR AN INDEMNITEE OR ANY OTHER PERSON OR ANY INDEMNITEE IS OTHERWISE A
PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE
CONSUMMATED. THIS SECTION 9.2 SHALL NOT APPLY WITH RESPECT TO ANY TAXES.
(b)Waiver of Consequential Damages, Etc.
(i)To the fullest extent permitted by applicable law, no Credit Party shall
assert, agrees not to assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof; provided that
nothing contained in this sentence shall limit any Credit Party’s
indemnification obligations to the extent set forth in clause (a) above to the
extent such special, indirect, consequential or punitive damages are included in
any third party claim in connection with which such indemnified person is
otherwise entitled to indemnification hereunder. No Indemnitee referred to in
subsection (a) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic
or other information transmission systems in connection with this Agreement or
the other Credit Documents or the transactions contemplated hereby or thereby
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.
(ii)To the fullest extent permitted by applicable law, no Indemnitee shall
assert, agrees not to assert, and hereby waives, any claim against any Credit
Party, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof other than for
such claims provided for in this Agreement provided that nothing contained in
this sentence shall limit any Credit Party’s indemnification obligations to the
extent set forth in clause (a) above to the extent such special, indirect,
consequential or punitive damages are included in any third party claim in
connection with which such indemnified person is otherwise entitled to
indemnification hereunder.
(c)Survival. Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 9.2 shall survive the termination of this Agreement
and the payment in full of the Loans and all other amounts payable under this
Agreement.
Section 9.3 Waivers and Amendments. No amendment or waiver of any provision of
this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lenders and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that:
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(a)no amendment, waiver, or consent shall, unless in writing and signed by all
the Lenders and the Borrower, do any of the following: (i) reduce the principal
of, or interest on, the Loans, (ii) postpone or extend any date fixed for any
payment of principal of, or interest on, the Loans, including, without
limitation, the Maturity Date, or (iii) change the number of Lenders which shall
be required for the Lenders to take any action hereunder or under any other
Credit Document;
(b)no amendment, waiver, or consent shall, unless in writing and signed by all
the Lenders and the Borrower, do any of the following: (i) waive any of the
conditions specified in Article 3, (ii) reduce any fees or other amounts payable
hereunder or under any other Credit Document (other than those specifically
addressed above in this Section 9.3), (iii) increase the aggregate Commitments,
(iv) postpone or extend any date fixed for any payment of any fees or other
amounts payable hereunder (other than those otherwise specifically addressed in
this Section 9.3), (v) amend Section 2.12(e), Section 7.6, this Section 9.3 or
any other provision in any Credit Document which expressly requires the consent
of, or action or waiver by, all of the Lenders, (vi) release any Guarantor from
its obligation under any Guaranty or, except as specifically provided in the
Credit Documents and as a result of transactions permitted by the terms of this
Agreement, release all or a material portion of collateral, if any, securing the
Obligations; or (vii) amend the definitions of “Secured Parties”, “Obligations”
or “Collateral” in a manner materially adverse to any Secured Party;
(c)no Commitment of a Lender or any obligations of a Lender may be increased
without such Lender’s written consent; and
(d)no amendment, waiver, or consent shall, unless in writing and signed by the
Lenders required above to take such action, affect the rights or duties of the
Lenders under this Agreement or any other Credit Document.
Section 9.4 Severability. In case one or more provisions of this Agreement or
the other Credit Documents shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality, and enforceability of
the remaining provisions contained herein or therein shall not be affected or
impaired thereby.
Section 9.5 Survival of Representations and Obligations. All representations
and warranties contained in this Agreement or made in writing by or on behalf of
the Credit Parties in connection herewith shall survive the execution and
delivery of this Agreement and the other Credit Documents, the making of the
Loans and any investigation made by or on behalf of the Lenders, none of which
investigations shall diminish any Lender’s right to rely on such representations
and warranties. All obligations of the Borrower or any other Credit Party
provided for in Sections 2.11, 2.13(c), 9.1 and 9.2 and all of the obligations
of the Lenders in Section 8.5 shall survive any termination of this Agreement
and repayment in full of the Obligations.
Section 9.6 Binding Effect. This Agreement shall become effective upon the
satisfaction of the conditions set forth in Section 3.1 above, and thereafter
shall be binding upon and inure to the benefit of the Borrower and each Lender
and their respective successors and assigns, except that neither the Borrower
nor any other Credit Party shall have the right to assign its rights or delegate
its duties under this Agreement or any interest in this Agreement without the
prior written consent of each Lender.
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Section 9.7 Lender Assignments and Participations.
(a)Each Lender may assign to one or more Eligible Assignees all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Loans); provided, however, that (i) each such assignment
shall be to an Eligible Assignee; (ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender’s rights and obligations
under this Agreement, any such partial assignment with respect to the Loans
shall be in an amount at least equal to $5,000,000; (iii) each assignment of a
Lender’s rights and obligations with respect to the Loans shall be of an
constant, and not varying percentage of all of its rights and obligations under
this Agreement as a Lender (other than rights of reimbursement and indemnity
arising before the effective date of such assignment) and shall be of an equal
pro rata share of the assignor’s interest in the Loans; and (iv) the parties to
such assignment shall execute and deliver to the Lenders for its acceptance an
Assignment and Acceptance, together with any Notes subject to such assignment
(if applicable) and the assignor or assignee Lender shall pay a processing fee
of $3,500. Upon execution, delivery, and acceptance of such Assignment and
Acceptance and payment of the processing fee, the assignee thereunder shall be a
party hereto and, to the extent of such assignment, have the obligations,
rights, and benefits of a Lender hereunder and the assigning Lender shall, to
the extent of such assignment, relinquish its rights and be released from its
obligations under this Agreement. Upon the consummation of any assignment
pursuant to this Section 9.7, the assignor, the Lenders and the Borrower shall
make appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee. If the assignee is not incorporated under the laws
of the United States of America or a state thereof, it shall deliver to the
Borrower and the Lenders certification as to exemption from or reduction of
withholding of Taxes in accordance with Section 2.13(e).
(b)The Lenders, acting as a nonfiduciary agent of the Credit Parties, shall
maintain at the addresses referred to in Section 9.9 a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and principal amount (and
stated interest) of the Loans owing to, each Lender from time to time (the
“Register”). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Credit Parties, the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement.
(c)Upon its receipt of an Assignment and Acceptance executed by the parties
thereto, together with any Notes subject to such assignment (if any) and payment
of the processing fee, the Lenders shall, if such Assignment and Acceptance has
been completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the parties thereto.
(d)Each Lender may sell participations to one or more Persons in all or a
portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Loans) provided, however, that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions including, but not limited to,
Section 2.11, (iv) so long as no Event of Default has occurred and is
continuing, such Person or Persons to whom any such participation is to be sold
must be approved by the Borrower, and (iv) the Borrower shall continue to deal
solely
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and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its Note (if
any) and to approve any amendment, modification, or waiver of any provision of
this Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans,
or extending any scheduled principal payment date or date fixed for the payment
of interest on such Loans); provided further, however, that such Participant
(A) agrees to be subject to the provisions of Section 2.11(b), Section 2.13(e),
(f) and (g) and Section 2.14 as if it were an assignee under paragraph (a) of
this Section; and (B) shall not be entitled to receive any greater payment under
the yield protection provisions, with respect to any participation, than its
participating Lender would have been entitled to receive, except to the extent
such entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation. Each Lender
that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Credit Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant's interest in any commitments, loans, letters of credit or its other
obligations under any Credit Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
(e)Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time assign and pledge all or any portion of its Loans to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f)Any Lender may furnish any information concerning the Borrower or any of its
Subsidiaries in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants), subject,
however, to the provisions of the following paragraph Section 9.8.
Section 9.8 Confidentiality. Each Lender (each a “Lending Party”) agree to keep
confidential any information furnished or made available to it by any Credit
Party pursuant to this Agreement and identified by such Credit Party in writing
as proprietary or confidential; provided that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party or
any Affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or Affiliate of any Lending Party for purposes
of administering, negotiating, considering, processing, implementing,
syndicating, assigning, or evaluating the credit facilities provided herein and
the transactions contemplated hereby, (b) to any other Person if directly
incidental to the administration of the credit facilities provided herein, (c)
as required by any Legal Requirement, (d) upon the order of any court or
administrative agency,
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(e) upon the request or demand of any regulatory agency or authority, (f) that
is or becomes available to the public or that is or becomes available to any
Lending Party other than as a result of a disclosure by any other Lending Party
prohibited by this Agreement, (g) in connection with any litigation relating to
this Agreement or any other Credit Document to which such Lending Party or any
of its Affiliates may be a party, (h) to the extent necessary in connection with
the exercise of any right or remedy under this Agreement or any other Credit
Document, and (i) to any actual or proposed participant or assignee, in each
case, subject to provisions similar to those contained in this Section
9.8. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, nothing in this
Agreement shall (a) restrict any Lending Party from providing information to any
regulatory or governmental authorities, including the Federal Reserve Board and
its supervisory staff; (b) require or permit any Lending Party to disclose to
any Credit Party that any information will be or was provided to the Federal
Reserve Board or any of its supervisory staff; or (c) require or permit any
Lending Party to inform any Credit Party of a current or upcoming Federal
Reserve Board examination or any nonpublic Federal Reserve Board supervisory
initiative or action.
Section 9.9 Notices, Etc. All notices and other communications shall be in
writing and hand delivered with written receipt, telecopied, sent by facsimile
(with a hard copy sent as otherwise permitted in this Section 9.9), sent by a
nationally recognized overnight courier, or sent by certified mail, return
receipt requested as follows: if to a Credit Party, as specified on Schedule I
and if to any Lender at its credit contact specified under its name on Schedule
I. Each party may change its notice address by written notification to the
other parties. All such notices and communications shall be effective when
delivered, except that notices and communications to any Lender pursuant to
Article 2 shall not be effective until received and, in the case of telecopy,
such receipt is confirmed by such Lender, as applicable, verbally or in
writing. Nothing in this Agreement or in any other Credit Document shall be
construed to limit or affect the obligation of the Borrower or any other Person
to serve upon the Lenders in the manner prescribed by the Bankruptcy Code any
pleading or notice required to be given to the Lenders pursuant to the
Bankruptcy Code.
Section 9.10 Business Loans. Each Credit Party warrants and represents that the
Obligations are and shall be for business, commercial, investment or other
similar purposes and not primarily for personal, family, household or
agricultural use, as such terms are used in Chapter One (“Chapter One”) of the
Texas Credit Code. At all such times, if any, as Chapter One shall establish a
Maximum Rate, the Maximum Rate shall be the “indicated rate ceiling” (as such
term is defined in Chapter One) from time to time in effect.
Section 9.11 Usury Not Intended. It is the intent of each Credit Party and each
Lender in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Loans of each Lender including such
applicable laws of the State of Texas, if any, and the United States of America
from time to time in effect. In furtherance thereof, the Lenders and the Credit
Parties stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes of
this Agreement “interest” shall include the aggregate of all charges which
constitute interest under such laws that are contracted for, charged or received
under this
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Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Loans, include amounts which by applicable law are deemed interest which
would exceed the Maximum Rate, then such excess shall be deemed to be a mistake
and each Lender receiving same shall credit the same on the principal (or if
Loans (and all other Obligations) owed to such Lender shall have been paid in
full, refund said excess to the Borrower). In the event that the maturity of
the Loans are accelerated by reason of any election of the holder thereof
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the Maximum Rate, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited to the Loans (or, if the Loans and all other
Obligations shall have been paid in full, refunded to the Borrower of such
interest). In determining whether or not the interest paid or payable under any
specific contingencies exceeds the Maximum Rate, the Credit Parties and the
Lenders shall to the maximum extent permitted under applicable law amortize,
prorate, allocate and spread in equal parts during the period of the full stated
term of the Loans all amounts considered to be interest under applicable law at
any time contracted for, charged, received or reserved in connection with the
Obligations. The provisions of this Section shall control over all other
provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.
Section 9.12 Usury Recapture. In the event the rate of interest chargeable
under this Agreement at any time is greater than the Maximum Rate, the unpaid
principal amount of the Loans shall bear interest at the Maximum Rate until the
total amount of interest paid or accrued on the Loans equals the amount of
interest which would have been paid or accrued on the Loans if the stated rates
of interest set forth in this Agreement had at all times been in effect. In the
event, upon payment in full of the Loans, the total amount of interest paid or
accrued under the terms of this Agreement and the Loans is less than the total
amount of interest which would have been paid or accrued if the rates of
interest set forth in this Agreement had, at all times, been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay ratably among the
Lenders an amount equal to the difference between (i) the lesser of (A) the
amount of interest which would have been charged on its Loans if the Maximum
Rate had, at all times, been in effect and (B) the amount of interest which
would have accrued on its Loans if the rates of interest set forth in this
Agreement had at all times been in effect and (ii) the amount of interest
actually paid under this Agreement on its Loans. In the event the Lenders ever
receive, collect or apply as interest any sum in excess of the Maximum Rate,
such excess amount shall, to the extent permitted by law, be applied to the
reduction of the principal balance of the Loans, and if no such principal is
then outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
Section 9.13 Governing Law; Waiver of Jury Trial.
(a)THIS AGREEMENT, THE NOTES AND THE OTHER CREDIT DOCUMENTS (UNLESS OTHERWISE
EXPRESSLY PROVIDED THEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ANY CHOICE OF LAW
PROVISIONS THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION
AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE, EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO
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CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. WITHOUT LIMITING THE INTENT
OF THE PARTIES SET FORTH ABOVE, (i) CHAPTER 346 OF THE TEXAS FINANCE CODE, AS
AMENDED (RELATING TO REVOLVING LOANS AND REVOLVING TRI-PARTY ACCOUNTS (FORMERLY
TEX. REV. CIV. STAT. ANN. ART. 5069, CH. 15)), SHALL NOT APPLY TO THIS
AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY AND (ii) TO THE
EXTENT THAT ANY LENDER MAY BE SUBJECT TO TEXAS LAW LIMITING THE AMOUNT OF
INTEREST PAYABLE FOR ITS ACCOUNT, SUCH LENDER SHALL UTILIZE THE INDICATED
(WEEKLY) RATE CEILING FROM TIME TO TIME IN EFFECT.
(b)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE CREDIT DOCUMENTS SHALL BE
BROUGHT IN THE BANKRUPTCY COURT AND IF THE BANKRUPTCY COURT DOES NOT HAVE (OR
ABSTAINS FROM) JURISDICTION, IN THE COURTS OF THE STATE OF TEXAS OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, IN EITHER CASE
LOCATED IN HARRIS COUNTY, TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY
LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND
DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY
COURT OTHERWISE HAVING JURISDICTION.
(c)EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 9.9 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 9.9 (OR ITS ASSIGNMENT AND ACCEPTANCE), SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY
IN ANY OTHER JURISDICTION.
(d)EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
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DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii)
CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE CREDIT DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 9.13.
Section 9.14 Reserved.
Section 9.15 Reserved.
Section 9.16 Submission to Jurisdiction. Each Credit Party hereby irrevocably
submits to the jurisdiction of any Texas state or federal court sitting in
Houston, Texas in any action or proceeding arising out of or relating to this
Agreement or the other Credit Documents, and each Credit Party hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court. Each Credit Party hereby unconditionally
and irrevocably waives, to the fullest extent it may effectively do so, any
right it may have to the defense of an inconvenient forum to the maintenance of
such action or proceeding. Each Credit Party hereby agrees that service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding may be made by mailing or delivering a copy of
such process to such Credit Party at its address set forth in this
Agreement. Each Credit Party hereby agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Section shall affect the rights of any Lender to serve
legal process in any other manner permitted by the law or affect the right of
any Lender to bring any action or proceeding against any Credit Party or its
Property in the courts of any other jurisdiction.
Section 9.17 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different 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.
Section 9.18 Reserved.
Section 9.19 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Credit Document
or in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Credit Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:
(a)the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and
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(b)the effects of any Bail-in Action on any such liability, including, if
applicable:
(i)a reduction in full or in part or cancellation of any such liability;
(ii)a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Credit Document; or
(iii)the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.
Section 9.20 USA Patriot Act. Each Lender that is subject to the Patriot Act
hereby notifies each Credit Party that pursuant to the requirements of the
Patriot Act it is required to obtain, verify and record information that
identifies such Credit Party, which information includes the name and address of
such Credit Party and other information that will allow such Lender to identify
such Credit Party in accordance with the Patriot Act.
Section 9.21 No Oral Agreements. PURSUANT TO SECTION 26.02 OF THE TEXAS
BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE
LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY’S
AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTERS SET FORTH HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 9.22 Right of Setoff. If an Event of Default shall have occurred and be
continuing, subject to the DIP Orders and First Day Orders, each Lender and each
of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations (of whatsoever kind, including, without limitations
obligations under Hedging Arrangements) at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower or any Subsidiary
against any of and all the obligations of the Borrower or any Subsidiary owed to
such Lender now or hereafter existing under this Agreement
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or any other Credit Document, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Credit Document and
although such obligations may be unmatured. Subject to the DIP Orders and First
Day Orders, the rights of each Lender under this Section 9.22 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have. Each Lender agrees to notify the Borrower promptly
after any such setoff and application; provided that the failure to give such
notice shall not affect the validity of such setoff and application.
Section 9.23 No Third Party Beneficiaries. This Agreement, the other Credit
Documents, and the agreement of the Lenders to make Loans hereunder are solely
for the benefit of the Borrower, and no other Person (including any Subsidiary
of the Borrower, any obligor, contractor, subcontractor, supplier or
materialman) shall have any rights, claims, remedies or privileges hereunder or
under any other Credit Document against any Lender for any reason whatsoever.
There are no third party beneficiaries.
Section 9.24 Credit Bidding. Each Secured Party hereby irrevocably authorizes
the Lenders to credit bid all or any portion of the Obligations (including by
accepting some or all of the collateral securing the Obligations pursuant to the
Security Documents in satisfaction of some or all of the Obligations pursuant to
a deed in lieu of foreclosure or otherwise) and in such manner purchase (either
directly or through one or more acquisition vehicles) all or any portion of such
collateral (a) at any sale thereof conducted under the provisions of the
Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy
Code, or any similar laws in any other jurisdictions to which a Credit Party is
subject or (b) at any other sale, foreclosure or acceptance of collateral in
lieu of debt conducted by (or with the consent or at the direction of) the
Lenders (whether by judicial action or otherwise) in accordance with any
applicable law. In connection with any such credit bid and purchase, the
Obligations owed to the Secured Parties shall be credit bid by the Lenders on a
ratable basis (with Obligations with respect to contingent or unliquidated
claims receiving contingent interests in the acquired assets on a ratable basis
that shall vest upon the liquidation of such claims in an amount proportional to
the liquidated portion of the contingent claim amount used in allocating the
contingent interests) for the asset or assets so purchased (or for the equity
interest or debt instruments of the acquisition vehicle or vehicles that are
issued in connection with such purchase). In connection with any such bid (i)
each Lender shall be authorized to form one or more acquisition vehicles and to
assign any successful credit bid to such acquisition vehicle or vehicles, (ii)
each of the Secured Parties’ ratable interests in the Obligations which was
credit bid shall be deemed without any further action under this Agreement to be
assigned to such vehicle or vehicles for the purpose of closing such sale, (iii)
each Lender shall be authorized to adopt documents providing for the governance
of the acquisition vehicle or vehicles (provided that any actions by the Lenders
with respect to such acquisition vehicle or vehicles, including any disposition
of the assets or equity interests thereof, shall be governed, directly or
indirectly, by, and the governing documents shall provide for, control by the
vote of the Lenders or their permitted assignees under the terms of this
Agreement or the governing documents of the applicable acquisition vehicle or
vehicles, as the case may be, irrespective of the termination of this Agreement
and without giving effect to the limitations on actions by the Lenders contained
in Section 6.2; provided further that any disbursement or other disposition of
any proceeds of such collateral or proceeds of such proceeds shall be consistent
with this Agreement, including Section 7.6), (iv) the Lenders on behalf of such
acquisition vehicle or vehicles shall be authorized to issue to each of the
Secured Parties, ratably on account of the relevant Obligations which was credit
bid,
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interests, whether as equity, partnership, limited partnership interests or
membership interests, in any such acquisition vehicle and/or debt instruments
issued by such acquisition vehicle, all without the need for any Secured Party
or acquisition vehicle to take any further action, and (v) to the extent that
Obligations that is assigned to an acquisition vehicle is not used to acquire
any collateral securing the Obligations for any reason, such Obligations shall
automatically be reassigned to the Lenders (or the applicable holder of the
Obligations so assigned) pro rata and the equity interests and/or debt
instruments issued by any acquisition vehicle on account of such Obligations
shall automatically be canceled, without the need for any Secured Party or any
acquisition vehicle to take any further action. Notwithstanding that the ratable
portion of the Obligations of each Secured Party is deemed assigned to the
acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured
Party shall execute such documents and provide such information regarding such
Secured Party (and/or any designee of the Secured Party which will receive
interests in or debt instruments issued by such acquisition vehicle) as the
Lenders may reasonably request in connection with the formation of any
acquisition vehicle, the formulation or submission of any credit bid or the
consummation of the transactions contemplated by such credit bid.
Section 9.25 Incorporation of DIP Orders by Reference. Each of the Credit
Parties and the Lenders agrees that any reference contained herein to the DIP
Orders shall include all terms, conditions and provisions of such DIP Order and
that the DIP Orders are incorporated herein for all purposes. To the extent
there is any conflict or inconsistency between the terms of any of the Credit
Documents and the terms of the DIP Orders, the terms of the Interim DIP Order or
the Final DIP Order, as applicable, shall govern.
[Remainder of this page intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective authorized officers as of the date
first above written.
BORROWER:
CARBO CERAMICS INC.
By:
/s/ Ernesto Bautista III
Name:
Ernesto Bautista III
Title:
Vice President and Chief Financial Officer
GUARANTORS:
ASSET GUARD PRODUCTS INC.
By:
/s/ Ernesto Bautista III
Name:
Ernesto Bautista III
Title:
Vice President and Chief Financial Officer
STRATAGEN, INC.
By:
/s/ Ernesto Bautista III
Name:
Ernesto Bautista III
Title:
Vice President and Chief Financial Officer
LENDERS:
WILKS BROTHERS, LLC,
as a Lender
By:
/s/ Matthew Wilks
Name:
Matthew Wilks
Title:
Portfolio Manager and Vice President of Capital Investments
[Signature Page to Senior Secured Super Priority Debtor-In-Possession Credit
Agreement]
--------------------------------------------------------------------------------
ANNEX I
Commitments1
Lender
Commitment
Outstanding Principal Amount of Loans
Wilks Brothers, LLC
$15,000,000.00
$0.00
Total:
$15,000,000.00
$0.00
1
As of the Effective Date of this Agreement.
Annex I
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SCHEDULE I
Contact Information
LENDERS
Wilks Brothers, LLC
Address for Notices:
Wilks Brothers, LLC
17010 IH-20
Cisco, TX 76437
Attention:Philip Pecora
Matthew Wilks
Facsimile:(817) 850-3698
Email:philip.pecora@wilksbrothers.com
matt.wilks@profac.com
CREDIT PARTIES
Borrower/Guarantors
Address for Notices:
Carbo Ceramics Inc.
Asset Guard Products Inc.
StrataGen, Inc.
Carbo International, Inc.
Energy Center II
575 N. Dairy Ashford Rd., Suite 300
Houston, TX 77079
Attn: Ernesto Bautista III
Chief Financial Officer
Telephone: (281) 931-8884
Facsimile: (281) 931-8302
Schedule I
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EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]2 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]3 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]4 hereunder are several and not
joint.]5 Capitalized terms used but not defined herein shall have the meanings
given to them in the Senior Secured Super Priority Debtor-In-Possession Credit
Agreement identified below (as amended, restated, amended and restated,
supplemented and/or modified from time to time, the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to
and incorporated herein by reference and made a part of this Assignment and
Acceptance as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the Lenders as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities as
Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the respective facilities
identified below (including without limitation any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of [the Assignor (in its capacity as a Lender)][the respective Assignors
(in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee
pursuant to clauses (i) and (ii) above being referred to herein collectively as
[the][an] “Assigned Interest”). Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Acceptance, without representation or warranty by [the][any]
Assignor.
2
For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.
3
For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.
4
Select as appropriate.
5
Include bracketed language if there are either multiple Assignors or multiple
Assignees.
--------------------------------------------------------------------------------
1.
Assignor[s]:
2.
Assignee[s]:
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
3.
Borrower: CARBO CERAMICS INC.
4.
Lenders: Wilks Brothers, LLC, as Lender
5.
Credit Agreement: Senior Secured Super Priority Debtor-In-Possession
Credit Agreement, dated as of March 30, 2020, among Borrower, the Lenders party
thereto from time to time, the Guarantors party thereto from time to time, and
Wilks Brothers, LLC, as Lender.
6.
Assigned Interest[s]:
Assignor[s]
Assignee[s]
Facility Assigned
Aggregate Amount of Commitments
/Advances for all Lenders
Amount of Commitment / Advances Assigned6
Percentage Assigned of Commitment / Advances7
CUSIP
Number
$
$
%
$
$
%
$
$
%
7.
Trade Date: _________________8
Effective Date: , 20 [TO BE INSERTED BY THE LENDERS
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
6
Amount to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.
7
Set forth, to at least 9 decimals, as a percentage of the Commitment / Advances
of all Lenders thereunder.
8
To be completed if the Assignor(s) and the Assignee(s) intend that the minimum
assignment amount is to be determined as of the Trade Date.
Exhibit A – Form of Assignment and Acceptance
Page 2 of 6
--------------------------------------------------------------------------------
The terms set forth in this Assignment and Acceptance are hereby agreed to:
ASSIGNOR[S]9
[NAME OF ASSIGNOR]
By:
Name:
Title:
ASSIGNOR[S]
[NAME OF ASSIGNOR]
By:
Name:
Title:
9
Add additional signature blocks as needed.
Exhibit A – Form of Assignment and Acceptance
Page 3 of 6
--------------------------------------------------------------------------------
[Consented to and]10 Accepted:
Wilks Brothers, LLC,
as Lender
By:
Name:
Title:
[Consented to:]11
CARBO CERAMICS INC.
By:
Name:
Title:
10
To be added only if the consent of the Lenders is required by the terms of the
Credit Agreement.
11
To be added only if the consents of the Borrower is required by the terms of the
Credit Agreement.
Exhibit A – Form of Assignment and Acceptance
Page 4 of 6
--------------------------------------------------------------------------------
Annex 1 To
Exhibit A – Assignment and Acceptance
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
1.Representations and Warranties.
1.1Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii)
[the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Credit Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Documents or any collateral thereunder, (iii) the
financial condition of the Borrower, its Subsidiaries or Affiliates or any other
Person obligated in respect of any Credit Document or (iv) the performance or
observance by the Borrower, its Subsidiaries or Affiliates or any other Person
of any of its obligations under any Credit Document.
1.2.Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 9.7 of the Credit
Agreement (subject to such consents, if any, as may be required under Section
9.7 of the Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by the Assigned Interest and
either it, or the person exercising discretion in making its decision to acquire
the Assigned Interest, is experienced in acquiring assets of such type, (v) it
has received a copy of the Credit Agreement, and has received or has been
accorded the opportunity to receive copies of the most recent financial
statements delivered pursuant to Section 5.2 thereof, as applicable, and such
other documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance and to
purchase [the][such] Assigned Interest, (vi) it has, independently and without
reliance upon any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase [the][such] Assigned Interest, and
(vii) if it is not incorporated under the laws of the United States of America
or a state thereof, attached to the Assignment and Acceptance is any
documentation required to be delivered by it pursuant to the terms of the Credit
Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Lenders, [the][any]
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender.
Exhibit A – Form of Assignment and Acceptance
Page 5 of 6
--------------------------------------------------------------------------------
2.
Payments. From and after the Effective Date, the Lenders shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignee
whether such amounts have accrued prior to, on or after the Effective Date. The
Assignor[s] and the Assignee[s] shall make all appropriate adjustments in
payments by the Lenders for periods prior to the Effective Date or with respect
to the making of this assignment directly between themselves.
3.
General Provisions. This Assignment and Acceptance shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Acceptance may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be
governed by, and construed in accordance with, the law of the State of Texas.
Exhibit A – Form of Assignment and Acceptance
Page 6 of 6
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
FOR THE PERIOD FROM ________, 20__ TO ________, 20__
This certificate dated as of ________________, 20__ is prepared pursuant to that
certain Senior Secured Super Priority Debtor-In-Possession Credit Agreement,
dated as of March [__], 2020 (as amended, restated, amended and restated,
supplemented and/or modified from time, the “Credit Agreement”) among CARBO
Ceramics Inc., a Delaware corporation (“Borrower”), the guarantors party thereto
from time to time, the lenders party thereto from time to time (the “Lenders”),
and Wilks Brothers, LLC, as Lender. Unless otherwise defined in this
certificate, capitalized terms that are defined in the Credit Agreement shall
have the meanings assigned to them by the Credit Agreement.
A.General
The undersigned certifies that:
(a)the Borrower has delivered the consolidated and consolidating balance sheet
and the related consolidated and consolidating statements of income or
operations required by Section 5.2[(a) / (b) / (c)] of the Credit Agreement for
the [fiscal year / fiscal quarter / month] of the Borrower ended as of the
financial statement date of __________, _____. Such consolidated and
consolidating balance sheet and statements of income or operations (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations, changes in shareholders’ equity
and cash flows for the period covered thereby; provided that, notwithstanding
the foregoing, such income statement and balance sheet may be subject to certain
expected material impairments, including any associated tax adjustments, and may
otherwise be incomplete as a result of the impact of the Chapter 11 Cases,
including, but not limited to, any inconsistencies in the accounting periods
covered thereby as a result of the commencement of the Chapter 11 Cases on the
Petition Date;
(b)except as otherwise set forth in this certificate, the Borrower and each
Credit Party has complied with all the terms, covenants and conditions to be
performed or observed by the Borrower contained in the Credit Agreement and any
other Credit Document; and
[(c)that no Default or Event of Default has occurred or is continuing as of the
date hereof.]
[(c)the following Default[s] or Event[s] of Default exist[s] as of the date
hereof, if any, and the actions set forth below are being taken to remedy such
circumstances:
.]
B.Covenants
--------------------------------------------------------------------------------
Section 5.6 – Material Domestic Subsidiaries.
(a)
Non-Material Domestic Subsidiaries' collective operating income12 $_______
(b)
Borrower's consolidated operating income $________
Operating income test = (a) divided by (b) __________%
(c)
Non-Material Domestic Subsidiaries collective book value of
total assets $___________
(d)Borrower's consolidated book value of total
assets $___________
Total book value test = (c) divided by (d) ___________%
Is either (a) divided by (b), or (c) divided by (d) equal to or greater than
10%:YesNo
If the answer to the above question is yes, attached hereto in Annex A is a list
of Non-Material Domestic Subsidiaries that will need to execute and deliver to
the Lenders a joinder to the Guaranty or otherwise deliver a Guaranty, in any
event, in form and substance satisfactory to the Lenders, in order to comply
with Section 5.6 of the Credit Agreement.
If the answer to the above question is no, the Borrower may attach hereto as
Annex B, a list of Non-Material Domestic Subsidiaries that the Borrower requests
to be released from their respective guaranty obligations and a detailed
calculation of compliance with the requirements of Section 5.6 of the Credit
Agreement after giving effect to each such release.
[Remainder of this page intentionally left blank.]
12
Calculated as of each fiscal quarter end, for the four-fiscal quarter period
then ended.
Exhibit B – Form of Compliance Certificate
Page 2
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IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate
as of the date and year first above written.
CARBO CERAMICS INC.
By:
Name:
Title:
Exhibit B – Form of Compliance Certificate
Page 3
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Annex A to
Exhibit B – Compliance Certificate
Non-Material Domestic Subsidiaries to Join Guaranty
[As appropriate.]
Exhibit B – Form of Compliance Certificate
Page 4
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Annex B to
Exhibit B – Compliance Certificate
Non-Material Domestic Subsidiaries to be Released from Guaranty
[As appropriate.]
Article 9
Exhibit B – Form of Compliance Certificate
Page 5
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EXHIBIT C
FORM OF GUARANTY AGREEMENT
This Guaranty Agreement dated as of March [__], 2020 (as amended, restated,
amended and restated, supplemented and/or modified from time to time, this
“Guaranty”) is executed by each of CARBO CERAMICS INC., a Delaware corporation
(the “Borrower”), and each Material Domestic Subsidiary of the Borrower party
hereto from time to time (collectively with the Borrower, the “Guarantors” and
individually, a “Guarantor”), in favor of WILKS BROTHERS, LLC, as Secured Party
(as defined the Credit Agreement), and the other Secured Parties from time to
time.
INTRODUCTION
A.Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of the date hereof, among the
Borrower, the Guarantors (as defined therein), the Lenders (as defined therein)
from time to time party thereto and the Secured Parties, as Lenders (as amended,
restated, amended and restated, supplemented and/or modified from time, the
“Credit Agreement”).
B.That certain Amended and Restated Credit Agreement dated as of March 2, 2017,
was entered into among the Borrower, the lenders party thereto (the “Prepetition
Lenders”), and Wilks Brothers, LLC, as Administrative Agent (the “Prepetition
Administrative Agent”) (as amended, restated, amended and restated, supplemented
and/or modified from time to time, the “Prepetition Credit Agreement”).
C.In order to secure the full and punctual payment and performance of the
obligations under the Prepetition Credit Agreement, the Borrower and the
Guarantors (as defined in the Prepetition Credit Agreement) executed and
delivered, among other things, that certain Guaranty Agreement dated as of March
2, 2017 (as amended, restated, supplemented and/or modified from time to time
immediately prior to giving effect to this Guaranty, and as amended, restated,
amended and restated, supplemented and/or modified from time to time after this
Guaranty becomes effective and/or in connection with this Guaranty becoming
effective, the “Prepetition Guaranty”).
D.On [March __], 2020 (the “Petition Date”), the Borrower and the Guarantors
each commenced a voluntary case (the “Chapter 11 Cases”) under chapter 11 of
title 11 of the United States Code (the “Bankruptcy Code”), and the Chapter 11
Cases are being jointly administered in the United States Bankruptcy Court for
the Southern District of Texas, Houston Division (the “Bankruptcy Court”).
E.From and after the Petition Date, the Guarantors continue to operate their
business and manage their property as debtors and debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.
F.The Borrower seeks to obtain post-petition debtor-in-possession credit
financing (the “DIP Facility”) consisting of a new money multiple draw term loan
facility in an aggregate amount not to exceed $15,000,000, in accordance with
the terms and conditions set forth in the Credit Documents (as defined in the
Credit Agreement).
Exhibit C – Form of Guaranty
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G.Each Guarantor, other than the Borrower, is a Material Domestic Subsidiary (as
defined in the Credit Agreement) of the Borrower and the transactions
contemplated by the Credit Agreement and the other Credit Documents, are (i) in
furtherance of such Guarantor’s corporate purposes, (ii) necessary or convenient
to the conduct, promotion or attainment of such Guarantor’s business, and (iii)
for such Guarantor’s direct or indirect benefit.
H.As a condition precedent to the effectiveness of the Credit Agreement, the
Borrower and each additional Guarantor are required to execute and deliver this
Guaranty.
I.Each Guarantor is executing and delivering this Guaranty (i) to induce the
Lenders to provide extensions of credit under the Credit Agreement, and (ii)
intending it to be a legal, valid, binding, enforceable and continuing
obligation of such Guarantor.
J.It is in the best interests of each Guarantor to execute this Guaranty
inasmuch as each Guarantor will derive substantial direct and indirect benefits
from the transactions contemplated by the Credit Agreement and the other Credit
Documents, and each Guarantor is willing to execute, deliver and perform its
obligations under this Guaranty to secure the Obligations (as defined in the
Credit Agreement).
NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees
as follows:
Section 1.
Definitions. All capitalized terms not otherwise defined in this Guaranty that
are defined in the Credit Agreement shall have the meanings assigned to such
terms by the Credit Agreement.
Section 2.
Guaranty.
(a)
Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment and performance, when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations (as defined in the Credit
Agreement), whether absolute or contingent and whether for principal, interest
(including, without limitation, interest that but for the existence of a
bankruptcy, reorganization or similar proceeding would accrue), fees, amounts
required to be provided as collateral, indemnities, expenses or otherwise
(collectively, the “Guaranteed Obligations”). Without limiting the generality
of the foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Borrower
or any Material Domestic Subsidiary of the Borrower to the Secured Parties or
any Lender under the Credit Documents but for the fact that they are
unenforceable or not allowable due to insolvency or the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower or any
Material Domestic Subsidiary of the Borrower.
(b)
In order to provide for just and equitable contribution among the Guarantors,
the Guarantors agree that in the event a payment shall be made on any date under
this Guaranty by any Guarantor (the “Funding Guarantor”), each other Guarantor
(each a “Contributing Guarantor”) shall indemnify the Funding Guarantor in an
amount equal to the amount of such payment, in each case multiplied by a
fraction the numerator of which shall be the net worth of the Contributing
Guarantor as of such date and the denominator of which shall be the aggregate
net
Exhibit C – Form of Guaranty
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worth of all the Contributing Guarantors together with the net worth of the
Funding Guarantor as of such date. Any Contributing Guarantor making any
payment to a Funding Guarantor pursuant to this Section 2(b) shall be subrogated
to the rights of such Funding Guarantor to the extent of such payment.
(c)
Reserved.
(d)
Anything contained in this Guaranty to the contrary notwithstanding, the
obligations of each Guarantor under this Guaranty on any date shall be limited
to a maximum aggregate amount equal to the largest amount that would not, on
such date, render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of the United States Bankruptcy Code
(11 U.S.C. §§ 101 et seq) or any applicable provisions of comparable laws
relating to bankruptcy, insolvency, or reorganization, or relief of debtors
(collectively, the “Fraudulent Transfer Laws”), but only to the extent that any
Fraudulent Transfer Law has been found in a final non-appealable judgment of a
court of competent jurisdiction to be applicable to such obligations as of such
date, in each case:
(i)
after giving effect to all liabilities of such Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws, but
specifically excluding:
(A)any liabilities of such Guarantor in respect of intercompany indebtedness to
the Borrower or other affiliates of the Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder;
(B)any liabilities of such Guarantor under this Guaranty; and
(C)any liabilities of such Guarantor under each of its other guarantees of and
joint and several co-borrowings of Debt, in each case entered into on the date
this Guaranty becomes effective, which contain a limitation as to maximum amount
substantially similar to that set forth in this Section 2(d) (each such other
guarantee and joint and several co-borrowing entered into on the date this
Guaranty becomes effective, a “Competing Guaranty”) to the extent such
Guarantor’s liabilities under such Competing Guaranty exceed an amount equal to
(1) the aggregate principal amount of such Guarantor’s obligations under such
Competing Guaranty (notwithstanding the operation of that limitation contained
in such Competing Guaranty that is substantially similar to this Section 2(d)),
multiplied by (2) a fraction (i) the numerator of which is the aggregate
principal amount of such Guarantor’s obligations under such Competing Guaranty
(notwithstanding the operation of that limitation contained in such Competing
Guaranty that is substantially similar to this Section 2(d)), and (ii) the
denominator of which is the sum of (x) the aggregate principal amount of the
obligations of such Guarantor under all other Competing Guaranties
(notwithstanding the operation of those limitations contained in such other
Competing Guaranties that are substantially similar to this Section 2(d)), (y)
the aggregate principal amount of the obligations of such Guarantor under this
Guaranty (notwithstanding the operation of this
Exhibit C – Form of Guaranty
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Section 2(d)), and (z) the aggregate principal amount of the obligations of such
Guarantor under such Competing Guaranty (notwithstanding the operation of that
limitation contained in such Competing Guaranty that is substantially similar to
this Section 2(d)); and
(ii)after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, reimbursement, indemnification or contribution of such Guarantor
pursuant to applicable law or pursuant to the terms of any agreement (including
any such right of contribution under Section 2(b)).
Section 3.
Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Credit Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Secured Parties
and any Lender with respect thereto but subject to Section 2(d) above. The
obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether
any action is brought against the Borrower, any other Guarantor or any other
Person or whether the Borrower, any other Guarantor or any other Person is
joined in any such action or actions. The liability of each Guarantor under
this Guaranty shall be irrevocable, absolute and unconditional irrespective of,
and each Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to, any or all of the following:
(a)
any lack of validity or enforceability of any Credit Document or any agreement
or instrument relating thereto or any part of the Guaranteed Obligations being
irrecoverable;
(b)
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations or any other obligations of any Person
under the Credit Documents, or any other amendment or waiver of or any consent
to departure from any Credit Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower or otherwise;
(c)
any taking, exchange, release or non-perfection of any Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;
(d)
any manner of application of Collateral, or proceeds thereof, to all or any of
the Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other obligations
of any other Person under the Credit Documents or any other assets of the
Borrower or any Guarantor;
(e)
any change, restructuring or termination of the corporate structure or existence
of the Borrower or any Guarantor;
Exhibit C – Form of Guaranty
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(f)
any failure of any Lender or any other Secured Party to disclose to the Borrower
or any Guarantor any information relating to the business, condition (financial
or otherwise), operations, properties or prospects of any Person now or in the
future known to any Lender or any other Secured Party (and each Guarantor hereby
irrevocably waives any duty on the part of any Secured Party to disclose such
information);
(g)
any signature of any officer of the Borrower or any Guarantor being mechanically
reproduced in facsimile or otherwise; or
(h)
any other circumstance or any existence of or reliance on any representation by
any Secured Party that might otherwise constitute a defense available to, or a
discharge of, the Borrower, any Guarantor or any other guarantor, surety or
other Person.
Section 4.
Continuation and Reinstatement, Etc. Each Guarantor agrees that, to the extent
that payments of any of the Guaranteed Obligations are made, or any Secured
Party receives any proceeds of Collateral, and such payments or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid, then to the extent
of such repayment the Guaranteed Obligations shall be reinstated and continued
in full force and effect as of the date such initial payment or collection of
proceeds occurred. EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY
FROM AND AGAINST ANY claim, damage, loss, liability, cost, or expense UNDER THIS
SECTION 4 (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) IN THE DEFENSE OF
ANY SUCH ACTION OR SUIT, INCLUDING such claim, damage, loss, liability, cost, or
expense arising as a result of the INDEMNIFIED Secured party'S OWN NEGLIGENCE
but excluding such claim, damage, loss, liability, cost, or expense that is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified sECURED PARTY'S gross negligence OR
willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH INDEMNIFIED SECURED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN
NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE
IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.
Section 5.
Waivers and Acknowledgments.
(a)
Each Guarantor hereby waives promptness, diligence, presentment, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Secured Party
protect, secure, perfect or insure any Lien or any property or exhaust any right
or take any action against the Borrower or any other Person or any Collateral.
(b)
Each Guarantor hereby irrevocably waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
Exhibit C – Form of Guaranty
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(c)
Each Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements involving the Borrower or any Guarantor
contemplated by the Credit Documents.
(d)
Each Guarantor acknowledges that the Secured Parties may, to the extent
permitted by applicable law and subject to any order of the Bankruptcy Court
(including the DIP Orders) and after the occurrence and during the continuance
of an Event of Default, without notice to or demand upon such Guarantor and
without affecting the liability of such Guarantor under this Guaranty, foreclose
under any Credit Document by non-judicial sale, and each Guarantor hereby waives
(to the extent permitted by applicable law) any defense to the recovery by the
Secured Parties against such Guarantor of any deficiency after such non-judicial
sale and any defense or benefits that may be afforded by applicable law.
(e)
Each Guarantor hereby unconditionally and irrevocably waives (to the extent
permitted by applicable law) (i) any defense arising by reason of any claim or
defense based upon an election of remedies by any Secured Party that in any
manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of such Guarantor or other rights of such Guarantor to proceed against any of
the other Credit Parties, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Guaranteed Obligations of such Guarantor hereunder.
(f)
Each Guarantor hereby unconditionally and irrevocably waives any duty on the
part of any Secured Party to disclose to such Guarantor any matter, fact or
thing relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Credit Party or any of its
Subsidiaries now or hereafter known by such Secured Party, as the case may be.
Section 6.
Subrogation and Subordination.
(a)
No Guarantor will exercise any rights that it may now have or hereafter acquire
against the Borrower or any other Person to the extent that such rights arise
from the existence, payment, performance or enforcement of such Guarantor's
obligations under this Guaranty or any other Credit Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Secured Party against the Borrower or any other Person, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Borrower or any other Person, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until the Termination Date (as defined in the
Security Agreement). If any amount shall be paid to a Guarantor in violation of
the preceding sentence at any time prior to or on the Termination Date, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Secured Parties to be credited and applied to the
Guaranteed Obligations and any and all other amounts payable by the Guarantors
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Credit Documents.
Exhibit C – Form of Guaranty
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(b)
Each Guarantor agrees that, until after the Termination Date, all Subordinated
Guarantor Obligations (as hereinafter defined) are and shall be subordinate and
inferior in rank, preference and priority to all obligations of such Guarantor
in respect of the Guaranteed Obligations hereunder, and such Guarantor shall, if
requested by the Secured Parties, execute a subordination agreement reasonably
satisfactory to the Secured Parties to more fully set out the terms of such
subordination. Each Guarantor agrees that none of the Subordinated Guarantor
Obligations shall be secured by a lien or security interest on any assets of
such Guarantor or any ownership interests in any Subsidiary of such
Guarantor. “Subordinated Guarantor Obligations” means any and all obligations
and liabilities of a Guarantor owing to the Borrower or any other Guarantor,
direct or contingent, due or to become due, now existing or hereafter arising,
including, without limitation, all future advances, with interest, attorneys’
fees, expenses of collection and costs.
Section 7.
Representations and Warranties. Each Guarantor hereby represents and warrants
as follows:
(a)
There are no conditions precedent to the effectiveness of this Guaranty. Such
Guarantor benefits from executing this Guaranty.
(b)
Such Guarantor has, independently and without reliance upon the Secured Parties
or any Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty, and such Guarantor has established adequate means of obtaining from
the Borrower and each other relevant Person on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely familiar
with, the business, financial condition, operations and properties of the
Borrower and each other relevant Person.
(c)
The obligations of such Guarantor under this Guaranty are the valid, binding and
legally enforceable obligations of such Guarantor (except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
at the time in effect affecting the rights of creditors generally and (ii)
general principles of equity whether applied by a court of law or equity) and
the execution and delivery of this Guaranty by such Guarantor has been duly and
validly authorized in all respects by all requisite corporate, limited liability
company or partnership actions on the part of such Guarantor, and the Person who
is executing and delivering this Guaranty on behalf of such Guarantor has full
power, authority and legal right to so do, and to observe and perform all of the
terms and conditions of this Guaranty on such Guarantor’s part to be observed or
performed.
Section 8.
Right of Set‑Off. Upon the occurrence and during the continuance of any Event
of Default, subject to the terms of any order by the Bankruptcy Court (including
the DIP Orders), any Lender or any other Secured Party is hereby authorized at
any time, to the fullest extent permitted by law, to set-off and apply any
deposits (general or special, time or demand, provisional or final) and other
indebtedness owing by such Secured Party to the account of each Guarantor
against any and all of the obligations of the Guarantors under this Guaranty,
irrespective of whether or not such Secured Party shall have made any demand
under this Guaranty and although such obligations may be contingent and
unmatured. Such Secured Party shall promptly notify the affected Guarantor
after any such set‑off and application is made, provided that the
Exhibit C – Form of Guaranty
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failure to give such notice shall not affect the validity of such set‑off and
application. The rights of the Secured Parties under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set‑off) which any Secured Party may have.
Section 9.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty and
no consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the affected
Guarantor and the Secured Parties, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 10.
Notices, Etc. All notices and other communications provided for hereunder shall
be sent in the manner provided for in Section 9.9 of the Credit Agreement, in
writing and hand delivered with written receipt, telecopied, sent by facsimile,
sent by a nationally recognized overnight courier, or sent by certified mail,
return receipt requested, if to a Guarantor, at its address for notices
specified in Schedule II to the Security Agreement, and if to the Secured
Parties or any Lender, at its address specified in or pursuant to the Credit
Agreement. All such notices and communications shall be effective when
delivered.
Section 11.
No Waiver: Remedies. No failure on the part of any Secured Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 12.
Continuing Guaranty: Assignments under the Credit Agreement. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
Termination Date, (b) be binding upon each Guarantor and its successors and
assigns, and (c) inure to the benefit of and be enforceable by each Secured
Party, each other Lender and their respective successors, and, in the case of
transfers and assignments made in accordance with the Credit Agreement,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, subject, however, in all respects to the provisions
of the Credit Agreement. Each Guarantor acknowledges that upon any Person
becoming a Lender or a Secured Party in accordance with the Credit Agreement,
such Person shall be entitled to the benefits hereof.
Section 13.
Governing Law; Venue; Waiver of Jury Trial. This Guaranty shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Texas. The other provisions of Section 9.13 of the Credit Agreement are
incorporated herein, mutatis mutandis, as if a part hereof.
Section 14.
INDEMNIFICATION. each Guarantor hereby indemnifies and holds harmless each
Secured Party and each of their respective officers, directors, employees and
agents (the "Indemnitees") from and against any and all claims, damages, losses,
liabilities, costs, and expenses of ANY KIND OR NATURE
Exhibit C – Form of Guaranty
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WHATSOEVER TO WHICH ANY OF THEM MAY BECOME SUBJECT RELATING TO OR ARISING OUT OF
THIS GUARANTY, including such Indemnitee's own negligence, except to the extent
such claims, losses or liabilities are found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnitee's
gross negligence or willful misconduct.
Section 15.
Reserved.
Section 16.
Additional Guarantors. Pursuant to Section 5.6 of the Credit Agreement, certain
Material Domestic Subsidiaries that were not in existence on the Effective Date
may be required to enter into this Guaranty as a Guarantor upon becoming a
Material Domestic Subsidiary. Upon execution and delivery after the date hereof
by such Material Domestic Subsidiary of an instrument in the form of Annex 1,
such Material Domestic Subsidiary shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor herein. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Guaranty shall not require the consent of any other Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Guaranty.
Section 17.
USA Patriot Act. Each Secured Party that is subject to the Act (as hereinafter
defined) and each Secured Party hereby notifies each Guarantor that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001))(the “Act”), it is required to obtain, verify and
record information that identifies such Guarantor, which information includes
the name and address of such Guarantor and other information that will allow
such Secured Party to identify such Guarantor in accordance with the
Act. Following a request by any Secured Party, each Guarantor shall promptly
furnish all documentation and other information that such Secured Party
reasonably requests in order to comply with its ongoing obligations under the
applicable "know your customer" and anti-money laundering rules and regulations,
including the Act.
Section 18.
ORAL AGREEMENTS. PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE
CODE, AN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN AGREEMENT EXCEEDS $50,000 IN
VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE
PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN AGREEMENT, AND
ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO
THIS GUARANTY. THIS GUARANTY AND THE CREDIT DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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Exhibit C – Form of Guaranty
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Each Guarantor has caused this Guaranty to be duly executed as of the date first
above written.
GUARANTORS:
CARBO CERAMICS INC.
By:
Name:
Title:
Asset guard Products inc.
CARBO CERAMICS INC.
By:
Name:
Title:
stratagen, inc.
By:
Name:
Title:
Exhibit C – Form of Guaranty
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Annex 1 to the Guaranty Agreement
SUPPLEMENT dated as of ______________(the “Supplement”), to the Guaranty
Agreement dated as of March [__], 2020 (as amended, restated, amended and
restated, supplemented and/or modified from time to time, the “Guaranty
Agreement”), among CARBO Ceramics Inc. (the “Borrower”), each Material Domestic
Subsidiary of Borrower party thereto from time to time (collectively with the
Borrower, the “Guarantors” and individually, a “Guarantor”), in favor of WILKS
BROTHERS, LLC, as Secured Party (as defined in the Credit Agreement), and the
other Secured Parties from time to time.
A.Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of March [__], 2020 (as amended,
restated, amended and restated, supplemented and/or modified from time to time,
the “Credit Agreement”), among the Borrower, the lenders from time to time party
thereto (the “Lenders”), and Wilks Brothers, LLC, as Lender.
B.Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Guaranty Agreement and the Credit
Agreement.
C.The Guarantors have entered into the Guaranty Agreement in order to induce the
Lenders to make extensions of credit. Section 16 of the Guaranty Agreement
provides that additional Material Domestic Subsidiaries of the Borrower shall
become Guarantors under the Guaranty Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Material Domestic
Subsidiary of the Borrower (the “New Guarantor”) is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Guarantor
under the Guaranty Agreement as consideration for the extensions of credit
previously made by the Lenders.
Accordingly, the New Guarantor agrees as follows:
SECTION 1.In accordance with Section 16 of the Guaranty Agreement, the New
Guarantor by its signature below becomes a Guarantor under the Guaranty
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct in all material respects on
and as of the date hereof. Each reference to a "Guarantor" in the Guaranty
Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement
is hereby incorporated herein by reference.
SECTION 2.The New Guarantor represents and warrants to each Secured Party that
this Supplement has been duly authorized, executed and delivered by it by all
requisite corporate limited liability company or partnership action and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)).
Exhibit C – Form of Guaranty
-16-
--------------------------------------------------------------------------------
SECTION 3.This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Secured
Parties shall have received counterparts of this Supplement that, when taken
together,bear the signatures of the New Guarantor. Delivery of an executed
signature page to this Supplement by fax transmission or by e-mail “PDF” copy
shall be as effective as delivery of a manually executed counterpart of this
Supplement.
SECTION 4.Except as expressly supplemented hereby, the Guaranty Agreement shall
remain in full force and effect.
SECTION 5.This supplement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas. The New Guarantor hereby
irrevocably submits to the jurisdiction of any Texas state or federal court
sitting in Houston, Texas in any action or proceeding arising out of or relating
to this Supplement or the Guaranty Agreement and the other Credit Documents, and
the New Guarantor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such court. The New
Guarantor hereby irrevocably waives, to the fullest extent it may effectively do
so, any right it may have to the defense of an inconvenient forum to the
maintenance of such action or proceeding. The New Guarantor hereby agrees that
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding may be made by mailing or delivering
a copy of such process to such Guarantor at its address set forth on the
signature page hereof. The New Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Section 5 shall affect the rights of any Secured Party to
serve legal process in any other manner permitted by the law or affect the right
of any Secured Party to bring any action or proceeding against the New Guarantor
or its Property in the courts of any other jurisdiction.
SECTION 6.THE NEW GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY SECURED PARTY OR
ANY OBLIGOR IN CONNECTION THEREWITH. THE NEW GUARANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH LENDER ENTERING INTO THE
CREDIT DOCUMENTS.
SECTION 7.In case any one or more of the provisions contained in this Supplement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and in
the Guaranty Agreement shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision hereof in a
particular jurisdiction shall not in and of itself affect the validity of
Exhibit C – Form of Guaranty
-17-
--------------------------------------------------------------------------------
such provision in any other jurisdiction). The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8.All communications and notices hereunder shall be in writing and given
as provided in Section 10 of the Guaranty Agreement.
THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS
DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
IN WITNESS WHEREOF, the New Guarantor has duly executed this Supplement to the
Guaranty Agreement as of the day and year first above written.
[Name of New Guarantor]
By:
Name:
Title:
Exhibit C – Form of Guaranty
-18-
--------------------------------------------------------------------------------
EXHIBIT D
FORM OF DIP TERM NOTE
THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME TAX
PURPOSES. THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) WITHIN THE
MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE. HOLDERS
MAY OBTAIN INFORMATION REGARDING THE AMOUNT OF OID, THE ISSUE PRICE, THE ISSUE
DATE AND THE YIELD TO MATURITY RELATING TO THE NOTES BY CONTACTING THE BORROWER
AT: CARBO CERAMICS INC., ATTN: ERNESTO BAUTISTA III, CHIEF FINANCIAL OFFICER,
ENERGY CENTER II, 575 N. DAIRY ASHFORD RD., STE 300, HOUSTON, TX 77079.
cARBO CERAMICS INC.
secured DIP TERM NOTE
$______ __________, 20__
For value received, the undersigned CARBO CERAMICS Inc., a Delaware corporation
(“Borrower”), hereby promises to pay to the order of WILKS BROTHERS, LLC
(“Payee”) the principal amount of ______________ No/100 DOLLARS ($___________)
or, if less, the aggregate outstanding principal amount of the Payee’s DIP Term
Loans (as defined in the Credit Agreement referred to below) made by the Payee
(or predecessor in interest) to the Borrower, together with interest on the
unpaid principal amount of the DIP Term Loans until such principal amount is
paid in full, at such interest rates, and at such times, as are specified in the
Credit Agreement. The Borrower may make prepayments on this Term Note in
accordance with the terms of the Credit Agreement.
This Note is one of the Notes referred to in, and is entitled to the benefits
of, and is subject to the terms of, that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement dated as of March [__], 2020 (as the same
may be amended, restated, amended and restated, supplement and/or modified from
time to time, the “Credit Agreement”), among the Borrower, the lenders party
thereto (the “Lenders”), the guarantors party thereto, and Wilks Brothers, LLC,
as Lender. Capitalized terms used in this Note that are defined in the Credit
Agreement and not otherwise defined in this Note have the meanings assigned to
such terms in the Credit Agreement. The Credit Agreement contains, among other
things, provisions for acceleration of the maturity of the unpaid principal
amount of this Note upon the happening of certain events stated in the Credit
Agreement and for prepayments of principal prior to the maturity of this Note
upon the terms and conditions specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to the Payee at the location or address specified by the Payee to the
Borrower in same day funds. The
Exhibit D – Form of DIP Term Note
Page 1
--------------------------------------------------------------------------------
Payee shall record payments of principal made under this Note, but no failure of
the Payee to make such recordings shall affect the Borrower's repayment
obligations under this Note.
This Note is guaranteed pursuant to the terms of the Guaranties.
This Note is made expressly subject to the terms of Section 9.11 and Section
9.12 of the Credit Agreement.
Except as specifically provided in the Credit Agreement, the Borrower hereby
waives presentment, demand, protest, notice of intent to accelerate, notice of
acceleration, and any other notice of any kind. No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder of this Note
shall operate as a waiver of such rights.
This Note shall be governed by, and construed and enforced in accordance with,
the laws of the state of Texas. THE PROVISIONS OF SECTION 9.13 OF THE CREDIT
AGREEMENT ARE INCORPORATED HEREIN, MUTATIS MUTANDIS, AS IF A PART HEREOF.
This Note and the other CREDIT Documents represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.
There are no unwritten oral agreements among the parties.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
Exhibit D – Form of DIP Term Note
Page 2
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Borrower has caused this Secured DIP Term Note to be
executed as of the date first above written.
[CARBO CERAMICS INC., a Delaware corporation
By:
Name:
Title:
Exhibit D – Form of DIP Term Note
Page 3
--------------------------------------------------------------------------------
EXHIBIT E
[RESERVED]
Exhibit E – Reserved
Page 1
--------------------------------------------------------------------------------
EXHIBIT F
DIP BUDGET
CARBO CERAMICS INC., et al.
Dip Order - Exhibit 1
4/3/20
4/10/20
4/17/20
4/24/20
($000s)
Wk 1
POST
Wk 2
POST
Wk 3
POST
Wk 4
POST
Cash Receipts
Customer Collections
$1,382
$1,273
$1,739
$1,674
Total Cash Receipts
$1,382
$1,273
$1,739
$1,674
Operating Disbursements
Operating Expenses
($1,107)
($1,129)
($996)
($996)
Wages & Benefits
(500)
(184)
(1,375)
(184)
Taxes
-
(20)
-
(2)
G&A / Other
(310)
(223)
(223)
(223)
Total Operating Disbursements
($1,917)
($1,556)
($2,595)
($1,405)
Total Operating Cash Flow
($535)
($283)
($856)
$269
Other Disbursements
Professional Fees
$0
$0
$0
$0
Adequate Assurance / CV Payments
(361)
-
(450)
(450)
Notes & Interest Payments
(1,491)
-
-
-
DIP Interest & Fees
(225)
-
-
-
Total Other Disbursements
($2,077)
$0
($450)
($450)
Total Disbursements
($3,994)
($1,556)
($3,045)
($1,855)
Net Cash Flow
($2,611)
($283)
($1,306)
($181)
Beginning Cash Balance
$18,096
$20,485
$20,202
$18,897
(+/-) Weekly Cash Flow
(2,611)
(283)
(1,306)
(181)
(+/-) Change in Float
-
-
-
-
(+/-) DIP Draw / Paydown
5,000
-
-
-
Ending Cash Balance
$20,485
$20,202
$18,897
$18,716
Less: Restricted Cash
(9,732)
(9,732)
(9,732)
(9,732)
Less: Foreign Cash
(781)
(781)
(781)
(781)
Ending Available Liquidity
$9,972
$9,689
$8,384
$8,203
Exhibit F – DIP Budget
Page 1
--------------------------------------------------------------------------------
EXHIBIT G
FORM OF BORROWING REQUEST
__________, 20____
Wilks Brothers, LLC
17010 IH-20
Cisco, TX 76437
Attention: Philip Pecora and Matthew Wilks
Facsimile: (817) 850-3698
Email: philip.pecora@wilksbrothers.com and matt.wilks@profrac.com
Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of March [__], 2020, among Carbo
Ceramics Inc., a Delaware corporation (the “Borrower”), the Guarantors (as
defined therein) from time to time party thereto, the Lenders (as defined
therein) from time to time party thereto and Wilks Brothers, LLC, as Lender (as
amended, restated, amended and restated, supplemented and/or modified from time,
the “Credit Agreement”). Unless defined herein or the context otherwise
requires, all capitalized terms have the meanings given to such terms in the
Credit Agreement. The undersigned hereby gives you notice pursuant to Section
2.3 of the Credit Agreement that it requests a Borrowing on the following terms:
(A)The aggregate principal amount of the Borrowing requested is $___________;
(B)the Borrowing Date (a Business Day) is _________, ____;
(C)the location and number of the Borrower’s account to which funds are to be
disbursed:
Bank:
ABA Routing Number:
Account Name:
Account Number:
Reference:
(D)the amount of the current total outstanding principal amount of the Loans
(without regard to the requested Borrowing) is $___________; and
(E)the pro forma total outstanding principal amount of the Loans (giving effect
to the requested Borrowing) is $___________.
Borrower hereby certifies that the following statements are true and correct on
the date hereof, and will be true and correct on the Borrowing Date specified
above after giving effect to such Borrowing: (a) all of the representations and
warranties in the Credit Documents are true and correct in all respects (or in
all material respects if such representation or warranty is not by its terms
already qualified by materiality) as of said time, except to the extent the same
expressly
Exhibit G – Borrowing Request
Page 1
--------------------------------------------------------------------------------
relate to an earlier date, in which case such representations and warranties
shall be and remain true and correct in all respects (or in all material
respects if such representation and warranty is not by its terms already
qualified as to materiality) as of such earlier date; (b) no Material Adverse
Change exists or has occurred since the Petition Date; (c) no Default or Event
of Default exists; and (d) the proposed use of the proceeds of the requested
Borrowing is for Budgeted Expenses in compliance with the DIP Budget.
[Signatures appear on Following Page]
Exhibit G – Borrowing Request
Page 2
--------------------------------------------------------------------------------
Very truly yours,
CARBO CERAMICS INC.,
a Delaware corporation
By:
Name:
Title:
Exhibit G – Borrowing Request
Page 3
--------------------------------------------------------------------------------
SCHEDULE 1.2
Existing Letters of Credit
[gfylfucjdif2000001.jpg]
Schedule 1.2
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.1
Organizational Information
CARBO Ceramics Inc.
Principal Office:
575 N. Dairy Ashford, Ste. 300
Houston, TX 77079
Local Office:
Same as Principal
Date of Incorporation:
Delaware - June 23, 1987
Type of Organization:
Corporation
Asset Guard Products Inc. (d/b/a Falcon Technologies and Services, Inc.)
f/k/a/ Falcon Technologies and Services, Inc.(2)
f/k/a Falcon Technology Services, Inc.(1)
Principal Office:
575 N. Dairy Ashford, Ste. 300,
Houston, Texas 77079
Local Offices:
2242 East Hwy 380
Decatur, Texas 76234
Date of Incorporation
Delaware — September 15, 2009
and Name Change Dates:
Name Change — September 29, 2009(1)
Name Change — December 12, 2016(2)
Type of Organization:
Corporation
StrataGen, Inc.13
Principal Office:
575 N. Dairy Ashford
Ste. 300
Houston, TX 77079
Sales and Operations Local Office:
575 N. Dairy Ashford
Ste. 300
Houston, TX 77079
Date of Incorporation and
Delaware — July 2, 2012
Name Change Dates:
Type of Organization:
Corporation
13
Previously incorporated in California — September 11, 1992. In California, name
changed to: (i) StrataGen Engineering, Inc. on February 26, 2009, and (ii)
StrataGen, Inc. on March 24, 2009.
Schedule 4.1
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.7
Litigation
Well Site Supply, Inc. vs. CARBO Ceramics Inc., Cause # 01-19-0004-6529,
American Arbitration Association. Breach of Contract claim. Alleged damages
$2.42M.
Schedule 4.7
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.8
Defaults
1.
Failure to meet railcar rent obligations due under the Lease Agreement (the
“Master Lease”) dated effective October 1, 2011 between MUL Railcars, Inc. (as
successor-interest to MUL Railcars Leasing, LLC)(as assignee of Greenbrier
Leasing company LLC) and CARBO Ceramics Inc., and that certain Schedule No. 8 to
the Master Lease dated April 15, 2014 and effective as of February 1, 2014, as
amended and modified from time to time.
2.
Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Lease") dated effective October 1, 2011 between Bridge Funding Group (as
successor-interest to Bridge Capital Leasing, Inc.)(as assignee of Greenbrier
Leasing company LLC) and CARBO Ceramics Inc., and those certain Schedule Nos. 9
and 10 to the Master Lease dated June 30, 2014 and September 15, 2014,
respectively, as amended and modified from time to time.
3.
Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Railcar Lease") dated effective April 17, 2006 between The CIT
Group/Equipment Financing, Inc. and CARBO Ceramics Inc., and those certain
Schedule Nos. 1-7 and 9-14 to the Master Railcar Lease dated, April 17, 2006,
March 9, 2007, March 13, 2008, March 14, 2008, April 7, 2008, April 7, 2008,
February 18, 2010, April 6, 2011, May 10, 2011, May 10, 2011, February 28, 2017,
February 28, 2017, and February 28, 2017, respectively, as amended and modified
from time to time.
4.
Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Lease") dated effective October 1, 2011 between Greenbrier Leasing
company LLC) and CARBO Ceramics Inc., and its Schedule Nos. 1-11, of which
Schedule No. 1 is assigned to CFG Community Bank, Schedule No. 2 is assigned to
Fifth Third Equipment Finance Company, Schedule Nos. 1B, 3, 5, and 6 are
assigned to Capital One Equipment Finance Corp., Schedule Nos. 7 and 11 are
assigned to Green Union IV Trust, Schedule No. 8 is assigned to MUL as described
in item #1 above, and Schedule Nos. 9 and 10 are assigned to Bridge Funding
Group as described in item #2 above.
5.
Failure to meet railcar rent obligations due under the Lease Agreements dated
August 21, 1984, November 2, 1993, October 25, 1999, and July 31, 2006, between
Chicago Freight Car Leasing Co. (“Car Company”) (“Lessor”) and Carbo Ceramics
Inc. (“Lessee”) and that certain Third Supplement to lease effective August 1,
2014, and terminates July 31, 2021.
6.
Failure to meet railcar rent obligations due under the JAIX/SMBC Master Railcar
Lease Agreement (“Agreement”) between Jaix Leasing Company (“Lessor”) and Carbo
Ceramics Inc. (“Lessee”) executed and accepted on the 29th day of July 2014 and
Equipment Riders, each constituting a lease, to be entered into from to time.
7.
Failure to meet railcar rent obligations due under the Wells Fargo Railroad
Corporation (as successor to General Electric Railcar Services Corporation)
(“Lessor”) Car Leasing
Schedule 4.8
-1-
--------------------------------------------------------------------------------
Agreement No. 2183-97-00 with CARBO Ceramics Inc. (“Lessee”) dated March 5,
2002, to lease railroad cars subject to this agreement and subsequent riders.
8.
Failure to meet rent obligations due under the Lease Agreement dated December
31, 2014, as amended by First Amendment to Lease dated February 3, 2015 and by
that Second Amendment to Lease dated November 30, 2015 (collectively, the
“Lease”) by and between CARBO Ceramics Inc. and KTJ 251, LLC.
9.
Failure to meet payment obligations due under the Wildcat Minerals LLC
(“Operator”) Material Handling and Storage Agreement Dated October 11, 2013,
with CARBO Ceramics Inc. Operator to perform the necessary transloading,
handling and inventory storage services of proppant for CARBO. The term of the
agreement began on the agreement date and ends on December 31, 2023.
10.
Failure to meet rent obligations due under the Lease Agreement dated November
20, 2014, as amended by First Amendment dated January 21, 2015, by that Second
Amendment dated February 3, 2015, and by that Third Amendment dated August 20,
2015 (collectively, the “Lease”) by and between CARBO Ceramics Inc. and KTJ 250,
LLC.
11.
Failure to meet payment obligations due under the Wildcat Minerals LLC
(“Wildcat”) Storage Facility Agreement dated October 11, 2013, with Carbo
Ceramics Inc. (“Company”) for construction of a silo and storage in that silo
aggregating 10,000 tons of storage space. The term of the agreement began on
the agreement date and ends on December 31, 2023.
Schedule 4.8
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SCHEDULE 4.10
Environmental Conditions
1.
A claim from The Port of Shreveport-Bossier for $68,208.92*.
*CARBO has received an invoice from The Port of Shreveport-Bossier for
environmental remediation work in an amount of $68,408.92. We have sent a
letter to the Port of Shreveport-Bossier disputing the necessity of such
remediation and are seeking at least a mutually-agreeable reduction in the
amount of this invoice.
Schedule 4.10
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.11
Subsidiaries
NAME OF ENTITY
JURISDICTION OF ORGANIZATION
OWNER
OWNERSHIP INTEREST
1. CARBO Ceramics (Mauritius) Inc.
Mauritius
CARBO Ceramics Inc.
100%
2. CARBO Ceramics (China) Company Ltd.
China
CARBO Ceramics (Mauritius) Inc.
100%
3. LLC CARBO International Eurasia
Russia
CARBO International, Inc.
100%
4. CARBO International, Inc.
Delaware, USA
CARBO Ceramics Inc.
100%
5. Asset Guard Products Inc. (formerly known as Falcon Technologies and
Services, Inc.)
Delaware, USA
CARBO Ceramics Inc.
100%
6. StrataGen, Inc.
Delaware, USA
CARBO Ceramics Inc.
100%
7. CARBO Ceramics (Canada) Inc.
BC, Canada
CARBO International, Inc.
100%
Schedule 4.11
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.13
Waivers of Tax Statute of Limitations
1.
Asset Guard Products Inc. has entered into a waiver of the statute of
limitations with respect to an audit relating to the payment of state sales tax
in the State of Texas during the period from May 2016 through May 2019.
2.
CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to the payment of federal income tax during the
period from 2012 through 2015.
3.
CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to the payment of state sales tax in the State of
Texas during the period from January 2014 through June 2017.
4.
CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to a refund of state sales tax paid in the State of
Georgia during the period from December 2013 through December 2015.
Schedule 4.13
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.20
Sanctions
The Borrower’s indirect, wholly-owned subsidiary, LLC CARBO International
Eurasia, is organized in the Russian Federation and conducts sales operations in
that country. From time to time, the Borrower or its other Subsidiaries may
enter into business transactions with that entity or with customers located in
the Russian Federation.
Schedule 4.20
-1-
--------------------------------------------------------------------------------
SCHEDULE 4.21
Deposit Accounts
Name of Grantor
Name of Depositary Institution
Account Number
Description of Account
1.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
3705590132
Premium Commercial Money Market
2.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
Lockbox
Lockbox
3.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
298287613
Accounts Payable
4.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
298279693
Payroll
5.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
298278315
Operating
6.
Carbo Ceramics Inc.
JPMorgan Chase Bank, N.A.
359236061
Ecommerce
7.
Asset Guard Products Inc.
JPMorgan Chase Bank, N.A.
Lockbox
Lockbox
8.
Asset Guard Products Inc.
JPMorgan Chase Bank, N.A.
298316651
Accounts Payable - ZBA
9.
Asset Guard Products Inc.
JPMorgan Chase Bank, N.A.
298316537
Operating
10.
StrataGen Inc.
JPMorgan Chase Bank, N.A.
Lockbox
Lockbox
11.
StrataGen Inc.
JPMorgan Chase Bank, N.A.
298317121
Operating
12.
StrataGen Inc.
JPMorgan Chase Bank, N.A.
298317071
Accounts Payable - ZBA
13.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
Lockbox
Legacy Lockbox
14.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
4950031153
Legacy Receipts Account
15.
Asset Guard Products Inc. f/k/a Falcon Technologies and Services Inc.
Wells Fargo Bank, National Association
Lockbox
Legacy Lockbox
Schedule 4.21
-1-
--------------------------------------------------------------------------------
16.
Asset Guard Products Inc. f/k/a Falcon Technologies and Services Inc.
Wells Fargo Bank, National Association
4122000599
Operating
17.
StrataGen Inc.
Wells Fargo Bank, National Association
4121685424
Operating
18.
StrataGen Inc.
Wells Fargo Bank, National Association
Lockbox
Legacy Lockbox
19.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
9600031814
Legacy Outstanding Chks AP
20..
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
4945077261
Outstanding Chks PR – Proposed Utility Adequate Assurance Escrow Account
21.
Asset Guard Products Inc, f/k/a Falcon Technologies and Services Inc.
Wells Fargo Bank, National Association
9600134246
Legacy Accounts Payable
22.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
4121233100
Legacy FSA Disbursement
23.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
4067470724
Amazon Disbursement – Proposed Professional Fee Escrow Account
24.
Carbo Ceramics Inc., Mauritius, CIE, Dubai
Foreign bank accounts
Various operating
25.
Century Bank & Trust
Certificates of Deposit
Accounts ending 3253,3260,2429
Collateral for reclamation bonds
26.
Carbo Ceramics Inc.
Wells Fargo Bank, National Association
Accounts ending 3458,3466,3474
Collateral for Credit Cards
Schedule 4.21
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SCHEDULE 5.9(d)
Real Property
Type
Address
City
State
Zip
Plant
1800 Dent Rd
Toomsboro
GA
31090
Plant
2301 East 4th Street
Marshfield
WI
54449
Plant
2295 Wrigley Road
McIntyre
GA
31054
Plant
36 Arch Drive
Eufaula
AL
36027
Plant
4801 Industrial Drive
New Iberia
LA
70560
Office/Manufacturing Facility
2242 East Hwy 380
Decatur
TX
76234
Minerals Sand – Helgerson
9240 County Road V
Marshfield
WI
54449
Minerals Sand - Hansen
11575 MacArthur Drive
Marshfield
WI
54449
Minerals Sublease - Kaolin Allen North
Wilkinson County
GA
Minerals owned Kaolin Brannan
Wilkinson County
GA
Minerals owned Kaolin Kellam
Wilkinson County
GA
Minerals owned Kaolin CE Dent
Wilkinson County
GA
Minerals owned Kaolin CBrick
Wilkinson County
GA
Minerals Sublease Kaolin F Wall
Wilkinson County
GA
Minerals Sublease Kaolin CM Shepherd 1
Wilkinson County
GA
Minerals Sublease Kaolin CM Shepherd 2
Wilkinson County
GA
Minerals Sublease CD Dent
Wilkinson County
GA
Minerals Sublease - Kaolin CM Shepherd 2N
Wilkinson County
GA
Minerals stockpile Kaolin Roland
Henry County
AL
Minerals stockpile kaolin Sellers
Henry County
AL
Minerals stockpile kaolin Bell
Henry County
AL
Minerals stockpile kaolin Espy 4
Barbour County
AL
Distribution Center
4810 Industrial Drive
New Iberia
LA
70560
Distribution Center
1975 W Blairtown Rd.
Rock Springs
WY
82901
Distribution Center
2600 10180 101 St
Edmonton, AB
CA
T5J 3Y2
Distribution Center
8715 Park Road
Grand Prairie, AB
CA
T6R 2W9
Distribution Center
2346 CR 115
Alice
TX
78332
Distribution Center
51 Main Street
Douglas
ND
58735
Schedule 5.9(d)
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SCHEDULE 6.2(f)
Purchase Money Debt and Capital Leases
1.
Development Authority of Wilkinson County (as “Lessor”) and CARBO Ceramics Inc.
(as “Lessee”) dated November 1, 2008, as amended, pertaining to each of the
Toomsboro Facility and McIntyre Facility, respectfully.
Schedule 6.2(f)
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SCHEDULE 6.2(k)
Outstanding Debt
1.
Amended and Restated Credit Agreement, dated as of March 2, 2017 (as amended by
that certain First Amendment to Amended and Restated Credit Agreement, dated as
of June 7, 2018, and as further amended by that certain Second Amendment to
Amended and Restated Credit Agreement and Joinder, dated as of June 20, 2019, as
so amended), among Carbo Ceramics Inc., as Borrower, Wilks Brothers, LLC, as
Administrative Agent, and the lenders named therein, namely, Wilks Brothers, LLC
and Equify Financial LLC.
Schedule 6.2(k)
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SCHEDULE 6.2(m)
Existing Corporate Credit Card Services
As part of the Cash Management System, and in the ordinary course of business,
the Debtors maintain various Company-paid credit cards (collectively, the
“Credit Cards”) and various corporate purchasing cards and corporate fuel cards
(collectively, the “P-Cards,” and together with the Credit Cards, the “Corporate
Cards”) that are utilized to pay for certain work related expenses, such as
work-related travel, fuel charges, and other small, non-recurring purchases made
on behalf of the Debtors (collectively, the “Corporate Card Programs”). The
Corporate Cards are issued by four credit card providers, Wells Fargo, The
Universal Air Travel Plan, Inc. (“UATP”), Universal Advantage Fleet Card
(“Universal”), and Wright Express Fleet Card (“WEX,” and together with Wells
Fargo, UATP, and Universal, the “Credit Card Providers”).
Schedule 6.2(m)
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SCHEDULE 6.4(a)
Investments
NONE
Schedule 6.4(a)
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SCHEDULE 6.9(a)(iii)
Specified Dispositions
NONE
Schedule 6.9(a)(iii)
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PELOTON
February 6, 2017
Thomas P. Cortese
Dear Tom:
Peloton Interactive, Inc. (together with its successors and assigns, the
"Company'') is pleased to offer you continued employment on the terms set forth
in this letter agreement (the "Agreement"), which supersedes and replaces any
existing agreements, whether written or oral, with respect to the matters set
forth herein:
1. Position. Your title will be Chief Operating Officer, and you will report to
the Company's President as determined by the Company. This is a full-time
position. While you render services to the Company, you will not engage in any
other employment, consulting or other business activity (whether full-time or
part-time) that would create a conflict of interest with the Company. By signing
this Agreement, you confirm to the Company that you have no contractual
commitments or other legal obligations that would prohibit you from performing
your duties for the Company.
2.Cash Compensation. The Company will pay you a starting salary at the rate of
$400,000 per year, payable in accordance with the Company's standard payroll
schedule. This salary will be subject to adjustment pursuant to the Company's
employee compensation policies in effect from time to time. You will also be
eligible for an annual bonus (the "Annual Bonus") with a target of 50% of your
base salary (''Target Bonus"). The actual Annual Bonus payout will be based on
achievement of performance goals to be determined by the Company's Board of
Directors (the "Board") or its Compensation Committee and may be higher or lower
than the Target Bonus. The actual Annual Bonus payout may be higher or lower
than the Target Bonus. The Annual Bonus, if any, will be payable within 2½
months following the end of the Company's fiscal year (currently February 28) to
which it relates. The Annual Bonus, if any, will be payable following the end of
the fiscal year to which it relates. Except as set forth below, the Annual Bonus
will be payable only if you remain employed by the Company on the date of
payment.
3.Employee Benefits. As a regular employee of the Company, you will be eligible
to participate in a number of Company-sponsored benefits. In addition, you will
be entitled to paid vacation in accordance with the Company's vacation policy,
as in effect from time to time.
4.Equity.
(a)As of the date of this Agreement, you hold shares of the Company's common
stock (the "Common Stock") and options to purchase Common Stock as follows:
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PELOTON
(i)494,263 shares of Common Stock, all of which are fully vested.
(ii)An incentive stock option ("Option 1") under the Company's 2015 Stock Plan
(the "Plan") to purchase 156,384 shares of Common Stock pursuant to a Stock
Option Agreement (with Notice of Stock Option Grant) dated July 13, 2015
("Option Agreement 1"). 25% of the shares subject to Option 1 vested on
September 30, 2014, with the balance vesting in equal monthly installments over
the next 36 months of continuous service thereafter, as described in Option
Agreement 1.
(iii)An incentive stock option ("Option 2") under the Plan to purchase 203,000
shares of Common Stock pursuant to a Stock Option Agreement (with Notice of
Stock Option Grant) dated July 13, 2015 ("Option Agreement 2"). 25% of the
shares subject to Option 2 vested on March 30, 2016, with the balance vesting in
equal monthly installments over the next 36 months of continuous service
thereafter, as described in Option Agreement 2.
(iv)An incentive stock option ("Option 3") under the Plan to purchase 200,000
shares of Common Stock pursuant to a Stock Option Agreement (with Notice of
Stock Option Grant) dated April 20, 2016 ("Option Agreement 3"). 1/48th of the
shares subject to Option 3 vest upon the completion of each month of continuous
service after January 1, 2016, as described in Option Agreement 3.
(b)Subject to the approval by the Board or its Compensation Committee, Option
Agreement 1, Option Agreement 2 and Option Agreement 3 will be amended such that
if your employment is terminated without Cause (as defined below) or if you
resign for Good Reason (as defined below), 100% of the shares subject to Option
1, Option 2 and Option 3 will be deemed vested (the "Option Acceleration").
(c)For purposes of this Agreement, "Cause" is defined as any of the following:
(i) any act or omission that constitutes a material breach by you of your
obligations under this Agreement or any other agreement between you and the
Company; (ii) your failure or refusal to perform the lawful duties required of
you as an employee of the Company to the reasonable satisfaction of the Company;
(iii) any material violation by you of any (x) written policy, rule or
regulation of the Company or (y) any law or regulation applicable to the
business of the Company; (iv) your act or omission constituting fraud,
dishonesty, breach of fiduciary duty, gross negligence, willful misconduct or
intentional misrepresentation in relation to your duties to the Company, or any
of its respective customers, suppliers or other material business relations; or
(v) your conviction of, or plea of guilty or nolo contendere to, any crime which
constitutes a felony or crime of moral turpitude.
(d)For purposes of this Agreement, "Good Reason" is defined as any of the
following occurring without your prior written consent: (i) relocation of your
principal place of business by more than SO miles, (ii) a significant diminution
of job function, including a demotion that changes your title to anything other
than a C-level executive position, or (iii) a
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PELOTON
significant decrease in base salary compensation or your Target Bonus
opportunity as a percentage of your base salary; provided, in each case, that
you provide notice of such circumstances to the Company's Chief Executive
Officer (or principal executive officer, regardless of title) within 90 days of
such circumstances' occurrence, the Company fails to cure such circumstances
within 30.days of receipt of such notice and you resign within 180 days of such
circumstances coming into existence.
5.Termination Without Cause or Resignation for Good Reason.
(a) If your employment with the Company is terminated by the Company without
Cause, or in the event of your resignation for Good Reason, then, subject to the
conditions set forth in this Section S, you will become eligible to receive (i)
severance pay in an aggregate amount equal to twelve (12) months of your base
salary, to be paid in equal installments at your then base salary rate
(determined without regard to any reduction giving rise to your right to resign
for Good Reason) in accordance with the Company's regular payroll cycle for 12
months following the date of your termination of employment, and (ii) the Option
Acceleration (together, "Severance Pay"). The salary continuation payments in
(i) above will commence within 60 days after your termination date and, once
they commence, will include any unpaid amounts accrued from the termination
date; provided that, if the 60 day-period described in the preceding clause
spans two calendar years, then the payments will in any event begin in the
second calendar year.
(b) Except as set forth herein, the Severance Pay does not entitle you to any
ongoing benefits from the Company and you will not be an employee of the Company
for any purpose during any period that you are receiving Severance Pay. In order
to receive Severance Pay, you must: (i) sign and deliver to the Company a full
general release of all claims prepared by the Company (the "General Release"),
and any revocation period, if any, applicable to the General Release must have
expired, each within the time period specified by the Company, (ii) cooperate
with the orderly transfer of your duties as requested by the Company and; (iii)
return all Company property by a date specified by the Company. For the
avoidance of doubt, upon any termination of your employment you shall be
entitled to payment of your base salary through your termination date, payment
of any accrued but unused vacation days (if required by law and only to the
extent you have any vacation days accrued in accordance with the Company's
then-current vacation policy), reimbursement of any unreimbursed business
expenses, and any vested benefits or entitlements pursuant to any applicable
Company plan, policy or other agreement. All Severance Pay or other
post-termination compensation is, in each case, subject to required withholding.
6.Proprietary Information and Inventions Agreement. At all times in the future,
you will remain bound by your Proprietary Information and Inventions Agreement
(Technical Employees) with the Company, a copy of which is attached hereto as
Exhibit A and which you are executing at the same time as this Agreement (the
"PIIA").
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PELOTON
7.Employment Relationship. Employment with the Company is for no specific period
of time. Your employment with the Company will be "at will," meaning that either
you or the Company may terminate your employment at any time and for any reason,
with or without cause. Any contrary representations that may have been made to
you are superseded by this Agreement. This is the full and complete agreement
between you and the Company on this term. The "at will" nature of your
employment may only be changed in an express written agreement signed by you and
a duly authorized officer of the Company (other than you).
8.Tax Matters.
(a)Withholding. All forms of compensation referred to in this Agreement are
subject to reduction to reflect applicable withholding and payroll taxes and
other deductions required by law.
(b)Tax Advice. You are encouraged to obtain your own tax advice regarding your
compensation from the Company. You agree that the Company does not have a duty
to design its compensation policies in a manner that minimizes your tax
liabilities, and you will not make any claim against the Company or the Board
related to tax liabilities arising from your compensation.
(c)Section 409A. It is the intent of the parties that this Agreement is
interpreted such that it is either exempt from or complies with Section 409A of
the Internal Revenue Code of 1986, as amended (the "Code") in a manner which
does not impose any additional taxes, interest or penalties on you pursuant to
Section 409A of the Code and its implementing notices and regulations and it
shall be interpreted consistent with this intent. Each salary continuation
payment under Section S is hereby designated as a separate payment.
Notwithstanding any other provision of this Agreement to the contrary, any
payment or benefit described herein which represents a "deferral of
compensation" within the meaning of Section 409A of the Code shall only be paid
or provided to you if you have incurred a "separation from service" in
accordance with Section 409A of the Code. If the Company determines that you are
a "specified employee" under Section 409A{a)(2){B)(i) of the Code at the time of
your Separation, then (i) the salary continuation payments under Section S, to
the extent that they are subject to Section 409A of the Code, will commence on
the first business day following
(x)expiration of the six-month period measured from your "separation from
service" date or
(y)the date of your death and (ii) the installments that otherwise would have
been paid prior to such date will be paid in a lump sum when the salary
continuation payments commence.
9.Interpretation, Amendment and Enforcement. This Agreement and the PIIA
constitute the complete agreement between you and the Company, contain all of
the terms of your employment with the Company and supersede any prior
agreements, representations or understandings (whether written, oral or implied)
between you and the Company. This Agreement may not be amended or modified,
except by an express written agreement signed by both you and a duly authorized
officer of the Company. The terms of this Agreement and the
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PELOTON
resolution of any disputes as to the meaning, effect, performance or validity of
this Agreement or arising out of, related to, or in any way connected with, this
Agreement, your employment with the Company or any other relationship between
you and the Company {the "Disputes") will be governed by New York law, excluding
laws relating to conflicts or choice of law. You and the Company submit to the
exclusive personal jurisdiction of the federal and state courts located in New
York in connection with any Dispute or any claim related to any Dispute. This
Agreement shall be binding upon and inure to the benefit of the Company and you
and your respective successors and assigns.
* * * *
You may indicate your agreement with these terms by signing and dating the
enclosed duplicate original of this Agreement and returning it to me.
SIGNATURES ON NEXT PAGE
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PELOTON
If you have any questions, please feel free to reach out.
Kind Regards,
PELOTON INTERACTIVE, INC.
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Title: Chief Executive Officer
I have read and accept this employment offer:
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Signature of Employee
Dated: February 7, 2017
ATTACHMENTS:
Exhibit A Proprietary Information and Inventions Agreement (Technical Employees)
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